REVOLVING CREDIT AGREEMENT


                          Dated as of January 26, 1996


                                  By And Among



                             ONEITA INDUSTRIES, INC.

                                       AND


                 SUNTRUST BANK, ATLANTA individually, as Agent,
                          and as Administrative Agent,

                  FIRST UNION NATIONAL BANK OF SOUTH CAROLINA,
                         individually and as Agent, and

                                NATWEST BANK N.A.




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                        TABLE OF CONTENTS

                                                                          Page

ARTICLE I     DEFINITIONS; CONSTRUCTION. . . . . . . . . . . . . .           2

    Section 1.01.   Definitions. . . . . . . . . . . . . . . . . .           2
    Section 1.02.   Accounting Terms and
                    Determination. . . . . . . . . . . . . . . . .          26
    Section 1.03.   Other Definitional Terms . . . . . . . . . . .          26
    Section 1.04.   Exhibits and Schedules . . . . . . . . . . . .          26


ARTICLE II    REVOLVING CREDIT COMMITMENTS . . . . . . . . . . . .          26

    Section 2.01.   Commitment; Use of Proceeds. . . . . . . . . .          26
    Section 2.02.   Notes; Repayment of Principal. . . . . . . . .          27
    Section 2.03.   Voluntary Reduction of Commitments . . . . . .          27


ARTICLE III   GENERAL LOAN TERMS . . . . . . . . . . . . . . . . .          28

    Section 3.01.   Funding Notices. . . . . . . . . . . . . . . .          28
    Section 3.02.   Disbursement of Funds. . . . . . . . . . . . .          29
    Section 3.03.   Interest . . . . . . . . . . . . . . . . . . .          30
    Section 3.04.   Interest Periods . . . . . . . . . . . . . . .          31
    Section 3.05.   Fees . . . . . . . . . . . . . . . . . . . . .          33
    Section 3.06.   Prepayments of Borrowings. . . . . . . . . . .          33
    Section 3.07.   Payments, etc. . . . . . . . . . . . . . . . .          34
    Section 3.08.   Interest Rate Not Ascertainable,
                    etc. . . . . . . . . . . . . . . . . . . . . .          36
    Section 3.09.   Illegality . . . . . . . . . . . . . . . . . .          36
    Section 3.10.   Increased Costs. . . . . . . . . . . . . . . .          37
    Section 3.11.   Lending Offices. . . . . . . . . . . . . . . .          38
    Section 3.12.   Funding Losses . . . . . . . . . . . . . . . .          39
    Section 3.13.   Assumptions Concerning Funding of
                    Eurodollar Advances. . . . . . . . . . . . . .          39
    Section 3.14    Apportionment of Payments. . . . . . . . . . .          40
    Section 3.15.   Sharing of Payments, Etc.. . . . . . . . . . .          40
    Section 3.16.   Capital Adequacy . . . . . . . . . . . . . . .          40
    Section 3.17.   Benefits to Guarantors . . . . . . . . . . . .          41

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ARTICLE IV    CONDITIONS TO BORROWINGS . . . . . . . . . . . . . .          41

    Section 4.01.   Conditions Precedent to
                    Initial Loans. . . . . . . . . . . . . . . . .          41
    Section 4.02.   Conditions to All Loans. . . . . . . . . . . .          45


 ARTICLE V    REPRESENTATIONS AND WARRANTIES . . . . . . . . . . .          46

    Section 5.01.   Organization and Qualification . . . . . . . .          46
    Section 5.02.   Corporate Authority. . . . . . . . . . . . . .          46
    Section 5.03.   Financial Statements . . . . . . . . . . . . .          47
    Section 5.04.   Tax Returns. . . . . . . . . . . . . . . . . .          48
    Section 5.05.   Judgments, Actions, Proceedings. . . . . . . .          48
    Section 5.06.   Title to Properties. . . . . . . . . . . . . .          48
    Section 5.07.   Enforceability of Agreement. . . . . . . . . .          49
    Section 5.08.   Consent. . . . . . . . . . . . . . . . . . . .          49
    Section 5.09.   Use of Proceeds; Federal Reserve
                    Regulations. . . . . . . . . . . . . . . . . .          49
    Section 5.10.   ERISA. . . . . . . . . . . . . . . . . . . . .          49
    Section 5.11.   Ownership Structure. . . . . . . . . . . . . .          52
    Section 5.12.   Outstanding Debt . . . . . . . . . . . . . . .          52
    Section 5.13.   Burdensome Documents . . . . . . . . . . . . .          52
    Section 5.14.   No Defaults. . . . . . . . . . . . . . . . . .          52
    Section 5.15.   Compliance with Laws . . . . . . . . . . . . .          53
    Section 5.16.   Pollution and Other Regulations. . . . . . . .          53
    Section 5.17.   Possession of Franchises, Licenses,
                    Etc. . . . . . . . . . . . . . . . . . . . . .          54
    Section 5.18    Intangibles. . . . . . . . . . . . . . . . . .          54
    Section 5.19.   Governmental Consent . . . . . . . . . . . . .          54
    Section 5.20.   Disclosure . . . . . . . . . . . . . . . . . .          55
    Section 5.21.   Insurance Coverage . . . . . . . . . . . . . .          55
    Section 5.22.   Labor Matters. . . . . . . . . . . . . . . . .          55
    Section 5.23.   Name Changes, Mergers,
                    Acquisitions . . . . . . . . . . . . . . . . .          56
    Section 5.24    Condition of Assets. . . . . . . . . . . . . .          56


ARTICLE VI    AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . .          56

    Section 6.01.   Corporate Existence, Etc.. . . . . . . . . . .          56
    Section 6.02.   Compliance with Laws, Etc. . . . . . . . . . .          56
    Section 6.03.   Payment of Taxes and Claims, Etc.. . . . . . .          57
    Section 6.04.   Books and Records. . . . . . . . . . . . . . .          57
    Section 6.05.   Inspections and Audits . . . . . . . . . . . .          57
    Section 6.06.   Maintenance and Repairs. . . . . . . . . . . .          58

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    Section 6.07.   Reporting Covenants. . . . . . . . . . . . . .          58
    Section 6.08.   Financial Covenants. . . . . . . . . . . . . .          62
    Section 6.09.   Notices Under Certain Other
                    Indebtedness . . . . . . . . . . . . . . . . .          63
    Section 6.10.   Additional Significant Subsidiaries. . . . . .          64
    Section 6.11.   Ownership of Significant4
                    Subsidiaries . . . . . . . . . . . . . . . . .          64
    Section 6.12.   Insurance. . . . . . . . . . . . . . . . . . .          64
    Section 6.13.   Copies of Corporate Documents. . . . . . . . .          64


 ARTICLE VII  NEGATIVE COVENANTS . . . . . . . . . . . . . . . . .          65

    Section 7.01.   Reserved . . . . . . . . . . . . . . . . . . .          65
    Section 7.02.   Liens. . . . . . . . . . . . . . . . . . . . .          65
    Section 7.03.   Mergers, Acquisitions. . . . . . . . . . . . .          66
    Section 7.04.   Investments, Loans, Etc. . . . . . . . . . . .          66
    Section 7.05.   Capital Expenditures . . . . . . . . . . . . .          67
    Section 7.06.   Minimum Tangible Net Worth . . . . . . . . . .          67
    Section 7.07.   Sale and Leaseback Transactions. . . . . . . .          67
    Section 7.08.   Transactions with Affiliates . . . . . . . . .          67
    Section 7.09.   Optional Prepayments . . . . . . . . . . . . .          68
    Section 7.10.   Changes in Business. . . . . . . . . . . . . .          69
    Section 7.11.   ERISA Obligations. . . . . . . . . . . . . . .          69
    Section 7.12.   Additional Negative Pledges. . . . . . . . . .          69
    Section 7.13.   Limitation on Payment Restrictions
                    Affecting Consolidated Companies . . . . . . .          70
    Section 7.14.   Actions Under Certain Documents. . . . . . . .          70
    Section 7.15.   Redemptions, Distributions . . . . . . . . . .          70
    Section 7.16.   Stock Issuance . . . . . . . . . . . . . . . .          70
    Section 7.17.   Fiscal Year. . . . . . . . . . . . . . . . . .          70
    Section 7.18.   Hazardous Material . . . . . . . . . . . . . .          71


ARTICLE VIII  EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . .          71

    Section 8.01.   Payments . . . . . . . . . . . . . . . . . . .          71
    Section 8.02.   Covenants Without Notice . . . . . . . . . . .          71
    Section 8.03.   Other Covenants. . . . . . . . . . . . . . . .          71
    Section 8.04.   Representations. . . . . . . . . . . . . . . .          71
    Section 8.05.   Non-Payments of Other Indebtedness . . . . . .          71
    Section 8.06.   Defaults Under Other Agreements. . . . . . . .          72
    Section 8.07.   Bankruptcy . . . . . . . . . . . . . . . . . .          72
    Section 8.08.   Judgment . . . . . . . . . . . . . . . . . . .          73

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    Section 8.09.   Attachments. . . . . . . . . . . . . . . . . .          73
    Section 8.10.   ERISA. . . . . . . . . . . . . . . . . . . . .          73
    Section 8.11.  Ownership of Credit Parties
                    and Pledged Entities . . . . . . . . . . . . .          73
    Section 8.12.   Change in Control of Borrower. . . . . . . . .          74
    Section 8.13.   Credit Documents . . . . . . . . . . . . . . .          74


ARTICLE IX    THE AGENT. . . . . . . . . . . . . . . . . . . . . .          74

    Section 9.01.   Appointment of Agent and the
                    Administrative Agent . . . . . . . . . . . . .          74
    Section 9.02.   Nature of Duties of Agent and
                    the Administrative Agent . . . . . . . . . . .          75
    Section 9.03.   Lack of Reliance on Agent and
                    the Administrative Agent . . . . . . . . . . .          75
    Section 9.04.   Certain Rights of the Agent and
                    the Administrative Agent . . . . . . . . . . .          76
    Section 9.05.   Reliance by Agent and Administrative
                    Agent. . . . . . . . . . . . . . . . . . . . .          76
    Section 9.06.   Indemnification of the Agent and
                    the Administrative Agent . . . . . . . . . . .          77
    Section 9.07.   The Agent and Administrative Agent
                    in their Individual Capacities . . . . . . . .          77
    Section 9.08.   Holders of Notes . . . . . . . . . . . . . . .          77
    Section 9.09.   Successor Agent; Successor
                    Administrative Agent . . . . . . . . . . . . .          78

ARTICLE X     MISCELLANEOUS. . . . . . . . . . . . . . . . . . . .          78

    Section 10.01.  Notices. . . . . . . . . . . . . . . . . . . .          78
    Section 10.02.  Amendments, Etc. . . . . . . . . . . . . . . .          79
    Section 10.03.  No Waiver; Remedies Cumulative . . . . . . . .          79
    Section 10.04.  Payment of Expenses,Indemnity, Etc.. . . . . .          80
    Section 10.05.  Right of Setoff. . . . . . . . . . . . . . . .          82
    Section 10.06.  Benefit of Agreement . . . . . . . . . . . . .          82
    Section 10.07.  Governing Law; Submission to
                    Jurisdiction . . . . . . . . . . . . . . . . .          85
    Section 10.08.  Independent Nature of Lenders'
                    Rights . . . . . . . . . . . . . . . . . . . .          86
    Section 10.09.  Counterparts . . . . . . . . . . . . . . . . .          86
    Section 10.10.  Effectiveness; Survival. . . . . . . . . . . .          86
    Section 10.11.  Severability . . . . . . . . . . . . . . . . .          86
    Section 10.12.  Independence of Covenants. . . . . . . . . . .          86

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    Section 10.13.  Change in Accounting Principles,
                    Fiscal Year or Tax Laws. . . . . . . . . . . .          86
    Section 10.14.  Headings Descriptive; Entire
                    Agreement. . . . . . . . . . . . . . . . . . .          87
    Section 10.15.  Time is of the Essence . . . . . . . . . . . .          87
    Section 10.16.  Usury. . . . . . . . . . . . . . . . . . . . .          87
    Section 10.17.  Construction . . . . . . . . . . . . . . . . .          87
    Section 10.18.  Release of Collateral. . . . . . . . . . . . .          88
    Section 10.19.  Confidentiality. . . . . . . . . . . . . . . .          88
    Section 10.20   Provisions Relating to the
                    Refinanced Indebtedness. . . . . . . . . . . .          88

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                            SCHEDULES

Schedule 1.01           Applicable Margin Percentages

Schedule 5.01           Organization and Ownership of
                           Subsidiaries
Schedule 5.03           Material Changes since 9/30/95
Schedule 5.05           Certain Pending and Threatened
                           Litigation
Schedule 5.08           Governmental Approvals and Consents
Schedule 5.10           Employee Benefit Plans
Schedule 5.12           Existing Indebtedness
Schedule 5.16           Environmental Matters
Schedule 5.18           Patent, Trademark, License, and
                           Other Intellectual Property
                           Matters
Schedule 5.22           Labor and Employment Matters
Schedule 5.23           Name Change, etc.
Schedule 6.10           Additional Significant Subsidiaries
                           Documentation
Schedule 7.02           Existing Liens


                             EXHIBITS

Exhibit A               Form of Assignment and Acceptance
Exhibit B               Form of Borrower Security Agreement
Exhibit C               Form of Guarantor Security Agreement
Exhibit D               Form of Guaranty
Exhibit E               Form of Promissory Note
Exhibit F               Form of Closing Certificate of Borrower
Exhibit G-1             Form of Opinion of Counsel to the
                           Borrower
Exhibit G-2             Form of Opinion of Counsel to the
                        Guarantor
Exhibit G-3             Form of Opinion of Local Counsel to the
                             Credit Parties in Alabama, Georgia,
                             South Carolina North Carolina
Exhibit H               Form of Borrowing Base Certificate
Exhibit I               Form of Standby Agreement


<PAGE>

                           REVOLVING CREDIT AGREEMENT


     THIS  REVOLVING  CREDIT  AGREEMENT,  dated  as of  January  26,  1996  (the
"Agreement")  by and among  ONEITA  INDUSTRIES,  INC.  ("Borrower"),  a Delaware
corporation, SUNTRUST BANK, ATLANTA ("SunTrust"), a Georgia banking corporation,
FIRST UNION  NATIONAL BANK OF SOUTH  CAROLINA,  a national  banking  association
("First  Union"),   and  NATWEST  BANK  N.A.,  a  national  banking  association
("NatWest")  (SunTrust,  First  Union and NatWest  are  hereinafter  referred to
collectively,  as the "Lenders" and, individually,  as a "Lender"), SUNTRUST and
FIRST UNION as Agent for the Lenders,  and SUNTRUST as Administrative  Agent for
Lenders.


                              W I T N E S S E T H :


     WHEREAS, SunTrust and NatWest have each made a $12,500,000 revolving credit
facility  available  to the Borrower  pursuant to that  certain Loan  Agreement,
dated as of March 26,  1993,  among  the  Borrower,  SunTrust  and  NatWest,  as
heretofore amended or modified, and SunTrust and NatWest have independently made
guidance lines of credit  available to the Borrower in the principal  amounts of
$10,000,000 and $5,000,000, respectively;

     WHEREAS,  First Union has made a guidance  line of credit  available to the
Borrower in the principal amount of $10,000,000;

     WHEREAS the Borrower has requested that  SunTrust,  NatWest and First Union
amend and restate their  existing  facilities  and increase the total  principal
amount of such facilities to  $60,000,000,  and the Lenders are willing to do so
subject to the terms and conditions hereof,  including without  limitation,  the
guarantees of the Borrower's  significant  subsidiaries  and a lien upon certain
assets of the Borrower and its significant subsidiaries;

     NOW,  THEREFORE,  for and in  consideration  of the mutual  covenants  made
herein,  and  for  other  good  and  valuable  consideration,  the  receipt  and
sufficiency of which are hereby acknowledged,  the parties hereto,  intending to
be legally bound, agree as follows:


<PAGE>

                                    ARTICLE I

                            DEFINITIONS; CONSTRUCTION

     Section  1.01.  Definitions.   As  used  in  this  Agreement,  and  in  any
instrument,  certificate,  document or report  delivered  pursuant  hereto,  the
following terms shall have the following  meanings (to be equally  applicable to
both the singular and plural forms of the term defined):

     "Adjusted LIBO Rate" shall mean, with respect to each Interest Period for a
Eurodollar  Advance,  the rate  obtained by dividing (A) LIBOR for such Interest
Period by (B) a percentage equal to 1 minus the then stated maximum rate (stated
as a decimal) of all reserves requirements (including,  without limitation,  any
marginal, emergency,  supplemental, special or other reserves) applicable to any
member bank of the Federal  Reserve System in respect of Eurodollar  liabilities
as defined in Regulation D (or against any successor  category of liabilities as
defined in Regulation D).

     "Administrative Agent" shall mean SunTrust Bank, Atlanta, a Georgia banking
corporation, and each successor Administrative Agent.

     "Advance"   shall  mean  any  principal   amount   advanced  and  remaining
outstanding  at any  time  under  the  Loans,  which  Advance  shall  be made or
outstanding as a Base Rate Advance or Eurodollar Advance, as the case may be.

     "Affiliate"  of any Person  means any other Person  directly or  indirectly
controlling,  controlled by, or under common control with, such Person,  whether
through the  ownership  of voting  securities,  by contract  or  otherwise.  For
purposes of this definition, "control" (including with correlative meanings, the
terms  "controlling",  "controlled  by",  and "under  common  control  with") as
applied to any Person,  means the  possession,  directly or  indirectly,  of the
power to direct or cause the  direction of the  management  and policies of that
Person,  provided  that,  in any event:  (i) any Person  that owns  directly  or
indirect thirty percent (30%) or more of the securities have the ordinary voting
power for the election of directors or other  governing body of a corporation or
thirty percent (30%) or more of the partnership or other ownership  interests of
any other  Person  (other than a limited  partner of such other  Person) will be

<PAGE>

deemed to control such  corporation or other Person;  and (ii) each director and
officer of the Borrower shall be deemed to be an Affiliate of the Borrower.

     "Agent"  shall mean  SunTrust and First Union,  jointly and  severally,  as
agent for the Lenders hereunder and under the other Credit  Documents,  and each
successor Agent.

     "Agreement"  shall  mean  this  Revolving  Credit   Agreement,   either  as
originally  executed  or as it may be from time to time  supplemented,  amended,
restated, renewed or extended and in effect.

     "Applicable Law" shall mean (i) all applicable common law and principles of
equity and (ii) all applicable  provisions of all (a)  constitutions,  statutes,
rules,  regulations  and  orders  of  Governmental  Agencies,  (b)  Governmental
Approvals  and (c) orders,  decisions,  judgments  and decrees of all courts and
arbitrators.

     "Applicable Margin" shall mean, (i) with respect to all Eurodollar Advances
outstanding under the Commitments through March 31, 1996, two and three-quarters
of one percent  (2.75%) per annum,  (ii) with respect to all Base Rate  Advances
outstanding under the Commitments through March 31, 1996,  three-quarters of one
percent  (0.75%) per annum,  and (iii) with respect to all Advances  outstanding
under  to the  Commitments  commencing  on April 1,  1996  and  thereafter,  the
relevant  percentage  indicated  on Schedule  1.01  hereto for the  Consolidated
Companies'  Funded  Debt to EBITDA  Ratio and  Leverage  Ratio,  based  upon the
financial  statements  delivered to the Lenders  pursuant to Section  6.07(a) or
Section  6.07(b) hereof,  as the case may be, with such Applicable  Margin to be
effective  with  respect to  calculations  based upon the  financial  statements
delivered  pursuant to Section  6.07(b) as of the first day of the second fiscal
quarter  immediately  following  the fiscal  quarter  for which  such  financial
statements  are delivered and with such  Applicable  Margin to be effective with
respect to calculations based upon the financial  statements  delivered pursuant
to Section  6.07(a) on the earlier of (y) delivery of such financial  statements
(but in no event earlier than 90 days after the end of any fiscal year), and (z)
the date which is 120 days after the end of each fiscal year of the Borrower.

