EXECUTION
                                                                            COPY








                            SECURED CREDIT AGREEMENT

                                  BY AND AMONG

                        GIBRALTAR PACKAGING GROUP, INC.,

                                  as Borrower,


                            THE LENDERS NAMED HEREIN,

                                   as Lenders,


                                       AND


                           FIRST SOURCE FINANCIAL LLP,

                              as Agent and a Lender


                                   Dated as of

                                  July 31, 1998







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                                TABLE OF CONTENTS


SECTION 1   CERTAIN DEFINITIONS..............................................1
      SECTION 1.1     Certain Definitions....................................1
      SECTION 1.2     Accounting and Financial Determinations...............22
      SECTION 1.3     Cross References; Headings............................22

SECTION 2   COMMITMENTS OF LENDERS;  LOAN  REQUESTS;  REDUCTION 
      OR TERMINATION OF THE COMMITMENTS; PREPAYMENTS; MAKING OF PAYMENTS; 
      SETOFF................................................................23
      SECTION 2.1     Commitments...........................................23
      SECTION 2.2     Revolving Loan Termination Date.......................24
      SECTION 2.3     Loan Requests.........................................24
      SECTION 2.4     Certain Waivers.......................................26
      SECTION 2.5     Mandatory and Permitted Prepayments of the Term Loans.27
      SECTION 2.6     Voluntary  Reduction  or  Termination  of the  
                      Revolving Commitment..................................28
      SECTION 2.7     Mandatory Prepayments on Revolving Loans..............28
      SECTION 2.8     Prepayment Premium....................................28
      SECTION 2.9     Making of Payments....................................29
      SECTION 2.10    Due Date Extension....................................29
      SECTION 2.11    Set Off and Sharing of Payments.......................29
      SECTION 2.12    Certain Matters Relating to Letters of Credit.........30
            2.12.1    Issuance of Letters of Credit.........................30
            2.12.2    Terms of Letters of Credit............................31
            2.12.3    Lenders' Participation................................31
            2.12.4    Notice of Issuance....................................31
            2.12.5    Payment of Amounts Drawn Under Letters of Credit......32
            2.12.6    Payment by Lenders....................................33
            2.12.7    Issuing Bank..........................................33
            2.12.8    Obligations Absolute..................................34
            2.12.9    Agent's  Execution  of  Applications  and Other  
                      Issuing Bank Documentation; Reliance on Credit  
                      Agreement by Issuing Bank.............................35
            2.12.10   Cash Collateral.......................................35
            2.12.11.  Indemnification.......................................35
      SECTION 2.13    Loan Account..........................................36
      SECTION 2.14    Statements............................................36

SECTION 3   NOTES; RECORDKEEPING............................................37
      SECTION 3.1     Term Note.............................................37
      SECTION 3.2     Revolving Note........................................37

SECTION 4   INTEREST........................................................37



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      SECTION 4.1     Interest Rates........................................37
      SECTION 4.2     Default Interest......................................38
      SECTION 4.3     Conversion or Continuation............................38
      SECTION 4.4     Special Provisions Governing LIBOR Rate Loans.........39
      SECTION 4.5     Interest Payment Dates................................41
      SECTION 4.6     Setting of Rates......................................41
      SECTION 4.7     Computation of Interest...............................41

SECTION 5   FEES............................................................42
      SECTION 5.1     Non-Use Fees..........................................42
      SECTION 5.2     Commitment Fee........................................42
      SECTION 5.3     Closing Fee...........................................42
      SECTION 5.4     Letter of Credit Fees.................................42
      SECTION 5.5     Audit Fees............................................42
      SECTION 5.6     Computation of Fees...................................43

SECTION 6   ACCOUNT  AGREEMENTS;   ACCOUNTS;  LIST  OF  ACCOUNTS  AND  ACCOUNT
      STATEMENTS............................................................43
      SECTION 6.1     Account Agreements....................................43
      SECTION 6.2     Bank Accounts.........................................44
      SECTION 6.3     List of Accounts and Account Statements...............44

SECTION 7 PROCEEDS OF COLLATERAL; APPLICATION OF FUNDS; DEEMED LOANS .......44 
      SECTION 7.1     Proceeds of Collateral; Notices to Account Debtors; 
                      Lockbox...............................................44
      SECTION 7.2     Application of Master Account Funds...................45
      SECTION 7.3     Application of Funds Available for Loan Repayments....45
      SECTION 7.4     Application Upon an Event of Default..................45
      SECTION 7.5     Deemed Loans..........................................46
      SECTION 7.6     Application of Proceeds...............................46

SECTION 8   INCREASED COSTS AND OTHER SPECIAL PROVISIONS....................48
      SECTION 8.1     Increased Costs.......................................48
      SECTION 8.2     Funding Losses........................................48
      SECTION 8.3     Discretion of the Lenders as to Manner of Funding.....49
      SECTION 8.4     Conclusiveness of Statements; Survival of Provisions..49

SECTION 9   COLLATERAL AND ELIGIBILITY REQUIREMENTS.........................49
      SECTION 9.1     Eligible Accounts.....................................49
      SECTION 9.2     Account Warranties....................................50
      SECTION 9.3     Verification of Accounts..............................51
      SECTION 9.4     Eligible Inventory....................................51
      SECTION 9.5     Inventory Warranties..................................52

 

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      SECTION 9.6     Security Interest.....................................52
      SECTION 9.7     Consigned Inventory...................................52
      SECTION 9.8     Collateral Documents..................................52
      SECTION 9.9     Subsequently Acquired Property........................53
      SECTION 9.10    Change of Location or Name............................53
      SECTION 9.11    Deliveries; Further Assurances........................54

SECTION 10  REPRESENTATIONS AND WARRANTIES..................................54
      SECTION 10.1    Due Organization, Authorization, Etc..................54
      SECTION 10.2    Certain Agreements....................................55
      SECTION 10.3    Financial Information; Financial Condition............55
      SECTION 10.4    Litigation and Contingent Obligations.................56
      SECTION 10.5    Liens.................................................56
      SECTION 10.6    Contracts; Absence of Default.........................56
      SECTION 10.7    Employee Benefit Plans................................57
      SECTION 10.8    Investment  Company Act;  Public Utility Holding 
                      Company Act...........................................58
      SECTION 10.9    Regulations U and X...................................58
      SECTION 10.10   Proceeds..............................................58
      SECTION 10.11   Confirmation of Warranties............................58
      SECTION 10.12   Insurance.............................................58
      SECTION 10.13   Material Disruptions..................................58
      SECTION 10.14   Patents, Trademarks, Etc..............................58
      SECTION 10.15   Ownership of Properties; Property Schedule............59
      SECTION 10.16   Business Locations; Trade Names.......................59
      SECTION 10.17   Accuracy of Information...............................59
      SECTION 10.18   Subsidiaries..........................................60
      SECTION 10.19   Hazardous Materials...................................60
      SECTION 10.20   Agent's Fees..........................................61
      SECTION 10.21   Taxes.................................................61
      SECTION 10.22   Securities Laws.......................................61
      SECTION 10.23   Governmental Authorizations...........................61
      SECTION 10.24   Compliance with Laws..................................61
      SECTION 10.25   Employees and Labor...................................62
      SECTION 10.26   Year 2000.............................................62
      SECTION 10.27   Solvency..............................................62
      SECTION 10.28   Collateral............................................62

SECTION 11  COVENANTS.......................................................63
      SECTION 11.1    Reports, Certificates and Other Information...........63
      SECTION 11.2    Corporate Existence; Foreign Qualification............67
      SECTION 11.3    Books, Records and Inspections........................67
      SECTION 11.4    Insurance.............................................67
      SECTION 11.5    Taxes and Liabilities.................................68

 

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      SECTION 11.6    Employee Benefit Plans................................68
      SECTION 11.7    Collateral Documents..................................68
      SECTION 11.8    Compliance with Laws..................................69
      SECTION 11.9    Maintenance of Permits................................69
      SECTION 11.10   Purchase, Redemption, Distribution, Interest and
                      Payment Restrictions..................................69
      SECTION 11.11   Loans, Advances or Investments........................69
      SECTION 11.12   Mergers,  Consolidations, Sales.......................69
      SECTION 11.13   Unconditional Purchase Obligations....................69
      SECTION 11.14   Regulations U and X...................................70
      SECTION 11.15   Subsidiaries..........................................70
      SECTION 11.16   No Amendment of Organization Documents................70
      SECTION 11.17   Other Agreements......................................70
      SECTION 11.18   Business Activities; Name.............................70
      SECTION 11.19   Transactions with Affiliates..........................70
      SECTION 11.20   Environmental Liabilities.............................70
      SECTION 11.21   Indebtedness..........................................71
      SECTION 11.22   Liens.................................................71
      SECTION 11.23   Fiscal Year...........................................71
      SECTION 11.24   Landlord and Warehouseman Agreements..................71
      SECTION 11.25   Maintenance of Real Estate............................72
      SECTION 11.26   Account Records.......................................72
      SECTION 11.27   Instruments and Chattel Paper.........................72
      SECTION 11.28   Inventory Records.....................................73
      SECTION 11.29   Collateral Locations..................................73
      SECTION 11.30   Disposal of Property..................................73
      SECTION 11.31   Corporate Accounts....................................74
      SECTION 11.32   Financial Covenants...................................74
      SECTION 11.33   Intercompany Loans....................................76

SECTION 12  CONDITIONS......................................................77
      SECTION 12.1    Term Loans............................................77
      SECTION 12.2    All Loans; LC Guaranties..............................79
      SECTION 13      EVENTS OF DEFAULT AND THEIR EFFECT....................80
      SECTION 13.1    Events of Default.....................................82
      SECTION 13.2    Effect of Event of Default............................82
      SECTION 13.3    Rights and Remedies Generally.........................83
      SECTION 13.4    Entry Upon Premises and Access to Information.........83
      SECTION 13.5    Sale or Other Disposition of Collateral by Agent......84
      SECTION 13.6    Notice to Account Debtors.............................84
      SECTION 13.7    Waiver of Demand......................................84
      SECTION 13.8    Waiver of Notice......................................84

 

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SECTION 14  GENERAL.........................................................85
      SECTION 14.1    Waiver; Amendments....................................85
      SECTION 14.2    Confirmations.........................................85
      SECTION 14.3    Notices...............................................85
      SECTION 14.4    Costs, Expenses and Taxes.............................86
      SECTION 14.5    Indemnification.......................................86
      SECTION 14.6    Submission To Jurisdiction............................88
      SECTION 14.7    Governing Law.........................................88
      SECTION 14.8    Sale of Notes; Participations.........................88
      SECTION 14.9    Entry Into Agreement..................................89
      SECTION 14.10   Legal Opinions........................................89
      SECTION 14.11   Jury Trial; Damage Waiver.............................89
      SECTION 14.12   Successors and Assigns................................89
      SECTION 14.13   Marshaling............................................89
      SECTION 14.14   Waivers With Respect to Other Instruments.............90
      SECTION 14.15   Retention of Borrower's Documents.....................90
      SECTION 14.16   Survival of Warranties................................90
      SECTION 14.17   Counterparts..........................................90
      SECTION 14.18   Exceptions to Covenants...............................90
      SECTION 14.19   Construction..........................................90
      SECTION 14.20   Reinstatement.........................................91
      SECTION 14.21   Entire Agreement......................................91
      SECTION 14.22   Acknowledgment........................................91
      SECTION 14.23   Confidentiality.......................................91
      SECTION 14.24   Several Obligations; Nature of Lender's Rights........92

SECTION 15  ASSIGNMENT AND PARTICIPATION; AGENT.............................92
      SECTION 15.1  Assignments and Participations in Loans and Notes.......92
      SECTION 15.2  Agent...................................................94
            15.2.1  Appointment of Agent....................................94
            15.2.2  Nature of Duties of Agent...............................94
            15.2.3  Lack of Reliance on Agent...............................94
            15.2.4  Certain Rights of Agent.................................95
            15.2.5  Reliance by Agent.......................................95
            15.2.6  Indemnification of Agent................................95
            15.2.7  Agent in its Individual Capacity........................96
            15.2.8  Holders of Notes........................................96
            15.2.9  Successor Agent.........................................96
            15.2.10 Collateral Matters......................................97
            15.2.11 Actions with Respect to Defaults........................98
            15.2.12 Delivery of Information.................................98
       SECTION 15.3 Disbursement of Funds...................................98

 

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      SECTION 15.4 Agent's Discretion.......................................99

 

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                                      (vii)



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                                     (viii)

 

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                                      (ix)
 

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                                      (x)
 

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                                      (xi)

 

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                                    Exhibits

Exhibit 1.2          -  Form of Borrowing Base Certificate  
Exhibit 2.3(b)       -  Notice of LIBOR Activity            
Exhibit 3.1          -  Form of Term Note                   
Exhibit 3.2          -  Form of Revolving Note              
Exhibit 9.8.1        -  Form of Security Agreement          
Exhibit 9.8.2        -  Form of Mortgage                    
Exhibit 9.8.3        -  Form of Stock Pledge Agreement      
Exhibit 11.1(e)      -  Form of Compliance Certificate
Exhibit 11.1(m)      -  Form of Monthly Report Certificate
Exhibit 12.2(c)-1    -  Form of Borrowing Certificate
Exhibit 12.2(c)-2    -  LC Guaranty Request


                                    Schedules

Schedule 1           -  Financial Institutions            
Schedule 2.8         -  Potential Acquirers               
Schedule 6.3         -  Accounts                          
Schedule 10.1        -  Jurisdictions                     
Schedule 10.4        -  Litigation                        
Schedule 10.5        -  Liens                             
Schedule 10.6        -  Material Contracts                
Schedule 10.7        -  Terminated Pension Plans          
Schedule 10.12       -  Insurance                         
Schedule 10.14       -  Intellectual Property             
Schedule 10.15       -  Real and Personal Property        
Schedule 10.16       -  Business Locations and Trade Names
Schedule 10.18       -  Subsidiaries                      
Schedule 10.19       -  Hazardous Materials               
Schedule 10.20       -  Fees                              
Schedule 10.21       -  Taxes                             
Schedule 10.25       -  Collective Bargaining Agreements  
Schedule 10.26       -  Year 2000                         
Schedule 11.18       -  Business Activities               
Schedule 11.19       -  Affiliate Transactions            
Schedule 11.20       -  Remedial Actions                  
Schedule 11.21       -  Indebtedness                      
Schedule 11.29       -  Collateral Locations              
Schedule 12.1(h)     -  Indebtedness to be Refinanced


                                     (xii)
 

<PAGE>
                            SECURED CREDIT AGREEMENT


            THIS SECURED CREDIT AGREEMENT (this "AGREEMENT") dated as of July
31, 1998 is entered into among, Gibraltar Packaging Group, Inc., a Delaware
corporation ("BORROWER"), the financial institutions identified on Schedule 1
hereto (together with each of their successors and assigns, hereinafter referred
to individually as a "LENDER" and collectively as the "LENDERS"), and First
Source Financial LLP, an Illinois registered limited liability partnership,
acting as agent for Lenders.

                                    RECITAL:

            Borrower desires to borrow from Lenders and Lenders desire to lend
to Borrower on the terms and conditions set forth herein.

            NOW THEREFORE, in consideration of the mutual agreements contained
herein, and subject to the terms and conditions hereof, the parties hereto agree
as follows:

            SECTION 1    CERTAIN DEFINITIONS.
                         -------------------

            SECTION 1.1  CERTAIN DEFINITIONS When used herein, the following 
terms shall have the following meanings:

            "ACCOUNT  DEBTOR"  shall  mean  any  Person  who is or may  become
      obligated on or under an Account.

            "ACCOUNTS" shall mean all presently existing and hereafter arising
      or acquired accounts, accounts receivable, contracts, notes, drafts,
      acceptances, and other forms of obligations (including forms of
      obligations evidenced by Chattel Paper, Documents or Instruments) now or
      hereafter owned or held by or payable to a Person relating in any way to
      Inventory or arising from the sale or lease of Inventory or the rendering
      of services by such Person or howsoever otherwise arising, including the
      right to payment of any interest or finance charges with respect thereto;
      all such merchandise that may be reclaimed or repossessed or returned to
      such Person, all of Such Person's rights as an unpaid vendor, including
      stoppage in transit, reclamation, rescission, replevin, and sequestration;
      all pledged assets and all letters of credit, guaranty claims, Liens held
      by or granted to such Person to secure payment of any Accounts; all
      proceeds and products of all of the foregoing described properties and
      interests in properties; and all proceeds of insurance with respect
      thereto; and all customer lists, ledgers, books of account, records,
      computer programs, computer disks or tape files (including all microfilm),
      computer printouts, computer runs, and other computer prepared information
      relating to any of the foregoing.

            "ACCOUNTS TRIAL BALANCE" - see Section 11.1(m).

 

<PAGE>
            "AFFILIATE" of any Person shall mean (a) any director (or Person
      holding the equivalent position) or officer (or Person holding the
      equivalent position) of such Person or of any Person described in clause
      (b) with respect to such Person, and (b) any other Person which, directly
      or indirectly, controls or is controlled by or under common control with
      such Person (excluding any trustee under, or any committee with
      responsibility for administering, any Pension Plan). None of the Lenders
      and Agent shall be deemed to be an Affiliate of Borrower or any such
      Person. A Person shall be deemed to be (x) "controlled by" any other
      Person if such other Person possesses, directly or indirectly, power (i)
      to vote 30% or more of the securities or Equity Interests having at the
      time of any determination hereunder voting power for the election of
      directors of such Person (or Persons holding equivalent positions); or
      (ii) to direct or cause the direction of the management and policies of
      such Person whether by contract or otherwise; or (y) "controlled by" or
      "under common control with" such other Person if such other Person is a
      member of the immediate family of such Person or is the executor,
      administrator, or other personal representative of such Person.

            "AGENT" shall mean FSFP as agent for the benefit of the Lenders, and
      not in its individual capacity as a Lender, and any successor appointed
      pursuant to Section 15.2.9.

            "ASSET SALE" shall mean any sale, assignment, conveyance, transfer
      or other disposition of any Property of Borrower in excess of $5,000 for
      any one item other than (i) any sale or lease of inventory in the ordinary
      course of business , (ii) any sale of obsolete or unusable items of
      equipment so long as the aggregate proceeds of all such sales do not
      exceed $100,000 in any Fiscal Year and (iii) any sale or trade-in of
      obsolete or unusable items of equipment which are promptly replaced with
      new items of equipment of like function and comparable value to the
      obsolete or unusable items of equipment when the same were new or not
      obsolete or unusable.

            "ASSET SALE PROCEEDS" shall mean the aggregate cash proceeds payable
      to Borrower in connection with any Asset Sale after deduction of all
      reasonable, customary and documented costs and expenses of such Asset
      Sale.

            "ASSIGNMENT AND ACCEPTANCE" - see Section 15.1.

            "AUDIT FEE" shall have the meaning ascribed thereto in Section 5.5.

            "BANK ACCOUNTS" - see Section 6.1.

            "BANK AGENCY AGREEMENT" - see Section 6.1.

            "BANKRUPTCY CODE" shall mean Title 11, United States Code, as
      amended from time to time.

            "BORROWER" - see Preamble.

                     2
<PAGE>

            "BORROWING AVAILABILITY" shall mean, at any date of determination,
      the excess of (a) the lesser of (i) the Revolving Commitment or (ii) the
      Borrowing Base over (b) Total Revolving and L/C Exposure.

            "BORROWING BASE" shall mean an amount equal to: (i) eighty-five
      percent (85%) of the face amount (less maximum discounts, credits and
      allowances which may have been taken by or granted to Account Debtors in
      connection therewith) then outstanding of existing Eligible Accounts, plus
      (ii) sixty percent (60%) of the book value of Borrower's then existing
      Eligible Inventory (the book value of Eligible Inventory to be determined
      at the lower of cost (determined on a first-in-first-out ("FIFO") basis)
      or market).

            "BORROWING BASE CERTIFICATE" shall mean a certificate in
      substantially the form of Exhibit 1.2, duly certified by the president,
      chief financial officer, treasurer or controller of Borrower.

            "BUSINESS DAY" shall mean any day of the year (other than any
      Saturday or Sunday) on which the Federal Reserve Bank of Chicago, Illinois
      is open for business in Chicago, Illinois and when used in connection with
      LIBOR Rate Loans, this definition will also exclude any day on which
      commercial banks are not open for dealing in United States dollar deposits
      in the London (U.K.) interbank market.

            "CAP AMOUNT" shall mean, at any time, the sum of the reimbursement
      obligations of Borrower guaranteed by each LC Guaranty at the time of its
      issuance (such amount, with respect to any LC Guaranty, being herein
      called the "RELEVANT CAP"); it being understood that:

            (a)   the Relevant  Cap with  respect to any LC Guaranty  shall be
                  reduced  from  time  to  time  by  the  Stated  Amount  of a
                  Permitted  LC covered  thereby if Agent shall have  received
                  evidence  satisfactory  to the  Lender  that  the  following
                  conditions have been satisfied:  (i) such Permitted LC shall
                  have  terminated or expired in accordance with its terms, or
                  (ii) such  Permitted LC shall have been  surrendered  to the
                  Issuer  thereof and canceled,  or (iii) if such Permitted LC
                  shall have been drawn upon,  the Issuer  thereof  shall have
                  been  fully  reimbursed  for the amount of such draw or (iv)
                  such Issuer shall have  consented in writing to a reduction,
                  equal to such Stated Amount in such Relevant Cap; and

            (b)   the Relevant Cap with respect to any LC Guaranty may be
                  increased from time to time by the Stated Amount of a
                  Permitted LC to be covered thereby if Lender shall have
                  received evidence satisfactory to the Lender that such
                  Permitted LC shall be issued in a manner permitted by this
                  Agreement concurrently with such increase;

                          3

<PAGE>
      provided, however, that in no event shall the Cap Amount exceed at any
      time $2,000,000; and provided, further, that for purposes of determining
      the Cap Amount, each LC Guaranty issued hereunder shall be included unless
      the applicable Issuer shall have acknowledged in writing that the Lenders
      shall have no further obligations thereunder or the Lenders shall have
      received other assurances from the applicable Issuer that the Lenders
      shall have no further obligations thereunder.

            "CAPITALIZED LEASES" shall mean as to any Person at any time any
      lease which, in accordance with GAAP, is required to be capitalized on the
      balance sheet of such Person at such time, and "CAPITALIZED LEASE
      OBLIGATIONS" of such Person at any time shall mean the aggregate amount
      which, in accordance with GAAP, is required to be reported as a liability
      on the balance sheet of such Person at such time as lessee under
      Capitalized Leases.

            "CASH EQUIVALENTS" shall mean any or all of the following:
      obligations of, or guaranteed as to interest and principal by, the United
      States Government maturing within 90 days after the date on which such
      obligations are purchased; open market commercial paper of any corporation
      (other than Borrower or any of its Affiliates) incorporated under the laws
      of the United States of America or any State thereof or the District of
      Columbia rated "Prime-1" or its equivalent by Moody's Investors Service
      Inc. and "A-1" or its equivalent by Standard & Poor's Corporation; or
      certificates of deposit maturing within 90 days after the issuance thereof
      issued by commercial banks organized under the laws of the United States
      of America or of any political subdivision thereof and either having a
      combined capital and surplus in excess of $500,000,000.

            "CASH INSTRUMENTS" shall mean all cash, checks, drafts and other
      similar writings for the payment of money.

            "CHANGE OF CONTROL" shall mean (a) Richard D. Hinrichs shall cease
      to be employed by Borrower either in the capacity in which (and with
      substantially the responsibility for which) such Person is employed on the
      date hereof or as president of Borrower with the responsibilities accorded
      to the president in the by-laws of Borrower, (b) either John W. Lloyd or
      Walter E. Rose shall cease to be employed by Borrower in the capacity in
      which (and with substantially the responsibility for which) such Person is
      employed on the date hereof or (c) the failure of Borrower to own, free
      and clear of all Liens (other than Liens in favor of Agent for the benefit
      of the Lenders) one hundred percent (100%) of the outstanding Stock of
      each of its Subsidiaries which shall become a borrower hereunder or a
      guarantor of the Liabilities hereunder; provided, that no Change of
      Control shall result from the occurrence of any event set forth in (a) or
      (b) above if Borrower replaces such Person with another Person acceptable
      to Agent within ninety (90) days after the occurrence of such event.

            "CHATTEL PAPER" shall mean any "chattel paper," as such term is
      defined in the Code, now owned or hereafter acquired by Borrower, wherever
      located.
                                       4
                         

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           "CLOSING DATE" shall mean the date on which the initial Loans
hereunder are made.

            "CODE" - see Section 1.2.

            "COLLATERAL" shall mean all property and/or rights on or in which a
      Lien or security interest is granted to any one or more of Agent and the
      Lenders (or to any agent, trustee or other party acting on behalf of any
      one or more of Agent and the Lenders) to secure all or any of the
      Liabilities, including any such Lien or security interest pursuant to this
      Agreement or any of the Collateral Documents or any other agreements,
      instruments or documents provided for herein or therein or delivered or to
      be delivered hereunder or thereunder or in connection herewith or
      therewith.

            "COLLATERAL ACCESS AGREEMENTS" shall mean any landlord waivers,
      mortgagee waivers, bailee letters or any similar acknowledgment agreements
      of any warehouseman or processor in possession of Inventory, in each case
      in a form reasonably acceptable to Agent.

            "COLLATERAL DOCUMENTS" shall mean, collectively, the Security
      Agreements, the Stock Pledge Agreements, the Mortgages, the Guaranty, the
      Collateral Access Agreements, the Bank Agency Agreement, LC Guaranties,
      any Uniform Commercial Code financing statements, and any and all other
      documents provided for in Section 9 or otherwise pursuant to which a Lien
      is granted to any one or more of Agent and the Lenders (or to any agent,
      trustee, or other party acting on behalf of any one or more of Agent and
      the Lenders) as security for any of the Liabilities, and all agreements,
      instruments and documents, including, without limitation, this Agreement
      and any security agreements, loan agreements, notes, guarantees,
      mortgages, deeds of trust, leasehold mortgages, leasehold deeds of trust,
      subordination agreements, pledges, powers of attorney, consents,
      assignments, intercreditor agreements, mortgagee waivers, reimbursement
      agreements, contracts, notices, leases, financing statements, whether
      heretofore, now or hereafter executed by or on behalf of Borrower or any
      Subsidiary, in connection with the Liabilities, in each case as the same
      may be amended, modified, continued or supplemented from time to time.

            "COMMITMENTS" shall mean the Letter of Credit Commitments, the Term
      Commitments and the Revolving Commitments, and "COMMITMENT" shall mean any
      thereof.

            "COMPLIANCE CERTIFICATE" - see Section 11.1(e).

            "CONTINGENT OBLIGATION" as to any Person shall mean the undrawn face
      amount of any letters of credit issued for the account of such Person and
      shall also mean any obligation of such Person guaranteeing or in effect
      guaranteeing any Indebtedness, leases, dividends, letters of credit or
      other obligations ("PRIMARY OBLIGATIONS") of any other Person (the
      "PRIMARY OBLIGOR") in any manner, whether directly or indirectly,
      including, without limitation, any obligation of such Person, whether or
      not contingent, (a) to purchase any such primary 

                                       5
 

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      obligation or any property constituting direct or indirect security
      therefor, (b) to advance or supply funds (i) for the purchase or payment
      of any such primary obligation or (ii) to maintain working capital or
      equity capital of the primary obligor or otherwise to maintain the
      financial condition or solvency of the primary obligor, (c) to purchase
      property, securities or services primarily for the purpose of assuring the
      obligee under any such primary obligation of the ability of the primary
      obligor to make payment of such primary obligation or (d) otherwise to
      assure or hold harmless the obligee under such primary obligation against
      loss in respect thereof; provided, however, that the term Contingent
      Obligation shall not include endorsements of instruments for deposit or
      collection in the ordinary course of business. The amount of any
      Contingent Obligation shall be deemed to be an amount equal to the stated
      or determinable amount of the primary obligation or, where such Contingent
      Obligation is specifically limited to a portion of any such primary
      obligation, that portion to which it is limited or, if not stated or
      determinable, the maximum reasonably anticipated liability in respect
      thereof (assuming such Person is required to perform thereunder) as
      determined by such Person in good faith.

            "CONTRACT" shall mean each agreement of Borrower with respect to the
      sale of goods or services by Borrower.

            "CONTRACTUAL OBLIGATION" of any Person shall mean any provision of
      any security issued by such Person or of any agreement, document,
      instrument or undertaking to which such Person is a party or by which it
      or any of its property is bound.

            "CONTROLLED GROUP" shall mean Borrower and any corporation, trade,
      business or other Person that is, along with Borrower, a member of a
      controlled group of Persons or a controlled group of trades or businesses
      or an affiliated service group as described in Sections 414(b), 414(c) and
      414(m), respectively, of the IRC or in Section 4001 of ERISA.

            "CURRENT ASSETS" shall mean, at any date, the amount which, in
      conformity with GAAP, would be set forth opposite the caption "total
      current assets" (or any like caption) on a balance sheet of Borrower and
      its Subsidiaries on a consolidated basis at such date, less (without
      duplication) Cash Instruments and Cash Equivalents.

            "CURRENT LIABILITIES" shall mean, at any date, the amount which, in
      conformity with GAAP, would be set forth opposite the caption "total
      current liabilities" (or any like caption) on a balance sheet of Borrower
      and its Subsidiaries on a consolidated basis at such date, less any
      portion thereof attributable to the Notes, bank overdrafts (but only to
      the extent repaid in full on the Business Day following creation thereof),
      or any other Indebtedness incurred hereunder.

            "DEBT TO EBITDA RATIO" shall mean, for any calendar quarter, the
      ratio of (a) Indebtedness of Borrower and its Subsidiaries on a
      consolidated basis at the end of such calendar quarter, as determined in
      accordance with GAAP, to (b) EBITDA of Borrower for 

                                       6
 

<PAGE>
     the four calendar quarters ending with the last day of such calendar
     quarter, provided that, with respect to any calendar quarter ending before
     July 3, 1999, EBITDA shall be equal to EBITDA for the period from and
     including the Closing Date to and including the last day of such calendar
     quarter, multiplied by the quotient determined by dividing 365 by the
     number of days in such period.

            "DEFAULT INTEREST PERIOD" - see Section 4.2(b).

            "DEFAULT RATE" - see Section 4.2(a).

            "DOCUMENTS" shall mean any "documents" as such term is defined in
      the Code, now owned or hereafter acquired by Borrower, wherever located.

            "DOLLAR(S)" and the sign "$" shall mean lawful money of the United
      States of America.

            "EBITDA" shall mean, for any period, the Net Income for such period,
      plus, to the extent deducted in computing such Net Income, the sum of (a)
      all Federal, state, local and foreign income tax expense, (b) Interest
      Expense, (c) depreciation and amortization expenses, and (d) any
      extraordinary, unusual or non-recurring pre-tax losses approved by Lender,
      minus, to the extent added in computing such Net Income, (i) any interest
      income and (ii) any extraordinary, unusual or non-recurring pre-tax gains
      approved by Lender, all as determined for Borrower and its Subsidiaries on
      a consolidated basis in accordance with GAAP.

            "ELECTRONIC NOTICE" - see Section 2.3(c).

            "ELIGIBLE ACCOUNTS"  shall have the  meaning  ascribed  thereto in
      Section 9.1.

            "ELIGIBLE INVENTORY"  shall have the meaning  ascribed  thereto in
      Section 9.4.

            "EMPLOYEE BENEFIT PLAN" shall mean any "employee benefit plan," as
      defined under Section 3(3) of ERISA or any other plan, policy, program,
      arrangement or agreement, whether or not written, with respect to current
      employees, former employees, independent contractors or leased employees,
      as defined in IRC ss. 414(n), or the beneficiaries or dependents thereof,
      which is or has been maintained by Borrower or a current or past member of
      its Controlled Group or as to which Borrower or any current or past member
      of its Controlled Group otherwise has or could have any liability.

             "ENVIRONMENTAL LAWS" means any and all applicable federal, state or
      local laws, statutes, common law, policies, ordinances, codes, rules,
      regulations, orders, decrees, directives and standards or relating to the
      protection of health, safety or the environment, or to the regulation of
      Hazardous Material, including, but not limited to, the following statutes

                                       7
 

<PAGE>
     as now written and amended, and as amended hereafter: the Federal Water
     Pollution Control Act, 33 U.S.C. ss. 1251 et seq., the Clear Air Act, 42
     U.S.C. ss. 7401 et. seq., the ToxiC Substances Control Act, 15 U.S.C. ss.
     2601 et set., the OccupationaL Safety and Health Act, 29 U.S.C. ss. 651 et
     seq., the Solid WastE Disposal Act, 42 U.S.C. ss. 6901 et seq., the
     Comprehensive EnvironmentaL Response, Compensation and Liability Act, 42
     U.S.C. ss. 9601 et seq., thE Emergency Planning and Community Right-to-Know
     Act of 1986, 42 U.S.C. ss. 11001 et seq., and the Safe Drinking Water Act,
     42 U.S.C. ss. 300f et seq.

            "EQUIPMENT" shall mean all of Borrower's machinery, equipment and
      furniture of every kind and nature, trade fixtures and fixtures not
      forming a part of real property, all whether now owned or hereafter
      acquired, and wherever situated, together with all appurtenances,
      additions and accessions thereto, replacements therefor, all parts
      therefor, all substitutes for any of the foregoing, and all manuals,
      drawings, instructions, warranties and rights with respect thereto, and
      all products and proceeds thereof and condemnation awards and insurance
      proceeds with respect thereto.

            "EQUITY INTERESTS" shall mean the capital stock of any class of
      Borrower and options, warrants and other rights to acquire capital stock
      or other equity interests of Borrower.

            "EQUITY SALE" shall mean any issuance, sale, give away, conveyance,
      transfer or other disposition of any Equity Interests by Borrower or any
      other change in the capital structure of Borrower.

            "EQUITY SALE PROCEEDS" shall mean the aggregate cash proceeds paid
      or payable to Borrower in connection with any Equity Sale, after deduction
      of all reasonable, customary and documented costs and expenses of such
      Equity Sale.

            "ERISA" shall mean the Employee Retirement Income Security Act of
      1974, as amended.

            "ERISA AFFILIATE" shall mean any Subsidiary or any Person, trade or
      business (whether or not incorporated) that is, or was at any time during
      the previous six (6) years, along with Borrower or any Subsidiary, in the
      same controlled group of corporations, under common control, or otherwise,
      treated as a single employer for any purpose under Section 414 of the IRC.

            "EVENT OF  DEFAULT"  shall  mean any of the  events or  conditions
      described in Section 13.1.

            "EXCESS CASH FLOW" - See Section 2.5(b).

            "EXCESS CASH FLOW PAYMENT" - See Section 2.5(b).

                                       8
 

<PAGE>
            "FACILITY"  shall  mean each of  Borrower's  facilities  listed on
      Schedule 10.31.

            "FEDERAL FUNDS RATE" shall mean, for any period, a fluctuating
      interest rate per annum equal, for each day during such period, to the
      weighted average of the rates on overnight Federal Funds transactions with
      members of the Federal Reserve System arranged by Federal Funds brokers,
      as published for such day (or, if such day is not a Business Day, for the
      next preceding Business Day) by the Federal Reserve Bank of New York, or,
      if such rate is not so published for any day that is a Business Day, the
      average of the quotations for such day on such transactions received by
      Agent or any Lender from three Federal Funds brokers of recognized
      standing selected by it, or if any such quotations are not received as
      reasonably determined by Agent.

            "FEE LETTER" - see Section 5.2.

            "FINAL MATURITY DATE" shall mean July 31, 2003.

            "FINANCIALS" - see Section 10.3(a).

            "FISCAL QUARTER" shall mean each of Borrower's and its Subsidiaries'
      fiscal quarters for financial accounting purposes, which ends on the last
      day of March, the Saturday nearest June 30, the last day of September and
      the last day of December, respectively.

            "FISCAL YEAR" shall mean Borrower's and its Subsidiaries' fiscal
      year for financial accounting purposes, which ends on the Saturday nearest
      June 30 of each calendar year.

