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[LOGO] June 3, 1999




Mr. Donald T. Marshall
SunSource Inc.
3000 One Logan Square
Philadelphia, Pennsylvania 19103

Dear Don:

   As you know the Board of Directors (the "Board") of SunSource, Inc. (the
"Company") has been discussing with you the terms of your continued employment
by the Company following the recent appointment of a new President and Chief
Executive Officer of the Company (the "CEO"). The Company and you desire to
facilitate a prompt and smooth transition to the CEO. This letter sets forth the
terms on which you and the Company have agreed for the continuation of your
employment starting April 28, 1999 (the "Commencement Date").

1. Term.

   The term of your employment under this Agreement begins on the Commencement
Date and will continue until the third anniversary thereof (the "Term") unless
terminated at an earlier date as provided herein.

2. Position.

   During the Term, you will continue in your role as Chairman of the Board,
which will be an executive officer of the Company, and the Company will nominate
you for election to the Board during the Term.

3. Duties.

   In your role as Chairman of the Board, you will serve as the chairman of the
meetings of the board of directors of the Company (the "Board") and of the
stockholders of the Company, and you will retain all corporate governance
authority and responsibility applicable to your role as Chairman of the Board.
You will also perform in your role as Chairman such executive-level duties as
the Board or the CEO may assign to you from time to time. For so long as and to
the extent that the CEO requests these services, your services as Chairman will
include the following: advising the CEO regarding the strengths and weaknesses
of key personnel;



       One Logan Square, Philadelphia, PA 19103 o Telephone: 215-282-1290
                           o Facsimile: 215-282-1309


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familiarizing the CEO with the strategies of the Company and its operating
subsidiaries; advising the CEO of formal and informal reporting systems; acting
as a sound board for the CEO; giving support and guidance to the CEO in order to
optimize the chances for the success of the CEO; and visiting the operating
companies to obtain such information and make such assessments as the Board
deems desirable. It is the intention of the parties that your duties will be
largely advisory in nature and will require significantly less than your
full-time efforts which time commitment will continue to decrease during the
Term, thereby enabling you to pursue your non-work related interests on an
expanded basis.

4. Compensation.

   (a) During the Term, the Company will pay you an annual base salary (the
"Base Salary") of $525,000 in the first year, $425,000 in the second year and
$325,000 in the third year. The Company shall pay the Base Salary to you in
accordance with its customary payroll policies for executive employees.

   (b) The Company is also granting to you on the date hereof by a separate
document (the "Grant Letter") non-qualified options to purchase 150,000 shares
of Common Stock of the Company at a price per share of $15.00 (the "Options")
under the 1998 Equity Compensation Plan (the "Plan"). The Options shall vest and
become exercisable by you at the rate of 50,000 shares on each of the first
three anniversaries of the Commencement Date and shall be subject to the other
terms and restrictions set forth in the Grant Letter and Plan. Except as
otherwise provided in the Grant Letter, the Options will be exercisable by you
until the tenth (10th) anniversary of the Date of the Grant (as defined in the
Grant).

   (c) The Compensation Committee of the Board will determine from time to time
whether you will receive any options in addition to those provided for herein.

   (d) During the Term, the Company will provide you access to an office and
secretarial assistance at its corporate headquarters in Philadelphia. The
Company will give the office that you currently occupy to the CEO.

   (e) During the Term, the Company will provide you with an automobile
allowance and country club memberships consistent with such benefits that are
provided to you on the date hereof plus such other fringe benefits (other than
stock options) that are generally made available to other senior executives of
the Company.

5. Termination Without Compensation,

   (a) If you become Disabled (as defined below), the Company may terminate the
Term, and thereafter the Company would have no further liability or obligation
to you except that you would receive from the Company: (i) any unpaid Base
Salary and fringe benefits that have accrued through the date of termination;
and (ii) whatever benefits that you may be entitled to receive under any then
existing disability benefit plans of the Company that apply to you. The term
"Disabled" means your becoming permanently and totally disabled within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.


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   (b) If you die during the Term, the Term will terminate, and thereafter the
Company would not have any further liability or obligation to you, your
executors, administrators, heirs, assigns or any other person claiming under or
through you except that your estate would receive from the Company (i) any
unpaid Base Salary and fringe benefits that have accrued through the date of
termination and (ii) whatever benefits that you may be entitled to receive under
any then existing life insurance plans of the Company that apply to you.

   (c) The Company may terminate the Term for "cause" by giving you notice of
the termination, and thereafter the Company would not have any further liability
or obligation to you, except that you would be entitled to receive from the
Company any unpaid Base Salary and Fringe Benefits that have accrued through the
date of termination. For purposes of this Agreement, "cause" shall mean that you
have (i) breached Section 7 of this Agreement and not remedied such breach
within 30 days after receiving written notice specifying the details thereof;
(ii) been engaged in proven disloyalty to the Company, including fraud,
embezzlement, theft, commission of a felony or proven dishonesty, affecting the
Company adversely in a material way in the course of your employment or
services; or (iii) disclosed Company Information (defined in Section 8(a)) in
violation of Section 8, affecting the Company adversely in a material way,
provided that good faith disclosures in the performance of your duties shall not
constitute cause.

6. Relief of Duties With Compensation and Benefits.

   (a) The Board shall have the right to relieve you of all of your duties
during the Term without cause (as defined above) at any time by giving you 30
days' notice. Under such circumstances, the Company will pay to you the Base
Salary and provide you with fringe benefits (including your car allowance and
country club memberships) that would have been paid or provided to you if you
had continued to perform your duties for the remainder of the Tenn. The Base
Salary shall be paid in accordance with the Company's customary payroll policies
maintained by the Company.