     "Asbestos  Laws" shall mean the common law in all federal,  state and local
and foreign jurisdictions and other laws in such jurisdictions, and regulations,
codes, orders, decrees, judgments or injunctions issued,  promulgated,  approved

<PAGE>

or entered  thereunder,  now or  hereafter in effect  relating to or  concerning
asbestos or asbestos-containing material, including without limitation, exposure
to asbestos or asbestos-containing material.

     "Asset Sale" shall mean the conveyance,  sale, lease, assignment,  transfer
or other  disposition by the Borrower or any of its Subsidiaries of any of their
respective properties, assets or business.

     "Asset  Value"  shall mean,  with  respect to any  property or asset of any
Consolidated  Company as of any particular  date, an amount equal to the greater
of (i) the  then  book  value  of such  property  or  asset  as  established  in
accordance  with GAAP,  and (ii) the then fair market value of such  property or
asset as determined in good faith by the board of directors of such Consolidated
Company.

     "Assignment and Acceptance" shall mean an assignment and acceptance entered
into by a Lender and an Eligible  Assignee in accordance  with the terms of this
Agreement and substantially in the form of Exhibit A.

     "Avondale" shall mean Avondale Mills, Inc., an Alabama corporation.

     "Avondale Debt" shall mean all Indebtedness  and other  obligations owed by
the Borrower to Avondale (including,  without limitation,  principal,  interest,
premiums, make-whole and yield maintenance amounts, fees, costs and expenses and
all other amounts owing by the Borrower to Avondale)  arising under or evidenced
by the Avondale Note, the Convertible Note to Avondale and the Subordinated Debt
Documents.

     "Avondale Note" shall mean that certain  Subordinated  10% Promissory Note,
dated as of the date  hereof,  executed by the  Borrower in favor of Avondale in
the  principal  amount of  $7,500,000,  as any of the  foregoing  may  hereafter
amended,  restated,  replaced,  supplemented or otherwise  modified from time to
time with the prior written consent of the Lenders.

     "Avondale/Gintel  Documents"  shall mean,  collectively,  (i) that  certain
Registration Rights Agreement,  dated as of the date hereof, among the Borrower,
Gintel  and  Avondale,  (ii) the  Standby  Agreement,  (iii) that  certain  Note

<PAGE>

Purchase  Agreement,  dated as of December 28, 1995, among the Borrower,  Gintel
and Avondale and (iv) all other documents and agreements  executed in connection
therewith, as any of the foregoing may be hereafter amended, restated, replaced,
supplemented  or  otherwise  modified  with the  prior  written  consent  of the
Lenders.

     "Bankruptcy Code" shall mean The Bankruptcy Code of 1978, as amended and in
effect from time to time (11 U.S.C. 101 et seq.).

     "Base Rate" shall mean (with any change in the Base Rate to be effective as
of the date of change of either of the  following  rates)  the higher of (a) the
rate which the Administrative Agent designates from time to time to be its prime
lending rate, as in effect from time to time, and (b) the Federal Funds Rate, as
in effect from time to time, plus one-half of one percent (0.50%) per annum. The
Administrative  Agent's  prime  lending  rate is a  reference  rate and does not
necessarily  represent  the  lowest  or best  rate  charged  to  customers;  the
Administrative  Agent  may make  commercial  loans  or  other  loans at rates of
interest at, above or below the Administrative Agent's prime lending rate.

     "Base Rate Advance"  shall mean an Advance  bearing  interest  based on the
Base Rate.

     "Base Rate Loan" shall mean any Loan  hereunder  which bears interest based
on the Base Rate.

     "Borrower  Security  Agreement" shall mean that certain Security  Agreement
(Borrower),  dated as of the date  hereof,  executed by the Borrower in favor of
the Collateral  Agent,  substantially  in the form of Exhibit B, as the same may
hereafter be amended, restated,  supplemented or otherwise modified from time to
time.

     "Borrowing"  shall mean the  incurrence by Borrower of Advances of one Type
concurrently  having the same Interest Period or the  continuation or conversion
of an existing Borrowing or Borrowings in whole or in part.

     "Borrowing Base" shall mean, at any time, an amount equal to the sum of:


<PAGE>

         (i) eighty percent (80%) of Eligible Accounts Receivable,
    plus

         (ii) the lesser of (A) fifty percent (50%) of Eligible  Finished  Goods
    Inventory and (B) (1)  $35,000,000 at any time on or prior to April 30, 1996
    and (2) $30,000,000 thereafter, plus

         (iii) (A) thirty  percent (30%) of Eligible  Work-In-Process  Inventory
    during the period  commencing  January 1, 1996 and ending on March 31, 1996,
    (B) twenty-five percent (25%) of Eligible  Work-In-Process  Inventory during
    the period  commencing  on April 1, 1996 and ending on May 31,  1996 and (C)
    none of Eligible Work-In-Process Inventory after May 31, 1996, plus

         (iv) $5,000,000  during the period  commencing on November 1 and ending
    on May 31  during  each  year,  including,  without  limitation  the  period
    commencing as of the Closing Date and ending on May 31, 1996.

     "Business Day" shall mean, with respect to Eurodollar  Loans, any day other
than a day on which  commercial  banks are closed or  required  to be closed for
domestic and international  business,  including  dealings in Dollar deposits on
the London  Interbank  Market,  and with respect to all other Loans and matters,
any day other  than  Saturday,  Sunday and a day on which  commercial  banks are
closed or required to be closed for  business in Atlanta,  Georgia,  Greenville,
South Carolina or New York, New York.

     "Capital  Expenditures"  shall mean, for any fiscal period of the Borrower,
the total capital  expenditures of the Consolidated  Companies on a consolidated
basis made during such period, as determined in accordance with GAAP.

     "Capitalized   Lease  Obligations"  shall  mean,  as  to  any  Person,  the
obligations  of such  Person to pay rent or other  amounts  under a lease of (or
other  agreement  conveying  the right to use) real or personal  property  which
obligations  are required to be classified  and accounted for as a capital lease
on a  balance  sheet  of such  Person  under  GAAP  and,  for  purposes  of this
Agreement,  the  amount  of such  obligations  shall be the  capitalized  amount
thereof determined in accordance with GAAP.


<PAGE>

     "CERCLA" means the Comprehensive  Environmental  Response  Compensation and
Liability Act as amended by the Super Fund Amendments and  Reauthorization  Act,
42 U.S.C. 9601 et seq., and as amended from time to time.

     "Closing  Date" shall mean the date on or before January 26, 1996, on which
the  initial  Loans are made and the  conditions  set forth in Section  4.01 are
satisfied or waived in accordance with Section 10.02.

     "Code" shall mean the Internal  Revenue Code of 1986,  as amended from time
to time.

     "Collateral  Agent" shall mean SunTrust Bank,  Atlanta,  in its capacity as
collateral agent for the Lenders and Prudential, and its successors and assigns.

     "Commitment"  shall  mean,  for any Lender at any time,  the amount of such
commitment set forth  opposite such Lender's name on the signature  pages hereof
under the caption  "Commitment",  as the same may be increased or decreased from
time to time as a result of any reduction  thereof pursuant to Section 2.03, any
assignment  thereof pursuant to Section 10.06, or any amendment thereof pursuant
to Section 10.02.

     "Consolidated Companies" shall mean, collectively,  Borrower and all of its
Subsidiaries.

     "Consolidated EBITDA" shall mean, for any fiscal period of the Borrower, an
amount equal to the sum of (A) Consolidated  Net Income (Loss),  plus (B) to the
extent deducted in determining  Consolidated Net Income (Loss), (i) Consolidated
Interest Expense, (ii) provisions for taxes based on income for the Consolidated
Companies,  and (iii)  depreciation  expense  and  amortization  expense  of the
Consolidated Companies.

     "Consolidated EBITR" shall mean, for any fiscal period of the Borrower,  an
amount equal to the sum of (A) Consolidated  Net Income (Loss),  plus (B) to the
extent deducted in determining  Consolidated  Net Income (Loss),  (i) provisions
for taxes based on income for the Consolidated  Companies for such period,  (ii)
Consolidated Interest Expense, and (iii) Consolidated Rental Expense.


<PAGE>

     "Consolidated  Interest  Expense"  shall  mean,  for any  fiscal  period of
Borrower, total interest expense (including without limitation, interest expense
attributable  to  capitalized  leases) of the  Consolidated  Companies  for such
period, determined on a consolidated basis in accordance with GAAP.

     "Consolidated  Net Income  (Loss)"  shall  mean,  for any fiscal  period of
Borrower,  the net  income  (or  loss) of the  Consolidated  Companies  for such
period, determined on a consolidated basis in accordance with GAAP;

     "Consolidated  Rental  Expense"  shall  mean,  for  any  fiscal  period  of
Borrower,  total operating lease expense of the Consolidated  Companies for such
period, determined on a consolidated basis in accordance with GAAP.

     "Consolidated  Subsidiary"  shall  mean,  as at any  particular  time,  any
corporation included as a consolidated Subsidiary of Borrower in Borrower's most
recent  financial  statements  furnished to its  stockholders  and  certified by
Borrower's  independent public  accountants,  provided that under then generally
accepted accounting  principles approved by such independent public accountants,
such corporation may continue to be so included as a consolidated  Subsidiary of
Borrower in any financial statements thereafter certified by such accountants.

     "Contractual  Obligation"  of any Person  shall mean any  provision  of any
security  issued by such Person or of any  agreement,  instrument or undertaking
under which such Person is obligated or by which it or any of the property owned
by it is bound.

     "Controlled  Group"  shall  mean  all  members  of a  controlled  group  of
corporations and all trades or businesses  (whether or not  incorporated)  under
common  control  which,  together  with the  Borrower,  are  treated as a single
employer  under  Section  414(b),  414(c)  or  414(m)  of the Code  and  Section
4001(a)(14) of ERISA.

     "Convertible  Notes"  shall  have the  meaning  set forth in  Section  7.09
hereof.

     "Credit Documents" shall mean, collectively, this Agreement, the Notes, the
Guaranty Agreement,  the Security Agreements,  the Intercreditor  Agreement, the
Subordination Agreement, all UCC-1 financing statements and other instruments of

<PAGE>

perfection  executed  in  connection  therewith  and  all  other  documents  and
instruments  relating to, guaranteeing or securing the Loans, as the same may be
amended, restated, supplemented or otherwise modified from time to time.

     "Credit  Parties"  shall  mean,   collectively,   each  of  Borrower,   the
Guarantors,  and each  other  Person  who from  time to time  executes  a Credit
Document with respect to all or any portion of the Obligations.

     "Current  Assets" shall mean,  for any fiscal  period of the Borrower,  the
current assets of the Consolidated  Companies determined on a consolidated basis
in accordance with GAAP.

     "Current  Liabilities"  shall mean,  for any fiscal period of the Borrower,
the  current  liabilities  of  the  Consolidated   Companies   determined  on  a
consolidated  basis  in  accordance  with  GAAP,  and  shall  include,   without
limitation,  as of the date of any determination  thereof:  (i) all Indebtedness
payable on demand or maturing within one year after such date without any option
on the part of the  obligor  to extend or renew  beyond  such  year,  (ii) final
maturities,  installments  and prepayments of  Indebtedness  required to be made
within one year after such date, (iii) the unpaid principal balance of the Notes
due within one year after such date, and (iv) all other items  (including  taxes
accrued as  estimated  and reserves  for  deferred  income  taxes) that would be
included on a balance sheet as current liabilities in accordance with GAAP.

     "Current  Ratio" shall mean the ratio of (A) Current  Assets to (B) Current
Liabilities,  but excluding all Loans then outstanding to the extent included in
Current Liabilities.

     "Debt Instrument" shall mean, as to any Person, any bond, note,  debenture,
credit  or  loan  agreement,  indenture,  guaranty,  trust  agreement,  security
agreement,  pledge agreement,  deed of trust, capital lease, mortgage or similar
agreement or instrument to which such Person is a party, by which it is bound or
by which any of its properties or assets may be affected.

     "Debt  Service  Coverage  Ratio"  shall  mean,  as at the end of any fiscal
period of Borrower,  the ratio of (A) the sum of Consolidated Net Income (Loss),
plus to the  extent  deducted  in  determining  such  Consolidated  Net  Income,

<PAGE>

depreciation  expense and amortization  expense of the  Consolidated  Companies,
plus  Consolidated  Interest  Expense  to (B) an  amount  equal  to the  current
maturities of Long-term Indebtedness of the Consolidated Companies, minus to the
extent deducted in determining current maturities of Long-term Indebtedness, the
principal  amount of the Loans  then  outstanding,  plus  Consolidated  Interest
Expense,  in each case  determined on a  consolidated  basis in accordance  with
GAAP.

     "December 1995 Factoring Agreement" shall have the meaning assigned to such
term in Section 10.20 hereof.

     "Default" shall mean any condition or event which,  with notice or lapse of
time or both, would constitute an Event of Default.

     "Defined Contribution Plan" shall mean a plan which is not covered by Title
IV of ERISA or subject to the minimum  funding  standards  of Section 412 of the
Code and which provides for an individual  account for each  participant and for
benefits based solely on the amount  contributed to the  participant's  account,
and any income,  expenses,  gains and losses, and any forfeitures of accounts of
other participants which may be allocated to such participant's account.

     "Dollar" and "U.S.  Dollar" and the sign "$" shall mean lawful money of the
United States of America.

     "Eligible Accounts Receivable" shall mean any Receivable of the Borrower or
a Guarantor which the  Administrative  Agent, in the reasonable  exercise of its
credit judgment  consistent with industry  practice,  deems eligible,  provided,
that once a Receivable has been deemed eligible by the Administrative  Agent and
therefore admitted to the Borrowing Base, the Administrative Agent cannot at any
later time (provided that the Receivable  satisfies the  requirements of clauses
(i) through and including (xi) below) deem such  Receivable to be ineligible and
therefore  remove such  Receivable  from the Borrowing Base (such  Receivable to
remain  in the  Borrowing  Base  until  the  earlier  of (i)  such  time  as the
Receivable  fails to meet the  requirements of clauses (i) through and including
(xi)  below  or  (ii)  the  account  debtor  owing  such  Receivable  pays  such
Receivable),  provided,  further,  that the Administrative  Agent shall have the
right to deem other  Receivables  from the same account  debtor as ineligible as
and when they are  presented to the  Administrative  Agent to be admitted to the

<PAGE>

Borrowing Base, but must first give the Borrower or such Guarantor  thirty days'
prior notice of the ineligibility of Receivables from such account debtor;  and,
in any event,  is a  Receivable:  (i) which is  denominated  and payable only in
Dollars  in the  United  States;  (ii) which  constitutes  the legal,  valid and
binding  obligation of the obligor of such Receivable  enforceable  against such
obligor in accordance with its terms,  (iii) which is not subject to any dispute
or setoff,  counterclaim or defense whatsoever; (iv) as to which the Borrower or
such Guarantor,  as applicable,  has good and marketable  title thereto free and
clear  of  all  adverse  claims  or  other  claims  of  any  kind,  any  setoff,
counterclaim  or  defense  of any kind;  (v) which  together  with any  contract
related  thereto,  does not  contravene  in any material  respect any federal or
state law, statute,  rule,  regulation,  ordinance,  code, order and judgment (a
"Law")  applicable  thereto and with  respect to which no party to any  contract
related  thereto is in violation of any such Law in any material  respect;  (vi)
which  satisfies  all  applicable  requirements  of the  credit  and  collection
policies and practices of the Borrower or such  Guarantor  (which are subject to
approval by the  Administrative  Agent, which approval shall not be unreasonably
withheld and which approval shall be consistent with industry  practice);  (vii)
payments  which  may  not  be  avoided  as a  preferential  transfer  under  the
Bankruptcy   Code   and   all   other   applicable   dissolution,   liquidation,
conservatorship,  bankruptcy,  moratorium,  readjustment  of  debt,  compromise,
rearrangement, receivership, insolvency, reorganization or similar debtor relief
laws affecting creditors' rights generally;  (viii) that is no more than 60 days
delinquent past the date due as stated on the invoice relating thereto; (ix) not
representing  customer  deductions  from  previous  payments;  (x) for an amount
which,  when combined with the aggregate amount of all other Receivables owed by
the  same  account  debtor  or  affiliate  thereof,  does not  equal  or  exceed
$5,000,000,  unless the  Administrative  Agent has been given its prior  consent
thereto and (xi) the obligor of which is not bankrupt or insolvent.

     "Eligible  Assignee"  means  any of the  following  (i) a  commercial  bank
organized under the laws of the United States, or any State thereof,  and having
total assets in excess of  $100,000,000;  (ii) a savings and loan association or
savings  bank  organized  under  the laws of the  United  States,  or any  State
thereof,  and having total assets in excess of $100,000,000;  (iii) a commercial
bank organized under the laws of any other country having total assets in excess
of  $100,000,000,  provided that such bank is acting  through a branch or agency
located in the United States; (iv) a finance company, insurance company or other

<PAGE>

financial  institution,  lender or fund (whether a  corporation,  partnership or
other entity) which is engaged in making,  purchasing or otherwise  investing in
commercial loans in the ordinary course of its business, and having total assets
in excess of at least  $100,000,000;  (v) any  Lender  or any  Affiliate  of any
Lender;  or (vi) any other  Person  consented  to by the Borrower and the Agent,
such consent not unreasonably to be withheld.

     "Eligible  Finished Goods Inventory"  shall mean Eligible  Inventory of the
Borrower or any Guarantor that consists of finished goods.

     "Eligible  Inventory"  shall mean the lower of FIFO cost or market value of
Inventory of the Borrower or any Guarantor  which the  Administrative  Agent, in
the  reasonable  exercise  of  its  credit  judgment  consistent  with  industry
practice,  shall deem eligible,  provided that any changes in credit judgment of
the  Administrative  Agent shall effective on the thirtieth (30th) day after the
Administrative  Agent gives the Borrower or such Guarantor notice of such change
in credit  judgment;  and, in any event,  such Inventory must meet the following
criteria:

         (a) the Inventory must be subject to a perfected first-priority Lien in
    favor of the  Collateral  Agent,  other than Inventory  located  outside the
    United  States for which a  Permitted  Bailee has  executed in favor of, and
    delivered to, the Collateral Agent a bailee letter in substantially the form
    of Exhibit A to the Company Security  Agreement,  provided that the value of
    Inventory  as measured as set forth  above at  locations  outside the United
    States  which  are  not  owned  or  leased  by  the  Borrower  or any of its
    Subsidiaries may not at any time exceed $5,000,000;

         (b) except for the Lien in favor of the Collateral  Agent, the Borrower
    or the  Guarantors  must  otherwise  have  clear  title  to  all  Inventory,
    regardless of where located, free and clear of all other Liens;

         (c) the Inventory  must be (i) located at one of the places of business
    of the Borrower listed on Schedule 1 of the Borrower  Security  Agreement or
    of the Guarantors listed on Schedule 1 of the Guarantor Security  Agreement,
    or (ii) in transit from one such location to another;


<PAGE>

         (d) the  Inventory may not be located at any  third-party  finishing or
    processing location or public warehouse, other than with a Permitted Bailee,
    and the  Inventory  may not be in the  possession  of a bailee  other than a
    Permitted Bailee;

         (e) the  Inventory  consists of  finished  goods  Inventory  or work in
    process Inventory,  and does not consist of raw materials  Inventory used in
    the  manufacture  of  finished  goods  or  processing  supplies,  packaging,
    advertising,  promotional  materials,  stores or other  non-product  related
    items;

         (f) the Inventory  has been  inspected and does not consist of returned
    goods which are currently  unsalable in the ordinary  course of the business
    of the Borrower or the Guarantor;

         (g)  the Inventory is not under consignment to or from
    any Person or under any bill and hold or like arrangement;

         (h) the  Inventory  is of  good  and  merchantable  quality,  has  been
    accurately graded as first quality, second quality or third quality, and has
    been  accurately  valued to  reflect  its  status as first  quality,  second
    quality or third quality as the case may be;

         (i)  the Inventory meets all standards imposed by any
    Governmental Agency having regulatory authority over such
    Inventory; and

         (j) with  respect to such  Inventory,  any  representation  or warranty
    contained  herein or in any other Credit  Documents  applicable to Inventory
    has not been breached;

the  Administrative  Agent hereby  acknowledges  that as of the Closing Date the
amount and mix of the Inventory is acceptable in the reasonable  exercise of the
Administrative Agent's credit judgment;  provided, that the Administrative Agent
may, in the  exercise of its  reasonable  credit  judgment at any time after the
Closing Date, find the amount and mix of the Inventory unacceptable, even if the
amount  and  mix of the  Inventory  is the  same  as the  amount  and mix of the
Inventory  as of the  Closing  Date,  and  therefore  deem  some  or all of such
Inventory ineligible based upon such factors,  such change in credit judgment to
be effective on the thirtieth  (30th) day after the  Administrative  Agent gives
the Borrower or such Guarantor notice thereof.


