<PAGE>

                               SEVERANCE AGREEMENT

         Agreement made as of the 1st day of November, 2000, between SunSource
Technology Services Inc., a Delaware corporation ("Company"), SunSource, Inc., a
Delaware corporation ("SunSource"), and Justin Jacobi ("Employee").

         WHEREAS, Employee has been retained as the President and Chief
Operating Officer of the Company; and

         WHEREAS, the Company has determined that appropriate steps should be
taken to and encourage the attention and dedication of Employee to his assigned
duties without distraction; and

         WHEREAS, in consideration of Employee's continued employment with the
Company, the Company agrees that Employee shall receive the compensation set
forth in this Agreement against the adverse financial and career impact on
Employee in the event Employee's employment with the Company is terminated under
specified circumstances;

         WHEREAS, SunSource agrees to serve as the guarantor of the obligations
of the Company hereunder;

         NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:

         1. Definitions. For all purposes of this Agreement, the following terms
shall have the meanings specified in this Section unless the context clearly
otherwise requires:

         (a) "Cause" shall mean a finding by the Company that Employee has: (i)
materially failed to perform assigned duties and does not remedy such material
breach within 30 days after receiving written notice specifying the details
thereof; (ii) been engaged in fraud, embezzlement, theft, commission of a felony
or proven dishonesty in the course of his employment or service or deliberate
injury to the Company; or (iii) disclosed trade secrets or confidential
information of the Company to persons not entitled to receive such information.

         (b) "Change of Control" means the occurrence of any one of the
following events:

                  (i) the sale or other disposition of 25% or more of the voting
stock of the Company, (ii) the sale or other disposition of all or substantially
all of the assets of the Company, (iii) a liquidation or dissolution of the
Company; provided, however, that any such action with respect to the Company
shall not constitute a change of control so long as SunSource continues to own,
directly or indirectly, substantially all of the assets thereof.


<PAGE>

         (c) "Constructive Termination Without Cause" shall mean a termination
of Employee's employment by Employee following the occurrence, without his prior
written consent, of one or more of the following events: (i) a material
reduction in Employee's compensation; (ii) a significant diminution in
Employee's duties, responsibilities, titles or position, or the assignment to
Employee of duties and responsibilities inconsistent with the title or positions
held by Employee on the date of this Agreement; or (iii) the required
geographical relocation of Employee out of the greater Chicago, Illinois area. A
Constructive Termination Without Cause will not take effect unless: (A) Employee
has delivered written notice to the Company within 60 days after acquiring
knowledge of one of the events described in this Subsection 1(c) that provides a
basis for Constructive Termination Without Cause, stating which one of these
events has occurred; and (B) within 30 days after receipt of such notice the
Company has not remedied such event and provided Employee with written notice of
such remedy.

         (d) "Earned Bonus" shall mean any bonuses earned under the Company's
annual bonus program on the special "STS Turnaround Bonus Pool" program. For
purposes hereof, a bonus shall not be deemed to have been earned until the
completion of the calendar year to which it relates and accordingly, Employee
will not be deemed to have earned any bonus with respect to the calendar year in
which he incurs a Termination of Employment. Anything contained herein to the
contrary notwithstanding, Employee shall be deemed to have an Earned Bonus for
the year 2001 equal to a minimum of forty (40%) percent of his initial Base
Salary.

         (e) "Salary" shall mean Employee's base salary at the time of reference
exclusive of any and all bonuses, incentives and fringe benefits of any kind.
Employee's Salary as of the date of this Agreement is $288,000 per year.

         (f) "Termination Date" shall mean the date of Employee's termination of
employment with the Company.

         (g) "Termination of Employment" shall mean the termination of
Employee's employment by the Company.

         2. Severance Benefits upon Termination.

         (a) If upon or within one year following a Change of Control (i)
Employee suffers a Termination of Employment for any reason other than Cause,
death or disability (within the meaning of section 22(e)(3) of the Internal
Revenue Code) of Employee or (ii) Employee suffers a Constructive Termination
Without Cause, the Company shall pay Employee his Salary for a period of thirty
(30) months from the Termination Date. In addition, Employee shall be entitled
to receive his Earned Bonus, if any, at the time or times and in the same manner
that such Earned Bonus would have become payable to him if he had not had a
Termination of Employment.

         (b) If prior to a Change of Control (i) Employee suffers a Termination
of Employment for any reason other than Cause, death or disability (within the
meaning of section 22(e)(3) of the Internal Revenue Code) of Employee or (ii)
Employee suffers a Constructive Termination Without Cause, the Company shall pay
Employee his Salary for a period of twelve (12) months from the Termination
Date. In addition, Employee shall be entitled to receive his Earned Bonus, if
any, at the time or times and in the same manner that such Earned Bonus would
have become payable to him if he had not had a Termination of Employment.

                                      -2-
<PAGE>

         (c) Salary payments under this Section 2 shall be paid in accordance
with the Company's normal payroll practices, with the first payment commencing
as soon as practicable after Employee's Termination Date. In no event will
interest be credited on the unpaid balance to which Employee may become
entitled. Payment shall be made by mail to the last known address provided by
Employee to Company or, at Employee's option by direct deposit to Employee's
account at a bank or other financial instruction designated by Employee.