            "FIXED CHARGE COVERAGE RATIO" shall mean, for any period, the ratio
      for such period of (i) an amount equal to (a) EBITDA for such period, less
      (b) Net Capital Expenditures incurred during such period, to (ii) Total
      Fixed Charges, all as determined for Borrower and its Subsidiaries on a
      consolidated basis in accordance with GAAP.

            "FIXTURES" shall mean all "fixtures" as such term is defined in the
      Code, now owned or hereafter acquired by Borrower, wherever located.

            "FORCE MAJEURE" shall mean acts of God, acts of public enemies,
      insurrections, riots, civil disturbances, strikes, boycotts, other direct
      consequences of a labor dispute, other industrial disturbances, fires,
      explosions, floods, epidemics, quarantine restrictions, shortages of
      materials, equipment or transportation, freight embargoes, power or
      utility failures, orders or acts, or failures to act, of civil or military
      authority or other similar causes beyond the control of Borrower.

            "FSFP" shall mean First Source Financial LLP, an Illinois registered
      limited liability partnership.

                                       9
 

<PAGE>
            "FUNDING DATE" shall mean the date of funding of a Loan and each
      continuation or conversion of Prime Rate Loans and LIBOR Rate Loans or
      issuance of a Letter of Credit or a LC Guaranty therefor, which date in
      all cases shall be a Business Day.

            "GAAP" shall mean generally accepted accounting principles in the
      United States of America as in effect from time to time consistently
      applied with those used in preparation of Borrower's audited financial
      statements for the Fiscal Year ending June 28, 1997.

            "GENERAL INTANGIBLES" shall mean all of Borrower's presently owned
      or hereafter acquired general intangibles, including Intellectual
      Property, goodwill, chooses in action, causes of action, franchises,
      customer lists, contract rights, confidential information, employment
      agreements, engineering contracts, leasehold interests in real and
      personal property, insurance policies (including business interruption
      insurance), licenses, permits, and such other Property which uniquely
      reflect the goodwill of the business of Borrower; deposit accounts,
      letters of credit, and General Intangibles relating to other items of
      Collateral, including rights to refunds or indemnification; reversionary
      or other rights of Borrower to excess Employee Benefit Plan assets upon
      termination or amendment thereof; and proceeds of all of the foregoing,
      including insurance proceeds, including proceeds of business interruption
      insurance, income tax refunds, and claims for tax or other refunds against
      any Governmental Authority.

            "GOVERNMENTAL AUTHORITY" shall mean any nation or government or any
      other political subdivision thereof, any state or other political
      subdivision thereof, and any agency, authority, court, central bank,
      instrumentality, department or other law, regulation or rulemaking entity
      exercising executive, legislative, judicial, taxing, regulatory or
      administrative functions of or pertaining to government.

            "GUARANTY" shall mean the joint and several guaranty of the
      Liabilities executed by the Guarantors in favor of the Agent and the
      Lenders, as such Guaranty may be amended, supplemented or otherwise
      modified from time to time.

            "GROSS CAPITAL EXPENDITURES" shall mean, for any period, the total
      of all expenditures incurred by Borrower or any Subsidiary in respect of
      the purchase or other acquisition of fixed or capital assets during such
      period, without any deduction for trade-ins, salvage values, resales or
      similar recoveries, including the amount which, in accordance with GAAP,
      is or should be initially posted to Borrower's or such Subsidiary's
      balance sheet with respect to leases entered into during such period which
      have been, or, in accordance with GAAP, should be, recorded as Capitalized
      Leases.

            "GUARANTOR" shall mean each of RidgePak Corporation, Niemand
      Holdings, Inc., Niemand Industries, Inc., GB Labels, Inc., Standard
      Packaging and Printing Corp., and "Guarantors" shall mean all such Persons
      collectively.

                                       10

 
<PAGE>
            "HAZARDOUS MATERIAL" shall mean: (a) any "hazardous substance" as
      now defined pursuant to the Comprehensive Environmental Response,
      Compensation and Liability Act ("CERCLA"), 42 U.S.C.A. ss. 9601(14), aS
      amended by the Superfund Amendments and Reauthorization Act ("SARA"), and
      including any judicial interpretations thereof; (b) any "pollutant or
      contaminant" as defined in 42 U.S.C.A. ss. 9601(33); (c) any materiaL now
      defined as "hazardous waste" pursuant to 40 C.F.R. Part 261; (d) any
      petroleum, including crude oil and any fraction thereof; (e) natural gas,
      natural gas liquids, liquefied natural gas, or synthetic gas usable for
      fuel; (f) any "hazardous chemical" as defined pursuant to 29 C.F.R. Part
      1910; (g) any asbestos, polychlorinated biphenyl (PCB), or isomer of
      dioxin, or any material or thing containing or composed of such substance
      or substances; and (h) any other substance, regardless of physical form,
      that is subject to any past, present or future Federal, state or local
      governmental statute, rule or regulation relating to the protection of
      human health, plant life, animal life, natural resources, property or the
      reasonable enjoyment of life or property from the presence in the
      environment of any solid, liquid, gas, odor or any form of energy, from
      whatever source.

            "INDEBTEDNESS" of a Person means, without duplication, (a)
      indebtedness for borrowed money or for the deferred purchase price of
      property or services (other than deferred compensation to employees and
      trade liabilities incurred in the ordinary course of business and payable
      in accordance with customary practices), whether on open account or
      evidenced by a note, bond, debenture or similar instrument, (b)
      obligations under Capitalized Leases, (c) reimbursement obligations for
      letters of credit, banker's acceptances or other credit accommodations,
      whether drawn or undrawn, (d) liabilities, as determined by Agent, under
      any interest rate agreement, (e) Contingent Obligations and (f)
      Indebtedness secured by any Lien on any property of that Person, even if
      that Person has not assumed such Indebtedness.

            "INDEBTEDNESS TO BE REFINANCED" - see Section 12.1(h).

            "INITIAL TERM" - See Section 2.2.

            "INTANGIBLE ASSETS" shall mean licenses, franchises, patents, patent
      applications, trademarks, trademark applications, trade names, copyrights,
      copyright applications, computer software rights, goodwill and research
      and development expense or other intangibles shown on the balance sheet of
      Borrower and its Subsidiaries on a consolidated basis.

            "INSTRUMENT" shall mean any "instrument," as such term is defined in
      the Code, now owned or hereafter acquired by Borrower, wherever located,
      other than instruments that constitute, or are a part of a group of
      writings that constitute, Chattel Paper.

            "INTELLECTUAL PROPERTY" of a Person shall mean all of such Person's
      present and future designs, patents, patent rights and applications
      therefor, technology, trademarks 

                                       11
 
<PAGE>
      and registrations or applications therefor, service marks, trade names,
      inventions, copyrights and all applications and registrations therefor,
      advertising matter, software or computer programs, license rights, trade
      secrets, methods, processes, logos, knowhow, drawings, specifications,
      descriptions and licenses with respect thereto, and all memoranda, notes,
      and records with respect to any research and development, whether now
      owned or hereafter acquired by such Person, and proceeds of all of the
      foregoing, including proceeds of insurance policies thereon.

            "INTERCOMPANY NOTES"  - see Section 11.33.

            "INTEREST COVERAGE RATIO" shall mean, for any period, the ratio for
      such period of (i) EBITDA to (ii) Interest Expense, but excluding interest
      on any Indebtedness permitted by Section 11.33, all as determined for
      Borrower and its Subsidiaries on a consolidated basis in accordance with
      GAAP.

            "INTEREST EXPENSE" shall mean, for any period, the gross interest
      expense accrued or paid by Borrower and its Subsidiaries on a consolidated
      basis during such period, determined in accordance with GAAP. For the
      purposes of the foregoing, gross interest expense shall be determined
      after giving effect to any net payments made or received by Borrower or
      any such Subsidiary with respect to interest rate protection agreements.

            "INTEREST PERIOD" shall mean with respect to any LIBOR Rate Loan, a
      period of one, three or six months commencing on a Business Day selected
      by a Borrower pursuant to this Agreement. Each such Interest Period shall
      end on (but exclude) the date which numerically corresponds to such date
      one, three or six months thereafter; provided, however, that if there is
      no such numerically corresponding day in such next, third or sixth
      succeeding month, such Interest Period shall end on the first Business Day
      of the month next succeeding such next, third or sixth succeeding month.
      If any Interest Period would otherwise end on a day which is not a
      Business Day, such Interest Period shall end on the next succeeding
      Business Day.

            "INVENTORY" shall mean all of the inventory of a Person of every
      kind and description, now or at any time hereafter owned by or in the
      custody or possession, actual or constructive, of such Person, wherever
      located, including all merchandise, raw materials, parts, supplies,
      work-in-process and finished goods intended for sale, together with all
      the containers, packing, packaging, shipping and similar materials related
      thereto, and including such inventory as is temporarily out of such
      Person's custody or possession, including inventory on the premises of
      other Persons and items in transit, and including any goods reclaimed,
      returned or repossessed upon any Accounts, Documents, Instruments or
      Chattel Paper relating to or arising from the sale of inventory, and all
      substitutions and replacements therefor, and all additions and accessions
      thereto, and all ledgers, books of account, records, computer printouts,
      computer runs, microfilm, microfiche and other computer-prepared
      information relating to any of the foregoing, and any and all proceeds of
      any of the foregoing, including proceeds of insurance policies thereon.

                                       12
 

<PAGE>
            "INVESTMENT PROPERTY" of a Person shall have the meaning ascribed
      thereto in Section 9-115 of the Code in those jurisdictions in which such
      definition has been adopted and shall include (i) all securities, whether
      certificated or uncertificated, including stocks, bonds, interests in
      limited liability companies, partnership interests, treasuries,
      certificates of deposit, and mutual fund shares; (ii) all securities
      entitlement of such Person, including the rights of such Person to any
      securities account and the financial assets held by a securities
      intermediary in such securities account and any free credit balance or
      other money owing by any securities intermediary with respect to that
      account; (iii) all securities accounts held by such Person; (iv) all
      commodity contracts held by such Person; and (v) all commodity accounts
      held by such Person.

            "IRC" shall mean the Internal Revenue Code of 1986, as amended from
      time to time, and any replacements thereof.

            "ISSUING BANK" shall mean any bank or financial institution selected
      by Borrower (which may be a Lender) which is approved by Agent and which
      issues one or more Letters of Credit for the account of Borrower as to
      which Agent or the Lenders have issued an LC Guaranty.

            "ISSUING BANK FEES" - see Section 5.4.

            "LC EXPOSURE" shall mean, at any time, the sum of (a) the Cap Amount
      at such time less the amount of outstanding Letters of Credit included in
      Reimbursement Obligations for the purposes of clause (b) of this
      definition, plus (b) the then aggregate amount of outstanding
      Reimbursement Obligations.

            "LC GUARANTY" shall mean any document, instrument or agreement
      pursuant to which Agent or the Lenders request or apply for the issuance
      of Letter of Credit at Borrower's request or Agent or the Lenders assure
      an Issuing Bank of Borrower's payment or performance of some or all of its
      obligations in connection with such letter of credit (including without
      limitation any obligations of reimbursement), which term shall include (i)
      any reimbursement agreement or application entered into by Agent or the
      Lenders (whether with or without Borrower as a co-signer, joint or primary
      obligor or otherwise), or any guaranty entered into by Agent or the
      Lenders, and (ii) this Agreement if a Lender is the Issuing Bank.

            "LC GUARANTY REQUEST" - see Section 12.2(c).

            "LC LIABILITY" shall mean, as to each LC Guaranty, all liabilities
      of the Lenders with respect to each LC Guaranty or the transaction for
      which any Letter of Credit was issued, whether contingent or otherwise,
      including: (a) the amount available to be drawn or which may become
      available to be drawn on a Letter of Credit; (b) all amounts which have
      been 

                                       13
 

<PAGE>
      paid or made available by the Issuing Bank or the Lenders to the extent
      not reimbursed by Borrower; and (c) all unpaid interest, fees and expenses
      with respect thereto.

            "LEASE OBLIGATIONS" shall mean, at any date, the rental commitments
      of Borrower under leases for real and/or personal property (including
      taxes, insurance, maintenance and similar expenses which Borrower is
      obligated to pay under the terms of said leases) on such date, whether or
      not such obligations are reflected as liabilities or commitments on a
      balance sheet of Borrower or in the notes thereto, excluding, however,
      Capitalized Lease Obligations.

            "LENDERS" shall mean, collectively, FSFP and all other financial
      institutions parties to this Agreement, together with their respective
      successors and permitted assigns pursuant to Section 15.1, and "LENDER"
      shall mean any of such Persons.

            "LENDER PARTY" - see Section 14.5.

            "LETTER OF CREDIT" shall mean a letter of credit issued by an
      Issuing Bank for the account of Borrower as to which Agent or the Lenders
      have issued an LC Guaranty.

            "LETTER OF CREDIT COMMITMENT" - see Section 2.1(c).

            "LIABILITIES" shall mean all of the following, in each case
      howsoever created, arising or evidenced, whether direct or indirect, joint
      or several, absolute or contingent, or now or hereafter existing or
      arising, or due or to become due: (i) all liabilities, obligations and
      indebtedness of Borrower and its successors and assigns to any one or more
      of Agent and the Lenders under or in connection with this Agreement, any
      Note, any Letter of Credit, any LC Guaranty or any of the other Related
      Documents and (ii) all other obligations of Borrower or its successors and
      assigns to any one or more of Agent and the Lenders in connection with the
      Related Transactions.

            "LIBOR INTEREST PAYMENT DATE" shall mean, with respect to any LIBOR
      Rate Loan, the fifteenth day of each month and the last day of each
      Interest Period applicable thereto, commencing with the first of such
      dates to occur after the making of such Loan.

            "LIBOR INTEREST RATE DETERMINATION DATE" shall mean each date of
      determining the LIBOR Rate with respect to an Interest Period which date
      shall be the first Business Day prior to the first day of the applicable
      Interest Period for any LIBOR Rate Loan.

            "LIBOR RATE" shall mean, for any Interest Period, an interest rate
      per annum obtained by dividing (i) the rate of interest published in The
      Wall Street Journal on the LIBOR Interest Rate Determination Date in the
      column captioned "Money Rates" under the heading "London Interbank Offered
      Rates (LIBOR)," with respect to a time period equal to such Interest
      Period, by (ii) a percentage equal to 100% minus the LIBOR Reserve

                                       14
 
<PAGE>

      Percentage, if any, in effect on the applicable LIBOR Interest Rate
      Determination Date; provided, however, that if such publication is not
      available or such rate is not set forth therein, the LIBOR Rate shall be
      determined on the basis of any other source determined by Agent in its
      reasonable discretion. The LIBOR Rate shall be adjusted to the nearest
      one-sixteenth percent (1/16%) or, if there is no nearest one-sixteenth
      percent (1/16%), to the next higher one-sixteenth percent (1/16%).

            "LIBOR  RATE  LOANS"  shall  mean,  collectively,  LIBOR Rate Term
      Loans and LIBOR Rate Revolving Loans.

            "LIBOR RATE REVOLVING LOAN" shall mean that portion of a Revolving
      Loan which bears interest for a specific Interest Period based on the
      LIBOR Rate.

            "LIBOR RATE TERM LOAN" shall mean that portion of a Term Loan which
      bears interest for a specific Interest Period based on the LIBOR Rate.

            "LIBOR RESERVE PERCENTAGE" shall mean, for any day, the aggregate of
      the rates (expressed as a decimal) of any reserve requirements current on
      such day (including, without limitation, basic, supplemental, marginal and
      emergency reserves) under any regulation promulgated by the Board of
      Governors of the Federal Reserve System (or any successor thereto) as in
      effect from time to time dealing with reserve requirements prescribed for
      eurocurrency funding, including any reserve requirements with respect to
      "eurocurrency liabilities" under Regulation D of the Board of Governors of
      the Federal Reserve System. As of the Closing Date, the LIBOR Reserve
      Percentage is 0%.

            "LIBOR REVOLVING MARGIN" - see Section 4.1.

            "LIEN" shall mean, when used with respect to any Person, any
      interest in any real or personal property, asset or other right held,
      owned or being purchased or acquired by such Person which secures payment
      or performance of any obligation and shall include any security interest,
      mortgage, lien, pledge, encumbrance, charge, retained security title of a
      conditional vendor or lessor, or other security interest of any kind,
      whether arising under a security agreement, mortgage, deed of trust,
      chattel mortgage, assignment, pledge, retention of security title,
      financing or similar statement or notice or arising as a matter of law,
      judicial process or otherwise.

            "LOAN ACCOUNT" - see Section 2.13.

            "LOANS" shall mean, collectively, all Revolving Loans and Term
      Loans, and "LOAN" shall mean any thereof.

            "LOCKBOX" - see Section 6.2(a).

                                       15
 
<PAGE>
            "LOSS PROPERTY" - see Section 7.6.

            "LOSS PROCEEDS" - see Section 7.6.

            "MANAGER" shall mean First Source Financial, Inc., a Delaware
      corporation, and its successors and assigns, as manager of FSFP.

            "MASTER ACCOUNT" - see Section 6.2(a).

            "MASTER ACCOUNT BANK" shall mean each bank and other entity serving
      in the capacity of agent for Agent under the Bank Agency Agreement
      (including any successor Bank Agency Agreement). Initially Master Account
      Bank shall mean Harris Trust and Savings Bank.

            "MASTER ACCOUNT COLLECTED BALANCES" - see Section 7.2.

            "MASTER AGENT" - see Section 14.23.

            "MATERIAL ADVERSE EFFECT" shall mean (a) a material adverse effect
      on the financial condition, operations, assets, business or prospects of
      Borrower or of Borrower and its Subsidiaries taken as a whole or (b) a
      material impairment of the ability of Borrower or any Subsidiary to
      perform its obligations in connection with this Agreement or any of the
      Related Documents to which it is a party or of Agent or any Lender to
      enforce or collect any of the Liabilities.

            "MATERIAL CONTRACT" - see Section 10.6.

            "MATERIAL INTELLECTUAL PROPERTY RIGHT" - see Section 10.14.

            "MONTHLY  REPORT"  shall  have the  meaning  ascribed  thereto  in
      Section 11.1(m).

            "MORTGAGES" - see Section 9.8.

            "MULTIEMPLOYER PLAN" shall mean any "multiemployer plan" within the
      meaning of Section 3(37) or 4001(a)(3) of ERISA to which Borrower or a
      current or past member of its Controlled Group is making or has made
      contributions to or as to which Borrower or any current or past member of
      its Controlled Group otherwise has or could have any liability.

            "NET  CAPITAL  EXPENDITURES"  shall  mean  for  any  period  Gross
      Capital Expenditures minus proceeds from Permitted Purchase Money Debt
      used to finance Gross Capital Expenditures.

                                       16
 
<PAGE>

            "NET INCOME" shall mean, for any period, net income or loss of
      Borrower and its Subsidiaries on a consolidated basis as it would appear
      on an income statement of Borrower and its Subsidiaries for such period
      prepared in accordance with GAAP.

            "NET WORTH" shall mean the net worth of Borrower and its
      Subsidiaries on a consolidated basis as it would appear on a consolidated
      balance sheet of Borrower prepared in accordance with GAAP.

            "NIEMAND SALE" - See Section 11.12.

            "NON-USE FEE" - See Section 5.1.

            "NOTE" and  "NOTES"  shall  mean the Term Notes and the  Revolving
      Notes, or any of them.

            "NOTICE OF LIBOR ACTIVITY" - see Section 2.3(b).

            "OPERATING ACCOUNTS" - see Section 6.2(b).

            "ORGANIZATION DOCUMENTS" of a Person shall mean, as applicable, the
      articles of incorporation, articles of organization, operating agreement,
      bylaws, partnerships agreement and all other organization documents of
      such Person.

            "PBGC" shall mean Pension Benefit Guaranty Corporation, and any
      entity succeeding to any or all of its functions under ERISA.

            "PENSION PLAN" shall mean any "employee pension benefit plan", as
      such term is defined in Section 3(2) of ERISA (other than a Multiemployer
      Plan), which is (a) subject to Title IV of ERISA or subject to the minimum
      funding standards under Section 412 of the IRC or Section 302 of ERISA and
      (b) is or has been maintained by Borrower or a current or past member of
      its Controlled Group, or as to which Borrower or any member of its
      Controlled Group otherwise has or could have any liability.

            "PERMITTED LC" shall mean a Letter of Credit issued with Agent's
      prior written consent; provided, however, that (a) each such Letter of
      Credit shall expire pursuant to its terms on or before the Revolving Loan
      Termination Date, (b) at no time shall Total Revolving and LC Exposure
      exceed the lesser of the amount of the Revolving Commitment in effect or
      the Borrowing Base at such time, (c) Borrower's reimbursement obligations
      with respect to each such Letter of Credit shall be secured by an LC
      Guaranty and (d) Agent and the respective Issuing Bank shall have agreed
      in writing that the Relevant Cap for such LC Guaranty shall be increased
      by an amount equal to the stated amount of such Letter of Credit.

                                       17
 
<PAGE>

            "PERMITTED LIENS" shall mean any of the following Liens: (a) Liens
      in favor of Agent granted pursuant to the Collateral Documents; (b) Liens
      (i) in connection with the acquisition of fixed assets after the date
      hereof and attaching only to the Property being acquired, if the
      Indebtedness secured thereby is incurred in connection with the
      acquisition and does not exceed the fair market value of such Property at
      the time of acquisition thereof, and (ii) Liens on property being leased
      pursuant to leases which are Capitalized Lease Obligations permitted under
      this Agreement, provided that the aggregate outstanding amount of all such
      Indebtedness and Capitalized Lease Obligations described in the preceding
      clauses (i) and (ii) does not at any time exceed $500,000; (c) Liens for
      current taxes or other governmental charges or levies which are not
      delinquent or are being contested in good faith and by appropriate
      proceedings, and with respect to which adequate reserves have been
      established, and are being maintained, in accordance with GAAP; (d)
      mechanic's, worker's, materialmen's and other like Liens arising in the
      ordinary course of business in respect of obligations which are not
      delinquent or which are being contested in good faith and by appropriate
      proceedings, and with respect to which adequate reserves have been
      established, and are being maintained, in accordance with GAAP; (e) Liens
      arising in the ordinary course of business for sums being contested in
      good faith and by appropriate proceedings, and with respect to which
      adequate reserves have been established, and are being maintained, in
      accordance with GAAP, or for sums not due, and in any case not involving
      any deposits or advances for borrowed money or the deferred purchase price
      of Property or services; (f) zoning ordinances, easements, licenses,
      reservations, covenants, conditions or restrictions on the use of real
      property which, in Agent's determination, are not violated by existing
      uses or improvements, do not in the aggregate interfere with the use of
      the related real property and do not adversely affect the marketability of
      the title to the related real property; (g) Liens incurred in the ordinary
      course of business in connection with worker's compensation, unemployment
      insurance or other forms of governmental insurance or benefits; (h) Liens
      shown on Schedule 10.5; (i) Liens in the form of cash securing letter of
      credit reimbursement obligations existing on the Closing Date in an
      aggregate amount not exceeding $230,000; provided, that the Liens
      permitted in this clause (i) shall cease to be Permitted Liens sixty (60)
      days after the Closing Date; and (j) Liens securing Property located at
      1410 South Washington Street, Marion, Alabama, in favor of the Alabama
      Department of Economic and Community Affairs existing on the Closing Date;
      provided, that the Liens permitted in this clause (j) shall cease to be
      Permitted Liens fifteen (15) days after the Closing Date.

            "PERMITTED PURCHASE MONEY DEBT" see Section 11.21.

            "PERSON" shall mean any natural person, corporation, firm,
      partnership, limited liability company, limited liability partnership,
      firm, trust, association, government, governmental agency, Employee
      Benefit Plan or other entity, whether acting in an individual, fiduciary
      or other capacity.

            "PREPAYMENT PREMIUM" - see Section 2.8.

                                       18
 
<PAGE>

            "PRIME RATE" shall mean the highest "prime rate" of interest
      reported, from time to time, by The Wall Street Journal; provided,
      however, that in the event that The Wall Street Journal ceases reporting a
      "prime rate," the "Prime Rate" shall be determined from a comparable index
      chosen Agent in good faith. The "Prime Rate" shall change effective on the
      date of the publication of any change in the applicable index by which
      such "Prime Rate" is determined.

            "PRIME RATE LOANS" shall mean Loans or the portion thereof which
      bear interest determined by reference to the Prime Rate.

            "PRIME RATE REVOLVING LOAN" shall mean a Revolving Loan which bears
      interest based on Prime Rate.

            "PRIME RATE TERM LOAN" shall mean that portion of a Term Loan which
      bears interest based on the Prime Rate.

            "PRO FORMA" - see Section 10.3(c).

            "PRO RATA SHARE" shall mean, with respect to a Lender, a fraction
      (expressed as a percentage), the numerator of which is the amount of such
      Lender's Commitment and the denominator of which is the amount of all of
      the Commitments.

            "PROPERTY" of a Person shall mean all types of real, personal or
      mixed property and all types of tangible or intangible property of such
      Person

            "REAL ESTATE" of a Person shall mean the real property, mineral
      rights, leasehold or other interests in real property together with any
      purchase options and other rights related to such leaseholds or other
      interests owned, leased, used or operated now or hereafter by such Person,
      all Fixtures and personal property used in conjunction therewith and such
      Person's rights to leases, rents and profits with respect thereto.

            "REIMBURSEMENT OBLIGATIONS" shall mean, at any time, the sum of (i)
      the aggregate undrawn amount of all Letters of Credit outstanding at such
      time, plus (ii) the aggregate amount of all drawings under Letters of
      Credit for which the Issuing Bank has not at such time been reimbursed
      (either by Borrower, Agent or the Lenders), plus (iii) the aggregate
      amount of all payments made by each Lender to the Issuing Bank with
      respect to such Lender's participation in Letters of Credit as provided in
      Section 2.12 hereof for which Borrower have not at such time reimbursed
      the Lenders, whether by way of a Revolving Loan or otherwise.

            "RELATED DOCUMENTS" shall mean, collectively, the Notes, this
      Agreement and the Collateral Documents, in each case as the same may be
      amended, modified or supplemented from time to time pursuant to the terms
      hereof or thereof.
                                       19
 
<PAGE>

            "RELATED TRANSACTIONS" shall mean all transactions contemplated by
      this Agreement and the Related Documents, including, without limitation,
      the Loans and the granting by Borrower of Liens on the Collateral to
      secure the Liabilities.

                        "RENEWAL TERM" - See Section 2.2.

            "REPORTABLE EVENT" shall have the meaning given to such term under
      Section 4043 of ERISA or the regulations issued thereunder.

            "REQUIRED LENDERS" shall mean (i) Lenders having sixty-six and
      two-thirds percent (66_%) or more of the total Commitments then in effect
      or (ii) if the Revolving Commitment has been terminated, Lenders having in
      the aggregate sixty-six percent (66_%) or more of the aggregate
      outstanding amount of the Loans.

            "REQUIREMENT OF LAW" for any Person shall mean the corporate charter
      and by-laws or other organizational or governing documents of such Person,
      and any law, treaty, rule, ordinance or regulation or determination of an
      arbitrator or a court or other governmental authority, in each case
      applicable to or binding upon such Person or any of its property or to
      which such Person or any of its Property is subject.

            "REVOLVING COMMITMENT" - see Section 2.1(b).

            "REVOLVING LOANS" - see Section 2.1(b).

            "REVOLVING LOAN TERMINATION DATE" - see Section 2.1(b).

            "REVOLVING NOTES" - see Section 3.2.

            "SECURITY AGREEMENTS" - see Section 9.8.

            "SOLVENCY AFFIDAVIT" shall mean the Affidavit of Solvency, dated as
      of the Closing Date, executed and delivered by the chief financial officer
      of Borrower in favor of Lender.

            "SOLVENT" with respect to any Person on any date of determination,
      shall mean that (i) the fair saleable value of such Person's Property is
      in excess of the total amount of the present value of its Liabilities
      (including for purposes of this definition all liabilities, whether or not
      reflected on a balance sheet prepared in accordance with GAAP, and whether
      direct or indirect, fixed or contingent, liquidated or unliquidated,
      secured or unsecured, disputed or undisputed), (ii) such Person is able to
      pay its debts or obligations in the ordinary course as they mature, and
      (iii) such Person has capital sufficient to carry on its business as
      conducted and as proposed to be conducted. In computing the amount of
      contingent, unliquidated or disputed liabilities at any time, such
      liabilities will be computed at the amount which, in light of all of the
      facts and circumstances existing at such time, represents

                                       20
 
<PAGE>

      the amount that can reasonably be expected to become an actual or matured
      liability. "SOLVENCY" shall have a correlative meaning.

            "STOCK PLEDGE AGREEMENT" - See Section 9.8.

            "SUBSIDIARY" shall mean, with respect to any Person (herein referred
      to as the "parent"), any corporation, association or other business entity
      (whether now existing or hereafter organized) of which at least a majority
      of the securities or other ownership interests having ordinary voting
      power for the election of directors (or their equivalent under the laws of
      the jurisdiction of organization of such person) is, at the time any
      determination is being made, owned or controlled by the parent or one or
      more subsidiaries of the parent or by parent and one or more subsidiaries
      of the parent. Unless otherwise expressly provided or the context requires
      otherwise, all references herein to a "Subsidiary" shall mean a direct or
      indirect Subsidiary of Borrower.

            "TERM LOANS" - see Section 2.1(a).

            "TERM COMMITMENT"  - see Section 2.1(a).

            "TERM NOTES" - see Section 3.1.

            "TOTAL FIXED CHARGES" shall mean, for any period, the sum of (i) all
      scheduled payments of interest or principal on account of Indebtedness of
      Borrower and its Subsidiaries on a consolidated basis, including any and
      all penalties, premiums, prepayment fees or the like thereon (including
      without limitation any scheduled payments on the Term Loans) with respect
      to such period, plus (ii) income taxes paid or payable with respect to
      such period directly by Borrower or any Subsidiary to any Governmental
      Authority, plus (iii) to the extent not subtracted in determining Net
      Income and without double counting, all amounts paid by Borrower with
      respect to such period (A) to purchase, redeem or otherwise acquire any of
      Borrower's Equity Interests, or (B) in respect of the purchase of or
      satisfaction of any principal installment or any Indebtedness of any
      Affiliate of Borrower. For purposes of the foregoing, "scheduled payments"
      shall not include repayments of Revolving Loans pursuant to Section 7.3.

            "TOTAL REVOLVING AND LC EXPOSURE" shall mean, at any time, the sum
      of (a) the LC Exposure, if any, at such time and (b) the then aggregate
      outstanding principal amount of all Revolving Loans.

            "UNAPPLIED INSURANCE OR CONDEMNATION PROCEEDS" - shall mean Loss
      Proceeds which Lender may apply against the Liabilities in accordance with
      Section 7.6.
                                       21
 

<PAGE>
            "UNMATURED EVENT OF DEFAULT" shall mean any event or condition which
      if it continues uncured will, with lapse of time or notice or lapse of
      time and notice, constitute an Event of Default.

            "WELFARE PLAN" shall mean any "employee welfare benefit plan", as
      such term is defined in Section 3(1) of ERISA.

            "WORKING CAPITAL" shall mean, at any date, the excess of Current
      Assets over Current Liabilities as at said date.

            SECTION 1.2     ACCOUNTING AND FINANCIAL DETERMINATIONS. Where the
character or amount of any asset or liability or item of income or expense is
required to be determined, or any accounting computation is required to be made,
for the purpose of this Agreement or the Related Documents, such determination
or calculation shall be made, to the extent applicable and except as otherwise
specified in this Agreement or such Related Document, in accordance with GAAP;
provided, however, that if any change in generally accepted accounting
principles from those applied in the preparation of the financial statements
referred to in Section 10.3 hereof is occasioned by the promulgation of rules,
regulations, pronouncements and opinions by or required by the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions), the
initial announcement of which change is made after the Closing Date, results in
a change in the method of calculation of financial covenants, standards or terms
found in Sections 1 or 11 hereof, the parties hereto agree to enter into good
faith negotiations in order to amend such provisions so as to reflect such
changes with the desired result that the criteria for evaluating Borrower's
financial condition shall be the same after such changes as if such changes had
not been made; and provided, further, that until such time as the parties hereto
agree upon such amendments, such financial covenants, standards and terms shall
be construed and calculated as though such change had not taken place. When used
herein, the term "financial statement" shall include the notes and schedules
thereto, if any. All other terms contained in this Agreement (and which are not
otherwise specifically defined herein) shall have the meanings provided in
Article 9 of the Uniform Commercial Code of the State of Illinois (the "Code")
to the extent the same are used or defined therein. All determinations of the
book value of Inventory contemplated hereby shall be at the lower of cost (on a
first-in, first-out basis) or market.

            SECTION 1.3       CROSS REFERENCES; HEADINGS. The words "hereof",
"herein" and "hereunder" and words of a similar import when used in this
Agreement or in any of the Related Documents shall refer to this Agreement or
such Related Document as a whole and not to any particular provision of this
Agreement or such Related Document. Section, Schedule and Exhibit references
contained in this Agreement are references to Sections, Schedules and Exhibits
in or to this Agreement unless otherwise specified. Any reference in any Section
or definition to any clause is, unless otherwise specified, to such clause of
such Section or definition. The various headings in this Agreement and the
Related Documents are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or such Related Document or any
provision hereof or thereof.

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<PAGE>

            SECTION 2   COMMITMENTS OF LENDERS;  LOAN REQUESTS;  REDUCTION OR
TERMINATION OF THE COMMITMENTS; PREPAYMENTS; MAKING OF PAYMENTS; SETOFF

            SECTION 2.1    COMMITMENTS Subject to the terms and conditions of
this Agreement, each Lender agrees to, severally on its own behalf and not
jointly with any other Lender:

            (a) Term Commitment. Make a loan (each such loan is herein called a
"TERM LOAN" and all such loans are herein collectively called the "TERM LOANS")
to Borrower on the Closing Date in the amount set forth opposite such Lender's
name on Schedule I under the heading "Term Commitment". The foregoing commitment
of the Lenders is herein called the "TERM COMMITMENT."

            (b) Revolving Commitment. Make loans to Borrower (each such loan is
herein called a "REVOLVING LOAN" and all such loans are herein collectively
called the "REVOLVING LOANS") on a revolving basis from time to time before July
31, 2003 or such later date as may be established pursuant to Section 2.2
(herein called the "REVOLVING LOAN TERMINATION DATE") in such amounts as
Borrower from time to time may request up to the amount set forth opposite such
Lender's name in Schedule I under the heading "Revolving Commitment" (the
foregoing commitment of the Lenders, as it may be reduced in accordance with the
terms hereof from time to time, is herein called the "REVOLVING COMMITMENT"),
less all reductions in the amount of the Revolving Commitment pursuant to
Section 2.6 of this Agreement; provided, however, that the Lenders shall not be
required to make any Revolving Loan if, after giving effect to such Revolving
Loan, Total Revolving and LC Exposure would exceed the lesser of (i) the amount
of the Revolving Commitment then in effect or (ii) the Borrowing Base at such
time. Agent reserves the right in its reasonable business judgment with respect
to the Borrowing Base to (x) adjust any eligibility criteria or establish new
eligibility criteria, (y) modify the advance rates against Eligible Accounts and
Eligible Inventory and (z) establish reserves against Borrowing Availability.

            (c) Letter of Credit Commitment. To the extent of Borrowing
Availability, upon the request of Borrower, Agent (on behalf of each Lender
according to such Lender's Pro Rata Share) may issue LC Guaranties for the
account of Borrower. Each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from Agent, without recourse,
representation or warranty, an individual participation interest equal to its
Pro Rata Share of the amount of such LC Guaranty and each draw paid by the
Issuing Bank under the Letter of Credit issued in connection therewith. Each
Lender's obligation to pay its Pro Rata Share of all draws under the Letters of
Credit issued in connection with each LC Guaranty shall be absolute,
unconditional and irrevocable and in each case shall be made without
counterclaim or set-off by such Lender and shall be made irrespective of whether
a Unmatured Event of Default or Event of Default shall have occurred and be
continuing at the time. The aggregate maximum amount of Letters of Credit
subject to LC Guaranties shall not at any time exceed $2,000,000. The foregoing
commitment of the Lenders is herein called the "LETTER OF CREDIT COMMITMENT."