   (b) In the event that the Company shall relieve you of all of your duties
under this provision during the Term without cause as defined above, or you and
the Company shall mutually agree that you shall cease performing all of your
duties, you shall remain an employee of the Company for all purposes and shall
retain your right to exercise the Options under the Grant Letter and under the
Company's 1998 Equity Compensation Plan ("Plan"), notwithstanding your having
been relieved of all of your duties.


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7. Agreement Not to Compete.

   During the Restricted Period (defined below), you shall not, at any time
within the Territory (defined below), directly or indirectly, engage in, or have
any interest on behalf of itself or others in, any person, 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 at any time has been engaged, or at any
time during the Term will have been engaged (the "Restricted Business");
provided, however, that nothing contained herein shall prevent or prohibit you
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, you 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 shall
be paying you the Base Salary hereunder, whether under Section 4 or Section 6,
plus an additional one year after the end of such payments. 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. You acknowledge, however, that this Section 7 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 business of the Company.

8. Confidential Information.

   (a) You have had and will have possession of or access to confidential
information relating to the business of the Company, including manuals,
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 (i) is in the
public domain through no act or omission of you, (ii) is made available to you
after the Term by an independent third party or (iii) is required by law to be
disclosed, is referred to collectively as the "Company Information." During and
after the Employment Term, you shall not (i) use or exploit in any manner the
Company Information for yourself or any person, partnership, association,
corporation or other entity other than the Company, (ii) remove any Company
Information, or any reproduction thereof, from the possession or control of the
Company or (iii) treat Company Information otherwise than in a confidential
manner. It is understood that your possession and/or control of Company
Information during your employment (and thereafter to the extent necessary to
enable you to perform your duties in the event that you serve as a non-employee
member of the Board of Directors of the Company) shall not constitute removal of
any Company Information, or reproduction thereof, from the possession or control
of the Company in violation of this Section 8.


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

9. Remedies.

   You expressly acknowledge 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 your obligations under these provisions without the
necessity of proving the actual damage to the Company or the inadequacy of a
legal remedy. Subject to the remainder of this Section 9, 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.

10. General.

    (a) For purposes of Sections 7, 8, 9 and 10, the term "Company" shall be
deemed to include any incorporate or unincorporated subsidiaries or Affiliates
(as hereinafter defined) of the Company and any majority-owned subsidiaries
thereof. The term "Affiliate" shall mean persons or entities controlling,
controlled by or under common control with the applicable person or entity, as
well as any officers, directors and majority-owned entities of such person or
entity and of its other Affiliates. For the purposes of the foregoing,
ownership, directly or indirectly, of 20% or more of the voting stock or other
equity interest shall be deemed to constitute control.

    (b) The terms of this Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania.

    (c) All of the terms and provisions of this Agreement shall be binding upon
and inure to the benefit and be enforceable by the respective heirs,
representatives, successors (including any successor as a result of a merger or
similar reorganization) and assigns of the parties hereto, except that your
duties and responsibilities are of a personal nature and shall not be assignable
in whole or in part by you.

    (d) All notices required to be given under this Agreement shall be in
writing and shall be deemed to have been given when personally delivered or when
mailed by registered or certified mail, postage prepaid, return receipt
requested, or when sent by Federal Express or other overnight delivery service,
addressed as follows: if to the Company, to the Company's corporate
headquarters, attention the Chief Executive Officer, and if to you, to you at
the most residential address on file with the Company for you.


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    (e) This Agreement constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof and may not be modified or amended in
any way except in writing by the parties hereto. As of the date hereof, all
prior agreements and understandings, including all employment agreements and any
other employment arrangements, between you and the Company are hereby terminated
and shall be of no further force and effect from and after the date hereof,
except that this Agreement shall not affect your right to receive any unpaid
salary or fringe benefits that has accrued as of the date hereof nor shall this
Agreement affect you or the Company's rights and obligations under the Company's
Deferred Compensation Plan for Key Employees or your Nonqualified Stock Option
Grants, dated July 30, 1998 and March 5, 1999.

    (f) No waiver of any breach of this Agreement shall be construed to be a
waiver as to succeeding breaches.

    (g) If any provision of this Agreement or application thereof to anyone
under any circumstances is adjudicated to be invalid or unenforceable in any
jurisdiction, 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 and shall not invalidate
or render unenforceable such provision in any other jurisdiction.

    (h) Unless the context of this Agreement clearly requires otherwise, (i)
references to the plural include the singular, the singular the plural, the part
the whole, (ii) references to one gender include all genders, (iii) "including"
has the inclusive meaning frequently identified with the phrase "but not limited
to" and (iv) references to "hereunder" or "herein" relate to this Agreement. The
section and other headings contained in this Agreement are for reference
purposes only and shall not control or affect the construction of this Agreement
or the interpretation thereof in any respect. Section, subsection, schedule and
exhibit references are to this Agreement unless otherwise specified.

    (i) This Agreement may be executed in any number of counterparts, each of
which shall be binding as of the date first written above. Each such copy shall
be deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.


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    (j) Notwithstanding the termination of the Term and your employment by the
Company, this Agreement shall continue to bind the parties hereto for so long as
any obligations remain under the terms of this Agreement.

    IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
hereunto duly executed this Agreement as of the day and year first written
above.

                                                 SUNSOURCE, INC.


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


                                                 Name: Joseph M. Corvino
                                                       -------------------------
                                                 Title: Vice President - Finance
                                                        ------------------------

                                                 /s/ Donald T. Marshall
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                                                 DONALD T. MARSHALL


APPROVED AND RATIFIED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS.


                                                 /s/ XXXXXXXXXXXXXXXXXXXXX
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