<PAGE>

                                                                    EXHIBIT 4(e)

================================================================================
================================================================================

                                CREDIT AGREEMENT

                                      AMONG

                     APPLIED INDUSTRIAL TECHNOLOGIES, INC.,

                                       AND

                      THE CANADIAN BORROWERS NAMED HEREIN,
                                  AS BORROWERS,

                    THE FINANCIAL INSTITUTIONS NAMED HEREIN,
                                   AS LENDERS,

                          KEYBANK NATIONAL ASSOCIATION,
             AS LEAD ARRANGER, BOOK RUNNER AND ADMINISTRATIVE AGENT,

                                       AND

                         U.S. BANK NATIONAL ASSOCIATION,
                              AS SYNDICATION AGENT

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

                                   DATED AS OF
                                OCTOBER 31, 2003

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

================================================================================
================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                            PAGE
                                                                                            ----
<S>                                                                                         <C>
ARTICLE I.  DEFINITIONS................................................................       1
         Section 1.1.  Definitions.....................................................       1
         Section 1.2.  Accounting Terms................................................      21
         Section 1.3.  Terms Generally.................................................      21

ARTICLE II.  AMOUNT AND TERMS OF CREDIT................................................      21
         Section 2.1.  Amount and Nature of Credit.....................................      21
         Section 2.2.  US Revolving Credit.............................................      22
         Section 2.3.  CAD Revolving Loans.............................................      27
         Section 2.4.  Interest........................................................      27
         Section 2.5.  Evidence of Indebtedness........................................      29
         Section 2.6.  Notice of Credit Event; Funding of Loans........................      30
         Section 2.7.  Payment on Loans and Other Obligations..........................      31
         Section 2.8.  Prepayment......................................................      32
         Section 2.9.  Facility and Other Fees.........................................      33
         Section 2.10.  Modification of Commitment.....................................      34
         Section 2.11.  Computation of Interest and Fees...............................      35
         Section 2.12.  Mandatory Payment..............................................      35
         Section 2.13.  Canadian Borrowers.............................................      36
         Section 2.14.  Waivers of Borrowers...........................................      37
         Section 2.15.  Extension of Commitment........................................      37

ARTICLE III.  ADDITIONAL PROVISIONS RELATING TO FIXED RATE LOANS;
INCREASED CAPITAL; TAXES...............................................................      38
         Section 3.1.  Requirements of Law.............................................      38
         Section 3.2.  Taxes...........................................................      39
         Section 3.3.  Funding Losses..................................................      40
         Section 3.4.  Eurodollar Rate or CAD Fixed Rate Lending Unlawful; Inability to
                Determine Rate.........................................................      41

ARTICLE IV.  CONDITIONS PRECEDENT......................................................      42
         Section 4.1.  Conditions to Each Credit Event.................................      42
         Section 4.2.  Conditions to the First Credit Event............................      42

ARTICLE V.  COVENANTS..................................................................      44
         Section 5.1.  Insurance.......................................................      44
         Section 5.2.  Money Obligations...............................................      44
         Section 5.3.  Financial Statements and Information............................      44
         Section 5.4.  Financial Records...............................................      45
         Section 5.5.  Franchises; Change in Business..................................      45
         Section 5.6.  ERISA Compliance................................................      45
         Section 5.7.  Financial Covenants.............................................      46
         Section 5.8.  Borrowing.......................................................      46
         Section 5.9.  Liens...........................................................      46
</TABLE>

                                       i

<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                            PAGE
                                                                                            ----
<S>                                                                                         <C>
         Section 5.10.  Regulations U and X............................................      47
         Section 5.11.  Investments and Loans..........................................      47
         Section 5.12.  Merger and Sale of Assets......................................      49
         Section 5.13.  Acquisitions...................................................      49
         Section 5.14.  Notice.........................................................      50
         Section 5.15.  Environmental Compliance.......................................      50
         Section 5.16.  Affiliate Transactions.........................................      51
         Section 5.17.  Use of Proceeds................................................      51
         Section 5.18.  Corporate Names................................................      51
         Section 5.19.  Subsidiary Guaranties..........................................      51
         Section 5.20.  Other Covenants................................................      52
         Section 5.21.  Guaranties Under the Note Purchase Agreement...................      52
         Section 5.22.  Pari Passu Ranking.............................................      52

ARTICLE VI.  REPRESENTATIONS AND WARRANTIES............................................      52
         Section 6.1.  Corporate Existence; Subsidiaries; Foreign Qualification........      52
         Section 6.2.  Corporate Authority.............................................      53
         Section 6.3.  Compliance with Laws............................................      53
         Section 6.4.  Litigation and Administrative Proceedings.......................      53
         Section 6.5.  Title to Assets.................................................      54
         Section 6.6.  Liens and Security Interests....................................      54
         Section 6.7.  Tax Returns.....................................................      54
         Section 6.8.  Environmental Laws..............................................      54
         Section 6.9.  Continued Business..............................................      54
         Section 6.10.  Employee Benefits Plans........................................      55
         Section 6.11.  Consents or Approvals..........................................      55
         Section 6.12.  Solvency.......................................................      55
         Section 6.13.  Financial Statements...........................................      56
         Section 6.14.  Regulations....................................................      56
         Section 6.15.  Material Agreements............................................      56
         Section 6.16.  Intellectual Property..........................................      56
         Section 6.17.  Insurance......................................................      56
         Section 6.18.  Accurate and Complete Statements...............................      57
         Section 6.19.  Note Purchase Agreement........................................      57
         Section 6.20.  Defaults.......................................................      57

ARTICLE VII.  EVENTS OF DEFAULT........................................................      57
         Section 7.1.  Payments........................................................      57
         Section 7.2.  Special Covenants...............................................      57
         Section 7.3.  Other Covenants.................................................      57
         Section 7.4.  Representations and Warranties..................................      57
         Section 7.5.  Cross Default...................................................      58
         Section 7.6.  ERISA Default...................................................      58
</TABLE>

                                       ii

<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                            PAGE
                                                                                            ----
<S>                                                                                         <C>
         Section 7.7.  Change in Control...............................................      58
         Section 7.8.  Money Judgment..................................................      58
         Section 7.9.  Validity of Loan Documents......................................      58
         Section 7.10.  Note Purchase Agreement........................................      58
         Section 7.11.  Solvency.......................................................      58

ARTICLE VIII.  REMEDIES UPON DEFAULT...................................................      59
         Section 8.1.  Optional Defaults...............................................      59
         Section 8.2.  Automatic Defaults..............................................      59
         Section 8.3.  Letters of Credit...............................................      60
         Section 8.4.  Offsets.........................................................      60
         Section 8.5.  Equalization Provision..........................................      60
         Section 8.6.  Other Remedies..................................................      61

ARTICLE IX.  THE AGENT.................................................................      61
         Section 9.1.  Appointment and Authorization...................................      61
         Section 9.2.  Note Holders....................................................      62
         Section 9.3.  Consultation With Counsel.......................................      62
         Section 9.4.  Documents.......................................................      62
         Section 9.5.  Agent and Affiliates............................................      62
         Section 9.6.  Knowledge of Default............................................      62
         Section 9.7.  Action by Agent.................................................      62
         Section 9.8.  Notice of Default...............................................      63
         Section 9.9.  Indemnification of Agent........................................      63
         Section 9.10.  Successor Agent................................................      63
         Section 9.11.  Other Agents...................................................      63
         Section 9.12.  Designated Lending Office......................................      63

ARTICLE X.  MISCELLANEOUS..............................................................      63
         Section 10.1.  Lenders' Independent Investigation.............................      64
         Section 10.2.  No Waiver; Cumulative Remedies.................................      64
         Section 10.3.  Amendments, Consents...........................................      64
         Section 10.4.  Notices........................................................      64
         Section 10.5.  Costs, Expenses and Taxes......................................      65
         Section 10.6.  Indemnification................................................      65
         Section 10.7.  Obligations Several; No Fiduciary Obligations..................      66
         Section 10.8.  Execution in Counterparts......................................      66
         Section 10.9.  Binding Effect; Borrowers' Assignment..........................      66
         Section 10.10.  Lender Assignments............................................      66
         Section 10.11.  Sale of Participations........................................      68
         Section 10.12.  Severability of Provisions; Captions; Attachments.............      69
         Section 10.13.  Investment Purpose............................................      69
         Section 10.14.  Confidentiality...............................................      69
         Section 10.15.  Entire Agreement..............................................      70
</TABLE>

                                      iii

<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                   ---------------
<S>                                                                                <C>
Section 10.16.  Legal Representation of Parties...............................                  70
Section 10.17.  Currency......................................................                  70
Section 10.18.  Governing Law; Submission to Jurisdiction.....................                  71
Section 10.19.  Jury Trial Waiver.............................................     Signatue Page 1
</TABLE>

Exhibit A             Form of US Revolving Credit Note
Exhibit B             Form of Swing Line Note
Exhibit C             Form of CAD Revolving Credit Note
Exhibit D             Form of Notice of Loan
Exhibit E             Form of Compliance Certificate
Exhibit F             Form of Assignment and Acceptance Agreement
Exhibit G             Form of Request for Extension

Schedule 1            Lenders and Commitments
Schedule 2            Canadian Borrowers
Schedule 2.2          Existing Letters of Credit
Schedule 3            Guarantors of Payment
Schedule 5.9          Liens
Schedule 6.1          Subsidiaries
Schedule 6.4          Litigation and Administrative Proceedings
Schedule 6.10         ERISA Plans
Schedule 6.15         Material Agreements

                                       iv

<PAGE>

         This CREDIT AGREEMENT (as the same may from time to time be amended,
restated or otherwise modified, this "Agreement") is made effective as of the
31st day of October, 2003, among:

         (a)      APPLIED INDUSTRIAL TECHNOLOGIES, INC., an Ohio corporation
("US Borrower");

         (b)      each Canadian Borrower, as hereinafter defined (each such
Canadian Borrower, together with US Borrower, collectively, "Borrowers" and,
individually, each a "Borrower");

         (c)      the financial institutions listed on Schedule 1 hereto and
each other Eligible Transferee, as hereinafter defined, that becomes a party
hereto pursuant to Section 10.10 hereof (collectively, the "Lenders" and,
individually, each a "Lender");

         (d)      KEYBANK NATIONAL ASSOCIATION, as lead arranger, book runner
and administrative agent for the Lenders under this Agreement ("Agent"); and

         (e)      U.S. BANK NATIONAL ASSOCIATION, as syndication agent for the
Lenders under this Agreement (the "Syndication Agent").

                                   WITNESSETH:

         WHEREAS, Borrowers, Agent and the Lenders desire to contract for the
establishment of credits in the aggregate principal amounts hereinafter set
forth, to be made available to Borrowers upon the terms and subject to the
conditions hereinafter set forth;

         NOW, THEREFORE, it is mutually agreed as follows:

                             ARTICLE I. DEFINITIONS

         Section 1.1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:

         "Acquisition" shall mean any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of any Person, or any
business or division of any Person (other than a Company), (b) the acquisition
of in excess of fifty percent (50%) of the stock (or other equity interest) of
any Person (other than a Company), or (c) the acquisition of another Person
(other than a Company) by a merger, amalgamation or consolidation or any other
combination with such Person.

         "Additional Commitment" shall have the meaning given to such term in
Section 2.10(b) hereof.

<PAGE>

         "Additional Lender" shall mean a financial institution that shall
become a Lender hereunder during the Commitment Increase Period pursuant to
Section 2.10(b) hereof.

         "Additional Lender Assumption Agreement" shall mean an assumption
agreement, in form and substance satisfactory to Agent, wherein an Additional
Lender shall become a US Lender hereunder.

         "Additional Lender Assumption Effective Date" shall have the meaning
given such term in Section 2.10(b) hereof.

         "Advantage" shall mean any payment (whether made voluntarily or
involuntarily, by offset of any deposit or other indebtedness or otherwise)
received by any Lender in respect of the Applicable Debt, if such payment
results in that Lender having less than its pro rata share (based upon its
Applicable Commitment Percentage and, in the case of an Equalization Event
pursuant to the terms of Section 8.5 hereof, based upon its Equalization
Percentage, as defined in Section 8.5 hereof) of the Applicable Debt then
outstanding, than was the case immediately before such payment.

         "Affiliate" shall mean any Person, directly or indirectly, controlling,
controlled by or under common control with a Company and "control" (including
the correlative meanings, the terms "controlling", "controlled by" and "under
common control with") shall mean the power, directly or indirectly, to direct or
cause the direction of the management and policies of a Company, whether through
the ownership of voting securities, by contract or otherwise.

         "Agent Fee Letter" shall mean the Agent Fee Letter between US Borrower
and Agent, dated as of the Closing Date, as the same may from time to time be
amended, restated or otherwise modified.

         "Applicable Commitment Percentage" shall mean, for each Lender:

         (a)      with respect to any US Revolving Credit Commitment, the
percentage, if any, set forth opposite such Lender's name under the column
headed "US Revolving Credit Commitment Percentage" as described in Schedule 1
hereto; and

         (b)      with respect to the CAD Revolving Credit Commitment, the
percentage, if any, set forth opposite such Lender's name under the column
headed "CAD Revolving Credit Commitment Percentage" as described in Schedule 1
hereto.

         "Applicable Debt" shall mean:

         (a)      with respect to the Canadian Commitment, collectively, (i) all
Indebtedness incurred by Canadian Borrowers to the Canadian Lenders pursuant to
this Agreement and includes, without limitation, the principal of and interest
on all of the Notes payable by Canadian Borrowers to the Canadian Lenders, (ii)
each extension, renewal or refinancing thereof in whole or in part, and (iii)
the facility, usage, prepayment and other fees and amounts payable hereunder in
connection with the Canadian Commitment; and

                                       2

<PAGE>

         (b)      with respect to the US Commitment, collectively, (i) all
Indebtedness incurred by US Borrower to the US Lenders pursuant to this
Agreement and includes, without limitation, the principal of and interest on all
of the Notes payable by US Borrower to such US Lenders in connection with the US
Commitment, and all obligations with respect to Letters of Credit, (ii) each
extension, renewal or refinancing thereof, in whole or in part, and (iii) the
facility, usage, prepayment and other fees and amounts payable hereunder in
connection with the US Commitment.

         "Applicable Facility Fee Rate" shall mean:

         (a)      for the period from the Closing Date through February 29,
2004, seventeen and one-half (17.50) basis points; and

         (b)      commencing with the Consolidated financial statements of US
Borrower for the fiscal quarter ending December 31, 2003, the number of basis
points set forth in the following matrix, based upon the result of the
computation of the Capitalization Ratio, shall be used to establish the number
of basis points that will go into effect on March 1, 2004 and thereafter:

<TABLE>
<CAPTION>
         CAPITALIZATION RATIO             APPLICABLE FACILITY FEE RATE
----------------------------------------------------------------------
<S>                                       <C>
Greater than 0.40 to 1.00                       30.00 basis points
----------------------------------------------------------------------
Less than or equal to 0.40 to 1.00 but          22.50 basis points
greater than 0.30 to 1.00
----------------------------------------------------------------------
Less than or equal to 0.30 to 1.00 but          17.50 basis points
greater than 0.20 to 1.00
----------------------------------------------------------------------
Less than or equal to 0.20 to 1.00              15.00 basis points
----------------------------------------------------------------------
</TABLE>

After March 1, 2004, changes to the Applicable Facility Fee Rate shall be
effective on the first day of each month following the date upon which Agent
received, or, if earlier, Agent should have received, pursuant to Section 5.3(a)
or (b) hereof, the financial statements of the Companies. The above matrix does
not modify or waive, in any respect, the requirements of Section 5.7 hereof, the
rights of Agent and the Lenders to charge the Default Rate, or the rights and
remedies of Agent and the Lenders pursuant to Articles VII and VIII hereof.

         "Applicable Lender" shall mean, (a) US Lenders with respect to the US
Commitment, and (b) Canadian Lenders with respect to the Canadian Commitment.

         "Applicable Margin" shall mean:

         (a)      for the period from the Closing Date through February 29,
2004, seventy (70) basis points; and

         (b)      commencing with the Consolidated financial statements of US
Borrower for the fiscal quarter ending December 31, 2003, the number of basis
points set forth in the following matrix, based upon the result of the
computation of the Capitalization Ratio, shall be used to establish the number
of basis points that will go into effect on March 1, 2004 and thereafter:

                                       3

<PAGE>

<TABLE>
<CAPTION>
         CAPITALIZATION RATIO              APPLICABLE MARGIN
-------------------------------------------------------------
<S>                                       <C>
Greater than 0.40 to 1.00                 120.00 basis points
-------------------------------------------------------------
Less than or equal to 0.40 to 1.00 but    90.00 basis points
greater than 0.30 to 1.00
-------------------------------------------------------------
Less than or equal to 0.30 to 1.00 but    70.00 basis points
greater than 0.20 to 1.00
-------------------------------------------------------------
Less than or equal to 0.20 to 1.00        60.00 basis points
-------------------------------------------------------------
</TABLE>

After March 1, 2004, changes to the Applicable Margin shall be effective on the
first day of each month following the date upon which Agent received, or, if
earlier, Agent should have received, pursuant to Section 5.3(a) or (b) hereof,
the financial statements of the Companies. The above matrix does not modify or
waive, in any respect, the requirements of Section 5.7 hereof, the rights of
Agent and the Lenders to charge the Default Rate, or the rights and remedies of
Agent and the Lenders pursuant to Articles VII and VIII hereof.

         "Assignment Agreement" shall mean an Assignment and Acceptance
Agreement in the form of the attached Exhibit F.

         "Authorized Officer" shall mean a Financial Officer or other individual
authorized by a Financial Officer in writing (with a copy to Agent) to handle
certain administrative matters in connection with this Agreement.

         "Base Rate" shall mean a rate per annum equal to the greater of (a) the
Prime Rate or (b) one-half of one percent (0.50%) in excess of the Federal Funds
Effective Rate. Any change in the Base Rate shall be effective immediately from
and after such change in the Base Rate.

         "Base Rate Loan" shall mean a US Revolving Loan described in Section
2.2 hereof on which US Borrower shall pay interest at a rate based on the Base
Rate.

         "Business Day" shall mean (a) a day of the year on which banks are not
authorized or required to close in Cleveland, Ohio, (b) if the applicable
Business Day shall relate to any Eurodollar Loan, a day of the year on which
dealings in deposits are carried on in the London interbank Eurodollar market,
or (c) if the applicable Business Day shall relate to any CAD Revolving Loan, a
day of the year on which dealings in deposits are carried on in Canada.

         "CAD Base Rate" shall mean the per annum interest rate established from
time to time by Bank of Montreal as Bank of Montreal's "prime rate" or similar
index, whether or not such rate is publicly announced, applicable to commercial
loans made by Bank of Montreal in Canada in CAD; provided that the CAD Base Rate
may not be the lowest interest rate charged by Bank of Montreal for such
commercial loans. Each change in the CAD Base Rate shall be effective
immediately from and after such change.

         "CAD Base Rate Loan" shall mean a CAD Revolving Loan described in
Section 2.3 hereof on which Canadian Borrowers shall pay interest at a rate
based on the CAD Base Rate.

                                       4

<PAGE>

         "CAD Equivalent" shall mean the amount denominated in CAD, as of any
date of determination, that could be purchased with the applicable amount of
Dollars at the most favorable spot exchange rate quoted by Agent at
approximately 11:00 A.M. (Eastern time) on such date.

         "CAD Fixed Rate" shall mean, in respect of any Interest Period
applicable to a CAD Fixed Rate Loan, the rate per annum determined by Agent by
reference to the average rate quoted on the Reuters Monitor Screen (Page CDOR,
or such other page as may replace such page on such screen for the purpose of
displaying Canadian interbank bid rates for Canadian Dollar bankers'
acceptances) applicable to Canadian Dollar bankers' acceptances (on a three
hundred sixty-five (365) day basis) with a term comparable to such Interest
Period as of 10:00 A.M. (Eastern time) on the first day of such Interest Period.
If for any reason the Reuters Monitor Screen rates are unavailable, CAD Fixed
Rate means the rate of interest determined by Agent that is equal to the rate
(rounded upwards to the nearest basis point) quoted by The Bank of Montreal in
respect of Canadian Dollar bankers' acceptances (on a three hundred sixty-five
(365) day basis) with a term comparable to such Interest Period. No adjustment
shall be made to account for the difference between the number of days in a year
on which the rates referred to in this definition are based and the number of
days in a year on the basis of which interest is calculated in this Agreement.

         "CAD Fixed Rate Loan" shall mean a CAD Revolving Loan described in
Section 2.3 hereof on which Canadian Borrowers shall pay interest at a rate
based on the Derived CAD Fixed Rate.

         "CAD Revolving Credit Commitment" shall mean the obligation hereunder,
during the Commitment Period, of each Canadian Lender to make CAD Revolving
Loans up to the Maximum Amount for such Canadian Lender.

         "CAD Revolving Credit Note" shall mean a CAD Revolving Credit Note
executed and delivered pursuant to Section 2.5(c) hereof.

         "CAD Revolving Exposure" shall mean the Dollar Equivalent of the
aggregate principal amount of all CAD Revolving Loans.

         "CAD Revolving Loan" shall mean a CAD Base Rate Loan or a CAD Fixed
Rate Loan granted to a Canadian Borrower in accordance with Section 2.3 hereof.

         "Canadian Borrower" shall mean each of the Foreign Subsidiaries of US
Borrower set forth on Schedule 2 hereto.

         "Canadian Commitment" shall mean the obligation hereunder of the
Canadian Lenders, during the Commitment Period, to make Loans pursuant to the
CAD Revolving Credit Commitments, up to the Maximum CAD Revolving Amount.

         "Canadian Dollar" or "CAD" shall mean lawful money of Canada.

                                       5

<PAGE>

         "Canadian Guarantor of Payment" shall mean each Foreign Subsidiary that
shall execute and deliver a Guaranty of Payment to Agent, pursuant to Section
5.19 hereof, subsequent to the Closing Date.

         "Canadian Lender" shall mean each Lender that is designated as a
Canadian Lender on Schedule 1 hereto.

         "Capitalization Ratio" shall mean, for the most recently completed
fiscal quarter of US Borrower, on a Consolidated basis and in accordance with
GAAP, the ratio of (a) Consolidated Funded Indebtedness to (b) Consolidated
Total Capitalization.

         "Capitalized Lease Obligations" shall mean obligations of the Companies
for the payment of rent for any real or personal property under leases or
agreements to lease that, in accordance with GAAP, have been or should be
capitalized on the books of the lessee and, for purposes hereof, the amount of
any such obligation shall be the capitalized amount thereof determined in
accordance with GAAP.

         "Change in Control" shall mean (a) the acquisition of, or, if earlier,
the shareholder or director approval of the acquisition of, ownership or voting
control, directly or indirectly, beneficially or of record, on or after the
Closing Date, by any Person or group (within the meaning of Rule 13d-3 of the
SEC under the Securities Exchange Act of 1934, as then in effect), of shares
representing more than thirty-three percent (33%) of the aggregate ordinary
Voting Power represented by the issued and outstanding capital stock of US
Borrower; (b) the occupation of a majority of the seats (other than vacant
seats) on the board of directors of US Borrower by Persons who were neither (i)
nominated by the board of directors of US Borrower nor (ii) appointed by
directors so nominated; or (c) the occurrence of a change in control, or other
similar provision, as defined in any Material Indebtedness Agreement.

         "Closing Commitment Amount" shall mean the Dollar Equivalent of One
Hundred Million Dollars ($100,000,000).

         "Closing Date" shall mean the effective date of this Agreement as set
forth in the first paragraph of this Agreement.

         "Closing Fee Letter" shall mean the Closing Fee Letter among Borrowers,
Agent and the Lenders, dated as of the Closing Date.

         "Code" shall mean the Internal Revenue Code of 1986, as amended,
together with the rules and regulations promulgated thereunder.

         "Commitment" shall mean the US Commitment and the Canadian Commitment.

         "Commitment Increase Period" shall mean the period from the Closing
Date to the date that is thirty (30) days prior to the last day of the
Commitment Period.

                                       6

<PAGE>

         "Commitment Period" shall mean the period from the Closing Date to
October 31, 2008 or such earlier date on which the Commitment shall have been
terminated pursuant to Article VIII hereof.

         "Companies" shall mean all Borrowers and all Subsidiaries.

         "Company" shall mean a Borrower or a Subsidiary.

         "Compliance Certificate" shall mean a certificate, substantially in the
form of the attached Exhibit E.

         "Confidential Information" shall mean all confidential or proprietary
information about the Companies that has been furnished by any Company to Agent
or any Lender, whether furnished before or after the Closing Date and regardless
of the manner in which it is furnished, but does not include any such
information that (a) is or becomes generally available to the public other than
as a result of a disclosure by Agent or such Lender not permitted by this
Agreement, (b) was available to Agent or such Lender on a nonconfidential basis
prior to its disclosure to Agent or such Lender, or (c) becomes available to
Agent or such Lender on a nonconfidential basis from a Person other than any
Company that is not, to the best knowledge of Agent or such Lender, acting in
violation of a confidentiality agreement with a Company or is not otherwise
prohibited from disclosing the information to Agent or such Lender.

         "Consideration" shall mean, in connection with an Acquisition (or a
Disposition), the aggregate consideration paid, including borrowed funds, cash,
the issuance of securities or notes, the assumption or incurring of liabilities
(direct or contingent), the payment of consulting fees or fees for a covenant
not to compete and any other consideration paid for such Acquisition (or
Disposition).

