<PAGE>

                                                                  EXECUTION COPY
                                                                   
                                                                   Exhibit 10.14



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                                    $120,000,000
                                          
                                AMENDED AND RESTATED
                                  CREDIT AGREEMENT
                                          
                                          
                                       among
                                          
                           CORE-MARK INTERNATIONAL, INC.,
                                          
                                          
                                The Several Lenders
                          from Time to Time Parties Hereto
                                          
                                          
                                        and
                                          
                                          
                             THE CHASE MANHATTAN BANK,
                              as Administrative Agent
                                          
                                          
                                          
                             Dated as of April 1, 1998

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

<PAGE>

                                  TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                 Page

<S>                                                                              <C>
SECTION 1.  DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
     1.1  Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
     1.2  Other Definitional Provisions. . . . . . . . . . . . . . . . . . . . . . 23

SECTION 2.  AMOUNT AND TERMS OF COMMITMENTS. . . . . . . . . . . . . . . . . . . . 24
     2.1  Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . . . . 24
     2.2  Procedure for Revolving Credit Borrowing . . . . . . . . . . . . . . . . 24
     2.3  Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
     2.4  Termination or Reduction of Commitments. . . . . . . . . . . . . . . . . 25
     2.5  Repayment of Loans; Evidence of Debt . . . . . . . . . . . . . . . . . . 25
     2.6  Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . 26
     2.7  Mandatory Prepayments and Other Reductions of Revolving Credit
            Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
     2.8  Conversion and Continuation Options. . . . . . . . . . . . . . . . . . . 27
     2.9  Maximum Number of Tranches . . . . . . . . . . . . . . . . . . . . . . . 27
     2.10  Interest Rates and Payment Dates. . . . . . . . . . . . . . . . . . . . 27
     2.11  Computation of Interest and Fees. . . . . . . . . . . . . . . . . . . . 28
     2.12  Inability to Determine Interest Rate. . . . . . . . . . . . . . . . . . 29
     2.13  Pro Rata Treatment and Payments . . . . . . . . . . . . . . . . . . . . 29
     2.14  Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
     2.15  Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . 30
     2.16  Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
     2.17  Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
     2.18  Change of Lending Office. . . . . . . . . . . . . . . . . . . . . . . . 33

SECTION 3.  LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
     3.1  L/C Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
     3.2  Procedure for Issuance of Letters of Credit. . . . . . . . . . . . . . . 34
     3.3  Fees, Commissions and Other Charges. . . . . . . . . . . . . . . . . . . 35
     3.4  L/C Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
     3.5  Reimbursement Obligation of the Borrower . . . . . . . . . . . . . . . . 36
     3.6  Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . 37
     3.7  Letter of Credit Payments. . . . . . . . . . . . . . . . . . . . . . . . 37
     3.8  Application. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

SECTION 4.  REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 38
     4.1  Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
     4.2  No Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
     4.3  Corporate Existence; Compliance with Law . . . . . . . . . . . . . . . . 38
     4.4  Corporate Power; Authorization; Enforceable Obligations. . . . . . . . . 39
     4.5  No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
     4.6  No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 39
     4.7  No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                 Page
                                                                                 ----
<S>                                                                              <C>
     4.8  Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . . . . 39
     4.9  Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . 40
     4.10  No Burdensome Restrictions. . . . . . . . . . . . . . . . . . . . . . . 40
     4.11  Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
     4.12  Federal Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . 40
     4.13  ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
     4.14  Investment Company Act; Other Regulations . . . . . . . . . . . . . . . 41
     4.15  Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
     4.16  Purpose of Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
     4.17  Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . 41
     4.18  Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . 42
     4.19  Security Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
     4.20  Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

SECTION 5.  CONDITIONS TO EFFECTIVENESS. . . . . . . . . . . . . . . . . . . . . . 43
     5.1  Conditions to Restatement Effective Date . . . . . . . . . . . . . . . . 43
     5.2  Conditions to Each Extension of Credit . . . . . . . . . . . . . . . . . 46

SECTION 6.  AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 46
     6.1  Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 46
     6.2  Certificates; Other Information. . . . . . . . . . . . . . . . . . . . . 47
     6.3  Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 49
     6.4  Conduct of Business and Maintenance of Existence . . . . . . . . . . . . 49
     6.5  Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . 49
     6.6  Inspection of Property; Books and Records; Discussions . . . . . . . . . 49
     6.7  Annual Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
     6.8  Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
     6.9  Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
     6.10  Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
     6.11  Cash Management System. . . . . . . . . . . . . . . . . . . . . . . . . 51
     6.12  Additional Collateral . . . . . . . . . . . . . . . . . . . . . . . . . 52
     6.13  Tax Stamp Bonding.. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
     6.14  Compliance with Terms of Leaseholds.. . . . . . . . . . . . . . . . . . 52

SECTION 7.  NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 53
     7.1  Financial Condition Covenants. . . . . . . . . . . . . . . . . . . . . . 53
     7.2  Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 54
     7.3  Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
     7.4  Limitation on Guarantee Obligations. . . . . . . . . . . . . . . . . . . 56
     7.5  Limitation on Fundamental Changes. . . . . . . . . . . . . . . . . . . . 57
     7.6  Limitation on Sale of Assets . . . . . . . . . . . . . . . . . . . . . . 57
     7.7  Limitation on Speculative Transactions . . . . . . . . . . . . . . . . . 58
     7.8  Limitation on Dividends. . . . . . . . . . . . . . . . . . . . . . . . . 58
     7.9  Limitation on Capital Expenditures . . . . . . . . . . . . . . . . . . . 58
    7.10  Limitation on Investments, Loans and Advances . . . . . . . . . . . . .  59

</TABLE>

                                     -ii-
<PAGE>

<TABLE>
<CAPTION>
                                                                                 Page
                                                                                 ----
<S>                                                                              <C>
     7.11  Limitation on Optional Payments and Modifications of Debt
             Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
     7.12  Limitation on Transactions with Affiliates. . . . . . . . . . . . . . . 59
     7.13  Limitation on Sales and Leasebacks. . . . . . . . . . . . . . . . . . . 60
     7.14  Limitation on Changes in Fiscal Year. . . . . . . . . . . . . . . . . . 60
     7.15  Limitation on Negative Pledge Clauses . . . . . . . . . . . . . . . . . 60
     7.16  Limitation on Lines of Business . . . . . . . . . . . . . . . . . . . . 60

SECTION 8.  EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . 60

SECTION 9.  THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . . . . . . . 63
     9.1  Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
     9.2  Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . 64
     9.3  Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 64
     9.4  Reliance by Administrative Agent . . . . . . . . . . . . . . . . . . . . 64
     9.5  Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
     9.6  Non-Reliance on Administrative Agent and Other Lenders . . . . . . . . . 65
     9.7  Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
     9.8  Administrative Agent in Its Individual Capacity. . . . . . . . . . . . . 66
     9.9  Successor Administrative Agent . . . . . . . . . . . . . . . . . . . . . 66

SECTION 10.  MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
     10.1  Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . 66
     10.2  Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
     10.3  No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . . . . . . . 68
     10.4  Survival of Representations and Warranties. . . . . . . . . . . . . . . 68
     10.5  Payment of Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . 68
     10.6  Successors and Assigns; Participations and Assignments. . . . . . . . . 69
     10.7  Adjustments; Set-off. . . . . . . . . . . . . . . . . . . . . . . . . . 71
     10.8  Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
     10.9  Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
     10.10  Integration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
     10.11  GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
     10.12  Submission To Jurisdiction; Waivers. . . . . . . . . . . . . . . . . . 72
     10.13  Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
     10.14  WAIVERS OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . . . 73
     10.15  Judgment Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . 73
     10.16  Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
     10.17  Special Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 74
</TABLE>


                                     -iii-
<PAGE>

ANNEXES

Annex A   Fee and Applicable Margin Table

SCHEDULES

1.1(a)      Commitments
4.2         Changes
4.4         Consents
4.6         Litigation
4.8         Ownership of Property; Liens
4.9         Intellectual Property
4.11        Taxes
4.13        ERISA
4.15        Subsidiaries
4.17        Environmental Matters
4.19(b)     Security Documents; Offices
7.2         Indebtedness
7.3         Liens
7.4         Guarantee Obligations


EXHIBITS

Exhibit A   Form of Revolving Credit Note
Exhibit B   Form of Borrowing Base Certificate
Exhibit C   Form of Borrowing Certificate
Exhibit D   Form of Responsible Officer's Certificate
Exhibit E   Form of Supplemental Reporting
Exhibit F-1 Form of Opinion of Paul, Weiss, Rifkind, 
            Wharton & Garrison
Exhibit F-2 Form of Opinion of Sheppard, Mullin,
            Richter & Hampton, LLP
Exhibit F-3 Form of Opinion of Stoel Rives LLP
Exhibit F-4 Form of Opinions of Stikeman, Elliott; and Thompson Dorfman
              Sweatman
Exhibit G   Form of Assignment and Acceptance 


                                     -iv-
<PAGE>

          AMENDED AND RESTATED CREDIT AGREEMENT, dated as of April 1, 1998,
among CORE-MARK INTERNATIONAL, INC., a Delaware corporation (the "BORROWER"),
the several banks and other financial institutions from time to time parties to
this Agreement (the "LENDERS") and The Chase Manhattan Bank, a New York banking
corporation, as administrative agent for the Lenders hereunder.

                                W I T N E S S E T H :


          WHEREAS, the Borrower, certain of the Lenders and the Administrative
Agent are parties to that certain Credit Agreement, dated as of August 7, 1996
(as heretofore amended, the "EXISTING CREDIT AGREEMENT"); 

          WHEREAS, subject to the terms and conditions of this Agreement, the
Borrower, the Lenders and the Administrative Agent wish to amend and restate the
Existing Credit Agreement in its entirety as provided herein;

          NOW, THEREFORE, subject to the satisfaction of the conditions set
forth in subsection 5.1, the Borrower, the Lenders and the Administrative Agent
hereby agree to amend and restate the Existing Credit Agreement in its entirety
to read as follows: 


                               SECTION 1.  DEFINITIONS

          1.1 DEFINED TERMS.  As used in this Agreement, the following terms
shall have the following meanings:

          "ABR":  for any day, a rate per annum (rounded upwards, if necessary,
     to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in
     effect on such day, (b) the Base CD Rate in effect on such day plus 1% and
     (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. 
     For purposes hereof:  "PRIME RATE" shall mean the rate of interest per
     annum publicly announced from time to time by the Administrative Agent as
     its prime rate in effect at its principal office in New York City (the
     Prime Rate not being intended to be the lowest rate of interest charged by
     Chase Manhattan Bank in connection with extensions of credit to debtors);
     "BASE CD RATE" shall mean the sum of (a) the product of (i) the Three-Month
     Secondary CD Rate and (ii) a fraction, the numerator of which is one and
     the denominator of which is one minus the C/D Reserve Percentage and (b)
     the C/D Assessment Rate; "THREE-MONTH SECONDARY CD RATE" shall mean, for
     any day, the secondary market rate for three-month certificates of deposit
     reported as being in effect on such day (or, if such day shall not be a
     Business Day, the next preceding Business Day) by the Board of Governors of
     the Federal Reserve System (the "BOARD") through the public information
     telephone line of the Federal Reserve Bank of New York (which rate will,
     under the current practices of the Board, be published in Federal Reserve
     Statistical Release H.15(519) during the week following such day), or, if
     such rate shall not be so reported on such day or such next preceding
     Business Day, the average of the secondary market quotations for
     three-month certificates of deposit of major money 

<PAGE>
                                                                               2



     center banks in New York City received at approximately 10:00 A.M., New 
     York City time, on such day (or, if such day shall not be a Business Day, 
     on the next preceding Business Day) by the Administrative Agent from three
     New York City negotiable certificate of deposit dealers of recognized 
     standing selected by it; and "FEDERAL FUNDS EFFECTIVE RATE" shall mean, 
     for any day, 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 on the next succeeding Business Day by
     the Federal Reserve Bank of New York, or, if such rate is not so published
     for any day which is a Business Day, the average of the quotations for the
     day of such transactions received by the Administrative Agent from three 
     federal funds brokers of recognized standing selected by it.  Any change in
     the ABR due to a change in the Prime Rate, the Three-Month Secondary CD 
     Rate or the Federal Funds Effective Rate shall be effective as of the 
     opening of business on the effective day of such change in the Prime Rate,
     the Three-Month Secondary CD Rate or the Federal Funds Effective Rate, 
     respectively.

          "ABR LOANS":  Loans the rate of interest applicable to which is based
     upon the ABR.

          "ACCOUNT":  as defined in Section 9-106 of the UCC.

          "ADJUSTMENT DATE":  the second Business Day following receipt by the
     Administrative Agent of both (a) the financial statements required to be
     delivered pursuant to subsection 6.1(a) or 6.1(b), as the case may be, for
     the most recently completed fiscal period and (b) the certificate required
     to be delivered pursuant to subsection 6.2(b) with respect to such fiscal
     period.

          "ADMINISTRATIVE AGENT":  Chase, together with its affiliates, as the
     arranger of the Commitments and as the administrative agent for the Lenders
     under this Agreement and the other Loan Documents.

          "AFFILIATE":  as to any Person, any other Person (other than a
     Subsidiary) which, directly or indirectly, is in control of, is controlled
     by, or is under common control with, such Person.  For purposes of this
     definition, "control" of a Person means the power, directly or indirectly,
     either to (a) vote 10% or more of the securities having ordinary voting
     power for the election of directors of such Person or (b) direct or cause
     the direction of the management and policies of such Person, whether by
     contract or otherwise.

          "AGGREGATE COVERED OUTSTANDING REVOLVING EXTENSIONS OF CREDIT":  at
     any date of determination, the excess of (a) the Aggregate Outstanding
     Revolving Extensions of Credit over (b) the lesser of the L/C Obligations
     then outstanding and the Uncovered L/C Amount.

          "AGGREGATE OUTSTANDING REVOLVING EXTENSIONS OF CREDIT":  at any time,
     an amount equal to the sum of (a) the aggregate principal amount of all
     Revolving Credit Loans then outstanding and (b) the L/C Obligations then
     outstanding.

<PAGE>
                                                                               3


          "AGREEMENT":  this Credit Agreement, as amended, supplemented or
     otherwise modified from time to time.

          "APPLICABLE COMMITMENT FEE RATE":  0.375%, PROVIDED that, the
     Applicable Commitment Fee Rate will be adjusted, on each Adjustment Date
     occurring after the Restatement Effective Date, to the Commitment Fee Rate
     set forth on ANNEX A opposite the Category of the Borrower in effect on
     such Adjustment Date, PROVIDED, HOWEVER that the Applicable Commitment Fee
     Rate shall not be adjusted below Category 2 for a period of six months
     following the Restatement Effective Date, at which time the Applicable
     Commitment Fee Rate will be adjusted if necessary based on the Borrower's
     most recent financial statements.  In the event that the financial
     statements required to be delivered pursuant to subsection 6.1(a) or
     6.1(b), as applicable, and the related certificate required pursuant to
     subsection 6.2(b), are not delivered when due, the Administrative Agent or
     the Majority Lenders may, at their option, during the period from the date
     upon which such financial statements were required to be delivered until
     two Business Days following the date upon which they actually are
     delivered, increase the Applicable Commitment Fee Rate to 0.50%. 

          "APPLICABLE MARGIN":  for each Type of Revolving Loan, the rate per
     annum set forth under the relevant column heading below: 

<TABLE>
<CAPTION>
               ABR LOANS                EURODOLLAR LOANS    
               ---------                ----------------
               <S>                      <C>
               1.00%                        2.00%
</TABLE>

     PROVIDED that, the Applicable Margin for each Type of Revolving Loan will
     be adjusted, on each Adjustment Date occurring after the Restatement
     Effective Date, to the Applicable Margin set forth on ANNEX A opposite the
     Category of the Borrower in effect on such Adjustment Date, PROVIDED,
     HOWEVER, that the Applicable Margin shall not be adjusted below Category 2
     for a period of six months following the Restatement Effective Date, at
     which time the Applicable Margin will be adjusted if necessary based on the
     Borrower's most recent financial statements.  In the event that the
     financial statements required to be delivered pursuant to subsection 6.1(a)
     or 6.1(b), as applicable, and the related certificate required pursuant to
     subsection 6.2(b), are not delivered when due, the Administrative Agent or
     the Majority Lenders may, at their option, during the period from the date
     upon which such financial statements were required to be delivered until
     two Business Days following the date upon which they actually are
     delivered, increase the Applicable Margin for ABR Loans to 1.50% and the
     Applicable Margin for Eurodollar Loans to 2.50%.

          "APPLICATION":  an application, in such form as the Issuing Bank may
     specify from time to time, requesting the Issuing Bank to open a Letter of
     Credit.

          "ASSIGNEE":  as defined in subsection 10.6(c).

          "AVAILABLE REVOLVING CREDIT COMMITMENTS":  at any time, an amount
     equal to the excess, if any, of (a) the Revolving Credit Commitments over
     (b) the Aggregate Outstanding Revolving Extensions of Credit.


<PAGE>
                                                                               4

          "BORROWER SECURITY DOCUMENTS":  the collective reference to the
     Security Agreement and the Borrower Stock Pledge Agreement.

          "BORROWER STOCK PLEDGE AGREEMENT":  the Borrower Stock Pledge
     Agreement, dated as of August 7, 1996, executed and delivered by the
     Borrower in connection with the Existing Credit Agreement, as the same may
     be amended, supplemented or otherwise modified from time to time.

          "BORROWING BASE":  on any date of determination thereof, the sum
     (without duplication) of:

     a.   85% of the aggregate Eligible Canadian Accounts Receivable;
     b.   85% of the excess of the aggregate Eligible Canadian Cash Equivalents
            over the Canadian Cash Adjustment;
     c.   75% of the aggregate Eligible Vendor Receivables;
     d.   85% of the aggregate Eligible Cigarette Inventory purchased by the
            Borrower on zero day EFT terms;
     e.   65% of the aggregate Eligible Cigarette Inventory purchased by the
            Borrower on terms other than zero day EFT terms;
     f.   80% of the aggregate Eligible Tobacco and Cigar Inventory;
     g.   65% of the aggregate Eligible Other Inventory; and
     h.   100% of the aggregate cash held by the Administrative Agent in the US
            Cash Collateral Account.

     All determinations in connection with the Borrowing Base shall be (i) made
     by the Borrower in conjunction with the Borrowing Base Certificates and
     Supplemental Reportings to be provided by the Borrower to the
     Administrative Agent pursuant to subsection 6.2(f), (ii) made by the
     Borrower in Dollars, and any amounts determined in Canadian dollars shall,
     for purposes of calculating the Borrowing Base, be converted into Dollars
     at the Spot Rate and (iii) certified to the Administrative Agent by a
     Responsible Officer of the Borrower, provided, however, that the
     Administrative Agent shall have the final right to review and adjust, in
     its reasonable judgment, any such determination to the extent such
     determination is not in accordance with this Agreement.  The Administrative
     Agent may also decrease any of the foregoing percentages upon ten Business
     Days' written notice to the Borrower if, in the judgment of the
     Administrative Agent in its reasonable discretion based on the findings of
     the on-site periodic field exams conducted pursuant to subsection 6.7, a
     material adverse change shall have occurred in any of the items included in
     the Borrowing Base.

          "BORROWING BASE CERTIFICATE":  a certificate delivered by the Borrower
     to the Administrative Agent pursuant to subsection 6.2(f) and certified by
     a Responsible Officer of the Borrower, substantially in the form of Exhibit
     B.

          "BORROWING DATE":  any Business Day specified in a notice pursuant to
     subsection 2.2 as a date on which the Borrower requests the Lenders to make
     Loans hereunder.

<PAGE>
                                                                               5

          "BUSINESS":  as defined in subsection 4.17.

          "BUSINESS DAY":  a day other than a Saturday, Sunday or other day on
     which commercial banks in New York City are authorized or required by law
     to close.

          "CANADIAN CASH ADJUSTMENT":  as of any date of determination, the
     aggregate total of all checks written and outstanding, payable to Canadian
     government cigarette tax jurisdictions, for amounts owing to them related 
     to cigarette sales or purchases.

          "CANADIAN CASH COLLATERAL ACCOUNT":  has the meaning specified in the
     Security Agreement.

          "CANADIAN CASH EQUIVALENTS":  means (i) any term deposit receipts of
     the Bank of Montreal having a maturity of not greater than 90 days from the
     date of acquisition thereof, (ii) cash owned by the Borrower or any of its
     Subsidiaries and denominated in Canadian dollars and (iii) subject to the
     receipt by the Administrative Agent of a written legal opinion in form and
     substance and from a firm satisfactory to the Administrative Agent and its
     counsel to the effect that the Administrative Agent and the Lenders would
     have a perfected security interest in such items, the following items
     having a maturity of not greater than 90 days from the date of acquisition
     thereof:

               (a)  readily marketable direct obligations of the Government of
          Canada or any province thereof or obligations unconditionally
          guaranteed by the full faith and credit of the Government of Canada;

               (b)  insured certificates of deposit, deposit notes or term
          deposit receipts of any commercial bank listed on Schedule 1 of the
          Bank Act (Canada); or

               (c)  commercial paper in an aggregate amount of no more than
          $1,000,000 per issuer outstanding at any time, issued by any
          corporation organized under the laws of Canada or any province thereof
          and rated at least A-1 or better (or the then equivalent grade) by
          Canada Bond Rating Service or R-2 (middle) or better (or the then
          equivalent grade) by Dominion Bond Rating Service.

          "CANADIAN RECEIVABLE OFFSETS":  the aggregate Canadian credit balances
     of the Borrower (determined on an account debtor by account debtor basis)
     more than 45 days past due.

          "CAPITAL STOCK":  any and all shares, interests, participations or
     other equivalents (however designated) of capital stock of a corporation,
     any and all equivalent ownership interests in a Person (other than a
     corporation) and any and all warrants or options to purchase any of the
     foregoing.

          "CASH INTEREST EXPENSE":  of any Person for any period, Interest
     Expense of such Person for such period (a) minus, in each case to the
     extent included in determining such Interest Expense for such period, the
     sum of the following: (i) non-cash expenses for interest payable in kind
     and (ii) amortization of debt discount and 



<PAGE>
                                                                               6

     fees and (iii) the fees described in subsections 2.3 and 3.3 and (b) plus 
     the sum of the following in each case to the extent previously subtracted 
     pursuant to clause (a) of this definition: cash payments made by such 
     Person or any Subsidiary of such Person during such period in respect of 
     the items referred to in such clause (a)(i).

          "C/D ASSESSMENT RATE":  for any day as applied to any ABR Loan, the
     annual assessment rate in effect on such day which is payable by a member
     of the Bank Insurance Fund maintained by the Federal Deposit Insurance
     Corporation (the "FDIC") classified as well-capitalized and within 
     supervisory subgroup "B" (or a comparable successor assessment risk 
     classification) within the meaning of 12 C.F.R. Section 327.4 (or any 
     successor provision) to the FDIC (or any successor) for the FDIC's (or 
     such successor's) insuring time deposits at offices of such institution 
     in the United States.

          "C/D RESERVE PERCENTAGE":  for any day as applied to any ABR Loan,
     that percentage (expressed as a decimal) which is in effect on such day, as
     prescribed by the Board of Governors of the Federal Reserve System (or any
     successor) (the "BOARD"), for determining the maximum reserve requirement
     for a Depositary Institution (as defined in Regulation D of the Board) in
     respect of new non-personal time deposits in Dollars having a maturity of
     30 days or more.

          "CHASE":  The Chase Manhattan Bank.

          "CIGARETTE INVENTORY":  the cigarette Inventory of the Borrower and
     its Subsidiaries, including all tax stamps (whether affixed or unaffixed)
     in respect thereof.

          "CMIC":  Core-Mark Interrelated Companies, Inc., a California
     corporation and a wholly-owned Subsidiary of the Borrower.

          "CM MIDCONTINENT":  Core-Mark Midcontinent, Inc., an Arkansas
     corporation and a wholly-owned Subsidiary of the Borrower.

          "C/M PRODUCTS":  C/M Products, Inc., a California corporation and a
     wholly-owned Subsidiary of the Borrower.

          "CODE":  the Internal Revenue Code of 1986, as amended from time to
     time.

          "COLLATERAL":  all assets of the Loan Parties, now owned or
     hereinafter acquired, upon which a Lien is purported to be created by any
     Security Document.

          "COMMERCIAL LETTER OF CREDIT":  as defined in subsection 3.1(b)(1)(B).

          "COMMITMENT PERIOD":  the period from and including the date hereof to
     but not including the Termination Date or such earlier date on which the
     Commitments shall terminate as provided herein.

          "COMMITMENTS":  the collective reference to the Revolving Credit
     Commitments.


<PAGE>
                                                                               7

          "COMMONLY CONTROLLED ENTITY":  an entity, whether or not incorporated,
     which is under common control with the Borrower within the meaning of
     Section 4001 of ERISA or is part of a group which includes the Borrower and
     which is treated as a single employer under Section 414 of the Code.

          "CONSOLIDATED": when used in connection with any defined term, and not
     otherwise defined, means such term as it applies to the Borrower and its
     Subsidiaries on a consolidated basis, after eliminating all intercompany
     items.

          "CONSOLIDATED WORKING CAPITAL": as of the date of determination,
     Current Assets of the Borrower and its Subsidiaries at such date, 
     determined on a consolidated basis in conformity with GAAP, minus Current 
     Liabilities of the Borrower and its Subsidiaries at such date, determined 
     on a consolidated basis in conformity with GAAP.

          "CONTRACTUAL OBLIGATION":  as to any Person, any provision of any
     security issued by such Person or any provision applicable to such Person
     of any agreement, instrument or other undertaking to which such Person is a
     party or by which it or any of its property is bound.

          "CONTROL PERCENTAGE":  means 51%, provided that such percentage may be
     reduced but not below 35%, if prior to or concurrently with such reduction,
     the following conditions have been satisfied: (1) there has been an initial
     public offering of the common stock of the Borrower, (2) the Uncovered L/C
     Amount shall have been permanently reduced to zero and (3) the lesser of
     (x) the available Borrowing Base and (y) the Available Revolving Credit
     Commitments shall be at least $15,000,000 determined on a pro forma basis
     giving effect to the transaction that causes such reduction on the basis of
     the average amount of the Borrowing Base and the Aggregate Outstanding
     Revolving Extensions of Credit, respectively, during the calendar month
     preceding the month in which such transaction occurs.