                                       23
 
<PAGE>
            SECTION 2.2    REVOLVING LOAN TERMINATION DATE. This Agreement shall
be effective from the Closing Date until the Revolving Loan Termination Date;
provided, that all of the Lenders' and Agent's rights and remedies under this
Agreement shall survive such termination until all of the Liabilities have been
finally paid in full in cash. In addition, this Agreement may be terminated as
set forth in Section 13.2. Upon the effective date of termination, all of the
Liabilities shall become immediately due and payable without notice or demand
notwithstanding any terms contained herein or in any Note to the contrary.
Notwithstanding any termination of this Agreement, until (i) all of the
Liabilities except unmatured contingent Liabilities (other than those
Liabilities described in clauses (ii) and (iii) below) for which no claim has
been asserted shall have been paid in full in cash, (ii) each LC Guaranty shall
have been terminated and (iii) Borrower shall have provided to Agent security on
terms satisfactory to the Required Lenders with respect to any pending or
overtly threatened action against any Person which could result in a claim
against Borrower by any Lender Party for indemnification under Section 14.5,
Borrower shall remain bound by the terms of this Agreement and Agent shall be
entitled to retain its Liens on the Collateral.

             SECTION 2.3      LOAN REQUESTS

            (a) With respect to borrowings consisting of Prime Rate Loans,
Borrower shall give notice to Agent of each proposed borrowing by 10:00 A.M.
Chicago time on the proposed Funding Date. Prime Rate Loans made on any Funding
Date shall be in an aggregate minimum amount of $100,000 and integral multiples
of $5,000 in excess thereof.

            (b) With respect to borrowings consisting of LIBOR Rate Loans,
Borrower shall give notice to Agent of each proposed borrowing by 10:00 A.M.
Chicago time no later than three (3) Business Days and no more than five (5)
Business Days prior to the proposed date of such borrowing. With respect to
borrowings comprised of LIBOR Rate Loans, Borrower shall deliver to Agent
written notice of each such proposed borrowing substantially in the form set
forth in Exhibit 2.3(b) (each a "NOTICE OF LIBOR ACTIVITY") by 10:00 A.M.
Chicago time at least three (3) Business Days prior to, but in any event no more
than five (5) Business Days prior to, the proposed date of such borrowing. LIBOR
Rate Loans shall be in an aggregate minimum amount of $100,000 and integral
multiples of $100,000 in excess thereof (or in such other amount as Agent shall
permit as shall be evidenced by the making of such LIBOR Rate Loan by the
Lenders).

            (c) Each notice given pursuant to this Section 2.3 shall be
irrevocable and Borrower shall be bound to make a borrowing in accordance
therewith. Subject to receipt by Agent of the documents required under Section
12 with respect to a borrowing and the satisfaction of all other conditions
precedent to such borrowing set forth in this Agreement, on the requested
Funding Date each Lender shall pay over its Pro Rata Share of such funds by wire
transfer to the Operating Account (except that, with respect to the initial
Loans, disbursement shall be according to instructions to be agreed upon by
Agent and Borrower on or prior to the Closing Date). Such notice shall be in
writing or by "Electronic Notice" and, if by Electronic Notice, shall be
confirmed in writing on or before the fifteenth Business Day of the first
calendar month following the date of such borrowing by delivery of a Borrowing
Certificate to Lender. Each such notice shall specify the date,

                                       24
 
<PAGE>

amount and type of borrowing. "ELECTRONIC NOTICE" shall mean notice sent via
facsimile. No Lender Party shall incur any liability to Borrower in acting upon
any Electronic Notice referred to above which such Lender Party believes in good
faith to have been given by a duly authorized officer or other persons
authorized to borrow on behalf of Borrower or for otherwise acting in good faith
under this Section 2.3 and, upon funding of any Loans by a Lender in accordance
with this Agreement pursuant to any such Electronic Notice, Borrower shall have
effected a Loan hereunder.

            (d) Except as provided in Section 2.3(e) (which provides for the
settlement by Agent of Revolving Loans made, and payments thereon on a weekly
basis at Agent's discretion to avoid daily settlements between Lenders), on or
prior to 11:00 a.m. (Chicago time) on each Business Day on which it is asked to
make an advance with respect to Loans, Agent shall advise each Lender by
telephone or facsimile transmission of the requested Funding Date, the amount of
such advance and the amount of such Lender's Pro Rata Share thereof. Each Lender
shall pay to Agent the amount of such Lender's Pro Rata Share of such advance
prior to 11:00 a.m. (Chicago time) on the proposed Funding Date. Except as
provided in Section 2.3(e) and provided that each Lender has made all payments
required to be made by it hereunder, on or prior to 11:00 a.m. (Chicago time) on
the next Business Day after receipt by Agent of any payments of principal with
respect to the Loans and interest, fees and other amounts with respect to the
Liabilities (the "DAILY SETTLEMENT DATE"), Agent shall pay to each Lender the
amount of such Lender's Pro Rata Share of such payments. If any payment from any
Lender to Agent or from Agent to any Lender is not, in fact, made by the party
from whom payment is due, the other party shall be entitled to recover such
corresponding amount on demand (which demand shall be promptly made) together
with interest thereon at the Federal Funds Rate, for each day from the Funding
Date or Daily Settlement Date on which such amount was due until such amount is
paid.

            (e) Agent on behalf of the Lenders may (but shall not be obligated
to) make Revolving Loans and receive and retain payments on the Revolving Loans
in accordance with this Section 2.3(e) without notice to, or settlement with,
the Lenders; provided, Agent shall settle the amount of the Revolving Loans with
the Lenders at least once a week as follows:

      The amount of each Lender's Pro Rata Share of outstanding Revolving Loans
      shall be computed weekly (or more frequently in Agent's discretion) and
      shall be adjusted upward or downward on the basis of the amount of
      outstanding Revolving Loans as of 3:00 P.M. Chicago time on the last
      Business Day of the period specified by Agent (such date being referred to
      as the "SETTLEMENT DATE"). Agent shall deliver to each of the Lenders
      promptly after any Settlement Date a summary statement of the amount of
      outstanding Revolving Loans for such period. The Lenders shall transfer to
      Agent, or, subject to [SECTION 12.6(C)], Agent shall transfer to the
      Lenders, such amounts as are necessary so that (after giving effect to all
      such transfers) the amount of the Revolving Loans made by each Lender
      shall be equal to such Lender's Pro Rata Share of the aggregate amount of
      the Revolving Loans outstanding as of such Settlement Date. If the summary
      statement is received by the Lenders prior to 10:00 A.M. Chicago time on
      any Business Day, each Lender shall make the transfers described above in
      immediately available funds no later than 12:00 noon Chicago time on the
      day such summary statement was received; and if such summary statement is
      received by the Lenders after 10:00 A.M. Chicago time on such day, each
      Lender shall make such transfers no later than 12:00 noon Chicago time on

                                       25
 
<PAGE>

      the next succeeding Business Day. The obligation of each of the Lenders to
      transfer such funds shall be irrevocable and unconditional and without
      recourse to or warranty by Agent. Each of Agent and the Lenders agree to
      mark their respective books and records on the Settlement Date to show at
      all times the dollar amount of their respective Pro Rata Shares of the
      outstanding Revolving Loans. To the extent that the settlement described
      above shall not yet have occurred, upon repayment of any part of the
      Revolving Loans by any Borrower, Agent may first apply such amounts repaid
      directly to the amounts made available by Agent pursuant to this Section
      2.3(e).

Because Agent on behalf of the Lenders may be advancing and/or may be repaid all
or a portion of the Revolving Loans prior to the time when the Lenders will
actually advance and/or be repaid all or a portion of Revolving Loans, interest
with respect to the Revolving Loans shall be allocated by Agent to each Lender
and Agent in accordance with the amount of the Revolving Loans actually advanced
by and repaid to each Lender and Agent and shall accrue from and including the
date such Revolving Loans are so advanced to but excluding the date such
Revolving Loans are either repaid by any Borrower in accordance with Section 7.3
or actually settled by the applicable Lender as described in this Section
2.3(e).

            SECTION 2.4     CERTAIN WAIVERS. Borrower waives notice of the
creation of any of the Liabilities and all other notices whatsoever to Borrower
with respect to the Liabilities except statements required under Section 2.14
and notices required under Section 13.1.

                                       26
 
<PAGE>

            SECTION 2.5      MANDATORY AND PERMITTED PREPAYMENTS OF THE TERM
LOANS

            (a) The aggregate principal balance of the Term Loans shall be
payable to the Agent, for the benefit of the Lenders, in twenty (20) quarterly
installments on the 15th day of January, April, July and October of each year,
commencing October 15, 1998, and in the Final Maturity Date as follows:

                  Payment Date                      Installment Amount

            October 15, 1998 through
               July 15, 1999                        $     562,500

            October 15, 1999 through
               July 15, 2000                        $     625,000

            October 15, 2000 through
              April 15, 2003                        $     687,500

               July 31, 2003                        $  12,687,500

            (b) In addition, on the date as to each Fiscal Year of Borrower
which is ninety (90) days after the end of such Fiscal Year, commencing with the
first such date with respect to a Fiscal Year ending after the date hereof,
Borrower shall make a payment (the "EXCESS CASH FLOW PAYMENT") of principal on
the Term Loans in addition to the other payments on the Term Loans required to
be made pursuant to this Agreement or the Term Notes in an amount equal to 75%
of the Excess Cash Flow of Borrower for such Fiscal Year. As used herein, the
term "EXCESS CASH FLOW" shall mean EBITDA minus Total Fixed Charges minus Net
Capital Expenditures plus any decrease in Working Capital minus any increase in
Working Capital. Each Excess Cash Flow Payment shall be applied to reduce the
remaining regularly scheduled principal installments of the Term Loans in
inverse order of their maturity. No Prepayment Premium shall be due and payable
as a result of the making of any Excess Cash Flow Payment.

            (c) Additionally, upon receipt by Borrower of any Unapplied
Insurance or Condemnation Proceeds except as to Inventory, Asset Sale Proceeds,
or Equity Sale Proceeds or proceeds of any refinancing of the Liabilities or
other source of funds (other than revenue derived in the ordinary course of
business) of the Borrower and its Subsidiaries, Borrower shall make a mandatory
prepayment of the Term Loans in the amount thereof, subject to Agent's right to
otherwise apply such payments after the occurrence and during the continuance of
an Event of Default. Each such payment shall be accompanied by accrued interest
on such principal amount, amounts payable under Section 4.4(f), if any, and,
with respect to reductions as a result of any prepayment described in Section
2.8, the Prepayment Premium required under such Section. Each

                                       27
 
<PAGE>

such payment shall be applied to reduce the remaining regularly scheduled
principal installments of the Term Loans in inverse order of their maturities.

            (d) In addition to the mandatory repayments of the Term Loans under
clauses (a), (b) and (c) above, Borrower may voluntarily from time to time on at
least five Business Days' prior written irrevocable notice to the Lenders prepay
the Term Loans in whole or in part. Each such voluntary prepayment of the Term
Loans, if in part, shall be in an aggregate amount of at least $100,000 and an
integral multiple of $50,000. Each such partial prepayment shall be applied to
reduce the remaining regularly scheduled principal installments of the Term
Loans to be prepaid in inverse order of their maturity. Each such payment shall
be accompanied by accrued interest on such principal amount, amounts payable
under Section 4.4(f), if any, and, with respect to reductions as a result of any
prepayment described in Section 2.8, the Prepayment Premium required under such
Section.

            SECTION 2.6     VOLUNTARY REDUCTION OR TERMINATION OF THE REVOLVING
COMMITMENT. Borrower may voluntarily from time to time on at least five
Business Days' prior written irrevocable notice to the Lenders permanently
reduce the Revolving Commitment in whole or in part. If in part, any such
reduction to be in an aggregate amount of at least $100,000 and an integral
multiple of $50,000; provided, that concurrently with such reduction Borrower
pay the Prepayment Premium required by Section 2.8 of this Agreement.

            SECTION 2.7     MANDATORY PREPAYMENTS ON REVOLVING LOANS

            (a) Concurrently with each reduction (including any termination) of
the Revolving Commitment (whether pursuant to Section 2.6 or otherwise),
Borrower shall make a mandatory prepayment of Revolving Loans outstanding in the
amount, if any, by which (i) the Total Revolving and LC Exposure exceeds (ii)
the then reduced amount of the Revolving Commitment. In addition, if at any time
(i) the Total Revolving and LC Exposure shall exceed (ii) the Borrowing Base,
Borrower shall make a mandatory prepayment of the Revolving Loans in the
aggregate amount of such excess. Each such payment shall be accompanied by
accrued interest on such principal amount, and amounts payable under Section
4.4(f), if any.

            (b) If at any time after the making of a deemed Revolving Loan
pursuant to the first sentence of Section 7.5(b), the Total Revolving and LC
Exposure exceeds the lesser of (i) the Revolving Commitment, or (ii) the
Borrowing Base, then Borrower immediately shall make a mandatory prepayment of
Revolving Loans outstanding in the aggregate amount of such excess and each such
payment shall be accompanied by accrued interest on such principal amount and
amounts payable under Section 4.4(f), if any.


            SECTION 2.8     PREPAYMENT PREMIUM. Each voluntary reduction of the
Revolving Commitment pursuant to Section 2.6, and (without duplication) each
prepayment of all or any portion of the outstanding principal balance of the
Term Loans made (i) from the proceeds of any refinancing of the Liabilities,
(ii) from Asset Sale Proceeds, (iii) from Equity Sale Proceeds (other than the
issuance of Equity Interests as part of an employee stock incentive or benefit
plan 
                                       28
 
<PAGE>

approved by the board of directors of Borrower) or (iv) from any other
source of funds (other than revenue derived in the ordinary course of Borrower's
business operations) shall be accompanied in each case by a prepayment premium
("PREPAYMENT PREMIUM") paid to Agent for the benefit of the Lenders in an amount
equal to: (a) if such Commitment reduction or prepayment is made at any time
during the period from and including the Closing Date to and including the first
anniversary of the Closing Date, 1.5% of such prepayment or Commitment
reduction; (b) if such Commitment reduction or prepayment is made at any time
during the period from and after the first anniversary of the Closing Date
through and including the second anniversary of the Closing Date, 1.0% of such
prepayment or Commitment reduction; and (c) if such Commitment reduction or
prepayment is made at any time during the period from and after the second
anniversary of the Closing Date through and including the third anniversary of
the Closing Date, 0.5% of such prepayment or Commitment reduction; provided,
however, that if, on or before December 31, 1998, such a Commitment reduction or
prepayment is made from the proceeds of a sale of all or substantially all of
the assets of the Company to an acquirer disclosed by Borrower to Agent in
writing on or prior to the Closing Date and set forth on Schedule 2.8, then the
Prepayment Premium with respect to such prepayment or reduction shall be an
amount equal to 0.75% of such prepayment or Commitment Reduction; provided,
further, that no Prepayment Premium shall be paid in connection with the Niemand
Sale.

            SECTION 2.9     MAKING OF PAYMENTS. All payments of principal of, or
interest on, the Notes and of all fees and other Liabilities shall be made by
Borrower to Agent in immediately available Dollars. All such payments shall be
made to Agent's Account No. 2358874 at LaSalle National Bank, ABA #071000505 (or
such other account as Agent may from time to time specify), not later than 11:30
A.M. Chicago time, on the date due; and funds received after that hour shall be
deemed to have been received by Agent on the next following Business Day.
Anything in this Agreement to the contrary notwithstanding, under no
circumstances shall receipt by Master Account Bank of funds of Borrower into the
Master Account or the holding of funds therein constitute repayment of Loans, or
entitle Borrower to interest thereon.

            SECTION 2.10     DUE DATE EXTENSIONS. If any payment of principal,
interest or fees with respect to any of the Loans falls due on a Saturday,
Sunday or other day which is not a Business Day, then such due date shall be
extended to the next following Business Day, and additional interest and fees
shall accrue and be payable for the period of such extension.

            SECTION 2.11    SET OFF AND SHARING OF PAYMENTS. In addition to any
rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, at any time (i) any payment or amount owing by
Borrower under or in connection with this Agreement or the Related Documents is
then due to any one or more of Agent and the Lenders or any such holder of a
Note, and (ii) upon the occurrence and during the continuance of any Event of
Default, Agent, each Lender, Master Account Bank (as agent of Agent and each
Lender), and each holder of any Note is hereby authorized by Borrower at any
time or from time to time, without notice to Borrower or to any other Person,
any such notice being hereby expressly waived, to set off and to appropriate and
to apply any and all balances held by it at any of its offices for the account
of Borrower
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<PAGE>

(regardless of whether such balances are then due to Borrower) and any other
property at any time held or owing by Agent, that Lender, Master Account Bank
(as agent of Agent and each Lender) or that holder to or for the credit or for
the account of Borrower against and on account of any of the Liabilities which
are not paid when due; provided that no Agent or Lender shall exercise any such
right without giving prior written notice to Agent. Any Lender or holder of any
Note having a right to set off shall, to the extent the amount of any such set
off exceeds its Pro Rata Share of the Liabilities, purchase for cash (and the
other Lenders or holders shall sell) participations in each such other Lender's
or holder's Pro Rata Share of the Liabilities as would be necessary to cause
such Lender to share such excess with each other Lender or holder in accordance
with their respective Pro Rata Shares. Borrower agrees, to the fullest extent
permitted by law, that (a) any Lender or holder may exercise its right to set
off with respect to amounts in excess of its Pro Rata Share of the Liabilities
and may sell participations in such excess to other Lenders and holders and (b)
any Lender or holder so purchasing a participation in the Loans made or other
Liabilities held by other Lenders or holders may exercise all rights of set-off,
bankers' lien, counterclaim or similar rights with respect to such participation
as fully as if such Lender or holder were a direct holder of Loans and other
Liabilities in the amount of such participation.

            SECTION 2.12      CERTAIN MATTERS RELATING TO LETTERS OF CREDIT.

          2.12.1 ISSUANCE OF LETTERS OF CREDIT. Agent and the Lenders shall not
     be obligated to issue an LC Guaranty or cause an Issuing Bank to issue any
     Letter of Credit for the account of Borrower if at the time of such
     requested issuance:

                  (a) The face amount of such requested Letter of Credit, when
            added to the Reimbursement Obligations then outstanding, (i) would
            cause LC Exposure to exceed $2,000,000, (ii) when added to the
            aggregate outstanding principal amount of Revolving Loans and all
            Reimbursement Obligations then outstanding would cause Total
            Revolving and LC Exposure to exceed the Borrowing Base then in
            effect, or (iii) when added to the aggregate outstanding principal
            amount of Revolving Loans and all Reimbursement Obligations then
            outstanding, would cause Total Revolving and LC Exposure to exceed
            the Revolving Commitment; or

                  (b) Any order, judgment or decree of any Governmental
            Authority or arbitrator shall purport by its terms to enjoin or
            restrain the Issuing Bank from issuing such Letter of Credit or
            Agent or the Lenders from issuing an LC Guaranty or any Requirement
            of Law applicable to Agent, any Lender or the Issuing Bank or any
            request or directive (whether or not having the force of law) from
            any Governmental Authority with jurisdiction over Agent, any Lender
            or the Issuing Bank shall prohibit, or request that Agent or the
            Issuing Bank refrain from, the issuance of guaranties or letters of
            credit generally or such Letter of Credit or LC Guaranty in
            particular or shall impose upon Agent, any Lender or the Issuing
            Bank with respect to such Letter of Credit or LC Guaranty any
            restriction or reserve or capital requirement (for which Agent or
            such Lender or the Issuing Bank is not

                                       30
 
<PAGE>

            otherwise compensated) not in effect as of the date of this
            Agreement, or any unreimbursed loss, cost or expense which was not
            applicable, in effect or known to Agent, the Lenders or the Issuing
            Bank as of the Closing Date; or

                  (c) A default of any Lender's obligations to fund exists,
            unless Agent and the Issuing Bank have entered into satisfactory
            arrangements with Borrower to eliminate Agent's and the Issuing
            Bank's risk with respect to such Lender, including cash
            collateralization of such Lender's Pro Rata Share of the
            Reimbursement Obligations; or

                  (d) Any of the conditions set forth in Section 12 shall not be
            satisfied.

          2.12.2 TERMS OF LETTERS OF CREDIT. The Letters of Credit shall be in a
     form satisfactory to the Issuing Bank and the Lenders. At the time of
     issuance, the amount and the terms and conditions of each Letter of Credit,
     and of any drafts or acceptances thereunder, shall be subject to approval
     by Agent and Borrower. In no event may the term of any standby Letter of
     Credit issued hereunder exceed 360 days nor the term of any documentary
     Letter of Credit exceed 120 days, and all Letters of Credit issued
     hereunder shall expire no later than the date that is five (5) Business
     Days prior to the Revolving Loan Termination Date. No Letter of Credit
     shall contain an automatic renewal provision. In addition to all other
     terms and conditions set forth in this Agreement, the issuance by Agent of
     any LC Guaranty shall be subject to the conditions precedent that the
     Issuing Bank be satisfactory to Agent and that the Letter of Credit for
     which Borrower requests a LC Guaranty be in such form, contain such terms
     and support such transactions as are reasonably satisfactory to Agent.
     Borrower shall comply with all such terms and conditions imposed by any
     Issuing Bank or by Agent with respect to the issuance of any Letter of
     Credit, whether such terms and conditions are imposed in the application
     for such Letter of Credit, the LC Guaranty with respect to such Letter of
     Credit or otherwise.

          2.12.3 LENDERS' PARTICIPATION. Immediately upon issuance or amendment
     by Agent of any LC Guaranty in accordance with the procedures set forth in
     this Agreement, each Lender shall be deemed to have irrevocably and
     unconditionally purchased and received from Agent, without recourse or
     warranty, an undivided interest and participation to the extent of such
     Lender's Pro Rata Share in the liability with respect to such LC Guaranty
     and the related Letter of Credit (including, without limitation, all
     obligations of Borrower with respect thereto to Agent, other than amounts
     owing to the Issuing Bank consisting of Issuing Bank Fees) and any security
     therefor or guaranty pertaining thereto.

          2.12.4 NOTICE OF ISSUANCE. Whenever Borrower desires the issuance of a
     Letter of Credit, Borrower shall deliver to Agent a written notice no later
     than 1:00 P.M. Chicago time at least five (5) Business Days in advance of
     the proposed date of issuance of any Letter of Credit, which written notice
     shall be in such form as may be required from time to time by Agent (a
     "LETTER OF CREDIT REQUEST"). The transmittal by Borrower of each Letter of
     Credit 
                                       31
 
<PAGE>

     Request shall be deemed to be a representation and warranty by Borrower
     that the Letter of Credit may be issued in accordance with and will not
     violate any of the requirements of Section 12. Prior to the date of
     issuance of each Letter of Credit, Borrower shall provide to Agent a
     precise description of the documents and the text of any certificate to be
     presented by the beneficiary of such Letter of Credit which if presented by
     such beneficiary on or prior to the expiration date of the Letter of Credit
     would require the Issuing Bank to make payment under the Letter of Credit.
     Agent, in its reasonable judgment, may require changes in any such
     documents and certificates. No Letter of Credit shall require payment
     against a conforming draft to be made thereunder prior to the second
     business day after the date on which such draft is presented, together with
     all documents and/or certificates required to be presented in connection
     therewith under the terms of the applicable Letter of Credit. A Letter of
     Credit Request may be given to Agent in writing or by Electronic Notice
     and, if requested by Agent, with prompt confirmation in writing. Any Letter
     of Credit Request given to Agent by Electronic Notice shall be deemed to
     have been prepared by, or under the supervision of, the chief financial
     officer of Borrower.

          2.12.5 PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. Borrower
     shall be irrevocably and unconditionally obligated forthwith without
     presentment, demand, protest or other formalities of any kind, to reimburse
     Agent, on behalf of the Lenders, for any amounts paid by the Lenders with
     respect to each LC Guaranty including all amounts paid by the Lenders upon
     any draw with respect to a Letter of Credit, any guaranty or reimbursement
     obligation paid by the Lenders to any Person upon any draw upon a Letter of
     Credit and all fees, costs and expenses paid by the Lenders to any Issuing
     Bank. All such reimbursement obligations shall be due and payable on
     demand. In the event of any drawing under any Letter of Credit by the
     beneficiary thereof, Borrower shall give notice to be received by Agent on
     the Business Day prior to the Business Day on which such drawing is payable
     if Borrower intends to reimburse the Issuing Bank for the amount of such
     drawing with funds other than the proceeds of Loans. Such notice from
     Borrower shall be irrevocable and, if given, Borrower shall reimburse the
     Issuing Bank not later than the close of business Chicago time on the day
     on which such drawing is honored in an amount in immediately available
     funds equal to the amount of such drawing. If Agent shall not have timely
     received such notice (i) Borrower shall be deemed to have timely requested
     the making of Revolving Loans on the date on which such drawing is honored
     in an amount equal to the amount of such drawing and (ii) subject to
     satisfaction or waiver of the conditions specified in Section 12 hereof and
     the other terms and conditions of Revolving Loans contained herein, Agent
     shall notify the Lenders thereof, and the Lenders shall, on the date of
     such drawing, make Revolving Loans in the amount of their Pro Rata Share of
     such drawing, the proceeds of which shall be applied directly by Agent to
     reimburse the Issuing Bank for the amount of such drawing or payment. If
     for any reason, proceeds of such Loans are not received by Agent on such
     date in an amount equal to the amount of such drawing, Borrower shall be
     obligated to and shall reimburse Agent, on the business day (under the laws
     of the jurisdiction of the Issuing Bank) immediately following the date of
     such drawing, in an amount in immediately available funds equal to the
     excess of the amount of such drawing 

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<PAGE>

     over the amount of such Loans, if any, which are so received, plus accrued
     interest on such amount at the rate set forth in Section 4.2 hereof. Each
     Lender acknowledges and agrees that its obligation to reimburse Agent
     pursuant to this Section 2.12.5 is absolute and unconditional and shall not
     be affected by any circumstance whatsoever including the occurrence or
     continuance of an Unmatured Event of Default or an Event of Default, and
     further acknowledges and agrees that each such payment shall be made
     without any offset, abatement, withholding or reduction whatsoever.

          2.12.6 PAYMENT BY LENDERS. In the event that Borrower does not
     reimburse Agent for the full amount of any drawing pursuant to Section
     2.12.5 , Agent shall promptly notify each Lender of the unreimbursed amount
     of such drawing and of such Lender's respective participation therein.
     Unless Agent shall have so elected, each Lender shall make available to
     Agent an amount equal to such Lender's respective participation in
     immediately available funds, not later than 1:00 P.M. Chicago time on the
     Business Day after the date notified by Agent. In addition, in the event
     that any Lender fails to make available to Agent the amount of any such
     Lender's participation in such LC Guaranty as provided in this Section
     2.12.6, Agent may, but shall not be obligated to, fund the amount of such
     Lender's participation in such LC Guaranty and recover such amount on
     demand from such Lender. In the event that any Lender fails to make
     available to Agent the amount of such Lender's participation in such LC
     Guaranty as provided in this Section 2.12.6, and Agent does not elect to
     fund to the Issuing Bank such defaulting Lender's participation in such LC
     Guaranty as provided in the immediately preceding sentence, Agent shall be
     entitled to recover such amount on demand from such Lender together with
     interest at the Prime Rate. Agent shall distribute to each other Lender
     which has paid all amounts payable by it under this Section 2.12.6 with
     respect to any Letter of Credit such other Lender's Pro Rata Share of all
     payments subsequently received by Agent from Borrower in reimbursement of
     payments made by Agent under such Letter of Credit when such payments are
     received.

          2.12.7 ISSUING BANK. As between Borrower, the Issuing Bank, Agent and
     each Lender, Borrower assumes all risks of the acts and omissions of the
     Issuing Bank, or misuse of the LC Guaranties or Letters of Credit by the
     respective beneficiaries of such LC Guaranties and Letters of Credit. In
     furtherance and not in limitation of the foregoing, neither Agent nor any
     of the Lenders shall be responsible (i) for the form, validity,
     sufficiency, accuracy, genuineness or legal effects of any document
     submitted by any party in connection with the application for and issuance
     of or any drawing honored under such LC Guaranties or Letters of Credit
     even if it should in fact prove to be in any or all respects invalid,
     insufficient, inaccurate, fraudulent or forged, (ii) for the validity or
     sufficiency of any instrument transferring or assigning or purporting to
     transfer or assign any such LC Guaranty or Letter of Credit, or the rights
     or benefits thereunder or proceeds thereof, in whole or in part, which may
     prove to be invalid or ineffective for any reason, (iii) for failure of the
     beneficiary of any such Letter of Credit to strictly comply with conditions
     required in order to draw upon such Letter of Credit, (iv) for errors,
     omissions, interruptions or delays in transmission or delivery of any
     messages, by mail, cable, telegraph, telex, telecopy or

                                       33
 
<PAGE>

     otherwise, whether or not they be in cipher, (v) for errors in
     interpretation of technical terms, (vi) for any loss or delay in the
     transmission or otherwise of any document required in order to make a
     drawing or request a payment under any such LC Guaranty or Letter of
     Credit, or of the proceeds thereof, (vii) for the misapplication by the
     beneficiary of any such LC Guaranty or Letter of Credit, of the proceeds of
     any drawing honored or payment under such LC Guaranty or Letter of Credit,
     and (viii) for any consequences arising from causes beyond the control of
     the Issuing Bank, Agent or the Lenders, except, in each case, as the result
     of the gross negligence or willful misconduct of the Issuing Bank. None of
     the above shall affect, impair, or prevent the vesting of any of the
     Agent's rights or powers hereunder. In furtherance and extension of, and
     not in limitation of, the specific provisions hereinabove set forth,
     Borrower hereby agrees that any action taken or omitted by Agent or any
     Lender or any Issuing Bank under or in connection with any LC Guaranty or
     Letter of Credit or any related certificates, or the Collateral relating
     thereto, if taken or omitted in good faith, shall be binding on Borrower
     and shall not impose any resulting liability on Agent or any Lender or
     relieve Borrower of any of its obligations hereunder to any such Person.

          2.12.8 OBLIGATIONS ABSOLUTE. The obligations of Borrower to reimburse
     Agent and the Lenders for payments made by the Lenders under the LC
     Guaranty or in connection with any Letter of Credit and the obligations of
     the Lenders under Section 2.12 hereof shall be unconditional and
     irrevocable and shall be paid strictly in accordance with the terms of this
     Agreement under all circumstances including, without limitation, the
     following circumstances:

                  (a)   any lack of validity or  enforceability  of any Letter
            of Credit;

                  (b) the existence of any claim, set-off, defense or other
            right which Borrower or any Affiliate of Borrower may have at any
            time against a beneficiary or any transferee of any Letter of Credit
            or LC Guaranty (or any Persons or entities for whom any such
            beneficiary or transferee may be acting), the Issuing Bank, Agent
            any Lender or any other Person, whether in connection with this
            Agreement, the transactions contemplated herein or any unrelated
            transaction (including any underlying transaction between Borrower
            or any of its Affiliates and the beneficiary for which such LC
            Guaranty was procured);

                  (c) any draft, demand, certificate or any other documents
            presented under any Letter of Credit proving to be forged,
            fraudulent, invalid or insufficient in any respect or any statement
            therein being untrue or inaccurate in any respect;

                  (d)   the  surrender or  impairment  of any security for the
            performance  or  observance  of  any of  the  terms  of any of the
            Related Documents;

                                       34
 
<PAGE>

                  (e) payment by the Issuing Bank under any Letter of Credit
            against presentation of a demand, draft or certificate or other
            document which does not comply with the terms of such Letter of
            Credit;

                  (f) failure of any drawing under a Letter of Credit or any
            non-application or misapplication by the beneficiary of the proceeds
            of any drawing;

                  (g) any draft, demand, certificate or any other document
            presented under any LC Guaranty proving to be forged, fraudulent,
            invalid or insufficient in any respect or any statement therein
            being untrue or inaccurate in any respect;

                  (h) payment by Agent or any Lender under any LC Guaranty
            against presentation of a demand, draft or certificate or other
            document which does not comply with the terms of such LC Guaranty;
            provided, that in the case of any payment by Agent or any Lender
            under such LC Guaranty, such Person has not acted with gross
            negligence or wilful misconduct as determined by a final judgment,
            not subject to review on appeal, of a court of competent
            jurisdiction in determining that the demand for payment under any LC
            Guaranty complies on its face with any applicable requirements for a
            demand for payment under such LC Guaranty;

                  (i) any other circumstance or happening whatsoever, which is
            similar to any of the foregoing; or

                  (j) the fact that an Unmatured Event of Default or an Event of
            Default shall have occurred and be continuing;

      provided, however, that Borrower shall have no obligation to reimburse the
      Issuing Bank, and the Lenders shall have no obligation under Section 2.12
      hereof, in the event of the Issuing Bank's willful misconduct or gross
      negligence in determining whether documents presented under the Letter of
      Credit comply with the terms of such Letter of Credit.

          2.12.9 AGENT'S EXECUTION OF APPLICATIONS AND OTHER ISSUING BANK
     DOCUMENTAION; RELIANCE ON CREDIT AGREEMENT BY ISSUING BANK. Agent shall be
     authorized to execute, deliver and perform on behalf of the Lenders such LC
     Guaranties, letter of credit applications, shipping indemnities, letter of
     credit modifications and consents and other undertakings for the benefit of
     the Issuing Bank as may be reasonably necessary or appropriate in
     connection with the issuance or modification of Letters of Credit requested
     by Borrower hereunder.

          2.12.10 CASH COLLATERAL. Upon demand by Agent or the Required
     Lenders after the occurrence of any Event of Default, Borrower shall
     deposit with Agent for the benefit of the Lenders with respect to each
     Letter of Credit then outstanding, promptly upon such demand, cash or Cash
     Equivalents in an amount equal to 110% of the greatest amount

                                       35
 
<PAGE>

     for which such Letter of Credit may be drawn. Such deposit shall be held by
     Agent for the benefit of the Issuing Bank and the other Lenders as security
     for, and to provide for the payment of, outstanding Letters of Credit.

          2.12.11. INDEMNIFICATION. In addition to amounts payable as elsewhere
     provided herein and to the provisions of Section 14.5 hereof, Borrower
     hereby agrees to indemnify, exonerate and hold each Lender Party free and
     harmless from and against any and all claims, demands, actions, causes of
     action, suits, losses, costs (including attorneys' fees and disbursements),
     charges, liabilities and damages, and expenses in connection therewith
     (irrespective of whether such Person is a party to the action for which
     indemnification hereunder is sought) which such Lender Party incurs or is
     subject to as a consequence, directly or indirectly, of (i) the issuance of
     any LC Guaranty or Letter of Credit, other than as a result of the gross
     negligence or willful misconduct of such Person as determined by a court of
     competent jurisdiction, or (ii) the failure of any Lender or Agent to honor
     a demand under a Letter of Credit or LC Guaranty as a result of any act or
     omission relating to a Letter of Credit or LC Guaranty, whether rightful or
     wrongful, of any present or future de jure or de facto government or
     Governmental Authority. Borrower's unconditional obligations to Agent and
     the Lenders hereunder shall not be modified or diminished for any reason or
     in any manner whatsoever. Borrower agrees that any charges made to Agent or
     the Lenders for Borrower's account by any Issuing Bank shall be conclusive
     as between such Persons and Borrower and may be charged to the Loan
     Account. All obligations under this Section 2.12.11 shall survive
     termination of this Agreement.

            The Issuing Bank shall not be liable for any error, negligence, or
      mistake, whether omission or commission, in following Borrower's
      instructions or those contained in any Letter of Credit or of any
      modifications, amendments or supplements thereto or in issuing or paying
      any Letter of Credit, except for the Issuing Bank's gross negligence or
      wilful misconduct.