         (d) All payments hereunder to Employee shall cease upon the occurrence
of the earliest of:

                  (i) completion of payment to Employee of benefits described in
this Section 2;

                  (ii) the date Employee again becomes employed by the Company,
an affiliate of the Company or a successor in interest to either;

                  (iii) disclosure of confidential information described in
Section 7;

                  (iv) competition in violation of Section 8; or

                  (v) the death or disability (within the meaning of section
22(e)(3) of the Internal Revenue Code) of Employee.

         (e) All benefits under this Agreement including, but not limited to,
payments under this Section 2, and other benefits under Section 4 shall be
conditioned upon the execution and continued acceptance of a release, in a form
then used by the Company or SunSource for other similarly situated executives.
If Employee has received benefits hereunder and subsequently repudiates the
release in any manner, he shall repay (i) the amount of payments under Section 2
and (ii) the value of any other benefits received under Section 4 or otherwise
hereunder.

         3. Other Severance Benefits. The payment due under Section 2 hereof
shall be in lieu of any severance or similar payments or benefits accrued for
Employee, or to which Employee otherwise becomes entitled, through the
Termination Date under any other severance or similar plan, policy or program of
the Company. Anything contained herein to the contrary notwithstanding, if
Employee becomes entitled to any severance or similar payments or benefits under
any such other plan, policy or program, any amounts otherwise due and payable
hereunder shall be offset by the amount of such other payments or benefits.

                                      -3-
<PAGE>

         4. Other Benefits.

         (a) Except as provided in Subsection (b) below, nothing in this
Agreement shall prevent or limit Employee's continuing or future participation
in or rights under any benefit, bonus, incentive or other plan or program
provided by the Company, and for which Employee may qualify, from the date
hereof through the Termination Date.

         (b) During the period in which Employee is entitled to payments under
Section 2, the Company shall (i) continue to provide Employee with the fringe
benefits listed in Attachment A, and (ii) continue Employee's coverage in the
Company's welfare benefit plans as available to similarly situated active
executives of the Company, to the extent permissible under the terms of such
plans and the applicable provisions of law, including the Internal Revenue Code,
until such time as Employee becomes entitled to a substantially similar welfare
benefit package at his new employer. Anything contained herein to the contrary
notwithstanding, the Company's obligation to provide medical and dental benefits
shall be limited to reimbursement of Employee's cost of COBRA continuation
coverage under the Company's medical and dental benefits plan. Nothing herein
shall alter the Company's right to amend, modify or terminate any such welfare
benefit plans.

         5. Set-Off. The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations shall be subject to
set-off, counterclaim, recoupment, defense or other right which the Company may
have against Employee.

         6. Taxes. Any payment required under this Agreement shall be subject to
all requirements of the law with regard to the withholding of taxes, filing,
making of reports and the like, and the Company shall use its best efforts to
satisfy promptly all such requirements.

         7. Confidential Information.

         (a) Employee will have possession of or access to confidential
information relating to the business of the Company, including writings,
equipment, processes, drawings, reports, manuals, invention records, financial
information, business plans, customer lists, the identity of or other facts
relating to prospective customers, inventory lists, arrangements with suppliers
and customers, computer programs, or other material embodying trade secrets,
customer or product information or technical or business information of the
Company. All such information, other than any information that is in the public
domain through no act or omission of Employee or which he is authorized to
disclose or required to disclose in connection with legal or administrative
proceedings, is referred to collectively as "Confidential Information." During
or after the Termination Date, Employee shall not (i) use or exploit in any
manner Confidential Information for himself or any person, partnership,
association, corporation or other entity other than the Company, (ii) remove any
Confidential Information, or any reproduction thereof, from the possession or
control of Company or (iii) treat Confidential Information other than in a
confidential manner.

         (b) All Confidential Information developed, created or maintained by
Employee, alone or with others while employed by the Company, and all
Confidential Information maintained by Employee thereafter, shall remain at all
times the exclusive property of the Company. Employee shall return to the
Company all Confidential Information, and reproductions thereof, whether
prepared by him or others, that are in his possession immediately upon request
and in any event upon the termination of his employment with the Company.

                                      -4-
<PAGE>

         (c) For purposes of this Section 7, the term "Company" shall include
the Company, SunSource and their subsidiaries.