          "CURRENT ASSETS": of any Person, at the date of determination, all
     assets of such Person which would, in accordance with GAAP (using the
     first-in, first-out inventory valuation method), be classified on a balance
     sheet of such Person as current assets, other than deferred taxes.

          "CURRENT LIABILITIES": of any Person, at the date of determination,
     all liabilities of such Person which would, in accordance with GAAP (using
     the first-in, first-out inventory valuation method), be classified on a
     balance sheet of such Person as current liabilities, other than deferred
     taxes and the current portion of any long-term Indebtedness of such Person.

          "CUSTOMER REBATE RESERVES":  $30,000 for rebates to customers subject
     to change by the Administrative Agent in its reasonable discretion based on
     the findings of the on-site periodic field exams conducted pursuant to
     subsection 6.7.

<PAGE>
                                                                               8

          "DEFAULT":  any of the events specified in Section 8, whether or not
     any requirement for the giving of notice, the lapse of time, or both, or
     any other condition, has been satisfied.

          "DEPOSIT ACCOUNT LETTERS":  has the meaning specified in the Security
     Agreement.

          "DEPOSIT ACCOUNTS":  has the meaning specified in the Security
     Agreement.

          "DEPOSITORY LETTERS":  has the meaning specified in the Security
     Agreement.

          "DOLLARS" and "$":  dollars in lawful currency of the United States of
     America.

          "EBITDA":  means with respect to any Person, for any period, the Net
     Income of such Person for such period determined on a consolidated basis,
     PLUS, to the extent deducted in determining such Net Income, (i) Interest
     Expense, (ii) depreciation, (iii) depletion, (iv) amortization, (v) all
     Federal, state, local and foreign income taxes and (vi) any extraordinary
     and unusual losses, and, MINUS, to the extent added in determining such
     Net Income, any extraordinary and unusual gains, all as determined on a
     consolidated basis in accordance with GAAP using the first-in, first-out
     inventory valuation method.

          "EFT":  electronic funds transfer.

          "ELIGIBLE CANADIAN ACCOUNTS RECEIVABLE":  at a particular date, the
     total outstanding balance of accounts receivable before bad debt reserves
     historically recorded by the Borrower, determined in accordance with GAAP
     and stated on a basis consistent with the historical practices of the
     Borrower as of the date thereof (but excluding in any event any material
     delivery charges, freight charges, finance charges, late fees and other
     fees and less the value of any accrual which has been recorded by the
     Borrower with respect to downward price adjustments) of the Borrower or any
     of its Subsidiaries (excluding Vendor Receivables):  (a) which are accounts
     within the meaning of Section 9-106 of the New York Uniform Commercial Code
     (or any successor provisions thereto), (b) which are bona fide, valid and
     legally enforceable obligations of the parties thereto or the account
     debtor in respect thereof and arise from the actual sale of goods in the
     ordinary course of business to such account debtor or parties, (c) with
     respect to which all consents, licenses, approvals or authorizations of, or
     registrations or declarations with, any Governmental Authority required to
     be obtained, effected or given in connection with the execution, delivery
     and performance of such accounts receivable have been duly obtained,
     effected or given, are in full force and effect and do not subject the
     scope of such Accounts to any materially adverse limitation, either
     specific or general in nature, (d) which conform in all other respects to
     the representations and warranties contained herein and in the Security
     Agreement, (e) which have been invoiced by the Borrower or any of its
     Subsidiaries and which are not more than 45 days past due, (f) which are
     not owed by an obligor which is (i) a Governmental Authority, or (ii) an
     Affiliate or Subsidiary of the Borrower, (g) which are not owed by an
     obligor which has taken any of the actions or suffered any of the events of
     the kind described in subsection 8(f), (h) which are not 

<PAGE>
                                                                               9

     owed by an obligor 25% or more of the outstanding balance of accounts 
     receivable (that otherwise meet the requirements of clauses (n) and (o) of
     this definition) of which do not constitute Eligible Canadian Accounts 
     Receivable hereunder, (i) which are assignable and subject to a perfected,
     first-priority Lien in favor of the Administrative Agent pursuant to the 
     Security Agreement and which are not subject to any other Liens except 
     Liens permitted under subsection 7.3(a), (b) or (h), (j) which are not 
     owed by an obligor with terms greater than 45 days, (k) which the 
     Borrower is not required to perform any additional services or perform or 
     incur any additional obligations to the account debtor in order to collect
     such accounts receivable, (l) which are not subject to any defense, 
     setoff, recoupment or counterclaim, (m) to which the Borrower or any of its
     Subsidiaries has good, valid and marketable title as sole owner and as to 
     which no other Person has asserted in writing any claim to right of 
     possession or dominion, (n) the obligor in respect of which is located in 
     Canada, (o) which is denominated in Dollars or in Canadian dollars, and 
     (p) which the Administrative Agent in its reasonable discretion based on 
     the findings of the on-site periodic field exams conducted pursuant to 
     subsection 6.7 has not otherwise determined to be unacceptable, EXCLUDING 
     the aggregate amount of Canadian Receivable Offsets and Customer Rebate 
     Reserves and the aggregate amount owing to any obligor who is a supplier 
     or creditor of the Borrower or any of its Subsidiaries to the extent that 
     there is a receivable balance due from such obligor that would otherwise 
     constitute an Eligible Canadian Accounts Receivable.

          "ELIGIBLE CANADIAN CASH EQUIVALENTS":  at a particular date, the total
     value of Canadian Cash Equivalents credited to the Canadian Cash Collateral
     Account and the Deposit Accounts in accordance with subsection 6.11.

          "ELIGIBLE CIGARETTE INVENTORY":  at a particular date, the total value
     of the Cigarette Inventory of the Borrower and its Subsidiaries (calculated
     as the lower of (x) cost, determined on a first in first out basis in
     accordance with GAAP and stated on a basis consistent with the historical
     practices of the Borrower on the date hereof before inventory reserves
     historically recorded by the Borrower and (y) fair market value) (a) which
     conforms in all respects to the representations and warranties contained
     herein and in the Security Agreement, (b) which is located in the United
     States of America, (c) which is subject to a perfected, first-priority Lien
     in favor of the Administrative Agent pursuant to the Security Agreement and
     which is not subject to any other Liens except Liens permitted under
     subsection 7.3 (a), (b) or (h), (d) which is stored in the Borrower's or
     any of its Subsidiaries' warehouses, which has been placed in the
     Borrower's or any of its Subsidiaries' storage area or allocated to the
     Borrower or any of its Subsidiaries in a third-party warehouse and
     identified separately from the inventory of others, or which is in transit
     between such third-party warehouses and Borrower's or any of its
     Subsidiaries' warehouses, (e) to which the Borrower or any of its
     Subsidiaries has good, valid and marketable title as sole owner and as to
     which no other Person has asserted in writing any claim to right of
     possession or dominion, (f) which is not raw materials, supplies, work-
     in-process or packaging, packing or shipping materials, and (g) which the
     Administrative Agent in its reasonable discretion based on the findings of
     the on-site periodic field exams conducted pursuant to subsection 6.7 has
     not otherwise determined to be unacceptable, EXCLUDING the 

<PAGE>
                                                                              10

     aggregate amount of the Inventory Reserves, Tax Reserves and Landlord Lien
     Reserves allocable to such Inventory.

          "ELIGIBLE OTHER INVENTORY":  at a particular date, the total value of
     Inventory of the Borrower and its Subsidiaries (calculated as the lower of
     (x) cost, determined on a first in a first out basis in accordance with
     GAAP and stated on a basis consistent with the historical practices of the
     Borrower on the date hereof before inventory reserves historically recorded
     by the Borrower, and (y) fair market value:  (a) which does not consist of
     Tobacco Products Inventory, (b) which does not consist of fresh produce,
     fresh meat or dairy products in an aggregate amount in excess of $250,000,
     (c) which conforms in all respects to the representations and warranties
     contained herein and in the Security Agreement, (d) which is located in the
     United States of America, (e) which is subject to a perfected, first-
     priority Lien in favor of the Administrative Agent pursuant to the Security
     Agreement and which is not subject to any other Liens except Liens
     permitted under subsection 7.3 (a), (b) or (h), (f) which is stored in the
     Borrower's or any of its Subsidiaries' warehouses, which has been placed in
     the Borrower's or any of its Subsidiaries' storage area or allocated to the
     Borrower or any of its Subsidiaries in a third-party warehouse and
     identified separately from the inventory of others, or which is in transit
     between such third-party warehouses and Borrower's or any of its
     Subsidiaries' warehouses, (g) to which the Borrower or any of its
     Subsidiaries has good, valid and marketable title as sole owner and as to
     which no other Person has asserted in writing any claim to right of
     possession or dominion, (h) which is not raw materials, supplies, work-
     in-process or packaging, packing or shipping materials, and (i) which the
     Administrative Agent in its reasonable discretion based on the findings of
     the on-site periodic field exams conducted pursuant to subsection 6.7 has
     not otherwise determined to be unacceptable, EXCLUDING the aggregate amount
     of the Inventory Reserves, Tax Reserves and Landlord Lien Reserves
     allocable to such Inventory.

          "ELIGIBLE TOBACCO AND CIGAR INVENTORY":  at a particular date, the
     total value of the Tobacco and Cigar Inventory of the Borrower and its
     Subsidiaries (calculated as the lower of (x) cost, determined on a first in
     first out basis in accordance with GAAP and stated on a basis consistent
     with the historical practices of the Borrower on the date hereof before
     inventory reserves historically recorded by the Borrower, and (y) fair
     market value):  (a) which is not Eligible Cigarette Inventory, (b) which
     conforms in all respects to the representations and warranties contained
     herein and in the Security Agreement, (c) which is located in the United
     States of America, (d) which is subject to a perfected, first-priority Lien
     in favor of the Administrative Agent pursuant to the Security Agreement and
     which is not subject to any other Liens except Liens permitted under
     subsection 7.3 (a), (b) or (h), (e) which is stored in the Borrower's or
     any of its Subsidiaries' warehouses, which has been placed in the
     Borrower's or any of its Subsidiaries' storage area or allocated to the
     Borrower or any of its Subsidiaries in a third-party warehouse and
     identified separately from the inventory of others, or which is in transit
     between such third-party warehouses and Borrower's or any of its
     Subsidiaries' warehouses, (f) to which the Borrower or any of its
     Subsidiaries has good, valid and marketable title as sole owner and as to
     which no other Person has asserted in writing any claim to right of
     possession or dominion, (g) which is not raw materials, supplies, work-in-
     process or packaging, packing or shipping materials, and 





<PAGE>
                                                                              11

     (h) which the Administrative Agent in its reasonable discretion based on 
     the findings of the on-site periodic field exams conducted pursuant to 
     subsection 6.7 has not otherwise determined to be unacceptable, EXCLUDING 
     the aggregate amount of the Inventory Reserves, Tax Reserves and Landlord 
     Lien Reserves allocable to such Inventory.

          "ELIGIBLE VENDOR RECEIVABLES": at a particular date, the total
     outstanding balance of Vendor Receivables of the Borrower and its
     Subsidiaries, determined in accordance with GAAP and stated on a basis
     consistent with the historical practices of the Borrower as of the date
     thereof (a) which are accounts within the meaning of Section 9-106 of the
     New York Uniform Commercial Code (or any successor provisions thereto), (b)
     which are bona fide, valid and legally enforceable obligations of the
     parties thereto or the account debtor in respect thereof and arise in the
     ordinary course of business to such account debtor or parties, (c) with
     respect to which all consents, licenses, approvals or authorizations of, or
     registrations or declarations with, any Governmental Authority required to
     be obtained, effected or given in connection with the execution, delivery
     and performance of such accounts receivable have been duly obtained,
     effected or given, are in full force and effect and do not subject the
     scope of such Accounts to any materially adverse limitation, either
     specific or general in nature, (d) which conform in all other respects to
     the representations and warranties contained herein and in the Security
     Agreement, (e) which are not owed by an obligor which is (i) a Governmental
     Authority, or (ii) an Affiliate or Subsidiary of the Borrower, (f) which
     are not owed by an obligor which has taken any of the actions or suffered
     any of the events of the kind described in subsection 8(f), (g) which are
     assignable and subject to a perfected, first-priority Lien in favor of the
     Administrative Agent pursuant to the Security Agreement and which are 
     not subject to any other Liens except Liens permitted under subsection 
     7.3(a), (b) or (h), (h) which are not subject to any defense, setoff, 
     recoupment or counterclaim, (i) to which the Borrower or any of its 
     Subsidiaries has good, valid and marketable title as sole owner and as to 
     which no other Person has asserted in writing any claim to right of 
     possession or dominion, (j) the obligor in respect of which is located in 
     the United States of America or in Canada, (k) which is denominated in 
     Dollars or in Canadian dollars, and (l) which the Administrative Agent in 
     its reasonable discretion based on the findings of the on-site periodic 
     field exams conducted pursuant to subsection 6.7 has not otherwise 
     determined to be unacceptable, EXCLUDING (1) the aggregate amount owing to
     any obligor who is a supplier or creditor of the Borrower or any of its 
     Subsidiaries to the extent that there is a receivable balance due from 
     such obligor that would otherwise constitute an Eligible Vendor Receivable
     and (2) 50% of any Vendor Receivable due 180 days or more from the 
     applicable date of determination.

          "ENVIRONMENTAL LAWS":  any and all foreign, Federal, state,
     provincial, local or municipal laws, rules, guidelines, orders,
     regulations, statutes, ordinances, codes, decrees, requirements of any
     Governmental Authority or other Requirements of Law (including common law)
     regulating, relating to or imposing liability or standards of conduct
     concerning protection of employee health and safety or the environment, as
     now or may at any time hereafter be in effect.



<PAGE>
                                                                              12

          "ERISA":  the Employee Retirement Income Security Act of 1974, as
     amended from time to time.

          "EUROCURRENCY RESERVE REQUIREMENTS":  for any day as applied to a
     Eurodollar Loan, the aggregate (without duplication) of the rates
     (expressed as a decimal fraction) of reserve requirements in effect on such
     day (including, without limitation, basic, supplemental, marginal and
     emergency reserves under any regulations of the Board of Governors of the
     Federal Reserve System or other Governmental Authority having jurisdiction
     with respect thereto) dealing with reserve requirements prescribed for
     eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
     in Regulation D of such Board) maintained by a member bank of such System.

          "EURODOLLAR BASE RATE":  with respect to each day during each Interest
     Period pertaining to a Eurodollar Loan, the rate per annum equal to the
     rate at which Chase is offered Dollar deposits at or about 10:00 A.M., New
     York City time, two Business Days prior to the beginning of such Interest
     Period in the interbank eurodollar market where the eurodollar and foreign
     currency and exchange operations in respect of its Eurodollar Loans are
     then being conducted for delivery on the first day of such Interest Period
     for the number of days comprised therein and in an amount comparable to the
     amount of its Eurodollar Loan to be outstanding during such Interest
     Period.

          "EURODOLLAR LOANS":  Loans the rate of interest applicable to which is
     based upon the Eurodollar Rate.

          "EURODOLLAR RATE":  with respect to each day during each Interest
     Period pertaining to a Eurodollar Loan, a rate per annum determined for
     such day in accordance with the following formula (rounded upward to the
     nearest 1/100th of 1%):

                      Eurodollar Base Rate        
             ----------------------------------------
             1.00 - Eurocurrency Reserve Requirements

          "EVENT OF DEFAULT":  any of the events specified in Section 8,
     PROVIDED that any requirement for the giving of notice, the lapse of time,
     or both, or any other condition, has been satisfied.

          "EXISTING CREDIT AGREEMENT":  as defined in the recitals hereto.

          "EXISTING CREDIT FACILITY":  the Existing Credit Agreement. 

          "EXISTING HIGH YIELD SUBORDINATED DEBT":  Indebtedness of the Borrower
     evidenced by the High Yield Notes.

          "EXITING LENDER":  a lender under the Existing Credit Facility who is
     not a Lender under this Agreement.

          "FINANCING LEASE":  any lease of property, real or personal, the
     obligations of the lessee in respect of which are required in accordance
     with GAAP to be capitalized on a balance sheet of the lessee.



<PAGE>
                                                                              13

          "GAAP":  generally accepted accounting principles in the United States
     of America in effect from time to time.

          "GOVERNMENTAL AUTHORITY":  any nation or government, any state,
     province or other political subdivision thereof and any entity exercising
     executive, legislative, judicial, regulatory or administrative functions of
     or pertaining to government.

          "GUARANTEE OBLIGATION":  as to any Person (the "GUARANTEEING PERSON"),
     any obligation of (a) the guaranteeing person or (b) another Person
     (including, without limitation, any bank under any letter of credit) to
     induce the creation of which the guaranteeing person has issued a
     reimbursement, counterindemnity or similar obligation, in either case
     guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
     or other obligations (the "PRIMARY OBLIGATIONS") of any other third Person
     (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly,
     including, without limitation, any obligation of the guaranteeing person,
     whether or not contingent, (i) to purchase any such primary obligation or
     any property constituting direct or indirect security therefor, (ii) to
     advance or supply funds (1) for the purchase or payment of any such primary
     obligation or (2) to maintain working capital or equity capital of the
     primary obligor or otherwise to maintain the net worth or solvency of the
     primary obligor, (iii) to purchase property, securities or services
     primarily for the purpose of assuring the owner of any such primary
     obligation of the ability of the primary obligor to make payment of such
     primary obligation or (iv) otherwise to assure or hold harmless the owner
     of any such primary obligation against loss in respect thereof; PROVIDED,
     HOWEVER, that the term Guarantee Obligation shall not include endorsements
     of instruments for deposit or collection in the ordinary course of
     business.  The amount of any Guarantee Obligation of any guaranteeing
     person shall be deemed to be the lower of (a) an amount equal to the stated
     or determinable amount of the primary obligation in respect of which such
     Guarantee Obligation is made and (b) the maximum amount for which such
     guaranteeing person may be liable pursuant to the terms of the instrument 
     embodying such Guarantee Obligation, unless such primary obligation and 
     the maximum amount for which such guaranteeing person may be liable are 
     not stated or determinable, in which case the amount of such Guarantee 
     Obligation shall be such guaranteeing person's maximum reasonably 
     anticipated liability in respect thereof as determined by the Borrower in 
     good faith.

          "GUARANTOR":  any Person who delivered the Subsidiaries Guarantee.

          "HEDGE AGREEMENTS":  means interest rate swap, cap or collar
     agreements, interest rate future or option contracts, currency swap
     agreements, currency future or option contracts and other similar
     agreements.

          "HIGH YIELD NOTES":  $75,000,000 11-3/8% senior subordinated notes due
     2003 of the Borrower issued pursuant to the indenture dated as of September
     27, 1996. 

          "INDEBTEDNESS":  of any Person at any date, (a) all indebtedness of
     such Person for borrowed money or for the deferred purchase price of
     property or services (other than current trade liabilities incurred in the
     ordinary course of business and payable in accordance with customary
     practices), (b) any other indebtedness of such Person which 


<PAGE>
                                                                              14

     is evidenced by a note, bond, debenture or similar instrument, (c) all 
     obligations of such Person under Financing Leases, (d) all obligations of 
     such Person in respect of outstanding letters of credit, acceptances and 
     similar obligations created for the account of such Person, (e) all 
     obligations of such Person under Hedge Agreements and (f) all liabilities 
     secured by any Lien on any property owned by such Person even though such 
     Person has not assumed or otherwise become liable for the payment thereof.
     Indebtedness of the Borrower and its Subsidiaries shall include, without 
     limitation, the liabilities of the Receivables Sub under the Receivables 
     Transaction whether or not such liabilities would be classified as 
     indebtedness on a Consolidated balance sheet of the Borrower under GAAP. 
     The principal amount of such liabilities at any time shall be deemed to be
     the Invested Amount at such time.

          "INSOLVENCY":  with respect to any Multiemployer Plan, the condition
     that such Plan is insolvent within the meaning of Section 4245 of ERISA.

          "INSOLVENT":  pertaining to a condition of Insolvency.

          "INTELLECTUAL PROPERTY":  the collective reference to Copyrights,
     Copyright Licenses, Patents, Patent Licenses, Trademarks and Trademark
     Licenses, in each case, as defined in the Security Agreement.
          
          "INTEREST EXPENSE": of any Person for any period the amount of
     interest expense, both expensed and capitalized, of such Person, determined
     on a consolidated basis in accordance with GAAP, for such period on the
     aggregate principal amount of its Indebtedness.

          "INTEREST PAYMENT DATE":  (a) as to any ABR Loan, the last day of each
     March, June, September and December, (b) as to any Eurodollar Loan having
     an Interest Period of three months or less, the last day of such Interest
     Period, and (c) as to any Eurodollar Loan having an Interest Period longer 
     than three months, each day which is three months or a whole multiple 
     thereof, after the first day of such Interest Period and the last day of 
     such Interest Period.

          "INTEREST PERIOD":  with respect to any Eurodollar Loan:

                  (i)      initially, the period commencing on the borrowing or
          conversion date, as the case may be, with respect to such Eurodollar
          Loan and ending one, two, three or six months thereafter, as selected
          by the Borrower in its notice of borrowing or notice of conversion, as
          the case may be, given with respect thereto; and

                 (ii)      thereafter, each period commencing on the last day of
          the next preceding Interest Period applicable to such Eurodollar Loan
          and ending one, two, three or six months thereafter, as selected by
          the Borrower by irrevocable notice to the Administrative Agent not
          less than three Business Days prior to the last day of the then
          current Interest Period with respect thereto;



<PAGE>
                                                                              15
    
     PROVIDED that, all of the foregoing provisions relating to Interest Periods
     are subject to the following:

               (1)  if any Interest Period would otherwise end on a day that is
          not a Business Day, such Interest Period shall be extended to the next
          succeeding Business Day unless the result of such extension would be
          to carry such Interest Period into another calendar month in which
          event such Interest Period shall end on the immediately preceding
          Business Day;

               (2)  any Interest Period that would otherwise extend beyond the
          Termination Date shall end on the Termination Date;

               (3)  any Interest Period that begins on the last Business Day of
          a calendar month (or on a day for which there is no numerically
          corresponding day in the calendar month at the end of such Interest
          Period) shall end on the last Business Day of a calendar month; and

               (4)  the Borrower shall select Interest Periods so as not to
          require a payment or prepayment of any Eurodollar Loan during an
          Interest Period for such Loan.

          "INVENTORY":  as defined in Section 9-109(4) of the UCC.

          "INVENTORY RESERVE":  with respect to any Inventory of the Borrower
     and its Subsidiaries, determined on a first in first out basis in
     accordance with GAAP and stated on a basis consistent with the historical
     practices of the Borrower on the date hereof, which intent is to record a
     deterioration in Inventory value for damaged, unsalable in the ordinary
     course or otherwise unmerchantable items or which have been held for more
     than six months in the case of Tobacco Products Inventory or more than
     twelve months in the case of other Inventory or is stale.

          "INVESTED AMOUNT":  shall mean, with respect to any date of
     determination, an amount equal to the outstanding principal amount of the
     investment under the Receivables Transaction on such date.

          "ISSUING BANK":  Chase or an Affiliate of Chase designated by it, in
     its capacity as issuer of any Letter of Credit; initially, Chase Manhattan
     Bank Delaware.

          "LANDLORD LIEN RESERVES":  at any time, the aggregate amount of any
     and all past due and current amounts then owing by the Borrower and its
     Subsidiaries to landlords in respect of their warehouse facilities.

          "L/C COMMITMENT":  at any date of determination the lesser of
     $40,000,000 and Revolving Credit Commitments at such date.

          "L/C FEE PAYMENT DATE":  the last day of each March, June, September,
     and December, and the Termination Date.

<PAGE>
                                                                              16

          "L/C OBLIGATIONS":  at any time, an amount equal to the sum of (a) the
     aggregate then undrawn and unexpired amount of the then outstanding Letters
     of Credit and (b) the aggregate amount of drawings under Letters of Credit
     which have not then been reimbursed pursuant to subsection 3.5(a).

          "L/C PARTICIPANTS":  the collective reference to all the Lenders with
     Revolving Credit Commitments other than the Issuing Bank.

          "LEASE EXPENSE": for any Person for any period, the aggregate amount
     of fixed and contingent rentals payable by such Person for such period with
     respect to leases of real and personal property.

          "LETTERS OF CREDIT":  as defined in subsection 3.1(a).

          "LIEN":  any mortgage, pledge, hypothecation, assignment, deposit
     arrangement, encumbrance, lien (statutory or other), charge or other
     security interest or any preference, priority or other security agreement
     or preferential arrangement of any kind or nature whatsoever (including,
     without limitation, any conditional sale or other title retention agreement
     and any Financing Lease having substantially the same economic effect as
     any of the foregoing).

          "LOAN":  any loan made by any Lender pursuant to this Agreement.

          "LOAN DOCUMENTS":  this Agreement, any Notes, the Applications, any
     Letters of Credit, the Subsidiaries Guarantee and the Security Documents.

          "LOAN PARTIES":  the Borrower and each Subsidiary of the Borrower
     which is a party to a Loan Document.

          "MAJORITY LENDERS":  at any time, Lenders the Voting Percentages of
     which aggregate more than 50%.

          "MATERIAL ADVERSE EFFECT":  a material adverse effect on (a) the
     business, assets, property, condition (financial or otherwise) or prospects
     of the Borrower and its Subsidiaries taken as a whole or (b) the validity
     or enforceability of this or any of the other Loan Documents or the rights
     or remedies of the Administrative Agent or the Lenders hereunder or
     thereunder.

          "MATERIALS OF ENVIRONMENTAL CONCERN":  any gasoline or petroleum
     (including crude oil or any fraction thereof) or petroleum products or any
     hazardous or toxic substances, materials or wastes, defined or regulated as
     such in or under any Environmental Law, including, without limitation,
     asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.

          "MULTIEMPLOYER PLAN":  a Plan which is a multiemployer plan as defined
     in Section 4001(a)(3) of ERISA.