<PAGE>

     "Eligible  Work-In-Process  Inventory" shall mean Eligible Inventory of the
Borrower or any Guarantor that consists of work in process.

     "Employee  Benefit  Plan" shall mean any  employee  benefit plan within the
meaning of Section 3(3) of ERISA which (a) is  maintained  for  employees of the
Borrower  or any of its  ERISA  Affiliates  or (b) has at any  time  within  the
preceding  six (6) years been  maintained  for  employees of the Borrower or any
current ERISA Affiliate while an ERISA Affiliate.

     "Employee Welfare Benefit Plan" shall mean any employee benefit plan within
the meaning of Section 3(q) of ERISA.

     "Environmental  Laws"  shall mean all  federal,  state,  local and  foreign
statutes and codes or regulations,  rules or ordinances issued,  promulgated, or
approved thereunder, now or hereafter in effect (including,  without limitation,
those with  respect to asbestos or asbestos  containing  material or exposure to
asbestos or asbestos containing  material),  relating to pollution or protection
of the  environment  and relating to public  health and safety,  relating to (i)
emissions,   discharges,   releases  or  threatened   releases  of   pollutants,
contaminants,   chemicals  or  industrial   toxic  or  hazardous   constituents,
substances or wastes, including without limitation, any "hazardous substance" as
defined in CERCLA,  petroleum  including crude oil or any fraction thereof,  any
petroleum  product or other  waste,  chemicals  or  substances  regulated by any
Environmental Law, into the environment  (including without limitation,  ambient
air, surface water,  ground water, land surface or subsurface  strata),  or (ii)
the manufacture,  processing, distribution, use, generation, treatment, storage,
disposal,  transport  or handling of any  "hazardous  substances"  as defined in
CERCLA,  petroleum  including crude oil or any fraction  thereof,  any petroleum
product or other waste,  chemicals or substances  regulated by any Environmental
Law, and (iii)  underground  storage tanks and related  piping,  and  emissions,
discharges and releases or threatened  releases  therefrom,  such  Environmental
Laws to include,  without limitation (A) CERCLA, (B) RCRA, (C) the Federal Clean
Air Act (42 U.S.C.  7401 et seq.),  (D) the Clean  Water Act (33 U.S.C.  1251 et
seq.), (E) the Toxic Substances Control Act (15 U.S.C. 2601 et seq.) and (F) the
Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.).


<PAGE>

     "Environmental Liability" shall mean any liability under any applicable law
for any  release  of a  hazardous  substance  caused by the  seeping,  spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of hazardous wastes or other chemical substances,
pollutants or contaminants into the environment, and any liability for the costs
of any clean-up or other remedial action including,  without  limitation,  costs
arising  out  of  security  fencing,   alternative  water  supplies,   temporary
evacuation  and  housing  and  other  emergency  assistance  undertaken  by  any
environmental  regulatory  body  having  jurisdiction  over the  Borrower or any
Subsidiary  to  prevent or  minimize  any  actual or  threatened  release by the
Borrower or any Subsidiary of any Hazardous  Materials into the environment that
would endanger the public health or the environment.

     "Environmental  Matter(s)"  shall mean a release of any toxic or  hazardous
waste or other  Hazardous  Materials  into the  environment  or the  generation,
treatment,  storage  or  disposal  of any  toxic or  hazardous  wastes  or other
Hazardous Materials.

     "Environmental  Proceeding" shall mean any judgment,  action, proceeding or
investigation  pending  before  any  court or  Governmental  Agency,  including,
without  limitation,  any environmental  regulatory body, with respect to, or to
the best of the Borrower's  knowledge  threatened  against,  the Borrower or any
Subsidiary or relating to the assets of liabilities  of any of them,  including,
without  limitation,  in respect of any "facility" owned,  leased or operated by
any of them under CERCLA or any other  Environmental Law in respect thereof,  in
connection  with any release of any toxic or hazardous  waste or other Hazardous
Materials into the environment,  or with the generation,  storage or disposal of
any toxic or hazardous wastes or other chemical substances.

     "ERISA" shall mean the Employee  Retirement Income Security Act of 1974, as
it may be amended from time to time, and the regulations promulgated thereunder.


<PAGE>

     "ERISA   Affiliate"   shall  mean,  with  respect  to  the  Borrower,   any
corporation,  person or trade or  business  which is a member of the  Borrower's
Controlled Group.

     "Eurodollar  Advance" shall mean an Advance  bearing  interest based on the
Adjusted LIBO Rate.

     "Eurodollar  Loan" shall mean any Loan hereunder which bears interest based
on the Adjusted LIBO Rate.

     "Event of Default" shall have the meaning set forth in Article IX.

     "Excess Cash Flow" shall mean,  as of the end of any fiscal  quarter of the
Borrower,  an amount equal to the  Consolidated  Companies' (a) Consolidated Net
Income for such fiscal quarter,  plus (b)  depreciation  expense for such fiscal
quarter  determined on a consolidated  basis in accordance  with GAAP,  plus (c)
amortization  expense for such fiscal quarter determined on a consolidated basis
in  accordance  with  GAAP,  plus (d)  increases  in  deferred  taxes  (or minus
decreases  in  deferred   taxes)  for  such  fiscal  quarter   determined  on  a
consolidated  basis in  accordance  with GAAP,  minus (e)  increases  in Working
Capital (or plus  decreases  in Working  Capital)  (but  excluding  increases or
decreases in Working Capital  attributable to the net cash proceeds  received by
the  Borrower  from  the  issuance  of  the  Subordinated   Debt  or  any  other
Indebtedness  evidenced  by a Debt  Instrument  (except to the  extent  required
pursuant to Section  7.02(f)  hereof to be used to repay the  Obligations),  the
exercise of the Gintel  Warrant and the  consummation  of the Rights  Offering),
minus (f) Capital  Expenditures for such fiscal quarter,  minus (g) all payments
of principal  applied to current  maturities of Long-term  Indebtedness for such
fiscal quarter, in each case measured as of the last Business Day of such fiscal
quarter;  provided,  however,  that to the extent that the  foregoing  amount is
negative, the Excess Cash Flow Payment shall be deemed to be zero.

     "Exchange Act" shall mean the  Securities  Exchange Act of 1934, as amended
from time to time, and any successor statute thereto.

     "Facility" or  "Facilities"  shall mean the Revolving Loan  Commitments and
Loans.


<PAGE>

     "Factored  Receivables"  shall mean all  accounts  receivable  purchased by
SunTrust  from the Borrower  pursuant to the December 1995  Factoring  Agreement
which remain uncollected in whole or in part on the Closing Date.

     "Fayette Alabama Plant  Expenditures"  shall mean all Capital  Expenditures
made by the Borrower and its Subsidiaries at their Fayette, Alabama facility.

     "Federal Funds Rate" shall mean for any period, a fluctuating interest rate
per annum equal for each day during such period to the  weighted  average of the
rates on overnight  Federal funds  transactions with member banks of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next  preceding  Business Day) by the
Federal  Reserve Bank of Atlanta,  or, if such rate is not so published  for any
day which is a Business Day, the average of the  quotations for such day on such
transactions  received  by the  Administrative  Agent from three  Federal  funds
brokers of recognized standing selected by the Administrative Agent.

     "Final  Maturity  Date" shall mean the date on which all  commitments  have
been  terminated  and all amounts  outstanding  under this  Agreement  have been
declared or have automatically become due and payable pursuant to the provisions
of Article IX.

     "Financial  Statements"  shall mean (i) the  consolidated  audited  Balance
Sheet of the Consolidated  Companies as at September 30, 1995, together with the
related  audited  Income  Statement,   Statement  of  Shareholders'  Equity  and
Statement of Cash Flows for the fiscal year then ended.

     "Fixed  Charge  Coverage  Ratio"  shall  mean,  as at the end of any fiscal
period of Borrower,  the ratio of (A)  Consolidated  EBITR to (B) the sum of (i)
Consolidated Interest Expense plus (ii) Consolidated Rental Expense.

     "Funded Debt" of any Person shall mean all Indebtedness for money borrowed,
purchase money  mortgages,  Capitalized  Lease  Obligations,  conditional  sales
contracts and similar title retention debt instruments of such Person, including
any current  maturities  of such  indebtedness,  which by its terms matures more
than one year from the date of any calculation  thereof or which is renewable or
extendable  at the  option of the  obligor  to a date  beyond one year from such

<PAGE>

date,  including,  without  limitation,  Long-term  Indebtedness  and short-term
Indebtedness.  The  calculation  of Funded Debt of any Person shall  include all
Funded Debt of such Person, plus (without  duplication) all Funded Debt of other
entities or persons  guaranteed by such Person or which is supported by a letter
of credit issued for the account of the such Person.

     "Funded Debt Coverage Ratio" shall mean, as of the end of any fiscal period
of the Borrower,  the ratio of (A) Funded Debt of the Consolidated  Companies to
(B) Consolidated EBITDA of the Consolidated Companies.

     "GAAP" shall mean generally accepted accounting principles set forth in the
opinions and  pronouncements of the Accounting  Principles Board of the American
Institute of Certified Public  Accountants and statements and  pronouncements of
the Financial  Accounting  Standards  Board or in such other  statements by such
other  entity as may be  approved  by a  significant  segment of the  accounting
profession,  as from time to time in effect that are  consistently  applied and,
when used with respect to the Borrower,  that are consistent with the accounting
practice of the  Borrower,  as  reflected  in the  financial  statements  of the
Borrower.

     "Gintel" shall mean Robert M. Gintel,  an individual  whose principal place
of business is in Connecticut.

     "Gintel Debt" shall mean all Indebtedness and other obligations owed by the
Borrower  to  Gintel  (including,   without  limitation,   principal,  interest,
premiums,  fees and all other  amounts)  pursuant to or  evidenced by the Gintel
Notes, the Convertible Note to Gintel and the Subordinated Debt Documents.

     "Gintel Notes" shall mean, collectively,  (i) that certain Subordinated 10%
Promissory Note, dated as of the date hereof,  executed by the Borrower in favor
of  Gintel  in the  principal  amount  of  $3,750,000,  and  (ii)  that  certain
Subordinated 10% Promissory  Note, dated as of the date hereof,  executed by the
Borrower in favor of Gintel in the principal amount of $3,750,000, as any of the
foregoing  may  be  hereafter  amended,  restated,  replaced,   supplemented  or
otherwise  modified  from  time to time with the prior  written  consent  of the
Lenders.

     "Gintel  Warrant"  shall mean that  certain  Warrant,  dated as of the date
hereof,  issued by the Borrower to Gintel, for the purchase of 125,000 shares of

<PAGE>

the common  stock of the  Borrower,  as it may be hereafter  amended,  restated,
replaced,  supplemented  or otherwise  modified from time to time with the prior
written consent of the Lenders.

     "Governmental Agency" shall mean (a) any international,  foreign,  federal,
state, county or municipal government or political  subdivision thereof, (b) any
governmental  agency,  authority,  board,  bureau,  commission,   department  or
instrumentality,   (c)  any   court   or   administrative   tribunal,   (d)  any
non-governmental  agency or entity that is vested by a governmental  agency with
applicable  jurisdiction over a Person, or (e) any arbitration tribunal or other
non-governmental  authority to whose jurisdiction a Person has given its general
consent.

     "Governmental  Approval" shall mean any order,  permission,  authorization,
consent, approval,  license,  franchise,  permit or validation of, exemption by,
registration or filing with, or report or notice to, any Governmental Agency.

     "Guaranteed  Indebtedness"  of any Person shall mean any obligation of such
Person  guaranteeing  any  Indebtedness,  lease,  dividend,  or other obligation
("primary obligation") of any other Person (the "primary obligor") in any manner
including,  without limitation, any obligation or arrangement of such Person (a)
to purchase or repurchase any such primary obligation,  (b) to advance or supply
funds (i) for the purchase or payment of any such primary  obligation or (ii) to
maintain  working  capital or equity capital of the primary obligor or otherwise
to maintain  the net worth or solvency or any  balance  sheet  condition  of the
primary obligor, (c) 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 (d) to
indemnify the owner of such primary obligation against loss in respect thereof.

     "Guarantors"  shall  mean,  collectively,  Oneita-Kinston  Corp.,  a  North
Carolina  corporation,   and  all  Significant  Subsidiaries  now  or  hereafter
existing, and their respective successors and permitted assigns.

     "Guarantor  Security  Agreement" shall mean that certain Security Agreement
(Guarantors),  dated as of the date hereof,  executed by the Guarantors in favor
of the Collateral Agent, substantially in the form of Exhibit C, as the same may

<PAGE>

hereafter be amended, restated,  supplemented or otherwise modified from time to
time.

     "Guaranty Agreement" shall mean that certain Guaranty Agreement executed by
the Guarantors in favor of the Lenders and the Agent,  substantially in the form
of Exhibit D, as the same may be amended,  restated,  affirmed,  supplemented or
otherwise modified from time to time.

     "Hazardous  Materials"  shall mean oil,  petroleum  or chemical  liquids or
solids,  liquid or gaseous products,  asbestos,  or any other hazardous waste or
hazardous substances,  including, without limitation, hazardous medical waste or
any other substance described in any Environmental Law.

     "Indebtedness"  of any  Person  shall  mean,  without  duplication  (i) all
liabilities  and  obligations,  direct  or  indirect,  of such  Person  which in
accordance with GAAP would be included in determining total liabilities as shown
on the  liability  side of a balance sheet of such Person as of the date of such
determination,  including,  without limitation,  contingent liabilities that, in
accordance  with  GAAP,  would be set forth in a specific  dollar  amount on the
liability side of such balance sheet, and Capitalized  Lease Obligations of such
Person; (ii) all Guaranteed  Indebtedness of such Person;  (iii) all liabilities
and  obligations  secured by Liens on any assets of such Person,  whether or not
such  liabilities  or  obligations  shall have been  assumed by it; and (iv) all
liabilities and obligations of such Person,  direct or contingent,  with respect
to  letters  of  credit  (other  than  documentary  letters  of  credit  used in
connection with the purchase of goods) issued for the account of such Person and
bankers acceptances created for such Person.

     "Interest  Period"  shall mean with  respect to  Eurodollar  Advances,  the
period of 1, 2 or 3 months  selected by the  Borrower,  pursuant to the terms of
this Agreement and subject to customary adjustments in duration;  provided, that
(a) the first day of an Interest Period must be a Business Day, (b) any Interest
Period  that  would  otherwise  end on a day  that  is not a  Business  Day  for
Eurodollar  Loans  shall be  extended to the next  succeeding  Business  Day for
Eurodollar Loans,  unless such Business Day falls in the next calendar month, in
which case the Interest Period shall end on the next preceding  Business Day for
Eurodollar  Loans, and (c) Borrower may not elect an Interest Period which would
extend beyond the Final Maturity Date.


<PAGE>

     "Inventory" shall mean goods held by the Borrower or any Guarantor for sale
or raw materials,  work in process or materials used or consumed in the business
of the Borrower or any of the Guarantors.

     "Investment" shall mean, with respect to any Person, (a) the amount paid or
committed  to be paid,  or the value of property  and  services  contributed  or
committed  to be  contributed,  by such  Person for or in  consideration  of the
acquisition by such Person of any stock, bonds, notes,  debentures,  partnership
or other ownership interest or other securities of any other Person; and (b) the
amount of any  advance,  loan or extension of credit by such Person to any other
Person, or guarantee or other similar  obligation of such Person with respect to
any  Indebtedness  of such other Person,  and (without  duplication)  any amount
committed to be advanced, loaned or extended by such Person to any other Person,
or any amount the payment of which is  committed  to be assured by  guarantee or
similar obligation by such Person for the benefit of, such other Person.

     "IRS" shall have the meaning assigned such term in Section 6.07(h) hereof.

     "Latest Balance Sheet" shall have the meaning assigned such term in Section
5.03(a) hereof.

     "Leases"  shall mean all  leases  and  subleases  (other  than  Capitalized
Leases),  licenses  for the use of real  property,  easements,  grants and other
attachment rights and similar instruments under which the Borrower or any of its
Subsidiaries has the right to use real or personal property or rights of way.

     "Lender" or "Lenders" shall mean SunTrust,  First Union,  NatWest and their
respective successors and assigns.

     "Lending  Office"  shall mean for each  Lender the office  such  Lender may
designate in writing from time to time to Borrower and the Administrative  Agent
with respect to each Type of Loan.

         "Leverage  Ratio"  shall mean the ratio of (A) (i)  Funded  Debt of the
Consolidated Companies, less (ii) the principal amount of Subordinated Debt then
outstanding to (B) Total Capitalization of the Consolidated Companies.


<PAGE>

     "LIBOR" shall mean,  with respect to any Interest Period for any Eurodollar
Advance,  the rate per annum equal to the  quotient of (i) the  consensus of the
LIBOR  settings  as of 11:00  a.m.  (London  time) on the  second  Business  Day
preceding  the  first  day of such  Interest  Period  as shown  on page  3750 of
Telerate  or as  published  by a  comparable  service  selected  by the Bank for
deposits in immediately available funds in U.S. Dollars on the first day of such
Interest Period in an amount substantially equal to the principal amount of such
Eurodollar Advance and for a period approximately equal to such Interest Period,
divided by (ii) a number equal to 1.00 minus the Reserve Percentage, the rate so
determined to be rounded upward to the nearest whole multiple of 1/100 of 1%.

     "Lien" shall mean any mortgage,  deed of trust, pledge,  security interest,
encumbrance,  lien or charge of any kind or description (including any agreement
to give any of the  foregoing),  any  conditional  sale or other title retention
agreement,  any capitalized  lease in the nature thereof  including any lease or
similar  arrangement  with a public  authority  executed in connection  with the
issuance of industrial  development  revenue bonds or pollution  control revenue
bonds, and the filing of or agreement to give any financing  statement under the
Uniform Commercial Code of any jurisdiction.

     "Loans"  shall  mean,  collectively,  the  revolving  credit  loans made to
Borrower by the Lenders pursuant to Section 2.01.

     "Long-term  Indebtedness" shall mean (i) any Indebtedness payable more than
one year from the date of creation thereof  (including,  without  limitation and
without  duplication,  any portion  thereof payable on demand or maturing within
one year after such date),  which under GAAP is shown on the balance sheets as a
liability  (including  Capitalized Lease Obligations but excluding  reserves for
deferred income taxes and other reserves to the extent that such reserves do not
constitute an obligation), and (ii) Indebtedness payable more than one year from
the  date  of  creation  thereof  (including,  without  limitation  and  without
duplication,  any portion  thereof payable on demand or maturing within one year
after such date), which is secured by any Lien on property owned by the Borrower
or any Subsidiary,  whether or not the  indebtedness  secured thereby shall have

<PAGE>

been assumed by the Borrower or such Subsidiary. Any obligation shall be treated
as  Long-term  Indebtedness,  regardless  of its  term,  if such  obligation  is
renewable  pursuant  to the terms  thereof or of a  revolving  credit or similar
agreement  effective  for more than one year after the date of the  creation  of
such obligation,  or may be payable out of the proceeds of a similar  obligation
pursuant to the terms of such obligation or of any such agreement.