            SECTION 2.13     LOAN ACCCOUNT. Agent shall maintain a loan account
("LOAN ACCOUNT") on its books in which shall be recorded (i) all Loans and
advances made to Borrower pursuant to this Agreement, (ii) the issuance of all
LC Guaranties, (iii) all payments made by Borrower on all Loans and (iv) all
other appropriate debits and credits as provided in this Agreement including all
fees, charges, expenses and interest. The failure so to record any such
information or any error in so recording any such information shall not,
however, limit or otherwise affect the actual obligations of Borrower hereunder
or under the Notes to repay the principal amount of all Loans together with all
interest accruing thereon. All entries in the Loan Account shall be made in
accordance with Agent's customary accounting practices as in effect from time to
time. Borrower shall pay the Liabilities reflected as owing by it under the Loan
Account and all other Liabilities hereunder as such amounts become due or are
declared due pursuant to the terms of this Agreement. So long as an Unmatured
Event of Default or an Event of Default shall have occurred and be continuing,
Borrower irrevocably waives the right to direct the application of any and all
payments at any time or times thereafter received by Agent or any Lender from or
on behalf of Borrower, and 

                                       36
 
<PAGE>

Borrower does hereby irrevocably agree that each Lender shall have the
continuing exclusive right to apply and to reapply any and all payments received
at any time or times hereafter against the Liabilities in such manner as such
Lender may deem advisable notwithstanding any previous entry by Agent upon the
Loan Account or by Agent or such Lender on any other books and records.

            SECTION 2.14     STATEMENTS. All Loans and advances to Borrower, and
all other debits and credits provided for in this Agreement, shall be evidenced
by entries made by Agent in the Loan Account and in Agent's books and records
showing the date, amount and character for each such debit or credit. Until such
time as Agent shall have rendered to Borrower written statements of account as
provided herein, the balance in the Loan Account, as set forth on Agent's most
recent printout or other written statement, shall be rebuttably presumptive
evidence of the amounts due and owing to each Lender by Borrower; provided, that
any failure to so record or any error in so recording shall not limit or
otherwise affect Borrower's obligations to pay the Liabilities. Not more than
twenty (20) days after the last day of each calendar month, Agent shall render
to Borrower a statement setting forth the principal balance of the Loan Account
and the calculation of interest and fees due thereon. Each such statement shall
be subject to subsequent adjustment by Agent but shall, absent manifest errors
or omissions, be presumed correct and binding upon Borrower, and shall
constitute an account stated unless, within thirty (30) days after receipt of
any statement from Agent, Borrower shall deliver to Agent in accordance with
Section 14.3 written objection thereto specifying the error or errors, if any,
contained in such statement. In the absence of a written objection delivered to
Agent as set forth in this Section 2.14, Agent's statement of the Loan Account
shall be conclusive evidence of the amount of the Liabilities.

            SECTION 3   NOTES; RECORDKEEPING.

            SECTION 3.1     TERM NOTE. The Term Loans of each Lender shall be
evidenced by a promissory note (herein, as from time to time supplemented,
extended or replaced, called the "TERM NOTE") substantially in the form set
forth in Exhibit 3.1, with appropriate insertions, dated the date hereof,
payable to the order of such Lender in the maximum principal amount of such
Lender's Pro Rata Share of the Term Commitment.

            SECTION 3.2      REVOVLING NOTE. The Revolving Loans of each Lender
shall be evidenced, in part, by a promissory Note (herein, as such Note may be
from time to time supplemented, extended or replaced, called the "REVOLVING
NOTE") substantially in the form set forth in Exhibit 3.2, with appropriate
insertions, dated the date hereof, payable to the order of such Lender in the
amount of such Lender's Pro Rata Share of the maximum principal amount of the
initial amount of the Revolving Commitment.

            SECTION 4   INTEREST.

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<PAGE>

            SECTION 4.1     INTEREST RATES. Subject to Section 4.3, Borrower
hereby promises to pay interest on the outstanding principal amount of each Loan
for the period commencing on the date thereof until such Loan is paid in full,
at a rate per annum determined by reference to the Prime Rate or the LIBOR Rate,
respectively. The applicable basis for determining the rate of interest shall be
selected by Borrower at the time a borrowing is requested pursuant to Section
2.3 or at the time a Notice of LIBOR Activity is given pursuant to Section 4.4,
as the case may be. If on any day any portion of any Loan is outstanding with
respect to which notice has not been given to Agent in accordance with the terms
of this Agreement specifying the basis for determining the rate of interest
thereon, then for that day, such portion of such Loan shall be a Prime Rate Loan
and shall bear interest at a rate determined by reference to the Prime Rate.
Subject to Section 4.3, (i) each Prime Rate Revolving Loan and LIBOR Rate
Revolving Loan shall bear interest at a rate per annum determined as follows:
(a) if it is a Prime Rate Revolving Loan, then at the sum of the Prime Rate in
effect from time to time plus three-quarters of one percent (0.75%); or (b) if
it is a LIBOR Rate Revolving Loan, then at the sum of the LIBOR Rate for the
applicable Interest Period plus two and three-quarters of one percent (2.75%)
(the "LIBOR REVOLVING MARGIN"); and (ii) each Prime Rate Term Loan and LIBOR
Rate Term Loan shall bear interest at a rate per annum determined as follows:
(a) if it is a Prime Rate Term Loan, then at the sum of the Prime Rate in effect
from time to time plus one and one-quarter of one percent (1.25%); or (b) if it
is a LIBOR Rate Term Loan, then at the sum of the LIBOR Rate for the applicable
Interest Period plus three and one-quarter of one percent (3.25%).

             SECTION 4.2 DEFAULT INTEREST.

            (a) During any Default Interest Period, the unpaid principal amount
of (i) all Loans shall bear interest at the rate per annum set forth in Section
4.1 as to such Liabilities, and (ii) all other Liabilities shall bear interest
at the rate per annum applicable to Prime Rate Term Loans in each case plus 2.0%
per annum (the rate described in this clause (a) being herein called the
"DEFAULT RATE").

            (b) For purposes of this Section 4.2, the term "DEFAULT INTEREST
PERIOD" shall mean a period of time (i) if an Event of Default under Section
13.1(a) or 13.1(e) occurs, commencing on the date on which such Event of Default
occurs and ending on the date on which such Event of Default is waived, or (ii)
if an Event of Default (other than under Section 13.1(a) or 13.1(e)) occurs,
commencing on the date of written notice to Borrower from Agent of such
occurrence and ending on the date such Event of Default is waived by the
Required Lenders.

            SECTION 4.3 CONVERSION OR CONTINUATION

            (a) Subject to the provisions of Section 4.4, Borrower shall have
the option (i) to convert at any time all or any part of its outstanding Loans
equal to $100,000 and integral multiples of $100,000 in excess of that amount
(or in such other amount as Agent shall permit as shall be evidenced by the
conversion of such Loan by Agent) from a Prime Rate Loan to a LIBOR Rate Loan
for a specified Interest Period; (ii) to convert all or any part of its
outstanding Loans equal to 

                                       38
 
<PAGE>

$100,000 and integral multiples of $100,000 in excess of that amount (or in such
other amount as Agent shall permit as shall be evidenced by the conversion of
such Loan by Agent) from LIBOR Rate Loans to Prime Rate Loans on the expiration
date of any Interest Period applicable thereto; or (iii) upon the expiration of
the Interest Period with respect to any LIBOR Rate Loans, to continue all or any
portion of such Loans equal to $100,000 and integral multiples of $100,000 in
excess of that amount (or in such other amount as Agent shall permit as shall be
evidenced by the continuation of such Loan by Agent) as LIBOR Rate Loans for a
specified Interest Period, and the succeeding Interest Period(s) of such
continued Loans shall commence on the expiration date of the Interest Period
applicable thereto; provided, however, that, notwithstanding the foregoing,
pursuant to Section 4.4(h), no outstanding Loan may be continued as, or be
converted into, a LIBOR Rate Loan when any Event of Default or Unmatured Event
of Default has occurred and is continuing.

            (b) In the event Borrower shall elect to convert or continue a Loan
under Section 4.3(a), Borrower shall deliver to Agent a written Notice of LIBOR
Activity which shall set forth the details of such proposed conversion or
continuation, as the case may be, by 10:00 A.M., Chicago time three (3) Business
Days prior to, but in any event not more than five (5) Business Days prior to,
the proposed conversion/continuation date. Upon conversion or continuation by
Agent in accordance with this Agreement pursuant to any Notice of LIBOR
Activity, Borrower shall have effected the conversion/continuation of Loans
hereunder.

            (c) The officers and employees of Borrower authorized to request a
Loan on behalf of Borrower are also authorized to request a
conversion/continuation on behalf of Borrower. Neither Agent nor any Lender
shall incur any liability to Borrower in acting upon any notice referred to
above which Agent believes in good faith to have been given by a duly authorized
officer or other person authorized to act on behalf of Borrower or for otherwise
acting in good faith under this Section 4.3.

            (d) Each Notice of LIBOR Activity shall be irrevocable and Borrower
shall be bound to convert or continue in accordance therewith.

            SECTION 4.4 SPECIAL PROVISIONS GOVERNING LIBOR RATE LOANS.
Notwithstanding anything to the contrary contained in this Agreement, the
following provisions shall govern with respect to LIBOR Rate Loans as to the
matters covered:

            (a) Determination of Interest Period. By giving notice as set forth
in Sections 2.3 or 4.3(b), as the case may be, Borrower shall, subject to the
other provisions of this Section 4.4 specify whether the Interest Period
applicable to any requested LIBOR Rate Loan shall be a one-month, three-month or
six-month period. The determination of Interest Periods shall be further subject
to the following provisions: (i) in the case of immediately successive Interest
Periods, each successive Interest Period shall commence on the day on which the
immediately preceding Interest Period expires; (ii) if any Interest Period would
otherwise expire on a day which is not a Business Day, the Interest Period shall
be extended to expire on the next succeeding Business Day; (iii) Borrower may
not select an Interest Period for any Term Loan which terminates later than the

                                       40
 
<PAGE>

Final Maturity Date or for any Revolving Loan which terminates later than the
Revolving Loan Termination Date then in effect; (iv) Borrower may not select an
Interest Period with respect to any portion of principal of a Loan which extends
beyond a date on which Borrower could reasonably be expected to be required to
make a mandatory payment or prepayment of that portion of principal; (v) any
Interest Period which begins on a day for which there is no numerically
corresponding day in the calendar month during which such Interest Period is to
end shall (subject to clause (ii) above) end on the first Business Day following
the last day of such calendar month; and (vi) there shall be no more than two
(2) LIBOR Rate Loans in effect at any one time.

            (b) Determination of Interest Rate. As soon as practicable on the
LIBOR Interest Rate Determination Date, Agent shall determine (which
determination shall, absent manifest error, be presumptively correct) the
interest rate which shall apply to such Loans for such Interest Period and shall
promptly give notice thereof (in writing or by telephone) to Borrower.

            (c) Substituted Rate of Borrowing. In the event that on any LIBOR
Interest Rate Determination Date with respect to any Loans, Agent shall have
determined (which determination shall be presumptively correct and binding upon
all parties) that, by reason of any changes arising after the date of this
Agreement affecting the London interbank market, adequate and fair means do not
exist for ascertaining the LIBOR Rate on a basis consistent with the essential
intent of the parties hereto, then, and in each such event, the right of
Borrower to select the LIBOR Rate with respect to such Loans shall be suspended
until Agent shall notify Borrower that the circumstances causing such suspension
no longer exist, and such Loans shall be Prime Rate Loans.

            (d) Illegality. Notwithstanding anything to the contrary contained
in this Agreement, in the event that on any date any Lender shall have
reasonably determined (which determination shall be final and conclusive and
binding upon all parties) that the making or continuation of its LIBOR Rate
Loans violates any applicable law, treaty, governmental rule, regulation or
order (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful), then, and in any such event, such Lender
shall promptly give notice (by telephone confirmed in writing) to Borrower of
that determination. Subject to the prior withdrawal of a Notice of LIBOR
Activity or prepayment of the LIBOR Rate Loans of the Lenders as contemplated by
the following Section 4.4(e), the obligation of the Lenders to make or maintain
its LIBOR Rate Loans during any such period shall be terminated at the earlier
of the termination of the Interest Period then in effect or when required by
law, and Borrower shall no later than the termination of the Interest Period in
effect at the time any such determination pursuant to this Section 4.4(d) is
made or, earlier, when required by law, repay the LIBOR Rate Loans of the
Lenders, together with all interest accrued thereon and amounts payable under
Section 4.4(f).

            (e) Options of Borrower. In lieu of prepaying the Lenders as
required by Section 4.4(d) above, Borrower may, by giving notice (by telephone
confirmed immediately by telecopy) to Agent and subject to the other terms of
this Agreement, request the Lenders to make the LIBOR Rate Loan then being
requested as a Prime Rate Loan or to continue to maintain its outstanding Prime
Rate Loan then the subject of a Notice of LIBOR Activity as a Prime Rate Loan

                                       40
 
<PAGE>

or to convert its LIBOR Rate Loans then outstanding that are so affected into
Prime Rate Loans at the end of the then current Interest Period (or at such
earlier time as prepayment is otherwise required) in the manner contemplated by
Section 4.4 but without satisfying the advance notice requirements therein.


            (f) Compensation. In addition to (but without duplication of) such
amounts as are required to be paid by Borrower pursuant to Sections 4.1, 4.2,
8.1, 8.2, 8.3 and 8.4, Borrower shall compensate each Lender for all losses,
costs, expenses and liabilities and all customary administrative charges and
fees, including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund or maintain such Lender's LIBOR Rate Loans to Borrower and
all customary administrative charges and fees, which such Lender may sustain (i)
if for any reason a borrowing of any LIBOR Rate Loan does not occur on a date
specified therefor in a Notice of LIBOR Activity , or if a successive Interest
Period does not commence after notice therefor is given pursuant to Section
4.3(b), (ii) if any voluntary or mandatory prepayment of any LIBOR Rate Loan
occurs for any reason on a date which is not the last day of an Interest Period,
(iii) as a consequence of any required conversion of a LIBOR Rate Loan to a
Prime Rate Loan as a result of any of the events indicated in Sections 4.4(d) or
4.4(e), or (iv) as a consequence of any other default by Borrower to repay any
LIBOR Rate Loan when required by the terms of this Agreement. In addition,
Borrower shall pay the Lenders their customary administrative charges and fees
incurred in connection with any of the foregoing.

            (g) Manner of Funding of LIBOR Rate Loans. Each Lender shall be
entitled to fund and maintain its funding of all or any part of any LIBOR Rate
Loan requested by Borrower hereunder in any manner it sees fit, it being
understood and agreed, however, that for the purposes of this Agreement, all
determinations hereunder shall be made as if such Lender had actually funded and
maintained each LIBOR Rate Loan during each Interest Period for such Loan
through the purchase of deposits in the London interbank market having a
maturity corresponding to such Interest Period and bearing an interest rate
equal to the LIBOR Rate for such Interest Period.

            (h) LIBOR Rate Loans After Default. Unless the Required Lenders
shall otherwise agree in writing, after occurrence and during the continuance of
an Unmatured Event of Default or an Event of Default, Borrower may not elect to
have a Loan be made or continued as, or converted to, a LIBOR Rate Loan after
the expiration of any Interest Period then in effect for that Loan.

            SECTION 4.5     INTEREST PAYMENT DATES. Accrued interest on each
Prime Rate Loan shall be payable in arrears on the fifteenth day of each month,
and at maturity, commencing with August 15, 1998. Accrued interest on each LIBOR
Rate Loan shall be payable in arrears on each LIBOR Interest Payment Date
applicable to such Loan and, in any event, at maturity. After maturity (whether
by acceleration or otherwise), accrued interest on all Loans shall be payable on
demand.
                                       41
 
<PAGE>

            SECTION 4.6     SETTING OF RATES. Interest rates hereunder shall be
calculated from time to time by Agent and each such calculation of an interest
rate shall be conclusive and binding on Borrower in the absence of demonstrable
error.

            SECTION 4.7     COMPUTATION OF INTEREST. Interest on each Loan shall
be computed for the actual number of days elapsed on the basis of a year
consisting of 360 days. In computing interest on any Loan, the date of the
making of the Loan or the first day of an Interest Period, as the case may be,
shall be included and the date of payment of the Loan or the expiration date of
an Interest Period, as the case may be, shall be excluded; provided, however,
that if a Loan is repaid on the same day on which it is made, one day's interest
shall in any event be paid on that Loan. The interest rate applicable to each
Prime Rate Loan shall change simultaneously with each change in the Prime Rate.

            SECTION 5   FEES

            SECTION 5.1     NON-USE FEES. Borrower shall pay to Agent for the
benefit of each Lender, on a quarterly basis, a non-use fee (the "NON-USE FEE")
for the period from and including the date hereof to but excluding the Revolving
Loan Termination Date (or such earlier date on which the Revolving Loan
Commitment shall be terminated pursuant to Section 2.6 or 13.2 hereof) of
one-half of one percent (0.5%) per annum on the excess of (i) the daily average
of such Lender's Pro Rata Share of the then applicable Revolving Commitment over
(ii) the daily average of such Lender's Pro Rata Share of the aggregate
principal amount of the Total Revolving and LC Exposure. Such Non-Use Fees shall
be payable in arrears on the fifteenth day of each January, April, July and
October (commencing on October 15, 1998) and on the Revolving Loan Termination
Date (or such earlier date on which the Revolving Loan Commitment shall
terminate) for any period then ending for which such Non-Use Fees shall not have
been theretofore paid.

            SECTION 5.2     COMMITMENT FEE. If not previously paid to Agent,
Borrower shall pay to Agent on the date of the initial Loan a non-refundable
commitment fee as set forth in the fee letter between Borrower and Agent dated
July 2, 1998 (the "FEE LETTER").

            SECTION 5.3     CLOSING FEE. On the date of the initial Loan,
Borrower shall pay to Agent a non-refundable closing fee as set forth in the Fee
Letter.

            SECTION 5.4     LETTER OF CREDIT FEES. (a) Borrower shall pay to
Agent for the benefit of the Lenders a fee (the "LETTER OF CREDIT FEE") for the
period from and including the first date on which any Permitted LC is
outstanding to but excluding the Revolving Loan Termination Date (or such
earlier date on which all of the LC Guaranties shall no longer be of any force
or effect and the originals thereof are returned by the appropriate Issuing Bank
to the Lenders and the applicable Issuing Bank shall have acknowledged in
writing that the Lenders shall have no further obligations thereunder) in an
amount equal to the LIBOR Revolving Margin per annum on the daily average of the
LC Exposure. Such fees shall be payable in arrears on the fifteenth day of 

                                       42
 
<PAGE>

each January, April, July and October (commencing on October 15, 1998) and on
the date on which all of the LC Guaranties shall no longer be of any force or
effect.

            (b) Agent shall also be entitled to charge to the account of
Borrower as and when incurred by Agent or any Lender, any charges, fees, costs
and expenses charged to Agent or any Lender for Borrower's account by any
Issuing Bank (other than any fees charged to Agent or any Lender which would be
duplicative of the Letter of Credit Fee paid to Agent for the benefit of the
Lenders) (the "ISSUING BANK FEES") in connection with the issuance of any
Letters of Credit by the Issuing Bank. In addition, Borrower agrees to pay to
the Issuing Bank or the Issuing Bank's customary issuing, administrative and
negotiating fees and Agent shall pay the charges owing to such Issuing Bank upon
receipt of such amounts from Borrower.

            SECTION 5.5     AUDIT FEES. Borrower shall pay to Agent a collateral
audit fee (the "Audit Fee") in an amount equal to (i) Agent's reasonable
out-of-pocket costs per audit for each field audit conducted by Agent or its
agents pursuant to Section 11.3; provided that so long as no Unmatured Event of
Default or Event of Default shall have occurred and be continuing, Borrower
shall not be liable for reimbursing Agent for the costs and expenses of more
than three (3) field audits in any Fiscal Year plus (ii) so long as any Term
Loan remains outstanding, Agent's reasonable out-of-pocket costs of performing
annual "desk-top" appraisal updates of the Equipment and the Real Estate.

            SECTION 5.6     COMPUTATION OF FEES. All fees shall be computed for
the actual number of days elapsed on the basis of a year consisting of 360 days.

            SECTION 6   ACCOUNT  AGREEMENTS;  ACCOUNTS;  LIST OF ACCOUNTS AND
ACCOUNT STATEMENTS.

                                       43
 
<PAGE>

            SECTION 6.1     ACCOUNT AGREEMENTS. Prior to the date of the initial
Loan, Borrower, Master Account Bank and such other Persons as are designated by
Agent shall enter into a Bank Agency Agreement (herein, as the same may be
amended, modified or supplemented from time to time, called the "BANK AGENCY
AGREEMENT"). Pursuant to the Collateral Documents, including the Bank Agency
Agreement, Borrower shall grant to Agent a continuing first priority lien upon,
and security interest in, the Master Account and the Operating Account, each
described below (the Master Account and the Operating Account are collectively
referred to herein as the "BANK ACCOUNTS"), all funds, items, instruments,
investments, securities and other things of value at any time paid, deposited,
credited or held to or in the Lockbox or the Bank Accounts (whether for
collection, provisionally or otherwise), and all other Property of Borrower from
time to time in the possession or under the control of, or in transit to, Agent,
any Lender, Master Account Bank or any agent, bailee or custodian therefor, and
all proceeds of all of the foregoing. The Bank Agency Agreement shall specify
that throughout the term of this Agreement, Master Account Bank, to the extent
any such Person is a party to the Bank Agency Agreement, (i) shall be
pledgee-in-possession (for the benefit of the Lenders) of the Bank Accounts
described therein, all Cash Instruments of Borrower held by Master Account Bank,
and all such funds, items, instruments, investments, securities, other things of
value, Property and proceeds, (ii) shall take such action as shall be specified
in written notice from Agent to enable Agent to exercise its rights with respect
to such lien and security interest, (iii) shall be entitled to exercise all and
any rights which Agent or any Lender may have under this Agreement and the
Related Documents or applicable law with respect to the Bank Accounts described
therein and such other Property and (iv) shall provide Agent with copies of all
statements relating to the Bank Accounts provided by Master Account Bank to
Borrower. Notwithstanding any provision of this Section 6.1, Agent and the
Lenders shall have no obligation to reconcile or verify, at any time or for any
purpose, any balance in any Account or any other account maintained by Master
Account Bank as agent for Agent and the Lenders.

             SECTION 6.2 BANK ACCOUNTS

            (a) MASTER ACCOUNT AND LOCKBOX. Agent shall maintain at Master
Account Bank the account identified as the "Master Account" in the Bank Agency
Agreement (herein called the "MASTER ACCOUNT") and Borrower shall maintain one
or more lockboxes with Master Account Bank (herein called the "LOCKBOX"). The
Master Account and the Lockbox shall be under the sole dominion and control of
Agent, and Borrower shall not have any right of withdrawal therefrom.

            (b) OPERATING ACCOUNTS. Borrower shall maintain one or more
operating accounts at Master Account Bank described in the Bank Agency Agreement
(such accounts being herein called the "OPERATING ACCOUNT").

            (c) OTHER ACCOUNTS. Borrower shall not maintain any operating
account (other than the Operating Account), and agrees that it will not maintain
any bank, investment or other account of any kind whatsoever with any other
brokerage house or financial institution; provided, however, that so long as no
Event of Default shall have occurred and be continuing, Borrower may maintain
the petty cash and payroll accounts listed on Schedule 6.3 hereto at the
financial institutions 

                                       44
 
<PAGE>

indicated thereon, provided that the aggregate amount of funds on deposit in
each such (x) petty cash account shall not exceed $5,000, and (y) payroll
account shall not at any time exceed the sum of all accrued payroll and payroll
taxes then payable by Borrower on account of payroll obligations payable from
such account; and provided, further, that (i) Borrower shall have irrevocably
instructed the relevant financial institution, at the request of Agent, to
provide Agent with information concerning such accounts, (ii) such financial
institution shall have acknowledged such instructions in writing for the benefit
of Agent, and (iii) at any time when an Event of Default or Unmatured Event of
Default has occurred and is continuing Borrower shall, at Agent's request,
promptly cause each such financial institution to provide Agent with daily
reports of the balance in each such account.

            SECTION 6.3     LIST OF ACCOUNTS AND ACCOUNT STATEMENTS. All
accounts of Borrower and all payroll and petty cash accounts of Borrower are
described on Schedule 6.3. In the event Borrower opens any new accounts or
closes any account, Borrower shall deliver to Agent a revised version of
Schedule 6.3 showing any changes thereto within three (3) Business Days of any
such change. Borrower shall instruct all banks listed on Schedule 6.3 to provide
Agent with copies of all statements issued by such banks with respect to the
accounts described on Schedule 6.3.

                                       45
 
<PAGE>

            SECTION 7   PROCEEDS OF COLLATERAL;  APPLICATION OF FUNDS; DEEMED
LOANS.

            SECTION 7.1     PROCEEDS OF COLLATERAL; NOTICES TO ACCOUNT DEBTORS;
LOCKBOX. Borrower shall direct all Account Debtors to pay all Accounts and other
proceeds of Collateral directly to the Lockbox for deposit into the Master
Account. In addition, Borrower shall take all such actions as Agent in good
faith deems necessary or appropriate to ensure that at all times on and after
the date hereof all proceeds of Collateral (including, without limitation, all
Cash Instruments) are sent directly to the Lockbox. If, notwithstanding the
actions provided for in the preceding sentences of this Section 7.1, Borrower
shall receive, or any financial institution shall receive for the account of
Borrower, any Cash Instruments, Borrower shall, or shall cause such financial
institution to, transmit in the form received, before the close of business on
the next succeeding Business Day, all such Cash Instruments (properly endorsed,
where required, so that all items delivered may be collected by Master Account
Bank) to Master Account Bank for deposit in the Master Account. Borrower shall
not, and Borrower shall not permit or cause any such financial institution to,
commingle any Cash Instrument so received except in the Master Account, and
Borrower shall hold separate and apart from all other Property, all such Cash
Instruments in express trust for the benefit of the Lenders until delivery
thereof is made to Master Account Bank. Pursuant to, and subject to the terms
and conditions of the Bank Agency Agreement, items deposited in the Lockbox
shall be credited to the Master Account. Borrower, and any of its Affiliates,
employees, the Lenders or other Persons acting for or in concert with Borrower,
shall, acting as trustee for the Lenders, receive, as the sole and exclusive
property of the Lenders any monies, checks, notes, drafts or any other payments
relating to and/or proceeds of Accounts or other Collateral which come into the
possession or under the control of Borrower or any Affiliates, employees, the
Lenders or other Persons acting for or in concert with Borrower, and immediately
upon receipt thereof, Borrower or such other Persons shall remit the same or
cause the same to be deposited, in kind, into a Master Account or, at the
direction of Agent, shall remit the same, or cause the same to be remitted, in
kind, to Agent at Agent's address set forth in Section 14.3.

            SECTION 7.2     APPLICATION OF MASTER ACCOUNT FUNDS. At the opening
of business on each Business Day, Master Account Bank shall calculate the amount
of collected funds on deposit in the Master Account (herein the "MASTER ACCOUNT
COLLECTED BALANCES" for such day). Thereafter on such Business Day Master
Account Bank shall transfer from the Master Account to Agent the Master Account
Collected Balances in minimum amounts of $50,000 and in integral multiples of
$5,000 in excess thereof for such day.

            SECTION 7.3     APPLICATION OF FUNDS AVAILABLE FOR LOAN REPAYMENTS.
Any amounts received by Agent from the Master Account pursuant to Section 7.2
shall be applied to the outstanding obligations of Borrower in the following
order of priority: first, to principal of the Reimbursement Obligations and the
Revolving Loans then due and payable in such order as Agent shall determine
(provided, however, that application on account of Liabilities constituting
Revolving Loans shall be made by Agent (i) first to all Prime Rate Revolving
Loans and (ii) only when no Prime Rate Revolving Loans are outstanding to LIBOR
Rate Revolving Loans); second, 

                                       46
 
<PAGE>

to interest then due and payable on the Reimbursement Obligations and the
Revolving Loans in such order as Agent shall determine; third, to interest on
the Term Loans; fourth, to any fees hereunder then due and payable, in such
order as Agent may elect; and fifth, to the payment of any other Liabilities
then due and payable to Agent and the Lenders in such order as Agent may
determine. Immediately available funds received by Agent or deposited in the
Master Account shall be deemed to have been received two Business Days after the
date of receipt thereof.

            SECTION 7.4     APPLICATION UPON AN EVENT OF DEFAULT. If an Event of
Default shall have occurred and be continuing, and notwithstanding the foregoing
Sections 7.2 and 7.3, at the request of Agent, and Master Account Bank from time
to time shall transfer all Master Account Collected Balances in the Master
Account to Agent for application to the Liabilities in such order as Agent, in
its sole discretion, shall elect. Master Account Bank shall be entitled to rely
on a written statement of Agent to the effect that an Event of Default has
occurred and is continuing.

            SECTION 7.5     DEEMED LOANS. Notwithstanding any provision
contained herein to the contrary, and in addition to, and not in limitation of,
any of the other rights or remedies of Agent and the Lenders set forth herein,
including, without limitation, pursuant to Section 7.4, at the sole option of
Agent, in order to facilitate timely payment hereunder of all Liabilities in
respect of (i) payments of interest due on any Loans, (ii) payments of principal
due on the Term Loans, (iii) payments of cash, fees, expenses and other
Liabilities due and payable by Borrower to Agent and the Lenders hereunder or
under any of the Related Documents and (iv) payments by Agent and the Lenders of
any amount due and payable under the Bank Agency Agreement or any other
agreement entered into by any one or more of Agent and the Lenders and Master
Account Bank in connection with this Agreement (including, without limitation,
any amount resulting from the return, dishonor or other non-payment of items
deposited with Master Account Bank by or on behalf of Borrower), then, whether
or not there is Borrowing Availability under the Revolving Commitment, Borrower
shall be deemed automatically to have made a request for, and upon such payment
the Lenders shall be deemed to have made, a Prime Rate Revolving Loan, in the
full amount of such payment. Borrower acknowledges that such Loan may cause
Borrower to have exceeded the lesser of the Revolving Commitment or the
Borrowing Base, in which event Borrower shall be obligated to immediately make a
prepayment pursuant to Section 2.7(b).

            SECTION 7.6     APPLICATION OF PROCEEDS. In the event Borrower shall
suffer any loss covered by insurance, Borrower shall immediately notify Agent in
writing, and Borrower hereby authorizes and directs each and every insurance
company concerned to make payments for such loss directly and solely to Agent
(who may, but need not, make proof of loss) and Agent is hereby authorized to
adjust, collect and compromise in its discretion all claims under all such
policies, and Borrower shall sign, upon demand by Agent, all receipts, vouchers
and releases required by such insurance companies; provided, however, that other
than after the occurrence and during the continuance of an Event of Default,
Borrower may adjust, collect and compromise insurance claims upon notice to and
with Agent's consent (which shall be exercised reasonably and in good faith) so
long as Borrower is acting reasonably and diligently. In the event Borrower
shall be awarded any amount pursuant to any condemnation proceeding or the
taking or injury to any 

                                       47
 
<PAGE>

property for public use, Borrower shall immediately notify Agent in writing and
Borrower agrees that the proceeds of all such awards shall be paid to Agent and
authorizes Agent, on behalf and in the name of Borrower to execute and deliver
valid acquittances for and to appeal from any such award. Borrower shall also
immediately notify Agent of any actual or threatened condemnation or eminent
domain proceedings and shall give Agent at any time any additional instruments
requested by Agent for the purpose of validly and sufficiently assigning all
awards or appealing any such award. Insurance proceeds and awards described in
this Section 7.6 (collectively, "LOSS PROCEEDS"), or any part thereof, received
by Agent, after deducting therefrom any expenses incurred, may be applied by
Agent at its option (i) to the repair or restoration of the property suffering
any loss, condemnation or taking ("LOSS PROPERTY"), (ii) to the payment of the
Liabilities, whether or not due and in whatever order Agent elects, or (iii) to
any other purpose or objects for which Agent or the Lenders are entitled to
advance funds under this Agreement, all without affecting the lien or security
interest created by the Collateral Documents, and any balance of such monies
shall be paid to Borrower or the Person lawfully entitled thereto. None of Agent
and the Lenders shall be held responsible for any failure to collect any
insurance proceeds due under the terms of any policy regardless of the cause of
such failure unless due to the gross negligence or wilful misconduct of Agent.
Notwithstanding the foregoing, Agent and the Lenders agree that any Loss
Proceeds shall be applied as follows:

            (a) If no Unmatured Event of Default or Event of Default has
occurred and is continuing at the time of the insured loss, condemnation or
taking and the amount of such Loss Proceeds together with all other Loss
Proceeds previously or contemporaneously paid to Agent for the benefit of the
Lenders hereunder is less than $100,000, then such Loss Proceeds shall be paid
into the Master Account for application pursuant to this Agreement.

            (b) If no Unmatured Event of Default or Event of Default has
occurred and is continuing at the time of the insured loss, condemnation or
taking and the amount of such Loss Proceeds, together with all other Loss
Proceeds previously or contemporaneously paid to Agent for the benefit of the
Lenders hereunder is $100,000 or greater, then Agent will permit the Loss
Proceeds to be utilized toward the restoration of the Loss Property, provided
that (i) business interruption loss insurance will be payable to Borrower during
the period necessary to restore the Loss Property, (ii) the proceeds of such
business interruption insurance together with other funds available to Borrower
will be sufficient to pay all of Borrower's obligations during such period,
(iii) after giving effect to such proposed restoration no Event of Default or
Unmatured Event of Default will be in existence and (iv) prior to such
utilization of the Loss Proceeds, Agent shall be provided with (A) a full and
complete set of plans and specifications for the restoration of the Loss
Property, and (B) a current appraisal indicating that the value of the Loss
Property following the restoration as contemplated by such plans and
specifications will be of a value at least equal to the greater of (I) the Loss
Property prior to the loss or (II) the then outstanding principal balance of the
Liabilities, and (C) all other items that may be reasonably requested by Agent
in form and substance satisfactory to Agent. The plans and specifications and
the appraisal must be in a form and content fully satisfactory to Agent. Agent
shall disburse such Loss Proceeds for the purpose of restoration of the Loss
Property on a monthly basis upon receipt of satisfactory draw requests and
inspection 
                                       48
 
<PAGE>

reports of an architect approved by Agent certifying as to the percentage of
completion of the restoration project. Agent shall retain a ten percent (10%)
retainage of all Loss Proceeds disbursed hereunder pending the issuance of a
final certificate of substantial completion issued by the inspecting architect
certifying the completion of the restoration of the Loss Property in accordance
with the approved plans and specifications. In the event of an Unmatured Event
of Default or Event of Default at any time following an insurance loss,
condemnation or taking, the Lenders may apply all Loss Proceeds then in Agent's
possession as a reduction against the Liabilities. No interest shall be payable
by any Lender or Agent on account of any Loss Proceeds at any time held by any
Lender or Agent.

             SECTION 8   INCREASED COSTS AND OTHER SPECIAL PROVISIONS.

            SECTION 8.1     INCREASED COSTS. If, after the date hereof, the
adoption of any applicable "law" (which expression, as used in this Section 8.1,
includes statutes, rules and regulations thereunder and interpretations thereof
by any competent court or by any governmental authority or other regulatory body
or official charged with the administration or the interpretation thereof and
requests, directives, instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to any Lender by any central bank or
other fiscal, monetary or other authority (whether or not having the force of
law)) adopted, becoming effective, or any change in the interpretation or
administration thereof, or compliance by any Lender with any request or
directive (whether or not having the force of law) of any such authority or
agency, shall subject any Lender to any tax, levy, impost, duty, charge, fee,
deduction or withholding of any nature (other than taxes imposed on or measured
by the overall net income of any Lender) or capital adequacy requirement with
respect to, or shall impose or increase or render applicable any special
deposit, assessment, insurance charge, reserve or liquidity or other similar
requirement (whether or not having the force of law) against assets held by, or
deposits in or for the account of, or loans made by any Lender, or shall
otherwise increase the effective cost of, the Loans, or any Lender's obligation
to make, issue or maintain the Loans, or shall change the basis of taxation of
payments to any Lender of the principal of or interest on the Loans or any other
amounts due under this Agreement in respect of the Loans, or any Lender's
obligation to make, issue or maintain the Loans (except for changes in the rate
of tax on the overall net income of any Lender), or shall impose on any Lender
any other condition or requirement affecting the Loans or any Lender's
obligation to make the Loans, and the result of any of the foregoing is to
increase the cost to such Lender of making, funding, issuing or maintaining the
Loans, to require such Lender to make any payment or to forego any interest or
other sum payable under this Agreement, or to reduce the amount of any rate of
return or any sum received or receivable by such Lender under this Agreement or
under the Notes with respect thereto, then upon written notice of such
occurrence to Borrower by such Lender (which notice shall contain a statement
setting forth a description of such occurrence) at any time and from time to
time and as often as the occasion therefor may arise, Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
increased cost, payment, sum or such reduction.