<PAGE>
                                                                             17

          "NET INCOME": of any Person for any period, net income of such Person,
     determined on a consolidated basis in accordance with GAAP.

          "NET WORTH":   means, with respect to any Person as of any date of
     determination, the stockholder's equity of such Person as of such date,
     without giving effect to any cumulative gains or losses from foreign
     currency translations PLUS minority interests of such Person as of such
     date, in each case determined on a Consolidated basis and in accordance
     with GAAP using the first-in, first-out inventory valuation method
     (excluding any additional minimum pension liability); plus any reduction in
     Net Worth attributable to the write-off on the Restatement Effective Date
     of up to $700,000 of fees paid by the Borrower in connection with the
     Existing Credit Facility.

          "NON-EXCLUDED TAXES":  as defined in subsection 2.16.

          "NOTES":  the Revolving Credit Notes.

          "PARTICIPANT":  as defined in subsection 10.6(b).

          "PBGC":  the Pension Benefit Guaranty Corporation established pursuant
     to Subtitle A of Title IV of ERISA.

          "PERMITTED ACQUISITION":  any acquisition of all or substantially all
     the assets of, or shares or other equity interests in, a Person or division
     or line of business of a Person or other significant assets of a Person
     (other than inventory, leases, materials and equipment in the ordinary
     course of business) if immediately after giving effect thereto:  (a) no
     Default or Event of Default shall have occurred and be continuing or would
     result therefrom, (b) all transactions related thereto shall be consummated
     in all material respects in accordance with applicable laws, (c) 100% of
     the Capital Stock of any acquired or newly formed corporation, partnership,
     association or other business entity are owned directly by the Borrower or
     a Subsidiary and all actions required to be taken, if any, with respect to
     such acquired or newly formed subsidiary under subsections 6.10 and 6.12
     shall have been taken, (d)(i) the Borrower shall be in compliance, on a PRO
     FORMA basis after giving effect to such acquisition or formation, with the
     covenants contained in subsection 7.1 recomputed as at the last day of the
     most recently ended fiscal quarter of the Borrower as if such acquisition 
     had occurred on the first day of each relevant period for testing such 
     compliance, and the Borrower shall have delivered to the Administrative 
     Agent a certificate of a Responsible Officer to such effect, together with
     all relevant financial information for such subsidiary or assets (to the 
     extent reasonably available), and (ii) after giving effect to such 
     transaction, any acquired or newly formed subsidiary shall not be liable 
     for any Indebtedness (except for Indebtedness permitted by subsection 7.2)
     and (e) the Borrower shall have delivered to the Administrative Agent 
     monthly projections on a PRO FORMA basis after giving effect to such 
     acquisition or formation, for each of the twelve months following the 
     proposed date of such acquisition or formation, which projections shall 
     indicate that (i) the Borrower would be in compliance with the covenants 
     contained in subsection 7.1 recomputed as of the last day of the most 
     recently ended month as if such acquisition had occurred on the first 
     day of each 

<PAGE>
                                                                             18

     month for testing such compliance and (ii) the average amount of the 
     lesser of (1) the available Borrowing Base and (2) the Available Revolving
     Credit Commitments shall be at least $15,000,000 during such 12 month 
     period and the Borrower shall have delivered to the Administrative Agent a
     certificate of a Responsible Officer to such effect, PROVIDED, that 
     clauses (d)(i) and (e) above shall not apply to any acquisition the 
     aggregate amount of which is less than $5 million unless and until all 
     such acquisitions which are less than $5 million exceed $10 million in the
     aggregate during the term of this Agreement.

          "PERSON":  an individual, partnership, corporation, business trust,
     joint stock company, trust, unincorporated association, joint venture,
     Governmental Authority or other entity of whatever nature.

          "PLAN":  at a particular time, any employee benefit plan which is
     covered by ERISA and in respect of which the Borrower or a Commonly
     Controlled Entity is (or, if such plan were terminated at such time, would
     under Section 4069 of ERISA be deemed to be) an "employer" as defined in
     Section 3(5) of ERISA.

          "PROPERTIES":  as defined in subsection 4.17.

          "RECEIVABLES SALES DOCUMENTS":  shall mean the following documents,
     each dated as of the Restatement Effective Date: the Receivables Sale and
     Contribution Agreement, among the Borrower, CMIC, CM Midcontinent and the
     Receivables Sub; the Pooling Agreement (the "POOLING AGREEMENT"), among the
     Receivables Sub, the Borrower and Chase; the Servicing Agreement, among the
     Receivables Sub, the Borrower and the other subsidiaries named therein; the
     1998-1 Supplement, among the Receivables Sub, the Borrower and Chase; the
     1998-2 Supplement, among the Receivables Sub, the Borrower, Chase and Park
     Avenue Receivables Corporation and any other supplements to the Pooling
     Agreement which may be entered into from time to time.

          "RECEIVABLES SUB":  the wholly-owned Subsidiary, formed for the
     purpose of selling participations pursuant to the Receivables Transaction.

          "RECEIVABLES TRANSACTION":  the transaction contemplated by the
     Receivables Sales Documents.

          "REGISTER":  as defined in subsection 10.6(d).

          "REGULATION U":  Regulation U of the Board of Governors of the Federal
     Reserve System as in effect from time to time.

          "REIMBURSEMENT OBLIGATION":  the obligation of the Borrower to
     reimburse the Issuing Bank pursuant to subsection 3.5(a) for amounts drawn
     under Letters of Credit.

          "REORGANIZATION":  with respect to any Multiemployer Plan, the
     condition that such plan is in reorganization within the meaning of Section
     4241 of ERISA.

<PAGE>
                                                                             19

          "REPORTABLE EVENT":  any of the events set forth in Section 4043(b) of
     ERISA, other than those events as to which the thirty day notice period is
     waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
     Section 2615 or other PBGC regulations or guidance.

          "REQUIREMENT OF LAW":  as to any Person, the Certificate of
     Incorporation and By-Laws or other organizational or governing documents of
     such Person, and any law, treaty, rule 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.

          "RESPONSIBLE OFFICER":  the chief executive officer, the president, or
     the executive vice president of the Borrower or, with respect to financial
     matters, the chief financial officer, the treasurer or the Controller of
     the Borrower.

          "RESPONSIBLE OFFICER'S CERTIFICATE":  as defined in subsection 6.2(b).

          "RESTATEMENT EFFECTIVE DATE":  the date on which the conditions to
     effectiveness set forth in subsection 5.1 shall be satisfied.

          "REVOLVING CREDIT COMMITMENT":  as to any Lender, the obligation of
     such Lender to make Revolving Credit Loans to and/or issue or participate
     in Letters of Credit issued on behalf of the Borrower hereunder in an
     aggregate principal and/or face amount at any one time outstanding not to
     exceed the amount set forth opposite such Lender's name on Schedule 1.1(a)
     under the heading "Revolving Credit Commitment", as such amount may be
     reduced from time to time pursuant to this Agreement or as such amount may
     be adjusted from time to time pursuant to subsection 10.6; collectively, as
     to all such Lenders, the "REVOLVING CREDIT COMMITMENTS".

          "REVOLVING CREDIT COMMITMENT PERCENTAGE":  as to any Lender (a) at any
     time prior to the termination of the Revolving Credit Commitments, the
     percentage of the Revolving Credit Commitments then constituted by such
     Lender's Revolving Credit Commitment and (b) at any time after the
     termination of the Revolving Credit Commitments, the percentage which (i)
     the sum of (x) such Lender's Revolving Credit Loans then outstanding PLUS
     (y) the product of such Lender's Revolving Credit Commitment Percentage
     immediately prior to the termination of the Revolving Credit Commitments
     (after giving effect to any permitted assignment pursuant to subsection
     10.6) times the L/C Obligations then outstanding then constitutes of (ii)
     the sum of (x) the aggregate principal amount of Revolving Credit Loans of
     all the Lenders then outstanding PLUS (y) the aggregate L/C Obligations
     then outstanding.

          "REVOLVING CREDIT LOANS":  as defined in subsection 2.1.

          "REVOLVING CREDIT NOTE":  as defined in subsection 2.5(e).

          "SECURITY AGREEMENT":  the Amended and Restated Security Agreement,
     dated as of the date hereof, executed and delivered by the Borrower and
     each of the 

<PAGE>
                                                                             20

     Subsidiaries (other than the Receivables Sub), as the same may be further 
     amended, supplemented or otherwise modified from time to time.

          "SECURITY DOCUMENTS":  the collective reference to the Security
     Agreement, the Borrower Stock Pledge Agreement and all other security
     documents hereafter delivered to the Administrative Agent granting a Lien
     on any asset or assets of any Person to secure the obligations and
     liabilities of the Borrower hereunder and under any of the other Loan
     Documents or to secure any guarantee of any such obligations and
     liabilities.

          "SENIOR DEBT":  at any date of determination, Total Debt of the
     Borrower and its Subsidiaries outstanding at such date of determination
     MINUS all Subordinated Debt of the Borrower and its Subsidiaries
     outstanding at such date of determination, as determined on a consolidated
     basis in accordance with GAAP.
     
          "SINGLE EMPLOYER PLAN":  any Plan which is covered by Title IV of
     ERISA, but which is not a Multiemployer Plan.

          "SOSNICK ACQUISITION":  the acquisition, consummated on January 28,
     1997, of substantially all of the assets of the Melvin Sosnick Company and
     Capital Cigar Company and the payment of related costs and expenses.

          "SOLVENT":  when used with respect to any Person, means that, 
     as of any date of determination, (a) the amount of the "present fair 
     saleable value" of the assets of such Person will, as of such date, 
     exceed the amount of all "liabilities of such Person, contingent or 
     otherwise", as of such date, as such quoted terms are determined in 
     accordance with applicable federal and state laws governing 
     determinations of the insolvency of debtors, (b) the present fair 
     saleable value of the assets of such Person will, as of such date, be 
     greater than the amount that will be required to pay the liability of 
     such Person on its debts as such debts become absolute and matured, (c) 
     such Person will not have, as of such date, an unreasonably small amount 
     of capital with which to conduct its business, and (d) such Person will 
     be able to pay its debts as they mature. For purposes of this 
     definition, (i) "debt" means liability on a "claim", and (ii) "claim" 
     means any (x) right to payment, whether or not such a right is reduced 
     to judgment, liquidated, unliquidated, fixed, contingent, matured, 
     unmatured, disputed, undisputed, legal, equitable, secured or unsecured 
     or (y) right to an equitable remedy for breach of performance if such 
     breach gives rise to a right to payment, whether or not such right to an 
     equitable remedy is reduced to judgment, fixed, contingent, matured or 
     unmatured, disputed, undisputed, secured or unsecured.

          "SPOT RATE":  the rate of exchange quoted by the Administrative 
     Agent on such date of determination (at the hour on such date of 
     determination at which it customarily makes such determination) to prime 
     banks in the interbank market where its foreign currency exchange 
     operations in respect of Canadian Dollars are then being conducted for 
     the spot purchase of Canadian Dollars with Dollars.

          "STANDBY LETTER OF CREDIT":  as defined in subsection 3.1(b)(1)(A).


<PAGE>
                                                                             21

          "SUBORDINATED DEBT":  the Existing High Yield Subordinated Debt and
     any unsecured Indebtedness of the Borrower no part of the principal of
     which is required to be paid (whether by way of mandatory sinking fund,
     mandatory redemption, mandatory prepayment or otherwise) on or before the
     Termination Date; the payment of the principal of and interest on which and
     other obligations of the Borrower in respect thereof are subordinated to
     the prior payment in full of the principal of and interest (including
     post-petition interest) on the Loans and all other obligations and
     liabilities of the Borrower to the Administrative Agent and the Lenders
     hereunder on terms and conditions approved in writing by the Administrative
     Agent; and all other terms and conditions of which are satisfactory in form
     and substance to the Administrative Agent.

          "SUBSIDIARIES GUARANTEE":  the Guarantee, dated as of August 7, 1996,
     executed and delivered by each Subsidiary (other than the Receivables Sub)
     in connection with the Existing Credit Agreement, as the same may be
     amended, supplemented or otherwise modified from time to time.

          "SUBSIDIARY":  as to any Person, a corporation, partnership or other
     entity of which shares of stock or other ownership interests having
     ordinary voting power (other than stock or such other ownership interests
     having such power only by reason of the happening of a contingency) to
     elect a majority of the board of directors or other managers of such
     corporation, partnership or other entity are at the time owned, or the
     management of which is otherwise controlled, directly or indirectly through
     one or more intermediaries, or both, by such Person.  Unless otherwise
     qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
     Agreement shall refer to C/M Products, CMIC, CM Midcontinent and/or the
     Receivables Sub, the only active Subsidiaries of the Borrower.

          "SUPPLEMENTAL REPORTING":  the reports, accounting records and
     analyses delivered by the Borrower to the Administrative Agent pursuant to
     subsection 6.2(f) and certified by a Responsible Officer, as described in
     Exhibit E.

          "TAX RESERVES":  at any time, all unpaid and unbonded state and local
     municipality tax stamp liabilities.

          "TERMINATION DATE":  the fifth anniversary of the Restatement
     Effective Date.

          "TOBACCO AND CIGAR INVENTORY":  the cigar, chewing tobacco and other
     tobacco products Inventory of the Borrower and its Subsidiaries in respect
     thereof (excluding items classified as Cigarette Inventory).

          "TOBACCO PRODUCTS INVENTORY":  collectively, Cigarette Inventory and
     Tobacco and Cigar Inventory.

          "TOTAL DEBT":  at any date of determination, all Indebtedness of 
     the Borrower and its Subsidiaries outstanding at such date of 
     determination (other than Indebtedness of the type set forth in clauses 
     (d) (with respect to letters of credit only), (e) and (f) in 


<PAGE>
                                                                              22

     the definition thereof in subsection 1.1) as determined on a consolidated 
     basis in accordance with GAAP.

          "TOTAL DEBT LEVERAGE RATIO":  as of the last day of each fiscal
     quarter of the Borrower, the ratio of (i) Consolidated Total Debt of the
     Borrower at the last day of such fiscal quarter to (ii) Consolidated EBITDA
     of the Borrower for the period of four consecutive fiscal quarters of the
     Borrower ending on such last day.  For purposes of computing Consolidated
     Total Debt of the Borrower, the amount of Revolving Credit Loans and
     Invested Amount included therein as of the last day of a fiscal quarter
     shall be the average daily outstanding principal amount thereof for the
     period of two consecutive fiscal quarters ending on such date.

          "TRANCHE":  the collective reference to Eurodollar Loans the then
     current Interest Periods with respect to all of which begin on the same
     date and end on the same later date (whether or not such Loans shall
     originally have been made on the same day).

          "TRANSFEREE":  as defined in subsection 10.6(f).

          "TYPE":  as to any Loan, its nature as an ABR Loan or a Eurodollar
     Loan. 

          "UCC":  the Uniform Commercial Code as in effect in the State of New
     York from time to time.

          "UNCOVERED L/C AMOUNT":  $20,000,000.

          "UNIFORM CUSTOMS":  the Uniform Customs and Practice for Documentary
     Credits (1993 Revision), International Chamber of Commerce Publication No.
     500, as the same may be amended from time to time.

          "US CASH COLLATERAL ACCOUNT":  has the meaning specified in the
     Security Agreement.

          "US CASH EQUIVALENTS":  (a) securities with maturities of one year or
     less from the date of acquisition issued or fully guaranteed or insured by
     the United States Government or any agency thereof, (b) certificates of
     deposit and eurodollar time deposits with maturities of one year or less
     from the date of acquisition and overnight bank deposits of any Lender or
     of any commercial bank having capital and surplus in excess of
     $500,000,000, (c) repurchase obligations of any Lender or of any commercial
     bank satisfying the requirements of clause (b) of this definition, having a
     term of not more than 30 days with respect to securities issued or fully
     guaranteed or insured by the United States Government, (d) commercial paper
     of a domestic issuer rated at least A-2 by Standard and Poor's Rating Group
     ("S&P") or P-2 by Moody's Investors Service, Inc. ("MOODY'S"), (e)
     securities with maturities of one year or less from the date of acquisition
     issued or fully guaranteed by any state, commonwealth or territory of the
     United States, by any political subdivision or taxing authority of any such
     state, commonwealth or territory or by any foreign government, the
     securities of which state, commonwealth, territory, political subdivision,
     taxing authority or foreign 



<PAGE>
                                                                             23

     government (as the case may be) are rated at least A by S&P or A by 
     Moody's, (f) securities with maturities of one year or less from the 
     date of acquisition backed by standby letters of credit issued by any 
     Lender or any commercial bank satisfying the requirements of clause (b) 
     of this definition or (g) shares of money market mutual or similar funds 
     which invest primarily in assets satisfying the requirements of clauses 
     (a) through (f) of this definition.

          "VENDOR RECEIVABLES":  at a particular date, amounts not subject to
     offset or counter-claim, that are owing to the Borrower and its
     Subsidiaries from vendors whose creditworthiness is reasonably satisfactory
     to the Administrative Agent, that relate to marketing and promotional
     incentive programs and manufacturing rights agreements historically offered
     to the Borrower and its Subsidiaries from such vendors and are payable in
     cash.

          "VOTING PERCENTAGE":  as to any Lender (a) at any time prior to the
     termination of the Revolving Credit Commitments, the percentage which such
     Lender's Revolving Credit Commitment then constitutes of the Revolving
     Credit Commitments of all the Lenders then outstanding, and (b) at any time
     after the termination of the Revolving Credit Commitments, the percentage
     which (i) the sum of (x) the principal amount of such Lender's Loans then
     outstanding PLUS (y) the product of such Lender's Revolving Credit
     Commitment Percentage (as in effect immediately prior to the termination of
     the Revolving Credit Commitments) times the L/C Obligations then
     outstanding then constitutes of (ii) the sum of (x) the aggregate principal
     amount of Loans of all the Lenders then outstanding PLUS (y) the aggregate
     L/C Obligations of all the Lenders then outstanding.

          1.2  OTHER DEFINITIONAL PROVISIONS.  (a)  Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in any Notes or any certificate or other document made or delivered
pursuant hereto.

          (b)  As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms
partly defined in subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.

          (c)  The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.  The phrase "date hereof" when used in this Agreement shall refer to
the Restatement Effective Date.

          (d)  The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

          (e)  Notwithstanding anything to the contrary herein, for purposes of
making all calculations in connection with the covenants contained in Section 7,
all accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP as in effect on
the date of this Agreement consistently applied.  In the 



<PAGE>
                                                                             24

event of any material difference at any time between GAAP in effect on the 
date of this Agreement and GAAP from time to time in effect, the certificate 
of a Responsible Officer required pursuant to subsection 6.2(b) shall include 
a reconciliation of the calculations required thereby with the financial 
statements being delivered with such certificate.

                     SECTION 2.  AMOUNT AND TERMS OF COMMITMENTS

          2.1 REVOLVING CREDIT COMMITMENTS. (a)  Subject to the terms and
conditions hereof, each Lender severally agrees to make revolving credit loans
("REVOLVING CREDIT LOANS") to the Borrower from time to time during the
Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Lender's Revolving Credit Commitment Percentage of the
then outstanding L/C Obligations, does not exceed the amount of such Lender's
Revolving Credit Commitment, provided that no Lender shall be required to make a
Revolving Credit Loan to the extent that, after giving effect thereto, the
Aggregate Covered Outstanding Revolving Extensions of Credit at such time would
exceed the Borrowing Base.  During the Commitment Period the Borrower may use
the Revolving Credit Commitments by borrowing, prepaying the Revolving Credit
Loans in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof.

          (b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) ABR Loans, or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with subsections
2.2 and 2.8, PROVIDED that no Revolving Credit Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Termination Date.

          2.2 PROCEDURE FOR REVOLVING CREDIT BORROWING.  The Borrower may borrow
under the Revolving Credit Commitments during the Commitment Period on any
Business Day, PROVIDED that the Borrower shall give the Administrative Agent
irrevocable notice which notice must be received by the Administrative Agent
prior to 1:00 P.M., New York City time, (a) three Business Days prior to the
requested Borrowing Date, if all or any part of the requested Revolving Credit
Loans are to be initially Eurodollar Loans, or (b) on the requested Borrowing
Date, otherwise, specifying (i) the amount to be borrowed, (ii) the requested
Borrowing Date, (iii) whether the borrowing is to be of Eurodollar Loans, ABR
Loans or a combination thereof and (iv) if the borrowing is to be entirely or
partly of Eurodollar Loans, the amount of such Loan and the length of the
initial Interest Period therefor.  Each borrowing under the Commitments shall be
in an amount equal to (x) in the case of ABR Loans, $500,000 or a whole multiple
of $100,000 in excess thereof (or, if the then Available Revolving Credit
Commitments are less than $500,000, such lesser amount) and (y) in the case of
Eurodollar Loans, $1,000,000 or a whole multiple of $100,000 in excess thereof. 
Upon receipt of any such notice from the Borrower, the Administrative Agent
shall promptly notify each Lender thereof.  Each Lender will make the amount of
its pro rata share of each borrowing available to the Administrative Agent for
the account of the Borrower at the office of the Administrative Agent specified
in subsection 10.2 prior to 2:30 P.M., New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Administrative
Agent.  Such borrowing will then be made available to the Borrower by the
Administrative Agent crediting the account of the Borrower on the books of such
office with 

<PAGE>
                                                                             25

the aggregate of the amounts made available to the Administrative Agent by the 
Lenders and in like funds as received by the Administrative Agent.

          2.3 FEES. (a)  The Borrower agrees to pay to the Administrative 
Agent for the account of each Lender a commitment fee for the period from and 
including the first day of the Commitment Period to but not including the 
Termination Date, computed at a rate per annum equal to the Applicable 
Commitment Fee Rate then in effect on the average daily amount of the 
Available Revolving Credit Commitment of such Lender during the period for 
which payment is made, payable quarterly in arrears on the last day of each 
March, June, September and December and on the Termination Date or such 
earlier date as the Revolving Credit Commitments shall terminate as provided 
herein, commencing on the first of such dates to occur after the date hereof.

          (b) The Borrower agrees to pay to the Administrative Agent on the
Restatement Effective Date and on each anniversary thereof, the administration
fee as specified in the Fee Letter dated January 23, 1998.

          2.4 TERMINATION OR REDUCTION OF COMMITMENTS.  The Borrower shall have
the right, upon not less than five Business Days' notice to the Administrative
Agent, to terminate the Commitments or, from time to time, to reduce the amount
of the Commitments provided that no such termination or reduction shall be
permitted if, after giving effect thereto and to any prepayments of the
Revolving Credit Loans made on the effective date thereof, the Aggregate
Outstanding Revolving Extensions of Credit would exceed the Revolving Credit
Commitments then in effect.  Any such reduction shall be in an amount equal to
$100,000 or a whole multiple thereof and shall reduce permanently the Revolving
Credit Commitments then in effect.

          2.5 REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a)  The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of each Revolving Credit Loan of
such Lender on the Termination Date (or such earlier date on which the Revolving
Credit Loans become due and payable pursuant to Section 8).  The Borrower hereby
further agrees to pay interest on the unpaid principal amount of the Loans from
time to time outstanding from the date hereof until payment in full thereof at
the rates per annum, and on the dates, set forth in subsection 2.11.

          (b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.

          (c) The Administrative Agent shall maintain the Register pursuant to
subsection 10.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Revolving Credit Loan made hereunder, the Type
thereof and each Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) both the amount of any sum received
by the Administrative Agent hereunder from the Borrower and each Lender's share
thereof.

<PAGE>
                                                                             26

          (d) The entries made in the Register and the accounts of each Lender
maintained pursuant to subsection 2.5(b), absent manifest error, shall, to the
extent permitted by applicable law, be PRIMA FACIE evidence of the existence and
amounts of the obligations of the Borrower therein recorded; PROVIDED, HOWEVER,
that the failure of any Lender or the Administrative Agent to maintain the
Register or any such account, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay (with applicable interest) the
Loans made to such Borrower by such Lender in accordance with the terms of this
Agreement.

          (e) The Borrower agrees that, upon the request to the Administrative
Agent by any Lender, the Borrower will execute and deliver to such Lender a
promissory note of the Borrower evidencing the Revolving Credit Loans of such
Lender, substantially in the form of Exhibit A with appropriate insertions as to
date and principal amount (a "REVOLVING CREDIT NOTE").

          2.6 OPTIONAL PREPAYMENTS.  The Borrower may at any time and from time
to time, prepay the Loans, in whole or in part, without premium or penalty, (i)
with respect to Eurodollar Loans, upon at least three Business Days' irrevocable
notice to the Administrative Agent, specifying the date and amount of prepayment
and (ii) with respect to ABR Loans, upon same day irrevocable notice if such
notice is received by the Administrative Agent by 1:00 P.M., New York City time,
on such day, specifying the date and amount of prepayment; and whether the
prepayment is of Eurodollar Loans, ABR Loans or a combination thereof, and, if
of a combination thereof, the amount allocable to each.  Prepayments of
Eurodollar Loans shall be subject to the provisions of subsection 2.17.  Upon
receipt of any such notice the Administrative Agent shall promptly notify each
Lender thereof.  If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with any
amounts payable pursuant to subsection 2.17.  Partial prepayments of ABR Loans
shall be in an aggregate principal amount of a minimum of $500,000 and partial
prepayments of Eurodollar Loans shall be in an aggregate principal amount of a
minimum of $1,000,000. 