     "Materially  Adverse  Effect" shall mean any event the  occurrence of which
would have a material  adverse  effect on the  business,  operations,  financial
condition or properties of the Borrower and its  Subsidiaries  on a consolidated
basis or on the  ability of the  Borrower  or the  Guarantors  to perform  their
respective obligations under the Credit Documents.

     "Multiemployer  Plan"  shall  mean a  "multiemployer  plan" as  defined  in
Section 4001(a)(3) of ERISA which is a Pension Plan and to which the Borrower or
any  ERISA  Affiliate  is  making,   or  is  accruing  an  obligation  to  make,
contributions or has made, or been obligated to make,  contributions  within the
preceding six (6) years while an ERISA Affiliate.

     "Non-Notification    Factoring   Agreement"   shall   mean   that   certain
Non-Notification  Factoring Agreement, dated as of December 16, 1988, as amended
by that certain First Amendment to Non-Notification  Factoring Agreement,  dated
as of March 17, 1995,  between SunTrust and the Borrower,  as hereafter amended,
restated, supplemented or otherwise modified from time to time.

     "Note"  shall  mean a  promissory  note  evidencing  the  Loans in the form
attached  hereto as Exhibit E, either as originally  executed or as the same may
be from time to time supplemented, modified, amended, renewed or extended.

     "Notice of Borrowing" shall have the meaning provided in Section 3.01.

     "Notice of  Continuation/Conversion"  shall have the  meaning  provided  in
Section 3.01.

     "Obligations" shall mean all amounts owing to the Agent, the Administrative
Agent or any Lender  pursuant to the terms of this Agreement or any other Credit
Document,  including without limitation,  all Loans (including all principal and

<PAGE>

interest  payments  due  thereunder),   fees,   expenses,   indemnification  and
reimbursement payments, indebtedness, liabilities, and obligations of the Credit
Parties, direct or indirect, absolute or contingent, liquidated or unliquidated,
now existing or  hereafter  arising,  together  with all  renewals,  extensions,
modifications or refinancings thereof.

     "PBGC"  shall  mean  the  Pension  Benefit  Guaranty  Corporation  and  any
successor thereto.

     "Pension  Plan" shall mean, at any time, an employee  pension  benefit plan
that is covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and is either:  (i)  maintained by the Borrower or
any ERISA Affiliate of any ERISA  Affiliate,  or (ii)  maintained  pursuant to a
collective  bargaining  agreement or any other arrangement under which more than
one  employer  makes   contributions   and  to  which  the  obligation  to  make
contributions or has, while an ERISA  Affiliate,  within the preceding five plan
years made contributions.

     "Permitted  Bailee"  shall  mean all  parties  that have  executed a bailee
letter in favor of the Collateral Agent in  substantially  the form of Exhibit A
to the Company Security Agreement.

     "Permitted  Liens"  shall  mean,  with  respect  to on  any  property  of a
Consolidated  Company,  (a) Liens for taxes not yet  subject  to  penalties  for
non-payment, and Liens for taxes the payment of which is being contested in good
faith by appropriate proceedings and with respect to which adequate reserves are
being maintained;  (b) Liens imposed by law, such as carrier's,  warehousemen's,
materialmen's  and mechanics' liens, or Liens arising out of judgments or awards
against  such  Person  with  respect  to which  such  Person at such time  shall
currently be  prosecuting an appeal or  proceedings  for review;  (c) pledges or
deposits made under workers'  compensation  laws,  unemployment  insurance laws,
social  security  laws  or  similar  legislation,  or  good  faith  deposits  in
connection  with  bids,  tenders,  contracts  (other  than  for the  payment  of
Indebtedness  of such  Person) or leases,  to which such  Person is a party,  or
deposits to secure public or statutory obligations of such Person or deposits of
cash or United States Government Bonds to secure surety, appeal,  performance or
other similar bonds to which such Person is a party, or deposits as security for

<PAGE>

contested  taxes or import  duties  or for the  payment  of rent;  and (d) minor
survey exceptions,  minor encumbrances,  easements or reservations of, or rights
of, others for rights-of-way,  highways and railroad crossings, sewers, electric
lines,  telegraph and telephone lines and other similar  purposes,  or zoning or
other restrictions as to the use of real properties,  or Liens incidental to the
conduct of the  business of such  Person or to the  ownership  of such  Person's
property that were not incurred in connection with  Indebtedness of such Person,
all of  which  Liens  referred  to in  the  preceding  (d)  do not in  aggregate
materially  detract  from the value of the  properties  to which they  relate or
materially impair their use in the operation of the business taken as a whole of
such Person and only to the extent arising and continuing in the ordinary course
of business.

     "Person"  shall mean and shall  include an  individual,  a  corporation,  a
partnership,  a joint venture, a trust or unincorporated  organization,  a joint
stock organization or other similar organization,  a government or any political
subdivision  thereof,  a court or any other legal entity,  whether  acting in an
individual, fiduciary or other capacity.

     "Plan" shall mean any employee benefit plan, program, arrangement, practice
or contract,  maintained by or on behalf of the Borrower or an ERISA  Affiliate,
which provides  benefits or  compensation to or on behalf of employees or former
employees, whether formal or informal, whether or not written.

     "Projections"   shall  mean  the  Oneita  Industries,   Inc.  Statement  of
Operations for the year ended September 30, 1996 dated December 18, 1995.

     "Pro Rata Share"  shall mean,  with respect to each of the  Commitments  of
each  Lender and each Loan to be made by and each  payment  (including,  without
limitation,  any  payment  of  principal,  interest  or fees) to be made to each
Lender,  the  percentage  designated  as such  Lender's  Pro Rata  Share of such
Commitments,  such Loans or such payments,  as  applicable,  set forth under the
name of such Lender on the respective  signature  page for such Lender,  in each
case as such  Pro  Rata  Share  may  change  from  time to time as a  result  of
assignments or amendments made pursuant to this Agreement.


<PAGE>

     "Prudential" shall mean The Prudential  Insurance Company of America, a New
Jersey corporation.

     "Prudential Agreement" shall mean that certain Note Agreement,  dated as of
December 20, 1988, between the Borrower and Prudential, as heretofore amended or
modified,  including,  without  limitation,  as amended pursuant to that certain
Amendment  No.  6,  dated  as of the  date  hereof,  between  the  Borrower  and
Prudential.

     "Prudential Note" shall mean, collectively,  all "Notes" (as defined in the
Prudential  Agreement)  issued  by  the  Borrower  pursuant  to  the  Prudential
Agreement,  and each  promissory  note  delivered  in  substitution  or exchange
therefor.

     "RCRA" shall mean the Resource  Conservation  and Recovery Act of 1976,  42
U.S.C. 6901 et seq., as amended from time to time.

     "Receivable"  shall mean any "account",  as such term is defined in the UCC
as in effect on the Closing Date in the State of Georgia.

     "Refinanced  Indebtedness" shall mean the outstanding balance under the (i)
the $12,500,000  revolving credit facility and the $10,000,000  guidance line of
credit made by SunTrust  to the  Borrowers  (ii)  $10,000,000  guidance  line of
credit made by First Union to the Borrower and, (iii) the $12,500,000  revolving
credit  facility and the  $5,000,000  guidance line of credit made by NatWest to
the Borrower.

     "Regulation  D" shall mean  Regulation  D of the Board of  Governors of the
Federal Reserve System, as the same may be in effect from time to time.

     "Required  Lenders"  shall  mean,  at any time,  Lenders  holding  at least
sixty-six and two-thirds  percent (66 2/3%) of the then aggregate  amount of the
Commitments and aggregate outstanding Loans.

     "Requirement  of Law" for any Person shall mean the articles or certificate
of incorporation and bylaws or other  organizational  or governing  documents of
such Person,  and any  Applicable  Law with respect to such Person or any of its
property or to which such Person or any of its property is subject.


<PAGE>

     "Reserve  Percentage"  shall mean,  for any day,  the stated  maximum  rate
(expressed as a decimal) of all reserves  required to be maintained with respect
to liabilities or assets consisting of or including "Eurocurrency  liabilities,"
as prescribed  by Regulation D of the Board of Governors of the Federal  Reserve
System (or by any other  Governmental  Agency having  jurisdiction  with respect
thereto),   including,  without  limitation,  any  basic,  marginal,  emergency,
supplemental, special, transitional or other reserves, the rate so determined to
be rounded upward to the nearest whole multiple of 1/100 of 1%.

     "Rights  Offering"  shall mean the offering of rights to purchase shares of
common stock of the Borrower  contemplated by the Borrower to be made by June 1,
1996 and as otherwise described to the Lenders prior to the date hereof.

     "Security  Agreements"  shall mean,  collectively,  the  Borrower  Security
Agreement and the Guarantor Security Agreement.

     "Shareholders'  Equity"  shall mean,  with  respect to any Person as at any
date of  determination,  shareholders'  equity of such Person,  determined  on a
consolidated basis in conformity with GAAP.

     "Significant  Subsidiary"  shall  mean each  Subsidiary  of  Borrower,  now
existing  or  hereinafter   established  or  acquired,  that  (i)  is  either  a
"significant"  subsidiary  under Rule  210.1-02(w)  of the Security and Exchange
Commission's  Regulation S-X or (ii) at any time prior to the Termination  Date,
has or acquires total assets (A) that are ten percent (10%) or more of the total
assets of the  Consolidated  Companies  determined  on a  consolidated  basis in
accordance  with GAAP at such time or (B) that  accounted  for or  produced  ten
percent (10%) or more of the Consolidated  EBITR of the  Consolidated  Companies
during any fiscal year of Borrower.

     "Standby  Agreement" shall mean a Standby  Agreement,  to be executed after
the  date  hereof  by  the  Borrower  and  agreed  to by  Gintel  and  Avondale,
substantially in form of Exhibit I hereto.

     "Subordinated   Debt"  shall  mean   Indebtedness   of  Borrower   and  its
Subsidiaries  that  is  subordinated  to all  obligations  of  Borrower  and its
Subsidiaries or any other Credit Party arising under this  Agreement,  the Notes
and the Credit  Documents upon terms and conditions,  and in form and substance,

<PAGE>

satisfactory  to the  Lenders,  including  without  limitation,  with respect to
interest rates, payment terms,  maturities,  amortization schedules,  covenants,
defaults,  remedies, and subordination  provisions, as evidenced by the Lenders'
written  consent thereto given prior to the creation of such  Indebtedness;  the
Lenders  hereby consent to the Avondale Debt and the Gintel Debt in the form set
forth in the  Avondale  Note and the  Gintel  Notes as in effect on the  Closing
Date.

     "Subordinated  Debt Documents"  shall mean all notes,  agreements and other
documents  evidencing or governing the terms of the Subordinated Debt,  together
with all certificates and opinions delivered in connection therewith, including,
without  limitation,  the Avondale Note, the Gintel Notes, the Convertible Notes
and  all  other  documents  hereafter  executed  pursuant  to  which  any of the
foregoing may be guaranteed or secured and the Subordination Agreement.

     "Subordination  Agreement" shall mean that certain Subordination Agreement,
dated as of the date  hereof,  among the  Lenders,  Prudential,  SunTrust  Bank,
Atlanta as Senior Agent,  Avondale and Gintel, and acknowledged and agreed to by
the Borrower and the Guarantors, as hereafter amended, restated, supplemented or
otherwise modified from time to time.

     "Subsidiary"  shall  mean,  with  respect to any Person,  any  corporation,
partnership,  joint venture or other  entity,  whether now existing or hereafter
organized or acquired, of which a majority of the total combined voting power of
all classes of securities or other  ownership  interests  having ordinary voting
power for the election of  directors  (other than  securities  having such power
only by reason of the happening of a contingency)  are, at the time at which any
determination  is made,  owned by such  Person,  either  directly or  indirectly
through one or more other Subsidiaries.

     "Tangible  Net Worth" shall mean as of the date of any  determination,  the
sum of the Consolidated  Companies' capital surplus,  earned surplus and capital
stock,  minus deferred  charges,  intangibles  and treasury  stock, in each case
determined on a consolidated basis in accordance with GAAP.

     "Taxes" shall mean any present or future taxes,  levies,  imposts,  duties,
fees, assessments, deductions, withholdings or other charges of whatever nature,

<PAGE>

including  without  limitation,   income,  receipts,  excise,  property,  sales,
transfer, license, payroll, withholding, social security and franchise taxes now
or  hereafter  imposed or levied by the United  States,  or any state,  local or
foreign government or by any department,  agency or other political  subdivision
or taxing authority thereof or therein and all interest, penalties, additions to
tax and similar liabilities with respect thereto.

     "Telerate" shall mean, when used in connection with any designated page and
"LIBOR," the display page so  designated on the Dow Jones  Telerate  Service (or
such other page as may  replace  that page on that  service  for the  purpose of
displaying rates comparable to "LIBOR").

         "Termination Date" shall mean January 26, 1999.

     "Termination  Event"  shall  mean (a) a  "Reportable  Event"  described  in
Section 4043 of ERISA and the regulations issued thereunder for which the 30-day
notice  requirement is not waived by the  regulations;  or (b) the withdrawal of
any  Consolidated  Company or any ERISA  Affiliate  from a Pension Plan during a
plan  year in  which it was a  "substantial  employer"  as  defined  in  Section
4001(a)(2)  of ERISA or was deemed such under Section  4068(f) of ERISA;  or (c)
the termination of a Pension Plan subject to Title IV of ERISA,  the filing of a
notice of intent to terminate a Pension  Plan  subject to Title IV of ERISA,  or
the treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA;  or (d) the institution of proceedings to terminate a Pension Plan by the
PBGC; or (e) any other event or condition which would  constitute  grounds under
Section 4042(a) of ERISA for the termination of, or the appointment of a trustee
to  administer  any Pension  Plan subject to such  Section  4042(a);  or (f) the
partial  or  complete  withdrawal  of any  Consolidated  Company  or  any  ERISA
Affiliate from a Multiemployer Plan; or (g) the imposition of a Lien pursuant to
Section  412 of the IRC or Section 302 of ERISA;  or (h) any event or  condition
which results in the  reorganization or insolvency of a Multiemployer Plan under
Section  4041A  of  ERISA  or the  institution  by the  PBGC of  proceedings  to
terminate a Multiemployer Plan under Section 4042 of ERISA.

     "Total Capitalization" shall mean, as of any date of determination, the sum
of (A) Funded Debt of the  Consolidated  Companies and (b) Tangible Net Worth of
the Consolidated Companies.


<PAGE>

     "Total Commitment" shall mean the sum of the Lenders' Commitments,  as such
Total Commitment may be reduced from time to time as provided herein.

     "Type" of Borrowing shall mean a Borrowing consisting of Base Rate Advances
or Eurodollar Advances.

     "Wholly  Owned  Subsidiary"  shall  mean any  Subsidiary,  all the stock or
ownership interest of every class of which, except directors' qualifying shares,
shall,  at the time as of which any  determination  is being  made,  be owned by
Borrower either directly or indirectly.

     "Working  Capital"  shall mean,  as of the date of any  determination,  the
amount by which  Current  Assets  (after  excluding  cash and cash  equivalents)
exceeds Current Liabilities.

     Section 1.02. Accounting Terms and Determination.  Unless otherwise defined
or  specified  herein,  all  accounting  terms shall be  construed  herein,  all
accounting  determinations  hereunder  shall be made,  all financial  statements
required to be delivered hereunder shall be prepared,  and all financial records
shall be maintained in accordance with, GAAP.

     Section 1.03. Other  Definitional  Terms. 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 Article,  Section,  Schedule,  Exhibit and like references are to
this Agreement unless otherwise specified.

     Section 1.04.  Exhibits and Schedules.  All Exhibits and Schedules attached
hereto are by reference made a part hereof.


                                   ARTICLE II

                          REVOLVING CREDIT COMMITMENTS

         Section 2.01.  Commitment; Use of Proceeds.

     (a)  Subject to and upon the terms and  conditions  herein set forth,  each
Lender  severally  agrees to make to Borrower from time to time on and after the
Closing Date, but prior to the Termination  Date,  Loans in an aggregate  amount

<PAGE>

outstanding at any time not to exceed such Lender's  Commitment.  Borrower shall
be  entitled  to repay and  reborrow  Loans in  accordance  with the  provisions
hereof.

     (b) Each Loan shall, at the option of Borrower, be made or continued as, or
converted into,  part of one or more  Borrowings that shall consist  entirely of
Base Rate Advances or Eurodollar Advances; provided, however, that the aggregate
amount of  Eurodollar  Advances  that may be  outstanding  at any time  shall be
limited to an amount equal to the sum of the amounts specified in clause (i) and
(ii) of the  definition  of Borrowing  Base,  and any Advances in excess of such
amount  shall be Base Rate  Advances.  The  aggregate  principal  amount of each
Borrowing  of Loans  shall be not less than  $5,000,000  or a  greater  integral
multiple of $500,000,  provided that each  Borrowing of Loans  comprised of Base
Rate Advances shall be not less than $1,000,000 or a greater  integral  multiple
of $100,000.  At no time shall the number of Borrowings  outstanding  under this
Article II exceed  eight;  provided  that,  for the purpose of  determining  the
number of Borrowings outstanding and the minimum amount for Borrowings resulting
from  conversions or  continuations,  all Borrowings of Base Rate Advances under
this Facility  shall be considered as one  Borrowing.  The parties  hereto agree
that (i) the aggregate  principal balance of the Loans of the Lenders as a group
shall not exceed the Total Commitment,  (ii) the aggregate  principal balance of
the Loans of the Lenders as a group and the principal  amount  outstanding  with
respect to the Prudential  Note shall not exceed the Borrowing Base and (iii) no
Lender  shall be  obligated  to make  Loans in excess  of the  lesser of (A) the
Commitment  of such  Lender  and (B) an  amount  equal  to the  Borrowing  Base,
multiplied by the principal  amount such  Lender's  Commitment,  divided by (the
aggregate  principal amount of the Commitments of all Lenders plus the principal
amount of the Prudential Note).

     (c) The proceeds of Loans shall be used solely for the following purposes:

                  (i)   To repay Refinanced Indebtedness of the
    Consolidated Companies on the Closing Date, and to repurchase
    the Factored Receivables; and


<PAGE>

                 (ii) To fund working capital needs and Capital Expenditures
    and to be used for other general corporate purposes.

         Section 2.02.  Notes; Repayment of Principal.

     (a)  Borrower's  obligations  to pay the principal of, and interest on, the
Loans to each Lender  shall be  evidenced  by the records of the  Administrative
Agent and such Lender and by the Note payable to such Lender (or the assignor of
such Lender) completed in conformity with this Agreement.

     (b) All  outstanding  principal  amounts  under the Loans  shall be due and
payable in full on the Termination Date.

     Section 2.03.  Voluntary Reduction of Commitments.  Upon at least three (3)
Business Days' prior telephonic  notice  (promptly  confirmed in writing) to the
Administrative Agent, Borrower shall have the right, without premium or penalty,
to terminate the  Commitments,  in part or in whole,  provided that (i) any such
termination  shall  apply  to   proportionately   and  permanently   reduce  the
Commitments  of each of the Lenders,  (ii) any partial  termination  pursuant to
this  Section  2.03 shall be in an amount of at least  $1,000,000  and  integral
multiples of $1,000,000,  and (iii) no such reduction shall be permitted without
payment of all costs required to be paid hereunder with respect to a prepayment.
If the  aggregate  outstanding  amount of the Loans  exceeds  the  amount of the
Commitments  as so reduced,  Borrower  shall  immediately  repay the Loans by an
amount equal to such excess,  together  with all accrued and unpaid  interest on
such excess amount and any amounts due under Section 3.12 hereof.


                                   ARTICLE III

                               GENERAL LOAN TERMS

         Section 3.01.  Funding Notices.