            SECTION 8.2    FUNDING LOSSES. Borrower hereby agrees that if any
Lender receives a notice (whether written or oral) of borrowing or repayment
pursuant to this Agreement

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<PAGE>

and Borrower fails to borrow or repay strictly in accordance therewith, then,
upon demand by such Lender (which demand shall be accompanied by a statement
setting forth the basis for the calculations of the amount being claimed)
Borrower will indemnify such Lender against any net loss or expense which such
Lender may sustain or incur (including, without limitation, any net loss or
expense incurred by reason of the liquidation or reemployment of funds acquired
by such Lender to fund or maintain Loans), as reasonably determined by such
Lender, as a result of any failure of Borrower to borrow or repay any Loan on a
date specified therefor in a notice (whether written or oral) of borrowing or
repayment pursuant to this Agreement. For this purpose, all notices to Agent and
the Lenders pursuant to this Agreement shall be deemed to be irrevocable.

            SECTION 8.3    DISCRETION OF THE LENDERS AS TO MANNER OF FUNDING.
Notwithstanding any provision of this Agreement to the DING contrary, each
Lender shall be entitled to internally fund and maintain its funding of all or
any part of the Loans in any manner it sees fit.

            SECTION 8.4     CONCLUSIVENESS OF STATEMENTS; SURVIVAL OF
PROVISIONS. In making the determinations contemplated by this Section 8, each
Lender may make such reasonable estimates, assumptions, allocations and the like
that such Lender in good faith determines to be appropriate; and, subject to the
foregoing clause, determinations and statements of the Lenders pursuant to this
Section 8 shall be conclusive absent demonstrable error. The provisions of this
Section 8 shall survive termination of this Agreement.

            SECTION 9   COLLATERAL AND ELIGIBILITY REQUIREMENTS

            SECTION 9.1     ELIGIBLE ACCOUNTS. "ELIGIBLE ACCOUNTS" shall mean
all Accounts other than the following: (i) Accounts which remain unpaid as of
the earlier to occur of ninety (90) days after the due date specified in the
original invoice with respect thereto or one hundred twenty (120) days after the
date of the original invoice with respect thereto; (ii) all Accounts owing by a
single Account Debtor, including a currently scheduled Account, if twenty-five
percent (25%) or more of the balance owing by such Account Debtor is ineligible
by reason of the criterion set forth in clause (i) of this Section 9.1; (iii)
Accounts with respect to which the Account Debtor is an Affiliate of either
Borrower or a Guarantor or a director, officer or employee of Borrower, any
Guarantor or its Affiliates; (iv) Accounts with respect to which the Account
Debtor is a Governmental Authority or prime contractor thereof unless Borrower
or any Guarantor has complied in a manner satisfactory to Agent with the Federal
Assignment of Claims Act of 1940, as amended, or similar law or statute of the
relevant state, province, municipality or other jurisdiction and any amendments
thereto, relative to the assignment of such Accounts; (v) Accounts with respect
to which the Account Debtor is not a resident of the United States or Canada
(other than the provinces of Prince Edward Island, Newfoundland and Nova Scotia
and the Northwest Territories) unless such Account is payable in United States
Dollars and the Account Debtor has supplied Borrower or any Guarantor with an
irrevocable letter of credit, issued by a financial institution satisfactory to
the Required Lenders, in an amount sufficient to cover such Account and in form
and substance satisfactory to the Required Lenders and without right of setoff;
(vi) Accounts arising with respect to goods which have not been shipped and
delivered to and accepted as satisfactory by the Account

                                       50
 
<PAGE>

Debtor or arising with respect to services which have not been fully performed
and accepted as satisfactory by the Account Debtor; (vii) Accounts for which the
prospect of payment in full or performance in a timely manner by the Account
Debtor is or is likely to become impaired as determined by Agent in the exercise
of its discretion; (viii) Accounts which are not invoiced (and dated as of the
date of such invoice) and sent to the Account Debtor within five (5) days after
delivery of the underlying goods to or performance of the underlying services
for the Account Debtor; (ix) Accounts with respect to which Agent, on behalf of
the Lenders, does not have a first and valid fully perfected Lien free and clear
of any other Lien; (x) Accounts with respect to which the Account Debtor is the
subject of bankruptcy or a similar insolvency proceeding or has made an
assignment for the benefit of creditors or whose assets have been conveyed to a
receiver or trustee; (xi) Accounts with respect to which the Account Debtor's
obligation to pay the Account is conditional upon the Account Debtor's approval
or is otherwise subject to any repurchase obligation or return right, as with
sales made on a guaranteed sale, bill-and-hold, sale-or-return, demonstration,
sale on approval or other terms by reason of which the payment by the Account
Debtor is or may be conditional (except with respect to Accounts in connection
with which Account Debtors are entitled to return Inventory solely on the basis
of the quality of such Inventory) or consignment basis; (xii) Accounts to the
extent that the Account Debtor's indebtedness to Borrower or any Guarantor
exceeds a credit limit determined by Agent in Agent's discretion following prior
written notice of such credit limit from Agent to Borrower or such Guarantor;
(xiii) Accounts with respect to which any disclosure is required in accordance
with Section 9.2; (xiv) contra Accounts to the extent of the amount of the
accounts payable owed by Borrower or any Guarantor to the Account Debtor; (xv)
Accounts with respect to which the Account Debtor is located in Minnesota or any
other state denying creditors access to its courts in the absence of a Notice of
Business Activities Report or other similar filing unless Borrower or any
Guarantor has either qualified as a foreign corporation authorized to transact
business in such state or has filed a Notice of Business Activities Report or
similar filing with the applicable Governmental Authority in such state for the
then current year; (xvi) Accounts evidenced by Chattel Paper or any Instrument
of any kind, to the extent possession of such Chattel Paper or Instrument is not
granted to Agent, for the benefit of the Lenders; (xvii) Accounts which Agent
determines in good faith to be unacceptable and (xviii) the Accounts do not
arise from the sale of Inventory produced in violation of the Fair Labor
Standards Act so as to be subject to the so-called "hot goods" provision
contained in Title 19 U.S.C., Section 215(a)(1). In the event that an Eligible
Account previously scheduled in a Borrowing Base Certificate ceases to be an
Eligible Account, Borrower shall notify, or shall cause the applicable Guarantor
to notify, Agent thereof immediately.

            SECTION 9.2     ACCOUNT WARRANTIES. With respect to Accounts
scheduled, listed or referred to on the initial Accounts Trial Balance included
in the initial Monthly Report or on any subsequent Accounts Trial Balance or
Borrowing Base Certificate, Borrower represents and warrants to Agent and the
Lenders that, except as disclosed in the applicable Accounts Trial Balance or
Borrowing Base Certificate: (i) the Accounts represent bona fide sales of
Inventory or the provision of services to customers in the ordinary course of
business completed in accordance with the terms and provisions contained in the
documents available to Agent and each Lender with respect thereto and are not
evidenced by a judgment or by an Instrument or Chattel Paper; (ii) the amounts

                                       51
 
<PAGE>

shown on the applicable Accounts Trial Balance and on Borrower's and each
Guarantor's books and records and all invoices and statements which may be
delivered to Agent or any Lender with respect thereto are actually and
absolutely owing to Borrower and such Guarantor and are not in any way
contingent; (iii) no payments have been or shall be made thereon except payments
immediately delivered to a Lockbox pursuant to this Agreement; (iv) there are no
setoffs, claims or disputes existing or asserted with respect thereto and none
of Borrower or any Guarantor has made any agreement with any Account Debtor for
any deduction therefrom except a discount or allowance allowed by Borrower or
such Guarantor in the ordinary course of its business for prompt payment and
which discount and allowance is reflected in the calculation of the face amount
of each invoice related to such Account; (v) to the best of Borrower's or any
Guarantor's knowledge, there are no facts, events or occurrences which in any
way impair the validity or enforcement thereof or tend to reduce the amount
payable thereunder as shown on the respective Accounts Trial Balances or
Borrowing Base Certificates, Borrower's or such Guarantor's books and records
and all invoices and statements delivered to Agent or any Lender with respect
thereto; (vi) to the best of Borrower's and each Guarantor's knowledge, all
Account Debtors have the capacity to contract and are Solvent; (vii) none of
Borrower or any Guarantor has received notice of proceedings or actions which
are threatened or pending or have been taken against any Account Debtor which
might result in any material adverse change in such Account Debtor's financial
condition; (viii) none of Borrower or any Guarantor has knowledge that any
Account Debtor is unable generally to pay its debts as they become due; (ix) the
services furnished and/or Inventory sold giving rise to the Account are not, and
will not be at the time of sale thereof, subject to any Lien except that of
Agent; (x) the Accounts have not been pledged or sold to any Person or otherwise
encumbered and Borrower or a Guarantor is the owner of the Accounts free and
clear of any Lien except that of Agent; and (xi) with respect to Accounts for
which the Account Debtor is located in Minnesota or any other state denying
creditors access to its courts in the absence of a Notice of Business Activities
Report or other similar filing, Borrower or a Guarantor, as applicable, has
either qualified as a foreign corporation authorized to transact business in
such state or has filed all required Notice of Business Activities Reports or
comparable filings with the applicable Governmental Authority.

            SECTION 9.3     VERIFICATION OF ACCOUNTS. Agent shall have the
right, at any time or times hereafter, in the name of Borrower or a nominee of
Agent, or during the pendency of an Event of Default, in Agent's name, to verify
with Account Debtors the validity, amount or any other matter relating to any
Account, by mail, telephone, or in person.

            SECTION 9.4     ELIGIBLE INVENTORY. "ELIGIBLE INVENTORY" shall
consist of all of the Inventory of Borrower and each Guarantor, except the
following: (i) Inventory which is damaged, obsolete, not in good condition, or
not either currently usable or currently saleable in the ordinary course of such
Person's business as determined by Agent; (ii) Inventory which Agent determines,
or which in accordance with such Person's customary business practices, is
unacceptable due to age, type, category and/or quantity, including any Inventory
which is in excess of a one (1) year's supply or is otherwise slow-moving; (iii)
Inventory with respect to which Agent does not have a first and valid, fully
perfected Lien; (iv) Inventory consisting of packaging or supplies; (v)
Inventory in the possession of such Person but not owned by such Person; (vi)
Inventory
                                       52
 
<PAGE>

produced in violation of the Fair Labor Standards Act and subject to the
so-called "hot goods" provision contained in Title 29 U.S.C. ss.215(a)(1); (vii)
Inventory with respect to which any disclosure is requireD in the applicable
Monthly Report or Borrowing Base Certificate in accordance with clauses (i)
through (vi) of Section 9.5; (viii) Inventory which is on consignment or is
located at a place other than the places of business and collateral locations of
such Person listed on Schedule 11.29; provided that, subject to Section 11.24,
in the case of leased or bailment locations listed on Schedule 11.29, no
Inventory located at any such location shall be "Eligible Inventory" until the
applicable landlord or bailee has executed a lien waiver in form and substance
satisfactory to Agent), including Inventory in transit; (ix) Inventory
consisting of finished goods which do not meet the specifications of the
purchase order for which such Inventory was produced; (x) Inventory which fails
to meet the standards imposed by any governmental agency, or department or
division thereof, having regulatory authority over such goods, its use and/or
sale and (xi) work in process. In the event that Inventory previously scheduled
in a Monthly Report or Borrowing Base Certificate ceases to be Eligible
Inventory, Borrower shall notify, or shall cause the applicable Guarantor to
notify, Agent thereof immediately.

            SECTION 9.5     INVENTORY WARRANTIES. With respect to Inventory
scheduled, listed or referred to in any Monthly Report or Borrowing Base
Certificate, Borrower represents and warrants that, except as disclosed in such
Monthly Reports or Borrowing Base Certificate (i) such Inventory is located at
one of the Facilities or locations set forth on Schedule 11.29, (ii) Borrower or
a Guarantor has good, indefeasible and merchantable title to such Inventory and
such Inventory is not subject to any Lien or document whatsoever except for the
prior, first perfected Lien granted to Lender hereunder, (iii) such Inventory is
of good and merchantable quality, free from any defects and is not goods
returned to Borrower or a Guarantor by or repossessed from an Account Debtor or
goods taken in trade, (iv) such Inventory is not subject to any licensing,
patent, royalty, trademark, trade name or copyright agreements with any third
parties which materially restricts the ability of Borrower or a Guarantor or, in
the case of the exercise of its remedies, Agent to sell the Inventory, (v) the
completion of manufacture, sale or other disposition of such Inventory by Agent
following an Event of Default shall not require the consent of any Person and
shall not constitute a breach or default under any contract or agreement to
which Borrower or a Guarantor is a party or to which the Inventory is subject,
and (vi) no Inventory has been produced in violation of the Fair Labor Standards
Act so as to be subject to the so-called "hot goods" provision contained in
Title 29 U.S.C., Section 215(a)(1).

            SECTION 9.6     SECURITY INTEREST. All of Borrower's Liabilities
constitute one (1) loan secured by Agent's Liens on the Collateral now or from
time to time hereafter granted by Borrower to Agent. To secure timely payment
and performance in full of the Liabilities, Borrower shall grant to Agent, for
the benefit of the Lenders, a right of setoff against and a continuing Lien upon
all of Borrower's right, title and interest in and to the Collateral, whether
now owned or hereafter acquired by Borrower and wheresoever located. In
addition, concurrently with the execution and delivery hereof Borrower shall
deliver the Mortgages.
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            SECTION 9.7     CONSIGNED INVENTORY. With respect to consigned
Inventory in an aggregate amount of $100,000 or more with respect to which
Borrower or any Guarantor is the consignor, Borrower shall perfect its interest
in such Inventory by filing and delivering notice to the creditors of record of
the consignee, all as provided in Section 9-114 of the Code, and in form and
substance satisfactory to Agent, and Borrower shall execute and deliver all
financing statements, security agreements, amendments thereto, or other
documents (and pay the cost of filing or recording the same in all public
offices deemed necessary by Agent), as Agent may request, in a form satisfactory
to Agent, to perfect and maintain the Liens on such Collateral granted by
Borrower to Agent hereunder.

            SECTION 9.8     COLLATERAL DOCUMENTS. Concurrently with or prior to
the making of the initial Loan, Borrower shall execute and deliver, and, as
applicable, shall cause each Subsidiary to execute and deliver, to Agent the
following: (a) a security agreement in the form of 
9.8.1 (as the same
may be amended, modified or supplemented from time to time, collectively, the
"SECURITY AGREEMENTS" and individually, the "SECURITY AGREEMENT"); (b) mortgages
covering all real estate owned by Borrower and each Subsidiary (except for the
real estate identified in Schedule 10.5), and substantially in the form of
Exhibit 9.8.2, or in such other form as Agent may reasonably require (as the
same may be amended, modified or supplemented from time to time, collectively,
the "MORTGAGES" and individually, a "MORTGAGE") and (c) a Stock Pledge
Agreements in the form of Exhibit 9.8.3 (as the same may be amended, modified or
supplemented from time to time, collectively, the "STOCK PLEDGE AGREEMENTS" and
individually, the "STOCK PLEDGE AGREEMENT"). At any time after the date hereof
that a Subsidiary shall be formed or acquired by Borrower, Borrower shall cause
such Subsidiary to execute and deliver to Agent a security agreement and a
guaranty in form and substance satisfactory to Agent with such changes therein
as Agent may reasonably require, together with such other documents, instruments
and things as Agent may reasonably require in connection therewith.

            SECTION 9.9     SUBSEQUENTLY ACQUIRED PROPERTY. As further security
for the payment, performance and observance of the Liabilities, Borrower shall
so long as any of the Liabilities shall remain outstanding or any Lender shall
continue to have any Commitment: (a) acquire and maintain its property in a
manner which will enable Borrower to allow such property to become subject to
the Liens of the Collateral Documents; (b) obtain and maintain the consent or
approval of any Person whose consent or approval is required to the granting of
a Lien on any such property to or for the benefit of Agent; (c) execute and
deliver from time to time within ten (10) days after its purchase or acquisition
of any real property or leasehold interest in real property or of property
subject to a titling statute or of any other personal property, asset or other
right, amendments and supplements to the Collateral Documents in form and
substance, and together with other documents, satisfactory to Agent, and in such
number of counterparts as Agent may require, by which it shall (and only in the
event that such action shall be required in order to) pledge, mortgage and grant
a perfected Lien on such property, asset or right to Agent; (d) execute and
deliver to Agent , in form and substance satisfactory to Agent and in such
number of counterparts as Agent may require, (i) an assignment of Borrower's
rights under any contract to construct any property with a fair market value in
excess of $100,000 promptly upon entering into such contract, and (ii) such

                                       54
 
<PAGE>

other agreements and instruments (including, without limitation, acknowledgments
by other contract parties) as may be necessary to grant a Lien on and security
interest in Borrower's rights and interests under each such contract and each
such property, whether under construction or otherwise, to Agent; and (e)
execute and deliver to Agent, in form and substance satisfactory to Agent and in
such number of counterparts as Agent may require, assignments of Borrower's
rights under each lease to which Borrower is a party as landlord or sublandlord,
promptly upon entering into such lease.

            SECTION 9.10     CHANGE OF LOCATION OR NAME. So long as any of the
Liabilities shall remain outstanding or any Lender shall continue to have any
Commitment, Borrower shall not change (a) the location of its principal place of
business, chief executive office, major executive office, chief place of
business or its records concerning its business and financial affairs, or (b)
its name or the name under or by which it conducts its business, in each case
without first giving Agent and the Lenders at least 30 days' advance written
notice thereof and having taken any and all action required or desirable by
Agent to maintain and preserve the first perfected Lien and security interest in
favor of Agent on all property thereof free and clear of any Lien whatsoever
except for Permitted Liens; provided, however, that notwithstanding the
foregoing, Borrower shall not change the location of its principal place of
business, chief executive office, major executive office, chief place of
business or its records concerning its business and financial affairs to any
place outside the contiguous continental United States of America.

            SECTION 9.11     DELIVERIES; FURTHER ASSURANCES. Borrower agrees
that it will, at its sole expense, (i) without any request by the Lenders,
immediately deliver or cause to be delivered to Agent, in due form for transfer
(i.e., endorsed in blank or accompanied by duly executed undated blank stock or
bond powers), all securities, chattel paper, instruments and documents, if any,
at any time representing all or any of the Collateral, (ii) upon request of
Agent, furnish or cause to be furnished to Agent such surveys, mortgagee title
commitments or policies, appraisals, opinions of counsel and other documents as
Agent may specify, (iii) upon request by Agent, cause Agent's Lien hereunder and
under the Collateral Documents to be at all times duly noted on any certificate
of title issuable with respect to any of the Collateral and forthwith deliver or
cause to be delivered to Agent each such certificate of title, and (iv) execute
and deliver, or cause to be executed and delivered, to Agent in due form for
filing or recording (and pay the cost of filing or recording the same in all
public offices deemed necessary or advisable by Agent) such assignments
(including, without limitation, assignments of life insurance), security
agreements, mortgages, deeds of trust, pledge agreements, consents, waivers,
financing statements, stock or bond powers, and other documents, and do such
other acts and things, all as may from time to time be necessary or desirable to
establish and maintain to the satisfaction of Agent a valid first perfected Lien
on and security interest in all assets of Borrower now or hereafter existing or
acquired (free of all other Liens whatsoever other than Permitted Liens) to
secure payment and performance of the Liabilities.

            SECTION 10 REPRESENTATIONS AND WARRANTIES

      To induce the Lenders to enter into this Agreement and to make Loans
hereunder, Borrower represents and warrants to the Lenders that:

                                       55
 
<PAGE>

            SECTION 10.1     DUE ORGANIZATION AUTHORIZATION, ETC. Borrower and
each Subsidiary is a corporation duly existing and in good standing under the
laws of the jurisdiction of its formation and is duly qualified and in good
standing in each jurisdiction where, because of the nature of its activities or
properties, such qualification is required or where the failure so to qualify
could have a Material Adverse Effect (which jurisdictions shall include, without
limitation, those jurisdictions listed on Schedule 10.1). The execution,
delivery and performance by Borrower and each Subsidiary of this Agreement and
the Related Documents to which it is a party, and the consummation of the
Related Transactions, are within its corporate powers, have been duly authorized
by all necessary corporate action (including, without limitation, director and
shareholder approval, if required), have received all necessary governmental and
other consents and approvals and made all necessary filings with and given all
necessary notices to any governmental authority (if any shall be required), and
do not and will not contravene or conflict with, or create a Lien or right of
termination or acceleration under, any Requirement of Law or Contractual
Obligation binding upon it. This Agreement and each of the Related Documents to
which Borrower and each Guarantor and Subsidiary is a party are (or when
executed and delivered will be) the legal, valid, and binding obligations of
Borrower and each Guarantor and Subsidiary enforceable against such Persons in
accordance with their respective terms, except as limited by applicable
bankruptcy, reorganization, insolvency or similar laws affecting the enforcement
of creditors' rights generally and except as limited by general principles of
equity.

            SECTION 10.2     CERTAIN AGREEMENTS. Borrower has furnished to the
Lenders true, correct and complete copies of each of the Related Documents
(including all schedules and written disclosures in connection therewith). All
warranties of Borrower and, to Borrower's knowledge, all warranties of the
Subsidiaries and all other parties thereto (other than Agent, the Lenders and
Master Account Bank) set forth in the Related Documents are true and correct in
all material respects without any waiver or modification thereof and no default
of Borrower and to its knowledge, no default of any Subsidiary or any other
party, exists thereunder.

            SECTION 10.3     FINANCIAL INFORMATION; FINANCIAL CONDITION. All
balance sheets and all statements of operations, of N shareholders' equity and
of changes in financial position, and other financial data (other than
projections) which have been or shall hereafter be furnished to the Lenders by
or on behalf of Borrower for the purposes of or in connection with this
Agreement, the Related Documents or the Related Transactions (including the
financial information referred to below, except for the Pro Forma and the
projections referred to in clauses (c) and (d) below) have been and will be
prepared in accordance with GAAP consistently applied throughout the periods
involved and do and will present fairly the financial condition of the entities
involved as of the dates thereof and the results of their operations for the
periods covered thereby. The Pro Forma and all projections (including, without
limitation, the Pro Forma and the projections described in clauses (c) and (d)
below) which have been or shall be furnished to the Lenders for purposes of or
in connection with this Agreement, the Related Documents or the Related
Transactions have represented and will, when delivered to the Lenders, represent
management's best estimates of future performance, based upon historical
financial information and reasonable assumptions of management. Such financial

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data includes, without limitation, the following financial statements and
reports which have been furnished to Agent or the Lenders on or prior to the
date hereof:

            (a) the audited balance sheet of Borrower and its Subsidiaries on a
consolidated basis as of June 28, 1997, and the related audited statements of
earnings, shareholders' equity, cash flow and changes in financial position for
the year ending on such date (the "FINANCIALS");

            (b) the balance sheet of Borrower and its Subsidiaries as of May 31,
1998 and the related statements of income and cash flow of the Borrower for the
eleven month period ending on such date;

            (c) the pro forma balance sheet of Borrower as of the Closing Date
after giving effect to all Related Transactions (the "PRO FORMA");

            (d) the projected balance sheets and projected statements of
earnings and cash flow for Borrower and its Subsidiaries for each month from
July 1998 to June 1999, and for each Fiscal Year through the Fiscal Year ending
June 30, 2003 after giving effect to all Related Transactions.

      There has been no Material Adverse Effect since March 31, 1998, other than
as a result of the Related Transactions, from that reflected in the financial
information as to Borrower referred to in clause (a) through (c).

            SECTION 10.4     LITIGATION AND CONTINGENT OBLIGATIONS. Except as
set forth in Schedule 10.4 hereto (including estimates of the dollar amounts
involved) and except for claims as to which the insurer has admitted coverage in
writing and which are fully covered by insurance, no claims, litigation
(including, without limitation, derivative actions and litigation with respect
to any Employee Benefit Plan), arbitration, governmental investigation or
proceeding or inquiry is pending or, to the best of Borrower's knowledge,
threatened against Borrower or any Subsidiary, any member of the Controlled
Group or any Employee Benefit Plan fiduciaries (i) which could, if adversely
determined, have a Material Adverse Effect, or (ii) which relates to any of the
Related Transactions, and, except as set forth in Schedule 10.4, there is no
basis known to Borrower for any of the foregoing. Other than any liability
incident to such claims, litigation or proceedings, neither Borrower nor any
Subsidiary has any material Contingent Obligations not provided for or referred
to in the Financials or in Schedule 10.4 hereto. The matters described on
Schedule 10.4, if adversely determined, would not be reasonably likely to have a
Material Adverse Effect.

            SECTION 10.5     LIENS. None of the assets of Borrower or any
Subsidiary will be subject to any Lien, except for Permitted Liens which are
junior to the Lien of the Collateral Documents. Except as described in Schedule
10.5, Agent will obtain, as security for the Liabilities, (i) a legally valid
and binding first mortgage Lien on all real property and interests in real
property now owned or hereafter acquired by Borrower and its Subsidiaries, and
(ii) a first priority perfected Lien on all other property described in the
Collateral Documents as being pledged, assigned or

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granted thereby. The descriptions of other Property described in the Collateral
Documents correctly describe all Property purported to be secured by such
Collateral Documents in a manner sufficient to create an enforceable Lien on or
security interest in such Property.

            SECTION 10.6     CONTRACTS; ABSENCE OF DEFAULT. Neither Borrower nor
any Subsidiary is in material default under any Contract or other contracts (a)
to which it is a party or by which it is bound, and (b)(i) pursuant to which
Borrower or any Subsidiary provides goods or services to one or more customers
which contributed more than $2,500,000 of gross revenue during the prior Fiscal
Year of Borrower or such Subsidiary, as the case may be, or which is reasonably
expected to contribute more than $2,500,000 of gross revenue during the current
or any future Fiscal Year of Borrower or such Subsidiary (each, a "MATERIAL
CONTRACT"), (ii) pursuant to which Borrower incurs or is committed to incur
Lease Obligations in excess of $500,000 during any Fiscal Year, (iii) which
cannot be replaced without material expense, delay or interruption of business
(including, without limitation, any Material Intellectual Property Right), or
(iv) where such default could have a Material Adverse Effect. A list of all
Material Contracts existing on the date hereof is attached hereto as Schedule
10.6. Neither Borrower nor any Subsidiary has received notice that any Material
Contract will be terminated or not extended or renewed.

            SECTION 10.7     EMPLOYEE BENEFIT PLANS

            (a) Neither Borrower nor any member of its Controlled Group have
incurred any liability with respect to any Pension Plan other than to pay
premiums to the PBGC and make required contributions to such Pension Plans
(provided that any such contributions and premiums which are due have been
paid).

            (b) With respect to any Employee Benefit Plan, full and timely
payment has been made of all amounts required under Section 412 of the IRC,
Section 302 of ERISA or under the terms of each such Plan, no event or condition
has occurred which has or could result in the imposition of a lien or an
accumulated funding deficiency (whether or not waived) under Section 412 of the
IRC or Section 302 of ERISA, Borrower and each current or past member of its
Controlled Group have fulfilled their obligations, if any, under the minimum
funding standards of ERISA and the IRC, and no security has been posted or is
required to be posted under Section 401(a)(29) of the IRC or Section 307 of
ERISA.

            (c) Except as set forth on Schedule 10.7, no steps have been taken
to terminate, or withdraw from, any Pension Plan or any Multiemployer Plan.

            (d) No Reportable Event has occurred.

            (e) Neither Borrower nor any member of its Controlled Group has any
contingent liability with respect to any post-retirement benefits under a
Welfare Plan (other than liability for health care continuation coverage in
compliance with the requirements of Part 6 of Subtitle B of Title I of ERISA or
Section 4980B of the IRC).
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            (f) All Employee Benefit Plans (i) comply in form with any
requirements of ERISA and have been operated and administered in compliance with
their terms and in a manner so as not to result in any liability to Borrower or
any current or past member of its Controlled Group for failure to comply with
ERISA and all of the applicable statutes and regulations issued thereunder, and
(ii) if intended to qualify under the IRC, are in a form and have been
administered in a manner so as not to result in any liability to Borrower or any
current or past member of its Controlled Group for failure to comply with the
applicable provisions thereof and are subject to an Internal Revenue Service
determination with respect to such qualification. Except for future funding
obligations, no conditions exist or events or transactions have occurred with
respect to any Employee Benefit Plan which could result in the incurrence by
Borrower or any current or past member of the Controlled Group of any liability,
except to the extent the same (x) have been funded or adequately reserved on the
balance sheet of Borrower, or (y) will not result in the incurrence of any
liability by Borrower or any current or past member of its Controlled Group in
excess of $50,000 in the aggregate.

            (g) Neither Borrower nor any Subsidiary is an Employee Benefit Plan.
Neither Borrower's nor any Subsidiary's assets constitute assets of an Employee
Benefit Plan. The execution, performance and delivery of this Agreement and the
Related Documents and the consummation of the Related Transactions will not
involve any prohibited transaction, as defined in Section 406 of ERISA or
Section 4975 of the IRC, for which an exemption is unavailable.

            SECTION 10.8     INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING
COMPANY ACT. Neither Borrower nor any Subsidiary is an "investment company" or
a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.

            SECTION 10.9     REGULATIONS U AND X. Neither Borrower nor any
Subsidiary is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U or X of the Board of Governors of the
Federal Reserve System). None of Borrower or any Affiliate of Borrower or any
Person acting on behalf of Borrower or any of its Affiliates has taken or will
take action to cause the execution, delivery or performance of this Agreement or
the Notes, or the other Related Documents, the making or existence of the Loans
or the use of proceeds of the Loans to violate Regulation U or X of the Board of
Governors of the Federal Reserve System.

            SECTION 10.10    PROCEEDS. The proceeds of the Loans will be used
for working capital purposes, except that proceeds of the Term Loans and the
initial Revolving Loan shall be used to refinance existing indebtedness of
Borrower.

            SECTION 10.11     CONFIRMATION OF WARRANTIES. All representations
and warranties of Borrower and, to Borrower's knowledge, each Subsidiary and
each other party to the
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Related Documents set forth in the Related Documents are true and correct in all
material respects as if made as of the Closing Date.

            SECTION 10.12     INSURANCE. Schedule 10.12 hereto sets forth a true
and correct summary of all insurance carried by Borrower. Borrower is adequately
insured for its benefit under policies issued by insurers of recognized
responsibility. No notice of any pending or threatened cancellation has been
received by Borrower with respect to any of such insurance policies. Borrower is
in compliance with all conditions contained in such insurance policies .

            SECTION 10.13    MATERIAL DISRUPTIONS. Neither the business nor the
properties of Borrower or any Subsidiary is affected, or anticipated to be
affected, by any existing event of Force Majeure or other existing casualty
which could have a Material Adverse Effect.

            SECTION 10.14    PATENTS, TRADEMARKS, ETC. Borrower and each
Subsidiary owns and possesses, or is licensed under valid and enforceable
license agreements, or is otherwise entitled to use without payment, all such
patents, patent rights, trademarks, trademark rights, trade names, trade name
rights, service marks, service mark rights, trade secrets, mask works and
copyrights as are necessary for the conduct of its business as now conducted or
presently proposed to be conducted without any infringement upon rights of
others which could have a Material Adverse Effect, and, except as set forth in
Part 1 of Schedule 10.14, there is no individual patent, patent right,
trademark, trademark right, trade name, trade name right, service mark, service
mark right, trade secret, mask work or copyright the loss of which could have a
Material Adverse Effect (any such item, whether or not set forth on Schedule
10.14, being herein called a "MATERIAL INTELLECTUAL PROPERTY RIGHT"). Parts 1
and 2 of Schedule 10.14 together contain a complete list of all license
agreements relating to patent rights, trademark rights, trade name rights,
service mark rights, trade secrets, mask works and copyrights held by Borrower
and its Subsidiaries under license agreements.

            SECTION 10.15     OWNERSHIP OF PROPERTIES; PROPERTY SCHEDULE.
Schedule 10.15 contains descriptions of all real and personal property (i) in
which Borrower and each Subsidiary has an interest as of the date hereof, (ii)
with respect to which the Collateral Documents will not create a valid and
perfected first lien and security interest, and (iii) which cannot be replaced
without material expense, delay or interruption of business. Borrower has good,
indefeasible and merchantable title to and ownership of, or a valid leasehold
interest in, each parcel of Real Estate described in Schedule 10.15, free and
clear of all Liens, except Liens in favor of Agent and the Permitted Liens. No
parcel of its Real Estate is subject to any boundary or encroachment dispute,
special assessment, condemnation or eminent domain proceeding, restrictive
covenant, zoning or building code violation or any other dispute, assessment,
claim or violation of law which might restrict or interfere with Borrower's or
such Subsidiary's use of such parcel of Real Estate in the ordinary course of
Borrower's or such Subsidiary's business or which might have a Material Adverse
Effect.

            SECTION 10.16     BUSINESS LOCATIONS; TRADE NAMES. Schedule 10.16
lists each of the locations where Borrower and each Subsidiary maintains an
office, a place of business
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or any records or has maintained an office, a place of business or any records
at any time during the during the five year period prior to the Closing Date
and, except as described on Schedule 10.16, none of such locations have changed
within the six (6) month period prior to the Closing Date; and Schedule 10.16
also lists each name under or by which Borrower and each Subsidiary conducts its
business or has conducted business at any time during the five year period prior
to the Closing Date and a complete and accurate address and legal description of
each parcel of real estate owned or leased by Borrower and each Subsidiary and
the principal place of business and chief executive office of Borrower and each
Subsidiary. The business conducted by Borrower will not be conducted under any
corporate, trade or fictitious name other than those names disclosed on Schedule
10.16. The books and records of Borrower and each Subsidiary and all Chattel
Paper, Instruments and all records of account of Borrower and each Subsidiary
are located and hereafter shall continue to be located at the principal place of
business and chief executive office of the such Person.

            SECTION 10.17     ACCURACY OF INFORMATION. All factual information
furnished prior to the Closing Date is true and accurate in every material
respect on the Closing Date and is not incomplete by omitting to state any
material fact necessary to make such information not misleading. All factual
information contemporaneously herewith furnished by or on behalf of Borrower and
each Subsidiary to any one or more of Agent and the Lenders for purposes of or
in connection with this Agreement or any transaction contemplated hereby is, and
all other such factual information hereafter furnished by or on behalf of
Borrower and each Subsidiary to any one or more of Agent and the Lenders will
be, true and accurate in every material respect on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information not misleading.

            SECTION 10.18     SUBSIDIARIES. Except as set forth on Schedule
10.18, Borrower has no Subsidiaries. Section 10.18 contains an accurate list of
all Subsidiaries of Borrower, setting forth their respective jurisdictions of
incorporation and the percentages of their capital stock owned by Borrower or
other Subsidiaries and a description of each class of its authorized capital
stock and the number of shares of each class issued and outstanding. Each
Subsidiary is duly organized and existing under the laws of the jurisdiction of
its organization, and duly licensed or qualified to do business in each state or
other jurisdiction where the nature of the assets owned or leased by it or
business conducted by it requires such licensing or qualification and in which
the failure to be so licensed or qualified would have a Material Adverse Effect
and has all necessary corporate power to carry on its present business. All of
the outstanding shares of capital stock of or other equity interest in each
Subsidiary are validly issued and outstanding and fully paid and nonassessable,
and all shares or other equity interests in each Subsidiary set forth on
Schedule 10.18 are owned, beneficially and of record, by Borrower free and clear
of all Liens other than the Lien of the Agent. Except as set forth on Schedule
10.18, there are no outstanding commitments or other obligations of any
Subsidiary to issue, and no options, warrants or other rights of any Person to
acquire, any shares of any class of capital stock of or other equity interest in
any Subsidiary.