         "Consolidated" shall mean the resultant consolidation of the financial
statements of US Borrower and its Subsidiaries in accordance with GAAP,
including principles of consolidation consistent with those applied in
preparation of the consolidated financial statements referred to in Section 6.13
hereof.

         "Consolidated Depreciation and Amortization Charges" shall mean, for
any period, the aggregate of all depreciation and amortization charges for fixed
assets, leasehold improvements and general intangibles (specifically including
goodwill) of US Borrower for such period, as determined on a Consolidated basis
and in accordance with GAAP.

         "Consolidated EBIT" shall mean, for any period, on a Consolidated basis
and in accordance with GAAP, Consolidated Net Earnings for such period plus the
aggregate amounts deducted in determining such Consolidated Net Earnings in
respect of (a) Consolidated Interest Expense, (b) Consolidated Income Tax
Expense, (c) Consolidated stock option expenses, up to an aggregate amount of
Two Million Dollars ($2,000,000) per fiscal year of US Borrower, and (d) (i)
extraordinary or non-recurring charges, minus (ii) extraordinary or
non-recurring cash gains.

                                       7

<PAGE>

         "Consolidated EBITDA" shall mean, for any period, on a Consolidated
basis and in accordance with GAAP, Consolidated EBIT plus Consolidated
Depreciation and Amortization Charges.

         "Consolidated Funded Indebtedness" shall mean, for any period, Funded
Indebtedness of US Borrower for such period, as determined on a Consolidated
basis and in accordance with GAAP.

         "Consolidated Income Tax Expense" shall mean, for any period, all
provisions for taxes based on the gross or net income of US Borrower (including,
without limitation, any additions to such taxes, and any penalties and interest
with respect thereto), and all franchise taxes of Borrower, as determined on a
Consolidated basis and in accordance with GAAP.

         "Consolidated Interest Expense" shall mean, for any period, the
interest expense of US Borrower for such period, as determined on a Consolidated
basis and in accordance with GAAP.

         "Consolidated Net Earnings" shall mean, for any period, without
duplication, an amount equal to (a) the net income (loss) of US Borrower for
such period, plus (b) upon the consummation of an Acquisition (with
Consideration in excess of Two Million Five Hundred Thousand Dollars
($2,500,000)) permitted under Section 5.13 hereof, trailing twelve months pro
forma historical net income (loss), less (c) upon the consummation of a
Disposition (with Consideration in excess of Two Million Five Hundred Thousand
Dollars ($2,500,000)), trailing twelve months pro forma historical net income
(loss), all as determined on a Consolidated basis and in accordance with GAAP.

         "Consolidated Net Worth" shall mean, at any date, the stockholders'
equity of US Borrower, determined as of such date on a Consolidated basis and in
accordance with GAAP.

         "Consolidated Tangible Net Worth" shall mean, at any date, (a) the net
book value (after deducting all applicable reserves and excluding any
re-appraisal or write-up of assets) of the assets (other than patents, goodwill,
treasury stock and other intangibles) of US Borrower, minus (b) Consolidated
Total Liabilities, as determined on a Consolidated basis and in accordance with
GAAP.

         "Consolidated Total Capitalization" shall mean, for any period, on a
Consolidated basis and in accordance with GAAP, Consolidated Tangible Net Worth
plus Consolidated Funded Indebtedness.

         "Consolidated Total Liabilities" shall mean, at any date, the Total
Liabilities of US Borrower, as determined on a Consolidated basis and in
accordance with GAAP.

         "Controlled Group" shall mean a Company and each Person required to be
aggregated with a Company under Code Section 414(b), (c), (m) or (o).

         "Credit Event" shall mean the making by the Lenders of a Loan, the
conversion by the Lenders of a Base Rate Loan or a CAD Base Rate Loan to a Fixed
Rate Loan, the continuation

                                       8

<PAGE>

by the Lenders of a Fixed Rate Loan after the end of the applicable Interest
Period, the making by the Swing Line Lender of a Swing Loan, or the issuance by
the Fronting Lender of a Letter of Credit.

         "Credit Party" shall mean a Borrower, a Subsidiary or an Affiliate,
including any Guarantor of Payment, that, in each case, is a party to any Loan
Document.

         "Debt" shall mean, collectively, all Indebtedness and other obligations
incurred by any Borrower or Guarantor of Payment to Agent, the Fronting Lender,
the Swing Line Lender, or any Lender (or any affiliate thereof) pursuant to this
Agreement and includes the principal of and interest on all Loans and all
obligations pursuant to the Letters of Credit, and each extension, renewal or
refinancing thereof in whole or in part, the facility, usage, prepayment and
other fees and amounts payable hereunder, and all fees and charges in connection
with the Letters of Credit.

         "Default" shall mean an event or condition that constitutes, or with
the lapse of any applicable grace period or the giving of notice or both would
constitute, an Event of Default, and that has not been waived by the Required
Lenders in writing.

         "Default Rate" shall mean (a) with respect to any Loan, a rate per
annum equal to two percent (2%) in excess of the rate otherwise applicable
thereto, and (b) with respect to any other amount, if no rate is specified or
available, a rate per annum equal to two percent (2%) in excess of the Base Rate
from time to time in effect.

         "Derived CAD Fixed Rate" shall mean a rate per annum equal to the sum
of the Applicable Margin (from time to time in effect) plus the CAD Fixed Rate.

         "Derived Eurodollar Rate" shall mean a rate per annum equal to the sum
of the Applicable Margin (from time to time in effect) plus the Eurodollar Rate.

         "Derived Swing Loan Rate" shall mean a rate per annum equal to (a)
Agent's cost of funds as quoted to US Borrower by Agent and agreed to by US
Borrower, plus (b) the Applicable Margin (from time to time in effect).

         "Designated Lending Office" shall mean the office of Agent, c/o Bank of
Montreal, 1 First Canadian Place, 19th Floor, Toronto, Ontario M5X1A1,
Attention: Manager, Global Distribution Services, or such other office and
address in Canada as Agent may from time to time designate.

         "Disposition" shall mean any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in the
transfer or other disposition of (a) in excess of fifty percent (50%) of the
stock (or other equity interest) or (b) all or substantially all of the assets
of any Company, or any business unit or division of any Company.

         "Dollar" or the sign $ shall mean lawful money of the United States of
America.

                                       9

<PAGE>

         "Dollar Equivalent" shall mean (a) with respect to a CAD Revolving
Loan, the Dollar equivalent of the amount of such CAD Revolving Loan, determined
by Agent on the basis of its spot rate at approximately 11:00 A.M. London time
on the date two Business Days before the date of such CAD Revolving Loan, for
the purchase of Canadian Dollars with Dollars for delivery on the date of such
CAD Revolving Loan, and (b) with respect to any other amount, if such amount is
denominated in Dollars, then such amount in Dollars and, otherwise the Dollar
equivalent of such amount, determined by Agent on the basis of its spot rate at
approximately 11:00 A.M. London time on the date for which the Dollar equivalent
amount of such amount is being determined, for the purchase of Canadian Dollars
with Dollars for delivery on such date; provided, however, that, in calculating
the Dollar Equivalent for purposes of determining (i) any Borrower's obligation
to prepay Loans pursuant to Section 2.12 hereof, or (ii) any Borrower's ability
to request additional Loans pursuant to the Commitment, Agent may, in its
discretion, on any Business Day selected by Agent (prior to payment in full of
the Debt), calculate the Dollar Equivalent of each such Loan. Agent shall notify
US Borrower of the Dollar Equivalent of the CAD Revolving Loans or any other
amount, at the time that such Dollar Equivalent shall have been determined
pursuant to this definition.

         "Domestic Guarantor of Payment" shall mean each of the Companies
designated a "Domestic Guarantor of Payment" on Schedule 3 hereto, each of which
is executing and delivering a Guaranty of Payment, and any other Domestic
Subsidiary that shall deliver a Guaranty of Payment to Agent subsequent to the
Closing Date.

         "Domestic Subsidiary" shall mean a Subsidiary that is not a Foreign
Subsidiary.

         "Dormant Subsidiary" shall mean a Company that (a) is not a Credit
Party, (b) has aggregate assets of less than One Million Dollars ($1,000,000)
and aggregate investments by the Companies of less than One Million Dollars
($1,000,000), and (c) has no direct or indirect Subsidiaries with aggregate
assets for all such Subsidiaries of more than One Million Dollars ($1,000,000).

         "Eligible Transferee" shall mean a commercial bank, financial
institution or other "accredited investor" (as defined in SEC Regulation D) that
is not a Borrower, a Subsidiary or an Affiliate.

         "Environmental Laws" shall mean all provisions of law, statutes,
ordinances, rules, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by the government
of the United States of America by any state or municipality thereof or any
foreign jurisdiction, or by any court, agency, instrumentality, regulatory
authority or commission of any of the foregoing concerning health, safety and
protection of, or regulation of the discharge of substances into, the
environment.

         "Equalization Event" shall mean the earlier of (a) the occurrence of an
Event of Default under Section 7.11 hereof, or (b) the acceleration of the
maturity of the Debt after the occurrence of an Event of Default.

                                       10

<PAGE>

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated pursuant thereto.

         "ERISA Event" shall mean (a) the existence of a condition or event with
respect to an ERISA Plan that presents a significant risk of the imposition of
an excise tax in a material amount or any other material liability on a Company
or of the imposition of a Lien on the assets of a Company; (b) the engagement by
a Controlled Group member in a non-exempt "prohibited transaction" (as defined
under ERISA Section 406 or Code Section 4975) or a breach of a fiduciary duty
under ERISA that, in either case, could result in a material liability to a
Company; (c) the application by a Controlled Group member for a waiver from the
minimum funding requirements of Code Section 412 or ERISA Section 302 or a
Controlled Group member is required to provide security under Code Section
401(a)(29) or ERISA Section 307; (d) the occurrence of a Reportable Event with
respect to any Pension Plan as to which 30-day notice is required to be provided
to the PBGC; (e) the withdrawal by a Controlled Group member from a
Multiemployer Plan in a "complete withdrawal" or a "partial withdrawal" (as such
terms are defined in ERISA Sections 4203 and 4205, respectively) which results
or is likely to result in a material liability to a Company; (f) the involvement
of, or occurrence or existence of any event or condition that makes likely the
involvement of, a Multiemployer Plan in any reorganization under ERISA Section
4241; (g) the failure of an ERISA Plan (and any related trust) that is intended
to be qualified under Code Sections 401 and 501 to be so qualified or the
failure of any "cash or deferred arrangement" under any such ERISA Plan to meet
the requirements of Code Section 401(k), provided, in any such case, that the
failure exposes or is likely to expose a Company to material liability; (h) the
taking by the PBGC of any steps to terminate a Pension Plan or appoint a trustee
to administer a Pension Plan, or the taking by a Controlled Group member of any
steps to terminate a Pension Plan; (i) the failure by a Controlled Group member
or an ERISA Plan to satisfy any requirements of law applicable to an ERISA Plan,
provided, in any such case, that the failure exposes or is likely to expose a
Company to material liability; (j) the commencement, existence or threatening of
a claim, action, suit, audit or investigation with respect to an ERISA Plan,
other than a routine claim for benefits, and such action or suit could
reasonably be expected to have a Material Adverse Effect; or (k) any incurrence
by or any expectation of the incurrence by a Controlled Group member of any
liability for post-retirement medical benefits under any Welfare Plan, other
than as required by ERISA Section 601, et. seq. or Code Section 4980B, except
for limited benefits in connection with a severance arrangement or benefits for
retired senior executives or directors of a Company.

         "ERISA Plan" shall mean an "employee benefit plan" (within the meaning
of ERISA Section 3(3)) that a Controlled Group member at any time sponsors or
maintains, or to which a Controlled Group member contributes, has liability or
has a contribution obligation.

         "Eurocurrency Liabilities" shall have the meaning assigned to that term
in Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.

         "Eurodollar" shall mean a Dollar denominated deposit in a bank or
branch outside of the United States.

                                       11

<PAGE>

         "Eurodollar Loan" shall mean a Loan described in Section 2.2 hereof on
which US Borrower shall pay interest at a rate based upon the Derived Eurodollar
Rate.

         "Eurodollar Rate" shall mean, with respect to a Eurodollar Loan, for
any Interest Period, a rate per annum equal to the quotient obtained (rounded
upwards, if necessary, to the nearest 1/16th of 1%) by dividing (a) the rate of
interest, determined by Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) as of approximately
11:00 A.M. (London time) three Business Days prior to the beginning of such
Interest Period pertaining to such Eurodollar Loan, as listed on British Bankers
Association Interest Rate LIBOR 01 or 02 as provided by Reuters (or, if for any
reason such rate is unavailable from Reuters, from any other similar company or
service that provides rate quotations comparable to those currently provided by
Reuters) as the rate in the London interbank market for Dollar deposits in
immediately available funds with a maturity comparable to such Interest Period,
provided that, in the event that such rate quotation is not available for any
reason, then the Eurodollar Rate shall be the average (rounded upward to the
nearest 1/16th of 1%) of the per annum rates at which deposits in immediately
available funds in Dollars for the relevant Interest Period and in the amount of
the Eurodollar Loan to be disbursed or to remain outstanding during such
Interest Period, as the case may be, are offered to Agent (or an affiliate of
Agent, in Agent's discretion) by prime banks in any Eurodollar market reasonably
selected by Agent, determined as of 11:00 A.M. (London time) (or as soon
thereafter as practicable), three Business Days prior to the beginning of the
relevant Interest Period pertaining to such Eurodollar Loan hereunder; by (b)
1.00 minus the Reserve Percentage.

         "Event of Default" shall mean an event or condition that shall
constitute an event of default as defined in Article VII hereof.

         "Excluded Taxes" shall mean net income taxes (and franchise taxes
imposed in lieu of net income taxes) imposed on Agent or any Lender by the
Governmental Authority located in the jurisdiction where Agent or such Lender is
organized (other than any such taxes arising solely from Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document).

         "Existing Letter of Credit" shall having the meaning given to such term
in Section 2.2(b)(vii) hereof.

         "Federal Funds Effective Rate" shall mean, for any day, the rate per
annum (rounded upward to the nearest one one-hundredth of one percent (1/100 of
1%)) announced by the Federal Reserve Bank of New York (or any successor) on
such day as being the weighted average of the rates on overnight federal funds
transactions arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the "Federal Funds Effective
Rate" as of the Closing Date.

         "Financial Officer" shall mean any of the following officers: chief
executive officer, president, any vice president, chief financial officer,
treasurer, assistant treasurer, controller or

                                       12

<PAGE>

assistant controller. Unless otherwise qualified, all references to a Financial
Officer in this Agreement shall refer to a Financial Officer of US Borrower.

         "Fixed Rate Loan" shall mean a Eurodollar Loan or a CAD Fixed Rate
Loan.

         "Foreign Subsidiary" shall mean a Subsidiary that is organized outside
of the United States.

         "Fronting Lender" shall mean, (a) as to any Letter of Credit
transaction hereunder, Agent as issuer of the Letter of Credit, or, in the event
that Agent either shall be unable to issue or shall agree, with the consent of
US Borrower, that another US Lender may issue, a Letter of Credit, such other US
Lender as shall agree to issue the Letter of Credit in its own name, but on
behalf of the Lenders hereunder, or (b) as to any Existing Letter of Credit,
KeyBank National Association.

         "Funded Indebtedness" shall mean, without duplication, the sum of (a)
all Indebtedness for borrowed money, (b) all Capitalized Lease Obligations and
(c) all Indebtedness pursuant to letters of credit, synthetic lease and asset
securitizations.

         "GAAP" shall mean generally accepted accounting principles as then in
effect, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, applied on a basis consistent with the
past accounting practices and procedures of US Borrower.

         "Governmental Authority" shall mean any nation or government, any
state, province or territory or other political subdivision thereof, any
governmental agency, authority, instrumentality, regulatory body, court, central
bank or other governmental entity exercising executive, legislative, judicial,
taxing, regulatory or administrative functions of or pertaining to government,
any securities exchange and any self-regulatory organization.

         "Guarantor" shall mean a Person that shall have pledged its credit or
property in any manner for the payment or other performance of the indebtedness,
contract or other obligation of another and includes (without limitation) any
guarantor (whether of payment or of collection), surety, co-maker, endorser or
Person that shall have agreed conditionally or otherwise to make any purchase,
loan or investment in order thereby to enable another to prevent or correct a
default of any kind.

         "Guarantor of Payment" shall mean a Domestic Guarantor of Payment or a
Canadian Guarantor of Payment.

         "Guaranty of Payment" shall mean each Guaranty of Payment of Debt
executed and delivered on or after the Closing Date in connection with this
Agreement by the Guarantors of Payment, as the same may from time to time be
amended, restated or otherwise modified.

         "Hedge Agreement" shall mean any (a) hedge agreement, interest rate
swap, cap, collar or floor agreement, or other interest rate management device
entered into by a Company with any Person in connection with any Indebtedness of
the Companies, or (b) currency swap

                                       13

<PAGE>

agreement, forward currency purchase agreement or similar arrangement or
agreement designed to protect against fluctuations in currency exchange rates
entered into by the Companies.

         "Indebtedness" shall mean, for any Company (excluding in all cases
trade payables payable in the ordinary course of business by such Company),
without duplication, (a) all obligations to repay borrowed money, direct or
indirect, incurred, assumed, or guaranteed, (b) all obligations for the deferred
purchase price of capital assets, (c) all obligations under conditional sales or
other title retention agreements, (d) all obligations (contingent or otherwise)
under any letter of credit, banker's acceptance, currency swap agreement,
interest rate swap, cap, collar or floor agreement or other interest rate
management or hedging device, (e) all synthetic leases, (f) all lease
obligations that have been or should be capitalized on the books of such Company
in accordance with GAAP, (g) all obligations of such Company with respect to
asset securitization financing programs to the extent that there is recourse
against such Company or such Company is liable (contingent or otherwise) under
any such program, (h) all obligations to advance funds to, or to purchase
assets, property or services from, any other Person in order to maintain the
financial condition of such Person, and (i) any other transaction (including
forward sale or purchase agreements) having the commercial effect of a borrowing
of money entered into by such Company to finance its operations or capital
requirements.

         "Interest Adjustment Date" shall mean the last day of each Interest
Period.

         "Interest Coverage Ratio" shall mean, for the most recently completed
four fiscal quarters of US Borrower, on a Consolidated basis and in accordance
with GAAP, the ratio of (a) Consolidated EBIT to (b) Consolidated Interest
Expense.

         "Interest Period" shall mean:

         (a)      with respect to a Eurodollar Loan, the period commencing on
the date such Eurodollar Loan is made and ending on the last day of such period,
as selected by US Borrower pursuant to the provisions hereof, and, thereafter
(unless such Eurodollar Loan is converted to a Base Rate Loan), each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of such period, as selected by US Borrower pursuant
to the provisions hereof. The duration of each Interest Period for a Eurodollar
Loan shall be one month, two months, three months or six months, in each case as
US Borrower may select upon notice, as set forth in Section 2.6 hereof; provided
that (i) if US Borrower shall fail to so select the duration of any Interest
Period at least three Business Days prior to the Interest Adjustment Date
applicable to such Loan, US Borrower shall be deemed to have converted such
Eurodollar Loan to a Base Rate Loan at the end of the then current Interest
Period; and (ii) US Borrower may not select any Interest Period for a Eurodollar
Loan that ends after any date when principal is due on such Eurodollar Loan; and

         (b)      with respect to a CAD Fixed Rate Loan, the period commencing
on the date such CAD Fixed Rate Loan is made and ending on the last day of such
period, as selected by Canadian Borrowers pursuant to the provisions hereof,
and, thereafter (unless such CAD Fixed Rate Loan is converted to a CAD Base Rate
Loan), each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the last day of such period,

                                       14

<PAGE>

as selected by Canadian Borrowers pursuant to the provisions hereof. The
duration of each Interest Period for a CAD Fixed Rate Loan shall be one month,
two months, three months or six months, in each case as Canadian Borrowers may
select upon notice, as set forth in Section 2.6 hereof; provided that (i) if
Canadian Borrowers shall fail to so select the duration of any Interest Period
at least three Business Days prior to the Interest Adjustment Date applicable to
such Loan, Canadian Borrowers shall be deemed to have converted such CAD Fixed
Rate Loan to a CAD Base Rate Loan at the end of the then current Interest
Period; and (ii) Canadian Borrowers may not select any Interest Period for a CAD
Fixed Rate Loan that ends after any date when principal is due on such CAD Fixed
Rate Loan.

         "Letter of Credit" shall mean a sight commercial documentary letter of
credit or standby letter of credit that shall be issued by the Fronting Lender
for the account of US Borrower or a Domestic Guarantor of Payment, including
amendments thereto, if any, and shall have an expiration date no later than the
earlier of (a) one year after its date of issuance or (b) thirty (30) days prior
to the last day of the Commitment Period.

         "Letter of Credit Commitment" shall mean the commitment of the Fronting
Lender, on behalf of the Lenders, to issue Letters of Credit in an aggregate
face amount of up to Fifteen Million Dollars ($15,000,000).

         "Letter of Credit Exposure" shall mean, at any time, the sum of (a) the
aggregate undrawn face amount of all issued and outstanding Letters of Credit,
and (b) the aggregate of the draws made on Letters of Credit that have not been
reimbursed by US Borrower or converted to a Revolving Loan pursuant to Section
2.2(b) hereof.

         "Leverage Ratio" shall mean, at any time, on a Consolidated basis and
in accordance with GAAP, the ratio of (a) Consolidated Funded Indebtedness (for
the most recently completed fiscal quarter of US Borrower) to (b) Consolidated
EBITDA (for the most recently completed four fiscal quarters of US Borrower).

         "Lien" shall mean any mortgage, security interest, lien (statutory or
other), charge, assignment, hypothecation, encumbrance on, pledge or deposit of,
or conditional sale, leasing (other than operating leases), sale with a right of
redemption or other title retention agreement and any capitalized lease with
respect to any property (real or personal) or asset.

         "Loan" shall mean a Revolving Loan or a Swing Loan granted to US
Borrower or Canadian Borrowers by the Lenders in accordance with Section 2.2(a),
2.2(c) or 2.3 hereof.

         "Loan Documents" shall mean, collectively, this Agreement, each Note,
each Guaranty of Payment, all documentation relating to each Letter of Credit,
the Agent Fee Letter and the Closing Fee Letter, as any of the foregoing may
from time to time be amended, restated or otherwise modified or replaced, and
any other document delivered pursuant thereto.

         "Material Adverse Effect" shall mean a material adverse effect on (a)
the business, operations, property, condition (financial or otherwise) or
prospects of US Borrower or (b) the

                                       15

<PAGE>

business, operations, property, condition (financial or otherwise) or prospects
of the Companies taken as a whole.

         "Material Indebtedness Agreement" shall mean any debt instrument, lease
(capital, operating or otherwise), guaranty, contract, commitment, agreement or
other arrangement evidencing or entered into in connection with Funded
Indebtedness of any Company or the Companies equal to or in excess of the amount
of Twenty Million Dollars ($20,000,000).

         "Maximum Amount" shall mean, for each Lender, the amount set forth
opposite such Lender's name under the column headed "Maximum Amount" as set
forth on Schedule 1 hereto, subject to decreases determined pursuant to Section
2.10(a) hereof, increases pursuant to Section 2.10(b) hereof and assignments of
interests pursuant to Section 10.10 hereof; provided, however, that the Maximum
Amount for the Swing Line Lender shall exclude the Swing Line Commitment.

         "Maximum CAD Revolving Amount" shall mean the CAD Equivalent of
Twenty-Five Million Dollars ($25,000,000), as such amount may be reduced
pursuant to Section 2.10(a) hereof.

         "Maximum Commitment Amount" shall mean the Dollar Equivalent of One
Hundred Twenty-Five Million Dollars ($125,000,000).

         "Maximum US Revolving Amount" shall mean Seventy-Five Million Dollars
($75,000,000), as such amount may be reduced pursuant to Section 2.10(a) hereof
or increased pursuant to Section 2.10(b) hereof.

         "Moody's" shall mean Moody's Investors Service, Inc., or any successor
to such company.

         "Multiemployer Plan" shall mean a Pension Plan that is subject to the
requirements of Subtitle E of Title IV of ERISA.

         "Note" shall mean a Revolving Credit Note or the Swing Line Note, or
any other promissory note delivered pursuant to this Agreement.

         "Note Purchase Agreement" shall mean, collectively, the (a) the Private
Shelf Agreement dated as of November 27, 1996, between US Borrower and each of
the Purchasers (as defined therein), as amended through the date of this
Agreement, (b) the Note Purchase Agreement, dated as of November 15, 2000, among
US Borrower, Applied Nova Scotia Company and each of the Purchasers (as defined
therein), relating to $20,000,000 of 7.98% Senior Notes due November 15, 2010,
(c) the Note Purchase Agreement, dated as of November 15, 2000, among US
Borrower and each of the Purchasers (as defined therein), relating to $5,000,000
of 7.98% Senior Notes due November 15, 2010, and (d) any other similar public or
private debt instrument or agreement that meets the definition of Material
Indebtedness Agreement; as each of the foregoing may from time to time be
further amended, restated or otherwise modified or replaced.

                                       16

<PAGE>

         "Notice of Loan" shall mean a Notice of Loan in the form of the
attached Exhibit D.

         "Organizational Documents" shall mean, with respect to a Person (other
than an individual), such Person's Articles (Certificate) of Incorporation, or
equivalent formation documents, and Regulations (Bylaws), or equivalent
governing documents, and any amendments to any of the foregoing.