     (a)  Whenever  Borrower  desires to make a  Borrowing  with  respect to the
Commitments (other than one resulting from a conversion or continuation pursuant
to Section 3.01(b)), it shall give the Administrative Agent prior written notice
(or  telephonic  notice  promptly  confirmed  in writing) of such  Borrowing  (a
"Notice of Borrowing"), such Notice of Borrowing to be given prior to 11:00 A.M.

<PAGE>

(local time for the Administrative Agent) at its Payment Office (x) one Business
Day  prior to the  requested  date of such  Borrowing  in the case of Base  Rate
Advances,  and  (y)  two  Business  Days  prior  to the  requested  date of such
Borrowing in the case of Eurodollar Advances.  Notices received after 11:00 A.M.
shall be deemed  received on the next  Business  Day.  Each Notice of  Borrowing
shall be  irrevocable  and shall specify the aggregate  principal  amount of the
Borrowing,  the date of Borrowing  (which shall be a Business  Day), and whether
the Borrowing is to consist of Base Rate Advances or Eurodollar Advances and (in
the case of Eurodollar Advances) the Interest Period to be applicable thereto.

     (b) Whenever Borrower desires to convert all or a portion of an outstanding
Borrowing under the Commitments,  which Borrowing consists of Base Rate Advances
or Eurodollar  Advances,  into one or more Borrowings  consisting of Advances of
another  Type, or to continue  outstanding a Borrowing  consisting of Eurodollar
Advances for a new Interest Period, it shall give the  Administrative  Agent (x)
at least one Business Day's prior written notice (or telephonic  notice promptly
confirmed  in writing) of each such  Borrowing  to be  converted  into Base Rate
Advances and (y) at least two Business Days' prior written notice (or telephonic
notice  promptly  confirmed  in writing) of each such  Borrowing to be converted
into  or  continued  as   Eurodollar   Advances.   Such  notice  (a  "Notice  of
Conversion/Continuation") shall be given prior to 11:00 A.M. (local time for the
Administrative  Agent)  on the  date  specified  at the  Payment  Office  of the
Administrative  Agent.  Each  such  Notice of  Conversion/Continuation  shall be
irrevocable and shall specify the aggregate  principal amount of the Advances to
be converted or continued,  the date of such conversion or continuation  and (in
the case of Eurodollar  Advances) the Interest Period  applicable  thereto.  If,
upon the  expiration  of any  Interest  Period in  respect of any  Borrowing  of
Eurodollar  Advances,  Borrower  shall  have  failed to  deliver  the  Notice of
Conversion/Continuation,  Borrower  shall be deemed to have  elected  to convert
such Borrowing to a Borrowing  consisting of Base Rate Advances.  So long as any
Default or Event of Default shall have occurred and be continuing,  no Borrowing
may be converted into or continued as (upon  expiration of the current  Interest
Period)  Eurodollar  Advances  unless the  Administrative  Agent and each of the
Lenders  shall  have  otherwise  consented  in  writing.  No  conversion  of any
Borrowing of Eurodollar  Advances  shall be permitted  except on the last day of
the Interest Period in respect thereof.


<PAGE>

     (c) Without in any way limiting Borrower's obligation to confirm in writing
any telephonic notice, the Administrative  Agent and the Lenders may act without
liability  upon the basis of telephonic  notice  believed by the  Administrative
Agent or the  Lender  in good  faith to be from  Borrower  prior to  receipt  of
written  confirmation.  In each such case,  Borrower  hereby waives the right to
dispute the Administrative  Agent's and the Lender's record of the terms of such
telephonic notice.

     (d) The  Administrative  Agent shall  promptly  give each Lender  notice by
telephone (confirmed in writing) or by telex, telecopy or facsimile transmission
of the matters covered by the notices given to the Administrative Agent pursuant
to this Section 3.01 with respect to the Commitments.

         Section 3.02.  Disbursement of Funds.

     (a) No later than 11:00 A.M. (local time for the  Administrative  Agent) on
the date of each Borrowing pursuant to the Commitments (other than one resulting
from a conversion or continuation pursuant to Section 4.01(b)), each Lender will
make available its Pro Rata Share of the amount of such Borrowing in immediately
available  funds  at  the  Payment  Office  of  the  Administrative  Agent.  The
Administrative  Agent will make  available  to  Borrower  the  aggregate  of the
amounts (if any) so made available by the Lenders to the Administrative Agent in
a timely manner by crediting such amounts to Borrower's  demand deposit  account
maintained with the  Administrative  Agent. In the event that the Lenders do not
make such amounts available to the  Administrative  Agent by the time prescribed
above,  but such amount is received  later that day, such amount may be credited
to  Borrower  in the manner  described  in the  preceding  sentence  on the next
Business Day (with interest on such amount to begin  accruing  hereunder on such
next Business Day).

     (b) Unless the Administrative  Agent shall have been notified by any Lender
prior to the date of a  Borrowing  that  such  Lender  does not  intend  to make
available to the Administrative  Agent such Lender's portion of the Borrowing to
be made on such date, the  Administrative  Agent may assume that such Lender has
made such  amount  available  to the  Administrative  Agent on such date and the
Administrative  Agent may make available to Borrower a corresponding  amount. If
such  corresponding  amount is not in fact made available to the  Administrative
Agent by such Lender on the date of Borrowing, the Administrative Agent shall be
entitled  to  recover  such  corresponding  amount  on demand  from such  Lender
together  with  interest at the Federal  Funds Rate. If such Lender does not pay

<PAGE>

such  corresponding  amount  forthwith  upon the  Administrative  Agent's demand
therefor,  the Administrative Agent shall promptly notify Borrower, and Borrower
shall  immediately pay such  corresponding  amount to the  Administrative  Agent
together with interest at the rate specified for the Borrowing.  Nothing in this
subsection shall be deemed to relieve any Lender from its obligation to fund its
Commitments hereunder or to prejudice any rights which Borrower may have against
any Lender as a result of any default by such Lender hereunder.

     (c) All Borrowings under the Commitments  shall be loaned by the Lenders on
the  basis  of their  Pro Rata  Share of the  Commitments.  No  Lender  shall be
responsible  for any default by any other Lender in its  obligations  hereunder,
and each Lender shall be  obligated to make the Loans  provided to be made by it
hereunder,  regardless of the failure of any other Lender to fund its Commitment
hereunder.

         Section 3.03.  Interest.

     (a)  Borrower  agrees to pay  interest  in respect of all unpaid  principal
amounts  of the Loans from the  respective  dates such  principal  amounts  were
advanced  to  maturity  (whether  by  acceleration,   notice  of  prepayment  or
otherwise)  at rates per annum  (on the  basis of a 360-day  year)  equal to the
applicable rates indicated below:

                  (i) For Base Rate  Advances--The Base Rate in effect from
    time to time plus the Applicable Margin for Base Rate Advances; and

                 (ii)   For Eurodollar Advances--The relevant Adjusted
    LIBO Rate plus the Applicable Margin for Eurodollar
    Advances;

provided, however, that to the extent that the aggregate principal amount of all
Eurodollar  Loans  outstanding  at any one time  exceeds  the sum of the amounts
specified  in clause (i) and (ii) of the  definition  of  Borrowing  Base,  such
excess shall be deemed to be a Base Rate Loan.


<PAGE>

     (b) Overdue  principal and, to the extent not prohibited by applicable law,
overdue  interest,  in respect of the Loans and all other overdue  amounts owing
hereunder,  shall bear  interest from each date that such amounts are overdue at
the higher of (i) the highest  rate then in effect for any  Eurodollar  Advances
plus an additional  two percent  (2.0%) per annum or (ii) the rate in effect for
Base Rate  Advances plus an additional  two percent  (2.0%) per annum;  provided
that no Loan shall bear  interest  after  maturity  (whether by  non-payment  at
scheduled due date,  acceleration,  notice of prepayment or otherwise) at a rate
per  annum  less  than two  percent  (2.0%)  per  annum in excess of the rate of
interest applicable thereto at maturity.

     (c) Interest on each Loan shall accrue from and  including the date of such
Loan to but  excluding the date of any repayment  thereof;  provided  that, if a
Loan is repaid on the same day made,  one day's  interest  shall be paid on such
Loan. Interest on all outstanding Base Rate Advances shall be payable monthly in
arrears on the last  calendar  day of each  calendar  month of  Borrower in each
year.  Interest on all outstanding  Eurodollar  Advances shall be payable on the
last day of each Interest Period applicable thereto. Interest on all Loans shall
be payable on any conversion of any Advances comprising such Loans into Advances
of another Type,  prepayment (on the amount  prepaid),  at maturity  (whether by
acceleration, notice of prepayment or otherwise) and, after maturity, on demand.

     (d) The  Administrative  Agent, upon determining the Adjusted LIBO Rate for
any Interest Period,  shall promptly notify by telephone  (confirmed in writing)
or in writing  Borrower and the other  Lenders.  Any such  determination  shall,
absent manifest error, be final, conclusive and binding for all purposes.

     Section  3.04.   Interest  Periods.   In  connection  with  the  making  or
continuation  of, or conversion  into,  each  Borrowing of Eurodollar  Advances,
Borrower  shall  select an interest  period  (each an  "Interest  Period") to be
applicable to such Eurodollar Advances,  which Interest Period shall be either a
1, 2 or 3 month period; provided that:

                  (a)  The  initial   Interest   Period  for  any  Borrowing  of
    Eurodollar Advances shall commence on the date of such Borrowing  (including
    the  date  of any  conversion  from a  Borrowing  consisting  of  Base  Rate
    Advances) and each Interest Period  occurring  thereafter in respect of such

<PAGE>

    Borrowing  shall  commence on the day on which the next  preceding  Interest
    Period expires;

                  (b) If any  Interest  Period would  otherwise  expire on a day
    which is not a Business Day,  such Interest  Period shall expire on the next
    succeeding  Business Day, provided that if any Interest Period in respect of
    Eurodollar  Advances would otherwise  expire on a day that is not a Business
    Day but is a day of the month after which no further  Business Day occurs in
    such month, such Interest Period shall expire on the next preceding Business
    Day;

                  (c) Any Interest  Period which begins on a day for which there
    is no numerically corresponding day in the calendar month at the end of such
    Interest  Period  shall,  subject  to part  (iv)  below,  expire on the last
    Business Day of such calendar month;

                  (d) No Interest Period shall extend beyond any date upon which
    any principal payment is due with respect to the Term Loans.

        Section 3.05.  Fees.

     (a) The Borrower shall pay to the Administrative  Agent, for the account of
each Lender in accordance  with its  respective Pro Rata Share, a closing fee in
an amount equal to one percent (1%) of the Total Commitment,  which fee shall be
due and payable on the Closing Date, fully earned when paid and nonrefundable.

     (b) Borrower shall pay to the Administrative Agent, for the account of each
Lender in accordance  with its  respective  Pro Rata share, a commitment fee for
the period commencing on the Closing Date to and including the Termination Date,
computed  at a rate equal to  three-eighths  of one percent  (0.375%)  per annum
(calculated  on the basis of a 360-day  year,  payable for the actual  number of
days elapsed) on the average daily unused portion of the Total Commitment,  such
fee being due and payable  quarterly in arrears on the last calendar day of each
calendar  quarter and on the  Termination  Date,  provided,  however,  that such

<PAGE>

commitment  fee shall be reduced to a rate equal to  one-quarter  of one percent
(0.25%) for any calendar  quarter  ending on or after June 30, 1996 during which
the Applicable Margin for Eurodollar Advances was less than or equal to 1.75.

     (c) Borrower shall pay to the Administrative Agent an administrative fee at
closing and thereafter  annually in advance in the respective  amount and on the
dates previously agreed in writing by Borrower with the Administrative Agent.

     (d)  Borrower  shall  pay to the  Agent  an  agent  fee at  closing  in the
respective amount previously agreed in writing by Borrower with the Agent.

        Section 3.06.  Prepayments of Borrowings.

     (a) Borrower may, at its option,  prepay Borrowings consisting of Base Rate
Advances  at any  time in  whole,  or from  time to  time in  part,  in  amounts
aggregating $250,000 or any greater integral multiple of $100,000, by paying the
principal amount to be prepaid together with interest accrued and unpaid thereon
to the date of prepayment.  Those Borrowings  consisting of Eurodollar  Advances
may be prepaid, at Borrower's option, in whole, or from time to time in part, in
the respective  minimum amounts and multiples set forth in Section  2.01(b),  by
paying the principal  amount to be prepaid,  together with interest  accrued and
unpaid thereon to the date of prepayment, and all compensation payments required
pursuant  to Section  3.12 if such  prepayment  is made on a date other than the
last day of an Interest Period applicable thereto. Each such optional prepayment
shall be applied in accordance with Section 3.06(e) below.

     (b) Borrower shall immediately make a mandatory  prepayment of the Loans if
at any time the aggregate  principal amount of the Loans outstanding exceeds the
Borrowing Base,  which  prepayment  shall be in a principal amount equal to such
excess together with accrued and unpaid interest thereon,  plus all compensation
payments  required  pursuant to Section  3.12 if such  prepayment  is applied to
Eurodollar  Loans and is made on a date other  than the last day of an  Interest
Period applicable  thereto.  Each such mandatory  prepayment shall be applied in
accordance with Section 3.06(e) below.


<PAGE>

     (c) Borrower shall make a mandatory prepayment of Loans within fifteen (15)
days  after the  earlier of (i) the date the  Borrower  delivers  its  financial
statements to the Lenders in accordance with Section 6.07(a) and Section 6.07(b)
hereof or (ii) the date such  financial  statements  are  required  to have been
delivered in accordance with Section  6.07(a) or Section  6.07(b) hereof,  in an
amount  equal to the  Excess  Cash Flow for the  fiscal  quarter  to which  such
financial  statements  relate  (and  the  last  fiscal  quarter  covered  by the
financial  statements  delivered  pursuant to Section 6.07(a) hereof),  less net
reductions in the  Obligations  for the fiscal  quarter for which such financial
statements relate,  plus all compensation  payments required pursuant to Section
3.12 if such  prepayment  is applied to  Eurodollar  Loans and is made on a date
other than the last day of an  Interest  Period  applicable  thereto.  Each such
mandatory prepayment shall be applied in accordance with Section 3.06(e) below.

     (d) Borrower shall give written notice (or telephonic  notice  confirmed in
writing) to the  Administrative  Agent of any  intended  voluntary  or mandatory
prepayment  of the  Loans  (i) not  less  than  one  Business  Day  prior to any
prepayment  of Base Rate Advances and (ii) not less than two Business Days prior
to any  prepayment of Eurodollar  Advances.  Such notice,  once given,  shall be
irrevocable;  provided,  however,  that same day notice shall be  permitted  for
mandatory  prepayments  required under Section 3.06(b)  hereof.  Upon receipt of
such notice of prepayment  pursuant to the first sentence of this paragraph (d),
the  Administrative  Agent shall promptly  notify each Lender of the contents of
such notice and of such Lender's share of such prepayment.

     (e) All amounts voluntarily or mandatorily prepaid pursuant to this Section
3.06 shall be applied first to Borrowings  consisting  of Eurodollar  Loans,  in
inverse  order  based upon the length of the  remaining  Interest  Periods,  and
thereafter to Borrowings of Base Rate Loans. All prepayments shall be applied to
the payment of any unpaid interest before application to principal.

        Section 3.07.  Payments, etc.

     (a) Except as otherwise  specifically  provided herein,  all payments under
this Agreement and the other Credit Documents, other than the payments specified

<PAGE>

in clause (ii) below, shall be made without defense,  set-off or counterclaim to
the  Administrative  Agent,  not  later  than  11:00  A.M.  (local  time for the
Administrative  Agent)  on the date  when due and  shall be made in  Dollars  in
immediately available funds at the respective Payment Office.

     (b) (i) All such  payments  shall be made  free  and  clear of and  without
deduction or withholding for any Taxes in respect of this  Agreement,  the Notes
or other Credit Documents, or any payments of principal, interest, fees or other
amounts payable  hereunder or thereunder (but excluding any Taxes imposed on the
overall net income of the Lenders  pursuant to the laws of the  jurisdiction  in
which the  principal  executive  office or  appropriate  Lending  Office of such
Lender is located).  If any Taxes are so levied or imposed,  Borrower agrees (A)
to pay the full  amount of such  Taxes,  and such  additional  amounts as may be
necessary so that every net payment of all amounts due  hereunder  and under the
Notes and other Credit  Documents,  after  withholding  or  deduction  for or on
account of any such Taxes (including  additional sums payable under this Section
3.07),  will not be less than the full  amount  provided  for herein had no such
deduction  or  withholding  been  required,  (B) to  make  such  withholding  or
deduction and (C) to pay the full amount  deducted to the relevant  authority in
accordance  with  applicable  law.  Borrower  will furnish to the Agent and each
Lender,  within  thirty (30) days after the date the payment of any Taxes is due
pursuant to applicable  law,  certified  copies of tax receipts  evidencing such
payment by Borrower.  Borrower will  indemnify and hold harmless the Agent,  the
Administrative Agent and each Lender and reimburse the Agent, the Administrative
Agent and each Lender upon written request for the amount of any Taxes so levied
or imposed and paid by the Agent, the Administrative Agent or any Lender and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes were correctly or illegally asserted.
A certificate as to the amount of such payment by the Agent, the  Administrative
Agent or such Lender,  absent  manifest  error,  shall be final,  conclusive and
binding for all purposes.

     (ii) Each Lender that is organized under the laws of any jurisdiction other
than the United States of America or any State thereof  (including  the District

<PAGE>

of Columbia) agrees to furnish to Borrower and the  Administrative  Agent, prior
to the time it becomes a Lender  hereunder,  two copies of either U.S.  Internal
Revenue  Service  Form 4224 or U.S.  Internal  Revenue  Service Form 1001 or any
successor  forms thereto  (wherein such Lender  claims  entitlement  to complete
exemption from or reduced rate of U.S. Federal  withholding tax on interest paid
by Borrower hereunder) and to provide to Borrower and the Administrative Agent a
new Form 4224 or Form 1001 or any  successor  forms  thereto  if any  previously
delivered form is found to be incomplete or incorrect in any material respect or
upon the obsolescence of any previously delivered form; provided,  however, that
no Lender shall be required to furnish a form under this paragraph (ii) if it is
not entitled to claim an exemption from or a reduced rate of  withholding  under
applicable  law. A Lender that is not entitled to claim an  exemption  from or a
reduced rate of withholding  under applicable law, promptly upon written request
of Borrower, shall so inform Borrower in writing.

     (c) Subject to Section  3.04(b),  whenever any payment to be made hereunder
or under any Note  shall be  stated  to be due on a day which is not a  Business
Day, the due date thereof shall be extended to the next succeeding  Business Day
and, with respect to payments of principal, interest thereon shall be payable at
the applicable rate during such extension.

     (d) All  computations  of interest and fees shall be made on the basis of a
year of 360 days for the  actual  number  of days  (including  the first day but
excluding the last day)  occurring in the period for which such interest or fees
are payable (to the extent  computed on the basis of days elapsed).  Interest on
Base Rate Advances shall be calculated based on the Base Rate from and including
the date of such Loan to but  excluding  the date of the repayment or conversion
thereof. Interest on Eurodollar Advances shall be calculated as to each Interest
Period from and  including  the first day thereof to but  excluding the last day
thereof.  Each determination by the Administrative  Agent of an interest rate or
fee hereunder shall be made in good faith and, except for manifest error,  shall
be final, conclusive and binding for all purposes.

     (e) Payment by Borrower to the Administrative  Agent in accordance with the
terms of this Agreement shall, as to Borrower, constitute payment to the Lenders
under this Agreement.