          2.7 MANDATORY PREPAYMENTS AND OTHER REDUCTIONS OF REVOLVING CREDIT
LOANS. If, at any time, the Aggregate Covered Outstanding Revolving Extensions
of Credit at such time exceed the Borrowing Base at such time, the Borrower
shall, without notice or demand, immediately repay the Revolving Credit Loans in
an aggregate principal amount equal to the lesser of (i) the amount of such
excess and (ii) the aggregate principal amount of Revolving Credit Loans then
outstanding, together with interest accrued to the date of such payment or
prepayment on the principal so prepaid and any amounts payable under subsection
2.17 in connection therewith.  To the extent that after giving effect to any
prepayment of the Revolving Credit Loans required by the preceding sentence, the
Aggregate Covered Outstanding Revolving Extensions of Credit at such time exceed
the Borrowing Base at such time, the Borrower shall, without notice or demand,
immediately deposit in a Cash Collateral Account upon terms reasonably
satisfactory to the Administrative Agent an amount equal to the lesser of (i)
the aggregate then outstanding L/C Obligations and (ii) the amount of such
remaining excess.  The Administrative Agent shall apply any cash deposited in
the Cash Collateral Account (to the extent thereof) to pay any Reimbursement
Obligations which become due thereafter, PROVIDED that the Administrative Agent
shall release to the Borrower from time to time such portion of the amount on
deposit in the Cash Collateral Account 

<PAGE>
                                                                             27

which is equal to the amount by which the Borrowing Base at such time plus 
the amount on deposit in the Cash Collateral Account exceeds the Aggregate 
Outstanding Revolving Extensions of Credit at such time.  "CASH COLLATERAL 
ACCOUNT" means an account established by the Borrower with the Administrative 
Agent and over which the Administrative Agent shall have exclusive dominion 
and control, including the right of withdrawal for application in accordance 
with this subsection 2.7.

          2.8 CONVERSION AND CONTINUATION OPTIONS. (a)  The Borrower may 
elect from time to time to convert Eurodollar Loans to ABR Loans by giving 
the Administrative Agent at least two Business Days' prior irrevocable notice 
of such election, PROVIDED that any such conversion of Eurodollar Loans may 
only be made on the last day of an Interest Period with respect thereto.  The 
Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans 
by giving the Administrative Agent at least three Business Days' prior 
irrevocable notice of such election.  Any such notice of conversion to 
Eurodollar Loans shall specify the length of the initial Interest Period or 
Interest Periods therefor. Upon receipt of any such notice the Administrative 
Agent shall promptly notify each Lender thereof.  All or any part of 
outstanding Eurodollar Loans and ABR Loans may be converted as provided 
herein, PROVIDED that (i) no Loan may be converted into a Eurodollar Loan 
when any Event of Default has occurred and is continuing and the 
Administrative Agent has or the Majority Lenders have determined that such a 
conversion is not appropriate and (ii) no Loan may be converted into a 
Eurodollar Loan after the date that is one month prior to the Termination 
Date.

          (b) Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
notice to the Administrative Agent, in accordance with the applicable provisions
of the term "Interest Period" set forth in subsection 1.1, of the length of the
next Interest Period to be applicable to such Loans, PROVIDED that no Eurodollar
Loan may be continued as such (i) when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Majority Lenders have
determined that such a continuation is not appropriate or (ii) after the date
that is one month prior to the Termination Date and PROVIDED, FURTHER, that if
the Borrower shall fail to give such notice or if such continuation is not
permitted such Loans shall be automatically converted to ABR Loans on the last
day of such then expiring Interest Period.

          2.9 MAXIMUM NUMBER OF TRANCHES.  In no event shall there be more than
ten (10) Eurodollar Tranches outstanding at any time.

          2.10 INTEREST RATES AND PAYMENT DATES. (a)  Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.

          (b) Each ABR Loan shall bear interest at a rate per annum equal to the
ABR plus the Applicable Margin.

          (c) If all or a portion of (i) any principal of any Loan, (ii) any
interest payable thereon, (iii) any commitment fee or (iv) any other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), the principal of the Loans and any such overdue
interest, commitment fee or other amount shall bear interest 

<PAGE>
                                                                             28

at a rate per annum which is (x) in the case of principal, the rate that 
would otherwise be applicable thereto pursuant to the foregoing provisions of 
this subsection plus 2% or (y) in the case of any such overdue interest, 
commitment fee or other amount, the rate described in paragraph (b) of this 
subsection plus 2%, in each case from the date of such non-payment until such 
overdue principal, interest, commitment fee or other amount is paid in full 
(as well after as before judgment).

          (d) Interest shall be payable in arrears on each Interest Payment
Date, PROVIDED that interest accruing pursuant to paragraph (c) of this
subsection shall be payable from time to time on demand.

          (e) Prior to the Restatement Effective Date, all principal amounts
outstanding under the Existing Credit Facilities shall continue to be subject to
the interest rates provided in 

the Existing Credit Agreement.  From and after the Restatement Effective 
Date, the interest rates provided in subsections 2.10(a) and (b) hereof shall 
apply to all principal amounts then outstanding hereunder. 

          2.11 COMPUTATION OF INTEREST AND FEES. (a)  Amounts payable under 
this Agreement including interest, shall be calculated on the basis of a 
360-day year for the actual days elapsed, except that with respect to (i) 
interest calculated on the basis of the Prime Rate and (ii) commitment fees, 
such amounts shall be calculated on the basis of a 365- (or 366-, as the case 
may be) day year for the actual days elapsed.  The Administrative Agent shall 
as soon as practicable, notify the Borrower and the affected Lenders of each 
determination of a Eurodollar Rate.  Any change in the interest rate on a 
Loan resulting from a change in the ABR or the Eurocurrency Reserve 
Requirement shall become effective as of the opening of business on the day 
on which such change becomes effective. The Administrative Agent shall, as 
soon as practicable, notify the Borrower and the affected Lenders of the 
effective date and the amount of each such change in interest rate.

          (b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error.  The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to subsection 2.10(a), (b) or (c).

          (c) For purposes of the INTEREST ACT (Canada), whenever any interest
under the Loan Documents is calculated using a rate based on a year of 360 days,
such rate determined pursuant to such calculation, when expressed as an annual
rate, is equivalent to (i) the applicable rate based on a year of 360 days, (ii)
multiplied by the actual number of days in the calendar year in which the period
for which such interest is payable (or compounded) ends, and (iii) divided by
360.

<PAGE>
                                                                             29

          2.12 INABILITY TO DETERMINE INTEREST RATE.  If prior to the first day
of any Interest Period:

          (a) the Administrative Agent shall have determined (which
     determination shall be conclusive and binding upon the Borrower) that, by
     reason of circumstances affecting the relevant market, adequate and
     reasonable means do not exist for ascertaining the Eurodollar Rate for such
     Interest Period, or

          (b) the Administrative Agent shall have received notice from the
     Majority Lenders that the Eurodollar Rate determined or to be determined
     for such Interest Period will not adequately and fairly reflect the cost to
     such Lenders (as conclusively certified by such Lenders) of making or
     maintaining their affected Loans during such Interest Period; 

the Administrative Agent shall give telecopy or telephonic notice thereof to 
the Borrower and the Lenders as soon as practicable thereafter.  If such 
notice is given (x) any Eurodollar Loans requested to be made on the first 
day of such Interest Period shall be made as ABR Loans, (y) any Loans that 
were to have been converted on the first day of such Interest Period to 
Eurodollar Loans shall be converted to or continued as ABR Loans and (z) any 
outstanding Eurodollar Loans shall be converted, on the first day of such 
Interest Period, to ABR Loans. Until such notice has been withdrawn by the 
Administrative Agent, no further Eurodollar Loans shall be made or continued 
as such, nor shall the Borrower have the right to convert ABR Loans to 
Eurodollar Loans.

          2.13 PRO RATA TREATMENT AND PAYMENTS. (a)  All payments (including
prepayments) to be made by the Borrower hereunder, whether on account of
principal, interest, fees or otherwise, shall be made without set off or
counterclaim and shall be made prior to 12:00 Noon, New York City time, on the
due date thereof to the Administrative Agent, for the account of the appropriate
Lenders, at the Administrative Agent's office specified in subsection 10.2
(except as otherwise provided herein) in Dollars and in immediately available
funds.  The Administrative Agent shall distribute such payments to the Lenders
entitled to receive the same promptly upon receipt in like funds as received. 
If any payment hereunder (other than payments on Eurodollar Loans) becomes due
and payable on a day other than a Business Day, such payment shall be extended
to the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.  If any payment on a Eurodollar Loan becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day (and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension)
unless the result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the immediately
preceding Business Day.

          (b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its portion of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount.  If such amount is not made available to the

<PAGE>
                                                                             30

Administrative Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available to
the Administrative Agent.  A certificate of the Administrative Agent submitted
to any Lender with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error.  If such Lender's portion of such
borrowing is not made available to the Administrative Agent by such Lender
within three Business Days of such Borrowing Date, the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to ABR Loans hereunder, on demand, from the Borrower.

          (c) Each borrowing by the Borrower of Revolving Credit Loans shall be
made ratably from the Lenders in accordance with their respective Revolving
Credit Commitment Percentages.  Any reduction of the Revolving Credit
Commitments shall be made ratably among the Lenders in accordance with their
respective Revolving Credit Commitment Percentages.  Each payment (including
each prepayment) by the Borrower on account of principal of and interest on the
Revolving Credit Loans shall be made PRO RATA according to the respective
outstanding principal amounts of the Revolving Credit Loans then held by the
Lenders.

          2.14 ILLEGALITY.  Notwithstanding any other provision herein, if 
the adoption of or any change in any Requirement of Law or in the 
interpretation or application thereof shall make it unlawful for any Lender 
to make or maintain Eurodollar Loans as contemplated by this Agreement, (a) 
the commitment of such Lender hereunder to make Eurodollar Loans, continue 
Eurodollar Loans as such and convert ABR Loans to Eurodollar Loans shall 
forthwith be cancelled and (b) such Lender's Loans then outstanding as 
Eurodollar Loans, if any, shall be converted automatically to ABR Loans on 
the respective last days of the then current Interest Periods with respect to 
such Loans or within such earlier period as required by law.  If any such 
conversion of a Eurodollar Loan occurs on a day which is not the last day of 
the then current Interest Period with respect thereto, the Borrower shall pay 
to such Lender such amounts, if any, as may be required pursuant to 
subsection 2.17.

          2.15 REQUIREMENTS OF LAW. (a)  If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:

             (i)  shall subject any Lender to any tax of any kind whatsoever 
     with respect to this Agreement, any Note or any Eurodollar Loan made by 
     it, or change the basis of taxation of payments to such Lender in 
     respect thereof (except for Non-Excluded Taxes covered by subsection 
     2.16 and changes in the rate of tax on the overall net income of such 
     Lender);

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

<PAGE>
                                                                             31

           (iii)  shall impose on such Lender any other condition; and the
     result of any of the foregoing is to increase the cost to such Lender, by
     an amount which such Lender deems to be material, of making, converting
     into, continuing or maintaining Eurodollar Loans or to reduce any amount
     receivable hereunder in respect thereof, 

then, in any such case, the Borrower shall promptly pay such Lender such
additional amount or amounts as will compensate such Lender for such increased
cost or reduced amount receivable.

          (b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under any Letter of Credit to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, the Borrower shall
promptly pay to such Lender such additional amount or amounts as will compensate
such Lender for such reduction.

          (c) If any Lender becomes entitled to claim any additional amounts 
pursuant to this subsection, it shall promptly notify the Borrower (with a 
copy to the Administrative Agent) of the event by reason of which it has 
become so entitled.  A certificate as to any additional amounts payable 
pursuant to this subsection submitted by such Lender to the Borrower (with a 
copy to the Administrative Agent) shall be conclusive in the absence of 
manifest error.  The agreements in this subsection shall survive the 
termination of this Agreement and the payment of the Loans and all other 
amounts payable hereunder.

          2.16 TAXES. (a)  All payments made by the Borrower under this 
Agreement and any Notes shall be made free and clear of, and without 
deduction or withholding for or on account of, any present or future income, 
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or 
withholdings, now or hereafter imposed, levied, collected, withheld or 
assessed by any Governmental Authority, excluding net income taxes and 
franchise taxes (imposed in lieu of net income taxes) imposed on the 
Administrative Agent or any Lender as a result of a present or former 
connection between the Administrative Agent or such Lender and the 
jurisdiction of the Governmental Authority imposing such tax or any political 
subdivision or taxing authority thereof or therein (other than any such 
connection arising solely from the Administrative Agent or such Lender having 
executed, delivered or performed its obligations or received a payment under, 
or enforced, this Agreement or any Note).  If any such non-excluded taxes, 
levies, imposts, duties, charges, fees deductions or withholdings 
("NON-EXCLUDED TAXES") are required to be withheld from any amounts payable 
to the Administrative Agent or any Lender hereunder or under any Note, the 
amounts so payable to the Administrative Agent or such Lender shall be 
increased to the extent necessary to yield to the Administrative Agent or 
such Lender (after payment of all Non-Excluded Taxes) interest or any such 
other amounts payable hereunder at the rates or in the amounts specified in 
this Agreement, PROVIDED, HOWEVER, that the Borrower shall not be required to 



<PAGE>
                                                                             32

increase any such amounts payable to any Lender that is not incorporated or 
organized under the laws of the United States of America or a state thereof 
if such Lender fails to comply with the requirements of paragraph (b) of this 
subsection.  Whenever any Non-Excluded Taxes are payable by the Borrower, as 
promptly as possible thereafter the Borrower shall send to the Administrative 
Agent for its own account or for the account of such Lender, as the case may 
be, a certified copy of an original official receipt received by the Borrower 
showing payment thereof.  If the Borrower fails to pay any Non-Excluded Taxes 
when due to the appropriate taxing authority or fails to remit to the 
Administrative Agent the required receipts or other required documentary 
evidence, the Borrower shall indemnify the Administrative Agent and the 
Lenders for any incremental taxes, interest or penalties that may become 
payable by the Administrative Agent or any Lender as a result of any such 
failure.  The agreements in this subsection shall survive the termination of 
this Agreement and the payment of the Loans and all other amounts payable 
hereunder.

          (b) Each Lender that is not incorporated or organized under the laws
of the United States of America or a state thereof shall:

             (i)  deliver to the Borrower and the Administrative Agent, prior to
     the Restatement Effective Date in the case of any Lenders not a party to
     the Existing Credit Facility, (A) two duly completed copies of United
     States Internal Revenue Service Form 1001 or 4224, or successor applicable
     form, as the case may be, and (B) an Internal Revenue Service Form W-8 or
     W-9, or successor applicable form, as the case may be;

            (ii)  deliver to the Borrower and the Administrative Agent two
     further copies of any such form or certification on or before the date that
     any such form or certification expires or becomes obsolete and after the
     occurrence of any event requiring a change in the most recent form
     previously delivered by it to the Borrower; and

           (iii)  obtain such extensions of time for filing and complete such
     forms or certifications as may reasonably be requested by the Borrower or
     the Administrative Agent;

unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred after the date of this Agreement and
prior to the date on which any such delivery would otherwise be required which
renders all such forms inapplicable or which would prevent such Lender from duly
completing and delivering any such form with respect to it and such Lender so
advises the Borrower and the Administrative Agent.  Such Lender shall certify
(i) in the case of a Form 1001 or 4224, that it is entitled to receive payments
under this Agreement or the Notes without deduction or withholding of any United
States federal income taxes and (ii) in the case of a Form W-8 or W-9, that it
is entitled to an exemption from United States backup withholding tax.  Each
Person that shall become a Lender or a Participant pursuant to subsection 10.6
shall, upon the effectiveness of the related transfer, be required to provide
all of the forms and statements required pursuant to this subsection, provided
that in the case of a Participant such Participant shall furnish all such
required forms and statements to the Lender from which the related participation
shall have been purchased.


<PAGE>
                                                                             33

          (c) Neither the Administrative Agent nor any Lender shall be entitled
to claim any indemnity payment or additional amount payable pursuant to this
subsection 2.16 with respect to any tax unless the Administrative Agent or such
Lender, as the case may be, shall have notified the Borrower that it will demand
compensation for such payment or amount not more than 120 days after the date on
which the Administrative Agent or such Lender, as the case may be, becomes aware
of the costs or reductions giving rise to such claim.  Failure on the part of
the Administrative Agent or such Lender, as the case may be, to demand any
indemnity payment of any such additional amount with respect to any period shall
not constitute a waiver of the Administrative Agent's or such Lender's, right,
as the case may be, to demand compensation with respect to any other period. 

          2.17 INDEMNITY.  The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto.  Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin referred to in subsection
2.10, included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) which would have accrued to such Lender on such
amount by placing such amount on deposit for a comparable period with leading
banks in the interbank eurodollar market.  This covenant shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.

          2.18 CHANGE OF LENDING OFFICE.  Each Lender agrees that if it makes
any demand for payment under subsection 2.15 or 2.16(a), or if any adoption or
change of the type described in subsection 2.14 shall occur with respect to it,
it will use reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions and so long as such efforts would not be
disadvantageous to it, as determined in its sole discretion) to designate a
different lending office if the making of such a designation would reduce or
obviate the need for the Borrower to make payments under subsection 2.15 or
2.16(a), or would eliminate or reduce the effect of any adoption or change
described in subsection 2.14.

<PAGE>
                                                                             34


                             SECTION 3. LETTERS OF CREDIT

          3.1 L/C COMMITMENT.

          (a) Subject to the terms and conditions hereof, the Issuing Bank, in
reliance on the agreements of the other Lenders set forth in subsection 3.4(a)
agrees to issue letters of credit ("LETTERS OF CREDIT") for the account of the
Borrower on any Business Day during the Commitment Period in such form as may be
approved from time to time by the Issuing Bank; PROVIDED that the Issuing Bank
shall have no obligation to issue any Letter of Credit if, after giving effect
to such issuance, (1) the L/C Obligations would exceed the L/C Commitment, (2)
the Available Revolving Credit Commitments would be less than zero or (3) the
Aggregate Covered Outstanding Revolving Extensions of Credit at such time would
exceed the Borrowing Base at such time.

          (b) Each Letter of Credit shall:

               (1) be denominated in Dollars and shall be either (A) a standby
     letter of credit issued to support obligations of the Borrower (a "STANDBY
     LETTER OF CREDIT"), or (B) a commercial letter of credit issued in respect
     of the purchase of goods or services by the Borrower and its Subsidiaries
     in the ordinary course of business (a "COMMERCIAL LETTER OF CREDIT") and

               (2)  expire no later than the earlier of (i) one year after the
     date of issuance and (ii) five Business Days prior to the Termination Date;
     provided that any Letter of Credit with a one-year tenor may provide for
     the renewal thereof for additional one-year periods (which shall in no
     event extend beyond the date referred to in clause (ii) above).

          (c) Each Letter of Credit shall be subject to the Uniform Customs and,
     to the extent not inconsistent therewith, the laws of the State of New
     York.

          (d) The Issuing Bank shall not at any time be obligated to issue any
     Letter of Credit hereunder if such issuance would conflict with, or cause
     the Issuing Bank or any L/C Participant to exceed any limits imposed by,
     any applicable Requirement of Law.

          3.2 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT.

          The Borrower may from time to time request that the Issuing Bank 
issue a Letter of Credit by delivering to the Issuing Bank at its address for 
notices specified herein an Application therefor, completed to the 
satisfaction of the Issuing Bank, and such other certificates, documents and 
other papers and information as the Issuing Bank may request. Upon receipt of 
any Application, the Issuing Bank will process such Application and the 
certificates, documents and other papers and information delivered to it in 
connection therewith in accordance with its customary procedures and shall 
promptly issue the Letter of Credit requested thereby (but in no event shall 
the Issuing Bank be required to issue any Letter of Credit earlier than three 
Business Days after its receipt of the Application therefor and all such 
other certificates, documents and other papers and information relating 
thereto) 

<PAGE>
                                                                             35

by issuing the original of such Letter of Credit to the beneficiary thereof 
or as otherwise may be agreed by the Issuing Bank and the Borrower. The 
Issuing Bank shall furnish a copy of such Letter of Credit to the Borrower 
promptly following the issuance thereof.

          3.3 FEES, COMMISSIONS AND OTHER CHARGES.

          (a) The Borrower shall pay to the Administrative Agent, for the
account of the Issuing Bank, a fronting fee with respect to each Letter of
Credit in an amount equal to 1/4 of 1% per annum of the face amount of such
Letter of Credit.  Such fronting fee shall be payable in arrears on each L/C Fee
Payment Date and shall be nonrefundable.

          (b) Subject to subsection 3.3(e), the Borrower shall pay to the
Administrative Agent, for the account of the Issuing Bank and the L/C
Participants, a letter of credit commission with respect to each Letter of
Credit, computed for the period from the date of issuance thereof at a per annum
rate equal to the Applicable Margin (less any fronting fee paid pursuant to
subsection 3.3(a)) then in effect for Eurodollar Loans, calculated on the basis
of a 360 day year, of the aggregate average daily amount available to be drawn
under such Letter of Credit during the period for which payment is being made. 
Such fee shall be payable to the Issuing Bank and the L/C Participants to be
shared ratably among them in accordance with their respective Revolving Credit
Commitment Percentages.  Such commissions shall be payable in arrears on each
L/C Fee Payment Date.

          (c) In addition to the foregoing fees and commissions, the Borrower
shall pay or reimburse the Issuing Bank for such normal and customary fees as
are incurred or charged by the Issuing Bank in issuing, effecting payment under,
amending or otherwise administering any Letter of Credit.

          (d) The Administrative Agent shall, promptly following its receipt
thereof, distribute to the Issuing Bank and the L/C Participants all fees and
commissions received by the Administrative Agent for their respective accounts
pursuant to this subsection.

          (e) Prior to the Restatement Effective Date, the Borrower shall pay a
letter of credit commission with respect to each Letter of Credit issued under
the Existing Credit Facility at a per annum rate as provided under the Existing
Credit Agreement.  From and after the Restatement Effective Date, the letter of
credit commission provided in subsection 3.3(b) hereof shall apply to all
outstanding Letters of Credit issued prior to the Restatement Effective Date.

          3.4 L/C PARTICIPATIONS.

          (a) The Issuing Bank irrevocably agrees to grant and hereby grants to
each L/C Participant, and, to induce the Issuing Bank to issue Letters of Credit
hereunder, each L/C Participant irrevocably agrees to accept and purchase and
hereby accepts and purchases from the Issuing Bank, on the terms and conditions
hereinafter stated, for such L/C Participant's own account and risk an undivided
interest equal to such L/C Participant's Revolving Credit Commitment Percentage
in the Issuing Bank's obligations and rights under each Letter of Credit issued
hereunder and the amount of each draft paid by the Issuing Bank thereunder. Each
L/C Participant unconditionally and irrevocably agrees with the Issuing Bank

<PAGE>
                                                                             36

that, if a draft is paid under any Letter of Credit for which the Issuing Bank
is not reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Bank upon demand at the
Issuing Bank's address for notices specified herein an amount equal to such L/C
Participant's Revolving Credit Commitment Percentage of the amount of such
draft, or any part thereof, which is not so reimbursed.

          (b) If any amount required to be paid by any L/C Participant to the
Issuing Bank pursuant to subsection 3.4(a) in respect of any unreimbursed
portion of any payment  made by the Issuing Bank under any Letter of Credit is
paid to the Issuing Bank within three Business Days after the date such payment
is due, such L/C Participant shall pay to the Issuing Bank on demand an amount
equal to the product of (i) such amount, times (ii) the daily average Federal
funds rate, as quoted by the Issuing Bank, during the period from and including
the date such payment is required to the date on which such payment is
immediately available to the Issuing Bank, times (iii) a fraction the numerator
of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any L/C
Participant pursuant to subsection 3.4(a) is not in fact made available to the
Issuing Bank by such L/C Participant within three Business Days after the date
such payment is due, the Issuing Bank shall be entitled to recover from such L/C
Participant, on demand, such amount with interest thereon calculated from such
due date at the rate per annum applicable to ABR Loans hereunder.  A certificate
of the Issuing Bank submitted to any L/C Participant with respect to any amounts
owing under this subsection shall be conclusive in the absence of manifest
error.

          (c) Whenever, at any time after the Issuing Bank has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with subsection 3.4(a), the Issuing
Bank receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of collateral applied thereto
by the Issuing Bank), or any payment of interest on account thereof, the Issuing
Bank will distribute to such L/C Participant its pro rata share thereof;
PROVIDED, HOWEVER, that in the event that any such payment received by the
Issuing Bank pursuant to subsection 3.5 shall be required to be returned by the
Issuing Bank, such L/C Participant shall return to the Issuing Bank the portion
thereof previously distributed by the Issuing Bank to it.

          3.5 REIMBURSEMENT OBLIGATION OF THE BORROWER.

          (a) The Borrower agrees to reimburse the Issuing Bank on each date on
which the Issuing Bank notifies the Borrower of the date and amount of a draft
presented under any Letter of Credit and paid by the Issuing Bank for the amount
of (i) such draft so paid and (ii) any taxes, fees, charges or other costs or
expenses incurred by the Issuing Bank in connection with such payment.  Each
such payment shall be made to the Issuing Bank at its address for notices
specified herein in lawful money of the United States of America and in
immediately available funds.

          (b) Interest shall be payable on any and all amounts remaining unpaid
by the Borrower under this subsection from the date such amounts become payable
(whether at stated maturity, by acceleration or otherwise) until payment in full
at the rate which would be payable on any outstanding ABR Loans which were then
overdue.


<PAGE>
                                                                             37

          3.6 OBLIGATIONS ABSOLUTE.

          (a) The Borrower's obligations under this Section 3 shall be 
absolute and unconditional under any and all circumstances and irrespective 
of any set-off, counterclaim or defense to payment which the Borrower may 
have or have had against the Issuing Bank or any beneficiary of a Letter of 
Credit.

          (b) The Borrower also agrees with the Issuing Bank that the Issuing
Bank shall not be responsible for, and the Borrower's Reimbursement Obligations
under subsection 3.5(a) shall not be affected by, among other things, (i) the
validity or genuineness of documents or of any endorsements thereon, even though
such documents shall in fact prove to be invalid, fraudulent or forged, provided
that the Issuing Bank shall have exercised the standard of care specified in the
Uniform Customs, or (ii) any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or (iii) any claims whatsoever of the Borrower against
any beneficiary of such Letter of Credit or any such transferee.

          (c) The Issuing Bank shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by the Issuing Bank's gross negligence or willful
misconduct.

          (d) The Borrower agrees that any action taken or omitted by the
Issuing Bank under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence of willful
misconduct and in accordance with the standards of care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Bank to the Borrower.

          3.7 LETTER OF CREDIT PAYMENTS.

          If any draft shall be presented for payment under any Letter of
Credit, the Issuing Bank shall promptly notify the Borrower of the date and
amount thereof. The responsibility of the Issuing Bank to the Borrower in
connection with any draft presented for payment under any Letter of Credit
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such presentment
are in conformity with such Letter of Credit.