         "Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, goods and services
taxes, harmonized sales taxes and other sales taxes, charges or similar levies
arising from any payment made hereunder or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other Loan
Document.

         "Parent Guaranty of Payment" shall mean the Guaranty of Payment of
Debt, executed and delivered by US Borrower with respect to the Canadian
Borrowers, as the same may from time to time be amended, restated or otherwise
modified.

         "PBGC" shall mean the Pension Benefit Guaranty Corporation, or its
successor.

         "Pension Plan" shall mean an ERISA Plan that is a "pension plan"
(within the meaning of ERISA Section 3(2)).

         "Permitted Foreign Subsidiary Loans and Investments" shall mean:

         (a)      any loans made prior to the Closing Date by a Credit Party or
a Domestic Subsidiary to a Foreign Subsidiary;

         (b)      any investments made prior to the Closing Date by a Credit
Party or a Domestic Subsidiary in a Foreign Subsidiary; and

         (c)      any loans by a Company to, investments by a Company in,
guaranties by a Company of Indebtedness of, and Letters of Credit issued to or
for the benefit of, a Foreign Subsidiary that is not a Credit Party, made on or
after the Closing Date, up to the aggregate amount, for all such Foreign
Subsidiaries, equal to the lesser of (i) Fifteen Million Dollars ($15,000,000)
per fiscal year of US Borrower, or (ii) ten percent (10%) of Consolidated Net
Worth during the Commitment Period; provided that, if any loan, investment,
guaranty or letter of credit is made for the benefit of a Foreign Subsidiary
that becomes a Credit Party after the Closing Date, the amount attributable to
such loan, investment, guaranty or letter of credit shall be excluded from the
foregoing calculation.

         "Permitted Investment" shall mean an investment of a Company in the
stock (or other debt or equity instruments) of a Person (other than a Company),
so long as the aggregate amount of all such investments of all Companies does
not exceed, at any time, an aggregate amount equal to twenty percent (20%) of
Consolidated Net Worth, based upon the financial statements of the Companies for
the most recently completed fiscal quarter; provided that, at such time as a

                                       17

<PAGE>

Permitted Investment results in an Acquisition and the acquired Person becomes a
Guarantor of Payment, the amount of such investment shall be excluded from the
aforesaid calculation.

         "Person" shall mean any individual, sole proprietorship, partnership,
joint venture, unincorporated organization, corporation, limited liability
company, institution, trust, estate, government or other agency or political
subdivision thereof or any other entity.

         "Prime Rate" shall mean the interest rate established from time to time
by Agent as Agent's prime rate, whether or not such rate shall be publicly
announced; the Prime Rate may not be the lowest interest rate charged by Agent
for commercial or other extensions of credit. Each change in the Prime Rate
shall be effective immediately from and after such change.

         "Regularly Scheduled Payment Date" shall mean the last day of each
March, June, September and December of each year.

         "Related Writing" shall mean each Loan Document and any other
assignment, mortgage, security agreement, guaranty agreement, subordination
agreement, financial statement, audit report or other writing furnished by any
Credit Party, or any of its officers, to Agent or the Lenders pursuant to or
otherwise in connection with this Agreement.

         "Reportable Event" shall mean a reportable event as that term is
defined in Title IV of ERISA, except actions of general applicability by the
Secretary of Labor under Section 110 of such Act.

         "Request for Extension" shall mean a notice, substantially in the form
of the attached Exhibit G.

         "Required Lenders" shall mean (a) (i) the holders of at least fifty-one
percent (51%) of the Total Commitment Amount, or, if there shall be any
borrowing hereunder, the holders of at least fifty-one percent (51%) of the
aggregate amount of the Revolving Credit Exposure (excluding the Swing Line
Exposure), and (ii) at least three of the Lenders; or (b) (i) the holders of at
least sixty-six and two-thirds percent (66-2/3%) of the Total Commitment Amount,
or, if there shall be any borrowing hereunder, the holders of at least sixty-six
and two-thirds percent (66-2/3%) of the aggregate amount of the Revolving Credit
Exposure (excluding the Swing Line Exposure), and (ii) at least two of the
Lenders.

         "Requirement of Law" shall mean, as to any Person, any law, treaty,
rule or regulation or determination or policy statement or interpretation of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

         "Reserve Percentage" shall mean for any day that percentage (expressed
as a decimal) that is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, without limitation, all basic,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements) for
a member bank

                                       18

<PAGE>

of the Federal Reserve System in Cleveland, Ohio, in respect of Eurocurrency
Liabilities. The Derived Eurodollar Rate shall be adjusted automatically on and
as of the effective date of any change in the Reserve Percentage.

         "Revolving Credit Commitment" shall mean the US Revolving Credit
Commitment and the CAD Revolving Credit Commitment.

         "Revolving Credit Exposure" shall mean, at any time, the sum of (a) the
US Revolving Exposure, and (b) the CAD Revolving Exposure.

         "Revolving Credit Note" shall mean a US Revolving Credit Note or a CAD
Revolving Credit Note.

         "Revolving Loan" shall mean a US Revolving Loan or a CAD Revolving
Loan.

         "SEC" shall mean the United States Securities and Exchange Commission,
or any governmental body or agency succeeding to any of its principle functions.

         "Standard & Poor's" shall mean Standard & Poor's Ratings Group, a
division of McGraw-Hill, Inc., or any successor to such company.

         "Subordinated" shall mean, as applied to Indebtedness, Indebtedness
that shall have been subordinated (by written terms or written agreement being,
in either case, in form and substance satisfactory to Agent and the Required
Lenders) in favor of the prior payment in full of the Debt.

         "Subsidiary" of a Company shall mean (a) a corporation more than fifty
percent (50%) of the Voting Power of which is owned, directly or indirectly, by
such Company or by one or more other subsidiaries of such Company or by such
Company and one or more subsidiaries of such Company, (b) a partnership or
limited liability company of which such Company, one or more other subsidiaries
of such Company or such Company and one or more subsidiaries of such Company,
directly or indirectly, is a general partner or managing member, as the case may
be, or otherwise has an ownership interest greater than fifty percent (50%) of
all of the ownership interests in such partnership or limited liability company,
or (c) any other Person (other than a corporation, partnership or limited
liability company) in which such Company, one or more other subsidiaries of such
Company or such Company and one or more subsidiaries of such Company, directly
or indirectly, has at least a majority interest in the Voting Power or the power
to elect or direct the election of a majority of directors or other governing
body of such Person.

         "Swing Line" shall mean the credit facility established by the Swing
Line Lender for US Borrower in accordance with Section 2.2(c) hereof.

         "Swing Line Commitment" shall mean the commitment of the Swing Line
Lender to make Swing Loans to US Borrower up to the aggregate amount at any time
outstanding of Fifteen Million Dollars ($15,000,000).

                                       19

<PAGE>

         "Swing Line Exposure" shall mean, at any time, the aggregate principal
amount of all Swing Loans outstanding.

         "Swing Line Lender" shall mean KeyBank National Association, as holder
of the Swing Line Commitment.

         "Swing Line Note" shall mean the Swing Line Note executed and delivered
pursuant to Section 2.5(b) hereof.

         "Swing Loan" shall mean a loan that shall be denominated in Dollars
granted to US Borrower by the Swing Line Lender under the Swing Line.

         "Swing Loan Maturity Date" shall mean, with respect to any Swing Loan,
the earlier of (a) the date agreed to by US Borrower and the Swing Line Lender,
which shall be no more than thirty (30) days after the date such Swing Loan is
made, or (b) the last day of the Commitment Period.

         "Taxes" shall mean any present or future taxes, levies, imposts,
duties, charges, fees, deductions or withholdings now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority (together
with any interest, penalties or similar liabilities with respect thereto) other
than Excluded Taxes.

         "Total Commitment Amount" shall mean the Closing Commitment Amount, as
such amount may be increased up to the Maximum Commitment Amount pursuant to
Section 2.10(b) hereof, or decreased pursuant to Section 2.10(a) hereof.

         "Total Liabilities" shall mean, at any date, the total of all items of
Indebtedness or liability that, in accordance with GAAP, would be included in
determining total liabilities on the liability side of the balance sheet.

         "US Commitment" shall mean the obligation hereunder of the US Lenders,
during the Commitment Period, to make Loans and issue Letters of Credit pursuant
to the US Revolving Credit Commitments, up to the Maximum US Revolving Amount.

         "US Lender" shall mean each Lender that is designated as a US Lender on
Schedule 1 hereto.

         "US Revolving Credit Commitment" shall mean the obligation hereunder,
during the Commitment Period, of (a) each US Lender to make US Revolving Loans
up to the Maximum Amount for such US Lender, (b) the Fronting Lender to issue
and each US Lender to participate in Letters of Credit pursuant to the Letter of
Credit Commitment, and (c) the Swing Line Lender to make and each US Lender to
participate in Swing Loans pursuant to the Swing Line Commitment.

         "US Revolving Credit Note" shall mean a US Revolving Credit Note
executed and delivered pursuant to Section 2.5(a) hereof.

                                       20

<PAGE>

         "US Revolving Exposure" shall mean the sum of (a) the aggregate
principal amount of all US Revolving Loans outstanding, (b) the Swing Line
Exposure, and (c) the Letter of Credit Exposure.

         "US Revolving Loan" shall mean a Base Rate Loan or a Eurodollar Loan
granted to US Borrower in accordance with Section 2.2(a) hereof.

         "Voting Power" shall mean, with respect to any Person, the exclusive
ability to control, through the ownership of shares of capital stock,
partnership interests, membership interests or otherwise, the election of
members of the board of directors or other similar governing body of such
Person. The holding of a designated percentage of Voting Power of a Person means
the ownership of shares of capital stock, partnership interests, membership
interests or other interests of such Person sufficient to control exclusively
the election of that percentage of the members of the board of directors or
similar governing body of such Person.

         "Welfare Plan" shall mean an ERISA Plan that is a "welfare plan" within
the meaning of ERISA Section 3(l).

         "Wholly-Owned Subsidiary" shall mean, with respect to any Person, any
corporation, limited liability company or other entity, all of the securities or
other ownership interest of which having ordinary Voting Power to elect a
majority of the board of directors, or other persons performing similar
functions, are at the time directly or indirectly owned by such Person.

         Section 1.2. Accounting Terms. Any accounting term not specifically
defined in this Article I shall have the meaning ascribed thereto by GAAP.

         Section 1.3. Terms Generally. The foregoing definitions shall be
applicable to the singular and plurals of the foregoing defined terms.

                     ARTICLE II. AMOUNT AND TERMS OF CREDIT

         Section 2.1. Amount and Nature of Credit.

         (a)      Subject to the terms and conditions of this Agreement, the
Lenders, during the Commitment Period and to the extent hereinafter provided,
shall make Loans to Borrowers, participate in Swing Loans made by the Swing Line
Lender to US Borrower, and issue or participate in Letters of Credit at the
request of US Borrower, in such aggregate amount as Borrowers shall request
pursuant to the Commitment; provided, however, that in no event shall the
Revolving Credit Exposure be in excess of the Total Commitment Amount.

         (b)      Each US Lender, for itself and not one for any other, agrees
to make US Revolving Loans, make or participate in Swing Loans, and issue or
participate in Letters of Credit, during the Commitment Period, on such basis
that, immediately after the completion of any borrowing by US Borrower or the
issuance of a Letter of Credit, (i) the aggregate principal

                                       21

<PAGE>

amount then outstanding on the US Revolving Credit Note issued to such US
Lender, when combined with such US Lender's pro rata share of the Letter of
Credit Exposure and the Swing Line Exposure, shall not be in excess of the
Maximum Amount for such US Lender, and (ii) such aggregate principal amount
outstanding on the US Revolving Credit Note issued to such US Lender shall
represent that percentage of the aggregate principal amount then outstanding on
all US Revolving Credit Notes that shall be such US Lender's Applicable
Commitment Percentage. Each borrowing (other than Swing Loans) from the US
Lenders hereunder shall be made pro rata according to the respective Applicable
Commitment Percentages of the US Lenders.

         (c)      Each Canadian Lender, for itself and not one for any other,
agrees to make CAD Revolving Loans, during the Commitment Period, on such basis
that, immediately after the completion of any borrowing by Canadian Borrowers,
(i) the Dollar Equivalent of the aggregate principal amount then outstanding on
the CAD Revolving Credit Note issued to such Canadian Lender shall not be in
excess of the Maximum Amount for such Canadian Lender, and (ii) such aggregate
principal amount outstanding on the CAD Revolving Credit Note issued to such
Canadian Lender shall represent that percentage of the aggregate principal
amount then outstanding on all CAD Revolving Credit Notes that shall be such
Canadian Lender's Applicable Commitment Percentage. Each borrowing from the
Canadian Lenders hereunder shall be made pro rata according to the respective
Applicable Commitment Percentages of the Canadian Lenders.

         (d)      The Loans may be made as US Revolving Loans as described in
Section 2.2(a) hereof, CAD Revolving Loans as described in Section 2.3 hereof
and Swing Loans as described in Section 2.2(c) hereof, and Letters of Credit may
be issued in accordance with Section 2.2(b) hereof.

         Section 2.2. US Revolving Credit.

         (a)      US Revolving Loans. Subject to the terms and conditions of
this Agreement, during the Commitment Period, the US Lenders shall make a US
Revolving Loan or US Revolving Loans to US Borrower in such amount or amounts as
US Borrower may from time to time request, but not exceeding in aggregate
principal amount at any time outstanding hereunder the Maximum US Revolving
Amount, when such US Revolving Loans are combined with the Letter of Credit
Exposure and the Swing Line Exposure. US Borrower shall have the option, subject
to the terms and conditions set forth herein, to borrow US Revolving Loans,
maturing on the last day of the Commitment Period, by means of any combination
of Base Rate Loans or Eurodollar Loans. Subject to the provisions of this
Agreement, US Borrower shall be entitled under this Section 2.2(a) to borrow
funds, repay the same in whole or in part and re-borrow hereunder at any time
and from time to time during the Commitment Period.

         (b)      Letters of Credit.

                  (i)      Generally. Subject to the terms and conditions of
         this Agreement, during the Commitment Period, the Fronting Lender
         shall, in its own name, on behalf of the US Lenders, issue such Letters
         of Credit for the account of US Borrower or a Domestic Guarantor of
         Payment, as US Borrower may from time to time request. US Borrower

                                       22

<PAGE>

         shall not request any Letter of Credit (and the Fronting Lender shall
         not be obligated to issue any Letter of Credit) if, after giving effect
         thereto, (A) the Letter of Credit Exposure would exceed the Letter of
         Credit Commitment or (B) the US Revolving Credit Exposure would exceed
         the Maximum US Revolving Amount. The issuance of each Letter of Credit
         shall confer upon each US Lender the benefits and liabilities of a
         participation consisting of an undivided pro rata interest in the
         Letter of Credit to the extent of such US Lender's Applicable
         Commitment Percentage.

                  (ii)     Request for Letter of Credit. Each request for a
         Letter of Credit shall be delivered to Agent (and to the Fronting
         Lender, if the Fronting Lender is a Lender other than Agent) by an
         Authorized Officer not later than 11:00 A.M. (Eastern time) three
         Business Days prior to the day upon which the Letter of Credit is to be
         issued. Each such request shall be in a form acceptable to Agent (and
         the Fronting Lender, if the Fronting Lender is a Lender other than
         Agent) and specify the face amount thereof, whether such Letter of
         Credit shall be a commercial documentary or standby Letter of Credit,
         the account party, the beneficiary, the intended date of issuance, the
         expiry date thereof, and the nature of the transaction to be supported
         thereby. Concurrently with each such request, US Borrower, and any
         other Credit Party for whose account the Letter of Credit is to be
         issued, shall execute and deliver to the Fronting Lender an appropriate
         application and agreement, being in the standard form of the Fronting
         Lender for such letters of credit, as amended to conform to the
         provisions of this Agreement if required by Agent. Agent shall give the
         Fronting Lender and each US Lender notice of each such request for a
         Letter of Credit.

                  (iii)    Commercial Documentary Letters of Credit. With
         respect to each Letter of Credit that shall be a commercial documentary
         letter of credit and the drafts thereunder, whether issued for the
         account of US Borrower or any other Credit Party, US Borrower agrees to
         (A) pay to Agent, for the pro rata benefit of the US Lenders, a
         non-refundable commission based upon the face amount of such Letter of
         Credit, which shall be paid quarterly in arrears, on each Regularly
         Scheduled Payment Date, at a rate per annum equal to the Applicable
         Margin for Eurodollar Loans (in effect on the date such payment is to
         be made) times the face amount of such Letter of Credit; (B) pay to
         Agent, for the sole benefit of the Fronting Lender, an additional
         Letter of Credit fee, which shall be paid on the date that any draw
         shall be made on such Letter of Credit, at the rate of one-eighth
         percent (1/8%) of the amount drawn under such Letter of Credit; and (C)
         pay to Agent, for the sole benefit of the Fronting Lender, such other
         issuance, amendment, negotiation, draw, acceptance, telex, courier,
         postage and similar transactional fees as are generally charged by the
         Fronting Lender under its fee schedule as in effect from time to time.

                  (iv)     Standby Letters of Credit. With respect to each
         Letter of Credit that shall be a standby letter of credit and the
         drafts thereunder, if any, whether issued for the account of US
         Borrower or any other Credit Party, US Borrower agrees to (A) pay to
         Agent, for the pro rata benefit of the US Lenders, a non-refundable
         commission based upon the face amount of such Letter of Credit, which
         shall be paid quarterly in arrears, on each Regularly Scheduled Payment
         Date, at a rate per annum equal to the Applicable

                                       23

<PAGE>

         Margin for Eurodollar Loans (in effect on the date such payment is to
         be made) times the undrawn face amount of such Letter of Credit; (B)
         pay to Agent, for the sole benefit of the Fronting Lender, an
         additional Letter of Credit fee, which shall be paid on each date that
         such Letter of Credit shall be issued, amended or renewed at the rate
         of one-eighth percent (1/8%) of the face amount of such Letter of
         Credit; and (C) pay to Agent, for the sole benefit of the Fronting
         Lender, such other issuance, amendment, negotiation, draw, acceptance,
         telex, courier, postage and similar transactional fees as are generally
         charged by the Fronting Lender under its fee schedule as in effect from
         time to time.

                  (v)      Refunding of Letters of Credit with Revolving Loans.
         Whenever a Letter of Credit shall be drawn, US Borrower shall
         immediately reimburse the Fronting Lender for the amount drawn. In the
         event that the amount drawn shall not have been reimbursed by US
         Borrower within one Business Day of the drawing of such Letter of
         Credit, at the sole option of Agent (and the Fronting Lender, if the
         Fronting Lender is a Lender other than Agent), US Borrower shall be
         deemed to have requested a US Revolving Loan, subject to the provisions
         of Sections 2.2(a) and 2.6 hereof (other than the requirement set forth
         in Section 2.6(d) hereof), in the amount drawn. Such US Revolving Loan
         shall be evidenced by the US Revolving Credit Notes (or, if a US Lender
         has not requested a US Revolving Credit Note, by the records of Agent
         and such US Lender). Each US Lender agrees to make a US Revolving Loan
         on the date of such notice, subject to no conditions precedent
         whatsoever. Each US Lender acknowledges and agrees that its obligation
         to make a US Revolving Loan pursuant to Section 2.2(a) hereof when
         required by this subsection (v) shall be absolute and unconditional and
         shall not be affected by any circumstance whatsoever, including,
         without limitation, the occurrence and continuance of a Default or
         Event of Default, and that its payment to Agent, for the account of the
         Fronting Lender, of the proceeds of such US Revolving Loan shall be
         made without any offset, abatement, recoupment, counterclaim,
         withholding or reduction whatsoever and whether or not such US Lender's
         US Revolving Credit Commitment shall have been reduced or terminated.
         US Borrower irrevocably authorizes and instructs Agent to apply the
         proceeds of any borrowing pursuant to this subsection (v) to reimburse,
         in full, the Fronting Lender for the amount drawn on such Letter of
         Credit. Each such US Revolving Loan shall be deemed to be a Base Rate
         Loan unless otherwise requested by and available to US Borrower
         hereunder. Each US Lender is hereby authorized to record on its records
         relating to its US Revolving Credit Note (or, if such US Lender has not
         requested a US Revolving Credit Note, its records relating to US
         Revolving Loans) such US Lender's pro rata share of the amounts paid
         and not reimbursed on the Letters of Credit.

                  (vi)     Participation in Letters of Credit. If, for any
         reason, Agent (or the Fronting Lender if the Fronting Lender shall be a
         Lender other than Agent) shall be unable to or, in the opinion of
         Agent, it shall be impracticable to, convert any Letter of Credit to a
         US Revolving Loan pursuant to the preceding subsection, Agent (or the
         Fronting Lender if the Fronting Lender is a Lender other than Agent)
         shall have the right to request that each US Lender purchase a
         participation in the amount due with respect to such Letter of Credit,
         and Agent shall promptly notify each US Lender thereof (by facsimile or
         telephone, confirmed in writing). Upon such notice, but without further

                                       24

<PAGE>

         action, the Fronting Lender hereby agrees to grant to each US Lender,
         and each US Lender hereby agrees to acquire from the Fronting Lender,
         an undivided participation interest in the amount due with respect to
         such Letter of Credit in an amount equal to such US Lender's Applicable
         Commitment Percentage of the principal amount due with respect to such
         Letter of Credit. In consideration and in furtherance of the foregoing,
         each US Lender hereby absolutely and unconditionally agrees, upon
         receipt of notice as provided above, to pay to Agent, for the account
         of the Fronting Lender, such US Lender's ratable share of the amount
         due with respect to such Letter of Credit (determined in accordance
         with such US Lender's Applicable Commitment Percentage). Each US Lender
         acknowledges and agrees that its obligation to acquire participations
         in the amount due under any Letter of Credit that is drawn but not
         reimbursed by US Borrower pursuant to this subsection (vi) shall be
         absolute and unconditional and shall not be affected by any
         circumstance whatsoever, including, without limitation, the occurrence
         and continuance of a Default or Event of Default, and that each such
         payment shall be made without any offset, abatement, recoupment,
         counterclaim, withholding or reduction whatsoever and whether or not
         such US Lender's US Revolving Credit Commitment shall have been reduced
         or terminated. Each US Lender shall comply with its obligation under
         this subsection (vi) by wire transfer of immediately available funds,
         in the same manner as provided in Section 2.6 hereof with respect to US
         Revolving Loans. Each US Lender is hereby authorized to record on its
         records such US Lender's pro rata share of the amounts paid and not
         reimbursed on the Letters of Credit. In addition, each US Lender agrees
         to risk participate in the Existing Letters of Credit as provided in
         subsection (vii) below.

                  (vii)    Existing Letters of Credit. Schedule 2.2 hereto
         contains a description of all letters of credit outstanding on, and to
         continue in effect after, the Closing Date. Each such letter of credit
         issued by a bank that is or becomes a US Lender under this Agreement on
         the Closing Date (each, an "Existing Letter of Credit") shall
         constitute a "Letter of Credit" for all purposes of this Agreement,
         issued, for purposes of subsection (vi) above, on the Closing Date. US
         Borrower, Agent and the US Lenders hereby agree that, from and after
         such date, the terms of this Agreement shall apply to the Existing
         Letters of Credit, superseding any other agreement theretofore
         applicable to them to the extent inconsistent with the terms hereof.
         Notwithstanding anything to the contrary in any reimbursement or other
         agreement applicable to the Existing Letters of Credit, the fees
         payable in connection with each Existing Letter of Credit to be shared
         with the US Lenders, or paid to the Fronting Lender for its own
         account, shall accrue from the Closing Date at the rate provided in
         this Section 2.2(b).

         (c)      Swing Loans.

                  (i)      Generally. Subject to the terms and conditions of
         this Agreement, during the Commitment Period, the Swing Line Lender
         shall make a Swing Loan or Swing Loans to US Borrower in such amount or
         amounts as US Borrower, through an Authorized Officer, may from time to
         time request; provided that US Borrower shall not request any Swing
         Loan if, after giving effect thereto, (A) the US Revolving Credit
         Exposure would exceed the Maximum US Revolving Amount, or (B) the Swing
         Line

                                       25

<PAGE>

         Exposure would exceed the Swing Line Commitment. Each Swing Loan shall
         be due and payable on the Swing Loan Maturity Date applicable thereto.
         US Borrower shall not request that more than two Swing Loans be
         outstanding at any time. Each Swing Loan shall be made in Dollars.

                  (ii)     Refunding of Swing Loans. If the Swing Line Lender so
         elects, by giving notice to US Borrower and the US Lenders, US Borrower
         agrees that the Swing Line Lender shall have the right, in its sole
         discretion, to require that any Swing Loan be refinanced as a US
         Revolving Loan. Such US Revolving Loan shall be a Base Rate Loan unless
         otherwise requested by and available to US Borrower hereunder. Upon
         receipt of such notice by US Borrower and the US Lenders, US Borrower
         shall be deemed, on such day, to have requested a US Revolving Loan in
         the principal amount of the Swing Loan in accordance with Sections
         2.2(a) and 2.6 hereof (other than the requirement set forth in Section
         2.6(d) hereof). Each US Lender agrees to make a US Revolving Loan on
         the date of such notice, subject to no conditions precedent whatsoever.
         Such US Revolving Loan shall be evidenced by the US Revolving Credit
         Notes (or, if a US Lender has not requested a US Revolving Credit Note,
         by the records of Agent and such US Lender). Each US Lender
         acknowledges and agrees that such US Lender's obligation to make a US
         Revolving Loan pursuant to Section 2.2(a) hereof when required by this
         subsection (ii) is absolute and unconditional and shall not be affected
         by any circumstance whatsoever, including, without limitation, the
         occurrence and continuance of a Default or Event of Default, and that
         its payment to Agent, for the account of the Swing Line Lender, of the
         proceeds of such US Revolving Loan shall be made without any offset,
         abatement, recoupment, counterclaim, withholding or reduction
         whatsoever and whether or not such US Lender's US Revolving Credit
         Commitment shall have been reduced or terminated. US Borrower
         irrevocably authorizes and instructs Agent to apply the proceeds of any
         borrowing pursuant to this subsection (ii) to repay in full such Swing
         Loan.