            SECTION 10.19     HAZARDOUS MATERIALS. Except as disclosed in
Schedule 10.19 hereto, (a) neither Borrower nor any Subsidiary nor, to
Borrower's knowledge, any other Person has

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ever caused or permitted any Hazardous Material to be released, treated, stored
or disposed of in a manner which could form the basis for any claim, demand,
proceeding or action by any Person, past, present or future on, under or at any
real property legally or beneficially owned (or any interest or estate in real
property which is owned) or operated by Borrower or any Subsidiary (including,
without limitation, any property owned by a land trust the beneficial interest
in which is owned in whole or in part by Borrower or any Subsidiary), (b) no
such real property has ever been used (by Borrower, any Subsidiary or any other
Person) as (i) a disposal site for any Hazardous Material or (ii) a permanent
storage site for any Hazardous Material, (c) to Borrower's knowledge no asbestos
containing materials, polychlorinated biphenyls or underground storage tanks are
or have been located in, on or under real property owned or operated by Borrower
or any Subsidiary, (d) there are no environmental liens attached or, to
Borrower's knowledge, threatened, to real property owned or operated by Borrower
or its Subsidiaries, and (e) neither Borrower nor any Subsidiary nor any of
their respective predecessors or its Affiliates, has ever caused or permitted
any Hazardous Material to be transported, released, treated, stored or disposed
of at any location other than those identified in Schedule 10.19 in a manner
which could form the basis for any claim, demand, proceeding or action by any
Person. The matters described on Schedule 10.19, if adversely determined, could
not reasonably be likely to have a Material Adverse Effect.

            SECTION 10.20    AGENT'S FEES. Except as set forth in Schedule
10.20, no agent, broker, investment banker, Person, or firm acting on behalf of
Borrower or Affiliates of Borrower, or under the authority of any such Person,
is or will be entitled to any broker's or finder's fee or any other commission
or similar fee, directly or indirectly, from any of the parties hereto in
connection with any of the transactions contemplated herein.

            SECTION 10.21    TAXES. Borrower and each Subsidiary has filed all
tax returns that are required to be filed by it or on behalf of any Employee
Benefit Plan, and has paid or provided adequate reserves for the payment of all
taxes, including, without limitation, all payroll taxes and federal and state
withholding taxes, and all assessments payable by it that have become due, other
than those that are not yet delinquent or that are disclosed on Schedule 10.21
and are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been established, and are being
maintained, in accordance with GAAP. There is no ongoing audit or, to Borrower's
knowledge, other governmental investigation of the tax liability of Borrower or
any Subsidiary or any Employee Benefit Plan and there is no unresolved claim by
a taxing authority concerning Borrower's or any Subsidiary's tax liability (or
by any governmental authority with respect to any Employee Benefit Plan), for
any period for which returns have been filed or were due. As used in this
Section 10.21, the term "TAXES" includes all taxes of any nature whatsoever and
however denominated, including, without limitation, excise, import, governmental
fees, duties and all other charges, as well as additions to tax, penalties and
interest thereon, imposed by any government or instrumentality, whether federal,
state, local, foreign or other.

            SECTION 10.22     SECURITIES LAWS. None of Borrower or its
Affiliates, nor anyone acting on behalf of any such Person, has directly or
indirectly offered any interest in the Notes or any other Liability for sale to,
or solicited any offer to acquire any such interest from, or 

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has sold any such interest to any Person that would subject the issuance or sale
of the Notes or any other Liability to registration under the Securities Act of
1933, as amended.

            SECTION 10.23     GOVERNMENTAL AUTHORIZATIONS. Borrower and each
Subsidiary has all licenses, franchises, permits and other governmental
authorizations necessary for all businesses carried on by it (including owning
and leasing the real and personal property owned and leased by it), except where
failure to obtain such licenses, franchises, permits and other governmental
authorizations (a) is not related to any use, manufacture, generation, storage,
transport, release or disposal by any such Person of any Hazardous Material, and
(b) could not (i) subject any such Person or any of its officers to criminal
liability or (ii) have a Material Adverse Effect.

            SECTION 10.24     COMPLIANCE WITH LAWS. Except as disclosed on
Schedule 10.19: (i) is in compliance with all laws, ordinances, rules,
regulations, orders, policies, guidelines or other requirements of any
governmental authority, including Environmental Laws, (ii) has obtained and is
in compliance with all permits, certificates, licenses, approvals and
authorizations required under Environmental Laws necessary for its operations
and have filed all required notifications or reports relating to chemical
substances, air emissions, effluent discharges and storage, treatment and
disposal of Hazardous Materials, (iii) has filed in a timely manner all reports,
documents and other materials required to be filed by it with any governmental
bureau, agency or instrumentality (and the information contained in each of such
filings is true, correct and complete in all material respects), except where
failure to make such filings is not related to the manufacture, use, generation,
release, storage, transport or disposal of any Hazardous Material by such Person
and could not have a Material Adverse Effect and (iv) has retained all records
and documents required to be retained by it pursuant to any law, ordinance,
rule, regulation, order, policy, guideline or other requirement of any
governmental authority, except where failure to retain such records is not
related to the use, manufacture, generation, release, storage, transport or
disposal of any Hazardous Material and could not subject such Person or any of
its officers to criminal liability or have a Material Adverse Effect.

            SECTION 10.25     EMPLOYEES AND LABOR. There is no unfair labor
practice complaint against Borrower or any Subsidiary pending before the
National Labor Relations Board or any state or local agency nor is there a labor
strike or other labor dispute, pending or, to Borrower's knowledge, threatened
affecting Borrower or any Subsidiary which if adversely resolved could have a
Material Adverse Effect; there is no existing representation question respecting
the employees of Borrower or any Subsidiary, nor are there organizational
attempts affecting any of the employees of Borrower or any Subsidiary which
could have a Material Adverse Effect; and there is no grievance pending or, to
Borrower's knowledge, threatened affecting Borrower or any Subsidiary. Neither
Borrower nor any Subsidiary is a party to any collective bargaining agreements,
except as listed on Schedule 10.25 hereto. To Borrower's knowledge, no customer
or supplier of Borrower or any Subsidiary is involved in, or threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding which could have a Material Adverse Effect.

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            SECTION 10.26    YEAR 2000. Borrower has conducted a review and
assessment of all computer applications and programs (the "SOFTWARE") owned,
licensed or used by any of Borrower and its Subsidiaries and all such Software
is fully able to perform date-sensitive or other functions on or after, or as to
dates on or after December 31, 1999, except for immaterial Software where the
failure to perform such function could not have a Material Adverse Effect, and
except as listed on Schedule 10.26 annexed hereto.

            SECTION 10.27    SOLVENCY. Borrower and each Subsidiary is Solvent
both before and after giving to the execution and delivery of this Agreement and
any of the other Related Documents to which it is a party and consummation of
the transactions contemplated hereunder or thereunder, including, without
limitation, the Related Transactions.

            SECTION 10.28     COLLATERAL. Except for the Permitted Liens, all of
the Collateral is and will continue to be owned by Borrower free and clear of
all Liens. From and after the making of the first Loan and after the making of
all necessary filings, the provisions of the Collateral Documents will be
effective to create and will give Agent as security for the repayment of the
Liabilities, a legal, valid, perfected and enforceable Lien (which priority is
subject only to Permitted Liens) upon all right, title and interest of Borrower
and the Subsidiaries in any and all of the Collateral (including the Lien in the
items and amounts deposited in the Bank Accounts.

            SECTION 11  COVENANTS.

            Until the expiration or termination of the Commitments and
thereafter until the Notes and all other Liabilities are paid and performed in
full, Borrower agrees that, unless at any time the Required Lenders shall
otherwise expressly consent in writing, it will:

            SECTION 11.1    REPORTS, CERTIFICATES AND OTHER INFORMATION.
Furnish or cause to be furnished to Agent and each Lender:

            (a) As soon as available, but in any event within 90 days after the
end of each Fiscal Year of Borrower: (i) copies of the balance sheet of Borrower
and its Subsidiaries on a consolidated and consolidating basis as at the end of
such Fiscal Year and the related statements of earnings, shareholders' equity
and cash flows for such Fiscal Year, in each case setting forth in comparative
form the figures for the previous year and, as prepared by Borrower, in the
current business plan and containing a narrative discussion by Borrower of
variances reflected by such comparisons, prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods reflected
therein, certified, without a going concern or like qualification or
qualification arising out of the scope of the audit, by Deloitte & Touche, L.P.
(or such other independent certified public accountants of recognized standing
as shall be selected by Borrower with Agent's approval); and (ii) a certificate
from the accountants identified in clause (i) of this Section 11.1(a) containing
a computation of, and showing compliance with, each of the financial ratios and
restrictions contained in this Section 11, and to the effect that, in making the
examination necessary for the signing of the annual audit report of Borrower by
such accountants, they have not 

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become aware of any non-compliance by Borrower or any Subsidiary with this
Agreement or any Related Document or any Event of Default or Unmatured Event of
Default.

            (b) As soon as available, but in any event within 45 days after the
end of each fiscal quarter of Borrower, copies of the unaudited balance sheet of
Borrower and its Subsidiaries on a consolidated and consolidating basis as at
the end of such fiscal quarter and the related unaudited statements of earnings,
shareholders' equity and cash flows for such fiscal quarter and the portion of
the Fiscal Year through such fiscal quarter, in each case setting forth in
comparative form the figures for the corresponding periods of the previous
Fiscal Year and in the current business plan and containing a narrative
discussion of variances reflected by such comparisons, prepared in reasonable
detail and in accordance with GAAP applied consistently throughout the periods
reflected therein, accompanied by a "management letter" containing a narrative
discussion of such financial statements and certified by the chief financial
officer of Borrower as presenting fairly the financial condition and results of
operations of Borrower and its Subsidiaries (subject to normal year-end audit
adjustments).

            (c) As soon as available, but in any event within 30 days after the
end of each month, copies of the unaudited balance sheet of Borrower and its
Subsidiaries on a consolidated and consolidating basis as at the end of such
month and the related unaudited statements of earnings and cash flows for such
month and the portion of the Fiscal Year through such month, in each case
setting forth in comparative form the figures for the corresponding periods of
the previous Fiscal Year and in the current business plan and containing a
narrative discussion of variances reflected by such comparisons, prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein and certified by the chief financial officer of
Borrower as presenting fairly the financial condition and results of operations
of Borrower and its Subsidiaries (subject to normal year-end audit adjustments).

            (d) As soon as available, but in any event: (i) within 30 days after
the beginning of each Fiscal Year of Borrower, a copy of the plan and forecast
(including a projected balance sheet, income statement and funds flow statement
and amount of the Revolving Commitment and Borrowing Availability) of Borrower
and its Subsidiaries for the current Fiscal Year in monthly detail; and (ii)
within 30 days after the end of the second fiscal quarter of Borrower in each
Fiscal Year, an update of each plan and forecast delivered with respect to the
Fiscal Year in which such fiscal quarter occurs, reflecting changes in such plan
resulting from actual and then anticipated results and forecasts.

            (e) Contemporaneously with the furnishing of a copy of each annual
audit report and of each set of financial statements provided for in Sections
11.1(a), 11.1(b) and 11.1(c), (i) a duly completed certificate in substantially
the form of Exhibit 11.1(e) or in such other form as Agent may from time to time
require (each a "COMPLIANCE CERTIFICATE"), signed by the chief financial officer
of Borrower, containing, among other things, a computation of, and showing
compliance with, each of the applicable financial ratios and restrictions
contained in this Section 11 and to the effect that as of such date no Event of
Default or Unmatured Event of Default has occurred and is 

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continuing or if such an Event of Default or Unmatured Event of Default has
occurred and is continuing, setting forth the nature thereof and the actions
Borrower is taking with respect thereto, and (ii) a report of the President or
Chief Executive Officer of Borrower describing the financial performance of
Borrower and its Subsidiaries during the period covered by such set of financial
statements and setting forth any significant events occurring during such period
affecting Borrower and its Subsidiaries.

            (f) Promptly upon receipt thereof, copies of all financial and
management reports regarding Borrower and its Subsidiaries, submitted to
Borrower, any Subsidiary or any shareholder of Borrower or any Subsidiary by
independent public accountants in connection with each annual or interim audit
report made by such accountants of the books of Borrower.

            (g) Promptly upon the filing or furnishing thereof, copies of all
regular and periodic reports, proxy statements, financial statements,
registration statements, prospectuses and other material filed by Borrower or
any Subsidiary with or to any securities exchange or the Securities and Exchange
Commission or any other Governmental Authority or distributed to the
stockholders of any such Person and all pres releases and other statements made
available by Borrower or any Subsidiary to the public concerning material
adverse changes or developments in the business of any such Person.

            (h) Forthwith upon Borrower learning of the occurrence of any of the
following, written notice thereof, describing the same and the steps being taken
by Borrower, any Subsidiary or any other party with respect thereto: (i) the
occurrence of an Event of Default or an Unmatured Event of Default, (ii) the
institution of, or any adverse determination or materially adverse development
in, any litigation, arbitration proceeding or governmental proceeding which
could have a Material Adverse Effect, (iii) the occurrence of a Reportable
Event, (iv) the institution of any steps to terminate any Pension Plan, (v) the
institution of any steps to completely or partially withdraw from any
Multiemployer Plan, (vi) the failure of Borrower or any current or past member
of its Controlled Group to make a required contribution to any Pension Plan if
such failure is sufficient to give rise to a Lien under Section 412 of the IRC
or Section 302 of ERISA, (vii) the adoption of any amendment which would require
Borrower or any current or past member of its Controlled Group to provide a bond
or other security to a Pension Plan under Section 401(a)(29) of the IRC or
Section 307 of ERISA, (viii) the incurrence of any increase in the contingent
liability of Borrower or any member of its Controlled Group or any other
conditions, events or transactions with respect to any present (or future)
Employee Benefit Plan which (a) is not adequately reserved on the balance sheet
of Borrower or one of its Controlled Group members and (b) could result in the
incurrence by Borrower or any member of its Controlled Group of any liability in
excess of $50,000 (in the aggregate), (ix) the commencement of any dispute which
might lead to the modification, transfer, revocation, suspension or termination
of any Related Document, (x) any termination (without renewal), loss, suspension
or other impairment of Borrower's or its Subsidiary's rights under any Material
Intellectual Property Right or Material Contract or any expectation of any such
termination, loss, suspension or other impairment, (xi) any other material
adverse change in a Material Contract, or (xii) any other event or events which
could have a Material Adverse Effect.

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            (i) (i) Within 90 days after the end of each Fiscal Year, a
certificate signed by its chief financial officer that summarizes the insurance
policies carried by Borrower (such certificate to be in form and substance
satisfactory to Agent), and (ii) written notification 30 days prior to any
cancellation or material change (other than one which enlarges the scope of
coverage, adds additional insureds or increases coverage limits) of any such
insurance by Borrower and within 5 days after receipt of any notice (whether
formal or informal) of cancellation, reduction in coverage, or shortening of
policy period or material adverse change by any of its insurers.

            (j) With respect to each Multiemployer Plan as to which Borrower or
any current or past member of its Controlled Group may have any liability, (i)
no less frequently than annually, a written estimate (which shall be based on
information received from each such plan, it being expressly understood that
Borrower shall take all reasonable steps to obtain such information) of the
withdrawal liability that would be incurred by Borrower or any current or past
member of its Controlled Group in the event that Borrower or any current or past
member of its Controlled Group were to completely withdraw from that plan in a
complete withdrawal as defined in Section 4201 of ERISA, and (ii) written notice
thereof, as soon as it has reason to believe (on the basis of the most recent
information available to it) that the sum of (a) the withdrawal liability that
would be incurred by Borrower or any current or past member of its Controlled
Group if Borrower or any current or past member of its Controlled Group
completely withdrew from any Multiemployer Plans as to which Borrower of any
current or past member of its Controlled Group has an obligation to contribute,
and (b) the amount of the outstanding withdrawal liability (without unaccrued
interest) incurred by Borrower of any current or past member of its Controlled
Group to Multiemployer Plans, would exceed $50,000 in the aggregate.

            (k) Prompt written notice of execution of any agreement by Borrower
or any Subsidiary to merge or consolidate into or with, or purchase or otherwise
acquire all or substantially all of the assets or stock of any class of, or any
partnership or joint venture interest in, any other Person, or for the sale,
transfer, lease or conveyance by Borrower or any Subsidiary of all or any
substantial part of its assets or sale or assignment without recourse of any of
its receivables.

            (l) Within 30 days after the filing thereof, copies of all income
tax returns filed by Borrower or any Subsidiary with any Federal taxing
authority.

            (m) Not later than the twentieth (20th) day of each month, a monthly
report ("MONTHLY REPORT"), accompanied by a certificate in the form attached as
Exhibit 11.1(m), which shall be signed by the chief executive officer or chief
financial officer of Borrower. The Monthly Report shall be in form and substance
satisfactory to Agent and shall include, as of the last Business Day of the
preceding month (and with respect to the initial Monthly Report attached hereto,
as of a date not more than two (2) Business Days prior to the Closing Date): (i)
an aged trial balance of Accounts ("ACCOUNTS TRIAL BALANCE") sorted by Account
Debtor in invoice detail and submitted in hard copy and electronic disk
indicating which Accounts are current, up to 30, 30 to 59, 60 to 89 and 90 days
or more past the original invoice date and listing the names and addresses of
all applicable Account Debtors, (ii) a summary of accounts payable showing which
accounts payable are current,

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up to 30, 30 to 59, 60 to 89 and 90 days or more past due and listing the names
and addresses of applicable creditors; and (iii) a schedule of Inventory owned
by Borrower and in Borrower's possession valued at the lower of cost or market
on a FIFO basis. Borrower shall provide in all Monthly Reports and more
frequently if requested by Agent, in form satisfactory to Agent, information on
each of the following occurrences arising subsequent to the immediately
preceding Monthly Report: all sales or other reductions of and all additions to
Inventory, all returns of Inventory, and all credits issued by Borrower, all
material complaints and claims against Borrower in connection with Inventory. In
addition, Borrower shall deliver a Borrowing Base Certificate to Agent not later
than each Tuesday as of the previous Friday.

            (n) Together with each delivery of financial statements required by
Section 11.1(c), a current list of outstanding intercompany loans made pursuant
to Section 11.33.

            (o) From time to time, such other information concerning Borrower or
any Subsidiary as Agent or any Lender may reasonably request.

            SECTION 11.12     CORPORATE EXISTENCE; FOREIGN QUALIFICATION. Do and
cause to be done at all times all things necessary to (i) maintain and preserve
the corporate existence of Borrower and each Subsidiary, (ii) be duly qualified
to do business and in good standing as a foreign corporation in each
jurisdiction where the nature of its business makes such qualification
necessary, except any such jurisdiction where failure to so qualify could not
have a Material Adverse Effect (which jurisdictions shall include, without
limitation, those jurisdictions listed in Schedule 10.1) and (iii) comply with
all Contractual Obligations and Requirements of Law binding upon Borrower and
each Subsidiary, except to the extent that the failure to comply therewith could
not have a Material Adverse Effect.

            SECTION 11.13     BOOKS, RECORDS AND INSPECTIONS. Maintain, and
shall cause each Subsidiary to maintain, complete and accurate books and
records. In addition, Agent, each Lender, or any Person designated by Agent or
any Lender in writing, shall have the right, from time to time hereafter, to
call at Borrower's place or places of business (or any other place where the
Collateral or any information relating thereto is kept or located) during normal
business hours upon reasonable prior written or telephonic notice by Agent and
each Lender or such other Person; provided, that no prior notice shall be
required upon the occurrence and during the continuance of an Event of Default
or Unmatured Event of Default, and, without hindrance or delay (i) to inspect,
audit, check and make copies of and extracts from Borrower's books, records,
journals, orders, receipts and any correspondence and other data relating to
Borrower's or any Subsidiary's business or to any transactions between the
parties hereto, (ii) to make such verification concerning the Collateral as
Agent or the Required Lenders may consider reasonable under the circumstances,
and (iii) to discuss the affairs, finances and business of Borrower or any
Subsidiary with any officers, employees or directors of Borrower and its
Subsidiaries.

            SECTION 11.14     INSURANCE. (i) If Borrower maintains "key man"
insurance with respect to any officer or director of Borrower, Borrower shall
assign the proceeds of such 

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insurance to Agent pursuant to an assignment in form and substance reasonably
satisfactory to Agent, (ii) maintain, and shall cause each Subsidiary to
maintain, such insurance (x) as may be required by law, or by the Collateral
Documents or otherwise by Agent or any Lender, and (y) in any event to such
extent and against such hazards and liabilities, as is customarily maintained by
prudent companies similarly situated, (iii) maintain, and shall cause each
Subsidiary to maintain, a sufficient amount of insurance so that neither
Borrower nor Agent or any Lender will be considered a co-insurer or co-insurers,
(iv) with respect to each liability insurance policy, including pollution
liability policies, (A) cause such policy to provide, pursuant to endorsements
in form and substance satisfactory to Agent, that Agent is named as an
additional insured and that the insurer will give Agent 30 days' prior written
notice of the termination or other material modification of such policy and (B)
notify Agent within 5 days after obtaining any new policy, or increasing
coverage under any existing policy, describing in detail in such notice any such
new policy or increase, and (v) with respect to each physical damage or casualty
policy, and each life insurance policy referred to in subclause (i), (1) cause
such policy to provide, pursuant to endorsements in form and substance
satisfactory to Agent, that Agent is named as a loss payee as to personal
property, mortgagee as to real property and an assignee with respect to life
insurance and that the insurer will give 30 days' prior written notice of the
termination or other material modification of such policy, (2) cause such policy
to provide, pursuant to endorsements in form and substance satisfactory to
Agent, that the insurance shall not be invalidated as against Agent or any
Lender by any action or inaction of any Person other than Agent or any Lender,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policy, (3) as against Agent and the Lenders, the insurers
shall waive any rights of subrogation to the extent that the named insured has
waived such rights (and Borrower hereby irrevocably and unconditionally waives
any right of subrogation against Agent and the Lenders, except for claims
arising out of the gross negligence or willful misconduct of the Lenders), and
(4) notify Agent within 5 days of obtaining any new policy or increasing
coverage under any existing policy, describing in detail in such notice any such
new policy or increase.

            SECTION 11.5     TAXES AND LIABILITIES. Pay, and shall cause each
Subsidiary to pay, when due all taxes, assessments and other material
liabilities except as contested in good faith and by appropriate proceedings
with respect to which adequate reserves have been established, and are being
maintained, in accordance with GAAP if and so long as forfeiture of any part of
the Collateral will not result from the failure to pay any such taxes,
assessments or other material liabilities during the period of any such contest.

            SECTION 11.6     EMPLOYEE BENEFIT PLANS. (i) Maintain, and cause
each current or past member of the Controlled Group to maintain, each Pension
Plan as to which it may have any liability, in compliance in all material
respects with all applicable Requirements of Law or as required pursuant to a
collective bargaining agreement, or if intended to qualify under Section 401(a)
or 501(a) of the IRC, in form and administered in a manner so as not to result
in any liability to Borrower or any current or past member of its Controlled
Group for failure to comply with the applicable provisions thereof, and (ii) not
institute any actions which could give rise to any of the following, unless the
liability to Borrower or any current or past member of its Controlled Group
arising from the same will not exceed $50,000 or is adequately reserved on the
balance sheet of 
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Borrower or one of its Controlled Group members: (a) a Reportable Event, (b) the
complete or partial withdrawal from any Multiemployer Plan as defined in Section
4210 of ERISA, (c) an amendment, modification or termination or withdrawal from
of a Pension Plan or the entering into of any new Pension Plan, (whether or not
resulting in the posting of a security under Section 401(a)(29) of the IRC or
Section 307 of ERISA), (d) an obligation to file a notice of intent to terminate
a Pension Plan under Section 4041 of ERISA, (e) a lien under Section 412 of the
IRC or Section 302 of ERISA, (f) the institution of proceedings to terminate a
Pension Plan by the Pension Benefit Guaranty Corporation under Section 4043 of
ERISA, or (g) other than in the ordinary course, the incurrence of any increase
in the contingent liability of Borrower or any other conditions, events or
transactions with respect to any present (or future) Employee Benefit Plan.

            SECTION 11.7      COLLATERAL DOCUMENTS. Cause the Collateral
Documents, as security for the payment and performance of Notes and all other
Liabilities, to be and remain valid, perfected Liens on and security interests
in all assets of Borrower and each Subsidiary now or hereafter existing or
acquired (free of all other Liens whatsoever other than Permitted Liens).

            SECTION 11.8     COMPLIANCE WITH LAWS. Comply, and shall cause each
Subsidiary to comply, with all Federal, state and local laws, rules and
regulations related to its business except to the extent that the failure to
comply could not have a Material Adverse Effect.

            SECTION 11.9     MAINTENANCE OF PERMITS. Maintain, and shall cause
each Subsidiary to maintain, all permits, licenses and consents as are required
for the conduct of its business by any state, Federal or local government agency
or instrumentality (including, without limitation, any such license, consent or
permit relating to Hazardous Materials or the disposal thereof) if the failure
to maintain such licenses, permits and consents could not have a Material
Adverse Effect.

            SECTION 11.10     PURCHASE, REDEMPTION, DISTRIBUTION, INTEREST AND
PAYMENT RESTRICTIONS. Not, nor shall it permit any Subsidiary to, (i) directly
or indirectly, purchase, redeem or otherwise acquire any of its Equity Interests
or declare or make any dividend, distribution or payment to any holder of any of
its Equity Interests, or set aside any funds for any such purpose, or make any
other payment of any nature whatsoever to any holder of any shares of the
capital stock or any of their or Borrower's Affiliates or members, partners or
shareholders (in their capacity as such), or (ii) enter into or assume any
agreement, instrument, indenture or other obligation (other than the Related
Documents) which (a) contains a negative pledge provision which would require a
sharing of any interest in the Collateral, (b) prohibits or limits the creation
or assumption of any Lien in favor of Agent for the benefit of itself and the
Lenders upon its Property, whether now owned or hereafter acquired, or (c)
restricts, prohibits or requires the consent of any Person with respect to the
payment of any dividend, distribution or payment to any holder of its Equity
Interests.

            SECTION 11.11     LOANS, ADVANCES OR INVESTMENTS. Not make or permit
any Subsidiary to make any loans or advances to, investments in, or
contributions to the capital of, any other Person, except for (i) the
endorsement, in the ordinary course of collection, of instruments

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payable to it or to its order, (ii) investments in Cash Equivalents and (iii)
loans made in accordance with Section 11.33.

            SECTION 11.12     MERGERS, CONSOLIDATIONS, SALES. Not, nor shall it
permit any Subsidiary to, (a) be a party to any merger or consolidation or
purchase or otherwise acquire all or substantially all of the assets or stock of
any class of, or any partnership or joint venture interest or other interest in,
any other Person; or (b) sell, transfer, convey or lease all or any substantial
part of its assets or sell or assign with or without recourse any Account, other
than (i) any sale of inventory in the ordinary course of business and (ii) a
sale of all or substantially all of the equity interests or all or substantially
all of the assets of Niemand Holdings, Inc. or Niemand Industries, Inc. for cash
at a price determined to be fair and reasonable by Borrower's board of directors
(the "NIEMAND SALE"), provided, that no Event of Default or Unmatured Event of
Default exists after giving effect to such sale.

            SECTION 11.13     UNCONDITIONAL PURCHASE OBLIGATIONS. Not, nor shall
it permit any Subsidiary to, enter into or be a party to any contract for the
purchase of materials, supplies or other property or services, if such contract
requires that payment be made by it regardless of whether delivery is ever made
of such materials, supplies or other property or services.

            SECTION 11.14    REGULATIONS U AND X. Not use or permit any proceeds
of the Loans to be used, either directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of "purchasing or carrying margin stock"
within the meaning of Regulations U and X of the Board of Governors of the
Federal Reserve System, as amended from time to time.

            SECTION 11.15     SUBSIDIARIES. Notwithstanding any provision of
this Agreement to the contrary, not create or permit to exist any Subsidiary of
it except for the Subsidiaries identified on Schedule 10.18.

            SECTION 11.16     NO AMENDMENT OF ORGANIZATION DOCUMENTS. Not enter
into or permit to exist any amendment or TS modification of the Organization
Documents of Borrower or any Subsidiary.

            SECTION 11.17     OTHER AGREEMENTS. Not enter into, nor shall it
permit any Subsidiary to enter into, any agreement containing any provision
which would be violated or breached by the performance of its obligations
hereunder, any of the Related Documents or under any other instrument or
document delivered or to be delivered by it hereunder or in connection herewith.

            SECTION 11.18     BUSINESS ACTIVITIES; NAME. Not engage in, nor
shall it permit any Subsidiary to engage in, any type of business except the
businesses described in Schedule 11.18 and the activities incidental and related
thereto. Borrower shall, and shall cause each Subsidiary to, transact business
only in its corporate name and such trade names as are set forth in Schedule
10.16.
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Following the Closing Date, neither Borrower nor any Subsidiary will conduct its
business under any trade or fictitious name other than the duly registered names
disclosed on Schedule 10.16.

            SECTION 11.19     TRANSACTIONS WITH AFFILIATES. Not, nor shall it
permit any Subsidiary to, enter into, or cause, suffer or permit to exist any
transaction, arrangement or contract with any Affiliate, including without
limitation the purchase, sale or exchange of property or the rendering of any
service, with any Affiliate, except transactions referred to on Schedule 11.19,
loans permitted by Section 11.33 and transactions entered into in the ordinary
course of business between Borrower and any Subsidiary or any two Subsidiaries
with respect to the operations of their respective businesses.

            SECTION11.20      ENVIRONMENTAL LIABILITIES. (i) Comply, and cause
any Subsidiary to comply with any applicable Environmental Laws; (ii) without
limiting the foregoing, not, and not permit any Person to store, release,
generate or dispose of (except in accordance with Environmental Laws) any
Hazardous Material at, onto, or from any real property owned or operated by it,
(iii) not allow any lien imposed pursuant to any Environmental Law to be imposed
or to remain on such real property, or (iv) perform, satisfy and implement any
assessments, investigations, response or corrective actions, at any real
property owned or operated by it or any subsidiary, as required by any
Governmental Authority or Environmental Law, including without limitation, such
actions as may be required to investigate, assess, remediate or abate the
contaminated conditions at, under or from the GB Labels, Inc., Burlington, North
Carolina facility (hereinafter "GB LABELS FACILITY"); (v) with respect to the
contaminated conditions at the GB Labels Facility, maintain in effect the
third-party pollution liability insurance identified on Schedule 10.12; (vi)
allow Agent and Lenders, or their representatives, from time to time at Agent's
or Lenders' reasonable discretion and expense to inspect the real property owned
or operated by it or any subsidiary and conduct an environmental assessment
(including invasive soil or groundwater sampling); (vii) notwithstanding its
notice obligations under Section 11.1(h), provide Agent with a copy of, (a) any
assessment, investigation, corrective action or other environmental reports or
plans, concerning remedial activities undertaken at the GB Labels Facility, (b)
any material written communications concerning such remedial activities or the
contaminated conditions with any Government Authority asserting jurisdiction
over the GB Labels Facility or the environmental conditions thereon or emanating
therefrom, and (c) any written communications (other than privileged
attorney-client work product and communications) concerning any material
developments, including the settlement of any claims, in any third-party
litigation relating to the contaminated conditions at or from the GB Labels
Facility; and (viii) promptly undertake and complete, at its own expense and to
the reasonable satisfaction of Agent, the remedial actions described on Schedule
11.20, in the time frame set forth therein and in accordance with applicable
Environmental Laws, and provide Agent written evidence of the completion of each
schedule remedial action or demonstration that such remedial action is not
required under applicable Environmental Laws.

            SECTION 11.21     INDEBTEDNESS. Not, nor shall it permit any
Subsidiary to, incur or permit to exist any Indebtedness or accounts payable
except (i) the Loans, (ii) deferred taxes, (iii) current accounts payable
arising in the ordinary course of business and not overdue, (iv) non-

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current accounts payable which Borrower or such Subsidiary, as the case may be,
is contesting in good faith and by appropriate proceedings diligently conducted,
and with respect to which adequate reserves have been established, and are being
maintained, in accordance with GAAP, and (v) Indebtedness of a type referenced
in clauses (b) and (c) of the definition of Permitted Liens ("PERMITTED PURCHASE
MONEY DEBT"), provided that the aggregate outstanding amount thereof does not at
any time exceed $100,000 as to the Indebtedness referenced in either such
clause, and (vi) other Indebtedness shown on Schedule 11.21; provided, that
Borrower may guarantee any Indebtedness of any Subsidiary that is permitted
pursuant to the terms of this Agreement.

            SECTION 11.22     LIENS. Not create or permit to exist, nor shall it
permit any Subsidiary to create or permit to exist, any Lien with respect to any
of its assets shall now or hereafter existing or acquired, except Permitted
Liens.

            SECTION 11.23     FISCAL YEAR. Not change, nor shall it permit any
Subsidiary to change, its Fiscal Year.

            SECTION 11.24     LANDLORD AND WAREHOUSE AGREEMENTS. Provide, and
shall cause each Subsidiary to provide, Agent with copies of all agreements
between such Person and any landlord, bailee, warehouseman or processor which
owns any premises at which Inventory or any other Collateral may, from time to
time, be located. Borrower shall deliver to Agent on or before the Closing Date
a landlord's waiver in form and substance acceptable to Agent from the lessor of
each leased property currently being used by Borrower or any Subsidiary where
Collateral is located. Borrower shall deliver to Agent a bailee letter in form
and substance acceptable to Agent with respect to any warehouse or other
location where Collateral is located. With respect to leased locations or
warehouse space or processing locations leased on the Closing Date, if Borrower
is unable to deliver such a landlord waiver or bailee letter the Inventory at
that location shall automatically be deemed ineligible without further action by
Agent . In the event that Borrower delivers to Agent such landlord waiver or
bailee letter, as applicable, after the Closing Date, subject to the terms and
conditions of this Agreement (including Section 9.4), Inventory located at such
leased location or other location, as applicable, may be considered Eligible
Inventory. Borrower shall timely and fully pay and perform its obligations under
all leases and other agreements with respect to each leased location or
warehouse or processing location where any Collateral is or may be located.
Borrower shall promptly deliver to Agent copies of (i) any and all default
notices received by it under or with respect to any such leased location or
other location, and (ii) such other notices or documents as Agent may request in
its reasonable discretion.

            SECTION 11.25     MAINTENANCE OF REAL ESTATE. Keep and maintain, and
shall cause each Subsidiary to keep and maintain, the Real Estate owned by such
Person and all improvements thereon in good condition and repair (ordinary wear
and tear excepted) and shall maintain, and shall cause each Subsidiary to
maintain, the value and utility thereof, and shall maintain, and shall cause
each Subsidiary to maintain, such Real Estate in conformity with all applicable
building and zoning codes and other applicable laws, statutes, rules and
regulations. Borrower shall maintain, and shall cause each Subsidiary to
maintain, its leased real property in the

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same manner as its owned Real Estate, and comply with the terms of its leases of
Real Estate, in accordance with the applicable leases.

            SECTION 11.26     ACCOUNTS RECORDS. At all times hereafter maintain
a record of its Accounts, keeping correct and accurate records itemizing and
describing the names and addresses of Account Debtors, relevant invoice numbers,
shipping dates and due dates, collection histories, and Accounts agings, all of
which records shall be available during Borrower's usual business hours at the
request of any of Agent's or any Lender's officers, employees or agents.
Borrower shall cooperate fully with Agent and its agents who shall have the
right at any time or times to inspect its Accounts and the records with respect
thereto. Borrower shall conduct a review of its bad debt reserves and collection
histories at least once each year and promptly following such review shall
supply Agent with a report in a form and with such specificity as may be
reasonably satisfactory to Agent concerning such review of the Accounts.

            SECTION 11.27     INSTRUMENTS AND CHATEL PAPER. All Chattel Paper
shall be marked with the following legend: "This writing and the obligations
evidenced or secured hereby are subject to the security interest of First Source
Financial LLP, as Agent." Upon the request of Agent and at all times upon the
occurrence and during the continuance of an Event of Default or Unmatured Event
of Default, immediately upon Borrower's receipt thereof, Borrower shall deliver
or cause to be delivered to Agent, with appropriate endorsement and assignment
to vest title, with full recourse to Borrower, and possession in Agent, all
Instruments and Chattel Paper which Borrower now owns or may at any time or
times hereafter acquire.