<PAGE>

     Section 3.08.  Interest Rate Not Ascertainable,  etc. In the event that the
Administrative  Agent,  in the  case  of the  Adjusted  LIBO  Rate,  shall  have
determined (which determination shall be made in good faith and, absent manifest
error, shall be final, conclusive and binding upon all parties) that on any date
for determining the Adjusted LIBO Rate for any Interest Period, by reason of any
changes arising after the date of this Agreement  affecting the London interbank
market or the Administrative Agent's position in such market,  adequate and fair
means do not exist for  ascertaining  the applicable  interest rate on the basis
provided for in the  definition  of Adjusted  LIBO Rate,  then,  and in any such
event,  the  Administrative  Agent shall  forthwith  give  notice (by  telephone
confirmed in writing) to Borrower and to the Lenders of such determination and a
summary  of the basis for such  determination.  Until the  Administrative  Agent
notifies Borrower that the circumstances giving rise to the suspension described
herein  no  longer  exist,  the  obligations  of the  Lenders  to make or permit
portions  of the  Loans  to  remain  outstanding  past  the last day of the then
current  Interest  Periods as Eurodollar  Advances shall be suspended,  and such
affected Advances shall bear the same interest as Base Rate Advances.

        Section 3.09.  Illegality.

     (a) In the event that any Lender shall have determined (which determination
shall  be made in good  faith  and,  absent  manifest  error,  shall  be  final,
conclusive  and  binding  upon all  parties)  at any time  that  the  making  or
continuance of any Eurodollar  Advance has become unlawful by compliance by such
Lender in good faith with any applicable  law,  governmental  rule,  regulation,
guideline  or order  (whether  or not having the force of law and whether or not
failure to comply  therewith  would be unlawful),  then, in any such event,  the
Lender shall give prompt notice (by telephone  confirmed in writing) to Borrower
and to the Administrative Agent of such determination and a summary of the basis
for such  determination  (which notice the  Administrative  Agent shall promptly
transmit to the other Lenders).


<PAGE>

     (b) Upon the giving of the notice to Borrower referred to in subsection (a)
above,  Borrower's  right  to  request  and  such  Lender's  obligation  to make
Eurodollar Advances shall be immediately  suspended,  and such Lender shall make
an Advance as part of the requested  Borrowing of Eurodollar  Advances as a Base
Rate  Advance,  which  Base  Rate  Advance  shall,  for all other  purposes,  be
considered part of such Borrowing.

        Section 3.10.  Increased Costs.

     (a) If, by reason of (x) after the date hereof,  the introduction of or any
change  (including,  without  limitation,  any  change by way of  imposition  or
increase  of reserve  requirements)  in or in the  interpretation  of any law or
regulation, or (y) the compliance with any guideline or request from any central
bank or other  Governmental  Agency  exercising  control over banks or financial
institutions generally (whether or not having the force of law):

        (i) any Lender (or its  applicable  Lending  Office) shall be subject to
    any tax, duty or other charge with respect to its Eurodollar Advances or its
    obligation to make Eurodollar Advances, or the basis of taxation of payments
    to any Lender of the principal of or interest on its Eurodollar  Advances or
    its obligation to make  Eurodollar  Advances shall have changed  (except for
    changes  in the  tax  on the  overall  net  income  of  such  Lender  or its
    applicable Lending Office imposed by the jurisdiction in which such Lender's
    principal executive office or applicable Lending Office is located); or

        (ii) any  reserve  (including,  without  limitation,  any imposed by the
    Board of  Governors  of the  Federal  Reserve  System),  special  deposit or
    similar  requirement against assets of, deposits with or for the account of,
    or credit  extended  by, any  Lender's  applicable  Lending  Office shall be
    imposed or deemed applicable or any other condition affecting its Eurodollar
    Advances or its obligation to make  Eurodollar  Advances shall be imposed on
    any Lender or its applicable  Lending Office or the London  interbank market
    or the United States secondary certificate of deposit market;


<PAGE>

and as a result  thereof  there shall be any increase in the cost to such Lender
of  agreeing  to make or making,  funding  or  maintaining  Eurodollar  Advances
(except to the extent already  included in the  determination  of the applicable
Adjusted LIBO Rate for  Eurodollar  Advances),  or there shall be a reduction in
the amount  received  or  receivable  by such Lender or its  applicable  Lending
Office,  then Borrower shall from time to time (subject,  in the case of certain
Taxes,  to the applicable  provisions of Section  3.07(b)),  upon written notice
from and  demand by such  Lender on  Borrower  (with a copy of such  notice  and
demand to the Administrative  Agent),  pay to the  Administrative  Agent for the
account of such Lender  within five  Business Days after the date of such notice
and demand,  additional amounts sufficient to indemnify such Lender against such
increased cost. A certificate as to the amount of such increased cost, submitted
to  Borrower  and the  Administrative  Agent by such  Lender  in good  faith and
accompanied  by a statement  prepared by such Lender  describing  in  reasonable
detail the basis for and calculation of such increased cost,  shall,  except for
manifest error, be final, conclusive and binding for all purposes.

     (b) If any Lender shall advise the  Administrative  Agent that at any time,
because of the circumstances  described in clauses (x) or (y) in Section 3.10(a)
or any other circumstances beyond such Lender's reasonable control arising after
the date of this Agreement  affecting such Lender or the London interbank market
or such Lender's position in such market,  the Adjusted LIBO Rate, as determined
by the Administrative  Agent, will not adequately and fairly reflect the cost to
such Lender of funding its Eurodollar Advances, then, and in any such event:

                  (i) the  Administrative  Agent shall forthwith give notice (by
    telephone confirmed in writing) to Borrower and to the other Lenders of such
    advice;

                 (ii) Borrower's  right to request and such Lender's  obligation
    to make or permit portions of the Loans to remain  outstanding past the last
    day of the then current  Interest  Periods as Eurodollar  Advances  shall be
    immediately suspended;

                (iii) such Lender shall  thereafter make all Advances as part of
    requested  Borrowings of Eurodollar  Advances as Base Rate  Advances,  which
    such Base Rate Advance shall, for all other purposes,  be considered part of
    such Borrowing; and


<PAGE>

                 (iv)  Borrower may convert all  Eurodollar  Advances  from such
    Lender to Base Rate  Advances  without  payment  of amounts  required  under
    Section 3.12 hereof.

         Section 3.11.  Lending Offices.

     (a)  Each  Lender  agrees  that,  if  requested  by  Borrower,  it will use
reasonable efforts (subject to overall policy  considerations of such Lender) to
designate an  alternate  Lending  Office with  respect to any of its  Eurodollar
Advances affected by the matters or circumstances described in Sections 3.07(b),
3.08,  3.09 or 3.10 to reduce the  liability  of  Borrower  or avoid the results
provided thereunder,  so long as such designation is not disadvantageous to such
Lender as determined by such Lender,  which determination if made in good faith,
shall be conclusive and binding on all parties  hereto.  Nothing in this Section
3.11 shall affect or postpone any of the obligations of Borrower or any right of
any Lender provided hereunder.

     (b) If any  Lender  that is  organized  under the laws of any  jurisdiction
other than the United  States of America  or any State  thereof  (including  the
District of Columbia) issues a public  announcement  with respect to the closing
of its  lending  offices  in the United  States  such that any  withholdings  or
deductions and  additional  payments with respect to Taxes may be required to be
made by Borrower thereafter  pursuant to Section 3.07(b),  such Lender shall use
reasonable  efforts to furnish  Borrower  notice  thereof as soon as practicable
thereafter;  provided,  however, that no delay or failure to furnish such notice
shall in any event release or discharge  Borrower from its  obligations  to such
Lender pursuant to Section 3.07(b) or otherwise  result in any liability of such
Lender.

     Section 3.12. Funding Losses. Except as set forth in clause (iv) of Section
3.10(b) hereof,  Borrower shall compensate each Lender, upon its written request
to Borrower (which request shall set forth the basis for requesting such amounts
in reasonable  detail and which request shall be made in good faith and,  absent
manifest error,  shall be final,  conclusive and binding upon all of the parties
hereto),  for  all  losses,   expenses  and  liabilities   (including,   without
limitation,  any interest paid by such Lender to lenders of funds borrowed by it
to make or carry its  Eurodollar  Advances,  in either  case to the  extent  not
recovered by such Lender in connection with the  re-employment of such funds and

<PAGE>

including loss of anticipated profits), which the Lender may sustain: (i) if for
any reason  (other than a default by such Lender) a borrowing  of, or conversion
to or  continuation  of,  Eurodollar  Advances to Borrower does not occur on the
date   specified   therefor   in  a   Notice   of   Borrowing   or   Notice   of
Conversion/Continuation  (whether  or not  withdrawn),  (ii)  if  any  repayment
(including  mandatory  prepayments  and  any  conversions  pursuant  to  Section
3.09(b)) of any  Eurodollar  Advances to Borrower  occurs on a date which is not
the last day of an Interest Period  applicable  thereto,  or (iii),  if, for any
reason,  Borrower  defaults in its obligation to repay its  Eurodollar  Advances
when required by the terms of this Agreement.

     Section  3.13.  Assumptions  Concerning  Funding  of  Eurodollar  Advances.
Calculation  of all amounts  payable to a Lender under this Article III shall be
made as though that Lender had actually funded its relevant  Eurodollar Advances
through the purchase of deposits in the relevant market bearing  interest at the
rate applicable to such Eurodollar  Advances in an amount equal to the amount of
the  Eurodollar  Advances  and  having a  maturity  comparable  to the  relevant
Interest Period and, in the case of Eurodollar Advances, through the transfer of
such  Eurodollar  Advances from an offshore  office of that Lender to a domestic
office of that Lender in the United States of America;  provided  however,  that
each Lender may fund each of its  Eurodollar  Advances in any manner it sees fit
and the  foregoing  assumption  shall be used only for  calculation  of  amounts
payable under this Article III.

     Section 3.14.  Apportionment of Payments.  Aggregate principal and interest
payments  in respect of Loans and  payments  in  respect  of  facility  fees and
commitment fees shall be apportioned among all outstanding Commitments and Loans
to which such payments relate,  proportionately  to the Lenders'  respective pro
rata portions of such  Commitments and  outstanding  Loans.  The  Administrative
Agent shall  promptly  distribute to each Lender at its payment office set forth
beside its name on the  appropriate  signature page hereof or such other address
as any  Lender  may  request  its  share of all such  payments  received  by the
Administrative Agent.

     Section  3.15.  Sharing of  Payments,  Etc. If any Lender  shall obtain any
payment or reduction  (including,  without  limitation,  any amounts received as
adequate protection of a deposit treated as cash collateral under the Bankruptcy

<PAGE>

Code) of the Obligations (whether voluntary,  involuntary,  through the exercise
of any right of  set-off,  or  otherwise)  in excess of its pro rata  portion of
payments  or  reductions  on account  of such  obligations  obtained  by all the
Lenders,  such Lender shall  forthwith  (i) notify each of the other Lenders and
the  Administrative  Agent of such  receipt,  and (ii)  purchase  from the other
Lenders such participations in the affected obligations as shall be necessary to
cause such  purchasing  Lender to share the excess payment or reduction,  net of
costs incurred in connection therewith, ratably with each of them, provided that
if all or any  portion  of  such  excess  payment  or  reduction  is  thereafter
recovered  from such  purchasing  Lender or additional  costs are incurred,  the
purchase  shall be rescinded  and the purchase  price  restored to the extent of
such recovery or such additional  costs,  but without interest unless the Lender
obligated  to return  such funds is  required  to pay  interest  on such  funds.
Borrower  agrees that any Lender so  purchasing  a  participation  from  another
Lender  pursuant to this  Section 3.15 may, to the fullest  extent  permitted by
law,  exercise all its rights of payment  (including  the right of set-off) with
respect  to such  participation  as fully  as if such  Lender  were  the  direct
creditor of Borrower in the amount of such participation.

     Section 3.16.  Capital  Adequacy.  Without  limiting any other provision of
this Agreement, in the event that any Lender shall have determined that any law,
treaty,  governmental (or  quasi-governmental)  rule,  regulation,  guideline or
order regarding  capital adequacy not currently in effect or fully applicable as
of the  Closing  Date,  or  any  change  therein  or in  the  interpretation  or
application  thereof  after the Closing  Date, or compliance by such Lender with
any request or directive  regarding  capital adequacy not currently in effect or
fully  applicable as of the Closing Date (whether or not having the force of law
and whether or not failure to comply therewith would be unlawful) from a central
bank or Governmental Agency having  jurisdiction,  does or shall have the effect
of reducing the rate of return on such Lender's  capital as a consequence of its
obligations  hereunder  to a level  below  that  which  such  Lender  could have
achieved but for such law, treaty, rule, regulation, guideline or order, or such
change or compliance  (taking into  consideration  such  Lender's  policies with
respect to capital  adequacy) by an amount deemed by such Lender to be material,
then  within  ten (10)  Business  Days after  written  notice and demand by such
Lender (with copies thereof to the  Administrative  Agent),  Borrower shall from
time to time pay to such Lender additional amounts sufficient to compensate such

<PAGE>

Lender for such reduction  (but, in the case of outstanding  Base Rate Advances,
without duplication of any amounts already recovered by such Lender by reason of
an adjustment in the applicable  Base Rate).  Each  certificate as to the amount
payable under this Section 3.16 (which certificate shall set forth the basis for
requesting  such  amounts in  reasonable  detail),  submitted to Borrower by any
Lender in good faith,  shall,  absent manifest  error, be final,  conclusive and
binding for all purposes.

     Section 3.17.  Benefits to Guarantors.  In consideration  for the execution
and delivery by the Guarantors of their Guaranty  Agreement,  Borrower agrees to
make the benefit of extensions of credit hereunder available to the Guarantors.


                                   ARTICLE IV.

                            CONDITIONS TO BORROWINGS

     The  obligations  of each Lender to make Advances to Borrower  hereunder is
subject to the satisfaction of the following conditions:

     Section 4.01.  Conditions  Precedent to Initial  Loans.  At the time of the
making of the initial Loans  hereunder on the Closing Date, (A) all  obligations
of Borrower  hereunder  incurred prior to the initial Loans (including,  without
limitation, Borrower's obligations to reimburse the reasonable fees and expenses
of counsel to the Agent and any fees and  expenses  payable to the Agent and the
Lenders as previously  agreed with  Borrower)  shall have been paid in full, (B)
the  Avondale  Debt and the Gintel Debt shall have been issued  subject to terms
and conditions satisfactory to the Lenders, the Borrower shall have received the
proceeds  therefrom and the Avondale Note, the Gintel Notes,  the Gintel Warrant
and the Avondale/Gintel Documents shall be in form and substance satisfactory to
the Lenders and (C) the Agent shall have  received  the  following,  in form and
substance reasonably satisfactory in all respects to the Lenders:

         (a)  the duly executed counterparts of this Agreement;

         (b)  the duly completed and executed Notes evidencing the
    Commitments;


<PAGE>

         (c)  the duly executed Guaranty Agreement;

         (d) the duly executed Security Agreements,  together with (i) such duly
    executed UCC financing  statements to be recorded in such  jurisdictions  as
    the  Required  Lenders  deem  necessary or desirable to perfect the security
    interests  granted  thereunder  and (ii) such bailee letters filed with such
    parties  holding  inventory of the Credit Parties,  as the Required  Lenders
    deem  necessary  or  desirable  to perfect  the  security  interest  granted
    thereunder;

         (e) Lien search  reports  listing all  effective  financing  statements
    which name the Borrower or any Significant  Subsidiaries as debtor, together
    with copies of such other  financing  statements  (none of which shall cover
    the Collateral purported to be covered by either of the Security Agreements,
    other than financing statements executed pursuant to clause (d) above);

         (f)  Evidence  satisfactory  to the  Required  Lenders  that all  other
    actions necessary or desirable to perfect and protect the security interests
    created by the Security Agreements have been taken;

         (g)  a duly executed Intercreditor Agreement, dated as of the date
    hereof, among the Lenders and acknowledged by the Borrower;

         (h)  a duly executed Subordination Agreement, dated as of the date
    hereof, among the Lenders, Avondale and Gintel, and acknowledged by the
    Borrower;

         (i)  a duly executed closing certificate of Borrower in substantially
    the form of Exhibit F attached hereto and appropriately completed;

         (j) certificates of the Secretary or Assistant Secretary of each of the
    Credit  Parties  attaching and certifying  copies of (1) the  certificate or
    articles of incorporation of such entity certified by the Secretary of State
    the state of such  entity's  incorporation,  (2) the  bylaws  or  comparable
    governing  documents of such  entity,  (3) the  resolutions  of the board of
    directors of such entity, authorizing as applicable the execution,  delivery

<PAGE>

    and performance of the Credit  Documents,  and (4) the name,  title and true
    signature of each officer of such entity executing the Credit Documents;

         (k)  certificates  of good standing or  existence,  as may be available
    from  the  Secretary  of  State  of the  jurisdiction  of  incorporation  or
    organization  of such Credit Party and each other  jurisdiction in which the
    failure of such Credit Party to be in good standing  would have a Materially
    Adverse Effect;

         (l) copies of all  documents and  instruments,  including all consents,
    authorizations  and filings,  required or advisable under any Requirement of
    Law or by any material  Contractual  Obligation  of the Credit  Parties,  in
    connection  with  the  execution,   delivery,   performance,   validity  and
    enforceability  of the  Credit  Documents  and  the  other  documents  to be
    executed and delivered hereunder, and such consents, authorizations, filings
    and orders  shall be in full force and  effect  and all  applicable  waiting
    periods shall have expired;

         (m)  acknowledgment from C.T. Corporation as to its appointment as 
    agent for service of process for the Borrower;

         (n)  certified copies of all Debt Instruments securing Indebtedness of 
    any Consolidated Company described on Schedule 5.12;

         (o)  certificates,  reports  and  other  information  as the  Agent may
    reasonably  request  from any  Consolidated  Company in order to satisfy the
    Lenders as to the absence of any material liabilities or obligations arising
    from matters relating to employees of the Consolidated Companies,  including
    employee  relations,  collective  bargaining  agreements,  Plans,  and other
    compensation and employee benefit plans;

         (p) certificates, reports, environmental audits and investigations, and
    other information as the Agent may reasonably  request from any Consolidated
    Company in order to satisfy the  Lenders as to the  absence of any  material
    liabilities or obligations  arising from  environmental  and employee health
    and safety exposures to which the Consolidated Companies may be subject, and
    the plans of the Consolidated Companies with respect thereto;


<PAGE>

         (q)  certificates,  reports  and  other  information  as the  Agent may
    reasonably  request  from any  Consolidated  Company in order to satisfy the
    Lenders as to the absence of any material liabilities or obligations arising
    from litigation (including without limitation, products liability and patent
    infringement   claims)  pending  or  threatened   against  the  Consolidated
    Companies;

         (r)  certificates  of  insurance  issued  by the  Borrower's  insurers,
    describing  in reasonable  detail the insurance  maintained by the Borrower,
    together with appropriate  evidence showing that the  Administrative  Agent,
    the  Agent  and the  Lenders  have been  named as loss  payee or  additional
    insured,  as their interest may appear,  on all insurance  policies insuring
    property of the Borrower and its Subsidiaries;

         (s) the favorable opinion of Blau, Kramer,  Wactler & Lieberman,  P.C.,
    counsel to the Borrower,  substantially in the form of Exhibit G-1 addressed
    to the Agent, the Administrative Agent and each of the Lenders;

         (t) the favorable opinion of Womble, Carlyle, Sandridge & Rice, counsel
    to the Guarantor in North Carolina, substantially in the form of Exhibit G-2
    addressed to the Agent, the Administrative Agent and each of the Lenders;

         (u) the favorable opinions of (1) Haskell,  Slaughter, Young & Johnson,
    local  counsel to the Credit  Parties in Alabama,  (2) Johnson & Montgomery,
    local  counsel to the Credit  Parties in Georgia,  and (3) Womble,  Carlyle,
    Sandridge & Rice,  local counsel to the Credit Parties in North Carolina and
    South Carolina,  each  substantially in the form of Exhibit G-3 addressed to
    the Agent, the Administrative Agent and each of the Lenders;

         (v)  the audited financial statements of Borrower and its Subsidiaries,
    on a consolidated basis for the fiscal year ended on September 30, 1995;

         (w) certified copies of all Subordinated  Debt Documents,  certified as
    true and correct copies by the President or Chief  Financial  Officer of the
    Borrower;


<PAGE>

         (x) certified  copies of the  Prudential  Agreement and all  amendments
    thereto,  including  the  Amendment No. 6 to be executed on the date hereof,
    amending the Prudential  Agreement to reflect  changes in certain  financial
    covenants and certified copies of all opinions and other documents delivered
    in connection therewith, if any, all certified as true and correct copies by
    the President or Chief Financial Officer of the Borrower; and

         (y)  an audit of the working capital assets of the Borrower and its 
    Subsidiaries.