                  (iii)    Participation in Swing Loans. If, for any reason,
         Agent is unable to or, in the opinion of Agent, it is impracticable to,
         convert any Swing Loan to a US Revolving Loan pursuant to the preceding
         subsection (ii), then on any day that a Swing Loan is outstanding
         (whether before or after the maturity thereof), Agent shall have the
         right to request that each US Lender purchase a participation in such
         Swing Loan, and Agent shall promptly notify each US Lender thereof (by
         facsimile or telephone, confirmed in writing). Upon such notice, but
         without further action, the Swing Line Lender hereby agrees to grant to
         each US Lender, and each US Lender hereby agrees to acquire from the
         Swing Line Lender, an undivided participation interest in such Swing
         Loan in an amount equal to such US Lender's Applicable Commitment
         Percentage of the principal amount of such Swing Loan. In consideration
         and in furtherance of the foregoing, each US Lender hereby absolutely
         and unconditionally agrees, upon receipt of notice as provided above,
         to pay to Agent, for the benefit of the Swing Line Lender, such US
         Lender's ratable share of such Swing Loan (determined in accordance
         with such US Lender's Applicable Commitment Percentage). Each US Lender
         acknowledges and agrees that its obligation to acquire participations
         in Swing Loans pursuant to this subsection (iii) is absolute and
         unconditional and shall not be affected by any circumstance whatsoever,

                                       26

<PAGE>

         including, without limitation, the occurrence and continuance of a
         Default or an Event of Default, and that each such payment shall be
         made without any offset, abatement, recoupment, counterclaim,
         withholding or reduction whatsoever and whether or not such US Lender's
         US Revolving Credit Commitment shall have been reduced or terminated.
         Each US Lender shall comply with its obligation under this subsection
         (iii) by wire transfer of immediately available funds, in the same
         manner as provided in Section 2.6 hereof with respect to US Revolving
         Loans to be made by such US Lender.

         Section 2.3. CAD Revolving Loans. Subject to the terms and conditions
of this Agreement, during the Commitment Period, the Canadian Lenders shall make
a CAD Revolving Loan or CAD Revolving Loans to Canadian Borrowers in such amount
or amounts as Canadian Borrowers may from time to time request, but not
exceeding in aggregate principal amount at any time outstanding hereunder the
Maximum CAD Revolving Amount. Canadian Borrowers shall have the option, subject
to the terms and conditions set forth herein, to borrow CAD Revolving Loans,
maturing no later than the last day of the Commitment Period, by means of any
combination of CAD Base Rate Loans or CAD Fixed Rate Loans. Subject to the
provisions of this Agreement, Canadian Borrowers shall be entitled under this
Section 2.3 to borrow funds, repay the same in whole or in part and re-borrow
hereunder at any time and from time to time during the Commitment Period.

         Section 2.4. Interest.

         (a)      US Revolving Loans.

                  (i)      Base Rate Loan. US Borrower shall pay interest on the
         unpaid principal amount of a Base Rate Loan outstanding from time to
         time from the date thereof until paid at the Base Rate from time to
         time in effect. Interest on such Base Rate Loan shall be payable,
         commencing December 31, 2003, and on each Regularly Scheduled Payment
         Date thereafter and at the maturity thereof.

                  (ii)     Eurodollar Loans. US Borrower shall pay interest on
         the unpaid principal amount of each Eurodollar Loan outstanding from
         time to time, fixed in advance on the first day of the Interest Period
         applicable thereto through the last day of the Interest Period
         applicable thereto (but subject to changes in the Applicable Margin),
         at the Derived Eurodollar Rate. Interest on such Eurodollar Loan shall
         be payable on each Interest Adjustment Date with respect to an Interest
         Period (provided that if an Interest Period shall exceed three months,
         the interest must be paid every three months, commencing three months
         from the beginning of such Interest Period).

         (b)      Swing Loans. US Borrower shall pay interest to Agent, for the
sole benefit of the Swing Line Lender (and any US Lender that shall have
purchased a participation in such Swing Loan), on the unpaid principal amount of
each Swing Loan outstanding from time to time from the date thereof until paid
at the Derived Swing Loan Rate applicable to such Swing Loan. Interest on each
Swing Loan shall be payable on the Swing Loan Maturity Date applicable thereto.
Each Swing Loan shall bear interest for a minimum of one day.

                                       27

<PAGE>

         (c)      CAD Revolving Loans.

                  (i)      CAD Base Rate Loan. Canadian Borrowers shall pay
         interest on the unpaid principal amount of a CAD Base Rate Loan
         outstanding from time to time from the date thereof until paid at the
         CAD Base Rate from time to time in effect. Interest on such CAD Base
         Rate Loan shall be payable, commencing December 31, 2003, and on each
         Regularly Scheduled Payment Date thereafter and at the maturity
         thereof.

                  (ii)     CAD Fixed Rate Loans. Canadian Borrowers shall pay
         interest on the unpaid principal amount of each CAD Fixed Rate Loan
         outstanding from time to time, fixed in advance on the first day of the
         Interest Period applicable thereto through the last day of the Interest
         Period applicable thereto (but subject to changes in the Applicable
         Margin), at the Derived CAD Fixed Rate. Interest on such CAD Fixed Rate
         Loan shall be payable on each Interest Adjustment Date with respect to
         an Interest Period (provided that if an Interest Period shall exceed
         ninety (90) days, the interest must be paid every ninety (90) days,
         commencing ninety (90) days from the beginning of such Interest
         Period).

         (d)      Default Rate. Anything herein to the contrary notwithstanding,
if an Event of Default shall occur, upon the election of the Required Lenders,
(i) the principal of each Loan and the unpaid interest thereon shall bear
interest, until paid, at the Default Rate, (ii) the fee for the aggregate
undrawn face amount of all issued and outstanding Letters of Credit shall be
increased by two percent (2%) in excess of the rate otherwise applicable
thereto, and (iii) in the case of any other amount then due and owing from
Borrowers hereunder or under any other Loan Document, such amount shall bear
interest at the Default Rate until paid; provided that, during an Event of
Default under Section 7.11 hereof, the applicable Default Rate shall apply
without any election or action on the part of Agent or any Lender.

         (e)      Limitation on Interest.

                  (i)      General. In no event shall the rate of interest
         hereunder exceed the maximum rate allowable by law.

                  (ii)     Canadian Interest. If any provision of this Agreement
         or any other Loan Document would obligate any Canadian Borrower to make
         any payment of interest or other amount payable to (including for the
         account of) any Canadian Lender in an amount, or calculated at a rate,
         that would be prohibited by law or would result in a receipt by such
         Canadian Lender of interest at a criminal rate (as such terms are
         construed under the Criminal Code (Canada)) then, notwithstanding such
         provision, such amount or rate shall be deemed to have been adjusted
         with retroactive effect to the maximum amount or rate of interest, as
         the case may be, as would not be so prohibited by law or so result in a
         receipt by such Canadian Lender of interest at a criminal rate, such
         adjustment to be effected, to the extent necessary, as follows: (A)
         first, by reducing the amount or rate of interest required to be paid
         to such Canadian Lender under this Article II; and (B) thereafter, by
         reducing any fees, commissions, premiums and other amounts required to
         be paid to such Canadian Lender that would constitute interest for
         purposes of

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<PAGE>

         Section 347 of the Criminal Code (Canada). Notwithstanding the
         foregoing, and after giving effect to all adjustments contemplated
         thereby, if a Canadian Lender shall have received an amount in excess
         of the maximum amount permitted by that section of the Criminal Code
         (Canada), then Canadian Borrowers shall be entitled, by notice in
         writing to such Canadian Lender, to obtain reimbursement from such
         Canadian Lender in an amount equal to such excess, and pending such
         reimbursement, such amount shall be deemed to be an amount payable by
         such Canadian Lender to Canadian Borrowers. Any amount or rate of
         interest referred to in this Article II with respect to the Canadian
         Commitment shall be determined in accordance with generally accepted
         actuarial practices and principles as an effective annual rate of
         interest over the term that the Canadian Commitment remains outstanding
         on the assumption that any charges, fees or expenses that fall within
         the meaning of "interest" (as defined in the Criminal Code (Canada))
         shall, if they relate to a specific period of time, be pro-rated over
         that period of time and otherwise be pro-rated over the Commitment
         Period and, in the event of a dispute, a certificate of a Fellow of the
         Canadian Institute of Actuaries appointed by Agent shall be conclusive
         for the purposes of such determination.

         Section 2.5. Evidence of Indebtedness.

         (a)      US Revolving Loans. Upon the request of a US Lender, to
evidence the obligation of US Borrower to repay the Base Rate Loans and
Eurodollar Loans made by such US Lender and to pay interest thereon, US Borrower
shall execute a US Revolving Credit Note in the form of the attached Exhibit A,
payable to the order of such US Lender in the principal amount of its US
Revolving Credit Commitment or, if less, the aggregate unpaid principal amount
of US Revolving Loans made by such US Lender; provided, however, that failure of
a US Lender to request a Revolving Credit Note shall in no way detract from US
Borrower's obligations to such US Lender hereunder.

         (b)      Swing Loan. The obligation of US Borrower to repay the Swing
Loans and to pay interest thereon shall be evidenced by a Swing Line Note of US
Borrower in the form of the attached Exhibit B, and payable to the order of the
Swing Line Lender in the principal amount of the Swing Line Commitment, or, if
less, the aggregate unpaid principal amount of Swing Loans made by the Swing
Line Lender.

         (c)      CAD Revolving Loans. Upon the request of a Canadian Lender, to
evidence the obligation of Canadian Borrowers to repay the CAD Base Rate Loans
and the CAD Fixed Rate Loans made by such Canadian Lender and to pay interest
thereon, Canadian Borrowers shall execute a CAD Revolving Credit Note in the
form of the attached Exhibit C, payable to the order of such Canadian Lender in
the principal amount of its CAD Revolving Credit Commitment or, if less, the
aggregate unpaid principal amount of CAD Revolving Loans made by such Canadian
Lender; provided, however, that failure of a Canadian Lender to request a CAD
Revolving Credit Note shall in no way detract from Canadian Borrowers'
obligations to such Canadian Lender hereunder.

                                       29

<PAGE>

         Section 2.6. Notice of Credit Event; Funding of Loans.

         (a)      Notice of Credit Event. US Borrower, through an Authorized
Officer, shall provide to Agent a Notice of Loan prior to (i) 11:00 A.M.
(Eastern time) on the proposed date of borrowing or conversion of any Base Rate
Loan, (ii) 11:00 A.M. (Eastern time) three Business Days prior to the proposed
date of borrowing, conversion or continuation of any Eurodollar Loan, (iii)
11:00 A.M. (Eastern time) on the proposed date of borrowing of any Swing Loan,
(iv) 11:00 A.M. (Eastern time) on the proposed date of borrowing or conversion
of any CAD Base Rate Loan, and (v) 11:00 A.M. (Eastern time) three Business Days
prior to the proposed date of borrowing, conversion or continuation of any CAD
Fixed Rate Loan. US Borrower shall comply with the notice provisions set forth
in Section 2.2(b) hereof with respect to Letters of Credit.

         (b)      Funding of Loans. Agent shall notify the Applicable Lenders of
the date, amount and Interest Period (if applicable) promptly upon the receipt
of a Notice of Loan, and, in any event, by 2:00 P.M. (Eastern time) on the date
such Notice of Loan is received. On the date that the Credit Event set forth in
such Notice of Loan is to occur, each such Applicable Lender shall provide to
Agent at the Designated Lending Office, not later than 3:00 P.M. (Eastern time),
the amount in Dollars, or, with respect to the Canadian Commitment, in Canadian
Dollars, in federal or other immediately available funds, required of it. If
Agent (or the Designated Lending Office) shall elect to advance the proceeds of
such Loan prior to receiving funds from such Lender, Agent (or the Designated
Lending Office, as appropriate) shall have the right, upon prior notice to the
appropriate Borrower, to debit any account of the appropriate Borrower or
otherwise receive such amount from the appropriate Borrower, on demand, in the
event that such Lender shall fail to reimburse Agent (or the Designated Lending
Office, as appropriate) in accordance with this subsection. Agent (or the
Designated Lending Office, as appropriate) shall also have the right to receive
interest from such Lender at the Federal Funds Effective Rate (or cost of funds
with respect to the Designated Lending Office) in the event that such Lender
shall fail to provide its portion of the Loan on the date requested and Agent
(or the Designated Lending Office, as appropriate) shall elect to provide such
funds.

         (c)      Conversion of Loans. At the request of US Borrower to Agent,
subject to the notice and other provisions of this Section 2.6, the US Lenders
shall convert a Base Rate Loan to one or more Eurodollar Loans at any time and
shall convert a Eurodollar Loan to a Base Rate Loan on any Interest Adjustment
Date applicable thereto. Swing Loans may be converted by the Swing Line Lender
to US Revolving Loans in accordance with Section 2.2(c)(ii) hereof. At the
request of Canadian Borrowers to Agent, subject to the notice and other
provisions of this Section 2.6, the Canadian Lenders shall convert a CAD Base
Rate Loan to one or more CAD Fixed Rate Loans at any time and shall convert a
CAD Fixed Rate Loan to a CAD Base Rate Loan on any Interest Adjustment Date
applicable thereto.

         (d)      Minimum Amount. Each request for:

                  (i)      a Base Rate Loan shall be in an amount of not less
         than One Million Dollars ($1,000,000), increased by increments of Five
         Hundred Thousand Dollars ($500,000);

                                       30

<PAGE>

                  (ii)     a Eurodollar Loan shall be in an amount of not less
         than Five Million Dollars ($5,000,000), increased by increments of One
         Million Dollars ($1,000,000);

                  (iii)    a Swing Loan shall be in an amount of not less than
         Five Hundred Thousand Dollars ($500,000);

                  (iv)     a CAD Base Rate Loan shall be in an amount of not
         less than One Million Canadian Dollars (CAD 1,000,000), increased by
         increments of Five Hundred Thousand Canadian Dollars (CAD 500,000); and

                  (v)      a CAD Fixed Rate Loan shall be in an amount of not
         less than Five Million Canadian Dollars (CAD 5,000,000), increased by
         increments of One Million Canadian Dollars (CAD 1,000,000).

         (e)      Interest Periods. At no time shall US Borrower request that
Eurodollar Loans be outstanding for more than six different Interest Periods,
and, if a Base Rate Loan is outstanding, then Eurodollar Loans shall be limited
to five different Interest Periods at any time. At no time shall Canadian
Borrowers request that CAD Fixed Rate Loans be outstanding for more than six
different Interest Periods, and, if a CAD Base Rate Loan is outstanding, then
CAD Fixed Rate Loans shall be limited to five different Interest Periods at any
time.

         Section 2.7. Payment on Loans and Other Obligations.

         (a)      Payments Generally. Each payment made hereunder by a Credit
Party shall be made without any offset, abatement, recoupment, counterclaim,
withholding or reduction whatsoever.

         (b)      Payments in Canadian Dollars. With respect to any CAD
Revolving Loan, all payments (including prepayments) to the Canadian Lenders of
the principal of or interest on such CAD Revolving Loan or other payment,
including but not limited to principal, interest, fees or any other amount owed
by Canadian Borrowers under this Agreement, shall be made in Canadian Dollars.
All such payments shall be remitted by Canadian Borrowers to Agent at the
Designated Lending Office, for the account of the Canadian Lenders, not later
than 1:00 P.M. (Eastern time) on the due date thereof in same day funds. Any
payments received by the Designated Lending Office after 1:00 P.M. (Eastern
time) shall be deemed to have been made and received on the next Business Day.

         (c)      Payments in Dollars. With respect to any Loan (other than a
CAD Revolving Loan), all payments (including prepayments) to Agent of the
principal of or interest on such Loan or other payment, including but not
limited to principal, interest, fees or any other amount owed by US Borrower
under this Agreement, shall be made in Dollars. All payments described in this
subsection (c) shall be remitted to Agent at the address of Agent for notices
referred to in Section 10.4 hereof for the account of the US Lenders (or the
Fronting Lender or the Swing Line Lender, as appropriate) not later than 11:00
A.M. (Eastern time) on the due date thereof in immediately available funds. Any
such payments received by Agent after 11:00 A.M. (Eastern time) shall be deemed
to have been made and received on the next Business Day.

                                       31

<PAGE>

         (d)      Payments to Lenders. Upon Agent's receipt of payments
hereunder, Agent shall immediately distribute to the Applicable Lenders (except
with respect to Swing Loans, which shall be paid to the Swing Line Lender) their
respective ratable share, if any, of the amount of principal, interest, and
facility and other fees received for the account of such Lender. Payments
received by Agent in Dollars shall be delivered to the US Lenders in Dollars in
immediately available funds and payments received at the Designated Lending
Office in Canadian Dollars shall be delivered to the Canadian Lenders in
Canadian Dollars in same day funds; provided that, if Agent receives a payment
in a currency other than the currency in which the underlying obligation was
made, Agent shall have the right, in its sole discretion, to convert such
currency into its CAD Equivalent or Dollar Equivalent, as applicable. Each
Lender shall record, as appropriate, any principal, interest or other payment,
the principal amounts of Base Rate Loans, Eurodollar Loans, CAD Base Rate Loans
and CAD Fixed Rate Loans, the type of currency for each Loan, all prepayments
and the applicable dates, including Interest Periods, with respect to the Loans
made, and payments received by such Lender, by such method as such Lender may
generally employ; provided, however, that failure to make any such entry shall
in no way detract from the obligations of Borrowers under this Agreement or any
Note. The aggregate unpaid amount of Loans, types of Loans, Interest Periods and
similar information with respect to the Loans and Letters of Credit set forth on
the records of Agent shall be rebuttably presumptive evidence with respect to
such information, including the amounts of principal, interest and fees owing to
each Lender.

         (e)      Timing of Payments. Whenever any payment to be made hereunder,
including, without limitation, any payment to be made on any Loan, shall be
stated to be due on a day that is not a Business Day, such payment shall be made
on the next Business Day and such extension of time shall in each case be
included in the computation of the interest payable on such Loan; provided,
however, that, with respect to any Eurodollar Loan, if the next Business Day
shall fall in the succeeding calendar month, such payment shall be made on the
preceding Business Day and the relevant Interest Period shall be adjusted
accordingly.

         Section 2.8. Prepayment.

         (a)      Right to Prepay. Borrowers shall have the right at any time or
from time to time to prepay, on a pro rata basis for all of the Applicable
Lenders, all or any part of the principal amount of the Loans then outstanding
to such Lenders from such Borrowers, as designated by Borrowers. Such payment
shall include interest accrued on the amount so prepaid to the date of such
prepayment and any amount payable under Article III hereof with respect to the
amount being prepaid. Prepayments of Base Rate Loans and CAD Base Rate Loans
shall be without any premium or penalty, other than any prepayment fees,
penalties or other charges that may be contained in any Hedge Agreement.

         (b)      Notice of Prepayment. US Borrower shall give Agent notice of
prepayment of any Base Rate Loan or Swing Loan not later than 11:00 A.M.
(Eastern time) on the Business Day such prepayment is to be made and written
notice of the prepayment of any Eurodollar Loan not later than 1:00 P.M.
(Eastern time) three Business Days before the Business Day on which such
prepayment is to be made. Canadian Borrowers shall give Agent notice of
prepayment of

                                       32

<PAGE>

any CAD Base Rate Loan not later than 11:00 A.M. (Eastern time) on the Business
Day such prepayment is to be made and written notice of the prepayment of any
CAD Fixed Rate Loan not later than 1:00 P.M. (Eastern time) three Business Days
before the Business Day on which such prepayment is to be made.

         (c)      Minimum Amount. Other than in the case of a mandatory payment
pursuant to Section 2.12 or Article III hereof, each prepayment of (i) a
Eurodollar Loan shall be in the principal amount of not less than Three Million
Dollars ($3,000,000), and (ii) a CAD Fixed Rate Loan shall be in the principal
amount of not less than Three Million Canadian Dollars (CAD 3,000,000).

         Section 2.9. Facility and Other Fees.

         (a)      Facility Fee.

                  (i)      US Commitment. US Borrower shall pay to Agent, for
         the ratable account of the US Lenders, as a consideration for the US
         Commitment, a facility fee from the Closing Date to and including the
         last day of the Commitment Period, payable quarterly, at a rate per
         annum equal to (A) the Applicable Facility Fee Rate in effect on the
         payment date, times (B) the average daily Maximum US Revolving Amount
         in effect during such quarter. The facility fee shall be payable in
         arrears, on December 31, 2003 and on each Regularly Scheduled Payment
         Date thereafter, and on the last day of the Commitment Period.

                  (ii)     Canadian Commitment. Canadian Borrowers shall pay to
         Agent at the Designated Lending Office, for the ratable account of the
         Canadian Lenders, as a consideration for the Canadian Commitment, a
         facility fee from the Closing Date to and including the last day of the
         Commitment Period, payable quarterly, at a rate per annum equal to (A)
         the Applicable Facility Fee Rate in effect on the payment date, times
         (B) the average daily Maximum CAD Revolving Amount in effect during
         such quarter. The facility fee shall be payable in arrears, on December
         31, 2003 and on each Regularly Scheduled Payment Date thereafter, and
         on the last day of the Commitment Period.

         (b)      Usage Fee. If the Leverage Ratio for the most recently
completed four fiscal quarters of US Borrower, at any time shall be greater than
3.50 to 1.00, then, commencing on the first day of the fiscal quarter after the
quarter in which Agent receives the financial statements of US Borrower pursuant
to Section 5.3(a) or (b) hereof, the interest rate to be paid by US Borrower on
all Eurodollar Loans and by Canadian Borrowers on all CAD Fixed Rate Loans shall
be fifty (50) basis points in excess of the rate otherwise payable pursuant to,
respectively, Section 2.4(a) and (c) hereof. Such additional interest shall
continue to be payable until the first day of the fiscal quarter after the
quarter in which Agent receives the financial statements of US Borrower pursuant
to Section 5.3(a) or (b) hereof that reflect that the Leverage Ratio is equal to
or less than 3.50 to 1.00.

         (c)      Agent Fee. Borrowers shall pay to Agent, for its sole benefit,
the fees set forth in the Agent Fee Letter.

                                       33

<PAGE>

         Section 2.10. Modification of Commitment.

         (a)      Optional Reduction of Commitment.

                  (i)      US Commitment. US Borrower may at any time or from
         time to time permanently reduce in whole or ratably in part the US
         Commitment of the US Lenders hereunder to an amount not less than the
         then existing US Revolving Credit Exposure, by giving Agent not fewer
         than three Business Days notice of such reduction, provided that any
         such partial reduction shall be in an aggregate amount, for all of the
         US Lenders, of not less than Five Million Dollars ($5,000,000),
         increased by increments of One Million Dollars ($1,000,000). Agent
         shall promptly notify each US Lender of the date of each such reduction
         and such US Lender's proportionate share thereof. After each such
         reduction, the facility fees payable hereunder shall be calculated upon
         the Maximum US Revolving Amount as so reduced.

                  (ii)     Canadian Commitment. Canadian Borrowers may at any
         time or from time to time permanently reduce in whole or ratably in
         part the Canadian Commitment of the Canadian Lenders hereunder to an
         amount not less than the then existing CAD Revolving Exposure, by
         giving Agent not fewer than three Business Days notice of such
         reduction, provided that any such partial reduction shall be in an
         aggregate amount, for all of the Canadian Lenders, of not less than
         Five Million Canadian Dollars (CAD 5,000,000), increased by increments
         of One Million Canadian Dollars (CAD 1,000,000). Agent shall promptly
         notify each Canadian Lender of the date of each such reduction and such
         Canadian Lender's proportionate share thereof. After each such
         reduction, the facility fees payable hereunder shall be calculated upon
         the Maximum CAD Revolving Amount as so reduced.

                  (iii)    Generally. If Borrowers reduce in whole the
         Commitment of the Lenders, on the effective date of such reduction
         (Borrowers having prepaid in full the unpaid principal balance, if any,
         of the Loans, together with all interest and facility and other fees
         accrued and unpaid), all of the Notes, if Notes have been issued, shall
         be delivered to Agent marked "Canceled" and Agent shall redeliver such
         Notes to Borrowers. Any partial reduction in the Total Commitment
         Amount shall be effective during the remainder of the Commitment
         Period. The US Commitment may not, at any time, be reduced to an amount
         less than the then existing amount of the Canadian Commitment.