          3.8 APPLICATION.

          To the extent that any provision of any Application related to any
Letter of Credit is inconsistent with the provisions of this Section 3, the
provisions of this Section 3 shall apply.


<PAGE>
                                                                             38

                      SECTION 4.  REPRESENTATIONS AND WARRANTIES

          To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, the Borrower hereby represents and warrants to the Administrative Agent
and each Lender that:

          4.1 FINANCIAL CONDITION.  The consolidated balance sheet of the 
Borrower and its consolidated Subsidiaries as at December 31, 1996 and the 
related consolidated statements of income and of cash flows for the fiscal 
year ended on such date, reported on by KPMG Peat Marwick LLP copies of which 
have heretofore been furnished to the Administrative Agent with copies for 
each Lender, present fairly in all material respects the consolidated 
financial condition of the Borrower and its consolidated Subsidiaries as at 
such date, and the consolidated results of their operations and their 
consolidated cash flows for the fiscal year then ended.  The unaudited 
consolidated balance sheet of the Borrower and its consolidated Subsidiaries 
as at September 30, 1997 and the related unaudited consolidated statements of 
income and of cash flows for the three and nine-month period ended on such 
date, certified by a Responsible Officer, copies of which have heretofore 
been furnished to the Administrative Agent with copies for each Lender, 
present fairly in all material respects the consolidated financial condition 
of the Borrower and its consolidated Subsidiaries as at such date, and the 
consolidated results of their operations and their consolidated cash flows 
for the three and nine-month period then ended (subject to normal year-end 
audit adjustments), except that they have been prepared on a 
first-in-first-out inventory valuation method and except for the absence of 
notes and related schedules.  All such financial statements, including the 
related schedules and notes thereto, have been prepared in accordance with 
GAAP applied consistently throughout the periods involved (except as approved 
by such accountants or Responsible Officer, as the case may be, and as 
disclosed therein).  Neither the Borrower nor any of its consolidated 
Subsidiaries had, at the date of the most recent balance sheet referred to 
above, any material Guarantee Obligation, contingent liability or liability 
for taxes, or any long-term lease or unusual forward or long-term commitment, 
including, without limitation, any interest rate or foreign currency swap or 
exchange transaction, which is not reflected in the foregoing statements or 
in the notes thereto.  During the period from December 31, 1996 to and 
including the date hereof there has been no sale, transfer or other 
disposition by the Borrower or any of its consolidated Subsidiaries of any 
material part of its business or property and no purchase or other 
acquisition of any business or property (including any capital stock of any 
other Person) material in relation to the consolidated financial condition of 
the Borrower and its consolidated Subsidiaries at December 31, 1996, except 
for the Sosnick Acquisition.

          4.2 NO CHANGE. (a) Except as set forth on Schedule 4.2, since December
31, 1996, there has been no development or event which has had or could
reasonably be expected to have a Material Adverse Effect, and (b) during the
period from December 31, 1996, to and including the date hereof no dividends or
other distributions have been declared, paid or made upon the Capital Stock of
the Borrower nor has any of the Capital Stock of the Borrower been redeemed,
retired, purchased or otherwise acquired for value by the Borrower or any of its
Subsidiaries.

          4.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW.  Each of the Borrower
and its Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of 

<PAGE>
                                                                              39

the jurisdiction of its organization, (b) has the corporate power and 
authority, and the legal right, to own and operate its property, to lease the 
property it operates as lessee and to conduct the business in which it is 
currently engaged, (c) is duly qualified as a foreign corporation and in good 
standing under the laws of each jurisdiction where its ownership, lease or 
operation of property or the conduct of its business requires such 
qualification except where the failure to obtain such qualification would not 
have a Material Adverse Effect and (d) is in compliance with all Requirements 
of Law except to the extent that the failure to comply therewith could not, 
in the aggregate, reasonably be expected to have a Material Adverse Effect.

          4.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.  The
Borrower has the corporate power and authority, and the legal right, to make,
deliver and perform this Agreement and to borrow hereunder and has taken all
necessary corporate action to authorize the borrowings on the terms and
conditions of the Loan Documents to which it is a party and to authorize the
execution, delivery and performance of this Agreement.  Except as set forth on
Schedule 4.4, no consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of this Agreement.  This
Agreement and each other Loan Document to which it is a party has been duly
executed and delivered on behalf of the Borrower.  This Agreement and each other
Loan Document to which it is a party constitutes a legal, valid and binding
obligation of the Borrower enforceable against the Borrower in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.

          4.5 NO LEGAL BAR.  The execution, delivery and performance of the Loan
Documents to which the Borrower is a party, the borrowings hereunder and the use
of the proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of the Borrower or of any of its Subsidiaries and will not result in,
or require, the creation or imposition of any Lien on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.

          4.6 NO MATERIAL LITIGATION.  Except as set forth on Schedule 4.6, 
no litigation, investigation or proceeding of or before any arbitrator or 
Governmental Authority is pending or, to the knowledge of the Borrower, 
threatened by or against the Borrower or any of its Subsidiaries or against 
any of its or their respective properties or revenues (a) with respect to any 
of the Loan Documents or any of the transactions contemplated hereby or 
thereby, or (b) which could reasonably be expected to have a Material Adverse 
Effect.

          4.7 NO DEFAULT.  Neither the Borrower nor any of its Subsidiaries is
in default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect. 
No Default or Event of Default has occurred and is continuing.

          4.8 OWNERSHIP OF PROPERTY; LIENS.  Except as set forth on Schedule
4.8, each of the Borrower and its Subsidiaries has a valid leasehold interest
in, all its real property, or a 



<PAGE>
                                                                              40

valid leasehold interest in, all its other property, and none of such owned 
property and no such leasehold interest is subject to any Lien except as 
permitted by subsection 7.3.

          4.9 INTELLECTUAL PROPERTY.  Except as set forth on Schedule 4.9, the
Borrower and each of its Subsidiaries owns, is licensed to use, or otherwise has
the right to use all trademarks, tradenames, copyrights, technology, know-how
and processes necessary for the conduct of its business as currently conducted
except for those the failure to own or license which could not reasonably be
expected to have a Material Adverse Effect (the "INTELLECTUAL PROPERTY").  No
claim has been asserted and is pending by any Person challenging or questioning
the use of any such Intellectual Property or the validity or effectiveness of
any such Intellectual Property, nor does the Borrower know of any valid basis
for any such claim, which could reasonably be expected to have a Material
Adverse Effect.  To the knowledge of the Borrower and its Subsidiaries the use
of such Intellectual Property by the Borrower and its Subsidiaries does not
infringe on the rights of any Person, except for such claims and infringements
that, in the aggregate, do not have and could not reasonably be expected to have
a Material Adverse Effect.  To the knowledge of the Borrower, all registrations
and filings which, in the reasonable judgment of the Borrower, are necessary to
preserve the rights of the Borrower and each of the Subsidiaries in their
material Intellectual Property have been made and are in good standing.

          4.10 NO BURDENSOME RESTRICTIONS.  No Requirement of Law or Contractual
Obligation of the Borrower or any of its Subsidiaries has or could reasonably be
expected to have a Material Adverse Effect.

          4.11 TAXES.  Except as set forth on Schedule 4.11, each of the
Borrower and its Subsidiaries has filed or caused to be filed all tax returns
which, to the knowledge of the Borrower, are required to be filed and has paid
all taxes shown to be due and payable on said returns or on any assessments made
against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority that are now
due and payable (other than any the amount or validity of which are currently
being contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the books of the
Borrower or its Subsidiaries, as the case may be); no tax Lien has been filed,
and, to the knowledge of the Borrower, no claim is being asserted, with respect
to any such tax, fee or other charge.

          4.12 FEDERAL REGULATIONS.  No part of the proceeds of any Loans 
will be used for "purchasing" or "carrying" any "margin stock" within the 
respective meanings of each of the quoted terms under Regulation G or 
Regulation U of the Board of Governors of the Federal Reserve System as now 
and from time to time hereafter in effect.  If requested by the 
Administrative Agent, the Borrower will furnish to the Administrative Agent 
with copies for each Lender a statement to the foregoing effect in conformity 
with the requirements of FR Form G-1 or FR Form U-1 referred to in said 
Regulation G or Regulation U, as the case may be.

          4.13 ERISA.  Neither a Reportable Event which could result in a
material liability to the Borrower or any of its Subsidiaries nor an
"accumulated funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA) has occurred during the five-year period prior to the
date on which this representation is made or deemed 


<PAGE>
                                                                             41

made with respect to any Plan, and each Plan has complied in all material 
respects with the applicable provisions of ERISA and the Code.  No 
termination of a Single Employer Plan has occurred that is reasonably likely 
to cause the Borrower to incur liability, and no Lien in favor of the PBGC or 
a Plan has arisen, during such five-year period. Except as set forth on 
Schedule 4.13, the present value of all accrued benefits under each Single 
Employer Plan (based on those assumptions used to fund such Plans) did not, 
as of the last annual valuation date prior to the date on which this 
representation is made or deemed made, exceed the value of the assets of such 
Plan allocable to such accrued benefits.  Except as set forth on Schedule 
4.13, neither the Borrower nor any Commonly Controlled Entity has had a 
complete or partial withdrawal from any Multiemployer Plan in the past five 
years, and neither the Borrower nor any Commonly Controlled Entity would 
become subject to any material liability under ERISA if the Borrower or any 
such Commonly Controlled Entity were to withdraw completely from all 
Multiemployer Plans as of the valuation date most closely preceding the date 
on which this representation is made or deemed made.  No such Multiemployer 
Plan is in Reorganization or Insolvent.

          4.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS.  The Borrower is not
an "investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.  The
Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.

          4.15 SUBSIDIARIES.  Schedule 4.15 sets forth a list of all
Subsidiaries of the Borrower at the date hereof.  Each subsidiary of the
Borrower that is not a Subsidiary, is a corporation that conducts no business,
owns no assets (other than certain intercompany receivables), has no liabilities
having an aggregate value in excess of $75,000 other than certain intercompany
payables, and other than corporate franchise taxes.

          4.16 PURPOSE OF LOANS.  The proceeds of the Revolving Credit Loans
shall be used by the Borrower for general corporate purposes, to fund ongoing
working capital and to finance future acquisitions of the Borrower and its
Subsidiaries in the ordinary course of business.

          4.17 ENVIRONMENTAL MATTERS.  Except as set forth on Schedule 4.17:  

          (a) The facilities and properties owned, leased or operated by the
     Borrower or any of its Subsidiaries (the "PROPERTIES") do not contain, and
     have not previously contained, any Materials of Environmental Concern in
     amounts or concentrations which (i) constitute or constituted a violation
     of, or (ii) could reasonably be expected to give rise to liability under,
     any Environmental Law, which, in either case, could reasonably be expected
     to have a Material Adverse Effect.

          (b) The Properties and all operations at the Properties are in
     compliance, and to the knowledge of the Borrower have in the last five (5)
     years been in compliance, in all material respects with all applicable
     Environmental Laws, and to the knowledge of the Borrower there is no
     contamination at, under or about the Properties or violation of any
     Environmental Law with respect to the Properties or the business operated
     by 


<PAGE>
                                                                              42

     the Borrower or any of its Subsidiaries (the "BUSINESS") which could
     materially interfere with the continued operation of the Properties or
     materially impair the fair saleable value thereof.

          (c) Neither the Borrower nor any of its Subsidiaries has received any
     notice of violation, alleged violation, non-compliance, liability or
     potential liability regarding environmental matters or compliance with
     Environmental Laws with regard to any of the Properties or the Business,
     nor does the Borrower have knowledge or reason to believe that any such
     notice is being threatened, except, in either case, for such notice as
     could not reasonably be expected to have a Material Adverse Effect.

          (d) Materials of Environmental Concern have not been transported or
     disposed of from the Properties in violation of, or in a manner or to a
     location which could reasonably be expected to give rise to liability
     under, any Environmental Law, except for such transportation or disposal as
     could not reasonably be expected to have a Material Adverse Effect, nor
     have any Materials of Environmental Concern been generated, treated, stored
     or disposed of at, on or under any of the Properties in violation of, or in
     a manner that could reasonably be expected to give rise to liability under,
     any applicable Environmental Law, except for such transportation or
     disposal as could not reasonably be expected to have a Material Adverse
     Effect.

          (e) No judicial proceeding or governmental or administrative action is
     pending or, to the knowledge of the Borrower, threatened, under any
     Environmental Law to which the Borrower or any Subsidiary is or will be
     named as a party with respect to the Properties or the Business, nor are
     there any consent decrees or other decrees, consent orders, administrative
     orders or other orders, or other administrative or judicial requirements
     outstanding under any Environmental Law with respect to the Properties or
     the Business.

          (f) There has been no release or threat of release of Materials of
     Environmental Concern at or from the Properties, or arising from or related
     to the operations of the Borrower or any Subsidiary in connection with the
     Properties or otherwise in connection with the Business, in violation of or
     in amounts or in a manner that could reasonably give rise to liability
     under Environmental Laws except such releases or threats of releases which
     could not reasonably be expected to have a Material Adverse Effect.

          4.18 ACCURACY OF INFORMATION.  No factual statement or information 
contained in this Agreement, any other Loan Document, or any other document, 
certificate or written statement furnished to the Administrative Agent or the 
Lenders or any of them by or on behalf of any Loan Party for use in 
connection with the transactions contemplated by this Agreement or the other 
Loan Documents (including, without limitation, any financial information 
furnished pursuant to Section 4.1), taken as a whole contained as of the date 
such statement, information, document or certificate was so furnished any 
untrue statement of a material fact or omitted to state a material fact 
necessary in order to make the statements contained herein or therein in 
light of the circumstances in which it was made not misleading.  The 
projections contained in the materials referenced above are based upon good 
faith estimates and assumptions believed by management of the Borrower to be 
reasonable at the 




<PAGE>
                                                                              43

time made, it being recognized by the Lenders that such financial information 
as it relates to future events is not to be viewed as fact and that actual 
results during the period or periods covered by such financial information 
may differ from the projected results set forth therein.  There is no fact 
known to any Loan Party that could reasonably be expected to have a Material 
Adverse Effect that has not been expressly disclosed herein, in the other 
Loan Documents, or in such other documents, certificates and statements 
furnished to the Administrative Agent for the benefit of the Lenders for use 
in connection with the transactions contemplated hereby and by the other Loan 
Documents.

          4.19 SECURITY DOCUMENTS. (a)  The Borrower Stock Pledge Agreement is
effective to create in favor of the Administrative Agent, for the benefit of the
Lenders, a legal, valid and enforceable security interest in the Pledged Stock
(as defined therein) and proceeds thereof and constitutes a fully perfected
first priority Lien on, and security interest in, all right, title and interest
of the Borrower in such Pledged Stock and the proceeds thereof, in each case
(except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally) prior and superior in right to any other Person.
 
          (b) The Security Agreement is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable security interest in the Collateral described therein and proceeds
thereof; financing statements in appropriate form have been filed in the offices
specified on Schedule 4.19(b) and, except as set forth in the Security
Agreement, the Security Agreement constitutes a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in such
Collateral and, to the extent provided therein, the proceeds thereof, in each
case (except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally) prior and superior in right to any other Person,
other than with respect to Liens expressly permitted by subsection 7.3. 

          4.20 SOLVENCY.  Each Loan Party is, and after giving effect to the
incurrence or assumption of all Indebtedness and obligations being incurred or
assumed in connection herewith and the Receivables Transaction, will continue to
be, Solvent.


                       SECTION 5.  CONDITIONS TO EFFECTIVENESS

          5.1 CONDITIONS TO RESTATEMENT EFFECTIVE DATE.  This amendment and
restatement of the Existing Credit Agreement shall become effective upon, and
the agreement of each Lender to make the initial extension of credit requested
to be made by it under the Existing Credit Agreement as so amended and restated
is subject to the satisfaction of, immediately prior to or concurrently with the
making of such extension of credit on the Restatement Effective Date, the
following conditions:

          (a) LOAN DOCUMENTS.  The Administrative Agent shall have received (i)
     this Agreement, executed and delivered by a duly authorized officer of the
     Borrower, with a counterpart for each Lender and (ii) the Security
     Agreement, executed by a duly authorized officer of the Borrower and each 
     Grantor named therein.


<PAGE>
                                                                              44

          (b) RECEIVABLES TRANSACTION.  The Receivables Transaction shall have
     been consummated and the Borrower shall have the ability to sell
     participations thereunder and/or to issue term and variable funding
     certificates thereunder in an aggregate face amount of not less than $70
     million.

          (c) BORROWING CERTIFICATE.  The Administrative Agent shall have
     received, with a counterpart for each Lender, a certificate of the
     Borrower, dated the Restatement Effective Date, substantially in the form
     of Exhibit C, with appropriate insertions and attachments, satisfactory in
     form and substance to the Administrative Agent, executed by a Responsible
     Officer.

          (d) CORPORATE PROCEEDINGS OF THE BORROWER.  The Administrative Agent
     shall have received, with a counterpart for each Lender, a copy of the
     resolutions, in form and substance satisfactory to the Administrative
     Agent, of the Board of Directors of the Borrower authorizing the execution,
     delivery and performance of this Agreement and the borrowings contemplated
     hereunder and shall state that such resolutions have not been amended,
     modified, revoked or rescinded.

          (e) BORROWER INCUMBENCY CERTIFICATE.  The Administrative Agent shall
     have received, with a counterpart for each Lender, a Certificate of the
     Borrower, dated the Restatement Effective Date, as to the incumbency and
     signature of the officer of the Borrower executing this Agreement
     satisfactory in form and substance to the Administrative Agent, executed by
     the President or any Vice President and the Secretary or any Assistant
     Secretary of the Borrower.

          (f) CORPORATE PROCEEDINGS OF SUBSIDIARIES.  The Administrative Agent
     shall have received, with a counterpart for each Lender, a copy of the
     resolutions, in form and substance satisfactory to the Administrative
     Agent, of the Board of Directors of each Subsidiary of the Borrower which
     is a party to any Loan Document authorizing the execution, delivery and
     performance of such Loan Document(s), certified by the Secretary or an
     Assistant Secretary of each such Subsidiary as of the Restatement Effective
     Date, which certificate shall be in form and substance satisfactory to the
     Administrative Agent and shall state that the resolutions thereby certified
     have not been amended, modified, revoked or rescinded.

          (g) SUBSIDIARY INCUMBENCY CERTIFICATES.  The Administrative Agent
     shall have received, with a counterpart for each Lender, a certificate of
     each Subsidiary of the Borrower which is a Loan Party, dated the
     Restatement Effective Date, as to the incumbency and signature of the
     officers of such Subsidiaries executing any Loan Document, satisfactory in
     form and substance to the Administrative Agent, executed by the President
     or any Vice President and the Secretary or any Assistant Secretary of each
     such Subsidiary.

          (h) CONSENTS, LICENSES AND APPROVALS.  The Administrative Agent shall
     have received, with a counterpart for each Lender, a certificate of a
     Responsible Officer of the Borrower (i) attaching copies of all consents,
     authorizations and filings referred to in subsection 4.4, and (ii) stating
     that such consents, licenses and filings are in full 


<PAGE>
                                                                              45

     force and effect, and each such consent, authorization and filing shall be
     in form and substance satisfactory to the Administrative Agent.

          (i) FEES AND EXPENSES.  The Lenders, the Administrative Agent and its
     Affiliates shall have received all fees required to be paid, and all
     expenses required to be paid for which invoices have been presented, on or
     before the Restatement Effective Date.

          (j) LEGAL OPINIONS.  The Administrative Agent shall have received,
     with a counterpart for each Lender, the following executed legal opinions:

                 (1)  the executed legal opinion of Paul, Weiss, Rifkind,
          Wharton & Garrison, special counsel to the Borrower and the other Loan
          Parties, substantially in the form of Exhibit F-1;

                 (2)  the executed legal opinion of Sheppard, Mullin, Richter &
          Hampton, LLP, special counsel to the Administrative Agent and the
          Lenders in the State of California, substantially in the form of
          Exhibit F-2;

                 (3)  the executed legal opinion of Stoel Rives LLP, special
          counsel to the Administrative Agent and the Lenders in the State of
          Oregon, substantially in the form of Exhibit F-3;

                 (4)  the executed legal opinions of (i) Stikeman, Elliott; and
          (ii) Thompson Dorfman, Sweatman, counsel to the Administrative Agent
          and the Lenders in Canada, substantially in the form of Exhibit F-4.

     Each such legal opinion shall cover such other matters incident to the
     transactions contemplated by this Agreement as the Administrative Agent may
     reasonably require;

          (k) REPAYMENT OF EXITING LENDERS; REPAYMENTS AND REBORROWINGS.  The
     Administrative Agent shall have received evidence satisfactory to it that
     the commitments of Exiting Lenders under the Existing Credit Facility have
     been cancelled and such Exiting Lenders have received payment in full of
     their outstanding loans under the Existing Credit Facility and accrued
     interest and fees thereunder and have been released from their obligations
     in respect of outstanding letters of credit thereunder.  In addition, the
     Borrower shall have effected such repayments and reborrowings hereunder
     from the Lenders such that, after giving effect thereto, the outstanding
     principal amount of the Revolving Credit Loans of each Lender shall be in
     proportion to the Revolving Commitment Percentages of the Lenders (after
     giving effect to the amendment and restatement hereof).

          (l) BORROWING BASE CERTIFICATE.  The Administrative Agent shall have
     received a Borrowing Base Certificate, certifying in reasonable detail the
     Borrowing Base as of the close of business on the last calendar day of the
     immediately preceding calendar week or calendar month, as the case may be,
     pursuant to subsection 6.2(f), which gives pro forma effect to the
     Receivables Transaction.


<PAGE>
                                                                              46

          5.2 CONDITIONS TO EACH EXTENSION OF CREDIT.  The agreement of each 
Lender to make any extension of credit requested to be made by it on any date 
(including, without limitation, its initial extension of credit) is subject 
to the satisfaction of the following conditions precedent:

          (a) REPRESENTATIONS AND WARRANTIES.  Each of the representations and
     warranties made by the Borrower in or pursuant to the Loan Documents shall
     be true and correct in all material respects on and as of such date as if
     made on and as of such date. 

          (b) NO DEFAULT.  No Default or Event of Default  shall have occurred
     and be continuing on such date or after giving effect to the extensions of
     credit requested to be made on such date.

          (c) ADDITIONAL MATTERS.  All corporate and other proceedings, and all
     documents, instruments and other legal matters in connection with the
     transactions contemplated by this Agreement and the other Loan Documents
     shall be reasonably satisfactory in form and substance to the
     Administrative Agent in all material respects, and the Administrative Agent
     shall have received such other documents and legal opinions in respect of
     any aspect or consequence of the transactions contemplated hereby or
     thereby as it shall reasonably request.

Each borrowing by and Letter of Credit issued on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date thereof that the conditions contained in this subsection have been
satisfied.


                          SECTION 6.  AFFIRMATIVE COVENANTS

          The Borrower hereby agrees that, so long as the Commitments remain in
effect or any amount is owing to any Lender or the Administrative Agent
hereunder or under any other Loan Document, the Borrower shall and (except in
the case of delivery of financial information, reports and notices) shall cause
each of its Subsidiaries to:

          6.1 FINANCIAL STATEMENTS.  Furnish to each Lender:

          (a) as soon as available, but in any event within 90 days after the
     end of each fiscal year of the Borrower, a copy of the consolidated balance
     sheet of the Borrower and its consolidated Subsidiaries as at the end of
     such year and the related consolidated statements of income and retained
     earnings and of cash flows for such year, in each case, using the last-in,
     first-out inventory valuation method, and setting forth in comparative form
     the figures for the previous year, reported on without a "going concern" or
     like qualification or exception, or qualification arising out of the scope
     of the audit, by KPMG Peat Marwick LLP or other independent certified
     public accountants of nationally recognized standing; and

          (b) as soon as available, but in any event not later than 45 days
     after the end of each of the first three quarterly periods of each fiscal
     year of the Borrower, the 


<PAGE>
                                                                              47

     unaudited consolidated balance sheet of the Borrower and its consolidated 
     Subsidiaries as at the end of such quarter and the related unaudited 
     consolidated statements of income and retained earnings and of cash flows 
     of the Borrower and its consolidated Subsidiaries for such quarter and the
     portion of the fiscal year through the end of such quarter, in each case, 
     using the first-in, first-out inventory valuation method, and setting 
     forth in comparative form the figures for the previous year, certified by 
     a Responsible Officer as being fairly stated in all material respects 
     (subject to normal year-end audit adjustments); and

          (c) as soon as available, but in any event not later than 30 days
     after the end of each month (other than March, June, September and
     December) of each fiscal year of the Borrower, the unaudited consolidated
     balance sheet of the Borrower and its consolidated Subsidiaries as at the
     end of such month and the related unaudited consolidated statements of
     income and retained earnings and of cash flows of the Borrower and its
     consolidated Subsidiaries for such month and the portion of the fiscal year
     through the end of such month, in each case, using the first-in, first-out
     inventory valuation method, and setting forth in comparative form the
     figures for the previous year, certified by a Responsible Officer as being
     fairly stated in all material respects (subject to normal year-end audit
     adjustments);

all such financial statements shall be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods reflected
therein and with prior periods (except as approved by such accountants or
officer, as the case may be, and disclosed therein).