            SECTION 11.28    INVENTORY RECORDS. At all times hereafter maintain
a perpetual inventory, keeping correct and accurate records itemizing and
describing the kind, type, quality and quantity of Inventory and of Eligible
Inventory, Borrower's cost therefor and daily withdrawals therefrom and
additions thereto, and the locations of all Inventory in the possession of
bailees, all of which records shall be available during Borrower's usual
business hours at the request of any of Agent's officers, employees or agents.
Borrower shall cooperate fully with Agent and its agents who shall have the
right at any time or times to inspect the Inventory and the records with respect
thereto. Borrower shall conduct a physical count of its Inventory at least once
each year and promptly following such physical inventory shall supply Agent with
a report in form and substance satisfactory to Agent concerning such physical
count of its Inventory, and shall furnish to Agent, at Agent's request, such
other documents and reports with respect to the Inventory.

            SECTION 11.29     COLLATERAL LOCATIONS. Neither the location of the
principal place of business and chief executive office of Borrower or any
Subsidiary as set forth on Schedule 10.16, the locations of Collateral as set
forth on Schedule 11.29, nor the corporate name or mailing address of Borrower
or any Subsidiary shall be changed, nor shall there be established additional
places of business or additional locations at which Collateral is stored, kept
or processed unless (i) Borrower shall have given Agent not less than thirty
(30) days prior written notice thereof, (ii) Agent shall have determined that,
after giving effect to any such change of name, address or location, Agent shall
have a first perfected Lien in the Collateral except for Permitted Liens, (iii)
in 
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the case of Collateral locations, Borrower shall have delivered a landlord
waiver or bailee letter, as applicable, in form and substance satisfactory to
Agent with respect to such location, and (iv) all negotiable documents and
receipts in respect of any Collateral maintained at such premises are promptly
delivered to Agent. Prior to making any such change or establishing such new
location, Borrower or a Subsidiary, as the case may be, shall execute any
additional financing statements or other documents or notices required by Agent.
All Collateral located at any such new location shall automatically without
further action by Agent be deemed ineligible to constitute Eligible Accounts or
Eligible Inventory, as the case may be, until Borrower shall have complied with
the requirements of this Section 11.29 and Section 11.24.

            SECTION 11.30    DISPOSAL OF PROPERTY. Not, and shall not permit any
Subsidiary to, sell, lease, assign, transfer or otherwise dispose of any of its
Property or rights to any Person except for (i) bona fide sales of Inventory to
customers for fair value in the ordinary course of business and (ii) sales of
Equipment which is obsolete, worn-out or otherwise not useable in Borrower's
business. In the event any Equipment of Borrower or any Subsidiary is sold,
transferred or otherwise disposed of as permitted by this Section 11.30 or with
the Required Lenders' consent, and (i) such sale, transfer or disposition is
effected without replacement of the Equipment so sold, transferred or disposed
of or such Equipment is replaced by Equipment leased by such Person, such Person
shall promptly (but in any event within three (3) Business Days of the receipt
thereof) deliver all of the cash proceeds of any such sale, transfer or
disposition to Agent, or (ii) such sale, transfer or disposition is made in
connection with the purchase by such Person of replacement Equipment, such
Person shall use the proceeds of such sale, transfer or disposition to finance
the purchase by such Person of replacement Equipment and shall deliver to Agent
written evidence of the use of the proceeds for such purchase. Except as
permitted by Section 11.22, all replacement Equipment purchased by Borrower or
any Subsidiary shall be free and clear of all Liens, except for Liens in favor
of Agent. All proceeds delivered to Agent under this Section 11.30 shall be
applied to the remaining scheduled payments on the Term Loans in the inverse
order of their maturities or, if the Term Loans have been paid in full, to the
outstanding Revolving Loans (without permanent reduction of the Revolving
Commitment) without premium or penalty except as provided in Section 2.8, with
such proceeds to be applied first to Base Rate Loans until paid in full and then
to LIBOR Rate Loans.

            SECTION 11.31     CORPORATE ACCOUNTS. Not maintain corporate deposit
accounts jointly with any Affiliate or commingle any of its funds with funds of
any Affiliate.

            SECTION 11.32     FINANCIAL COVENANTS.

            (a) Net Worth. Maintain a Net Worth at all times during each period
listed below of at least the amounts set forth opposite such period:


                                                     MINIMUM
                   PERIODS (ALL DATES ARE INCLUSIVE) NET WORTH

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             Fiscal Quarter ending September 30,
             1998                                    $ 27,500,000

             Fiscal Quarter ending December 31, 1998 $ 27,500,000

             Fiscal Quarter ending March 31, 1999    $ 27,500,000

             Fiscal Quarter ending July 3, 1999      $ 27,500,000

             July 4, 1999 through July 2, 2000       $ 28,000,000

             July 3, 2000 through June 30, 2001      $ 29,000,000

             July 1, 2001 through June 29, 2002      $ 30,000,000

             June 30, 2002 and thereafter            $ 32,000,000

            (b) Debt to EBITDA Ratio. Not permit the Debt to EBITDA Ratio for
any period set forth below to be more than the ratio listed below opposite such
period:


                                                         MAXIMUM
                                                          RATIO
               PERIOD(S) (ALL DATES ARE INCLUSIVE)      (TO 1.0)

             Fiscal Quarter ending September 30,
             1998                                       5.70:1.0

             Fiscal Quarter ending December 31, 1998    5.20:1.0

             Fiscal Quarter ending March 31, 1999       4.50:1.0

             Fiscal Quarter ending July 3, 1999         4.20:1.0

             Each Fiscal Quarter of Fiscal Year 2000    3.50:1.0

             Each Fiscal Quarter of Fiscal Year 2001    3.00:1.0

             Each Fiscal Quarter of Fiscal Year 2002    2.50:1.0

             Fiscal Quarter ending on June 30, 2002
             and each Fiscal Quarter thereafter         2.50:1.0

            (c) Interest Coverage Ratio. Not permit the Interest Coverage Ratio
measured on the last day of any month for any twelve (12) month period (or, in
the case of months ending before July 3, 1999, for the period from and including
June 27, 1998, to and including the last day of such month) ending on the last
day of such month to be less than the ratio listed below opposite the period
including such month:
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                                                         MAXIMUM
                                                          RATIO
               PERIOD(S) (ALL DATES ARE INCLUSIVE)      (TO 1.0)

             Fiscal Quarter ending September 30,
             1998                                       1.80:1.0

             Fiscal Quarter ending December 31, 1998    2.00:1.0

             Fiscal Quarter ending March 31, 1999       2.00:1.0

             Fiscal Quarter ending July 3, 1999         2.00:1.0

             July 4, 1999 through July 2, 2000          2.25:1.0

             July 3, 2000 through June 30, 2001         2.50:1.0

             July 1, 2001 through June 29, 2002         2.50:1.0

             June 30, 2002 and thereafter               2.50:1.0

            (d) Fixed Charge Coverage Ratio. Not permit the Fixed Charge
Coverage Ratio measured on the last day of any month for any twelve (12) month
period (or, in the case of months ending before July 3, 1999, for the period
from and including June 27, 1998, to and including the last day of each month)
ending on the last day of such month to be less than the ratio listed below
opposite the period including such month:

                                                         MAXIMUM
                                                          RATIO
               PERIOD(S) (ALL DATES ARE INCLUSIVE)      (TO 1.0)

             Fiscal Quarter ending September 30,
             1998                                       1.00:1.0

             Fiscal Quarter ending December 31, 1998    1.00:1.0

             Fiscal Quarter ending March 31, 1999       1.00:1.0

             Fiscal Quarter ending July 3, 1999         1.00:1.0

             July 4, 1999 through July 2, 2000          1.05:1.0

             July 3, 2000 through June 30, 2001         1.10:1.0

             July 1, 2001 through June 29, 2002         1.10:1.0

             June 30, 2002 and thereafter               1.10:1.0

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            (e) Gross Capital Expenditures. Not, nor shall it permit any
Subsidiary to, directly or indirectly (by way of the acquisition of the
securities of a Person or otherwise), make or commit to make Gross Capital
Expenditures, except that Borrower may, so long as no Event of Default or
Unmatured Event of Default shall exist or would result therefrom, make Gross
Capital Expenditures in the ordinary course of business in an aggregate amount
not to exceed during any Fiscal Year of Borrower $1,000,000.

            SECTION 11.33     INTERCOMPANY LOANS. Notwithstanding any provision
contained in this Agreement to the contrary, Borrower may make loans to any
Guarantor (and such Guarantor may incur the Indebtedness related thereto and
repay such Indebtedness) subject to the following terms and conditions:

                  (i)  such loans shall be unsecured and be payable on demand;

                  (ii) at the time any such intercompany loan is made by
            Borrower to any Guarantor and after giving effect to such loan, both
            Borrower and the Guarantor receiving the loan shall be Solvent;

                  (iii) the obligor of such loan shall use the proceeds thereof
            solely for its own working capital requirements arising in the
            ordinary course of business;

                  (iv) each Guarantor shall have executed and delivered to
            Borrower, on the Closing Date, a demand promissory note
            (collectively, the "INTERCOMPANY NOTES") to evidence any such
            intercompany Indebtedness owing at any time by such Guarantor to
            Borrower, which Intercompany Notes shall be in form and substance
            satisfactory to Agent and pledged to Agent for the benefit of the
            Lenders;

                  (v) each Guarantor shall record all intercompany transactions
            on its books and records in a manner satisfactory to Agent;

                  (vi) the obligations of each Guarantor under any such
            Intercompany Notes shall be subordinated to the Liabilities of such
            Guarantor under any Related Document in a manner satisfactory to
            Agent;

                  (vii) no Unmatured Event of Default or Event of Default would
            occur and be continuing after giving effect to the incurrence of any
            such proposed intercompany loan; and

                  (viii) after giving effect to each such loan, Borrower shall
            have cash in (including, without limitation, unused Borrowing
            Availability) an amount equal to or greater than its working capital
            requirements for the next succeeding ninety (90) days, based upon
            Borrower's historical cash needs and taking into account all of its

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<PAGE>

            payment obligations under the Related Documents and under any of its
            other Indebtedness.

            Borrower hereby agrees that, until all of the Obligations have been
indefeasibly repaid in full in cash, all loans made by it to the Guarantors
shall be subordinated in all respects to the Liabilities and subject in right of
payment to the prior payment of the Liabilities in full in cash.

            SECTION 12  CONDITIONS

            The obligation of the Lenders to make the Loans is subject to the
following conditions precedent or concurrent:

            SECTION 12.1     TERM LOANS. The obligations of each Lender to make
its Term Loan and its initial Revolving Loan shall be subject to the prior or
concurrent satisfaction (in form and substance satisfactory to Agent and the
Required Lenders) of each of the conditions precedent set forth below:

            (a) No Event of Default or Unmatured Event of Default shall have
occurred and be continuing or will result from the making of such Loan.

            (b) All warranties and representations contained in this Agreement
and the Related Documents shall be true and correct as of the date of such Loan,
with the same effect as though made on the date of such Loan.

            (c) In the opinion of Agent and the Required Lenders, in their sole
and absolute discretion, (i) no litigation (including, without limitation,
derivative actions), arbitration, governmental investigation or proceeding or
inquiry shall, on the date of the initial Loan, be pending, or to the knowledge
of Borrower, threatened which seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or to obtain relief as a result of,
the Related Transactions, or would be materially adverse to, or be detrimental
to the interests of, any of the parties to this Agreement or the Related
Documents or any of the Related Transactions, and (ii) no material adverse
development shall have occurred in any litigation (including, without
limitation, derivative actions), arbitration, government investigation or
proceeding or inquiry disclosed in Schedule 10.4.

            (d) The fees referred to in Section 5 which are due and payable on
or prior to the date of the initial Loan shall have been paid to Agent and the
Lenders.

            (e) The Lockbox, the Master Account and the Operating Account shall
have been established pursuant to Section 6.2 and the financial institutions at
which Borrower has established the payroll and petty cash accounts described in
Section 6.2(c) shall have furnished Agent with the acknowledgment referred to in
such Section.
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<PAGE>

            (f) Agent shall have received all of the following, each duly
executed and dated the date of the initial Loan (or such earlier date as shall
be satisfactory to Agent), in form and substance satisfactory to Agent: the
Notes, the Bank Agency Agreement, the Security Agreements, the Guaranties, the
Stock Pledge Agreement, the Mortgages, Borrower's and each Subsidiary's
certificate of incorporation and such other agreements, documents, environmental
reports, appraisals, instruments, certificates and opinions as Agent may
reasonably request.

            (g) Borrowing Availability after giving effect to all such Revolving
Loans and LC Exposure existing on the Closing Date shall be not less than
$3,800,000.

            (h) The obligations of Borrower identified on Schedule 12.1(h)
(herein called "INDEBTEDNESS TO BE REFINANCED"), together with all interest
accrued thereon and all prepayment premiums and other amounts payable in
connection therewith, shall have been refinanced in full from the proceeds of
the Loans and Agent shall have received (i) the certificate of the President or
a Vice President of Borrower, dated the date of the initial Term Loans to such
effect, (ii) a letter from each of the holders of the Indebtedness to be
Refinanced setting forth in each case (x) the amount of principal and accrued
interest thereon due such holder as of the date of such letter, (y) the per diem
interest rate on unpaid principal thereunder as of such date, and (z) payment
instructions relative to the payment of such Indebtedness to be Refinanced, and,
unless waived by Agent, enclosing in escrow any and all Uniform Commercial Code
termination statements, mortgage releases and releases of security interests in
patents, trademarks and copyrights, in form and substance satisfactory to Agent,
sufficient to terminate all Liens securing any of the Indebtedness to be
Refinanced.

            SECTION 12.2     ALL LOANS; LC GUARANTIES. The obligation of the
Lenders to make the initial Loan and each subsequent Loan or to issue an LC
Guaranty is subject to the following further conditions precedent (except as set
forth in Section 12.2(c)):

            (a) (i) No Event of Default or Unmatured Event of Default shall have
occurred and be continuing or will result from the making of such Loan or
issuing such LC Guaranty, (ii) the warranties and representations contained in
this Agreement and the Related Documents shall be true and correct in all
material respects as of the date of such requested Loan or provision of such LC
Guaranty, with the same effect as though made on the date of such Loan or
provision of such LC Guaranty, and (iii) there shall have been no material
adverse change or notice to Borrower of prospective material adverse change with
respect to insurance maintained by Borrower.

            (b) (i) No claims, litigation (including, without limitation,
derivative actions), arbitration, governmental proceeding, investigation or
inquiry not disclosed in writing by Borrower to Lender prior to the date of the
last previous Loan or issuance of an LC Guaranty, whichever shall be pending or
known to be threatened against Borrower, (ii) no material development not so
disclosed shall have occurred in any claim, litigation (including, without
limitation, derivative actions), arbitration, governmental proceeding,
investigation or inquiry which was so disclosed, and (iii) no event, condition
or development shall have occurred or developed at any time (whether

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<PAGE>

before or after the making of the last previous Loan), which (in the case of
each of the foregoing clauses (i) through (iii)) in the opinion of the Required
Lenders could have a Material Adverse Effect.

            (c) Agent shall have received (i) a Monthly Report from Borrower
dated no more than thirty-one (31) days prior to the date of such Loan (provided
such period shall be two (2) days prior in the case of the Initial Loans), (ii)
a Borrowing Base Certificate delivered in accordance with Section 11.1(m), (iii)
not later than the fifteenth Business Day of the first calendar month following
the making of each Loan, a certificate, substantially in the form of Exhibit
12.2(c)-1 or in such other form as Agent shall from time to time designate to
Borrower (the "BORROWING CERTIFICATE") dated the last Business Day of the month
in which such Loan was requested, signed by the President or a Vice President of
Borrower, (iv) not less than three (3) days prior to the making of an LC
Guaranty, a certificate substantially in the form of Exhibit 12.2(c)-2 (the "LC
GUARANTY REQUEST") relating to all Permitted LCs to be covered by an LC Guaranty
since the most recent prior LC Guaranty Request, signed by the President or a
Vice President or other appropriate officer of Borrower, and (v) such other
documents as Agent may reasonably request in support of such requested Loan or
LC Guaranty, provided, that unless otherwise requested by Agent, Borrower may
deliver one Borrowing Certificate each calendar month for all Loans for which
such Borrowing Certificate is required.

              SECTION 13  EVENTS OF DEFAULT AND THEIR EFFECT

            SECTION 13.1     EVENTS OF DEFAULT. Each of the following shall
constitute an Event of Default under this Agreement:

            (a) Default in the payment when due, whether by acceleration or
otherwise, of any principal of or interest or premium on any Loan.

            (b) Default, and continuance thereof for five days, in the payment
when due, whether by acceleration or otherwise, of any amount payable hereunder
or under the Related Documents (other than any amount described in Section
13.1(a)).

            (c) (i) Default in the payment when due (subject to any applicable
grace period), whether by acceleration or otherwise, of any other Indebtedness
of, or guaranteed by, Borrower or any Subsidiary, or (ii) default in the
performance or observance of any obligation or condition with respect to any
such other Indebtedness of, or guaranteed by, Borrower or any Subsidiary, if the
effect of such default is to accelerate the maturity of (or there is matured and
unpaid) such other Indebtedness aggregating $100,000 or more, or to cause such
other Indebtedness aggregating $100,000 or more to become due and payable, or to
permit the holder or holders of such other Indebtedness of $100,000 or more, or
any trustee or agent for such holders, to cause such other Indebtedness to
become due and payable prior to its expressed maturity.

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<PAGE>

            (d) Default in the payment when due, or in the performance or
observance of any material obligation of, or material condition agreed to by
Borrower or any Subsidiary (subject to applicable cure periods) with respect to
any Material Contract or any Material Intellectual Property Right (except only
to the extent that the existence of any such default is being contested by such
Person in good faith and by appropriate proceedings diligently conducted and
with respect to which such Person has established, and is maintaining, adequate
reserves therefor in accordance with GAAP).

            (e) (i) Borrower or any Subsidiary or Guarantor becomes insolvent or
generally fails to pay, or admits in writing its inability to pay, debts as they
become due; or (ii) Borrower or any Subsidiary or Guarantor applies for,
consents to, or acquiesces in the appointment of, a trustee, receiver or other
custodian or similar Person for itself or for any of its Property, or makes a
general assignment for the benefit of creditors; or (iii) in the absence of such
application, consent or acquiescence, a trustee, receiver or other custodian or
similar Person is appointed for Borrower or any Subsidiary or Guarantor or for a
substantial part of its Property, unless (I) Borrower or such Subsidiary or
Guarantor institutes appropriate proceedings to contest or discharge such
appointment within 10 days and thereafter continuously and diligently prosecutes
such proceedings and (II) such appointment is in fact discharged within 45 days
of such appointment; or (iv) any bankruptcy, reorganization, debt arrangement,
or other case or proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding is commenced in respect of Borrower or any
Subsidiary or Guarantor, unless (X) such case or proceeding is not commenced by
Borrower or such Subsidiary or Guarantor, (Y) such case or proceeding is not
consented to or acquiesced in by Borrower or such Subsidiary or Guarantor, and
(Z) Borrower or such Subsidiary or Guarantor institutes appropriate proceedings
to dismiss such case or proceeding within 10 days and thereafter continuously
and diligently prosecutes such proceedings and such case or proceeding is in
fact dismissed within 45 days after the commencement thereof; or (v) Borrower or
such Subsidiary or Guarantor takes any action to authorize, or in furtherance
of, any of the foregoing.

            (f) Failure by Borrower to comply with or to perform any provision
of this Agreement (other than occurrences referred to or embodied in other
clauses of this Section 13.1) for a period of five (5) days after the earlier of
(i) Borrower's receipt of notice from Agent or (ii) actual knowledge of such
breach by Borrower.

            (g) Any warranty or representation made by or on behalf of Borrower,
any Subsidiary or any other Person (other than Agent or a Lender) herein or in
any of other Related Documents, or otherwise in connection herewith or therewith
is inaccurate or incorrect, or is breached or false or misleading, in any
material respect as of the date such warranty or representation is made; or any
schedule, certificate, financial statement, report, notice, or other writing
furnished by or on behalf of Borrower or any Subsidiary to Agent or any Lender
is false or misleading in any material respect on the date as of which the facts
therein set forth are stated or certified.

            (h) Except to the extent that any of the following is expressly
permitted hereunder or does not give rise to the incurrence by Borrower or any
current or past member of its 
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Controlled Group of any liability in excess of $50,000, or except to the extent
any of the following is adequately reserved on the balance sheet of Borrower or
one of its current members of its Controlled Group , the institution of any
steps by Borrower or any other Person, including the Pension Benefit Guaranty
Corporation, (a) to amend, modify or terminate a Pension Plan or to enter into
any new Pension Plan, (b) to cause a complete or partial withdrawal from any
Multiemployer Plan, or (c) other than in the ordinary course, to directly or
indirectly cause to exist any other conditions, events or transaction which
could give rise to any liability of Borrower or any current member of its
Controlled Group with respect to any Employee Benefit Plan.

            (i) Any party (including Borrower) to any other Related Document
(other than Agent or any Lender) shall fail to comply with or to perform
(subject to any applicable grace period) any provision of such Related Document
applicable to it; or any of the Related Documents shall fail to remain in full
force and effect; or any action shall be taken by any Person (other than Agent
or any Lender or Master Account Bank) to discontinue or terminate any of the
Related Documents or to contest the validity, binding nature or enforceability
of any thereof.

            (j) Any of the Collateral or the Property of Borrower or any
Subsidiary having a fair market value of more than $50,000 in the aggregate is
attached, seized, subjected to a writ or distress warrant, or levied upon, or
come within the possession or control of any judgment creditor, receiver,
trustee, custodian or assignee for the benefit of creditors of Borrower or any
Subsidiary and on or before the thirty (30) day period thereafter such
Collateral or Property is not returned to such Person or such writ, distress
warrant or levy is not dismissed, vacated, stayed or lifted.

            (k) Any Change of Control shall occur.

            (l) There shall be entered against Borrower or any Subsidiary one or
more judgments, awards or decrees, or orders of attachment, garnishment or any
other writ, which exceed $100,000 in the aggregate at any one time outstanding,
excluding judgments, awards, decrees, orders or writs (i) for which there is
full insurance and with respect to which the insurer has assumed responsibility
in writing, (ii) for which there is full indemnification (upon terms and by
creditworthy indemnitors which are satisfactory to Agent) or (iii) which have
been in force for less than the applicable period for filing an appeal so long
as execution is not levied thereunder (or in respect of which Borrower or such
Subsidiary shall at the time in good faith be prosecuting an appeal or
proceeding for review and in respect of which a stay of execution or appropriate
appeal bond shall have been obtained pending such appeal or review).

            (m) The receipt by Borrower or any Subsidiary of any notice, claim
or assessment from any Federal, state or local governmental authority, or any
other Person, asserting liability or potential liability against Borrower or
such Subsidiary under any Environmental Law that could have a Material Adverse
Effect.

            (n) Any material damage to, or loss, theft, or destruction of, any
of the Collateral, whether or not insured, or any strike, lockout, labor
dispute, embargo, condemnation, act of God or

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<PAGE>
public enemy, or other casualty which results in or causes cessation or
substantial curtailment of production or other revenue producing activities of
more than ten percent (10%) of Borrower's consolidated gross revenues for more
than fifteen (15) consecutive days (based upon consolidated gross revenues for
the most recent twelve months ending on the date of such occurrence; provided,
that such occurrence shall not constitute an Event of Default if such occurrence
is covered by Borrower's business interruption insurance in an amount which, in
the judgement of the Required Lenders, is reasonably expected to cover the
period during which such revenue-producing activities have ceased or are
substantially curtailed.

            (o) Any security interest created under any Related Document shall
cease to be a valid and perfected first priority security interest or Lien
(subject to Permitted Liens) in any of the Collateral purported to be covered
thereby for any reason other than the failure of Agent or any Lender to take any
action within its control.

            SECTION 13.2     EFFECT OF DEFAULT. If an Unmatured Event of Default
or an Event of Default shall have occurred and be continuing, Agent may elect to
do one or more of the following at any time or times and in any order: (i)
reduce the amount of the Revolving Commitment, (ii) restrict the amount of, or
suspend its obligations to make, Revolving Loans, (iii) restrict or suspend the
issuance of Letters of Credit or LC Guaranties or (iv) demand that Borrower
immediately deposit with Agent an amount equal to one hundred ten percent (110%)
of the LC Exposure to enable Agent to make payments under the LC Guaranties when
required, and such amount shall become immediately due and payable. If any Event
of Default described in Section 13.1(e) shall occur, the Commitments (if not
theretofore terminated) shall immediately terminate and the Notes and all other
Liabilities shall become immediately due and payable, all without notice of any
kind; and, in the case of any other Event of Default, Agent may, and Agent shall
at the direction of the Required Lenders, declare the Commitments (if not
theretofore terminated) to be terminated and the Notes and all other Liabilities
to be due and payable, whereupon the Commitments (if not theretofore terminated)
shall immediately terminate and the Notes and all other Liabilities shall become
immediately due and payable, all without further notice of any kind. Agent shall
promptly provide Borrower written notice of any such declaration but failure to
do so shall not impair the effect of such declaration. Notwithstanding the
foregoing, the effect as an Event of Default of any event described in Section
13 may be waived by the Required Lenders in writing. In the case of any Event of
Default occurring by reason of any wilful action or inaction by or on behalf of
Borrower in order to avoid payment of any prepayment fee or premium pursuant to
Section 2.8 which Borrower would have to pay if the Liabilities were paid in
full, such prepayment fee or premium shall also be immediately due and payable
to the extent permitted by law.

            SECTION 13.3     RIGHTS AND REMEDIES GENERALLY. Upon acceleration of
the Liabilities, Agent, on behalf of the Lenders, shall have, in addition to any
other rights and remedies contained in this Agreement or in any of the other
Related Documents, all of the rights and remedies of a secured party under the
Code or other applicable laws, all of which rights and remedies shall be
cumulative and non-exclusive, to the extent permitted by law. In addition to all
such rights and remedies, Agent shall have the right to sell, lease or otherwise
dispose of all or any part of the
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Collateral and the sale, lease or other disposition of the Collateral, or any
part thereof, by Agent after an Event of Default may be for cash, credit or any
combination thereof, and Agent or any Lender may purchase all or any part of the
Collateral at public or, if permitted by law, private sale, and in lieu of
actual payment of such purchase price, may set-off the amount of such purchase
price against the Liabilities then owing. Any sales of the Collateral may be
adjourned from time to time with or without notice. Agent shall have the right
to conduct such sales on Borrower's premises, at Borrower's expense, or
elsewhere, on such occasion or occasions as Agent may see fit.

            SECTION 13.4     ENTRY UPON PREMISES AND ACCESS TO INFORMATION.
Upon acceleration of the Liabilities, Agent shall have the right (i) to cause
the Collateral to remain on Borrower's premises, without any obligation to pay
rent, (ii) to enter upon the premises of Borrower where the Collateral is
located or any other place or places where the Collateral is believed to be
located and kept, without any obligation to pay rent, to render the Collateral
useable or saleable, or to remove the Collateral therefrom to the premises of
Agent or any agent of Agent, at Borrower's expense, for such time as Agent may
desire in order effectively to collect or liquidate the Collateral, and (iii) to
require Borrower to assemble the Collateral and make it available to Agent at a
place or places to be designated by Agent. Upon acceleration of the Liabilities,
Agent shall have the right to take possession of Borrower's original books and
records, to obtain access to Borrower's data processing equipment, computer
hardware and software relating to the Collateral and to use all of the foregoing
and the information contained therein in any manner Agent deems appropriate; and
Agent shall have the right to notify postal authorities to change the address
for delivery of Borrower's mail to an address designated by Agent and to
receive, open and dispose of all mail addressed to Borrower and to take
possession of all checks or other original remittances contained in such mail.

            SECTION 13.5     SALE OR OTHER DISPOSITION FO COLLATERAL BY AGENT.
Any notice required to be given by Agent or any Lender of a NT sale, lease or
other disposition or other intended action by Agent with respect to any of the
Collateral which is given to Borrower as specified in Section 14.3, at least ten
(10) days prior to such proposed action, shall constitute fair and reasonable
notice to Borrower of any such action. The net proceeds realized by Agent upon
any such sale or other disposition, after deduction for the expenses of
retaking, holding, storing, transporting, preparing for sale, selling or
otherwise disposing of the Collateral incurred by Agent in connection therewith,
shall be applied as provided herein toward satisfaction of the Liabilities.
Agent shall account to Borrower for any surplus realized upon such sale or other
disposition, and Borrower shall remain liable for any deficiency. The
commencement of any action, legal or equitable, or the rendering of any judgment
or decree for any deficiency shall not affect Agent's Liens on the Collateral
until the Liabilities are fully paid.

            SECTION 13.6     NOTICE TO ACCOUNT DEBTORS. Agent may, in its sole
discretion, at any time or times, upon the occurrence and during the continuance
of an Event of Default and without prior notice to Borrower, notify any or all
Account Debtors that the Accounts have been assigned to Agent, for the benefit
of the Lenders, and that Agent has a Lien therein. Upon the occurrence and
during the continuance of an Event of Default, Agent may direct or, at the
request 
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of Agent, Borrower shall direct, any or all Account Debtors to make all
payments upon the Accounts directly to Agent. Agent shall furnish Borrower with
a copy of any such notice.

            SECTION 13.7     WAIVER OF DEMAND. DEMAND, PRESENTMENT, PROTEST AND
NOTICE OF DEMAND, PRESENTMENT, PROTEST, NONPAYMENT, INTENT TO ACCELERATE AND
ACCELERATION ARE HEREBY WAIVED BY BORROWER. BORROWER ALSO WAIVES THE BENEFIT OF
ALL VALUATION, APPRAISAL AND EXEMPTION LAWS.

            SECTION 13.8     WAIVER OF NOTICE. EXCEPT AS PROVIDED IN SECTION
13.5, UPON THE OCCURRENCE OF A DEFAULT OR AN EVENT OF DEFAULT, BORROWER HEREBY
WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY
AGENT AND THE LENDERS OF THEIR RIGHTS TO REPOSSESS THE COLLATERAL WITHOUT
JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL WITHOUT PRIOR
NOTICE OR HEARING. BORROWER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL OF
ITS CHOICE WITH RESPECT TO THIS TRANSACTION AND THIS AGREEMENT.

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             SECTION 14  GENERAL

            SECTION 14.1     WAIVER; AMENDMENTS. No delay on the part of any
Lender or Agent or any holder of a Note or other Liability in the exercise of
any right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise by any of them of any right, power or remedy preclude
other or further exercise thereof, or the exercise of any other right, power or
remedy. No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement or a Note or any Related Document shall in any event
be effective unless the same shall be in writing and signed and delivered by the
Required Lenders, and then any such amendment, modification, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided that no amendment, waiver or consent shall, unless in
writing and signed by all each affected Lender, do any of the following: (i)
increase the Commitment of a Lender or subject a Lender to any additional
obligations, (ii) except as otherwise expressly provided in this Agreement,
reduce the principal of, or interest on, the Notes, any Reimbursement
Obligations or any fees hereunder, (iii) postpone any date fixed for any payment
in respect of principal of, or interest on, the Notes, any Reimbursement
Obligations or any fees hereunder, (iv) change the percentage of the Commitment,
or any minimum requirement, necessary for the Lenders or the Required Lenders to
take any action hereunder, (v) amend or waive this Section 14.1, or change the
definition of Required Lenders, or (vi) except as otherwise expressly provided
in this Agreement (including without limitation as provided in Section 11.30
hereof), and other than in connection with the financing, refinancing, sale or
other disposition of any asset of any Borrower or Subsidiary permitted under
this Agreement, release any Liens in favor of Agent on all or any substantial
portion of the Collateral; provided, further, that no amendment, waiver or
consent affecting the rights or duties of Agent under any Related Documents
shall in any event be effective, unless in writing and signed by Agent, in
addition to the Lenders required hereinabove to take such action.
Notwithstanding any of the foregoing to the contrary, the consent of Borrower or
any Guarantor shall not be required for any amendment, modification or waiver of
the provisions of Section 15.2 (other than the provisions of Section 15.2.9). In
addition, Borrower and the Lenders hereby authorize Agent to modify this
Agreement by unilaterally amending or supplementing Schedule 1 from time to time
in the manner requested by Borrower, Agent or any Lender in order to reflect any
assignments or transfers of the Loans, as provided for hereunder; provided,
however, that Agent shall promptly deliver a copy of any such modification to
Borrower and each Lender. All Events of Default shall continue until the same
are waived in accordance with this Subsection 14.1.

            SECTION 14.2     CONFIRMATIONS. Borrower and the Lenders (or any
holder of a Note) agree from time to time, upon written request received by it
from the other, to confirm to the other in writing the aggregate unpaid
principal amount of the Loans then outstanding under such Note.

            SECTION 14..3     NOTICES. Except with respect to Sections 2.3 and
4.3: (a) notices forwarded by mail shall be deemed to have been given on the
earlier to occur of (i) receipt or (ii) three days after the date sent if sent
by registered or certified mail, postage paid, and:

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            (a)   if to Borrower,  addressed to Borrower at its address  shown
      below its signature hereto; or

            (b) if to Agent, addressed to Agent at the address shown below its
      signature hereto; or

            (c) if to a Lender, addressed to such Lender at its address set
      forth on Schedule 1; or

in the case of any party, at such other address as such party may, by written
notice received by the other parties to this Agreement, have designated as its
address for notices; and (b) notices given by telegram or facsimile transmission
shall be deemed to have been given when sent if addressed to the party to whom
sent, at its address as aforesaid. Notices of borrowing pursuant to Section 2.3
and Section 4.3 shall be effective upon receipt by Agent and shall be in writing
(or by telephone to be confirmed in writing by Borrower). Agent and the Lenders
shall be entitled to rely upon all telephone and Electronic Notices and Borrower
shall indemnify and hold Agent and each Lender harmless from any loss, cost or
expense ensuing from any such reliance, which indemnification shall survive any
termination of this Agreement.

            SECTION 14.4     COST, EXPENSES AND TAXES. Borrower shall pay on
demand all out-of-pocket costs and expenses of Agent (including the reasonable
fees and out-of-pocket expenses of counsel for Agent and of local counsel, if
any, who may be retained by said counsel and all costs of appraisals, surveys,
environmental reviews and the like required to be made or completed) in
connection with the preparation, execution and delivery of this Agreement, the
Related Documents and all other instruments or documents provided for herein or
delivered or to be delivered hereunder or in connection herewith. Borrower
further agrees to pay all out-of-pocket costs and expenses (including reasonable
attorneys' fees and legal expenses) incurred by Agent (and in the case of
enforcement, each Lender) in connection with the administration, enforcement,
waiver or amendment of this Agreement, the Related Documents and any such other
instruments or documents. In addition, Borrower agrees to pay, and to save Agent
and each Lender harmless from all liability for, any document, stamp, filing,
recording, mortgage or other taxes which may be payable in connection with the
borrowings hereunder or the execution, delivery, recording or filing of this
Agreement, any of the Related Documents or of any other instruments or documents
provided for herein or delivered or to be delivered hereunder or in connection
herewith. All obligations provided for in this Section 14.4 shall survive any
termination of this Agreement.