         (b)      Increase in Commitment. At any time during the Commitment
Increase Period, US Borrower may increase the Total Commitment Amount from the
Closing Commitment Amount up to the Maximum Commitment Amount (with a
corresponding increase in the Maximum US Revolving Amount) by either (i)
proportionally increasing, for one or more US Lenders, with their prior written
consent (and with the prior written consent of Agent), their respective US
Revolving Credit Commitments, or (ii) including one or more Additional Lenders,
with the prior written consent of Agent (which shall not be unreasonably
withheld), each with a new US Revolving Credit Commitment, as a party to this
Agreement (collectively, the "Additional Commitment"). During the Commitment
Increase Period, the Lenders agree that

                                       34

<PAGE>

Agent, in its sole discretion, may permit one or more Additional Commitments
upon satisfaction of the following requirements: (A) each Additional Lender, if
any, shall execute an Additional Lender Assumption Agreement, (B) Agent shall
provide to each Lender a revised Schedule 1 to this Agreement, including revised
Applicable Commitment Percentages for each of the Lenders, if appropriate, at
least three Business Days prior to the date of the effectiveness of such
Additional Commitments (each an "Additional Lender Assumption Effective Date"),
(C) each Additional Lender's US Revolving Credit Commitment shall be for an
amount of no less than Ten Million Dollars ($10,000,000), and (D) US Borrower
shall execute and deliver to Agent and the US Lenders such replacement or
additional US Revolving Credit Notes as shall be required by Agent (to the
extent Notes have been requested by the affected Lenders). The Lenders hereby
authorize Agent to execute each Additional Lender Assumption Agreement on behalf
of the Lenders. On each Additional Lender Assumption Effective Date, the US
Lenders shall make adjustments among themselves with respect to the US Revolving
Loans then outstanding and amounts of principal, interest, facility and usage
fees and other amounts paid or payable with respect thereto as shall be
necessary, in the opinion of Agent, in order to reallocate among such US Lenders
such outstanding amounts, based on the revised Applicable Commitment Percentages
and to otherwise carry out fully the intent and terms of this Section 2.10(b).
In connection therewith, it is understood and agreed that the Maximum Amount of
any Lender will not be increased (or decreased except pursuant to Section
2.10(a) hereof) without the prior written consent of such Lender. US Borrower
shall not increase the Total Commitment Amount pursuant to this Section 2.10(b)
if a Default or an Event of Default shall then exist, or immediately after
giving effect to any such increase would exist.

         Section 2.11. Computation of Interest and Fees.

         (a)      Generally. With the exception of Base Rate Loans, CAD Base
Rate Loans and CAD Fixed Rate Loans, interest on Loans and facility and other
fees and charges hereunder shall be computed on the basis of a year having three
hundred sixty (360) days and calculated for the actual number of days elapsed.
With respect to Base Rate Loans, CAD Base Rate Loans and CAD Fixed Rate Loans,
interest shall be computed on the basis of a year having three hundred
sixty-five (365) days or three hundred sixty-six (366) days, as the case may be,
and calculated for the actual number of days elapsed.

         (b)      Interest Act (Canada). For purposes of disclosure pursuant to
the Interest Act (Canada), the annual rates of interest or fees to which the
rates of interest or fees provided in this Agreement and the other Loan
Documents (and stated herein and therein, as applicable, to be computed on the
basis of a year having three hundred sixty (360) days, three hundred sixty-five
(365) days or any other period of time less than a calendar year) are equivalent
to the rates so determined when multiplied by the actual number of days in the
applicable calendar year and divided by three hundred sixty (360), three hundred
sixty-five (365) days or such other period of time, respectively.

         Section 2.12. Mandatory Payment.

         (a)      US Revolving Credit Commitment. If, at any time, the US
Revolving Credit Exposure shall exceed the Maximum US Revolving Amount as then
in effect, US Borrower

                                       35

<PAGE>

shall, as promptly as practicable, but in no event later than the next Business
Day, prepay an aggregate principal amount of the US Revolving Loans sufficient
to bring the US Revolving Credit Exposure within the Maximum US Revolving
Amount.

         (b)      Swing Line Commitment. If, at any time, the Swing Line
Exposure shall exceed the Swing Line Commitment, US Borrower shall, as promptly
as practicable, but in no event later than the next Business Day, prepay an
aggregate principal amount of the Swing Loans sufficient to bring the Swing Line
Exposure within the Swing Line Commitment.

         (c)      CAD Revolving Credit Commitment. If, at any time, the CAD
Revolving Exposure shall exceed the Maximum CAD Revolving Amount as then in
effect, Canadian Borrowers shall, as promptly as practicable, but in no event
later than the next Business Day, prepay an aggregate principal amount of the
CAD Revolving Loans sufficient to bring the CAD Revolving Exposure within the
Maximum CAD Revolving Amount.

         (d)      Total Commitment Amount. If, at any time, the Revolving Credit
Exposure shall exceed the Total Commitment Amount as then in effect, Borrowers
shall, as promptly as practicable, but in no event later than the next Business
Day, prepay an aggregate principal amount of the Loans sufficient to bring the
Revolving Credit Exposure within the Total Commitment Amount.

         (e)      Generally. Unless otherwise designated by Borrowers, each
prepayment pursuant to this Section 2.12 shall be applied in the following order
(i) first, on a pro rata basis among all of the outstanding Base Rate Loans or
CAD Base Rate Loans, as applicable, and (ii) second, on a pro rata basis among
all of the outstanding Eurodollar Loans and CAD Fixed Rate Loans, as applicable,
provided that, if the outstanding principal amount of any Eurodollar Loan or CAD
Fixed Rate Loan shall be reduced to an amount less than the minimum amount set
forth in Section 2.6 hereof as a result of such prepayment, then such Eurodollar
Loan or CAD Fixed Rate Loan, as the case may be, shall be converted into a Base
Rate Loan or CAD Base Rate Loan, as appropriate, on the date of such prepayment.
Any prepayment of a Eurodollar Loan, Swing Loan or CAD Fixed Rate Loan pursuant
to this Section 2.12 shall be subject to the prepayment provisions set forth in
Article III hereof.

         Section 2.13. Canadian Borrowers.

         (a)      Joint and Several Liability of Canadian Borrowers. Each
request by a Canadian Borrower for the making, conversion or continuation of a
CAD Revolving Loan shall be deemed to be a joint and several request by all
Canadian Borrowers. Each Canadian Borrower hereby authorizes any other Canadian
Borrower to request that US Borrower submit a Notice of Loan for a CAD Revolving
Loan on behalf of Canadian Borrowers. Each Canadian Borrower acknowledges and
agrees that Agent and the Canadian Lenders are entering into this Agreement at
the request of each Canadian Borrower and with the understanding that each
Canadian Borrower is and shall remain fully liable, jointly and severally, for
payment in full of the Applicable Debt; provided that, anything in this
Agreement to the contrary notwithstanding, no Canadian Borrower will at any time
be liable for the Indebtedness of US Borrower. Each

                                       36

<PAGE>

Canadian Borrower agrees that it is receiving or will receive a direct pecuniary
benefit for each CAD Revolving Loan made hereunder.

         (b)      Maximum Liability of Each Canadian Borrower. Anything in this
Agreement or any other Loan Document to the contrary notwithstanding, in no
event shall the maximum liability of any Canadian Borrower exceed the maximum
amount that (after giving effect to the incurring of the obligations hereunder
and to any rights to contribution of such Canadian Borrower from other
Affiliates of such Canadian Borrower) would not render the rights to payment of
Agent and the Canadian Lenders hereunder void, voidable or avoidable under any
applicable fraudulent transfer law.

         (c)      Appointment of US Borrower as Canadian Borrower's Agent. Each
Canadian Borrower hereby irrevocably appoints US Borrower as the borrowing agent
and attorney-in-fact for all Canadian Borrowers, which appointment shall remain
in full force and effect unless and until Agent shall have received prior
written notice signed by each Canadian Borrower that such appointment has been
revoked. Each Canadian Borrower hereby irrevocably appoints and authorizes US
Borrower (a) to provide Agent with all notices with respect to CAD Revolving
Loans obtained for the benefit of any Canadian Borrower and all other notices
and instructions under this Agreement, and (b) to take such action as US
Borrower deems appropriate on its behalf to obtain CAD Revolving Loans and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement.

         Section 2.14. Waivers of Borrowers. In the event that any obligation of
any Borrower under this Agreement is deemed to be an agreement by such Borrower
to answer for the debt or default of another Credit Party, each Borrower
represents and warrants that (a) no representation has been made to such
Borrower as to the creditworthiness of such other Credit Party, and (b) such
Borrower has established adequate means of obtaining from such other Credit
Party on a continuing basis, financial or other information pertaining to such
other Credit Party's financial condition. Each Borrower expressly waives, except
as expressly required under this Agreement, diligence, demand, presentment,
protest and notice of every kind and nature whatsoever, and consents that Agent,
the Lenders and any other Credit Party may deal with each other in connection
with such obligations or otherwise, or alter any contracts now or hereafter
existing between them, in any manner whatsoever, including without limitation
the renewal, extension, acceleration or changes in time for payment of any such
obligations or in the terms or conditions of any security held. Agent and the
Lenders are hereby expressly given the right, at their option, to proceed in the
enforcement of any of the Debt independently of any other remedy or security
they may at any time hold in connection with such obligations secured and it
shall not be necessary for Agent and the Lenders to proceed upon or against or
exhaust any other security or remedy before proceeding to enforce their rights
against such Borrower. Each Borrower further subordinates any right of
subrogation, reimbursement, exoneration, contribution, indemnification, setoff
or other recourse in respect of sums paid to Agent and the Lenders by any other
Credit Party.

         Section 2.15. Extension of Commitment. Contemporaneously with the
delivery of the financial statements required pursuant to Section 5.3(b) hereof
(beginning with the financial statements for the fiscal year of US Borrower
ending June 30, 2004), US Borrower may deliver a

                                       37

<PAGE>

Request for Extension, requesting that the Lenders extend the maturity of the
Commitment for an additional year. Each such extension shall require the
unanimous written consent of all of the Lenders and shall be upon such terms and
conditions as may be agreed to by Agent, Borrowers and the Lenders. US Borrower
shall pay any reasonable and properly documented attorneys' fees or other
expenses of Agent in connection with the documentation of any such extension, as
well as such other fees as may be agreed upon between Borrowers and Agent.

            ARTICLE III. ADDITIONAL PROVISIONS RELATING TO FIXED RATE
                         LOANS; INCREASED CAPITAL; TAXES

         Section 3.1. Requirements of Law.

         (a)      If, after the Closing Date, (i) the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
(ii) the compliance by any Lender with any request or directive (whether or not
having the force of law) from any central bank or other Governmental Authority:

                  (A)      shall subject any Lender to any tax of any kind
         whatsoever with respect to this Agreement, any Letter of Credit or any
         Fixed Rate Loan made by it, or change the basis of taxation of payments
         to such Lender in respect thereof (except for Taxes and Excluded Taxes
         which are governed by Section 3.2 hereof);

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

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

and the result of any of the foregoing is to increase the cost to such Lender of
making, converting into, continuing or maintaining Fixed Rate Loans or issuing
or participating in Letters of Credit, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, US Borrower (and any
Canadian Borrower to which such Loan was made) shall pay to such Lender,
promptly after receipt of a written request therefor, any additional amounts
necessary to compensate such Lender for such increased cost or reduced amount
receivable. If any Lender becomes entitled to claim any additional amounts
pursuant to this subsection (a), such Lender shall promptly notify US Borrower
(with a copy to Agent) of the event by reason of which it has become so
entitled.

         (b)      If any Lender shall have determined that, after the Closing
Date, the adoption of or any change in any Requirement of Law regarding capital
adequacy or in the interpretation or application thereof or compliance by such
Lender or any corporation controlling such Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
Governmental Authority shall have the effect of reducing the rate of return on
such

                                       38

<PAGE>

Lender's or such corporation's capital as a consequence of its obligations
hereunder, or under or in respect of any Letter of Credit, to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration the policies of such Lender or
corporation with respect to capital adequacy), then from time to time, upon
submission by such Lender to US Borrower (with a copy to Agent) of a written
request therefor (which shall include the method for calculating such amount and
reasonable detail with respect to the calculation), the appropriate Borrowers
shall promptly pay or cause to be paid to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.

         (c)      A certificate as to any additional amounts payable pursuant to
this Section 3.1 together with a reasonably detailed calculation and description
of such amounts contemplated by this Section 3.1, submitted by any Lender to US
Borrower (with a copy to Agent) shall be rebuttably presumptive evidence of the
amounts so payable. In determining any such additional amounts, such Lender may
use any method of averaging and attribution that it (in its good-faith,
reasonable credit judgment) shall deem applicable. The obligations of Borrowers
pursuant to this Section 3.1 shall survive the termination of this Agreement and
the payment of the Loans and all other amounts payable hereunder.

         Section 3.2. Taxes.

         (a)      All payments made by any Credit Party under any Loan Document
shall be made free and clear of, and without deduction or withholding for or on
account of any Taxes or Other Taxes. If any Taxes or Other Taxes are required to
be withheld from any amounts payable to Agent or any Lender thereunder, the
amounts so payable to Agent or such Lender shall be increased to the extent
necessary to yield to Agent or such Lender (after payment of all Taxes and Other
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in the Loan Documents.

         (b)      In addition, the Credit Parties shall pay Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

         (c)      Whenever any Taxes or Other Taxes are required to be withheld
and paid by a Credit Party, such Credit Party shall timely withhold and pay such
taxes to the relevant Governmental Authorities. As promptly as possible
thereafter, such Credit Party shall send to Agent for its own account or for the
account of the relevant Lender, as the case may be, a certified copy of an
original official receipt received by such Credit Party showing payment thereof.
If such Credit Party shall fail to pay any Taxes or Other Taxes when due to the
appropriate taxing authority or fails to remit to Agent the required receipts or
other required documentary evidence, such Credit Party shall indemnify Agent and
the appropriate Lenders on demand for any incremental taxes, interest or
penalties that may become payable by Agent or such Lender as a result of any
such failure.

         (d)      If any Lender shall be so indemnified by a Credit Party, such
Lender shall use reasonable efforts to obtain the benefits of any refund,
deduction or credit for any taxes or other amounts with respect to the amount
paid by such Credit Party and shall reimburse such Credit

                                       39

<PAGE>

Party to the extent, but only to the extent, that such Lender shall receive a
refund with respect to the amount paid by such Credit Party or an effective net
reduction in taxes or other governmental charges (including any taxes imposed on
or measured by the total net income of such Lender) of the United States or any
state or subdivision or any other Governmental Authority thereof by virtue of
any such deduction or credit, after first giving effect to all other deductions
and credits otherwise available to such Lender. If, at the time any audit of
such Lender's income tax return is completed, such Lender determines, based on
such audit, that it shall not have been entitled to the full amount of any
refund reimbursed to such Credit Party as aforesaid or that its net income taxes
shall not have been reduced by a credit or deduction for the full amount
reimbursed to such Credit Party as aforesaid, such Credit Party, upon request of
such Lender, shall promptly pay to such Lender the amount so refunded to which
such Lender shall not have been so entitled, or the amount by which the net
income taxes of such Lender shall not have been so reduced, as the case may be.

         (e)      Each Lender that is not (i) a citizen or resident of the
United States of America, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States of America (or
any jurisdiction thereof), or (iii) an estate or trust that is subject to U.S.
federal income taxation regardless of the source of its income (any such Person,
a "Non-U.S. Lender") shall deliver to US Borrower and Agent two copies of either
U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a
Non-U.S. Lender claiming exemption from U.S. federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", a statement with respect to such interest and a Form W-8BEN, or any
subsequent versions thereof or successors thereto, properly completed and duly
executed by such Non-U.S. Lender claiming complete exemption from, or a reduced
rate of, U.S. federal withholding tax on all payments by Credit Parties under
this Agreement and the other Loan Documents. Such forms shall be delivered by
each Non-U.S. Lender on or before the date it becomes a party to this Agreement
or such other Loan Document. In addition, each Non-U.S. Lender shall deliver
such forms or appropriate replacements promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. Each
Non-U.S. Lender shall promptly notify US Borrower at any time it determines that
such Lender is no longer in a position to provide any previously delivered
certificate to US Borrower (or any other form of certification adopted by the
U.S. taxing authorities for such purpose). Notwithstanding any other provision
of this subsection (e), a Non-U.S. Lender shall not be required to deliver any
form pursuant to this subsection (e) that such Non-U.S. Lender is not legally
able to deliver.

         (f)      The agreements in this Section 3.2 shall survive the
termination of the Loan Documents and the payment of the Loans and all other
amounts payable hereunder.

         Section 3.3. Funding Losses. US Borrower, and any appropriate Canadian
Borrower to the extent such activity involves a CAD Fixed Rate Loan made to such
Canadian Borrower, agree to indemnify each Lender, promptly after receipt of a
written request therefor, and to hold each Lender harmless from, any properly
documented loss or expense that such Lender may sustain or incur as a
consequence of (a) default by a Borrower in making a borrowing of, conversion
into or continuation of Fixed Rate Loans after such Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (b)
default by a

                                       40

<PAGE>

Borrower in making any prepayment of or conversion from Fixed Rate Loans after
such Borrower has given a notice thereof in accordance with the provisions of
this Agreement, (c) the making of a prepayment of a Fixed Rate Loan on a day
that is not the last day of an Interest Period applicable thereto, (d) the
making of a prepayment of a Swing Loan on a day that is not the Swing Loan
Maturity Date applicable thereto, or (e) any conversion of a Fixed Rate Loan to
a Base Rate Loan or CAD Base Rate Loan pursuant to Section 3.4 hereof on a day
that is not the last day of an Interest Period applicable thereto. Such
indemnification shall be in an amount equal to the excess, if any, of (i) the
amount of interest that would have accrued on the amounts so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) or the applicable Swing Loan Maturity Date in each case at the
applicable rate of interest for such Loans provided for herein (excluding,
however, the Applicable Margin included therein, if any) over (ii) the amount of
interest (as reasonably determined by such Lender) that would have accrued to
such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the appropriate London interbank market (or
Canadian market, if applicable), along with any administration fee charged by
such Lender. A certificate as to any amounts payable pursuant to this Section
3.3 submitted to US Borrower (with a copy to Agent) by any Lender, together with
a reasonably detailed calculation and description of such amounts shall be
rebuttably presumptive evidence of the amounts so payable. The obligations of
Borrowers pursuant to this Section 3.3 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

         Section 3.4. Eurodollar Rate or CAD Fixed Rate Lending Unlawful;
Inability to Determine Rate.

         (a)      If any Lender shall determine (which determination shall, upon
notice thereof to US Borrower and Agent, be conclusive and binding on Borrowers)
that, after the Closing Date, (i) the introduction of or any change in or in the
interpretation of any law makes it unlawful, or (ii) any Governmental Authority
asserts that it is unlawful, for such Lender to make or continue any Loan as, or
to convert (if permitted pursuant to this Agreement) any Loan into, a Fixed Rate
Loan, the obligations of such Lender to make, continue or convert any such Fixed
Rate Loan shall, upon such determination, be suspended until such Lender shall
notify Agent that the circumstances causing such suspension no longer exist, and
all outstanding Fixed Rate Loans payable to such Lender shall automatically
convert (if conversion is permitted under this Agreement) into a Base Rate Loan
or CAD Base Rate Loan, or be repaid (if no conversion is permitted) at the end
of the then current Interest Periods with respect thereto or sooner, if required
by law or such assertion.

         (b)      If Agent or the Required Lenders determine that for any reason
adequate and reasonable means do not exist for determining the Eurodollar Rate
or CAD Fixed Rate for any requested Interest Period with respect to a proposed
Fixed Rate Loan, or that the Eurodollar Rate or CAD Fixed Rate for any requested
Interest Period with respect to a proposed Fixed Rate Loan does not adequately
and fairly reflect the cost to the applicable Lenders of funding such Loan,
Agent will promptly so notify US Borrower and each applicable Lender.
Thereafter, the

                                       41

<PAGE>

obligation of the applicable Lenders to make or maintain such Fixed Rate Loan
shall be suspended until Agent (upon the instruction of the Required Lenders)
revokes such notice. Upon receipt of such notice, US Borrower may revoke any
pending request for a borrowing of, conversion to or continuation of such Fixed
Rate Loan or, failing that, will be deemed to have converted such request into a
request for a borrowing of a Base Rate Loan or CAD Base Rate Loan in the amount
specified therein.

                        ARTICLE IV. CONDITIONS PRECEDENT

         Section 4.1. Conditions to Each Credit Event. The obligation of the
Lenders to participate in any Credit Event shall be conditioned, in the case of
each Credit Event, upon the following:

         (a)      all conditions precedent as listed in Section 4.2 hereof
required to be satisfied prior to the first Credit Event shall have been
satisfied prior to or as of the first Credit Event;

         (b)      US Borrower shall have submitted a Notice of Loan (or with
respect to a Letter of Credit, complied with the provisions of Section 2.2(b)
hereof) and otherwise complied with Section 2.6 hereof;

         (c)      no Default or Event of Default shall then exist or immediately
after the Credit Event would exist; and

         (d)      each of the representations and warranties contained in
Article VI hereof shall be true in all material respects as if made on and as of
the date of the Credit Event, except to the extent that any thereof expressly
relate to an earlier date.

Each request by US Borrower or a Canadian Borrower for a Credit Event shall be
deemed to be a representation and warranty by Borrowers as of the date of such
request as to the satisfaction of the conditions precedent specified in
subsections (c) and (d) above.

         Section 4.2. Conditions to the First Credit Event. The obligation of
the Lenders to participate in the first Credit Event is subject to Borrowers
satisfying each of the following conditions prior to or concurrently with such
Credit Event:

         (a)      Notes. US Borrower shall have executed and delivered to each
US Lender requesting a US Revolving Credit Note its US Revolving Credit Note and
shall have executed and delivered to Swing Line Lender the Swing Line Note. Each
Canadian Borrower shall have executed and delivered to each Canadian Lender
requesting a CAD Revolving Credit Note its CAD Revolving Credit Note.

         (b)      Guaranties of Payment of Debt. Each Guarantor of Payment shall
have executed and delivered to Agent a Guaranty of Payment of Debt.

                                       42

<PAGE>

         (c)      Officer's Certificate, Resolutions, Organizational Documents.
Borrowers shall have delivered to Agent an officer's certificate (or comparable
domestic or foreign documents) certifying the names of the officers of each
Credit Party signing any of the Loan Documents, together with the true
signatures of such officers and certified copies of (i) the resolutions of the
board of directors (or comparable domestic or foreign documents) of such Credit
Party evidencing approval of the execution and delivery of the Loan Documents
and the execution of other Related Writings to which such Credit Party is a
party, and (ii) the Organizational Documents of such Credit Party.

         (d)      Legal Opinions. Borrowers shall have delivered to Agent
opinions of counsel, in form and substance satisfactory to Agent and the
Lenders, for each Credit Party.

         (e)      Good Standing and Full Force and Effect Certificates.
Borrowers shall have delivered to Agent a good standing certificate or full
force and effect certificate (or comparable domestic or foreign document), for
each Credit Party, issued on or about the Closing Date by the Secretary of State
in the state where such Credit Party is incorporated or formed (or appropriate
foreign official).

         (f)      Closing and Legal Fees; Agent Fee Letter. Borrowers shall have
(i) executed and delivered to Agent, the Agent Fee Letter and paid to Agent, for
its sole account, the fees stated therein to be paid on or prior to the Closing
Date, (ii) executed and delivered to Agent the Closing Fee Letter and paid to
Agent, for the account of the Lenders, the fees stated therein to be paid on or
prior to the Closing Date, and (iii) paid all reasonable and properly documented
legal fees and expenses of Agent in connection with the preparation and
negotiation of the Loan Documents.

         (g)      Letter of Direction. US Borrower shall have delivered to Agent
a letter of direction authorizing Agent, on behalf of the Lenders, to disburse
the proceeds of the Loans, which includes the transfer of funds under this
Agreement and wire instructions setting forth the locations to which such funds
shall be sent.

         (h)      Long Term Debt Instruments. US Borrower shall have provided to
Agent copies of all long term debt instruments, certified by a Financial Officer
as complete, of the Companies.

         (i)      Existing Credit Agreement. Borrowers shall have terminated the
Credit Agreement between Borrowers and KeyBank National Association, as agent,
dated as of November 5, 1998, as amended, which termination shall be deemed to
have occurred upon payment in full of all of the Indebtedness outstanding
thereunder and termination of the commitments established therein.

         (j)      No Material Adverse Change. No material adverse change, in the
opinion of Agent, shall have occurred in the financial condition, operations or
prospects of the Companies since June 30, 2003.

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<PAGE>

         (k)      Miscellaneous. Borrowers shall have provided to Agent and the
Lenders such other items and shall have satisfied such other conditions as may
be reasonably required by Agent or the Lenders.

                              ARTICLE V. COVENANTS

         Section 5.1. Insurance. The Companies shall (a) maintain insurance to
such extent and against such hazards and liabilities as is commonly maintained
by Persons similarly situated; and (b) within ten days of any Lender's written
request, furnish to such Lender such information about the Companies' insurance
as that Lender may from time to time reasonably request.

         Section 5.2. Money Obligations. Each Company shall pay in full (a)
prior in each case to the date when penalties would attach, all material taxes,
assessments and governmental charges and levies (except only those so long as
and to the extent that the same shall be contested in good faith by appropriate
and timely proceedings and for which adequate provisions have been established
in accordance with GAAP) for which it may be or become liable or to which any or
all of its properties may be or become subject; (b) all material wage
obligations to its employees in compliance with the Fair Labor Standards Act (29
U.S.C. Sections 206-207) or any comparable provisions; and (c) all of its other
obligations calling for the payment of money (except only those so long as and
to the extent that nonpayment would not cause a Material Adverse Effect) before
such payment becomes overdue.