          6.2 CERTIFICATES; OTHER INFORMATION.  Furnish to the Administrative
Agent with copies for each Lender except as otherwise provided in clause (g)
below:

          (a) concurrently with the delivery of the financial statements
     referred to in subsection 6.1(a), a certificate of the independent
     certified public accountants reporting on such financial statements stating
     that in making the examination necessary therefor no knowledge was obtained
     of any Default or Event of Default, except as specified in such
     certificate;

          (b) subject to the proviso below, concurrently with the delivery of
     the financial statements referred to in subsections 6.1(a), (b) and (c), a
     certificate of a Responsible Officer (1) stating that, to the best of such
     Officer's knowledge, during such period (i) no Subsidiary has been formed
     or acquired (or, if any such Subsidiary has been formed or acquired, the
     Borrower has complied with the requirements of subsection 6.12 with respect
     thereto), (ii) neither the Borrower nor any of its Subsidiaries has changed
     its name, its principal place of business, its chief executive office or
     the location of any material item of tangible Collateral without complying
     with the requirements of this Agreement and the Security Documents with
     respect thereto and (iii) the Borrower has observed or performed in all
     material respects all of its covenants and other agreements, and satisfied
     every condition, contained in this Agreement and the other Loan Documents
     to be observed, performed or satisfied by it, and that such Officer has
     obtained no knowledge of any Default or Event of Default except as
     specified in such certificate; provided that with respect to the financial




<PAGE>
                                                                              48

     statements delivered pursuant to subsection 6.1(c), such certificate need
     only cover the items set forth in clause (i) above, and (2) in the case of
     the financial statements delivered pursuant to subsections 6.1(a) and (b)
     setting forth, in reasonable detail, a calculation of the financial
     covenants set forth in subsection 7.1 for the period corresponding to such
     financial statements; and, with respect to the annual financial statements
     required to be furnished pursuant to subsection 6.1(a), a reconciliation of
     such financial statements from the last-in first-out inventory valuation
     method to the first-in, first-out inventory valuation method in order to
     calculate the financial covenants set forth in subsection 7.1, all in 
     substantially the form set forth on Exhibit D (the "Responsible Officer's 
     Certificate").

          (c) not later than 10 days prior to the end of each fiscal year of the
     Borrower, a copy of the projections by the Borrower of the operating budget
     and cash flow budget of the Borrower and its Subsidiaries for the
     succeeding fiscal year using the first-in, first-out inventory valuation
     method, such projections to be accompanied by a certificate of a
     Responsible Officer to the effect that such projections have been prepared
     on the basis of sound financial planning practice and that such Responsible
     Officer has no reason to believe they are incorrect or misleading in any
     material respect;

          (d) promptly upon receipt thereof, copies of all reports submitted to
     the Borrower or any of its Subsidiaries by KPMG Peat Marwick or any other
     independent accountants of the Borrower or any such Subsidiary in
     connection with each annual, interim or special audit of its financial
     statements made by such accountants (including, without limitation, any
     comment letter submitted by such accountants to management of the Borrower
     or any such Subsidiary in connection with their annual audit and any
     reports addressing internal accounting controls of the Borrower or such
     Subsidiary submitted by such accountants), and, promptly upon completion
     thereof, copies of any response report from the Borrower or such Subsidiary
     to such accountants;

          (e) within five days after the same are filed, copies of all financial
     statements and reports which the Borrower may make to, or file with, the
     Securities and Exchange Commission or any successor or analogous
     Governmental Authority, and at such time, if any, that the Borrower becomes
     subject to the reporting requirements of the Securities Exchange Act of
     1934, as amended, within five days after the same are sent, copies of all
     financial statements and reports which the Borrower sends to its
     stockholders;

          (f) promptly, but in no event later than 1:00 P.M., New York City
     time, on the third Business Day following the end of each calendar week,
     UNLESS such third Business Day falls in the last week of a calendar month,
     in which case, in no event later than 1:00 P.M., New York City time, on the
     third Business Day of the next calendar month, a Borrowing Base
     Certificate, certifying in reasonable detail the Borrowing Base as of the
     close of business on the last calendar day of the immediately preceding
     calendar week or calendar month, as the case may be, and in each case, a
     copy to the Administrative Agent of a Supplemental Reporting presenting the
     Borrower's computation thereof.  Each Borrowing Base Certificate shall
     remain in 




<PAGE>
                                                                              49

     effect from and including the date on which such Borrowing Base
     Certificate is delivered, to, but excluding, the date on which the next
     Borrowing Base Certificate is delivered; and

          (g) promptly, furnish to the Administrative Agent or any Lender such
     additional financial and other information with respect to the business or
     operations of the Borrower and its Subsidiaries as the Administrative Agent
     or such Lender may from time to time reasonably request.

          6.3 PAYMENT OF OBLIGATIONS.  Pay, discharge or otherwise satisfy at 
or before maturity or before they become delinquent, as the case may be, all 
its obligations of whatever nature, except where the amount or validity 
thereof is currently being contested in good faith by appropriate proceedings 
and reserves in conformity with GAAP with respect thereto have been provided 
on the books of the Borrower or its Subsidiaries, as the case may be.

          6.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.  Continue to
engage in business of the same general type as now conducted by it or businesses
reasonably related thereto; preserve, renew and keep in full force and effect
its corporate existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business except as otherwise permitted pursuant to subsection 7.5 and except to
the extent that failure to comply with the foregoing would not, in the
aggregate, be reasonably expected to have a Material Adverse Effect; comply with
all Contractual Obligations and Requirements of Law except to the extent that
failure to comply therewith could not, in the aggregate, be reasonably expected
to have a Material Adverse Effect.

          6.5 MAINTENANCE OF PROPERTY; INSURANCE.  Keep all tangible property
useful and necessary in its business in good working order and condition;
maintain with financially sound and reputable insurance companies insurance on
all its tangible property in at least such amounts and against at least such
risks (but including in any event public liability, product liability and
business interruption) as are usually insured against in the same general area
by companies engaged in the same or a similar business; and furnish to the
Administrative Agent with copies for each Lender, upon written request, full
information as to the insurance carried.

          6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.  Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time during normal business hours and as often as may reasonably be desired and
to discuss the business, operations, properties and financial and other
condition of the Borrower and its Subsidiaries with officers and employees of
the Borrower and its Subsidiaries and with its independent certified public
accountants; provided that such inspection shall be conducted in a manner that
does not unreasonably interfere with the business or operations of the Borrower
or its Subsidiaries.

          6.7 ANNUAL REVIEWS.  At any time upon the request of the
Administrative Agent, permit the Administrative Agent or professionals
(including investment bankers, consultants, accountants, lawyers and appraisers)
retained by the Administrative Agent to 




<PAGE>
                                                                              50

conduct evaluations and appraisals (at a reasonable time during normal 
business hours provided that the following is conducted in a manner that does 
not unreasonably interfere with the business or operations of the Borrower or 
its Subsidiaries) of (i) the Borrower's practices in the computation of the 
Borrowing Base, (ii) the assets included in the Borrowing Base, (iii) systems 
and procedures related to Borrowing Base items, (iv) other related procedures 
deemed necessary by the Administrative Agent, and pay the reasonable fees and 
expenses in connection therewith (including, without limitation, the 
reasonable fees and expenses associated with services performed by the 
Administrative Agent's Collateral Monitoring Department); provided, however, 
that such persons shall not be entitled to conduct such evaluations and 
appraisals of assets more frequently than once per year unless (x) a Default 
or Event of Default has occurred and is continuing or (y) the Administrative 
Agent or the Majority Lenders determine that any material event or material 
change has occurred with respect to the Loan Parties, their inventory or 
receivables practices or the performance of the Collateral and that as a 
result of such event or change more frequent evaluations or appraisals are 
required to effectively monitor the Borrowing Base, in which case the 
Borrower will permit such Persons to conduct such evaluations and appraisals 
at such reasonable times during normal business hours and as often as may be 
reasonably requested; provided that such inspection shall be conducted in a 
manner that does not unreasonably interfere with the business or operations 
of the Borrower or its Subsidiaries.

          6.8 NOTICES.  Promptly give notice to the Administrative Agent with
copies for each Lender of (to the extent it has knowledge of same):

          (a) the occurrence of any Default or Event of Default;

          (b) any (i) default or event of default under any Contractual
     Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
     investigation or proceeding which may exist at any time between the
     Borrower or any of its Subsidiaries and any Governmental Authority, which
     in either case, if not cured or if adversely determined, as the case may
     be, could reasonably be expected to have a Material Adverse Effect;

          (c) any litigation or proceeding affecting the Borrower or any of its
     Subsidiaries in which the amount involved is $2,000,000 or more and not
     covered by insurance or with respect to which the Borrower or its
     Subsidiaries is not fully indemnified by a third party or in which
     injunctive or similar relief is sought;

          (d) the following events, as soon as possible and in any event within
     30 days after the Borrower knows or has reason to know thereof:  (i) the
     occurrence or expected occurrence of any Reportable Event with respect to
     any Plan, a failure to make any required contribution to a Plan, the
     creation of any Lien in favor of the PBGC or a Plan or any withdrawal from,
     or the termination, Reorganization or Insolvency of, any Multiemployer Plan
     or (ii) the institution of proceedings or the taking of any other action by
     the PBGC or the Borrower or any Commonly Controlled Entity or any
     Multiemployer Plan with respect to the withdrawal from, or the terminating,
     Reorganization or Insolvency of, any Plan; and

          (e) any development or event which has had or which the Borrower
     believes could reasonably be expected to have a Material Adverse Effect.




<PAGE>
                                                                              51

Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.

          6.9 ENVIRONMENTAL LAWS. (a)  Comply with, and use diligent efforts to
ensure compliance by all tenants and subtenants, if any, with, all applicable
Environmental Laws and obtain and comply in all material respects with and
maintain, and use diligent efforts to ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws, except, in either case to the extent that failure
to do so could not be reasonably expected to have a Material Adverse Effect.

          (b) Conduct and complete all investigations, studies, sampling and 
testing, and all remedial, removal and other actions required under 
Environmental Laws and promptly comply in all material respects with all 
lawful orders and directives of all Governmental Authorities regarding 
Environmental Laws except to the extent that the same are being contested in 
good faith by appropriate proceedings and the pendency of such proceedings 
could not be reasonably expected to have a Material Adverse Effect.

          6.10 FURTHER ASSURANCES.  Upon the request of the Administrative
Agent, promptly perform or cause to be performed any and all acts and execute or
cause to be executed any and all documents (including, without limitation,
financing statements and continuation statements) for filing under the
provisions of the Uniform Commercial Code or any other Requirement of Law which
are necessary or advisable to maintain in favor of the Administrative Agent, for
the benefit of the Lenders, Liens on the Collateral that are duly perfected in
accordance with all applicable Requirements of Law.

          6.11 CASH MANAGEMENT SYSTEM.  Maintain (i) the US Cash Collateral
Account into which all proceeds of Collateral payable in the United States are
deposited (including any amounts paid to the Borrower or any of its Subsidiaries
and required pursuant to the Security Agreement, to be deposited by the Borrower
and its Subsidiaries into the Depository Accounts) with the Administrative Agent
and (ii) the Canadian Cash Collateral Account and the Deposit Accounts into
which all proceeds of Collateral payable in Canada are paid (including any
amounts paid to the Borrower or any of its Subsidiaries and required pursuant to
the Security Agreement to be deposited by the Borrower and its Subsidiaries into
the Canadian Cash Collateral Account or the Deposit Accounts) with Bank of
Montreal, or, in each case, one or more banks reasonably acceptable to the
Administrative Agent that have acknowledged the assignment of such accounts to
the Administrative Agent pursuant to the Depository Letters or the Deposit
Account Letters and the Security Agreement, as the case may be, and maintain
cash management systems reasonably acceptable to the Majority Lenders.

          At the beginning of each Business Day, transfer to the US Cash
Collateral Account such amounts of Canadian dollars as shall be necessary to
cause the aggregate amount of available funds on deposit in the Canadian Cash
Collateral Account and the Deposit Accounts not to exceed $30,000,000 Canadian
dollars.




<PAGE>
                                                                              52

          6.12 ADDITIONAL COLLATERAL. (a)  With respect to any assets acquired
on or after the Restatement Effective Date by the Borrower or any of its
Subsidiaries that are intended to be subject to the Lien created by any of the
Security Documents but which are not so subject (other than any assets described
in paragraph (b) or (c) of this subsection and assets that, in the judgment of
the Administrative Agent are immaterial or a Lien on which cannot be perfected
by filing UCC-1 financing statements or their foreign equivalents), promptly
(and in any event within 30 days after the acquisition thereof):  (i) execute
and deliver to the Administrative Agent such amendments to the relevant Security
Documents or such other documents as the Administrative Agent shall reasonably
deem necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a Lien on such assets, (ii) take all actions necessary
or advisable to cause such Lien to be duly perfected in accordance with all
applicable Requirements of Law, including, without limitation, the filing of
financing statements in such jurisdictions as may be reasonably requested by the
Administrative Agent, and (iii) if requested by the Administrative Agent,
deliver to the Administrative Agent legal opinions relating to the matters
described in clauses (i) and (ii) immediately preceding, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.

          (b) With respect to any Person that, on or subsequent to the 
Restatement Effective Date, becomes an active Subsidiary, promptly upon the 
request of the Administrative Agent: (i) execute and deliver to the 
Administrative Agent, for the benefit of the Lenders, a new pledge agreement 
or such amendments to the Borrower Stock Pledge Agreement as the 
Administrative Agent shall reasonably deem necessary or advisable to grant to 
the Administrative Agent, for the benefit of the Lenders, a Lien on the 
Capital Stock of such Subsidiary (unless such Subsidiary is a foreign 
Subsidiary in which case, 66% of the Capital Stock of such foreign 
subsidiary) which is owned by the Borrower or any of its Subsidiaries, (ii) 
deliver to the Administrative Agent the certificates representing such 
Capital Stock, together with undated stock powers executed and delivered in 
blank by a duly authorized officer of the Borrower or such Subsidiary, as the 
case may be, (iii) cause such new Subsidiary other than the Receivables Sub 
(A) to become a party to the Subsidiary Guarantee and the Security Agreement, 
in each case pursuant to documentation which is in form and substance 
satisfactory to the Administrative Agent, and (B) to take all actions 
necessary or advisable to cause the Lien created by the Security Agreement to 
be duly perfected in accordance with all applicable Requirements of Law, 
including, without limitation, the filing of financing statements in such 
jurisdictions as may be reasonably requested by the Administrative Agent and 
(iv) if requested by the Administrative Agent, deliver to the Administrative 
Agent legal opinions relating to the matters described in clauses (i), (ii) 
and (iii) immediately preceding, which opinions shall be in form and 
substance, and from counsel, reasonably satisfactory to the Administrative 
Agent.

          6.13 TAX STAMP BONDING.  Maintain surety bonds if and to the extent
required by law (including, with respect to amounts) with respect to all tobacco
tax stamps not paid for on a cash basis.

          6.14 COMPLIANCE WITH TERMS OF LEASEHOLDS.  Make all payments and
otherwise perform all material obligations in respect of all leases of real
property to which the Borrower or any of its Subsidiaries is a party, keep such
leases in full force and effect and not allow such leases to lapse or be
terminated or any rights to renew such leases to 

<PAGE>
                                                                              53

be forfeited or cancelled if the failure to make such payments or perform 
such obligations, to keep such lease in full force and effect, or the lapse, 
termination or failure to renew would reasonably be likely to result in a 
Material Adverse Effect, notify the Administrative Agent of any default by 
any party of which the Borrower has actual knowledge with respect to such 
leases and cooperate with the Administrative Agent in all respects to cure 
any such default, and cause each of its Subsidiaries to do so.  

                            SECTION 7.  NEGATIVE COVENANTS

          The Borrower hereby agrees that, so long as the Commitments remain in
effect or any amount is owing to any Lender or the Administrative Agent
hereunder or under any other Loan Document, the Borrower shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly:

          7.1 FINANCIAL CONDITION COVENANTS.

          (a) MAINTENANCE OF CURRENT RATIO.  Permit the ratio of Consolidated
     Current Assets of the Borrower to Consolidated Current Liabilities of the
     Borrower at any time to be less than 1.40 to 1.00.

          (b) MAINTENANCE OF NET WORTH.  Permit Consolidated Net Worth of the
     Borrower at any time to be less than an amount equal to $6,500,000 PLUS the
     aggregate of 50% of Consolidated Net Income of the Borrower, if positive,
     for each quarter during the period commencing on January 1, 1997 and ending
     at the close of the fiscal quarter then last ended.

          (c) MAINTENANCE OF SENIOR DEBT LEVERAGE RATIO.  Permit the ratio of
     (i) Consolidated Senior Debt of the Borrower at the last day of any fiscal
     quarter ending during any "Test Period" set forth below to (ii)
     Consolidated EBITDA for the period of four consecutive fiscal quarters
     ending on such date to be greater than the amount set forth opposite such
     period below:

<TABLE>
<CAPTION>
             TEST PERIOD                                              RATIO
             -----------                                              -----
          <S>                                                         <C>
          12/31/97 - 9/30/98                                          4.00 to 1.00
          12/31/98 - 9/30/01 and each four-quarter period thereafter  3.75 to 1.00
</TABLE>

          For purposes of computing Consolidated Senior Debt of the Borrower,
     the amount of Revolving Credit Loans and Invested Amount included therein
     as of the last day of a fiscal quarter shall be the average daily
     outstanding principal amount thereof for the period of two consecutive
     fiscal quarters ending on such date (or, if shorter, the period commencing
     on the Restatement Effective Date and ending on such date).

<PAGE>
                                                                              54

          (d) MAINTENANCE OF MINIMUM EBITDA.  Permit Consolidated  EBITDA of the
     Borrower for the four quarters ending at the last day of any period set
     forth below to be less than the amount set forth opposite such period
     below:

<TABLE>
<CAPTION>
             TEST PERIOD                         AMOUNT
             -----------                         ------
          <S>                                          <C>
          9/30/97 - 12/31/97                           $32,000,000
          3/31/98 - 6/30/98                            $33,500,000
          9/30/98 - 12/31/98                           $35,000,000
          3/31/99 - 6/30/99                            $36,500,000
          9/30/99 - 12/31/99 and 
          each four-quarter period thereafter          $38,000,000
</TABLE>

          (e) MAINTENANCE OF INTEREST COVERAGE.  Permit for any period of four
     consecutive fiscal quarters ending during any "Test Period" set forth below
     the ratio of (i) Consolidated EBITDA of the Borrower to (ii) Consolidated
     Cash Interest Expense of the Borrower for such period to be less than the
     ratio set forth opposite such period below:

<TABLE>
<CAPTION>
             TEST PERIOD                          RATIO
             -----------                          -----
          <S>                                          <C>
          12/31/97 - 9/30/98                           1.65 to 1.00
          12/31/98 - 9/30/99                           1.75 to 1.00
          12/31/99 - 9/30/00                           2.00 to 1.00
          12/31/00 - 9/30/01 and 
          each four quarter period thereafter          2.25 to 1.00
</TABLE>

          7.2 LIMITATION ON INDEBTEDNESS.  Create, incur, assume or suffer to
exist any Indebtedness, except:

          (a) Indebtedness of the Borrower under this Agreement;

          (b) Indebtedness of the Borrower to any Subsidiary and of any
     Subsidiary to the Borrower or any other Subsidiary;

          (c) Indebtedness of the Borrower and any of its Subsidiaries incurred
     to finance the acquisition of fixed or capital assets (whether pursuant to
     a loan, a Financing Lease or otherwise) in an aggregate principal amount
     not exceeding as to the Borrower and its Subsidiaries $5 million at any
     time outstanding;

          (d) Indebtedness outstanding on August 7, 1996 and listed on Schedule
     7.2 and any refinancings, refundings, renewals or extensions thereof;
     provided that the aggregate principal amount set forth on Schedule 7.2 does
     not increase in connection with any such refinancing, refunding, renewal or
     extension;

          (e) Indebtedness in respect of Hedge Agreements designed to hedge
     against fluctuations in interest rates or foreign exchange rates incurred
     in the ordinary course of business and consistent with prudent business
     practice in an aggregate notional 


<PAGE>
                                                                              55

     amount not to exceed $75,000,000, in the case of the interest rate Hedge 
     Agreements, and $40,000,000, in the case of foreign exchange rate Hedge 
     Agreements, at any time outstanding;

          (f) additional Indebtedness of the Borrower and its Subsidiaries (not
     otherwise described in this Section 7.2) not exceeding $3 million in
     aggregate principal amount at any one time outstanding;

          (g) Indebtedness constituting Existing High Yield Subordinated Debt;

          (h) Subordinated Debt of the Borrower (other than the High Yield
     Notes) in an aggregate principal amount not to exceed $2,000,000 at any one
     time outstanding;

          (i) Indebtedness in respect of the conditional sale of coffee machines
     and similar fast food equipment where the Borrower or its Subsidiaries
     guarantee the purchase price of such equipment in the event the purchaser
     of such equipment does not purchase such equipment through coffee and food
     purchases;

          (j) Indebtedness in respect of state cigarette stamp tax and other
     bonds incurred in the ordinary course of business on a basis consistent
     with past practice; 

          (k) Indebtedness in respect of letters of credit which are denominated
     in Canadian dollars and issued for the account of the Borrower, in an
     aggregate face amount not to exceed $5 million Canadian dollars; provided,
     that any such letter of credit is supported by a Letter of Credit;

          (l) Indebtedness of the type described in clause (f) of the definition
     of "Indebtedness" which is secured by Liens permitted under subsection 7.3;

          (m) Indebtedness assumed in connection with Permitted Acquisitions,
     provided that such Indebtedness was not incurred in anticipation of the
     Permitted Acquisition and, in any case, not to exceed $500,000 in the
     aggregate; and

          (n) Indebtedness under the Receivables Transaction.

          7.3 LIMITATION ON LIENS.  Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:

          (a) Liens for taxes not yet due or which are being contested in good
     faith by appropriate proceedings, PROVIDED that adequate reserves with
     respect thereto are maintained on the books of the Borrower or its
     Subsidiaries, as the case may be, in conformity with GAAP;

          (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
     landlord's or other like Liens arising in the ordinary course of business
     for amounts which are not overdue for a period of more than 60 days or
     which are being contested in good faith by appropriate proceedings;

<PAGE>
                                                                              56

          (c) pledges or deposits in connection with workers' compensation,
     unemployment insurance and other social security legislation;

          (d) deposits to secure the performance of bids, trade contracts (other
     than for borrowed money), leases, statutory obligations, surety and appeal
     bonds, performance bonds and other obligations of a like nature incurred in
     the ordinary course of business;

          (e) easements, rights-of-way, restrictions, restrictive covenants,
     encroachments and other similar encumbrances incurred in the ordinary
     course of business which, in the aggregate, are not substantial in amount
     and which do not in any case materially detract from the value of the
     property subject thereto or materially interfere with the ordinary conduct
     of the business of the Borrower or such Subsidiary;

          (f) Liens in existence on August 7, 1996 listed on Schedule 7.3,
     securing Indebtedness permitted by subsection 7.2(d) and new Liens created
     thereafter in connection with refinancings, refundings, renewals, and
     extensions described in subsection 7.2(d), PROVIDED that no such Lien is
     spread to cover any additional property after the Restatement Effective
     Date and that the principal amount of Indebtedness secured thereby is not
     increased;

          (g) Liens securing Indebtedness of the Borrower and its Subsidiaries
     permitted by subsection 7.2(c) incurred to finance the acquisition of fixed
     or capital assets, PROVIDED that (i) such Liens shall be created
     substantially simultaneously with the acquisition of such fixed or capital
     assets, (ii) such Liens do not at any time encumber any property other than
     the property financed by such Indebtedness, (iii) the principal amount of
     Indebtedness secured thereby is not increased and (iv) the principal amount
     of Indebtedness secured by any such Lien shall at no time exceed the
     original purchase price of such property at the time it was acquired;

          (h) Liens created pursuant to the Security Documents;

          (i) Liens arising under licensing agreements entered into by the
     Borrower or any Subsidiaries in the ordinary course of business for the use
     of Intellectual Property or other intangible assets of the Borrower or any
     Subsidiary, and any consents to use, and other similar agreements
     concerning Intellectual Property or other intangible assets or judgments
     adjudicating rights in any intangible rights in Intellectual Property or
     other intangible assets;

          (j) Liens securing Indebtedness of the Borrower and its Subsidiaries
     permitted by subsection 7.2(b); and

          (k) Liens on the assets of the Receivables Sub pursuant to the
     Receivables Transaction.

          7.4 LIMITATION ON GUARANTEE OBLIGATIONS.  Create, incur, assume or
suffer to exist any Guarantee Obligation except:


<PAGE>
                                                                              57

          (a) Guarantee Obligations in existence on the date hereof and listed
     on Schedule 7.4 and refinancings, renewals or extensions thereof, provided
     that the aggregate principal amount set forth on Schedule 7.4 does not
     increase in connection with any such refinancing, renewal or extension;

          (b) guarantees made in the ordinary course of its business by the
     Borrower of obligations of any Subsidiary of Indebtedness permitted by
     subsections 7.2(c), (d) and (e) or any leases for real property by any
     Subsidiary; and

          (c) the Subsidiaries Guarantee.

          7.5 LIMITATION ON FUNDAMENTAL CHANGES.  Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:

          (a) any Subsidiary of the Borrower may be merged or consolidated with
     or into, or be liquidated, wound up or dissolved into, the Borrower
     (PROVIDED that the Borrower shall be the continuing or surviving
     corporation) or with or into any one or more wholly owned Subsidiaries of
     the Borrower (PROVIDED that the wholly owned Subsidiary or Subsidiaries
     shall be the continuing or surviving corporation);

          (b) subject to subsections 7.10(c) and (d), the Borrower or any
     Subsidiary may be merged or consolidated with any other Person organized
     under a jurisdiction of the United States with assets held primarily in the
     United States; PROVIDED, that the Borrower or such Subsidiary shall be the
     continuing or surviving corporation; the Administrative Agent is provided
     with written notice, and after giving effect thereto no Default or Event of
     Default would exist or reasonably be expected to be caused thereby;

          (c) any wholly owned Subsidiary may sell, lease, transfer or otherwise
     dispose of any or all of its assets (upon voluntary liquidation or 
     otherwise) to the Borrower or any other wholly owned Subsidiary of the 
     Borrower; and

          (d) as contemplated pursuant to the Receivables Transaction.

          7.6 LIMITATION ON SALE OF ASSETS.  Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person other than the
Borrower or any wholly owned Subsidiary, except:

          (a) the sale or other disposition of obsolete or worn out property in
     the ordinary course of business;

          (b) the sale or other disposition of any property in the ordinary
     course of business, PROVIDED that (other than inventory) the aggregate book
     value of all assets so 


<PAGE>
                                                                              58

     sold or disposed of in any period of twelve consecutive months shall not 
     exceed $500,000; 

          (c) the sale of inventory in the ordinary course of business;

          (d) the sale or discount without recourse of accounts receivable
     arising in the ordinary course of business in connection with the
     compromise or collection thereof; and

          (e) the sale, abandonment or other disposition in the ordinary course
     of business of Intellectual Property that is no longer necessary for the
     conduct of the business of the Borrower or any Subsidiary; 

          (f) as permitted by subsection 7.5; and

          (g) as contemplated pursuant to the Receivables Transaction.