In addition to the foregoing, the following conditions shall have been satisfied
or shall exist, all to the satisfaction of the Agent, as of the time the initial
Loans are made hereunder:

         (x) the Loans to be made on the  Closing  Date and the use of  proceeds
    thereof shall not contravene, violate or conflict with, or involve the Agent
    or any Lender in a violation of, any law, rule,  injunction,  or regulation,
    or determination of any court of law or other Governmental Agency;

         (y) all corporate proceedings and all other legal matters in connection
    with the authorization,  legality, validity and enforceability of the Credit
    Documents  shall be  reasonably  satisfactory  in form and  substance to the
    Required Lenders; and

         (z) the status of all  pending  and  threatened  litigation  (including
    products  liability  and patent  claims)  which might result in a Materially
    Adverse Effect, including a description of any damages sought and the claims
    constituting the basis therefor,  shall have been reported in writing to the
    Administrative  Agent,  the  Administrative  Agent shall have  reported such
    matters to the Lenders, and the Lenders shall be satisfied with such status.

     Section  4.02.  Conditions  to All Loans.  At the time of the making of all
Loans  (before as well as after giving  effect to such Loans and to the proposed
use of the proceeds thereof), the following conditions shall have been satisfied
or shall exist:

         (a)  there shall exist no Default or Event of Default;


<PAGE>

         (b) all  representations  and warranties by Borrower  contained  herein
    shall be true and correct in all material  respects  with the same effect as
    though such  representations  and  warranties had been made on and as of the
    date of such Loans;

         (c)  since  the date of the most  recent  financial  statements  of the
    Consolidated Companies described in Section 5.03, and except as set forth on
    Schedule 5.03 hereof, there shall have been no change which has had or could
    reasonably be expected to have a Materially Adverse Effect.

         (d) there shall be no action or proceeding instituted or pending before
    any court or other  Governmental  Agency or, to the  knowledge  of Borrower,
    threatened  (i) which  reasonably  could be  expected  to have a  Materially
    Adverse  Effect,  or (ii) seeking to prohibit or restrict one or more Credit
    Party's  ownership or operation of any portion of its business or assets, or
    to compel one or more Credit Party to dispose of or hold separate all or any
    portion of its businesses or assets,  where such portion or portions of such
    business(es) or assets, as the case may be, constitute a material portion of
    the total businesses or assets of the Consolidated Companies;

         (e) the  Loans to be made and the use of  proceeds  thereof  shall  not
    contravene,  violate or conflict with, or involve the Agent or any Lender in
    a violation of, any law, rule, injunction,  or regulation,  or determination
    of any court of law or other Governmental Agency applicable to Borrower; and

         (f) the  Agent  shall  have  received  such  other  documents  or legal
    opinions as the Agent or any Lender may reasonably request,  all in form and
    substance reasonably satisfactory to the Agent.

     Each request for a Borrowing and the acceptance by Borrower of the proceeds
thereof shall  constitute a representation  and warranty by Borrower,  as of the
date of the Loans  comprising  such  Borrowing,  that the applicable  conditions
specified in Sections 4.01 and 4.02 have been satisfied.



<PAGE>

                                    ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

         Borrower represents, warrants and covenants to Lenders that:

     Section 5.01. Organization and Qualification.  (a) Each of the Borrower and
its  Subsidiaries  is duly organized and validly  existing under the laws of its
state of  incorporation  and has the  corporate  power to own its  assets and to
transact the business in which it is presently  engaged and in which it proposes
to be engaged.  Schedule 5.01 hereto accurately and completely lists, as to each
of the  Borrower  and  each  Subsidiary:  (i)  the  state  of  incorporation  or
organization,  and the type of legal  entity  that each of them is, and (ii) the
classes and number of authorized and outstanding shares of capital stock of each
such  corporation,  and the owners of such  outstanding  shares of capital stock
(other than with respect to the  Borrower).  Schedule 5.01 also  designates  the
Significant Subsidiaries as of the Closing Date.

     (b) Each of the Borrower and its  Subsidiaries  is in good  standing in its
state of organization and in each state in which it is qualified to do business.
There are no  jurisdictions  other than as set forth on Schedule  5.01 hereto in
which the  character  of the  properties  owned or  proposed  to be owned by the
Borrower or any  Subsidiary or in which the  transaction  of the business of the
Borrower or any  Subsidiary  as now  conducted  or as  proposed to be  conducted
requires  or will  require  the  Borrower  or any  Subsidiary  to  qualify to do
business and as to which failure so to qualify  could have a Materially  Adverse
Effect.

     Section 5.02. Corporate Authority.  The Borrower and each Guarantor has the
power to execute, deliver and perform the Credit Documents, the Borrower has the
power to borrow  hereunder  and the  Guarantor  has the power to  guarantee  the
obligations  of the  Borrower.  The  execution  and delivery by Borrower and the
Guarantors  of  and  the   performance  by  Borrower  and  Guarantors  of  their
obligations  under  the  Credit  Documents  have  been  duly  authorized  by all
requisite corporate action and all requisite  shareholder action, if any, on the
part of  Borrower  and the  Guarantors  and do not and will not (i)  violate any
provision of Applicable Law to the Borrower and its Subsidiaries,  (ii) conflict
with  or  result  in  a  breach  of  any  order,  writ,  injunction,  ordinance,
resolution,  decree,  or other  similar  document or  instrument of any court or
Governmental  Agency  applicable  to the  Borrower and its  Subsidiaries,  (iii)

<PAGE>

conflict  with any  certificate  or articles of  incorporation  or bylaws of the
Borrower or any of its Subsidiaries,  (iv) create (with or without the giving of
notice or lapse of time,  or both) a default  under or breach of, or give rights
of  termination  under,  any  Debt  Instrument  of  the  Borrower  or any of its
Subsidiaries,  or  (v)  result  in the  imposition  of any  Lien  of any  nature
whatsoever  upon any of the  properties or assets owned by or used in connection
with the business of the Borrower or its  Subsidiaries,  other than  pursuant to
the Security Agreements.

     Section 5.03. Financial Statements. (a) Each of the Financial Statements is
correct and complete and presents fairly the  consolidated  financial  position,
the consolidated results of operations, and changes in financial position of the
Borrower and its Subsidiaries,  as at and for its date, and has been prepared in
accordance  with GAAP.  Neither the Borrower nor any Subsidiary has any material
obligation,  liability or commitment,  direct or contingent (including,  without
limitation,  any  Environmental  Liability),  that is  required to be but is not
reflected  in the  Financial  Statements.  The  Borrower's  fiscal  year  is the
fifty-two/fifty-three  week period  ending on the closest  Saturday to September
30th in each year.

     (b) The  Projections  have been  prepared  on the basis of the  assumptions
accompanying  them and reflect as of the date thereof the Borrower's  good faith
projections,  after reasonable analysis, of the matters set forth therein, based
on such assumptions.

     (c) Since the date of the latest  balance  sheet  included in the Financial
Statements  (the "Latest  Balance Sheet") and except as is set forth on Schedule
5.03, (i) there has been no change in the condition  (financial or otherwise) of
the business  and  operations  of the  Borrower,  which either  singly or in the
aggregate,  is (or is likely to be) materially adverse to the Borrower;  (ii) no
sale of goods or services or other transactions of the Borrower other than those
occurring  in the ordinary  and regular  course of  business;  (iii) no material
change  in the  manner of  conducting  the  business  of the  Borrower;  (iv) no
material adverse change in the working capital position of the Borrower; and (v)
no financial or other commitments or obligations incurred by the Borrower except
such as may be  incidental  to carrying on the  ordinary  and regular  course of
business.


<PAGE>

     Section 5.04. Tax Returns.  Each of Borrower and its Subsidiaries has filed
all federal, state and local tax returns required to be filed by it, and has not
failed to pay any taxes,  or interest  and  penalties  relating  thereto,  on or
before the due dates  thereof.  Except to the extent that reserves  therefor are
reflected in the Financial Statements:  (i) there are no material federal, state
or local tax  liabilities of the Borrower or any Subsidiary due or to become due
for any tax year  ended on or prior  to the  date of the  Latest  Balance  Sheet
relating  to such  entity,  whether  incurred  in respect of or  measured by the
income of such  entity,  that are not properly  reflected in the Latest  Balance
Sheet relating to such entity, and (ii) there are no material claims pending or,
to the knowledge of the Borrower, proposed or threatened against the Borrower or
any of its Subsidiaries for past federal, state or local taxes, except those, if
any, as to which proper reserves are reflected in the Financial Statements.

     Section  5.05.  Judgments,  Actions,  Proceedings.  Except as  disclosed on
Schedule  5.05  hereto,   there  are  no  outstanding   judgments,   actions  or
proceedings,   including,  without  limitation,  any  Environmental  Proceeding,
pending before any court or Governmental Agency, with respect to or, to the best
of the Borrower's knowledge, threatened against or affecting the Borrower or any
Subsidiary involving, in the case of any court proceeding,  a claim in excess of
$100,000,  nor, to the best of the Borrower's knowledge, is there any reasonable
basis for the  institution of any such action or proceeding  that is probable of
assertion,  nor are there any such actions or  proceedings in which the Borrower
or any Subsidiary is a plaintiff or complainant.

     Section 5.06.  Title to Properties.  Each of Borrower and its  Subsidiaries
has (i) good and marketable fee simple title to its respective  real  properties
(other than real  properties  which it leases from others),  including such real
properties  reflected  in the  consolidated  balance  sheet of Borrower  and its
Subsidiaries  as of September 30, 1995  hereinabove  described  (other than real
properties  disposed of in the ordinary course of business),  subject to no Lien
of any kind except Liens permitted by Section 7.02 and (ii) good title to all of
its other  respective  properties  and assets (other than  properties and assets
which it  leases  from  others),  including  the  other  properties  and  assets
reflected in the consolidated  balance sheet of Borrower and its Subsidiaries at
September  30, 1995  hereinabove  described  (other than  properties  and assets
disposed of in the ordinary course of business),  subject to no Lien of any kind

<PAGE>

except Liens  permitted by Section 7.02.  Each of Borrower and its  Subsidiaries
enjoys peaceful and  undisturbed  possession  under all leases  necessary in any
material respect for the operation of its respective properties and assets, none
of which contains any unusual or burdensome  provisions  which might  materially
affect or impair the  operation  of such  properties  and  assets,  and all such
leases are valid and subsisting and in full force and effect.

     Section 5.07.  Enforceability of Agreement. The Borrower and the Guarantors
have duly executed and delivered  each of the Credit  Documents to which it is a
party,  and such Credit  Documents  constitutes  the valid and  legally  binding
obligation  agreement  of  Borrower  or  such  Guarantor,  as the  case  may be,
enforceable  against  Borrower  or  such  Guarantor,  as the  case  may  be,  in
accordance  with  its  terms,  except  as such  enforcement  may be  limited  by
applicable bankruptcy, insolvency, reorganization,  moratorium, or other similar
laws,  now or hereafter in effect,  relating to or affecting the  enforcement of
creditors'  rights generally and except that the remedy of specific  performance
and other equitable remedies are subject to judicial discretion.

     Section  5.08.  Consent.  No consent or approval of any Person  (including,
without limitation,  any Governmental Agency, any stockholder of the Borrower or
any landlord or mortgagee), no waiver of any Lien or right of distraint or other
similar  right  and  no  consent,   license,   certificate  of  need,  approval,
authorization or declaration of any  Governmental  Agency is or will be required
in connection with the execution, delivery or performance by the Borrower or the
Guarantors, or the validity, enforcement or priority, of the Credit Documents or
any  Lien  created  and  granted  thereunder,  or in  order  to  constitute  the
Indebtedness  to be incurred  hereunder and under the Notes and the other Credit
Documents  as "Senior  Debt" or any  similar  term  defined  within  each of the
Subordinated  Notes,  except as set forth on Schedule 5.08 hereto, each of which
either has been duly and validly  obtained on or prior to the date hereof and is
now in full force and effect, or is designated on Schedule 5.08 as waived by the
Required Lenders.

     Section 5.09. Use of Proceeds; Federal Reserve Regulations. The proceeds of
the Notes will be used solely for the purposes specified in Section 2.01(c), and
none of such proceeds will be used,  directly or indirectly,  for the purpose of
purchasing  or  carrying  any  "margin  security"  or "margin  stock" or for the

<PAGE>

purpose of reducing or retiring any indebtedness that originally was incurred to
purchase or carry a "margin security" or "margin stock" or for any other purpose
that might  constitute this transaction a "purpose credit" within the meaning of
the regulations of the Board of Governors of the Federal Reserve System.

         Section 5.10. ERISA.

     (a) Except as disclosed on Schedule 5.10 hereto, no Pension Plan or Defined
Contribution  Plan  which  is  an  Employee  Benefit  Plan,   including  without
limitation,  any Multiemployer Plan, exists or has ever existed, and neither the
Borrower nor any ERISA Affiliate is a participating employer in any Pension Plan
which  is an  Employee  Benefit  Plan in which  more  than  one  employer  makes
contributions  as  described  in  Sections  4063 and 4064 of  ERISA.  Except  as
disclosed on Schedule 5.10, neither the Borrower nor any ERISA Affiliate has any
contingent  liability  with  respect to any  post-retirement  benefit  under any
Employee  Welfare  Benefit  Plan which is a welfare  plan (as defined in Section
3(1) of ERISA),  other than  liability  for health  plan  continuation  coverage
described  in Part 6 of Title I of  ERISA,  which  together  with any  disclosed
liability on Schedule  5.10,  will not have a  Materially  Adverse  Effect.  The
Borrower has given to the Lenders true and complete copies of all the following:
each Pension Plan or Defined Contribution Plan which is an Employee Benefit Plan
and related trust  agreement  (including  all amendments  and  commitments  with
respect to such Employee  Benefit plan or trust) which the Borrower or any ERISA
Affiliate  maintains or is committed to  contribute to as of the date hereof and
the most recent summary plan description, actuarial report, determination letter
issued by the IRS and Form 5500 filed in respect of each such  Employee  Benefit
Plan; a listing of all of the  Multiemployer  Plans to which the Borrower or any
ERISA  Affiliate  contributes  or is committed to  contribute  and the aggregate
amount of the most recent annual contributions  required to be made to each such
Multiemployer  Plan, and any information which has been provided to the Borrower
or any ERISA Affiliate  regarding  withdrawal  liability under any Multiemployer
Plan and the collective bargaining agreement pursuant to which such contribution
is required to be made.

     (b) Each Employee Benefit Plan complies,  in both form and operation in all
material  respects,  with  its  terms,  ERISA  and the Code  including,  without
limitation,  Code Section 4980B,  and no condition  exists or event has occurred

<PAGE>

with  respect  to any such plan  which  would  result in the  incurrence  by the
Borrower or any ERISA  Affiliate  of any  material  liability,  fine or penalty.
Neither the Borrower nor any ERISA  Affiliate  has incurred any liability to the
PBGC which remains outstanding other than the payment of premiums, and there are
no premiums which have become due which are unpaid. Neither the Borrower nor any
ERISA  Affiliate  has  engaged  in any  transaction  which  could  subject it to
liability under Section 4069 or Section 4212(c) of ERISA.  Each Employee Benefit
Plan,  related trust  agreement,  arrangement and commitment of the Borrower and
each ERISA  Affiliate is legally valid and binding and in full force and effect.
Except as provided on Schedule 5.10 and subject to amendment and  submission for
a  determination  letter with regard to the Tax Reform Act of 1986  requirements
and other post 1986 requirements, each Employee Benefit Plan that is intended to
be qualified  under Section 401(a) of the Code has been determined by the IRS to
be so qualified,  and each trust related to such plan has been  determined to be
exempt under  Section  501(a) of the Code.  To the  knowledge  of the  Borrower,
nothing has  occurred or is  expected to occur that would  adversely  affect the
qualified status of the Employee Benefit Plan or any related trust subsequent to
the issuance of such  determination  letter.  No Employee  Benefit Plan is being
audited or, to the knowledge of the  Borrower,  investigated  by any  government
agency or subject to any pending or threatened claim or suit.

     (c) Each  Pension  Plan  currently  meets and  always  has met the  minimum
funding  standard of Section  302 of ERISA and Section 412 of the Code  (without
regard to any funding  waiver).  All  contributions or payments due and owing as
required  by Section  302 of ERISA,  Section 412 of the Code or the terms of any
Pension Plan have been made by the due date for such  contributions or payments.
With respect to each  Multiemployer  Plan, the Borrower and each ERISA Affiliate
has paid or accrued all  contributions  pursuant to the terms of the  applicable
collective  bargaining  agreement  required  to be paid or accrued  by it.  With
respect to each  Pension  Plan,  the market  value of assets  (exclusive  of any
contribution  due to the Pension  Plan)  equals or exceeds the present  value of
benefit liabilities as of the latest actuarial valuation date for such plan (but
not prior to 12 months prior to the date  hereof),  determined on the basis of a
shutdown of the Borrower or any ERISA  Affiliate in  accordance  with  actuarial
assumptions used by the PBGC in single-employer  plan terminations and since its
last valuation date,  there have been no amendments to such plan that materially

<PAGE>

increased the present value of accrued  benefits nor any other material  adverse
changes in the funding  status of such plan.  Neither the Borrower nor any ERISA
Affiliate is required to provide  security to a Pension Plan pursuant to Section
307 of ERISA or Section 401(a) (29) of the Code.

     (d) Neither the Borrower nor any ERISA  Affiliate  nor any fiduciary of any
Employee Benefit Plan has engaged in a prohibited  transaction under Section 406
of ERISA or Section  4975 of the Code with regard to any such  Employee  Benefit
Plans.  The execution,  delivery and carrying out of the terms of any agreements
that  are  related  to  this   transaction  will  not  constitute  a  prohibited
transaction under the aforementioned sections.

     (e) No Termination Event has occurred or is reasonably expected to occur.

     (f) None of the  following  "reportable  events"  which are  subject to the
30-day notice  requirement of Section  4043(b) of ERISA in respect of any of the
Pension  Plans has  occurred:  (i) an inability to pay benefits  when due,  (ii)
bankruptcy or insolvency of the sponsor of the Pension Plan,  (iii)  liquidation
or  dissolution  of the sponsor of the Pension Plan,  (iv) a failure to meet the
minimum funding  standards,  or (v) certain  transactions  involving a change of
employer. The Borrower has not received any notice from the PBGC that any of the
Pension  Plans is being  involuntarily  terminated  or from the Secretary of the
Treasury  that any partial or full  termination  of any of the Employee  Benefit
Plans has occurred and no event shall have occurred, and there shall exist as of
the date hereof no condition or set of  circumstances  which  present a material
risk of the involuntary termination of any of the Pension Plans.

     (g) There are no  agreements  which will  provide  payments to any officer,
employee,  shareholder or highly compensated individual which will be "parachute
payments" under Section 280G of the Code that are  nondeductible to the Borrower
and which will be subject  to the tax under  Section  4999 of the Code for which
the Borrower or any ERISA Affiliate would have a material withholding liability.

     (h) All  references  to the  Borrower in this  Section 5.10 or in any other
Section  of this  Agreement  relating  to ERISA  shall be deemed to refer to the
Borrower and any other entity which is considered an ERISA Affiliate.


<PAGE>

     (i) Neither the Borrower nor any ERISA Affiliate has ever  contributed to a
Multiemployer Plan.