         Section 5.3. Financial Statements and Information.

         (a)      Quarterly Financials. Borrowers shall furnish to Agent and the
Lenders, within forty-five (45) days after the end of each of the first three
quarter-annual periods of each fiscal year of US Borrower, balance sheets of the
Companies as of the end of such period and statements of income (loss),
stockholders' equity and cash flow for the quarter and fiscal year to date
periods, all prepared on a Consolidated basis, in accordance with GAAP, and in
form and detail satisfactory to Agent and the Lenders and certified by a
Financial Officer of US Borrower; provided, however, that delivery pursuant to
paragraph (d) below of copies of the Quarterly Report on Form 10-Q of the
Companies for such quarterly period filed with the SEC shall be deemed to
satisfy the requirements of this subsection (a).

         (b)      Annual Audit Report. Borrowers shall furnish to Agent and the
Lenders, within ninety (90) days after the end of each fiscal year of US
Borrower, an annual audit report of the Companies for that year prepared on a
Consolidated basis, in accordance with GAAP, and in form and detail satisfactory
to Agent and the Lenders and certified by an independent public accountant
satisfactory to Agent, which report shall include balance sheets and statements
of income (loss), stockholders' equity and cash-flow for that period, together
with a certificate by the accountant setting forth the Defaults and Events of
Default coming to its attention during the course of its audit or, if none, a
statement to that effect; provided, however, that delivery pursuant to paragraph
(d) below of copies of the Annual Report on Form 10-K of the Companies for such
period filed with the SEC shall be deemed to satisfy the requirements of this
paragraph (b).

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<PAGE>

         (c)      Compliance Certificate. Borrowers shall furnish to Agent and
the Lenders, concurrently with the delivery of the financial statements set
forth in subsections (a) and (b) above, a Compliance Certificate.

         (d)      Public Financial Information. Borrowers shall furnish to Agent
and the Lenders, as soon as available, (i) copies of Form 10-Q quarterly
reports, Form 10-K annual reports, and Form 8-K current reports, (ii) notice of
(and, upon the request of Agent, copies of) any other filings made by US
Borrower with the SEC, and (iii) notice of (and, upon the request of Agent,
copies of) any other information that is provided by US Borrower to its
shareholders generally, provided that if any such materials are available
electronically as a filing with the SEC, Borrowers shall give Agent prompt
notice of such filing and the giving of such notice shall satisfy Borrowers'
obligation to provide Agent and the Lenders copies of such publicly filed
materials.

         (e)      Financial Information of Companies. Borrowers shall furnish to
Agent and the Lenders, within ten Business Days of the written request of Agent
or any Lender, such other information about the material financial condition,
properties and operations of the Companies as Agent or such Lender may from time
to time reasonably request, which information shall be submitted in form and
detail reasonably satisfactory to Agent or such Lender and certified by a
Financial Officer of the Company or Companies in question.

         Section 5.4. Financial Records. The Companies shall at all times
maintain true and complete, in all material respects, records and books of
account, all in accordance with GAAP, and at all reasonable times (during normal
business hours and upon notice to such Company) permit Agent, or any
representative of Agent, to examine such Company's books and records and to make
excerpts therefrom and transcripts thereof.

         Section 5.5. Franchises; Change in Business.

         (a)      Each Company shall preserve and maintain at all times its
existence (except as otherwise permitted under Section 5.12 hereof) and its
material rights and franchises.

         (b)      No Company shall engage in any business if, as a result
thereof, the general nature of the business of the Companies taken as a whole
would be substantially changed from the general nature of the business the
Companies are engaged in on the Closing Date.

         Section 5.6. ERISA Compliance. No Company shall incur any material
accumulated funding deficiency within the meaning of ERISA, or any material
liability to the PBGC, established thereunder in connection with any ERISA Plan.
Borrowers shall furnish to the Lenders (a) as soon as possible and in any event
within thirty (30) days after any Company knows or has reason to know that any
material Reportable Event with respect to any ERISA Plan has occurred, a
statement of a Financial Officer of such Company, setting forth details as to
such Reportable Event and the action that such Company proposes to take with
respect thereto, together with a copy of the notice of such Reportable Event
given to the PBGC if a copy of such notice is available to such Company, and (b)
promptly after receipt thereof a copy of any

                                       45

<PAGE>

material notice such Company, or any member of the Controlled Group may receive
from the PBGC or the Internal Revenue Service with respect to any ERISA Plan
administered by such Company; provided that this latter clause shall not apply
to notices of general application promulgated by the PBGC or the Internal
Revenue Service or to letters or notices (such as favorable Determination
Letter) with respect to an ERISA Plan, which do not threaten a material
liability to the Companies. Borrowers shall promptly notify the Lenders of any
material taxes assessed, proposed to be assessed or that Borrowers have reason
to believe may be assessed against a Company by the Internal Revenue Service
with respect to any ERISA Plan. As used in this Section 5.6 and in Section 6.10
hereof, "material" means the measure of a matter of significance that shall be
determined as being an amount equal to five percent (5%) of Consolidated Net
Worth. As soon as practicable, and in any event within twenty (20) days, after
any Company shall become aware that a material ERISA Event shall have occurred,
such Company shall provide Agent with notice of such ERISA Event with a
certificate by a Financial Officer of such Company setting forth the details of
the event and the action such Company or another Controlled Group member
proposes to take with respect thereto. Borrowers shall, at the request of Agent
or any Lender, deliver or cause to be delivered to Agent or such Lender, as the
case may be, true and correct copies of any documents relating to the ERISA Plan
of any Company.

         Section 5.7. Financial Covenants.

         (a)      Capitalization Ratio. US Borrower shall not suffer or permit
at any time the Capitalization Ratio to exceed 0.50 to 1.00.

         (b)      Interest Coverage Ratio. US Borrower shall not suffer or
permit at any time the Interest Coverage Ratio to be less than 3.00 to 1.00.

         Section 5.8. Borrowing. No Company shall create, incur or have
outstanding any Indebtedness of any kind; provided that this Section 5.8 shall
not apply to the following:

         (a)      the Loans, the Letters of Credit or any other Indebtedness
under this Agreement;

         (b)      asset securitizations up to the maximum aggregate amount, for
all Companies, of Fifty Million Dollars ($50,000,000);

         (c)      secured Indebtedness (including Capitalized Lease Obligations)
so long as the aggregate amount of all such Indebtedness (exclusive of asset
securitizations) outstanding at any time for all Companies does not exceed an
amount equal to ten percent (10%) of Consolidated Net Worth, based upon the
financial statements of US Borrower for the most recently completed fiscal
quarter; and

         (d)      unsecured Indebtedness.

         Section 5.9. Liens. No Company shall create, assume or suffer to exist
any Lien upon any of its property or assets, whether now owned or hereafter
acquired; provided that this Section shall not apply to the following:

                                       46

<PAGE>

         (a)      (i) Liens for taxes, assessments or governmental charges or
levies on such Company's property or assets if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are being actively
contested in good faith by appropriate and timely proceedings and for which
adequate reserves shall have been established in accordance with GAAP, and (ii)
Liens arising in the ordinary course of business out of pledges or deposits
under workers' compensation laws, unemployment insurance, old age pensions, or
social security, retirement benefits or similar legislation;

         (b)      other statutory Liens incidental to the conduct of its
business or the ownership of its property and assets that (i) were not incurred
in connection with the borrowing of money or the obtaining of advances or
credit, and (ii) do not in the aggregate materially detract from the value of
its property or assets or materially impair the use thereof in the operation of
its business;

         (c)      Liens on property or assets of a Domestic Subsidiary to secure
obligations of such Domestic Subsidiary to US Borrower or a Domestic Guarantor
of Payment;

         (d)      Liens on property or assets of a Foreign Subsidiary to secure
obligations of such Foreign Subsidiary to a Canadian Borrower or a Canadian
Guarantor of Payment;

         (e)      easements or other minor defects or irregularities in title of
real property not interfering in any material respect with the use of such
property in the business of any Company;

         (f)      Liens relating to ledger balances, consignments and other
similar arrangements;

         (g)      asset securitizations permitted pursuant to Section 5.12(i)
hereof; or

         (h)      any other Liens (including all Liens existing on the Closing
Date as set forth in Schedule 5.9 hereto), so long as the aggregate amount of
Indebtedness secured by all such Liens (exclusive of asset securitizations) does
not exceed for all Companies at any time an aggregate amount equal to ten
percent (10%) of Consolidated Net Worth, based upon the financial statements of
US Borrower for the most recently completed fiscal quarter.

         Section 5.10. Regulations U and X. No Company shall take any action
that would result in any non-compliance of the Loans or Letters of Credit with
Regulations U or X, or any other applicable regulation, of the Board of
Governors of the Federal Reserve System.

         Section 5.11. Investments and Loans. No Company shall, without the
prior written consent of Agent and the Required Lenders, (a) create, acquire or
hold any Subsidiary, (b) make or hold any investment in any stocks, bonds or
securities of any kind, (c) be or become a party to any joint venture or other
partnership, (d) make or keep outstanding any advance or loan to any Person, or
(e) be or become a Guarantor of any kind; provided that this Section 5.11 shall
not apply to the following:

                                       47

<PAGE>

                  (i)      any endorsement of a check or other medium of payment
         for deposit or collection through normal banking channels or similar
         transaction in the normal course of business;

                  (ii)     any investment in direct obligations of the United
         States of America or in certificates of deposit issued by a member bank
         (having capital resources in excess of One Hundred Million Dollars
         ($100,000,000)) of the Federal Reserve System;

                  (iii)    any investment in commercial paper or securities that
         at the time of such investment is assigned the highest quality rating
         in accordance with the rating systems employed by either Moody's or
         Standard & Poor's;

                  (iv)     the holding of each of the Subsidiaries listed on
         Schedule 6.1 hereto, and the creation, acquisition and holding of any
         new Subsidiary after the Closing Date so long as such new Subsidiary
         shall have been created, acquired or held in accordance with the terms
         and conditions of this Agreement;

                  (v)      loans to a Credit Party or Domestic Subsidiary from a
         Company that are not prohibited under Section 5.8 hereof;

                  (vi)     any guaranty by a Company of Indebtedness of another
         Company so long as such Indebtedness is permitted pursuant to Section
         5.8 hereof;

                  (vii)    the holding of any stock or equity interest that
         remains following the sale or other disposition of a Company (or a
         majority interest therein) permitted by Section 5.12 hereof;

                  (viii)   any advance or loan to an officer, employee, agent or
         similar Person of or consultant to a Company as an advance on
         commissions, travel, relocation expenses and other items in the
         ordinary course of business, so long as all such advances and loans
         from all Companies aggregate not more than the maximum principal sum of
         Five Million Dollars ($5,000,000) at any time outstanding;

                  (ix)     Permitted Investments;

                  (x)      Permitted Foreign Subsidiary Loans and Investments;

                  (xi)     the holding of any stock or equity interest that has
         been acquired pursuant to an Acquisition permitted by Section 5.13
         hereof, subject to the restriction in subsection (x) hereof; or

                  (xii)    the creation, acquisition or holding of any Domestic
         Subsidiary so long as such Domestic Subsidiary, if required pursuant to
         Section 5.19 hereof, becomes a Guarantor of Payment in accordance with
         Section 5.19 hereof, and, subject to the restriction in subsection (x)
         hereof, the creation, acquisition or holding of any Foreign Subsidiary.

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         Section 5.12. Merger and Sale of Assets. No Company shall merge or
consolidate with any other Person, or sell, lease or transfer or otherwise
dispose of all or a substantial part of its assets to any Person, except that,
if no Default or Event of Default shall then exist or immediately thereafter
shall begin to exist:

         (a)      any Domestic Subsidiary may merge with US Borrower (provided
that US Borrower shall be the continuing or surviving Person) or any one or more
Domestic Guarantors of Payment;

         (b)      any Domestic Subsidiary may sell, lease, transfer or otherwise
dispose of any of its assets to (i) US Borrower or (ii) any Domestic Guarantor
of Payment;

         (c)      any Domestic Subsidiary (other than a Credit Party) may merge
with or sell, lease, transfer or otherwise dispose of any of its assets to any
other Domestic Subsidiary;

         (d)      any Foreign Subsidiary may merge or amalgamate with a Canadian
Borrower (provided that such Canadian Borrower shall be the continuing or
surviving Person) or one or more Canadian Guarantors of Payment (provided that
such Canadian Guarantor of Payment shall be the continuing or surviving Person);

         (e)      any Foreign Subsidiary may sell, lease, transfer or otherwise
dispose of any of its assets to a Canadian Borrower or a Canadian Guarantor of
Payment;

         (f)      any Foreign Subsidiary other than a Credit Party may merge or
amalgamate with or sell, lease, transfer or otherwise dispose of any of its
assets to any other Foreign Subsidiary;

         (g)      any Company may sell, lease, transfer or otherwise dispose of
any of its assets to any Person (in addition to any such sale, lease, transfer
or disposal to US Borrower or a Domestic Guarantor of Payment) so long as the
aggregate amount of all such assets sold, leased, transferred or otherwise
disposed of by all Companies in any fiscal year of US Borrower does not exceed
an amount equal to seven and one-half percent (7 1/2%) of the rolling two-year
average of Consolidated Net Worth;

         (h)      Acquisitions may be effected in accordance with the provisions
of Section 5.13 hereof; and

         (i)      any Company may enter into (or have existing on the Closing
Date) asset securitization financing programs, up to an aggregate amount, for
all such programs of all Companies (including existing asset securitization
programs), not to exceed Fifty Million Dollars ($50,000,000) during the
Commitment Period.

         Section 5.13. Acquisitions. No Company shall effect an Acquisition;
provided, however, that a Credit Party may effect an Acquisition so long as:

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<PAGE>

         (a)      in the case of a merger, amalgamation or other combination
with a Borrower, such Borrower shall be the surviving entity, and in each case,
US Borrower shall be a surviving entity;

         (b)      in the case of a merger, amalgamation or other combination
with a Credit Party (other than a Borrower), a Credit Party shall be the
surviving entity;

         (c)      the Companies shall be in full compliance with the Loan
Documents both prior to and subsequent to the transaction;

         (d)      no Default or Event of Default shall exist prior to or after
giving effect to such Acquisition; and

         (e)      Borrowers shall have provided to Agent and the Lenders, at
least ten days prior to such Acquisition, written notice of each proposed
Acquisition with respect to which the Consideration is in excess of Five Million
Dollars ($5,000,000), and, with respect to any Acquisition in which the
Consideration paid is in excess of the Dollar Equivalent of Fifty Million
Dollars ($50,000,000), historical financial statements of the target entity and
a pro forma financial statement of the Companies accompanied by a certificate of
a Financial Officer of US Borrower showing pro forma compliance with Section 5.7
hereof, both before and after the proposed Acquisition.

         Section 5.14. Notice. Each Borrower shall cause a Financial Officer of
such Borrower to promptly notify Agent and the Lenders whenever any Default or
Event of Default may occur hereunder or any representation or warranty made in
Article VI hereof or elsewhere in this Agreement or in any Related Writing may
for any reason cease in any material respect to be true and complete.

         Section 5.15. Environmental Compliance. Each Company shall comply in
all material respects with any and all Environmental Laws including, without
limitation, all Environmental Laws in jurisdictions in which such Company owns
or operates a facility or site, arranges for disposal or treatment of hazardous
substances, solid waste or other wastes, accepts for transport any hazardous
substances, solid waste or other wastes or holds any interest in real property
or otherwise. Borrowers shall furnish to the Lenders, promptly after receipt
thereof, a copy of any notice such Company may receive from any Governmental
Authority or private Person or otherwise that any material litigation or
proceeding pertaining to any environmental, health or safety matter has been
filed or is threatened against such Company, any real property in which such
Company holds any interest or any past or present operation of such Company. No
Company shall allow the release or disposal of hazardous waste, solid waste or
other wastes on, under or to any real property in which any Company holds any
interest or performs any of its operations, in violation of any material
provision of Environmental Law. As used in this Section, "litigation or
proceeding" means any demand, claim, notice, suit, suit in equity action,
administrative action, investigation or inquiry whether brought by any
Governmental Authority or private Person or otherwise. Borrowers shall defend,
indemnify and hold Agent and the Lenders harmless against all properly
documented costs, expenses, claims, damages, penalties and liabilities of every
kind or nature whatsoever (including attorneys' fees) arising out of or

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<PAGE>

resulting from the noncompliance of any Company with any Environmental Law. Such
indemnification shall survive any termination of this Agreement.

         Section 5.16. Affiliate Transactions. No Company shall, 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 Affiliate of a Company (other than a Company
that is a Credit Party) on terms that shall be less favorable to such Company
than those that might be obtained at the time in a transaction with a
non-Affiliate; provided, however, that the foregoing shall not prohibit (a) the
payment of customary and reasonable directors' fees to directors who are not
employees of a Company or an Affiliate; (b) any transaction between a Company
(if a Credit Party) and an Affiliate (if a Credit Party) which US Borrower
reasonably determines in good faith is beneficial to the Companies as a whole
and which is not entered into for the purpose of hindering the exercise by Agent
or the Lenders of their rights or remedies under this Agreement; (c) any
employment agreement, employee benefit plan, stock option plan, officer and
director indemnification agreement or any similar arrangement entered into by a
Company in the ordinary course of business; or (d) loans to employees or
officers to the extent permitted under this Agreement.

         Section 5.17. Use of Proceeds. US Borrower's use of the proceeds of the
US Revolving Loans shall be solely for working capital and other general
corporate purposes (including, without limitation, share repurchases) of the
Companies, for refinancing of existing credit facilities and for Acquisitions.
Canadian Borrowers' use of the proceeds of the CAD Revolving Loans shall be for
working capital and other general corporate purposes (including, without
limitation, share repurchases) of the Canadian Borrowers, for refinancing of
existing credit facilities and for Acquisitions.

         Section 5.18. Corporate Names. No Borrower shall change its corporate
name and no Credit Party shall change its state or jurisdiction of organization,
unless, in each case, US Borrower shall have provided Agent and the Lenders with
prompt written notice thereof.

         Section 5.19. Subsidiary Guaranties. Each Domestic Subsidiary and any
other Subsidiary that shall be organized under the laws of Canada or a Province
of Canada created, acquired or held subsequent to the Closing Date, shall,
within ten days after such Subsidiary is created or acquired, execute and
deliver to Agent a Guaranty of Payment of all of the Applicable Debt, such
agreement to be in form and substance acceptable to Agent and the Required
Lenders, along with such corporate governance and authorization documents and an
opinion of counsel as may be deemed necessary or advisable by Agent and the
Required Lenders; provided, however, that:

         (a)      a Subsidiary shall not be required to execute such Guaranty of
Payment so long as (i) the total assets of such Subsidiary shall be less than
Two Million Five Hundred Thousand Dollars ($2,500,000), and (ii) the aggregate
of the total assets of all such Subsidiaries with total asset values of less
than Two Million Five Hundred Thousand Dollars ($2,500,000) and which have not
executed a Guaranty of Payment does not exceed the aggregate amount of Five
Million Dollars ($5,000,000). In the event that the total assets of any
Subsidiary that shall not be a Guarantor of Payment shall be at any time equal
to or greater than Two Million Five Hundred

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<PAGE>

Thousand Dollars ($2,500,000) (or the foregoing Five Million Dollars
($5,000,000) shall be exceeded), Borrowers shall provide Agent and the Lenders
with prompt written notice of such asset value;

         (b)      with respect to a Subsidiary required to execute a Guaranty of
Payment pursuant to this Section 5.19, if (i) the total assets of such
Subsidiary shall be less than Fifteen Million Dollars ($15,000,000), and (ii)
the aggregate of the total assets of all such Subsidiaries shall be less than
Thirty Million Dollars ($30,000,000), then such Subsidiary may delay the
delivery to Agent of such Guaranty of Payment and ancillary documentation until
the first quarterly financial reporting date of US Borrower immediately
following such Subsidiary's creation, acquisition or increase in amount of
assets;

         (c)      a Foreign Subsidiary (other than a Subsidiary organized under
the laws of Canada or a Province of Canada) shall not be required to execute
such Guaranty of Payment; and

         (d)      a Foreign Subsidiary organized under the laws of Canada or a
Providence of Canada that is required to execute a Guaranty of Payment pursuant
to this Section 5.19 may, at Borrowers' option, in lieu of executing a Guaranty
of Payment, be joined as a Canadian Borrower pursuant to documentation in form
and substance acceptable to Agent, in its sole discretion.

         Section 5.20. Other Covenants. In the event that any Company shall
enter into, or shall have entered into, any Material Indebtedness Agreement,
wherein the covenants contained therein shall be more restrictive than the
covenants set forth herein, then the Companies shall be bound hereunder by such
more restrictive covenants with the same force and effect as if such covenants
were written herein.

         Section 5.21. Guaranties Under the Note Purchase Agreement. No Company
shall be or become a Guarantor of any Indebtedness incurred pursuant to the Note
Purchase Agreement unless such Company is also a Guarantor of Payment under this
Agreement.

         Section 5.22. Pari Passu Ranking. The Debt shall, and Borrowers shall
take all necessary action to ensure that the Debt shall, at all times, rank at
least pari passu in right of payment with any Indebtedness under the Note
Purchase Agreement and all other senior unsecured Indebtedness of each Borrower.

                   ARTICLE VI. REPRESENTATIONS AND WARRANTIES

         Section 6.1. Corporate Existence; Subsidiaries; Foreign Qualification.

         (a)      Each Company is duly organized, validly existing and in good
standing under the laws of its state or jurisdiction of incorporation or
organization, and is duly qualified and authorized to do business and is in good
standing as a foreign entity in each jurisdiction where the character of its
property or its business activities makes such qualification necessary, except

                                       52

<PAGE>

where the failure to so qualify could not reasonably be expected to cause or
result in a Material Adverse Effect.

         (b)      As of the Closing Date, Schedule 6.1 hereto sets forth (i)
each Company, (ii) each Company's state or jurisdiction of organization, and
(iii) each Person that owns the stock or other equity interest of each Company
(other than US Borrower).

         Section 6.2. Corporate Authority. Each Credit Party has the right and
power and is duly authorized and empowered to enter into, execute and deliver
the Loan Documents to which it is a party and to perform and observe the
provisions of the Loan Documents. The Loan Documents to which each Credit Party
is a party have been duly authorized and approved by such Credit Party's board
of directors or other governing body, as applicable, and are the valid and
binding obligations of such Credit Party, enforceable against such Credit Party
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by equitable principles (regardless of whether
enforcement is sought in equity or at law). The execution, delivery and
performance of the Loan Documents will not conflict with nor result in any
breach in any of the provisions of, or constitute a default under, or result in
the creation of any Lien (other than Liens permitted under Section 5.9 hereof)
upon any assets or property of any Company under the provisions of, such
Company's Organizational Documents or any agreement.

         Section 6.3. Compliance with Laws. Each Company:

         (a)      holds all material permits, certificates, licenses, orders,
registrations, franchises, authorizations, and other approvals from any
Governmental Authority necessary for the conduct of its business and is in
compliance in all material respects with all applicable laws relating thereto;

         (b)      is in compliance in all material respects with all federal,
state, local, or foreign applicable statutes, rules, regulations, and orders
including, without limitation, those relating to environmental protection,
occupational safety and health, and equal employment practices on the Closing
Date and, except where the failure to be in compliance could not reasonably be
expected to have or result in a Material Adverse Effect, after the Closing Date;
and

         (c)      is not in material violation of or in default under any
agreement to which it is a party or by which its assets are subject or bound on
the Closing Date and, except with respect to any violation or default that could
not reasonably be expected to have or result in a Material Adverse Effect, after
the Closing Date.

         Section 6.4. Litigation and Administrative Proceedings. Except as
disclosed on Schedule 6.4 hereto, there are (a) no lawsuits, actions,
investigations, or other proceedings pending or threatened against any Company,
or in respect of which any Company may have any liability, in any court or
before any Governmental Authority, arbitration board, or other tribunal, (b) no
orders, writs, injunctions, judgments, or decrees of any court or government
agency or instrumentality to which any Company is a party or by which the
property or assets of any Company are bound, and (c) no grievances, disputes, or
controversies outstanding with any

                                       53

<PAGE>

union or other organization of the employees of any Company, or threats of work
stoppage, strike, or pending demands for collective bargaining, that, as to (a)
through (c) above, could reasonably be expected to have a Material Adverse
Effect.

         Section 6.5. Title to Assets. Each Credit Party has good title to and
ownership of all property it purports to own, which property is free and clear
of all Liens, except those permitted under Section 5.9 hereof.

         Section 6.6. Liens and Security Interests. On and after the Closing
Date, except for Liens permitted pursuant to Section 5.9 hereof, (a) there is no
financing statement or similar notice of Lien outstanding covering any personal
property of any Company; (b) there is no mortgage or charge outstanding covering
any real property of any Company; and (c) no real or personal property of any
Company is subject to any security interest or Lien of any kind.

         Section 6.7. Tax Returns. All federal, state, provincial and local tax
returns and other reports required by law to be filed in respect of the income,
business, properties and employees of each Company have been filed and all
taxes, assessments, fees and other governmental charges that are due and payable
have been paid, except as otherwise permitted herein or where the failure to do
so could not reasonably be expected to cause or result in a Material Adverse
Effect. The provision for taxes on the books of each Company is adequate, in all
material respects, for all years not closed by applicable statutes and for the
current fiscal year.