          7.7 LIMITATION ON SPECULATIVE TRANSACTIONS.  Engage, or permit any of
its Subsidiaries to engage, in any transaction involving commodity options or
futures contracts or any similar speculative transactions (including, without
limitation, take-or-pay contracts) except for Hedge Agreements permitted under
subsection 7.2(e).

          7.8 LIMITATION ON DIVIDENDS.  Declare or pay any dividend (other than
dividends payable solely in common stock of the Borrower) on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any shares of any class of Capital Stock of the Borrower or any warrants or
options to purchase any such Stock, whether now or hereafter outstanding, or
make any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Borrower or any Subsidiary
(such declarations, payments, setting apart, purchases, redemptions,
defeasances, retirements, acquisitions and distributions being herein called
"RESTRICTED PAYMENTS"), except that if no Default or Event of Default exists or
would reasonably be expected to be caused thereby, the Borrower may repurchase
shares of its common stock from its employees and former employees so long as
the aggregate amount of all such repurchases since August 7, 1996 does not
exceed $1 million.

          7.9 LIMITATION ON CAPITAL EXPENDITURES.  Make or commit to make (by
way of the acquisition of securities of a Person or otherwise) any expenditure
in respect of the purchase or other acquisition of fixed or capital assets
except for expenditures in the ordinary course of business not exceeding, in the
aggregate for the Borrower and its Subsidiaries, $11,500,000, for the 1997
fiscal year and $9,500,000, for each fiscal year thereafter, PROVIDED, that up
to $1,500,000 of any such amount if not so expended in the fiscal year for which
it is permitted above, may be carried over for expenditure in the next following
fiscal year; PROVIDED, FURTHER, that any expenditures constituting a portion of
the acquisition price of a business or a line of business acquired as a going
concern and also classified as an acquisition covered by subsection 7.10 shall
not be taken into account for purposes of determining compliance with the
provisions of this subsection 7.9.

<PAGE>
                                                                              59

          7.10 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES.  Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any Person, except :

          (a) extensions of trade credit in the ordinary course of business;

          (b) investments in US Cash Equivalents and Canadian Cash Equivalents;

          (c)  investments constituting Permitted Acquisitions; provided, that
     at the date of signing of definitive documentation with respect to such
     proposed Permitted Acquisition, the lesser of (1) the Borrowing Base minus
     the Aggregate Outstanding Revolving Extensions of Credit and (2) the
     Available Revolving Credit Commitments shall be at least $15,000,000
     determined on the basis of the average amount of the Borrowing Base and the
     Aggregate Outstanding Revolving Extensions of Credit, respectively, during
     the calendar month preceding the date such definitive documentation is
     signed;

          (d) loans and advances to employees of the Borrower or its
     Subsidiaries for travel, entertainment and relocation expenses in the
     ordinary course of business in an aggregate amount for the Borrower and its
     Subsidiaries not to exceed $500,000 at any one time outstanding;

          (e) investments by the Borrower and its Subsidiaries in securities and
     notes to the extent received in settlement of delinquent obligations of any
     supplier or customer that is in bankruptcy or reorganization proceedings or
     received in settlement of accounts receivables that are more than 60 days
     past due; 

          (f) investments by the Borrower in its Subsidiaries and investments by
     such Subsidiaries in the Borrower and in other Subsidiaries; and

          (g) subject to the limitations set forth in subsection 7.2(e),
     investments constituting Hedge Agreements.

          7.11 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATIONS OF DEBT 
INSTRUMENTS.  (a) Make any optional payment or prepayment on or optional 
redemption or optional purchase of any Indebtedness or receivables sold 
pursuant to the Receivables Transaction (other than (1) the Loans and (2) a 
refinancing of Indebtedness permitted by subsection 7.2(d)), or (b) amend, 
modify or change, or consent or agree to any amendment, modification or 
change to any of the terms of any such Indebtedness (other than any such 
amendment, modification or change which would extend the maturity or reduce 
the amount of any payment of principal thereof or which would reduce the rate 
or extend the date for payment of interest thereon).

          7.12 LIMITATION ON TRANSACTIONS WITH AFFILIATES.  Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise not prohibited under this Agreement, and
(b) upon fair and reasonable terms no less favorable to 


<PAGE>
                                                                              60

the Borrower or such Subsidiary, as the case may be, than it would obtain in 
a comparable arm's length transaction with a Person which is not an Affiliate.

          7.13 LIMITATION ON SALES AND LEASEBACKS.  Enter into any arrangement
with any Person providing for the leasing by the Borrower or any Subsidiary of
real or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary.

          7.14 LIMITATION ON CHANGES IN FISCAL YEAR.  Permit the fiscal year of
the Borrower to end on a day other than December 31.

          7.15 LIMITATION ON NEGATIVE PLEDGE CLAUSES.  Enter into with any
Person any agreement, other than (a) this Agreement, (b) any Indebtedness
permitted by subsection 7.2(c) (in which case, any prohibition or limitation
shall only be effective against the assets financed thereby), (c) any
refinancing, refunding, renewal or extension permitted by subsection 7.2(d) (in
which case any prohibition or limitation shall not be more restrictive than the
prohibition or limitation contained in the Indebtedness that was so refinanced,
refunded, renewed or extended) and (d) the Receivables Transaction, which
prohibits or limits the ability of the Borrower or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired.

          7.16 LIMITATION ON LINES OF BUSINESS.  Enter into any business, either
directly or through any Subsidiary, except for those businesses in which the
Borrower and its Subsidiaries are engaged on the date of this Agreement or
businesses reasonably related thereto.


                            SECTION 8.  EVENTS OF DEFAULT

          If any of the following events shall occur and be continuing:

          (a) The Borrower shall fail to pay any principal of any Loan or any
     Reimbursement Obligation when due in accordance with the terms thereof or
     hereof; or the Borrower shall fail to pay any interest on any Loan, or any
     other amount payable hereunder, within five days after any such interest or
     other amount becomes due in accordance with the terms thereof or hereof; or

          (b) Any representation or warranty made or deemed made by the Borrower
     herein or in any other Loan Document or which is contained in any
     certificate, document or financial or other statement furnished by it at 
     any time under or in connection with this Agreement or any such other Loan
     Document shall prove to have been incorrect in any material respect on or 
     as of the date made or deemed made; or

          (c) The Borrower or any other Loan Party shall default in the
     observance or performance of any agreement contained in subsections 6.4,
     6.8, 6.11 (other than as a result of wire transfer difficulties or system
     malfunctions beyond the control of any 




<PAGE>
                                                                              61

     Loan Party), and 6.12, Section 7, Section 5 of the Borrower Stock Pledge 
     Agreement or Section 4 of the Security Agreement; or

          (d) The Borrower or any other Loan Party shall default in the
     observance or performance of any other agreement contained in this
     Agreement or any other Loan Document (other than as provided in paragraphs
     (a) through (c) of this Section), and such default shall continue
     unremedied for a period of 30 days; or

          (e) The Borrower or any of its Subsidiaries shall (i) default in any
     payment of principal of or interest of any Indebtedness (other than the
     Loans) or in the payment of any Guarantee Obligation, in each case, that is
     outstanding in a principal amount of at least $1 million either
     individually or in the aggregate, beyond the period of grace (not to exceed
     30 days), if any, provided in the instrument or agreement under which such
     Indebtedness or Guarantee Obligation was created; or (ii) default in the
     observance or performance of any other agreement or condition relating to
     any such Indebtedness or Guarantee Obligation or contained in any
     instrument or agreement evidencing, securing or relating thereto, or any
     other event shall occur or condition exist, the effect of which default or
     other event or condition is to cause, or to permit the holder or holders of
     such Indebtedness or beneficiary or beneficiaries of such Guarantee
     Obligation (or a trustee or agent on behalf of such holder or holders or
     beneficiary or beneficiaries) to cause, with the giving of notice if
     required, such Indebtedness to become due prior to its stated maturity or
     such Guarantee Obligation to become payable; or 

          (f) an Early Termination (as defined in the Receivables Sales
     Documents) occurs; or

          (g) (i) The Borrower or any of its Subsidiaries shall commence any
     case, proceeding or other action (A) under any existing or future law of
     any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
     reorganization or relief of debtors, seeking to have an order for relief
     entered with respect to it, or seeking to adjudicate it a bankrupt or
     insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
     liquidation, dissolution, composition or other relief with respect to it or
     its debts, or (B) seeking appointment of a receiver, trustee, custodian,
     conservator or other similar official for it or for all or any substantial
     part of its assets, or the Borrower or any of its Subsidiaries shall make a
     general assignment for the benefit of its creditors; or (ii) there shall be
     commenced against the Borrower or any of its Subsidiaries any case,
     proceeding or other action of a nature referred to in clause (i) above
     which (A) results in the entry of an order for relief or any such
     adjudication or appointment or (B) remains undismissed, undischarged or
     unbonded for a period of 60 days; or (iii) there shall be commenced against
     the Borrower or any of its Subsidiaries any case, proceeding or other
     action seeking issuance of a warrant of attachment, execution, distraint or
     similar process against all or any substantial part of its assets which
     results in the entry of an order for any such relief which shall not have 
     been vacated, discharged, or stayed or bonded pending appeal within 60 
     days from the entry thereof; or (iv) the Borrower or any of its 
     Subsidiaries shall take any action in furtherance of, or indicating its 
     consent to, approval of, or acquiescence in, any of the acts set forth in 
     clause (i), (ii), or (iii) above; or (v) the Borrower or any 




<PAGE>
                                                                              62

     

     of its Subsidiaries shall generally not, or shall be unable to, or shall 
     admit in writing its inability to, pay its debts as they become due; or

          (h) (i) Any Person shall engage in any non-exempt "prohibited
     transaction" (as defined in Section 406 of ERISA or Section 4975 of the
     Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
     defined in Section 302 of ERISA), whether or not waived, shall exist with
     respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise
     on the assets of the Borrower or any Commonly Controlled Entity, (iii) a
     Reportable Event shall occur with respect to, or proceedings shall commence
     to have a trustee appointed, or a trustee shall be appointed, to administer
     or to terminate, any Single Employer Plan, which Reportable Event or
     commencement of proceedings or appointment of a trustee is, in the
     reasonable opinion of the Majority Lenders, likely to result in the
     termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
     Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
     Borrower or any Commonly Controlled Entity shall, or in the reasonable
     opinion of the Majority Lenders is likely to, incur any liability in
     connection with a withdrawal from, or the Insolvency or Reorganization of,
     a Multiemployer Plan or (vi) any other event or condition shall occur or
     exist with respect to a Plan; and in each case in clauses (i) through (vi)
     above, such event or condition, together with all other such events or
     conditions in clauses (i) through (vi), if any, could reasonably be
     expected to have a Material Adverse Effect and is reasonably expected to
     result in liability exceeding $1 million; or

          (i) One or more judgments or decrees shall be entered against the
     Borrower or any of its Subsidiaries involving in the aggregate a liability
     (not paid or fully covered by insurance) of $1,000,000 or more, and all
     such judgments or decrees shall not have been vacated, discharged, stayed
     or bonded pending appeal within 60 days from the entry thereof or, in the
     event of such a stay, such judgment shall not be discharged within 60 days
     after such stay expires; or

          (j) (i) Any of the Security Documents shall cease, for any reason, to
     be in full force and effect, or the Borrower or any other Loan Party which
     is a party to any of the Security Documents shall so assert or (ii) the
     Lien created by any of the Security Documents shall cease to be enforceable
     and of the same effect and priority purported to be created thereby; or

          (k) The Subsidiaries Guarantee shall cease, for any reason, to be in
     full force and effect or any Guarantor shall so assert; or

          (l) (i) Jupiter Partners, LP ("Jupiter") shall at any time for any
     reason cease to control, directly or indirectly, at least the Control
     Percentage of the voting rights of the Borrower having ordinary voting
     power in the election of directors of the Borrower or (ii), any other
     Person or "group" (within the meaning of Section 13(d) or 14(d) of the
     Securities Exchange Act of 1934, as amended) (other than Jupiter and its
     Affiliates) shall have acquired control of 35% or more of the voting rights
     of the Borrower having ordinary voting power in the election of directors 
     of the Borrower unless the acquisition by any such Person or "group" shall
     have been recommended by the board of directors of the Borrower;




<PAGE>
                                                                              63

then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (g) of this Section with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) shall immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken:  (i) with the consent of
the Majority Lenders, the Administrative Agent may, or upon the request of the
Majority Lenders, the Administrative Agent shall, by notice to the Borrower
declare the Commitments to be terminated forthwith, whereupon the Commitments
shall immediately terminate; and (ii) with the consent of the Majority Lenders,
the Administrative Agent may, or upon the request of the Majority Lenders, the
Administrative Agent shall, by notice to the Borrower, declare the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement to be due and payable forthwith, whereupon the same shall immediately
become due and payable.  

          With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit in
a cash collateral account opened by the Administrative Agent an amount equal to
the aggregate then undrawn and unexpired amount of such Letters of Credit. The
Borrower hereby grants to the Administrative Agent, for the benefit of the
Issuing Bank and the L/C Participants, a security interest in such cash
collateral to secure all obligations of the Borrower under this Agreement and
the other Loan Documents. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder and under the Notes. After all
such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the Notes shall have been paid in full, the
Administrative Agent shall return the balance, if any, in such cash collateral
account to the Borrower and shall execute documents to terminate its security
interest in such cash collateral.  The Borrower shall execute and deliver to the
Administrative Agent, for the account of the Issuing Bank and the L/C
Participants, such further documents and instruments as the Administrative Agent
may request to evidence the creation and perfection of the security interest in
such cash collateral account.

          Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.

                         SECTION 9.  THE ADMINISTRATIVE AGENT

          9.1 APPOINTMENT.  Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly 




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                                                                              64

delegated to the Administrative Agent by the terms of this Agreement and the 
other Loan Documents, together with such other powers as are reasonably 
incidental thereto. Notwithstanding any provision to the contrary elsewhere 
in this Agreement, the Administrative Agent shall not have any duties or 
responsibilities, except those expressly set forth herein, or any fiduciary 
relationship with any Lender, and no implied covenants, functions, 
responsibilities, duties, obligations or liabilities shall be read into this 
Agreement or any other Loan Document or otherwise exist against the 
Administrative Agent.

          9.2 DELEGATION OF DUTIES.  The Administrative Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties.  The Administrative Agent
shall not be responsible for the negligence or misconduct of any administrative
agents or attorneys in-fact selected by it with reasonable care.

          9.3 EXCULPATORY PROVISIONS.  Neither the Administrative Agent nor any
of its officers, directors, employees, administrative agents, attorneys-in-fact
or Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Borrower or
any officer thereof contained in this Agreement or any other Loan Document or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of the Borrower to perform its obligations hereunder
or thereunder.  The Administrative Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of any
of the agreements contained in, or conditions of, this Agreement or any other
Loan Document, or to inspect the properties, books or records of the Borrower.

          9.4 RELIANCE BY ADMINISTRATIVE AGENT.  The Administrative Agent 
shall be entitled to rely, and shall be fully protected in relying, upon any 
Note, writing, resolution, notice, consent, certificate, affidavit, letter, 
telecopy, telex or teletype message, statement, order or other document or 
conversation believed by it to be genuine and correct and to have been 
signed, sent or made by the proper Person or Persons and upon advice and 
statements of legal counsel (including, without limitation, counsel to the 
Borrower), independent accountants and other experts selected by the 
Administrative Agent.  The Administrative Agent may deem and treat the payee 
of any Note as the owner thereof for all purposes unless a written notice of 
assignment, negotiation or transfer thereof shall have been filed with the 
Administrative Agent.  The Administrative Agent shall be fully justified in 
failing or refusing to take any action under this Agreement or any other Loan 
Document unless it shall first receive such advice or concurrence of the 
Majority Lenders as it deems appropriate or it shall first be indemnified to 
its satisfaction by the Lenders against any and all liability and expense 
which may be incurred by it by reason of taking or continuing to take any 
such action.  The Administrative Agent shall in all cases be fully protected 
in acting, or in refraining from acting, under this Agreement and the other 
Loan Documents in accordance with a request of 




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                                                                              65


the Majority Lenders, and such request and any action taken or failure to act 
pursuant thereto shall be binding upon all the Lenders and all future holders 
of the Loans.

          9.5 NOTICE OF DEFAULT.  The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default".  In the event
that the Administrative Agent receives such a notice, the Administrative Agent
shall give notice thereof to the Lenders.  The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Majority Lenders; PROVIDED that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.

          9.6 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS.  Each
Lender expressly acknowledges that neither the Administrative Agent nor any of
its officers, directors, employees, administrative agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and that no act by
the Administrative Agent hereinafter taken, including any review of the affairs
of the Borrower, shall be deemed to constitute any representation or warranty by
the Administrative Agent to any Lender.  Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to make
its Loans hereunder and enter into this Agreement.  Each Lender also represents
that it will, independently and without reliance upon the Administrative Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower.  Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.

          9.7 INDEMNIFICATION.  The Lenders agree to indemnify the 
Administrative Agent in its capacity as such (to the extent not reimbursed by 
the Borrower and without limiting the obligation of the Borrower to do so), 
ratably according to their respective Voting Percentages in effect on the 
date on which indemnification is sought, from and against any and all 
liabilities, obligations, losses, damages, penalties, actions, judgments, 
suits, costs, expenses or disbursements of any kind whatsoever which may at 
any time (including, without limitation, at any time following the payment of 
the Loans) be imposed on, incurred by or asserted against the Administrative 
Agent in any way relating to or arising out of, the Commitments, this 
Agreement, any of the other Loan Documents or any documents 


<PAGE>
                                                                              66

contemplated by or referred to herein or therein or the transactions 
contemplated hereby or thereby or any action taken or omitted by the 
Administrative Agent under or in connection with any of the foregoing; 
PROVIDED that no Lender shall be liable for the payment of any portion of 
such liabilities, obligations, losses, damages, penalties, actions, 
judgments, suits, costs, expenses or disbursements resulting solely from the 
Administrative Agent's gross negligence or willful misconduct.  The 
agreements in this subsection shall survive the payment of the Loans and all 
other amounts payable hereunder.

          9.8 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY.  The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower as though the
Administrative Agent were not the Administrative Agent hereunder and under the
other Loan Documents.  With respect to the Loans made by it and with respect to
any Letter of Credit issued or participated in by it, the Administrative Agent
shall have the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not the
Administrative Agent, and the terms "Lender" and "Lenders" shall include the
Administrative Agent in its individual capacity.

          9.9 SUCCESSOR ADMINISTRATIVE AGENT.  The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders.  If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Majority Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent (provided
that it shall have been approved by the Borrower), shall succeed to the rights,
powers and duties of the Administrative Agent hereunder.  Effective upon such
appointment and approval, the term "Administrative Agent" shall mean such
successor agent, and the former Administrative Agent's rights, powers and duties
as Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Loans.  After any retiring Administrative
Agent's resignation as Administrative Agent, the provisions of this Section 8
shall inure to its benefit as to any actions taken  or omitted to be taken by it
while it was Administrative Agent under this Agreement and the other Loan
Documents.

                              SECTION 10.  MISCELLANEOUS

          10.1 AMENDMENTS AND WAIVERS.  Neither this Agreement nor any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented,
waived or modified except in accordance with the provisions of this subsection. 
The Majority Lenders may, or, with the written consent of the Majority Lenders,
the Administrative Agent may, from time to time, (a) enter into with the
Borrower written amendments, supplements or modifications hereto and to the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights of the Lenders
or of the Borrower hereunder or thereunder or (b) waive, on such terms and
conditions as the Majority Lenders or the Administrative Agent, as the case may
be, may specify in such instrument, any of the requirements of this Agreement or
the other Loan Documents or any Default or Event of Default and its
consequences; PROVIDED, HOWEVER, that no such waiver and no such amendment,
supplement or modification shall (i) reduce the 


<PAGE>
                                                                              67

amount or extend the scheduled date of maturity of any Loan or of any 
installment thereof, or reduce the stated rate of any interest or fee payable 
hereunder or extend the scheduled date of any payment thereof or increase the 
amount or extend the expiration date of any Lender's Commitment, in each case 
without the consent of each Lender affected thereby, or (ii) amend, modify or 
waive any provision of this subsection or subsection 2.13, or reduce the 
percentage specified in the definition of Majority Lenders, or consent to the 
assignment or transfer by the Borrower of any of its rights and obligations 
under this Agreement and the other Loan Documents or, subject to the proviso 
below, release the Subsidiaries Guarantee or all or any substantial part of 
the Collateral, in each case without the written consent of all the Lenders; 
provided, that with respect to a release of the Subsidiaries Guarantee or all 
or any substantial part of the Collateral relating solely to the obligations 
of the Borrower or any of its Subsidiaries in connection with a Hedge 
Agreement entered into with any Lender, the written consent of the Lender 
affected thereby, or (iii) increase any of the percentages specified in the 
Borrowing Base or increase the Uncovered L/C Amount, in each case, without 
the written consent of all the Lenders, or (iv) amend, modify or waive any 
provision of Section 9 without the written consent of the then Administrative 
Agent.  Any such waiver and any such amendment, supplement or modification 
shall apply equally to each of the Lenders and shall be binding upon the 
Borrower, the Lenders, the Administrative Agent and all future holders of the 
Loans.  In the case of any waiver, the Borrower, the Lenders and the 
Administrative Agent shall be restored to their former positions and rights 
hereunder and under the other Loan Documents, and any Default or Event of 
Default waived shall be deemed to be cured and not continuing; no such waiver 
shall extend to any subsequent or other Default or Event of Default or impair 
any right consequent thereon.

          10.2 NOTICES.  All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed as
follows in the case of the Borrower, the Administrative Agent and the Issuing
Banks, and as set forth on its signature page hereto in the case of the other
parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto:

    The Borrower:        Core-Mark International, Inc.
                             395 Oyster Point Boulevard, Suite 415
                             South San Francisco, CA 94080
                             Attention: Leo F. Korman
                             Fax: 650-589-4010

    The Administrative
       Agent:            Chase Securities Inc.
                             101 California Street, 27th Floor
                             San Francisco, CA 94111
                         Attention: Wendy E. Gittings
                             Fax: 415-954-9583


<PAGE>
                                                                              68



    with a copy to:          Chase Agent Bank Services
                             1 Chase Manhattan Plaza, 8th Floor
                             New York, New York  10081
                             Attention: Janet Belden
                             Fax: 212-552-5658

    The Issuing Bank:    Chase Manhattan Bank Delaware
                             1201 Market Street
                             Wilmington, Delaware 19801
                         Attention: Michael Handago
                             Fax: 302-428-3390


PROVIDED that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 2.2, 2.4, 2.6, 2.7 or 2.12 shall not be
effective until received.

          10.3 NO WAIVER; CUMULATIVE REMEDIES.  No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.

          10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.  All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.

          10.5 PAYMENT OF EXPENSES AND TAXES.  The Borrower agrees (a) to pay 
or reimburse the Administrative Agent and its Affiliates for all its 
reasonable out-of-pocket costs and expenses incurred in connection with the 
preparation, execution, delivery and administration of, and any amendment, 
supplement or modification to, this Agreement and the other Loan Documents 
and any other documents prepared in connection herewith or therewith, and the 
consummation and administration of the transactions contemplated hereby 
including, without limitation, the fees specified in subsection 6.7 and 
monthly collateral monitoring fees, including, without limitation, the 
reasonable fees and disbursements of counsel to the Administrative Agent, (b) 
to pay or reimburse the Administrative Agent and the Lenders for all their 
out-of-pocket costs and expenses incurred in connection with the enforcement 
or preservation of any rights under this Agreement, the other Loan Documents 
and any such other documents, including, without limitation, the reasonable 
fees and disbursements of counsel to the Administrative Agent and the 
Lenders, (c) to pay, indemnify, and hold the Administrative Agent and its 
Affiliates and the Lenders (and their respective officers, directors, 
employees, advisors and agents) harmless from, any and all recording and 
filing fees and any and all liabilities with respect to, or resulting from 
any delay in paying, stamp, excise and other like taxes, if any, which may be 
payable or determined to be payable in connection with the execution and 
delivery of, or consummation or administration of any of the transactions 
contemplated by, or any amendment, supplement or modification of, or 



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                                                                              69

any waiver or consent under or in respect of, this Agreement, the other Loan 
Documents and any such other documents, and (d) to pay, indemnify, and hold 
the Administrative Agent and its Affiliates and the Lenders (and their 
respective officers, directors, employees, advisors and agents) harmless from 
and against any and all other liabilities, obligations, losses, damages, 
penalties, actions, judgments, suits, costs, expenses or disbursements of any 
kind or nature whatsoever with respect to the execution, delivery, 
enforcement, performance and administration of this Agreement or the other 
Loan Documents or of the financing contemplated thereby or the use or the 
proposed use of the proceeds thereof (other than matters the subject matter 
of which is covered by clauses (a), (b) or (c) above), including, without 
limitation, any of the foregoing relating to the violation of, noncompliance 
with or liability under, any Environmental Law applicable to the operations 
of the Borrower, any of its Subsidiaries or any of the Properties (all the 
foregoing in this clause (d), collectively, the "indemnified liabilities"), 
PROVIDED that the Borrower shall have no obligation hereunder to the 
Administrative Agent or any Lender with respect to indemnified liabilities 
arising from the gross negligence or willful misconduct of the Administrative 
Agent or any such Lender or arising from events or actions occurring after 
any Lender has taken possession of the property at issue by foreclosure or 
otherwise.  The agreements in this subsection shall survive repayment of the 
Loans and all other amounts payable hereunder.

          10.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. (a)  This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Administrative Agent and their respective successors and permitted
assigns.  The Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.