            SECTION 14.5     INDEMNIFICATION. In consideration of Agent's and
each Lender's execution and delivery of this Agreement and the Lenders'
extension of the Commitments, Borrower hereby agrees to indemnify, exonerate and
hold Agent, Manager, each Lender and each of their respective officers,
directors, employees and agents (including, without limitation, Master Account
Bank, and herein collectively called "LENDER PARTIES" and individually called a
"LENDER PARTY") free and harmless from and against any and all claims, demands,
actions, causes of action, suits, losses, costs (including, without limitation,
all documentary, recording, filing, mortgage or 

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other stamp taxes or duties), charges, liabilities and damages, and expenses in
connection therewith (irrespective of whether such Lender Party is a party to
the action for which indemnification hereunder is sought), and including,
without limitation, reasonable attorneys' fees and disbursements (called in this
Section 14.5 the "INDEMNIFIED LIABILITIES"), of any and every kind whatsoever
paid, incurred or suffered by, or asserted against, any Lender Party for, with
respect to, arising out of or as a direct or indirect result of:

            (a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan or involving any Loan or
the execution, delivery, performance or enforcement of this Agreement, the
Related Documents and any instrument, document or agreement executed pursuant
hereto by any of Lender Parties;

            (b) (i) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission or release from, any real property legally or
beneficially owned (or any estate or interest which is owned) or operated by
Borrower or any Subsidiary (including, without limitation, any property owned by
a land trust the beneficial interest in which is owned, in whole or in part, by
Borrower or any Subsidiary) of any Hazardous Material; (ii) any claims, demands,
actions, causes of action, suits, losses, costs (including investigation cleanup
or other response costs), charges, liabilities and damages, asserted or arising
under Environmental Laws relating to any such real property or Borrower's or any
Subsidiary's operations thereon, or arising from a breach in any of Borrower's
representations, warranties or covenants herein relating to environmental
matters, and (iii) any of the conditions disclosed on Schedule 10.19 regardless
of whether caused by, or within the control of, Borrower or any Subsidiary;

            (c) (i) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement, prospectus or offering
memorandum or in any preliminary prospectus or preliminary offering memorandum
or any amendment or supplement to any thereof or in any other writing prepared
in connection with the offer, sale or resale of any securities of Borrower or
any Subsidiary, or (ii) any omission or alleged omission to state therein a
material fact required to be stated or necessary to make the statements therein
not misleading; and

            (d) (i) any injury to person or damage to property, known or
unknown, reported or unreported, which results from the use of the products of
Borrower or any Subsidiary, or (ii) any obligation or liability arising out of
or with respect to the business or operations of Borrower or any Subsidiary, in
each case whether any of such matters arise before or after the foreclosure of
or other taking of title to all or any portion of the Collateral by Agent or the
Lenders;

except for any such Indemnified Liabilities arising, on account of the relevant
Lender Party's gross negligence or willful misconduct and, to the extent that
the foregoing undertaking may be unenforceable for any reason, Borrower agrees
to make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. All
obligations provided for in this Section 14.5 shall survive any termination of
this Agreement and shall not be reduced or impaired by any investigation made by
or on behalf of any Lender Party.
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            SECTION 14.6      SUBMISSION TO JURISDICTION. AGENT AND EACH LENDER
MAY ENFORCE ANY CLAIM ARISING OUT OF THIS AGREEMENT OR THE RELATED DOCUMENTS IN
ANY STATE OR FEDERAL COURT HAVING SUBJECT MATTER JURISDICTION AND LOCATED IN
CHICAGO, ILLINOIS. FOR THE PURPOSE OF ANY ACTION OR PROCEEDING INSTITUTED WITH
RESPECT TO ANY SUCH CLAIM, BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF SUCH COURTS. BORROWER HEREBY IRREVOCABLY DESIGNATES CT
CORPORATION SYSTEM WITH OFFICES ON THE DATE HEREOF AT 208 SOUTH LASALLE STREET,
CHICAGO, ILLINOIS, TO RECEIVE FOR AND ON BEHALF OF BORROWER SERVICE OF PROCESS
IN ILLINOIS. BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT
OF SAID COURTS BY MAILING A COPY THEREOF, BY REGISTERED MAIL, POSTAGE PREPAID,
TO BORROWER AND AGREES THAT SUCH SERVICE, TO THE FULLEST EXTENT PERMITTED BY
LAW, (i) SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON IT
IN ANY SUCH SUIT, ACTION OR PROCEEDING AND (ii) SHALL BE TAKEN AND HELD TO BE
VALID PERSONAL SERVICE UPON AND PERSONAL DELIVERY TO IT. NOTHING HEREIN
CONTAINED SHALL AFFECT THE RIGHT OF AGENT OR ANY LENDER TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR PRECLUDE AGENT OR ANY LENDER FROM BRINGING AN
ACTION OR PROCEEDING IN RESPECT HEREOF IN ANY OTHER COUNTRY, STATE OR PLACE
HAVING JURISDICTION OVER SUCH ACTION. BORROWER HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT LOCATED IN CHICAGO, ILLINOIS AND ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.

            SECTION 14.7    GOVERNING LAW. This Agreement and the Notes shall
be a contract made under and governed by the internal laws of the State of
Illinois without regard to conflict of laws principles. Whenever possible each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of Borrower, any of its Subsidiaries and rights of
Agent and each Lender and any other holder of a Note or Liability expressed
herein or in the Related Documents shall be in addition to and not in limitation
of those provided by applicable law or in any other written instrument or
agreement relating to any of the Liabilities.

            SECTION 14.8     SALE OF NOTES; PARTICIPATION. Any Lender may assign
to one or more banks or other Persons all or any part of or rights in, or may
grant participations to one or more banks or other Persons in or to, this
Agreement, any Loan or Loans or the Notes or either of them or such Lender's
rights and remedies hereunder and thereunder, and to the extent of any such
assignment or participation (unless otherwise stated therein) the assignee or
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assignment or participation shall have the same rights and
benefits hereunder and thereunder as it would have if it were a Lender
hereunder.

            SECTION 14.9     ENTRY INTO AGREEMENT. Borrower represents, warrants
and acknowledges that (i) the relationship between it and the Lenders is solely
that of a borrower and a lender, and (ii) Borrower is in sole control of its
business and has entered into this Agreement as its own free act and voluntary
deed, based upon its independent judgment as to its best interests.

            SECTION 14.10    LEGAL OPINIONS. Borrower expressly consents to the
rendering of opinions by its counsel and of each other counsel required by Agent
or a Lender to be rendered in connection with the initial closing of the matters
contemplated hereby, and thereafter to be rendered from time to time in
connection with this Agreement or any Related Document, and acknowledges that
such opinions, when so rendered, shall be deemed to be rendered at the request
and upon the instruction of Borrower, which has, and will have (prior to the
rendering of each opinion), consulted with and been advised by such counsel as
to the consequences of such consent, request and instructions.

            SECTION 14.11    JURY TRIAL; DAMAGE WAIVER. EACH PARTY HERETO HEREBY
EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER OR RELATED TO OR ARISING OUT OF THIS
AGREEMENT OR ANY RELATED DOCUMENT TO WHICH IT IS A PARTY, OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED DOCUMENT,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY. BORROWER WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION REFERRED TO ABOVE ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES.

            SECTION 14.12     SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon Borrower, Agent and the Lenders and their respective successors and
assigns, and shall inure to the benefit of Borrower, Agent and each Lender and
their respective successors and assigns; provided, however, that Borrower shall
have no right to assign their rights or delegate its duties under this
Agreement. FSFP may assign any of its rights under this Agreement and the
Related Documents to its lenders for collateral security purposes. This
Agreement and the Related Documents contain the entire agreement of the parties
hereto with respect to the matters covered hereby.

            SECTION 14.13     MARSHALING. The Lenders shall be under no
obligation to marshall any assets in favor of Borrower or any other Person or
against or in payment of any or all of the Liabilities.

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            SECTION 14.14     WAIVERS WITH RESPECT TO OTHER INSTRUMENTS.
Borrower waives presentment, demand and protest and notice of presentment,
demand protest, default, nonpayment, maturity, release, compromise, settlement,
extension, or renewal of any or all commercial paper, Accounts, contract rights,
documents, Instruments, Chattel Paper and guaranties at any time held by Agent
and the Lenders on which Borrower may in any way be liable and hereby ratifies
and confirms whatever Agent and the Lenders may do regarding the enforcement,
collection, compromise, or release thereof.

            SECTION 14.15     RETENTION OF BORROWER'S DOCUMENTS. Agent or any 
Lender may destroy or otherwise dispose of all documents, schedules, invoices or
other papers delivered to Agent or any Lender in accordance with its customary
practices unless Borrower requests in writing that same be returned. Upon
Borrower's request and at Borrower's expense, Agent or any Lender shall return
such papers held by it when its actual or anticipated need for same has
terminated.

            SECTION 14.16     SURVIVAL OF WARRANTIES. All representations and
warranties of Borrower, the Guarantors and the Subsidiaries contained in this
Agreement or any of the other Related Documents shall survive the execution and
delivery of this Agreement and the other Related Documents and the making of the
Loans. Notwithstanding anything contained in this Agreement to the contrary, the
provisions of, and the undertakings, indemnifications and agreements of Borrower
set forth in Sections 14.4 and 14.5 shall survive payment of the Liabilities and
termination of this Agreement.

            SECTION 14.17      COUNTERPARTS. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of counterparts
and by different parties in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one and the same agreement. Delivery
of an executed counterpart of this Agreement by telecopy or similar electronic
medium shall be equally as effective as delivery of a manually executed
counterpart of this Agreement. Any Person delivering an executed counterpart of
this Agreement by telecopy or similar electronic medium shall also deliver a
manually executed counterpart of this Agreement; provided, that the failure to
deliver a manually executed counterpart shall not affect the validity,
enforceability or binding effect of this Agreement.

            SECTION 14.18     EXCEPTIONS TO COVENANTS. Neither Borrower nor any
Guarantor or Subsidiary shall be deemed to be permitted to take any action or
omit to take any action which is permitted as an exception to any of the terms,
provisions or covenants contained in any of the Related Documents if such action
or omission would result in an Event of Default or Unmatured Event of Default or
the breach of any term, provision or covenant contained in any Related Document.

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            SECTION 14.19     CONSTRUCTION. Borrower acknowledges that it and
its counsel have approved the Related Documents and that the usual rule of
construction to the effect that any ambiguities or inconsistencies are to be
resolved against the drafting Person shall not be applicable in the
interpretation of any of the Related Documents.

            SECTION 14.20     REINSTATEMENT. This Agreement shall remain in full
force and effect and continue to be effective or to be reinstated, as the case
may be, if at any time payment and performance of the Liabilities, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Liabilities, whether as
a "voidable preference," "fraudulent conveyance," or otherwise, all as though
such payment or performance had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned, the Liabilities
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.

            SECTION 14.21     ENTIRE AGREEMENT. This Agreement, including all
Exhibits, Schedules, the Related Documents and other documents attached hereto
or incorporated by reference herein, constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede all other
negotiations, understandings and representations, oral or written, with respect
to the subject matter hereof, including that certain Commitment Letter dated as
of July __, 1998, between Borrower and FSFP.

            SECTION 14.22    CONFIDENTIALITY. BORROWER ACKNOWLEDGES THAT IT HAS
BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY, AND BORROWER ACKNOWLEDGES AND AGREES THAT (I)
EACH OF THE WAIVERS SET FORTH HEREIN WERE KNOWINGLY AND VOLUNTARILY MADE, (II)
THE OBLIGATIONS OF AGENT AND EACH LENDER HEREUNDER, INCLUDING THE OBLIGATION TO
ADVANCE AND LEND FUNDS TO BORROWER IN ACCORDANCE HEREWITH, SHALL BE STRICTLY
CONSTRUED AND SHALL BE EXPRESSLY SUBJECT TO BORROWER'S COMPLIANCE IN ALL
RESPECTS WITH THE TERMS AND CONDITIONS HEREIN SET FORTH, AND (III) NO
REPRESENTATIVE OF AGENT OR ANY LENDER HAS WAIVED OR MODIFIED ANY OF THE
PROVISIONS OF THIS AGREEMENT AS OF THE DATE HEREOF AND NO SUCH WAIVER OR
MODIFICATION FOLLOWING THE DATE HEREOF SHALL BE EFFECTIVE UNLESS MADE IN
ACCORDANCE WITH SECTION 14.1.

            SECTION 14.23     CONFIDENTIALITY. Borrower agrees that FSFP may
disclose information relating to Borrower (a) to any regulatory authority having
jurisdiction over the Agent or any Lender, (b) to any other Person in connection
with a Lender's proposed or actual assignment of, or sale of any participations
in, the Liabilities, (c) to any other Person in connection with the exercise of
the Agent's or any Lender's rights hereunder or under any of the other Related
Documents, or (d) to each of the Master Lenders and the Master Agents, so long
as each such party has agreed to use procedures substantially comparable to
those used by such Person in respect of non-public information as supplied to
such Person by or on behalf of FSFP to the extent that such information is not
and does not become publicly available and which FSFP indicates at the time is

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to be treated confidentially; provided, however, that each of the Master
Lenders, and the Master Agents, as the case may be, is hereby authorized to
deliver a copy of each or any financial statement of Borrower or any other
information relating to the Loans, or the Collateral, which may be furnished to
it hereunder or otherwise to (a) its legal counsel and auditors and other
professional advisors, (b) governmental or regulatory authorities having
jurisdiction over it, (c) independent financial rating agencies (including,
without limitation the Rating Agencies), (d) any person providing general
liquidity or credit enhancement to the Master Lenders , and (e) (subject to
obtaining a confidentiality agreement containing the foregoing confidentiality
restrictions) any Person to whom a Master Lender proposes to assign all or any
part of its interest or grant a participation in its interest. As used herein:
"MASTER AGENTS" shall mean Citicorp North America, Inc., Bank of New York and
any successor thereto or assignee thereof; "MASTER LENDER" shall mean any person
becoming a "Lender" under that certain Second Amended and Restated Credit
Agreement dated as of May 24, 1996 (as amended from time to time, the "MASTER
CREDIT AGREEMENT") among First Source Financial, Inc., FSFP, Master Agents and
such Lenders; and "RATING AGENCIES" shall mean Standard and Poor's and Moody's
Ratings Group, a division of McGraw-Hill, Inc., and Moody's Investors Services,
Inc.

            SECTION 14.24     SEVERAL OBLIGATIONS; NATURE OF LENDER'S RIGHTS.
The respective obligations of the Lenders hereunder are IGHTS several and not
joint and no Lender shall be the partner or agent of any other Lender (except to
the extent to which the Agent is authorized to act as such). No provision
contained herein or in any other Related Document and no course of dealing
between the parties shall be deemed to create any fiduciary relationship between
the Agent or any Lender and the Borrower or any Guarantor or Subsidiary. The
indebtedness of the Borrower incurred under each of the Notes shall be a
separate obligation owing to the holder thereof; provided that each Lender
hereby agrees that it shall have no individual right to seek to enforce its
rights under its Notes or this Agreement, or to realize upon the Collateral, it
being understood and agreed that such rights and remedies may be exercised
solely by the Agent for the benefit of the Lenders at the direction of the
Required Lenders in accordance with the terms of the Related Documents.

            SECTION 15  ASSIGNMENT AND PARTICIPATION; AGENT.

            SECTION 15.1      ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND NOTES.
Each Lender may assign its rights and delegate its obligations under this
Agreement to another Person; provided, that (i) such Lender shall first obtain
the written consent of Agent, (ii) the aggregate amount of the outstanding
Commitment and Loans of the assigning Lender being assigned pursuant to such
assignment (determined as of the date of the Assignment and Acceptance (the
"ASSIGNMENT AND ACCEPTANCE") entered into with respect to such assignment by the
assigning Lender and the assignee, and accepted by Agent, in form and substance
satisfactory to Agent, the assigning Lender and the assignee) shall in no event,
except in the case of an assignment of all of a Lender's rights and obligations
under this Agreement, be less than $5,000,000 of the assigning Lender's rights
and obligations under this Agreement, and (iii) the parties to each such
assignment shall execute and deliver to Agent, for its acceptance and recording
in the Register, an Assignment and Acceptance. In the case of an assignment
authorized under this Section 15.1, the assignee shall have, to the extent

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of such assignment, the same rights, benefits and obligations as it would if it
were a Lender hereunder and the assigning Lender shall be relieved of its
obligations hereunder with respect to its Commitment to the extent of such
assignment. Borrower hereby acknowledges and agrees that any assignment will
give rise to a direct obligation of Borrower to the assignee and that the
assignee shall be considered to be a Lender hereunder.
      Agent shall maintain a copy of each Assignment and Acceptance delivered to
and accepted by it and books and records, including computer records, in which
it shall record 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
"REGISTER"). The entries in the Register shall constitute rebuttably presumptive
evidence, absent manifest error, of the accuracy of the information contained
therein, and Borrower, Agent and the Lenders may treat each Person the name of
which is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by any Lender or
Borrower at any reasonable time and from time to time upon reasonable prior
notice.

      Upon its receipt of an Assignment and Acceptance executed by an assigning
Lender and an assignee, together with the Notes subject to such assignment,
Agent shall, if such Assignment and Acceptance has been completed, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register, and (iii) give prompt notice thereof to Borrower. Within five (5)
Business Days after Borrower's receipt of such notice, Borrower, at its own
expense, will execute and deliver to Agent in exchange for the surrendered
Notes, new Notes, to the order of such assignee in amounts corresponding to the
interest in the assigning Lender's rights and obligations under this Agreement
acquired by such assignee pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained an interest in such rights and obligations
hereunder, new Notes to the order of the assigning Lender in amounts
corresponding to such interest retained by it hereunder. Such Notes shall be in
an aggregate principal amount equal to the aggregate principal amount of such
surrendered Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the forms of Exhibits 3.1 and
3.2, as applicable. Upon delivery of such new Notes, the surrendered Notes shall
be canceled by Agent and returned to Borrower.

      Each Lender may sell participations in all or any part of any Loans and
Letters of Credit made by it to another Person; provided, that (i) immediately
after giving effect to any participation, the aggregate amount of the
outstanding Commitment and Loans still held by the Lender granting the
participation for its own account shall in no event be less than $5,000,000 and
(ii) all amounts payable by Borrower hereunder shall be determined as if that
Lender had not sold such participation and the holder of any such participation
shall not be entitled to require such Lender to take or omit to take any action
hereunder except action directly affecting (a) any reduction in the principal
amount, interest rate or fees payable with respect to any Loan in which such
holder participates; (b) any extension of the final scheduled maturity date of
the principal amount of the Loans in which such holder participates; and (c) any
release of any Collateral (other than in accordance with the terms of this
Agreement or the Related Documents). Borrower hereby acknowledges and agrees
that
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any participation will give rise to a direct obligation of Borrower to the
participant, and the participant shall for purposes of Sections 2.11 and 14.5 be
considered to be a Lender hereunder.

      Except as otherwise provided in this Section 15.1 no Lender shall, as
between Borrower and that Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment, transfer or negotiation of, or
granting of participation in, all or any part of the Loans, the Notes or other
Liabilities owed to such Lender. Each Lender may furnish any information
concerning Borrower in the possession of that Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject to such Lender's confidentiality obligations.

             SECTION 15.2      AGENT.

             15.2.1  APPOINTMENT OF AGENT.

            (a) Each Lender hereby designates FSFP as Agent to act as herein
      specified. Each Lender hereby irrevocably authorizes, and each holder of
      any Note or participation in any Letter of Credit and LC Guaranty by the
      acceptance of a Note or participation shall be deemed irrevocably to
      authorize, Agent to take such action on its behalf under the provisions of
      this Agreement and the Notes, the other Related Documents and any other
      instruments and agreements referred to herein and to exercise such powers
      and to perform such duties hereunder and thereunder as are specifically
      delegated to or required of Agent by the terms hereof and thereof and such
      other powers as are reasonably incidental thereto. Agent shall hold all
      Collateral and all payments of principal, interest, fees, charges and
      expenses received pursuant to this Agreement or any other Related
      Documents for the benefit of the Lenders to be distributed as provided
      herein. Agent may perform any of its duties hereunder by or through its
      agents or employees.

            (b) The provisions of this Section 15.2 are solely for the benefit
      of Agent and the Lenders, and Borrower shall not have any rights as a
      third party beneficiary of any of the provisions hereof (other than
      Subsection 15.2.9) nor shall Borrower have any obligations under this
      Section 15.2. In performing its functions and duties under this Agreement,
      Agent shall act solely as agent of the Lenders and does not assume and
      shall not be deemed to have assumed any obligation toward or relationship
      of agency or trust with or for Borrower.

            SECTION 15.2.2 NATURE OF DUTIES OF AGENT. Agent shall have no duties
      or responsibilities except those expressly set forth in this Agreement and
      the other Related Documents. Neither Agent nor any of its officers,
      directors, employees or agents shall be liable for any action taken or
      omitted by it as such hereunder or in connection herewith, unless caused
      by its or their own gross negligence or willful misconduct. The duties of
      Agent shall be mechanical and administrative in nature; Agent shall not
      have by reason of this Agreement or the other Related Documents a
      fiduciary relationship in respect of any Lender; and nothing in this
      Agreement or the other Related Documents, expressed or implied, is
      intended to or shall be
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      so construed as to impose upon Agent any obligations in respect of this
      Agreement or the other Related Documents except as expressly set forth
      herein or therein.

            15.2.3  LACK OF RELIANCE ON AGENT.

            (a) Independently and without reliance upon Agent, each Lender, to
      the extent it deems appropriate, has made and shall continue to make (i)
      its own independent investigation of the financial or other condition and
      affairs of Borrower in connection with the taking or not taking of any
      action in connection herewith and (ii) its own appraisal of the
      creditworthiness of Borrower, and, except as expressly provided in this
      Agreement, Agent shall have no duty or responsibility, either initially or
      on a continuing basis, to provide any Lender with any credit or other
      information with respect thereto, whether coming into its possession
      before the making of any Loan, Advance or issuance of any Letter of Credit
      or LC Guaranty or at any time or times thereafter.

            (b) Agent shall not be responsible to any Lender for any recitals,
      statements, information, representations or warranties herein or in any
      document, certificate or other writing delivered in connection herewith or
      for the execution, effectiveness, genuineness, validity, enforceability,
      collectibility, priority or sufficiency of this Agreement, the Notes or
      other Related Documents or the financial or other condition of Borrower.
      Agent shall not be required to make any inquiry concerning either the
      performance or observance of any of the terms, provisions or conditions of
      this Agreement, the Notes or any of the other Related Documents, or the
      financial condition of Borrower, or the existence or possible existence of
      any Unmatured Event of Default or Event of Default, unless specifically
      requested to do so in writing by any Lender.

            15.2.4 CERTAIN RIGHTS OF AGENT. Agent shall have the right to
      request instructions from the Required Lenders at any time. If Agent shall
      request instructions from the Required Lenders with respect to any act or
      action (including the failure to act) in connection with this Agreement or
      any of the other Related Documents, Agent shall be entitled to refrain
      from such act or taking such action unless and until Agent shall have
      received instructions from the Required Lenders, and Agent shall not incur
      liability to any Person by reason of so refraining. Without limiting the
      foregoing, no Lender shall have any right of action whatsoever against
      Agent as a result of Agent acting or refraining from acting hereunder in
      accordance with the instructions of the Required Lenders.

            15.2.5 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall
      be fully protected in relying, upon any note, writing, resolution, notice,
      statement, certificate, telex, teletype or telecopier message, cablegram,
      radiogram, order or other documentary, teletransmission or telephone
      message believed by it to be genuine and correct and to have been signed,
      sent or made by the proper person. Agent may consult with legal counsel
      (including counsel for Borrower with respect to matters concerning
      Borrower), independent public accountants and other experts selected by it
      and shall not be liable for any action taken or omitted to be taken 

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      by it in good faith in accordance with the advice of such counsel,
      accountants or experts.

            15.2.6 INDEMNIFICATION OF AGENT. To the extent that Agent is not
      reimbursed and indemnified by Borrower, the Lenders will reimburse and
      indemnify Agent for and against any and all liabilities, obligations,
      losses, damages, penalties, actions, judgments, suits, costs, expenses,
      advances or disbursements of any kind or nature whatsoever which may be
      imposed on, incurred by or asserted against Agent in any way relating to
      or arising out of this Agreement or any of the Related Documents or any
      action taken or omitted to be taken by Agent under this Agreement or the
      Related Documents, in proportion to each Lender's Pro Rata Share,
      including, without limitation, Agent Advances made pursuant to Section
      15.3. The obligations of the Lenders under this Section 15.2 shall survive
      the payment in full of the Loans and the termination of this Agreement.

            15.2.7 AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
      obligation to lend under this Agreement, any Loans made by it and the
      Notes issued to it, and its participation in Letters of Credit or LC
      Guaranty issued hereunder, or its issuance as the Issuing Bank of any
      Letter of Credit or LC Guaranty, Agent in its individual capacity shall
      have the same rights and powers hereunder as any other Lender or holder of
      a Note or participation interests or the Issuing Bank, as the case may be
      and may exercise the same as though it was not performing the duties
      specified herein; and the terms "Lenders," "Required Lenders," "holders of
      Notes," or "Issuing Bank" or any similar terms shall, unless the context
      clearly otherwise indicates, include Agent in its individual capacity.
      Agent in its individual capacity may accept deposits from, lend money to,
      acquire equity interests in, and generally engage in any kind of banking,
      trust, financial advisory or other business with any Borrower or any
      Affiliate of any Borrower as if it were not performing the duties
      specified herein, and may accept fees and other consideration from any
      Borrower for services in connection with this Agreement and otherwise
      without having to account for the same to the Lenders.

            15.2.8 HOLDERS OF NOTES. Agent may deem and treat the original named
      payee of any Note as the owner thereof for all purposes hereof unless and
      until a written notice of the assignment or transfer thereof shall have
      been filed with Agent. Any request, authority or consent of any Person
      who, at the time of making such request or giving such authority or
      consent, is the holder of any Note, shall be conclusive and binding on any
      subsequent holder, transferee or assignee of such Note or of any Note or
      Notes issued in exchange therefor.

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             15.2.9  SUCCESSOR AGENT.

            (a) Agent may, upon five (5) Business Days' notice to the Lenders
      and Borrower, resign at any time (effective upon the appointment of a
      successor Agent pursuant to the provisions of this Section 15.2.9) by
      giving written notice thereof to the Lenders and Borrower. Upon any such
      resignation, the Required Lenders shall have the right, upon five (5)
      days' notice and approval by Borrower (which approval shall not be
      unreasonably withheld), to appoint a successor Agent. If no successor
      Agent (i) shall have been so appointed by the Required Lenders, and (ii)
      shall have accepted such appointment, within thirty (30) days after the
      retiring Agent's giving of notice of resignation, then, upon five (5)
      days' notice, the retiring Agent may, on behalf of the Lenders, appoint a
      successor Agent.

            (b) Upon the acceptance of any appointment as Agent hereunder by a
      successor Agent, such successor Agent shall thereupon succeed to and
      become vested with all the rights, powers, privileges and duties of the
      retiring Agent, and the retiring Agent shall be discharged from its duties
      and obligations under this Agreement. After any retiring Agent's
      resignation hereunder as Agent, the provisions of this Section 15.2 shall
      inure to its benefit as to any actions taken or omitted to be taken by it
      while it was Agent under this Agreement.

             15.2.10  COLLATERAL MATTERS.

            (a) Each Lender authorizes and directs Agent to enter into any
      Collateral Documents and other Related Documents for the benefit of the
      Lenders. Each Lender hereby agrees, and each holder of any Note by the
      acceptance thereof will be deemed to agree, that, except as otherwise set
      forth herein, any action taken by the Required Lenders in accordance with
      the provisions of this Agreement or the Related Documents and the exercise
      by the Required Lenders of the powers set forth herein or therein,
      together with such other powers as are reasonably incidental thereto,
      shall be authorized and binding upon all of the Lenders. Agent is hereby
      authorized on behalf of all of the Lenders, without the necessity of any
      notice to or further consent from any Lender, from time to time, to take
      any action with respect to any Collateral or Related Documents which may
      be necessary to perfect and maintain perfected the security interest in
      and Liens upon the Collateral granted pursuant to any of the Related
      Documents.

            (b) The Lenders hereby authorize Agent to release any Lien granted
      to or held by Agent upon any Collateral upon termination of this Agreement
      and the Commitments and payment and satisfaction of all of the Liabilities
      at any time arising under or in respect of this Agreement and the other
      Related Documents or the transactions contemplated hereby or thereby. In
      addition, the Lenders hereby authorize Agent to release any Lien granted
      to or held by Agent upon any Collateral (i) constituting property being
      sold or disposed of upon receipt of the proceeds of such sale by Agent if
      Borrower certifies to Agent that the sale or disposition is made in
      compliance with this Agreement (and Agent may rely conclusively on any
      such certificate, without further inquiry), or (ii) constituting
      Collateral with a value 
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<PAGE>

     as certified to Agent by Borrower of less than $100,000 in the aggregate in
     any Fiscal Year (and Agent may rely conclusively on any such certificate,
     without further inquiry). Upon request by Agent at any time, the Lenders
     will confirm in writing Agent's authority to release particular types or
     items of Collateral pursuant to this Section 15.2.10.

            (c) Upon the release of any Lien in accordance with Section
      15.2.10(B), and upon at least five (5) Business Days' prior written
      request by Borrower, Agent shall (and is hereby irrevocably authorized by
      the Lenders to) execute such documents as may be necessary to evidence the
      release of such Liens; provided, that (i) Agent shall not be required to
      execute any such document on terms which, in Agent's reasonable opinion,
      would expose Agent to liability or create any obligation or entail any
      consequence other than the release of such Liens without recourse or
      warranty and (ii) such release shall not in any manner discharge, affect
      or impair the Liabilities or any Liens upon (or obligations of Borrower in
      respect of) all interests retained by Borrower, including (without
      limitation) the proceeds of the sale, all of which shall continue to
      constitute part of the Collateral. In the event of any sale or transfer of
      Collateral, or any foreclosure with respect to any of the Collateral,
      Agent shall be authorized to deduct all of the expenses reasonably
      incurred by Agent from the proceeds of any such sale, transfer or
      foreclosure.

            (d) Agent shall have no obligation whatsoever to the Lenders or to
      any other Person to assure that the Collateral exists or is owned by
      Borrower or any other Person or is cared for, protected or insured or that
      the Liens granted to Agent herein or pursuant hereto have been properly or
      sufficiently or lawfully created, perfected, protected or enforced or are
      entitled to any particular priority, or to exercise or to continue
      exercising at all or in any manner or under any duty of care, disclosure
      or fidelity any of the rights, authorities and powers granted or available
      to Agent in this Section 15.2.10 or in any of the Related Documents, it
      being understood and agreed that in respect of the Collateral, or any act,
      omission or event related thereto, Agent may act in any manner it may deem
      appropriate, in its sole discretion, given Agent's own interest in the
      Collateral as one of the Lenders and that Agent shall have no duty or
      liability whatsoever to the Lenders, except for its gross negligence or
      willful misconduct.

            15.2.11 ACTIONS WITH RESPECT TO DEFAULTS. In addition to Agent's
      right to take actions on its own accord as permitted under this Agreement,
      Agent shall take such action with respect to an Unmatured Event of Default
      or Event of Default as shall be directed by the Required Lenders;
      provided, that until Agent shall have received such directions, Agent may
      (but shall not be obligated to) take such action, or refrain from taking
      such action, with respect to such Unmatured Event of Default or Event of
      Default as it shall deem advisable.

            15.2.12 DELIVERY OF INFORMATION. Agent shall not be required to
      deliver to any Lender originals or copies of any documents, instruments,
      notices, communications or other information received by Agent from
      Borrower, the Required Lenders, any Lender or any other Person under or in
      connection with this Agreement or any other Related Document 

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<PAGE>

     except (i) as specifically provided in this Agreement or any other Related
     Document and (ii) as specifically requested from time to time in writing by
     any Lender with respect to a specific document, instrument, notice or other
     written communication received by and in the possession of Agent at the
     time of receipt of such request and then only in accordance with such
     specific request.

            SECTION 15.3 DISBURSEMENT OF FUNDS. Agent may, on behalf of the
Lenders, make such disbursements and advances ("AGENT ADVANCES") pursuant to
this Agreement and the Related Documents which Agent, in its sole discretion,
deems necessary or desirable to preserve or protect the Collateral, or any
portion thereof, in order to enhance the likelihood of, or maximize the amount
of, repayment by Borrower, or any guarantor or other Person, of the Loans and
other Liabilities or to pay any other amount chargeable to Borrower pursuant to
the terms of this Agreement, including, without limitation, costs, fees and
expenses as described in Section 14.4. Agent Advances shall be repayable on
demand and be secured by the Collateral. Agent Advances shall constitute
Revolving Loans and shall otherwise constitute Liabilities to pay principal
hereunder and shall bear interest at the rate applicable to the Revolving Loans.
Agent shall notify each Lender in writing of each such Agent Advance, which
notice shall include a description of the purpose of such Agent Advance. Without
limitation of any of its obligations under this Agreement, each Lender agrees
that it shall make available to Agent, upon Agent's demand, in immediately
available funds, an amount equal to such Lender's Pro Rata Share of each such
Agent Advance. If such funds are not made available to Agent by such Lender
within one (1) Business Day after Agent's demand therefor, Agent will be
entitled to recover any such amount from such Lender together with interest
thereon at the Federal Funds Rate for each day during the period commencing on
the date of such demand and ending on the date such amount is received. Each
Lender shall reimburse Agent on demand for all Loans disbursed on its behalf by
Agent, or if Agent so requests, each Lender will remit to Agent its Pro Rata
Share of any Loan before Agent disburses same to Borrower. If any Lender fails
to pay the amount of its Pro Rata Share forthwith upon Agent's demand, Agent
shall promptly notify Borrower, and Borrower shall immediately repay such amount
to Agent. Nothing in this Section 15.4 shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its Commitments hereunder or to prejudice any rights that
Borrower may have against any Lender as a result of any default by such Lender
hereunder.

            SECTION 15.4     AGENT'S DISCRETION. In the event Borrower is unable
to comply with (i) the Borrowing Base limitations applicable to it set forth in
Section 2 or (ii) the conditions precedent to the making of a Revolving Loan,
the Lenders authorize Agent, in its sole discretion, to make Revolving Loans
(and Lenders shall fund their Pro Rata Share of such Revolving Loans upon the
request of Agent) (such Revolving Loans are collectively referred to as "INTERIM
REVOLVING LOANS") for a period commencing on the date Agent first receives a
request for an Interim Revolving Loan until the earlier of (i) the 30th day
after such date, or (ii) the date Borrower is again able to comply with the
Borrowing Base limitations applicable to it and the conditions precedent to the
making of Revolving Loans set forth in Sections 2 and 12 hereof, or obtains an
amendment or waiver with respect thereto (such period, in each case, is referred
to as the "INTERIM REVOLVING LOAN

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PERIOD"). Agent shall not, in any event, make any Interim Revolving Loan if at
such time the amount of such Interim Revolving Loan when added to the then
aggregate outstanding principal amount of other Interim Revolving Loans made to
all Borrowers would exceed 10% of the amount of the Revolving Commitment;
provided, that nothing in this Section 15.4 shall limit the Agent's right to
Agent may make Agent's Advances; provided, further, that, after giving effect to
any Interim Revolving Loans, the aggregate outstanding principal amount of the
Total Revolving and LC Exposure shall not exceed the aggregate Commitments. All
Interim Revolving Loans shall be Prime Rate Loans. An Interim Revolving Loan
shall cease to be an Interim Revolving Loan (and shall be deemed to be an
Advance consisting of Revolving Loans) if the unsatisfied conditions giving rise
to such Interim Revolving Loan shall thereafter be satisfied or the events which
cause such Loan to be an Interim Revolving Loan shall thereafter cease to exist.
The provisions of this Section 15.4 are solely for the benefit of Agent and the
Lenders, and Borrower shall not have any rights of a third-party beneficiary of
any of the provisions hereof.


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      Delivered at Chicago, Illinois, as of the day and year first above
written.

                                    GIBRALTAR PACKAGING GROUP, INC.,
                                      as Borrower


                                    By:           /s/ John W. Lloyd
                                       ------------------------------
                                    Name Printed:
                                                 ---------------------
                                    Its:          Secretary
                                        ------------------------------


                                    Address:    2000 Summit Avenue
                                                Hastings, NE 68902-2148

                                    Attention:  Richard D. Hinrichs
                                    Telecopy:   (402) 463-2467
                                    Telephone: (402) 463-1366


Commitments:                        FIRST SOURCE FINANCIAL LLP,
===========                         individually and as Agent

Term Commitment: $25,000,000
Revolving Commitment: $15,000,000   By: First Source Financial, Inc.
                                    Its: Manager

                                    By:           /s/Chester R. Zara
                                       ------------------------------
                                    Name Printed:
                                                 ----------------------
                                    Its:          Senior Vice President
                                        -------------------------------

                                    2850 West Golf Road - Fifth Floor
                                    Rolling Meadows, Illinois 60008
                                    Attention: Contract Administration
                                    Telecopy: (847) 734-7910, 7911
                                    Telephone: (847) 734-2000

Aggregate Commitments:
=====================

     Term Commitment:      $25,000,000
                            ==========
     Revolving Commitment: $15,000,000
                            ==========



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