         Section 6.8. Environmental Laws. Each Company is in compliance, in all
material respects, with all Environmental Laws, including, without limitation,
all Environmental Laws in all jurisdictions in which any Company owns or
operates, or has owned or operated, a facility or site, arranges or has arranged
for disposal or treatment of hazardous substances, solid waste or other wastes,
accepts or has accepted for transport any hazardous substances, solid waste or
other wastes or holds or has held any interest in real property or otherwise. No
litigation or proceeding arising under, relating to or in connection with any
Environmental Law is pending or, to the best knowledge of each Company,
threatened, against any Company, any real property in which any Company holds or
has held an interest or any past or present operation of any Company that is
likely to have a Material Adverse Effect. No release, threatened release or
disposal of hazardous waste, solid waste or other wastes is occurring, or has
occurred (other than those that are currently being cleaned up in accordance
with Environmental Laws), on, under or to any real property in which any Company
holds any interest or performs any of its operations, in violation of any
Environmental Law that is likely to have a Material Adverse Effect. As used in
this Section, "litigation or proceeding" means any demand, claim, notice, suit,
suit in equity, action, administrative action, investigation or inquiry whether
brought by any Governmental Authority or private Person or otherwise.

         Section 6.9. Continued Business. There exists no actual, pending, or,
to each Borrower's knowledge, any threatened termination, cancellation or
limitation of, or any modification or change in the business relationship of any
Company and any customer or supplier, or any group of customers or suppliers,
whose purchases or supplies, individually or in the aggregate, are material to
the business of any Company, and there exists no present condition or state of
facts or circumstances that could reasonably be expected to have a Material
Adverse Effect or prevent a

                                       54

<PAGE>

Company from conducting such business or the transactions contemplated by this
Agreement in substantially the same manner in which it was previously conducted.

         Section 6.10. Employee Benefits Plans. Schedule 6.10 hereto identifies
each ERISA Plan. No ERISA Event has occurred or is expected to occur with
respect to an ERISA Plan. Full payment has been made of all amounts that a
Controlled Group member is required, under applicable law or under the governing
documents, to have paid as a contribution to or a benefit under each ERISA Plan.
The liability of each Controlled Group member with respect to each ERISA Plan
has been fully funded based upon reasonable and proper actuarial assumptions,
has been fully insured, or has been fully reserved for on its financial
statements. No changes have occurred or are expected to occur that would cause a
material increase in the cost of providing benefits under the ERISA Plan. With
respect to each ERISA Plan that is intended to be qualified under Code Section
401(a), (a) the ERISA Plan and any associated trust operationally comply with
the applicable requirements of Code Section 401(a); (b) the ERISA Plan and any
associated trust have been amended to comply, in all material respects, with all
such requirements as currently in effect, other than those requirements for
which a retroactive amendment can be made within the "remedial amendment period"
available under Code Section 401(b) (as extended under Treasury Regulations and
other Treasury pronouncements upon which taxpayers may rely); (c) the ERISA Plan
and any associated trust have received a favorable determination letter from the
Internal Revenue Service stating that the ERISA Plan qualifies under Code
Section 401(a), that the associated trust qualifies under Code Section 501(a)
and, if applicable, that any cash or deferred arrangement under the ERISA Plan
qualifies under Code Section 401(k), unless the ERISA Plan was first adopted at
a time for which the above-described "remedial amendment period" has not yet
expired; (d) the ERISA Plan currently satisfies the requirements of Code Section
410(b), without regard to any retroactive amendment that may be made within the
above-described "remedial amendment period"; and (e) no contribution made to the
ERISA Plan is subject to an excise tax under Code Section 4972. With respect to
any Pension Plan (other than with respect to the Detroit Ball Bearing Company
Union Employees' Retirement Plan), the "accumulated benefit obligation" of
Controlled Group members with respect to the Pension Plan (as determined in
accordance with Statement of Accounting Standards No. 87, "Employers' Accounting
for Pensions") does not exceed the fair market value of Pension Plan assets.

         Section 6.11. Consents or Approvals. No consent, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person is required to be obtained or
completed by any Company in connection with the execution, delivery or
performance of any of the Loan Documents, that has not already been obtained or
completed.

         Section 6.12. Solvency.

         (a)      US Borrower. US Borrower has received consideration that is
the reasonable equivalent value of the obligations and liabilities that US
Borrower has incurred to Agent and the Lenders. US Borrower is not insolvent as
defined in any applicable state, federal or relevant foreign statute, nor will
US Borrower be rendered insolvent by the execution and delivery of the Loan
Documents to Agent and the Lenders. US Borrower is not engaged or about to
engage in any business or transaction for which the assets retained by it are or
will be an unreasonably small amount of capital, taking into consideration the
obligations to Agent and the Lenders

                                       55

<PAGE>

incurred hereunder. US Borrower does not intend to, nor does it believe that it
will, incur debts beyond its ability to pay such debts as they mature.

         (b)      Canadian Borrowers. Each Canadian Borrower has received
consideration that is the reasonable equivalent value of the obligations and
liabilities that such Canadian Borrower has incurred to Agent and the Canadian
Lenders. No Canadian Borrower is insolvent as defined in any applicable state,
federal or relevant foreign statute, nor will any Canadian Borrower be rendered
insolvent by the execution and delivery of the Loan Documents to Agent and the
Canadian Lenders. No Canadian Borrower is engaged or about to engage in any
business or transaction for which the assets retained by it are or will be an
unreasonably small amount of capital, taking into consideration the obligations
to Agent and the Canadian Lenders incurred hereunder. No Canadian Borrower
intends to, nor does it believe that it will, incur debts beyond its ability to
pay such debts as they mature.

         Section 6.13. Financial Statements. The audited Consolidated financial
statements of Borrowers for the fiscal year ended June 30, 2003 furnished to
Agent and the Lenders, are true and complete, have been prepared in accordance
with GAAP, and fairly present, in all material respects, the financial condition
of the Companies as of the dates of such financial statements and the results of
their operations for the periods then ending. Since the dates of such
statements, there has been no material adverse change in any Company's financial
condition, properties or business or any change in any Company's accounting
procedures.

         Section 6.14. Regulations. No Company 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" (within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System of the United States of
America). Neither the granting of any Loan (or any conversion thereof) or Letter
of Credit nor the use of the proceeds of any Loan or Letter of Credit will
violate, or be inconsistent with, the provisions of Regulation T, U or X or any
other Regulation of such Board of Governors.

         Section 6.15. Material Agreements. Except as disclosed on Schedule 6.15
hereto, no Company is a party to any (a) debt instrument (excluding the Loan
Documents); (b) lease (capital, operating or otherwise), whether as lessee or
lessor thereunder; or (c) collective bargaining agreement that, as to
subsections (a) through (c), above, if violated, breached, or terminated for any
reason, would have or would be reasonably expected to have a Material Adverse
Effect.

         Section 6.16. Intellectual Property. Each Company owns, possesses, or
has the right to use all of the patents, patent applications, industrial
designs, trademarks, service marks, copyrights, licenses, and rights with
respect to the foregoing necessary for the conduct of its business without any
known material conflict with the rights of others.

         Section 6.17. Insurance. The Companies maintain with financially sound
and reputable insurers insurance with coverage and limits as required by law and
as is customary with Persons engaged in the same businesses as the Companies.

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         Section 6.18. Accurate and Complete Statements. Neither the Loan
Documents nor any written statement made by any Company in connection with any
of the Loan Documents contains any untrue statement of a material fact or omits
a material fact necessary to make the statements contained therein or in the
Loan Documents not misleading. After due inquiry by Borrowers, there is no known
fact that any Company has not disclosed to Agent and the Lenders that has or is
likely to have a Material Adverse Effect.

         Section 6.19. Note Purchase Agreement. (a) No Default or Event of
Default (as each term (or similar term, if any) is defined in the Note Purchase
Agreement) exists, nor will any such Default or Event of Default exist
immediately after the granting of any loan under this Agreement or the Note
Purchase Agreement, or any agreement executed in connection therewith; (b) no
Company has incurred any "Debt" (as defined, or as a similar term is defined, in
each Note Purchase Agreement) in violation of the provisions of any Note
Purchase Agreement; and (c) the Debt (as defined herein) constitutes "Debt" (as
defined or, as a similar term is defined, in each Note Purchase Agreement)
permitted pursuant to the provisions of the Note Purchase Agreements. No
Subsidiary is a Guarantor under any Note Purchase Agreement or any other
Material Indebtedness Agreement that is not also a Guarantor of Payment
hereunder.

         Section 6.20. Defaults. No Default or Event of Default exists
hereunder, nor will any begin to exist immediately after the execution and
delivery hereof.

                         ARTICLE VII. EVENTS OF DEFAULT

         Each of the following shall constitute an Event of Default hereunder:

         Section 7.1. Payments. If (a) the interest on any Loan or any facility
or other fee shall not be paid in full punctually when due and payable or within
three Business Days thereafter, or (b) the principal of any Loan or any
obligation under any Letter of Credit shall not be paid in full when due and
payable.

         Section 7.2. Special Covenants. If any Company shall fail or omit to
perform and observe Section 5.7, 5.8, 5.9, 5.11, 5.12 or 5.13 hereof.

         Section 7.3. Other Covenants. If any Company shall fail or omit to
perform and observe any agreement or other provision (other than those referred
to in Section 7.1 or 7.2 hereof) contained or referred to in this Agreement or
any Related Writing that is on such Company's part to be complied with, and that
Default shall not have been fully corrected within thirty (30) days after the
giving of written notice thereof to a Borrower by Agent or any Lender that the
specified Default is to be remedied.

         Section 7.4. Representations and Warranties. If any representation,
warranty or statement made in or pursuant to this Agreement or any Related
Writing or any other material information furnished by any Company to the
Lenders or any thereof or any other holder of any Note, shall be false or
erroneous in any material respect.

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<PAGE>

         Section 7.5. Cross Default. If any Company shall default in the payment
of principal or interest due and owing upon any other obligation for borrowed
money in excess of the aggregate, for all such obligations of all such
Companies, of the Dollar Equivalent of Twenty Million Dollars ($20,000,000)
beyond any period of grace provided with respect thereto or in the performance
or observance of any other agreement, term or condition contained in any
agreement under which such obligation is created, if the effect of such default
is to allow the acceleration of the maturity of such Indebtedness or to permit
the holder thereof to cause such Indebtedness to become due prior to its stated
maturity.

         Section 7.6. ERISA Default. The occurrence of one or more ERISA Events
that (a) the Required Lenders determine could reasonably be expected to have a
Material Adverse Effect, or (b) results in a Lien on any of the assets of any
Company, in the aggregate for all such Liens for all Companies, in excess of One
Million Dollars ($1,000,000).

         Section 7.7. Change in Control. If any Change in Control shall occur.

         Section 7.8. Money Judgment. A final judgment or order for the payment
of money shall be rendered against any Company by a court of competent
jurisdiction, that remains unpaid or unstayed and undischarged for a period
(during which execution shall not be effectively stayed) of thirty (30) days
after the date on which the right to appeal has expired, provided that the
aggregate of all such judgments, for all such Companies, shall exceed the Dollar
Equivalent of Ten Million Dollars ($10,000,000) (less any amount that will be
covered by the proceeds of insurance and is not subject to dispute by the
insurance provider).

         Section 7.9. Validity of Loan Documents. (a) Any material provision, in
the reasonable opinion of Agent, of any Loan Document shall at any time for any
reason cease to be valid, binding and enforceable against any Credit Party; (b)
the validity, binding effect or enforceability of any Loan Document against any
Credit Party shall be contested by any Credit Party; (c) any Credit Party shall
deny that it has any or further liability or obligation thereunder; or (d) any
Loan Document shall be terminated, invalidated or set aside, or be declared
ineffective or inoperative or in any way cease to give or provide to Agent and
the Lenders the benefits purported to be created thereby. In addition to any
other material Loan Documents, this Agreement, each Note and each Guaranty of
Payment shall be deemed to be "material".

         Section 7.10. Note Purchase Agreement. If (a) any event of default (as
each term or similar term is defined in any Note Purchase Agreement) shall occur
under any Note Purchase Agreement or any agreement executed in connection
therewith, or (b) the Indebtedness incurred in connection with any Note Purchase
Agreement shall be accelerated for any reason.

         Section 7.11. Solvency. If any Borrower or other Company (other than a
Foreign Subsidiary with aggregate assets of less than Two Million Dollars
($2,000,000) or a Dormant Subsidiary) shall (i) except as permitted in Section
5.12 hereof, discontinue business, (ii) generally not pay its debts as such
debts become due, (iii) make a general assignment for the benefit of creditors,
(iv) apply for or consent to the appointment of an interim receiver, a receiver
and manager, an administrator, sequestrator, monitor, a custodian, a trustee, an
interim trustee or liquidator of all or a substantial part of its assets or of
such Company (or Companies), (v) be

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adjudicated a debtor or insolvent or have entered against it an order for relief
under Title 11 of the United States Code, or under any other bankruptcy
insolvency, liquidation, winding-up, corporate or similar statute or law,
foreign, federal, state or provincial, in any applicable jurisdiction, now or
hereafter existing, as any of the foregoing may be amended from time to time,
(vi) file a voluntary petition in bankruptcy, or file a proposal or notice of
intention to file a proposal or have an involuntary proceeding filed against it
and the same shall continue undismissed for a period of thirty (30) days from
commencement of such proceeding or case, or file a petition or an answer or an
application or a proposal seeking reorganization or an arrangement with
creditors or seeking to take advantage of any other law (whether federal,
provincial or state, or, if applicable, other jurisdiction) relating to relief
of debtors, or admit (by answer, by default or otherwise) the material
allegations of a petition filed against it in any bankruptcy, reorganization,
insolvency or other proceeding (whether federal, provincial or state, or, if
applicable, other jurisdiction) relating to relief of debtors, (vii) suffer or
permit to continue unstayed and in effect for thirty (30) consecutive days any
judgment, decree or order entered by a court of competent jurisdiction, that
approves a petition or an application or a proposal seeking its reorganization
or appoints an interim receiver, a receiver and manager, an administrator,
custodian, trustee, interim trustee or liquidator of all or a substantial part
of its assets, or of such Company (or Companies), or (viii) take, or omit to
take, any action in order thereby to effect any of the foregoing.

                       ARTICLE VIII. REMEDIES UPON DEFAULT

         Notwithstanding any contrary provision or inference herein or
elsewhere:

         Section 8.1. Optional Defaults. If any Event of Default referred to in
Section 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9 or 7.10 hereof shall occur,
Agent may, with the consent of the Required Lenders, and shall, at the request
of the Required Lenders, give written notice to Borrowers, to:

         (a)      terminate the Commitment, if not previously terminated, and,
immediately upon such election, the obligations of the Lenders, and each
thereof, to make any further Loan and the obligation of the Fronting Lender to
issue any Letter of Credit immediately shall be terminated, and/or

         (b)      accelerate the maturity of all of the Debt (if the Debt is not
already due and payable), whereupon all of the Debt shall become and thereafter
be immediately due and payable in full without any presentment or demand and
without any further or other notice of any kind, all of which are hereby waived
by each Borrower.

         Section 8.2. Automatic Defaults. If any Event of Default referred to in
Section 7.11 hereof shall occur:

         (a)      all of the Commitment shall automatically and immediately
terminate, if not previously terminated, and no Lender thereafter shall be under
any obligation to grant any further Loan, nor shall the Fronting Lender be
obligated to issue any Letter of Credit, and

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         (b)      the principal of and interest then outstanding on all of the
Loans, and all of the other Debt, shall thereupon become and thereafter be
immediately due and payable in full (if the Debt is not already due and
payable), all without any presentment, demand or notice of any kind, which are
hereby waived by each Borrower.

         Section 8.3. Letters of Credit. If the maturity of the Debt shall be
accelerated pursuant to Section 8.1 or 8.2 hereof, US Borrower shall immediately
deposit with Agent, as security for the obligations of US Borrower and any other
Credit Party to reimburse Agent and the Lenders for any then outstanding Letters
of Credit, cash equal to the sum of the aggregate undrawn balance of any then
outstanding Letters of Credit. Agent and the Lenders are hereby authorized, at
their option, to deduct any and all such amounts from any deposit balances then
owing by any Lender (or any affiliate of such Lender) to or for the credit or
account of any Company, as security for the obligations of US Borrower and any
other Credit Party to reimburse Agent and the Lenders for any then outstanding
Letters of Credit.

         Section 8.4. Offsets. If there shall occur or exist any Event of
Default referred to in Section 7.11 hereof or if the maturity of the Debt is
accelerated pursuant to Section 8.1 or 8.2 hereof, each Lender shall have the
right at any time to set off against, and to appropriate and apply toward the
payment of, any and all Debt then owing by a Borrower to such Lender (including,
without limitation, any participation purchased or to be purchased pursuant to
Section 2.2(b), 2.2(c) or 8.5 hereof), whether or not the same shall then have
matured, any and all deposit (general or special) balances and all other
indebtedness then held or owing by such Lender (including, without limitation,
by branches and agencies or any affiliate of such Lender, wherever located) to
or for the credit or account of such Borrower, all without notice to or demand
upon any Borrower or any other Person, all such notices and demands being hereby
expressly waived by each Borrower.

         Section 8.5. Equalization Provision.

         (a)      Equalization Prior to an Equalization Event. Each US Lender
agrees with the other US Lenders that if it, at any time, shall obtain any
Advantage over the other US Lenders, or any thereof, in respect of the
Applicable Debt (except as to Swing Loans and amounts under Article III hereof),
such US Lender shall purchase from the other US Lenders, for cash and at par,
such additional participation in the Applicable Debt as shall be necessary to
nullify the Advantage. Each Canadian Lender agrees with the other Canadian
Lenders that if it, at any time, shall obtain any Advantage over the other
Canadian Lenders, or any thereof, in respect of the Applicable Debt (except as
to amounts under Article III hereof), such Canadian Lender shall purchase from
the other Canadian Lenders, for cash and at par, such additional participation
in the Applicable Debt as shall be necessary to nullify the Advantage.

         (b)      Equalization After an Equalization Event. After the occurrence
of an Equalization Event, each Lender agrees with the other Lenders that if such
Lender, at any time, shall obtain any Advantage over the other Lenders or any
thereof determined in respect of the Debt (including Swing Loans but excluding
amounts under Article III hereof) then outstanding (as calculated, with respect
to any amounts outstanding in Canadian Dollars, using the Dollar

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Equivalent in effect on the Equalization Date, as hereinafter defined), such
Lender shall purchase from the other Lenders, for cash and at par, such
additional participation in the Debt as shall be necessary to nullify the
Advantage in respect of the Debt. For purposes of determining whether or not,
after the occurrence of an Equalization Event, an Advantage in respect of the
Debt shall exist, Agent shall, as of the date that the Equalization Event occurs
(the "Equalization Date"), determine an equalization percentage (the
"Equalization Percentage") for each Lender by dividing the aggregate amount of
such Lender's US Revolving Exposure and Canadian Revolving Exposure by the
Revolving Credit Exposure.

         (c)      Recovery of Advantage. If any such Advantage resulting in the
purchase of an additional participation as aforesaid shall be recovered in whole
or in part from the Lender receiving the Advantage, each such purchase shall be
rescinded, and the purchase price restored (but without interest unless such
Lender receiving the Advantage is required to pay interest on the Advantage to
the Person recovering the Advantage from such Lender) ratably to the extent of
the recovery.

         (d)      Application and Sharing of Set-Off Amounts. Each Lender
further agrees with the other Lenders that if it at any time shall receive any
payment for or on behalf of a Credit Party on any Indebtedness owing by such
Credit Party to such Lender by reason of offset of any deposit or other
Indebtedness, it shall apply such payment first to any and all Indebtedness
owing by such Credit Party to such Lender pursuant to this Agreement (including,
without limitation, any participation purchased or to be purchased pursuant to
this Section or any other Section of this Agreement). Each Credit Party agrees
that any Lender so purchasing a participation from the other Lenders, or any
thereof, pursuant to this Section may exercise all of its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were a direct creditor of such Credit Party in the amount of such
participation.

         Section 8.6. Other Remedies. The remedies in this Article VIII are in
addition to, not in limitation of, any other right, power, privilege, or remedy,
either in law, in equity, or otherwise, to which the Lenders may be entitled.
Agent shall exercise the rights under this Article VIII and all other collection
efforts on behalf of the Lenders and no Lender shall act independently with
respect thereto, except as otherwise specifically set forth in this Agreement.

                              ARTICLE IX. THE AGENT

         The Lenders authorize KeyBank National Association and KeyBank National
Association hereby agrees to act as agent for the Lenders in respect of this
Agreement upon the terms and conditions set forth elsewhere in this Agreement,
and upon the following terms and conditions:

         Section 9.1. Appointment and Authorization. Each Lender hereby
irrevocably appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers hereunder as are delegated to Agent by the
terms hereof, together with such powers as are reasonably incidental thereto.
Neither Agent nor any of its affiliates, directors, officers, attorneys or
employees shall (a) be liable for any action taken or omitted to be taken by it
or

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them hereunder or in connection herewith, except for its or their own gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction), or be responsible in any manner to any of the Lenders for the
effectiveness, enforceability, genuineness, validity or due execution of this
Agreement or any other Loan Documents, (b) be under any obligation to any Lender
to ascertain or to inquire as to the performance or observance or any of the
terms, covenants or conditions hereof or thereof on the part of Borrowers, or
the financial condition of Borrowers, or (c) be liable to any of the Companies
for consequential damages resulting from any breach of contract, tort or other
wrong in connection with the negotiation, documentation, administration or
collection of the Loans or Letters of Credit or any of the Loan Documents.

         Section 9.2. Note Holders. Agent may treat the payee of any Note as the
holder thereof until written notice of transfer shall have been filed with it,
signed by such payee and in form satisfactory to Agent.

         Section 9.3. Consultation With Counsel. Agent may consult with legal
counsel selected by it and shall not be liable for any action taken or suffered
in good faith by it in accordance with the opinion of such counsel.

         Section 9.4. Documents. Agent shall not be under any duty to examine
into or pass upon the validity, effectiveness, genuineness or value of any Loan
Document or any other Related Writing furnished pursuant hereto or in connection
herewith or the value of any collateral obtained hereunder, and Agent shall be
entitled to assume that the same are valid, effective and genuine and what they
purport to be.

         Section 9.5. Agent and Affiliates. With respect to the Loans, Agent
shall have the same rights and powers hereunder as any other Lender and may
exercise the same as though it were not Agent, and Agent and its affiliates may
accept deposits from, lend money to and generally engage in any kind of business
with any Company or any affiliate thereof.

         Section 9.6. Knowledge of Default. It is expressly understood and
agreed that Agent shall be entitled to assume that no Default or Event of
Default has occurred, unless Agent has been notified by a Lender in writing that
such Lender believes that a Default or Event of Default has occurred and is
continuing and specifying the nature thereof or has been notified by a Borrower
pursuant to Section 5.14 hereof.

         Section 9.7. Action by Agent. Subject to the other terms and conditions
hereof, so long as Agent shall be entitled, pursuant to Section 9.6 hereof, to
assume that no Default or Event of Default shall have occurred and be
continuing, Agent shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights that may be vested in it by,
or with respect to taking or refraining from taking any action or actions that
it may be able to take under or in respect of, this Agreement. Agent shall incur
no liability under or in respect of this Agreement by acting upon any notice,
certificate, warranty or other paper or instrument believed by it to be genuine
or authentic or to be signed by the proper party or parties, or with respect to
anything that it may do or refrain from doing in the reasonable exercise of its
judgment, or that may seem to it to be necessary or desirable in the premises.

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         Section 9.8. Notice of Default. In the event that Agent shall have
acquired actual knowledge of any Default or Event of Default, Agent shall
promptly notify the Lenders and shall take such action and assert such rights
under this Agreement as the Required Lenders shall direct and Agent shall inform
the other Lenders in writing of the action taken. Agent may take such action and
assert such rights as it deems to be advisable, in its discretion, for the
protection of the interests of the holders of the Debt.

         Section 9.9. Indemnification of Agent. The Lenders agree to indemnify
Agent (to the extent not reimbursed by Borrowers) ratably, according to their
respective Applicable Commitment Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by or asserted against Agent in its capacity as agent in
any way relating to or arising out of this Agreement or any Loan Document or any
action taken or omitted by Agent with respect to this Agreement or any Loan
Document, provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including attorneys' fees) or disbursements resulting from
Agent's gross negligence or willful misconduct (as determined by a court of
competent jurisdiction), or from any action taken or omitted by Agent in any
capacity other than as agent under this Agreement.

         Section 9.10. Successor Agent. Agent may resign as agent hereunder by
giving not fewer than thirty (30) days prior written notice to Borrowers and the
Lenders. If Agent shall resign under this Agreement, then either (a) the
Required Lenders shall appoint from among the Lenders a successor agent for the
Lenders (with the consent of US Borrower so long as an Event of Default has not
occurred and which consent shall not be unreasonably withheld), or (b) if a
successor agent shall not be so appointed and approved within the thirty (30)
day period following Agent's notice to the Lenders of its resignation, then
Agent shall appoint a successor agent that shall serve as agent until such time
as the Required Lenders appoint a successor agent. Upon its appointment, such
successor agent shall succeed to the rights, powers and duties as agent, and the
term "Agent" shall mean such successor effective upon its appointment, and the
former agent's rights, powers and duties as agent shall be terminated without
any other or further act or deed on the part of such former agent or any of the
parties to this Agreement.