          (b) Any Lender may, in the ordinary course of its commercial 
banking business and in accordance with applicable law, at any time sell to 
one or more banks or other entities ("PARTICIPANTS") participating interests 
in any Loan owing to such Lender, any Commitment of such Lender or any other 
interest of such Lender hereunder and under the other Loan Documents, 
provided that each such sale shall be of Loans and Commitments in an 
aggregate amount of at least $5,000,000 and provided further, that no Lender 
may so sell its Commitments so that less than $5,000,000 of such Commitments 
are held by such Lender without participating interests therein, unless such 
Lender so sells 100% of its Commitments, in each case, unless otherwise 
agreed by the Borrower and the Administrative Agent.  In the event of any 
such sale by a Lender of a participating interest to a Participant, such 
Lender's obligations under this Agreement to the other parties to this 
Agreement shall remain unchanged, such Lender shall remain solely responsible 
for the performance thereof, such Lender shall remain the holder of any such 
Loan for all purposes under this Agreement and the other Loan Documents, and 
the Borrower and the Administrative Agent shall continue to deal solely and 
directly with such Lender in connection with such Lender's rights and 
obligations under this Agreement and the other Loan Documents.  No Lender 
shall be entitled to create in favor of any Participant, in the participation 
agreement pursuant to which such Participant's participating interest shall 
be created or otherwise, any right to vote on, consent to or approve any 
matter relating to this Agreement or any other Loan Document except for those 
specified in clauses (i) and (ii) of the proviso to subsection 10.1.  The 
Borrower agrees that if amounts outstanding under this Agreement are due or 
unpaid, or shall have been declared or shall have become due and payable upon 
the occurrence of an Event of Default, each Participant shall, to the maximum 
extent permitted by applicable law, be deemed to have 

<PAGE>
                                                                              70

the right of setoff in respect of its participating interest in amounts owing 
under this Agreement to the same extent as if the amount of its participating 
interest were owing directly to it as a Lender under this Agreement, PROVIDED 
that, in purchasing such participating interest, such Participant shall be 
deemed to have agreed to share with the Lenders the proceeds thereof as 
provided in subsection 10.7(a) as fully as if it were a Lender hereunder.  
The Borrower also agrees that each Participant shall be entitled to the 
benefits of subsections 2.15, 2.16 and 2.17 (Requirements of Law, Taxes and 
Indemnity) with respect to its participation in the Commitments and the Loans 
outstanding from time to time as if it was a Lender; PROVIDED that, in the 
case of subsection 2.16 (Taxes), such Participant shall have complied with 
the requirements of said subsection and PROVIDED, FURTHER, that no 
Participant shall be entitled to receive any greater amount pursuant to any 
such subsection than the transferor Lender would have been entitled to 
receive in respect of the amount of the participation transferred by such 
transferor Lender to such Participant had no such transfer occurred.

          (c) Upon prior written notice to the Borrower, any Lender may, in 
the ordinary course of its commercial banking business and in accordance with 
applicable law, at any time and from time to time assign to any Lender or any 
Affiliate thereof or, with the consent of the Borrower, the Administrative 
Agent and the Issuing Bank (which in each case shall not be unreasonably 
withheld), to an additional bank or financial institution (an "ASSIGNEE") all 
or any part of its rights and obligations under this Agreement and the other 
Loan Documents pursuant to an Assignment and Acceptance, substantially in the 
form of Exhibit G, executed by such Assignee, such assigning Lender (and, in 
the case of an Assignee that is not then a Lender or an affiliate thereof, by 
the Borrower, the Administrative Agent and the Issuing Bank) and delivered to 
the Administrative Agent for its acceptance and recording in the Register, 
PROVIDED that, each such sale be of Loans and Commitments of an aggregate 
amount of at least $5,000,000 and provided further, that no Lender party to 
this Agreement on the date hereof may so sell any of its initial Commitments 
hereunder such that such Lender holds directly less than $5,000,000 of such 
Commitments unless such Lender so sells 100% of its Commitments.  Upon such 
execution, delivery, acceptance and recording, from and after the effective 
date determined pursuant to such Assignment and Acceptance, (x) the Assignee 
thereunder shall be a party hereto and, to the extent provided in such 
Assignment and Acceptance, have the rights and obligations of a Lender 
hereunder with a Commitment as set forth therein PROVIDED that, no Assignee 
shall be entitled to receive any greater amount pursuant to subsection 2.16 
than the assignor Lender would have been entitled to receive in respect of 
the amount assigned by such assignor Lender to such Assignee had no such 
assignment occurred, and (y) the assigning Lender thereunder shall, to the 
extent provided in such Assignment and Acceptance, be released from its 
obligations under this Agreement (and, in the case of an Assignment and 
Acceptance covering all or the remaining portion of an assigning Lender's 
rights and obligations under this Agreement, such assigning Lender shall 
cease to be a party hereto).  Notwithstanding any provision of this paragraph 
(c) and paragraph (e) of this subsection, the consent of the Borrower shall 
not be required, and, unless requested by the Assignee and/or the assigning 
Lender, new Notes shall not be required to be executed and delivered by the 
Borrower, for any assignment which occurs at any time when any of the events 
described in Section 8(f) shall have occurred and be continuing.


<PAGE>
                                                                              71

          (d) The Administrative Agent, on behalf of the Borrower, shall
maintain at the address of the Administrative Agent referred to in subsection
10.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "REGISTER") for the recordation of the names and addresses of the Lenders
and the Commitments of, and principal amounts of the Loans owing to, each Lender
from time to time.  The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Administrative Agent and the
Lenders may (and, in the case of any Loan or other obligation hereunder not
evidenced by a Note, shall) treat each Person whose name is recorded in the
Register as the owner of a Loan or other obligation hereunder as the owner
thereof for all purposes of this Agreement and the other Loan Documents,
notwithstanding any notice to the contrary.  Any assignment of any Loan or other
obligation hereunder not evidenced by a Note shall be effective only upon
appropriate entries with respect thereto being made in the Register.  The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.

          (e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Borrower and the Administrative
Agent) together with payment to the Administrative Agent of a registration and
processing fee of $3,500, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Lenders and the Borrower.

          (f) Subject to subsection 10.16, the Borrower authorizes each Lender
to disclose to any Participant or Assignee (each, a "TRANSFEREE") and any
prospective Transferee any and all financial information in such Lender's
possession concerning the Borrower and its Affiliates which has been delivered
to such Lender by or on behalf of the Borrower pursuant to this Agreement or
which has been delivered to such Lender by or on behalf of the Borrower in
connection with such Lender's credit evaluation of the Borrower and its
Affiliates prior to becoming a party to this Agreement.

          (g)  For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this subsection concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law. 

          10.7 ADJUSTMENTS; SET-OFF. (a)  If any Lender (a "BENEFITTED 
LENDER") shall at any time receive any payment of all or part of its Loans or 
the Reimbursement Obligations owing to it, or interest thereon, or receive 
any collateral in respect thereof (whether voluntarily or involuntarily, by 
set-off, pursuant to events or proceedings of the nature referred to in 
Section 8(f), or otherwise), in a greater proportion than any such payment to 
or collateral received by any other Lender, if any, in respect of such other 
Lender's Loans or the Reimbursements Obligations owing to it, or interest 
thereon, such benefitted Lender shall purchase for cash from the other 
Lenders a participating interest in such portion of each such other Lender's 
Loans, or the Reimbursement Obligations owing to it, or shall provide such 
other Lenders with the benefits of any such collateral, or the proceeds 
thereof, as shall be necessary to cause such benefitted Lender to share the 
excess payment or benefits of such 


<PAGE>
                                                                              72

collateral or proceeds ratably with each of the Lenders; PROVIDED, HOWEVER, 
that if all or any portion of such excess payment or benefits is thereafter 
recovered from such benefitted Lender, such purchase shall be rescinded, and 
the purchase price and benefits returned, to the extent of such recovery, but 
without interest.

          (b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower.  Each Lender agrees promptly to notify
the Borrower and the Administrative Agent after any such set-off and application
made by such Lender, PROVIDED that the failure to give such notice shall not
affect the validity of such set-off and application.

          10.8 COUNTERPARTS.  This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.  A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.

          10.9 SEVERABILITY.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          10.10 INTEGRATION.  This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.

          10.11 GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

          10.12 SUBMISSION TO JURISDICTION; WAIVERS.  The Borrower hereby
irrevocably and unconditionally:

          (a) submits for itself and its property in any legal action or
     proceeding relating to this Agreement and the other Loan Documents to which
     it is a party, or for recognition and enforcement of any judgement in
     respect thereof, to the non-exclusive general jurisdiction of the Courts 
     of the State of New York sitting in the Borough of 


<PAGE>
                                                                              73

     Manhattan, the courts of the United States of America for the Southern 
     District of New York, and appellate courts from any thereof;

          (b) consents that any such action or proceeding may be brought in such
     courts and waives any objection that it may now or hereafter have to the
     venue of any such action or proceeding in any such court or that such
     action or proceeding was brought in an inconvenient court and agrees not to
     plead or claim the same;

          (c) agrees that service of process in any such action or proceeding
     may be effected by mailing a copy thereof by registered or certified mail
     (or any substantially similar form of mail), postage prepaid, to the
     Borrower at its address set forth in subsection 10.2 or at such other
     address of which the Administrative Agent shall have been notified pursuant
     thereto;

          (d) agrees that nothing herein shall affect the right to effect
     service of process in any other manner permitted by law or shall limit the
     right to sue in any other jurisdiction; and

          (e) waives, to the maximum extent not prohibited by law, any right it
     may have to claim or recover in any legal action or proceeding referred to
     in this subsection any special, exemplary, punitive or consequential
     damages.

          10.13 ACKNOWLEDGEMENTS.  The Borrower hereby acknowledges that:

          (a) it has been advised by counsel in the negotiation, execution and
     delivery of this Agreement and the other Loan Documents;

          (b) neither the Administrative Agent nor any Lender has any fiduciary
     relationship with or duty to the Borrower arising out of or in connection
     with this Agreement or any of the other Loan Documents, and the
     relationship between Administrative Agent and Lenders, on one hand, and the
     Borrower, on the other hand, in connection herewith or therewith is solely
     that of debtor and creditor; and

          (c) no joint venture is created hereby or by the other Loan Documents
     or otherwise exists by virtue of the transactions contemplated hereby among
     the Lenders or among the Borrower and the Lenders.

          10.14 WAIVERS OF JURY TRIAL.  THE BORROWER, THE ADMINISTRATIVE AGENT
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

          10.15 JUDGMENT CURRENCY.  (a)  If, for the purposes of obtaining 
judgment in any court, it is necessary to convert a sum due under any of the 
Loan Documents to the Administrative Agent or any Lender in any currency (the 
"Original Currency") into another currency (the "Other Currency"), the 
parties hereto agree, to the fullest extent that they may effectively do so, 
that the rate of exchange used shall be that at which in accordance with 





<PAGE>
                                                                              74

normal banking procedures the Administrative Agent or such Lender, as the 
case may be, could purchase the Original Currency with the Other Currency on 
the Business Day preceding that on which final judgment is paid or satisfied.

          (b)  The obligations of the Borrower in respect of any sum due in the
Original Currency from it to the Administrative Agent or any Lender under any of
the Loan Documents shall, notwithstanding any judgment in any Other Currency, be
discharged only to the extent that on the Business Day following receipt by the
Administrative Agent or such Lender of any sum adjudged to be so due in such
Other Currency, the Administrative Lender or such Lender, as the case may be,
may in accordance with normal banking procedures purchase the Original Currency
with such Other Currency.  If the amount of the Original Currency so purchased
is less than the sum originally due to the Administrative Agent or the Lender,
as the case may be, in the Original Currency, the Borrower agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify the
Administrative Agent or such Lender, as the case may be, against such loss, and
if the amount of the Original Currency so purchased exceeds the sum originally
due to the Administrative Agent or such Lender, as the case may be, in the
Original Currency, the Administrative Agent and such Lender, as the case may be,
agree to remit such excess to the Borrower.

          10.16 CONFIDENTIALITY.  The Administrative Agent and each Lender
agrees to keep confidential all non-public information provided to it by or on
behalf of the Borrower or any Subsidiary that is designated by the Borrower or
any Subsidiary as confidential; PROVIDED that nothing herein shall prevent the
Administrative Agent or any Lender from disclosing any such information (a) to
the Administrative Agent or any other Lender, (b) to any Transferee or
prospective Transferee which agrees to comply with the provisions of this
subsection 10.16, (c) to the employees, directors, agents, attorneys,
accountants and other professional advisors of such Lender for purposes related
to the transactions contemplated by the Loan Documents, (d) upon the request or
demand of any Governmental Authority having jurisdiction over the Administrative
Agent or such Lender, (e) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to applicable
law or regulation, (f) which has been publicly disclosed other than in breach of
this subsection 10.16, or (g) in connection with the exercise of any remedy
hereunder or under any other Loan Document.

          10.17 SPECIAL PROVISIONS. (a)  From and after the Restatement
Effective Date, (i) each Exiting Lender shall cease to be a party to this
Agreement, (ii) no Exiting Lender shall have any obligations or liabilities
under this Agreement with respect to the period from and after the Restatement
Effective Date and, without limiting the foregoing, no Exiting Lender shall have
any Revolving Credit Commitment under this Agreement or any participation in any
Letter of Credit outstanding hereunder and (iii) no Exiting Lender shall have
any rights under the Existing Credit Agreement, this Agreement or any other Loan
Document (other than rights under the Existing Credit Agreement expressly stated
to survive the termination of the Existing Credit Agreement and the repayment of
amounts outstanding thereunder).  

          (b) The Lenders hereby waive any requirements for notice of
prepayment, commitment terminations, minimum amounts of prepayments of Revolving
Credit Loans (as defined in the Existing Credit Agreement), ratable reductions
of Revolving Credit 




<PAGE>
                                                                              75

Commitments (as defined in the Existing Credit Agreement) and ratable 
payments on account of the principal or interest of any Revolving Credit Loan 
(as defined in the Existing Credit Agreement) under the Existing Credit 
Agreement to the extent such prepayment, reductions or payments are required 
pursuant to subsection 5.1(k).  

          (c) Each of the Exiting Lenders shall deliver to the Administrative
Agent prior to the Restatement Effective Date written consent waiving its rights
to pro-rata payment and pro-rata termination under the Existing Credit
Agreement.
 
          (d) The Lenders hereby confirm that, from and after the Restatement
Effective Date, all participations of the Lenders in respect of Letters of
Credit outstanding hereunder pursuant to subsection 3.4(a) shall be based upon
the Revolving Credit Commitment Percentages of the Lenders (after giving effect
to this Agreement).

          (e) The Borrower hereby releases, effective as of the Restatement
Effective Date, in full the Exiting Banks from their obligations in respect of
the Revolving Credit Commitments (as defined in the Existing Credit Agreement)
and, effective as of the Restatement Effective Date, the Lenders hereby assume
such obligations, it being understood that such assumption is reflected in the
Commitments of the Lenders hereunder.

          (f) The Borrower shall pay directly to each Exiting Lender, upon
receiving an invoice from such Exiting Lender, any payments due under Section
2.20 of the Existing Credit Agreement.





                               [Signature Pages Follow]


<PAGE>
                                                                              76

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.

                                       CORE-MARK INTERNATIONAL, INC.


                                       By:  /s/ LEO F. KORMAN
                                          -------------------------------------
                                         Name: Leo F. Korman
                                         Title: Sr. VP and CFO


                                       THE CHASE MANHATTAN BANK,
                                        as Administrative Agent and as a Lender


                                       By:  /s/ MARIAN N. SCHULMAN
                                          -------------------------------------
                                         Name: Marian N. Schulman
                                         Title: Vice President


<PAGE>

                                       BANKBOSTON, N.A., as a Lender



                                       By:  /s/ R. BRANDON
                                          -------------------------------------
                                         Name: R. Brandon
                                         Title: Director



                                       Address for Notices:
                                       BANKBOSTON, N.A.
                                       100 Federal Street
                                       Boston, MA  02110
                                       Attention: Kali Ramachandran
                                       Telecopy: 617-434-6241


<PAGE>

                                       UNION BANK OF CALIFORNIA, N.A., as a 
                                       Lender



                                       By:  /s/ DAVID W. KINKELA
                                          -------------------------------------
                                         Name: David W. Kinkela
                                         Title: Assistant Vice President



                                       Address for Notices:
                                       UNION BANK OF CALIFORNIA, N.A.
                                       350 California Street
                                       6th Floor
                                       San Francisco, CA 94104
                                       Attention: David Kinkela
                                       Telecopy: (415) 705-5093



<PAGE>


                                       BANK OF MONTREAL, as a Lender



                                       By: /s/ LEON H. SINCLAIR
                                          ----------------------------
                                          Name: Leon H. Sinclair
                                          Title: Director



                                       Address for Notices:
                                       BANK OF MONTREAL
                                       601 South Figueroa Street
                                       Los Angeles, CA  90017
                                       Attention: Maria Chachere
                                       Telecopy: 213-239-0617


<PAGE>


                                     LASALLE BUSINESS CREDIT, INC., as a Lender



                                     By:  /s/ ROBERT C. ALEXANDER
                                        ------------------------------
                                        Name: Robert C. Alexander
                                        Title: V.P.



                                     Address for Notices:
                                     LASALLE BUSINESS CREDIT, INC. 
                                     One Centerpointe Drive, Suite 100
                                     Lake Oswego, OR 97035
                                     Attention: John Mundstock
                                     Telecopy: 503-684-4665


<PAGE>


                                       SANWA BUSINESS CREDIT CORPORATION, 
                                       as a Lender



                                       By:  /s/ RAFFI SHIRINYAN
                                          ----------------------------
                                          Name: Raffi Shirinyan
                                          Title: Vice President



                                       Address for Notices:
                                       SANWA BUSINESS CREDIT CORPORATION 
                                       550 North Brand Blvd.
                                       Glendale, CA 91203
                                       Attention: Sandra Sha
                                       Telecopy: 818-545-0095


<PAGE>


                                       U.S. BANK NATIONAL ASSOCIATION, as a 
                                       Lender



                                       By:  /s/ GREG WILSON
                                          ----------------------------
                                          Name: Greg Wilson
                                          Title: Commercial Banking Officer



                                       Address for Notices:
                                       U.S. BANK NATIONAL ASSOCIATION
                                       601 Second Avenue South, MPFP0702
                                       Minneapolis, MN 55402-4302
                                       Attention: Elliot Jaffee
                                       Telecopy: (612) 973-0825<PAGE>


<PAGE>

                                       TRANSAMERICA BUSINESS CREDIT 
                                       CORPORATION, as a Lender



                                       By: /s/ PERRY VAVOULES
                                          ----------------------------
                                          Name: Perry Vavoules
                                          Title: Senior Vice President



                                       Address for Notices:
                                       TRANSAMERICA BUSINESS CREDIT CORPORATION
                                       555 Theodore Fremd Avenue, Suite C-301
                                       Rye, NY 10580
                                       Attention: Ron Walker
                                       Telecopy: (914) 921-0110


<PAGE>


                                       ERSTE BANK DER OSTERREICHISCHEN 
                                       SPARKASSEN AG, as a Lender 



                                       By:  /s/ RIMA TERRADISTA
                                          ----------------------------
                                          Name: Rima Terradista
                                          Title: Vice President


                                       By:  /s/ JOHN S. RUNNION
                                           -----------------------------
                                           Name: John S. Runnion
                                           Title: First Vice President

                                       Address for Notices:
                                       ERSTE BANK DER OSTERREICHISCHEN 
                                       SPARKASSEN AG
                                       280 Park Avenue West Building
                                       New York, NY 10017
                                       Attention: Rima Terradista
                                       Telecopy: (212) 984-5627


<PAGE>


                                       BANQUE NATIONALE DE PARIS, as a Lender



                                       By: /s/ DAVID W. LOW
                                          ---------------------------------
                                          Name: David W. Low
                                          Title: Vice President and Manager

                                       By: /s/ JEFFREY S. KAJISA
                                          ---------------------------------
                                          Name: Jeffrey S. Kajisa
                                          Title: Assistant Vice President


                                       Address for Notices:
                                       BANQUE NATIONALE DE PARIS
                                       180 Montgomery Street
                                       San Francisco, CA 94104
                                       Attention: David Low
                                       Telecopy: (650) 296-8954


<PAGE>


                                      CREDITANSTALT CORPORATE FINANCE, 
                                      INC., as a Lender 



                                      By:  /s/ JACK R. BERTGES
                                         ----------------------------
                                         Name: Jack R. Bertges
                                         Title: Senior Vice President

                                       By: /s/ JAMES F. MCCANN
                                          ---------------------------------
                                          Name: James F. McCann
                                          Title: Vice President


                                      Address for Notices:
                                      CREDITANSTALT CORPORATE FINANCE, INC.
                                      4 Embarcadero Center, Suite 1630
                                      San Francisco, CA 94111
                                      Attention: Jack R. Bertgus/James F. McCann
                                      Telecopy: (415) 481-0622


<PAGE>

                                  SCHEDULE 1.1 (a)
                                          
                           CORE-MARK INTERNATIONAL, INC.
                      REVOLVING CREDIT COMMITMENT ALLOCATIONS
                                    $120,000,000
                                          
                                          


<TABLE>
<CAPTION>

               BANKS                                   TOTAL ALLOCATION
<S>                                                      <C>

THE CHASE MANHATTAN BANK                                $12,000,000.00

U.S. BANK NATIONAL ASSOCIATION                           12,000,000.00

BANK OF MONTREAL                                         11,500,000.00

BANKBOSTON, N.A.                                         11,500,000.00


LASALLE BUSINESS CREDIT, INC.                            11,500,000.00


UNION BANK OF CALIFORNIA, N.A.                           11,500,000.00


SANWA BUSINESS CREDIT                                    10,000,000.00
CORPORATION


TRANSAMERICA BUSINESS CREDIT                             10,000,000.00
CORPORATION

CREDITANSTALT CORPORATE FINANCE, INC.                    10,000,000.00

BANQUE NATIONALE DE PARIS                                10,000,000.00

ERSTE BANK DER OSTERREICHISCHEN                          10,000,000.00
SPARKASSEN AG (FORMERLY
GIROCREDIT)

TOTALS                                                  120,000,000.00

</TABLE>

<PAGE>

                                                                  EXHIBIT A TO
                                                              CREDIT AGREEMENT



     [FORM OF]


                                REVOLVING CREDIT NOTE



                                                              New York, New York
$                                                                         , 1998
 ----------                                                   --------- --

     FOR VALUE RECEIVED, the undersigned, CORE-MARK INTERNATIONAL, INC., a 
Delaware corporation (the "BORROWER"), hereby unconditionally promises to pay 
to the order of __________________ (the "LENDER") at the office of The Chase 
Manhattan Bank, located at 270 Park Avenue, New York, New York 10017, in 
lawful money of the United States of America and in immediately available 
funds, on the Termination Date the principal amount of (a) ____________ 
($___________), or, if less, (b) the aggregate unpaid principal amount of all 
Revolving Credit Loans made by the Lender to the Borrower pursuant to 
subsection 2.1 of the Credit Agreement, as hereinafter defined.  The Borrower 
further agrees to pay interest in like money at such office on the unpaid 
principal amount hereof from time to time outstanding at the rates and on the 
dates specified in subsections 2.5 and 2.10 of such Credit Agreement.

     The holder of this Note is authorized to endorse on the schedules 
annexed hereto and made a part hereof or on a continuation thereof which 
shall be attached hereto and made a part hereof the date, Type and amount of 
each Revolving Credit Loan made pursuant to the Credit Agreement and the date 
and amount of each payment or prepayment of principal thereof, each 
continuation thereof, each conversion of all or a portion thereof to another 
Type and, in the case of Eurodollar Loans, the length of each Interest Period 
with respect thereto.  Each such endorsement, absent manifest error, shall 
constitute PRIMA FACIE evidence of the accuracy of the information endorsed. 
The failure to make any such endorsement or any error in such endorsement 
shall not affect the obligations of the Borrower in respect of such Revolving 
Credit Loan.

     This Note (a) is one of the Revolving Credit Notes referred to in the 
Amended and Restated Credit Agreement dated as of ___________ __, 1998 (as 
amended, supplemented or otherwise modified from time to time, the "CREDIT 
AGREEMENT"), among the Borrower, the Lender, the other banks and financial 
institutions from time to time parties thereto and The Chase Manhattan Bank, 
as administrative agent, (b) is subject to the provisions of the Credit 
Agreement and (c) is subject to optional and mandatory prepayment in whole or 
in part as provided in the Credit Agreement.  This Note is secured and 
guaranteed as provided in the Loan Documents.  Reference is hereby made to 
the Loan Documents for a description of the properties and assets in which a 
security interest has been granted, the nature and extent of the security and 
the guarantees, the terms and conditions upon which the security interests 
and each guarantee were granted and the rights of the holder of this Note in 
respect thereof.

<PAGE>

     Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.

     All parties now and hereafter liable with respect to this Note, whether as
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind in connection
with this Note.

     Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.

     THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.



                                   CORE-MARK INTERNATIONAL, INC.


                                      ---------------------------------
                                   By:
                                     Name:
                                     Title:

                                       2

<PAGE>

                                                                      Schedule A
                                                        TO REVOLVING CREDIT NOTE

                    LOANS, CONVERSIONS AND REPAYMENTS OF ABR LOANS

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                               Amount               Amount of           Amount of ABR Loans        Unpaid Principal
            Amount of       Converted to          Principal of             Converted to                Balance of          Notation
Date        ABR Loans         ABR Loans         ABR Loans Repaid         Eurodollar Loans              ABR Loans           Made By
------------------------------------------------------------------------------------------------------------------------------------
<S>         <C>             <C>                 <C>                     <C>                        <C>                     <C>
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</TABLE>


<PAGE>
                                                                      Schedule B
                                                        TO REVOLVING CREDIT NOTE
<TABLE>
<CAPTION>
       LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS

                                          Interest Period       Amount of            Amount of
        Amount of          Amount         and Eurodollar       Principal of      Eurodollar Loans    Unpaid Principal     
        Eurodollar      Converted to        Rate with        Eurodollar Loans      Converted to         Balance of       Notation
Date      Loans       Eurodollar Loans    Respect Thereto         Repaid              ABR Loans      Eurodollar Loans    Made By 
<S>     <C>           <C>                 <C>                <C>                 <C>                 <C>                 <C>
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</TABLE>