         8. Agreement Not to Compete. During the Restricted Period (defined
below), Employee shall not, at any time within the Territory (defined below),
directly or indirectly, engage in, or have any interest on behalf of himself or
others in, any firm, corporation or business (whether as an employee, officer,
director, agent, security holder, creditor, partner, joint venturer, beneficiary
under a trust, investor, consultant or otherwise) that engages within the
Territory in any of the business activities in which the Company shall have been
engaged at any time during the one year prior to the termination of Employee's
employment (the "Restricted Business"); provided, however, that nothing
contained herein shall prevent or prohibit Employee from owning of record or
beneficially up to 1% of the stock or equity of any corporation or other
business entity engaged in the Restricted Business if such corporation or other
entity is traded on the New York Stock Exchange, the American Stock Exchange or
the NASDAQ National Market. In addition, during the Restricted Period, Employee
shall not directly or indirectly solicit or otherwise encourage any of the
Company's employees to terminate their employment with the Company. The
"Restricted Period" means the period during which the Company is required to pay
Salary or Earned Bonus to Employee under Section 2, but in no event less than
the period of one year following Employee's Termination Date. The "Territory"
means any part of North America in which the Company engages in the Restricted
Business during the Restricted Period. If a court determines that the foregoing
restrictions are too broad or otherwise unreasonable under applicable law,
including with respect to time or space, the court is hereby requested and
authorized by the parties hereto to revise the foregoing restriction to include
the maximum restrictions allowable under applicable law. Employee acknowledges,
however, that this Section 8 has been negotiated by the parties hereto and that
the geographical and time limitations, as well as the limitation on activities,
are reasonable in light of the circumstances pertaining to the existing business
of the Company. For purposes of this Section 8, the term "Company" shall include
the Company, SunSource and their subsidiaries.

         9. SunSource as Guarantor. SunSource expressly agrees to serve as
guarantor of the obligations of the Company hereunder.

         10. Remedies. The Employee expressly acknowledges that the remedy at
law for any breach of Sections 7 or 8 will be inadequate and that upon any such
breach or threatened breach, the Company shall be entitled as a matter of right
to injunctive relief in any court of competent jurisdiction, in equity or
otherwise, and to enforce the specific performance of Employee's obligations
under these provisions without having to prove actual damage to the Company or
the inadequacy of a legal remedy. The rights conferred upon the Company by the
preceding sentence shall not be exclusive of, but shall be in addition to, any
other rights or remedies which the Company may have at law, in equity or
otherwise. For purposes of this Section 10, the term "Company" shall include the
Company, SunSource and their subsidiaries.

                                      -5-
<PAGE>

         11. Notice. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be delivered personally or mailed by registered or certified mail,
return receipt requested, or by overnight express courier service, as follows:

                      If to the Company, to:

                      SunSource Technology Service Inc.
                      2301 Windsor Court
                      Addison, IL 60101
                      Attention: Chuck Freeman

                      with a copy to SunSource, to:
                      SunSource
                      One Logan Square
                      Suite 3000
                      Philadelphia, PA  19103
                      Attn: Maurice P. Andrien, Jr.
                            President and CEO

                      If to Employee, to:

                            Mr. Justin Jacobi
                            390 Appleblossom Lane
                            Bay Village,  OH  44140

or to such other names or addresses as the Company, SunSource or Employee, as
the case may be, shall designate by notice to the other party hereto in the
manner specified in this Section. Any such notice shall be deemed delivered and
effective when received in the case of personal delivery, five days after
deposit, postage prepaid, with the U.S. Postal Service in the case of registered
or certified mail, or on the next business day in the case of overnight express
courier service.

         12. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.

         13. Contents of Agreement, Amendment and Assignment.

         (a) This Agreement supersedes all prior agreements, sets forth the
entire understanding between the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment executed by Employee, the Company and SunSource.

         (b) Nothing in this Agreement shall be construed as giving Employee any
right to be retained in the employ of the Company.

                                      -6-
<PAGE>

         (c) All of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective heirs,
representatives, successors and assigns of the parties hereto, except that the
duties and responsibilities of Employee hereunder shall not be assignable in
whole or in part.

         14. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.

         15. Remedies Cumulative; No Waiver. No right conferred upon the parties
by this Agreement is intended to be exclusive of any other right or remedy, and
each and every such right or remedy shall be cumulative and shall be in addition
to any other right or remedy given hereunder or now or hereafter existing at law
or in equity. No delay or omission by a party in exercising any right, remedy or
power hereunder or existing at law or in equity shall be construed as a waiver
thereof.

         16. Term of Agreement. This Agreement shall commence on the date hereof
and shall continue in effect until twelve (12) months after the occurrence of a
Change of Control; provided, however, that in the event Employee shall have
incurred a Termination of Employment prior thereto, this Agreement shall
continue in effect until the satisfaction of all obligations of the parties
hereunder.

         17. Survivorship. The respective rights and obligations of the parties
under this Agreement shall survive any termination of the Employee's employment
to the extent necessary to the intended preservation of such rights and
obligations.

         18. Miscellaneous. All section headings are for convenience only. This
Agreement may be executed in several counterparts, each of which is an original.
It shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.

                                      -7-
<PAGE>

         IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.


                            SUNSOURCE TECHNOLOGY SERVICES INC.



                            By:  /s/ Maurice P. Andrien
                                 ----------------------------------



                            SUNSOURCE, INC.


                            By:  /s/ Joseph M. Corvino
                                 ----------------------------------



                            EMPLOYEE

                                 /s/ Justin M. Jacobi
                                 ----------------------------------


                                      -8-
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                                  ATTACHMENT A

                                 FRINGE BENEFITS


Auto Allowance                                                  $1,050 per month

Country Club Reimbursement                               Reasonable Monthly Dues