         Section 9.11. Other Agents. As used in this Agreement, the term "Agent"
shall only include Agent. The Syndication Agent shall not have any rights,
obligations or responsibilities hereunder in such capacity.

         Section 9.12. Designated Lending Office. The Lender that acts as the
Designated Lending Office of Agent from time to time shall be entitled to the
same indemnifications with respect to Borrowers and the other Lenders that Agent
would have were it performing the administrative duties that the Designated
Lending Office performs from time to time.

                            ARTICLE X. MISCELLANEOUS

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         Section 10.1. Lenders' Independent Investigation. Each Lender, by its
signature to this Agreement, acknowledges and agrees that Agent has made no
representation or warranty, express or implied, with respect to the
creditworthiness, financial condition, or any other condition of any Company or
with respect to the statements contained in any information memorandum furnished
in connection herewith or in any other oral or written communication between
Agent and such Lender. Each Lender represents that it has made and shall
continue to make its own independent investigation of the creditworthiness,
financial condition and affairs of the Companies in connection with the
extension of credit hereunder, and agrees that Agent has no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto (other than such
notices as may be expressly required to be given by Agent to the Lenders
hereunder), whether coming into its possession before the first Credit Event
hereunder or at any time or times thereafter.

         Section 10.2. No Waiver; Cumulative Remedies. No omission or course of
dealing on the part of Agent, any Lender or the holder of any Note in exercising
any right, power or remedy hereunder or under any of the Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder or under any of the
Loan Documents. The remedies herein provided are cumulative and in addition to
any other rights, powers or privileges held by operation of law, by contract or
otherwise.

         Section 10.3. Amendments, Consents. No amendment, modification,
termination, or waiver of any provision of any Loan Document nor consent to any
variance therefrom, shall be effective unless the same shall be in writing and
signed by the Required Lenders and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. Anything herein to the contrary notwithstanding, unanimous consent of the
Lenders shall be required with respect to (a) any increase in the Commitment
hereunder (except as specified in Section 2.10(b) hereof), (b) the extension of
maturity of the Debt, the payment date of interest or principal thereunder, or
the payment of facility or other fees or amounts payable hereunder, (c) any
reduction in the rate of interest on the Debt, or in any amount of principal or
interest due on the Debt, or the payment of facility or other fees hereunder or
any change in the manner of pro rata application of any payments made by
Borrowers to the Lenders hereunder, (d) any change in any percentage voting
requirement, voting rights, or the Required Lenders definition in this
Agreement, (e) the release of any Borrower or Guarantor of Payment, or (f) any
amendment to this Section 10.3 or Section 8.5 hereof. Notice of amendments or
consents ratified by the Lenders hereunder shall be forwarded by Agent to all of
the Lenders. Each Lender or other holder of a Note shall be bound by any
amendment, waiver or consent obtained as authorized by this Section, regardless
of its failure to agree thereto.

         Section 10.4. Notices. All notices, requests, demands and other
communications provided for hereunder shall be in writing and, if to a Borrower,
mailed or delivered to it, addressed to it at the address specified on the
signature pages of this Agreement, if to a Lender, mailed or delivered to it,
addressed to the address of such Lender specified on the signature pages of this
Agreement, or, as to each party, at such other address as shall be designated by
such party in a written notice to each of the other parties. All notices,
statements, requests, demands and other communications provided for hereunder
shall be given by overnight delivery or first

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class mail with postage prepaid by registered or certified mail, addressed as
aforesaid, or sent by facsimile or e-mail (with telephonic confirmation of
receipt of such facsimile or e-mail, except that telephonic confirmation is not
required when notice is being provided under Section 5.3(d) hereof); provided
that all notices hereunder shall not be effective until received.

         Section 10.5. Costs, Expenses and Taxes. US Borrower and, to the extent
relating to the Canadian Commitment, Canadian Borrowers agree to pay, on demand,
all reasonable and properly documented costs and expenses of Agent, including
but not limited to, (a) syndication, administration, travel and out-of-pocket
expenses, including but not limited to attorneys' fees and expenses, of Agent in
connection with the preparation, negotiation and closing of the Loan Documents
and the administration of the Loan Documents, the collection and disbursement of
all funds hereunder and the other instruments and documents to be delivered
hereunder, (b) extraordinary expenses of Agent in connection with the
administration of the Loan Documents and the other instruments and documents to
be delivered hereunder, and (c) the reasonable fees and out-of-pocket expenses
of special counsel for Agent, with respect to the foregoing, and of local
counsel, if any, who may be retained by said special counsel with respect
thereto. US Borrower and, to the extent relating to the Canadian Commitment,
Canadian Borrowers also agree to pay, on demand, all properly documented costs
and expenses of Agent and the Lenders, including reasonable attorneys' fees, in
connection with the restructuring or enforcement of the Debt, this Agreement or
any Related Writing. In addition, US Borrower and, to the extent relating to the
Canadian Commitment, Canadian Borrowers shall pay any and all properly
documented stamp and other taxes and fees payable or determined to be payable in
connection with the execution and delivery of the Loan Documents, and the other
instruments and documents to be delivered hereunder, and agree to hold Agent and
each Lender harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes or fees other
than those liabilities resulting from the gross negligence or willful misconduct
(as determined by a court of competent jurisdiction) of Agent, or, with respect
to amounts owing to a Lender, such Lender, in each case.

         Section 10.6. Indemnification.

         (a)      US Borrower. US Borrower agrees to defend, indemnify and hold
harmless Agent and the Lenders (and their respective affiliates, officers,
directors, attorneys, agents and employees) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including attorneys' fees) or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by or asserted against Agent
or any Lender in connection with any investigative, administrative or judicial
proceeding (whether or not such Lender or Agent shall be designated a party
thereto) or any other claim by any Person relating to or arising out of any Loan
Document or any actual or proposed use of proceeds of the Loans or any of the
Debt, or any activities of any Company or its Affiliates.

         (b)      Canadian Borrowers. Each Canadian Borrower agrees to defend,
indemnify and hold harmless Agent and the Canadian Lenders (and their respective
affiliates, officers, directors, attorneys, agents and employees) from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including attorneys' fees) or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted

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<PAGE>

against Agent or any Canadian Lender in connection with any investigative,
administrative or judicial proceeding (whether or not such Canadian Lender or
Agent shall be designated a party thereto) or any other claim by any Person
relating to or arising out of any Loan Document executed by a Canadian Borrower
or any actual or proposed use of proceeds of the CAD Revolving Loans or any of
the Applicable Debt, or any activities of any Company or its Affiliates.

         (c)      Generally. No Lender nor Agent shall have the right to be
indemnified under this Section for its own gross negligence or willful
misconduct, as determined by a court of competent jurisdiction. All obligations
provided for in this Section 10.6 shall survive any termination of this
Agreement.

         Section 10.7. Obligations Several; No Fiduciary Obligations. The
obligations of the Lenders hereunder are several and not joint. Nothing
contained in this Agreement and no action taken by Agent or the Lenders pursuant
hereto shall be deemed to constitute Agent or the Lenders a partnership,
association, joint venture or other entity. No default by any Lender hereunder
shall excuse the other Lenders from any obligation under this Agreement; but no
Lender shall have or acquire any additional obligation of any kind by reason of
such default. The relationship between Borrowers and the Lenders with respect to
the Loan Documents and the Related Writings is and shall be solely that of
debtors and creditors, respectively, and neither Agent nor any Lender shall have
any fiduciary obligation toward any Credit Party with respect to any such
documents or the transactions contemplated thereby.

         Section 10.8. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, and by facsimile signature, each of which counterparts when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.

         Section 10.9. Binding Effect; Borrowers' Assignment. This Agreement
shall become effective when it shall have been executed by each Borrower, Agent
and each Lender and thereafter shall be binding upon and inure to the benefit of
each Borrower, Agent and each of the Lenders and their respective successors and
assigns, except that no Borrower shall have the right to assign its rights
hereunder or any interest herein without the prior written consent of Agent and
all of the Lenders.

         Section 10.10. Lender Assignments.

         (a)      Assignments of Commitments. Each Lender shall have the right
at any time or times to assign to an Eligible Transferee (other than to a Lender
that shall not be in compliance with this Agreement), without recourse, all or a
percentage of all of the following: (i) such Lender's Commitment, (ii) all Loans
made by that Lender, (iii) such Lender's Notes, and (iv) such Lender's interest
in any Letter of Credit or Swing Loan, and any participation purchased pursuant
to Section 2.2(b), 2.2(c) or 8.5 hereof.

         (b)      Prior Consent. No assignment may be consummated pursuant to
this Section 10.10 without the prior written consent of US Borrower and Agent
(other than an assignment by

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any Lender to another Lender or to any affiliate of such Lender which affiliate
is an Eligible Transferee and either wholly-owned by a Lender or is wholly-owned
by a Person that wholly owns, either directly or indirectly, such Lender), which
consent of US Borrower and Agent shall not be unreasonably withheld (a failure
of US Borrower to approve a distressed debt fund or vulture fund shall not be
deemed to be unreasonable so long as the Leverage Ratio for the most recently
completed four fiscal quarters of US Borrower shall be less than 3.00 to 1.00);
provided, however, that US Borrower's consent shall not be required if, at the
time of the proposed assignment, any Default or Event of Default shall then
exist. Anything herein to the contrary notwithstanding, any Lender may at any
time make a collateral assignment of all or any portion of its rights under the
Loan Documents to a Federal Reserve Bank, and no such assignment shall release
such assigning Lender from its obligations hereunder.

         (c)      Minimum Amount. Each such assignment shall be in a minimum
amount of the lesser of Five Million Dollars ($5,000,000) of the assignor's
Commitment and interest herein, or the entire amount of the assignor's
Commitment and interest herein.

         (d)      Assignment Fee. Unless the assignment shall be to an affiliate
of the assignor or the assignment shall be due to merger of the assignor or for
regulatory purposes, either the assignor or the assignee shall remit to Agent,
for its own account, an administrative fee of Three Thousand Five Hundred
Dollars ($3,500).

         (e)      Assignment Agreement. Unless the assignment shall be due to
merger of the assignor or a collateral assignment for regulatory purposes, the
assignor shall (i) cause the assignee to execute and deliver to US Borrower and
Agent an Assignment Agreement, and (ii) execute and deliver, or cause the
assignee to execute and deliver, as the case may be, to Agent such additional
amendments, assurances and other writings as Agent may reasonably require.

         (f)      Non-U.S. Assignee. If the assignment is to be made to an
assignee that is organized under the laws of any jurisdiction other than the
United States or any state thereof, the assignor Lender shall cause such
assignee, at least five Business Days prior to the effective date of such
assignment, (i) to represent to the assignor Lender (for the benefit of the
assignor Lender, Agent and Borrowers) that under applicable law and treaties no
taxes will be required to be withheld by Agent, Borrowers or the assignor with
respect to any payments to be made to such assignee in respect of the Loans
hereunder, (ii) to furnish to the assignor Lender (and, in the case of any
assignee registered in the Register (as defined below), Agent and US Borrower)
either (A) U.S. Internal Revenue Service Form W-8ECI or U.S. Internal Revenue
Service Form W-8BEN or (B) United States Internal Revenue Service Form W-8 or
W-9, as applicable (wherein such assignee claims entitlement to complete
exemption from U.S. federal withholding tax on all interest payments hereunder),
and (iii) to agree (for the benefit of the assignor, Agent and Borrowers) to
provide to the assignor Lender (and, in the case of any assignee registered in
the Register, to Agent and US Borrower) a new Form W-8ECI or Form W-8BEN or Form
W-8 or W-9, as applicable, upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S. laws
and regulations and amendments duly executed and completed by such assignee, and
to comply from time to time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption. Notwithstanding any other provisions
hereof, a Canadian Lender may not make any assignment

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<PAGE>

to an Eligible Assignee that is a non-resident of Canada for purposes of the
Income Tax Act of Canada (with respect to which payments to such non-resident of
principal, interest, fees and other amounts by the Canadian Borrowers would be
subject to Canadian withholding tax) at a rate higher than that then applicable
to the assignor.

         (g)      Deliveries by Borrowers. Upon satisfaction of all applicable
requirements specified in subsections (a) through (f) above, Borrowers shall
execute and deliver (i) to Agent, the assignor and the assignee, any consent or
release (of all or a portion of the obligations of the assignor) required to be
delivered by Borrowers in connection with the Assignment Agreement, and (ii) to
the assignee and the assignor, if applicable, an appropriate Note or Notes.
After delivery of the new Note or Notes, the assignor's Note or Notes being
replaced shall be returned to US Borrower marked "replaced".

         (h)      Effect of Assignment. Upon satisfaction of all applicable
requirements set forth in subsections (a) through (g) above, and any other
condition contained in this Section 10.10, (i) the assignee shall become and
thereafter be deemed to be a "Lender" for the purposes of this Agreement, (ii)
the Assignor shall be released from its obligations hereunder to the extent that
its interest has been assigned, (iii) in the event that the assignor's entire
interest has been assigned, the assignor shall cease to be and thereafter shall
no longer be deemed to be a "Lender" and (iv) the signature pages hereto and
Schedule 1 hereto shall be automatically amended, without further action, to
reflect the result of any such assignment.

         (i)      Agent to Maintain Register. Agent shall maintain at the
address for notices referred to in Section 10.4 hereof a copy of each Assignment
Agreement delivered to it and a register (the "Register") for the recordation of
the names and addresses of the Lenders and the Commitment of, and principal
amount of the Loans owing to, each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and Borrowers,
Agent and the Lenders may treat each Person whose name is recorded in the
Register as the owner of the Loan recorded therein for all purposes of this
Agreement. The Register shall be available for inspection by Borrowers or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.

         Section 10.11. Sale of Participations. Any Lender may, in the ordinary
course of its commercial banking business and in accordance with applicable law,
at any time sell participations to one or more commercial banks or other Persons
other than a Company or an Affiliate of a Company (each a "Participant") in all
or a portion of its rights or obligations under this Agreement and the other
Loan Documents (including, without limitation, all or a portion of the
Commitment and the Loans and participations owing to it and the Note held by
it); provided that:

         (a)      any such Lender's obligations under this Agreement and the
other Loan Documents shall remain unchanged;

         (b)      such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;

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<PAGE>

         (c)      the parties hereto shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement and each of the other Loan Documents;

         (d)      such Participant shall be bound by the provisions of Section
8.5 hereof, and the Lender selling such participation shall obtain from such
Participant a written confirmation of its agreement to be so bound; and

         (e)      no Participant (unless such Participant is itself a Lender)
shall be entitled to require such Lender to take or refrain from taking action
under this Agreement or under any other Loan Document, except that such Lender
may agree with such Participant that such Lender will not, without such
Participant's consent, take action of the type described as follows:

                  (i)      increase the portion of the participation amount of
         any Participant over the amount thereof then in effect, or extend the
         Commitment Period, without the written consent of each Participant
         affected thereby; or

                  (ii)     reduce the principal amount of or extend the time for
         any payment of principal of any Loan, or reduce the rate of interest or
         extend the time for payment of interest on any Loan, or reduce the
         commitment fee, without the written consent of each Participant
         affected thereby.

Borrowers agree that any Lender that sells participations pursuant to this
Section shall still be entitled to the benefits of Article III hereof,
notwithstanding any such transfer; provided, however, that the obligations of
Borrowers shall not increase as a result of such transfer and Borrowers shall
have no obligation to any Participant.

         Section 10.12. Severability of Provisions; Captions; Attachments. Any
provision of this Agreement that shall be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction. The several captions to Sections and subsections
herein are inserted for convenience only and shall be ignored in interpreting
the provisions of this Agreement. Each schedule or exhibit attached to this
Agreement shall be incorporated herein and shall be deemed to be a part hereof.

         Section 10.13. Investment Purpose. Each of the Lenders represents and
warrants to Borrowers that it is entering into this Agreement with the present
intention of acquiring any Note issued pursuant hereto for investment purposes
only and not for the purpose of distribution or resale, it being understood,
however, that each Lender shall at all times retain full control over the
disposition of its assets.

         Section 10.14. Confidentiality. Agent and each Lender shall hold all
Confidential Information in accordance with the customary procedures of Agent or
such Lender for handling confidential information of this nature, and in
accordance with safe and sound banking practices. Notwithstanding the foregoing,
Agent or any Lender may in any event make disclosures of, and

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<PAGE>

furnish copies of Confidential Information (a) to another agent under this
Agreement or another Lender; (b) when reasonably required by any bona fide
transferee or participant in connection with the contemplated transfer of any
Loans or Commitment or participation therein (provided that each such
prospective transferee or participant shall execute an agreement for the benefit
of Borrowers with such prospective transferor Lender or participant containing
provisions substantially identical to those contained in this Section 10.14);
(c) to the parent corporation or other affiliates of Agent or such Lender, and
to their respective auditors and attorneys; and (d) as required or requested by
any governmental agency or representative thereof, or pursuant to legal process,
provided, that, unless specifically prohibited by applicable law or court order,
Agent or such Lender, as applicable, shall notify the chief financial officer of
US Borrower of any request by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of Agent or such Lender by such governmental agency), and of any other
request pursuant to legal process, for disclosure of any such non-public
information prior to disclosure of such Confidential Information. In no event
shall Agent or any Lender be obligated or required to return any materials
furnished by or on behalf of any Company. Each Borrower hereby agrees that the
failure of Agent or any Lender to comply with the provisions of this Section
10.14 shall not relieve any Borrower of any of the obligations to Agent and the
Lenders under this Agreement and the other Loan Documents.

         Section 10.15. Entire Agreement. This Agreement, any Note and any other
Loan Document or other agreement, document or instrument attached hereto or
executed on or as of the Closing Date integrate all of the terms and conditions
mentioned herein or incidental hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject matter hereof.

         Section 10.16. Legal Representation of Parties. The Loan Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement or any
other Loan Document to be construed or interpreted against any party shall not
apply to any construction or interpretation hereof or thereof.

         Section 10.17. Currency.

         (a)      Currency Equivalent Generally. For the purposes of making
valuations or computations under this Agreement (but not for the purposes of the
preparation of any financial statements delivered pursuant hereto), unless
expressly provided otherwise, where a reference is made to a dollar amount the
amount is to be considered as the amount in Dollars and, therefor, each other
currency shall be converted into the Dollar Equivalent.

         (b)      Judgment Currency. If Agent, on behalf of the Lenders, obtains
a judgment or judgments against any Credit Party in Canadian Dollars, the
obligations of such Credit Party in respect of any sum adjudged to be due to
Agent or the Lenders hereunder or under the Notes (the "Judgment Amount") shall
be discharged only to the extent that, on the Business Day following receipt by
Agent of the Judgment Amount in Canadian Dollars, Agent, in accordance with
normal banking procedures, purchases Dollars with the Judgment Amount in
Canadian Dollars. If the amount of Dollars so purchased is less than the amount
of Dollars that could have been

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<PAGE>

purchased with the Judgment Amount on the date or dates the Judgment Amount
(excluding the portion of the Judgment Amount that has accrued as a result of
the failure of such Credit Party to pay the sum originally due hereunder or
under the Notes when it was originally due and owing to Agent or the Lenders
hereunder or under the Notes) was originally due and owing to Agent or the
Lenders hereunder or under the Notes (the "Original Due Date") (the "Loss"),
such Credit Party agrees as a separate obligation and notwithstanding any such
judgment, to indemnify Agent or such Lender, as the case may be, against the
Loss, and if the amount of Dollars so purchased exceeds the amount of Dollars
that could have been purchased with the Judgment Amount on the Original Due
Date, Agent or such Lender agrees to remit such excess to such Credit Party.

         Section 10.18. Governing Law; Submission to Jurisdiction. This
Agreement, each of the Notes and any Related Writing shall be governed by and
construed in accordance with the laws of the State of Ohio and the respective
rights and obligations of Borrowers, Agent, and the Lenders shall be governed by
Ohio law, without regard to principles of conflict of laws. Each Borrower hereby
irrevocably submits to the non-exclusive jurisdiction of any Ohio state or
federal court sitting in Cleveland, Ohio, over any action or proceeding arising
out of or relating to this Agreement, the Debt or any Related Writing, and each
Borrower hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such Ohio state or federal court. Each
Borrower, on behalf of itself and its Subsidiaries, hereby irrevocably waives,
to the fullest extent permitted by law, any objection it may now or hereafter
have to the laying of venue in any action or proceeding in any such court as
well as any right it may now or hereafter have to remove such action or
proceeding, once commenced, to another court on the grounds of FORUM NON
CONVENIENS or otherwise. Each Borrower agrees that a final, nonappealable
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.

                  [Remainder of page left intentionally blank]

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<PAGE>

         Section 10.19. JURY TRIAL WAIVER. TO THE EXTENT PERMITTED BY LAW, EACH
BORROWER, AGENT AND EACH LENDER WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG
BORROWERS, AGENT AND THE LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED THERETO.

         IN WITNESS WHEREOF, the parties have executed and delivered this Credit
Agreement in Cleveland, Ohio as of the date first set forth above.

Address: One Applied Plaza                  APPLIED INDUSTRIAL TECHNOLOGIES,
         Cleveland, Ohio  44115               INC.
         Attn: Chief Financial Officer
                                            By: /s/ Mark O. Eisele
                                                ----------------------------
                                            Name:  Mark O. Eisele
                                            Title: Vice President and Controller

                                            By: /s/ John R. Whitten
                                                --------------------------------
                                            Name: John R. Whitten
                                            Title: Vice President-Chief
                                            Financial Officer & Treasurer

Address: One Applied Plaza                  AIT LIMITED PARTNERSHIP
         Cleveland, Ohio  44115             by: Applied Nova Scotia Company, its
         Attn: Chief Financial Officer            general partner

                                            By: /s/ Mark O. Eisele
                                                --------------------------------
                                            Name: Mark O. Eisele
                                            Title: Vice President and Controller

                                            By: /s/ John R. Whitten
                                                --------------------------------
                                            Name: John R. Whitten
                                            Title: Vice President-Chief
                                            Financial Officer & Treasurer

                                 Signature Page
                         1 of 3 of the Credit Agreement

<PAGE>

Address: One Applied Plaza                 APPLIED INDUSTRIAL TECHNOLOGIES,
         Cleveland, Ohio  44115              LTD.
         Attn: Chief Financial Officer
                                           By: /s/ Mark O. Eisele
                                               ---------------------------------
                                           Name: Mark O. Eisele
                                           Title: Vice President

                                           By: /s/ John R. Whitten
                                               ---------------------------------
                                           Name: John R. Whitten
                                           Title: Vice President-Chief Financial
                                           Officer & Treasurer

Address: One Applied Plaza                 APPLIED NOVA SCOTIA COMPANY
         Cleveland, Ohio  44115
         Attn: Chief Financial Officer
                                           By: /s/ Mark O. Eisele
                                               ---------------------------------
                                           Name: Mark O. Eisele
                                           Title: Vice President and Controller

                                           By: /s/ John R. Whitten
                                               ---------------------------------
                                           Name: John R. Whitten
                                           Title: Vice President-Chief Financial
                                           Officer & Treasurer

Address: One Applied Plaza                 DYNAVEST NOVA SCOTIA COMPANY
         Cleveland, Ohio  44115
         Attn: Chief Financial Officer     By: /s/ Mark O. Eisele
                                               ---------------------------------
                                           Name: Mark O. Eisele
                                           Title: Vice President and Controller

                                           By: /s/ John R. Whitten
                                               ---------------------------------
                                           Name: John R. Whitten
                                           Title: Vice President-Chief Financial
                                           Officer & Treasurer

Address: 127 Public Square                 KEYBANK NATIONAL ASSOCIATION
         Cleveland, Ohio  44114-1306         as Agent and as a Lender
         Attention: Marianne T. Meil

                                           By: /s/ Marianne T. Meil
                                               ---------------------------------
                                           Name: Marianne T. Meil
                                           Title: Vice President

                                 Signature Page
                         2 of 3 of the Credit Agreement

<PAGE>

Address: 1350 Euclid Avenue, 11th Floor        U.S. BANK NATIONAL ASSOCIATION,
         Cleveland, Ohio  44115                  as Syndication Agent and as a
         Attention: Christine Gencer             Lender

                                              By: /s/ Christine C. Gencer
                                                  ------------------------------
                                              Name: Christine C. Gencer
                                              Title: Vice President

Address: 1404 East Ninth Street               FIFTH THIRD BANK
         Cleveland, Ohio  44114
         Attention: James P. Byrnes           By: /s/ James P. Byrnes
                                                  ------------------------------
                                              Name: James P. Byrnes
                                              Title: Vice President

Address: 1375 East Ninth Street, Suite 2430   PNC BANK, NATIONAL ASSOCIATION
         Cleveland, Ohio  44114
         Attention: Joseph Moran              By: /s/ Peter A. Yanief
                                                  ------------------------------
                                              Name: Peter A. Yanief
                                              Title: Assistant Vice President

Address: Bank One Center                      BANK ONE, NATIONAL ASSOCIATION,
         131 South Dearborn, 6th Floor          CANADA BRANCH
         Chicago, Illinois  60603
         Attention: Mike Kelly                By: /s/ Mike Kelly
                                                  ------------------------------
                                              Name: Mike Kelly
                                              Title: Associate

Address: 1 First Canadian Place, 4th Floor    BANK OF MONTREAL
         P.O. Box 150
         Toronto, Ontario  M5X 1H3            By: /s/ Ben Ciallella
         Attention: Ben Ciallella                 ------------------------------
                                              Name: Ben Ciallella
                                              Title: Vice President

                                 Signature Page
                         3 of 3 of the Credit Agreement