     Section 5.11. Ownership  Structure.  All the outstanding shares of stock of
the Borrower and each of its Subsidiaries have been validly issued and are fully
paid and  nonassessable  and all such  outstanding  shares of the  Subsidiaries,
except as noted on such Schedule  5.01,  are owned by Borrower or a Wholly Owned
Subsidiary  of  Borrower  free of any  Lien or  claim.  Except  as set  forth on
Schedule  5.01,  there  are  no  outstanding  warrants,  options,  contracts  or
commitments  of any kind  entitling any Person to purchase or otherwise  acquire
any shares of capital  stock or other  equity  interests  of the Borrower or any
Subsidiary,  nor are there  outstanding any securities that are convertible into
or exchangeable  for any shares of capital stock or other equity interest of the
Borrower or any  Subsidiary.  Except as set forth on Schedule 5.01,  neither the
Borrower nor any Subsidiary has any Subsidiary.

     Section 5.12.  Outstanding Debt. Except for the Refinanced  Indebtedness to
be repaid and  terminated on the Closing Date, and except for  Indebtedness  set
forth on Schedule  5.12 as of the Closing  Date,  and after giving effect to the
transactions  contemplated  by this Agreement,  neither  Borrower nor any of its
Subsidiaries has outstanding any Indebtedness evidenced by Debt Instruments.

     Section 5.13. Burdensome Documents. None of the Consolidated Companies is a
party  to  or  bound  by  any  Contractual  Obligation  or  Requirement  of  Law
(including,  without limitation, any Environmental Matter) that has had or would
reasonably be expected to have a Materially Adverse Effect.

     Section 5.14. No Defaults. Neither the Borrower nor any of its Subsidiaries
is  (a)  in  default  under  any  Debt  Instrument  relating  to  or  evidencing
Indebtedness  in a  principal  amount of  $100,000  in the  aggregate  or (b) in
default under any other agreement,  instrument,  ordinance,  resolution, decree,
order or judgment to which it is a party,  by which it is bound, or by which any
of its  properties  or  assets  may be  affected,  which  default  could  have a
Materially Adverse Effect.


<PAGE>

     Section 5.15.  Compliance  with Laws. The Borrower and each  Subsidiary has
complied  and is in  compliance  in  all  respects  with  all  Applicable  Laws,
including, without limitation, all applicable Environmental Laws, non-compliance
with which could have a Materially Adverse Effect.

         Section 5.16.  Pollution and Other Regulations.

     (a) Each of the Borrower and its  Subsidiaries has complied in all material
respects with all applicable  Environmental Laws,  including without limitation,
compliance with permits, licenses,  standards,  schedules and timetables, and is
not in violation  of, and does not  presently  have  outstanding  any  liability
under, has not been notified that it is or may be liable under and does not have
knowledge of any  liability  or potential  liability  (including  any  liability
relating to matters set forth on Schedule  5.16) except as set forth on Schedule
5.16,  under any applicable  Environmental  Law, which  violation,  liability or
potential  liability could  reasonably be expected to have a Materially  Adverse
Effect.

     (b)  Except as set forth on  Schedule  5.16,  the  Borrower  nor any of its
Subsidiaries  has received a written request for information  under CERCLA,  any
other  Environmental  Laws or any comparable  state law, or any public health or
safety or welfare law or written notice that any such entity has been identified
as a potential  responsible party under CERCLA, any other Environmental Laws, or
any comparable state law, or any public health or safety or welfare law, nor has
any such entity received any written  notification that any Hazardous  Materials
that it or any of its respective predecessors in interest has generated, stored,
treated,  handled,  transported,  or  disposed  of,  has  been  released  or  is
threatened to be released at any site at which any Person  intends to conduct or
is  conducting  a  remedial  investigation  or  other  action  pursuant  to  any
applicable Environmental Law, or any other Environmental Laws.

     (c) Except as set forth on  Schedule  5.16,  each of the  Borrower  and its
Subsidiaries has obtained all permits, licenses or other authorizations required
for  the  conduct  of  their   respective   operations   under  all   applicable
Environmental and Asbestos Laws where a failure to hold such permit,  license or
other authorization would have a material adverse effect on the related property

<PAGE>

or would otherwise have a Materially Adverse Effect, and each such authorization
is in full force and effect.

     (d) Each of Borrower and its Subsidiaries complies in all material respects
with all laws and  regulations  relating  to equal  employment  opportunity  and
employee  safety in all  jurisdictions  in which it is presently doing business,
and  Borrower  will use its best  efforts  to  comply,  and to cause each of its
Subsidiaries to comply,  with all such laws and regulations which may be legally
imposed  in  the  future  in  jurisdictions  in  which  Borrower  or  any of its
Subsidiaries may then be doing business,  non-compliance with which could have a
Materially Adverse Effect.

     Section 5.17. Possession of Franchises, Licenses, Etc. Each of Borrower and
its  Subsidiaries  possesses  all material  licenses,  permits,  franchises  and
authorizations from Governmental  Agencies,  free from burdensome  restrictions,
that are necessary in any material  respect for the ownership,  maintenance  and
operation  of its  properties  and assets,  and neither  Borrower nor any of its
Subsidiaries is in violation of any thereof in any material respect.

     Section 5.18. Intangibles.  Each of Borrower and its Subsidiaries possesses
all patents,  trademarks,  service marks, trade names, copyrights,  licenses and
other  rights,  free from  burdensome  restrictions,  which are necessary to the
conduct of its  business  as now  conducted  and as  proposed  to be  conducted,
without any conflict with the with the patents, trademarks, service marks, trade
names,  and copyrights  and rights with respect to the  foregoing,  of any other
Person, each of such patents, trademarks, service marks, trade names, copyrights
and  rights  with  respect  thereto,  together  with  any  pending  applications
therefor,  in each case which are material to the operations of the Borrower and
its  Subsidiaries,  are listed on Schedule 5.18 hereto.  Nothing has come to the
attention  of  Borrower,  any of its  Subsidiaries  or any of  their  respective
directors  and  officers to the effect that (i) any  product,  process,  method,
substance,  part  or  other  material  presently  contemplated  to be sold by or
employed by Borrower or any of its  Subsidiaries in connection with its business
may infringe any patent, trademark, service mark, trade name, copyright, license
or other right owned by any other  Person,  (ii) there is pending or  threatened
any claim or litigation against or affecting Borrower or any of its Subsidiaries

<PAGE>

contesting  its  right  to  sell  or use  any  such  product,  process,  method,
substance,  part or other  material  or (iii)  there is, or there is  pending or
proposed,  any  patent,  invention,  device,  application  or  principle  or any
statute, law, rule, regulation, standard or code which would prevent, inhibit or
render  obsolete the  production  or sale of any  products of, or  substantially
reduce the projected revenues of, or otherwise  materially  adversely affect the
business, condition or operations of, Borrower or any of its Subsidiaries.

     Section 5.19.  Governmental Consent.  Neither the nature of Borrower or any
of its Subsidiaries nor any of their  respective  businesses or properties,  nor
any relationship  between Borrower and any other Person, nor any circumstance in
connection  with the  execution  and  delivery of the Credit  Documents  and the
consummation of the transactions  contemplated  thereby is such as to require on
behalf of Borrower or any of its  Subsidiaries  any  consent,  approval or other
action by or any notice to or filing  with any court or  Governmental  Agency in
connection  with the  execution  and delivery of this  Agreement  and the Credit
Documents.

     Section 5.20. Disclosure. Neither this Agreement, the Credit Documents, the
Financial  Statements,  the  Projections  nor any  other  certificate,  opinion,
documents or any other  statement made or furnished to the Lenders in writing by
or on behalf  of  Borrower  or any  Subsidiary  in  connection  herewith  or the
transactions  contemplated  herein  contains any untrue  statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained  therein or herein not  misleading,  as of the date such statement was
made. To the  knowledge of the  Borrower,  there is no fact peculiar to Borrower
which materially  adversely affects or in the future may (so far as Borrower can
now  foresee)  materially  adversely  affect the  business,  property or assets,
financial  condition or  prospects  of Borrower  which has not been set forth in
this Agreement or in the Credit Documents,  certificates and written  statements
furnished  to Lenders by or on behalf of  Borrower  prior to the date  hereof in
connection with the transactions contemplated hereby.

     Section 5.21.  Insurance Coverage.  Each property of Borrower or any of its
Subsidiaries is insured in amounts deemed adequate by Borrower's  management and
no less than those amounts  customary in the industry in which  Borrower and its
Subsidiaries  operate against risks usually insured against by Persons operating
businesses  similar to those of Borrower or its  Subsidiaries  in the localities

<PAGE>

where such properties are located,  and the Agent, the Administrative  Agent and
the Lenders have been named (1) as loss payee and additional  insured,  as their
interests may appear,  on all property and casualty policies insuring any of the
Collateral  and (2) as  additional  insured  on all  general  and  comprehensive
liability policies, as their interests may appear.

     Section 5.22.  Labor  Matters.  Except as set forth on Schedule  5.22:  (a)
there are no collective  bargaining agreements or other labor contracts covering
the Borrower or any Subsidiary;  (b) no such collective  bargaining agreement or
other labor contract will expire during the term of this Agreement; (c) no union
or other labor  organization  is seeking to  organize,  or to be  recognized  as
bargaining representative for, a bargaining unit of employees of the Borrower or
any  Subsidiary;  (d) there is no pending or threatened  strike,  work stoppage,
material  unfair labor practice  claim or charge,  arbitration or other material
labor  dispute  against or  affecting  the Borrower or any  Subsidiary  or their
representative  employees;  (e)  there has not  been,  during  the five (5) year
period prior to the date hereof, a strike, work stoppage,  material unfair labor
practice claim or charge, arbitration or other material labor dispute against or
affecting  the  Borrower  or  any  Subsidiary  or any  of  their  representative
employees,  and (f) there  are no  actions,  suits,  charges,  demands,  claims,
counterclaims  or  proceedings  pending  or,  to  the  best  of  the  Borrower's
knowledge,  threatened against the Borrower or any of the Subsidiaries, by or on
behalf of, or with, its employees, other than employee grievances arising in the
ordinary course of business, that are not in the aggregate, material.

     Section 5.23. Name Changes, Mergers,  Acquisitions.  Except as set forth on
Schedule 5.23,  neither the Borrower nor any Subsidiary has within the five-year
period  immediately  preceding the date of this Agreement changed its name, been
the  surviving  entity  of  a  merger  or  consolidation,  or  acquired  all  or
substantially all of the assets of any Person.

     Section 5.24.  Condition of Assets. All of the assets and properties of the
Borrower and the Subsidiaries that are reasonably necessary for the operation of
their  respective  businesses are in good working  condition,  ordinary wear and
tear  excepted,  and are able to serve the function for which they are currently
being used.



<PAGE>

                                   ARTICLE VI

                              AFFIRMATIVE COVENANTS

     Borrower  covenants  and agrees  that so long as it may  borrow  under this
Agreement or so long as any  indebtedness  remains  outstanding  under the Notes
that the Borrower shall, and cause each of its Subsidiaries to:

     Section 6.01. Corporate Existence, Etc. Preserve and keep in full force and
effect its corporate existence and all permits, rights, privileges,  franchises,
licenses,  material patents and copyrights (for the scheduled duration thereof),
trademarks,  trade names, and service marks, necessary for the proper conduct of
its business,  and its qualification to do business as a foreign  corporation in
all  jurisdictions  where it conducts  business or other activities  making such
qualification necessary, where the failure to do so would reasonably be expected
to have a Materially  Adverse Effect, and continue to engage in the same line of
business  and  comply  in  all  material  respects  with  all  applicable  laws,
regulations and orders.

     Section 6.02.  Compliance with Laws, Etc. (a) Comply with all  Requirements
of Law (including,  without  limitation,  ERISA, the Code and the  Environmental
Laws) and Contractual  Obligations applicable to or binding on any of them where
the failure to comply with such Requirements of Law and Contractual  Obligations
would reasonably be expected to have a Materially Adverse Effect;

     (b) Operate  all  property  owned or leased by it such that no  obligation,
including a clean-up obligation,  shall arise under any Environmental Law, which
obligation would constitute a Lien on any property of any Consolidated  Company;
provided,  however,  that in the event  that any such  claim is made or any such
obligation arises, such Consolidated  Company shall, at its own cost and expense
either (i) immediately  satisfy such claim or obligation;  or (ii) contests such
claim by appropriate  proceedings and upon final judgment (subject to no further
appeal) immediately satisfy such judgment;  provided,  however, that in all such
cases,  the Borrower shall file a bond when necessary to avoid the creation of a
Lien against any of the properties of the Consolidated Companies;  and provided,
further,  that the Borrower  shall  indemnify and hold harmless the Lenders from
any liability,  responsibility or obligation in respect thereof or in respect of
any clean-up of any other  liability,  as successor,  secured party or otherwise

<PAGE>

for any reason, including,  without limitation,  the enforcement of the Lenders'
rights under any Credit Document or by operation of law.

     Section  6.03.  Payment of Taxes and Claims,  Etc. Pay and discharge all of
its obligations and liabilities,  including,  without limitation, (i) all taxes,
assessments  and  governmental  charges upon its income and properties when due,
and (ii) all claims (including, without limitation, claims for labor, materials,
supplies or services) which might,  if unpaid,  become a Lien upon its property,
unless  but  only to the  extent  that  such  obligations,  liabilities,  taxes,
assessments  and  governmental  charges  shall be contested in good faith and by
appropriate  proceedings  and that, to the extent  required by GAAP,  proper and
adequate book reserves relating thereto are established by the Borrower,  or, as
the case may be, by the appropriate  Subsidiary and then only to the extent that
a bond is filed in cases  where the filing of a bond is  necessary  to avoid the
creation of a Lien, other than a Permitted Lien, against any of its properties.

     Section 6.04.  Books and Records.  Keep proper books of record and account,
in a manner  reasonably  satisfactory  to the Lenders,  in which full,  true and
correct  entries  in  conformity  with  GAAP  shall be made of all  dealings  or
transactions in relation to its business and activities.

     Section 6.05.  Inspections  and Audits.  Permit any  representative  of the
Agent or any Lender (i) to make or cause to be made,  inspections  and audits of
any books,  records and papers of the Borrower and each of its  Subsidiaries and
to make  extracts  therefrom  and copies  thereof,  (ii) to discuss its affairs,
finances and  accounts  with its  officers,  and (iii) to make  inspections  and
examinations   of  any  properties  and  facilities  of  the  Borrower  and  the
Subsidiaries on reasonable  notice, at all such reasonable times and as often as
the Agent or any Lender may reasonably require, in order to assure the Agent and
each Lender that the Borrower is and will be in compliance  with its obligations
under the Credit  Documents or to evaluate any Lender's  investment  in the then
outstanding  Notes;  ;  provided,  however,  that  at  any  time  following  the
occurrence and during the  continuance of a Default or an Event of Default,  the
Agent or any of the Lenders may take any of the  above-mentioned  actions at any
time, with no notice and at the Borrower's expense.


<PAGE>

     Section 6.06.  Maintenance  and Repairs.  Maintain in good repair,  working
order and condition,  subject to normal wear and tear,  all material  properties
and  assets  from  time to time  owned  by it and used in or  necessary  for the
operation  of its  business,  and make  all  reasonable  repairs,  replacements,
additions and improvements thereto.

     Section 6.07. Reporting Covenants. Furnish to each Lender:

     (a) Annual  Financial  Statements.  As soon as  available  and in any event
within 120 days after the end of each fiscal year of Borrower, balance sheets of
the  Consolidated  Companies  as  at  the  end  of  such  year,  presented  on a
consolidated basis, and the related statements of income,  shareholders' equity,
and cash flows of the Consolidated  Companies for such fiscal year, presented on
a consolidated basis, setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable  detail and accompanied by (i) a
report thereon of Arthur  Andersen or other  independent  public  accountants of
comparable recognized national standing,  which such report shall be unqualified
as to going  concern  and  scope of audit and shall  state  that such  financial
statements present fairly in all material respects the financial condition as at
the end of such  fiscal  year  on a  consolidated  basis,  and  the  results  of
operations and statements of cash flows of the  Consolidated  Companies for such
fiscal year in accordance with GAAP and that the examination by such accountants
in  connection  with such  consolidated  financial  statements  has been made in
accordance with generally  accepted auditing standards and (ii) a certificate of
such  accountants  to the  effect  that  they are  familiar  with the  terms and
provisions  of this  Agreement  and that in  making  their  audit  they have not
discovered  any  condition,  act or  omission to act which  would  constitute  a
Default or Event of Default;

     (b) Quarterly Financial  Statements.  As soon as available and in any event
within 60 days after the end of each fiscal quarter of Borrower  (other than the
fourth fiscal quarter),  balance sheets of the Consolidated  Companies as at the
end of such quarter presented on a consolidated basis and the related statements
of income,  shareholders'  equity, and cash flows of the Consolidated  Companies
for such fiscal  quarter and for the portion of Borrower's  fiscal year ended at
the end of such quarter, presented on a consolidated basis setting forth in each

<PAGE>

case in  comparative  form the  figures  for the  corresponding  quarter and the
corresponding  portion of  Borrower's  previous  fiscal year,  all in reasonable
detail and  certified by the chief  financial  officer or  principal  accounting
officer  of  Borrower  that such  financial  statements  fairly  present  in all
material  respects the financial  condition of the Consolidated  Companies as at
the end of such  fiscal  quarter on a  consolidated  basis,  and the  results of
operations and statements of cash flows of the  Consolidated  Companies for such
fiscal  quarter and such portion of Borrower's  fiscal year, in accordance  with
GAAP consistently  applied (subject to normal year-end audit adjustments and the
absence of certain footnotes);

     (c)  No  Default/Compliance   Certificate.   Together  with  the  financial
statements  required pursuant to subsections (a) and (b) above, a certificate of
the  President,  Chief  Financial  Officer,  Treasurer or  Principal  Accounting
Officer  of  Borrower  (i) to the  effect  that,  based  upon  a  review  of the
activities of the Consolidated  Companies and such financial  statements  during
the period  covered  thereby,  there  exists no Event of Default  and no Default
under  this  Agreement,  or if there  exists  an Event of  Default  or a Default
hereunder,  specifying the nature thereof and the proposed response thereto, and
(ii)  demonstrating in reasonable detail compliance as at the end of such fiscal
year or such fiscal quarter with Section 6.08 and Sections 7.02 through 7.04;

     (d) Borrowing Base Certificate.  Within two (2) Business Days after the end
of each calendar week, a Certificate of the President,  Chief Financial Officer,
Treasurer or Principal Accounting Officer of the Borrower in the form of Exhibit
H hereto;

     (e) Notice of Default.  Promptly  after Borrower has notice or knowledge of
the  occurrence of an Event of Default or a Default,  a certificate of the Chief
Financial  Officer,  Treasurer,  or  Principal  Accounting  Officer of  Borrower
specifying the nature thereof and the proposed response thereto;

     (f) Litigation.  Promptly after (i) the occurrence  thereof,  notice of the
institution of or any adverse development in any litigation, legal proceeding or
dispute or any governmental  investigation or any arbitration,  before any court
or arbitrator or any Governmental  Agency,  involving  amounts in excess of Five
Hundred Thousand ($500,000) Dollars, affecting any of the Consolidated Companies

<PAGE>

or  any  of  their  respective  properties,  whether  or not  fully  covered  by
insurance, and regardless of the subject matter thereof (excluding, however, any
actions relating to workers'  compensation  claims or negligence claims relating
to use of motor vehicles, if fully covered by insurance, subject to deductibles)
or (ii) actual knowledge  thereof,  notice of the threat of any such litigation,
legal proceeding, dispute, investigation or arbitration;

     (g) Environmental Notices.  Prompt written notification if any Consolidated
Company  (i)  receives  (A) any notice of any  violation  or  administrative  or
judicial  complaint or order having been filed or about to be filed against such
Consolidated  Company alleging  violations of any Environmental  Law, or (B) any
notice  from any  Governmental  Agency or any other  Person  alleging  that such
Consolidated  Company is or may be subject to any  Environmental  Liability,  in
each case  providing  the  Lenders  with a copy of such notice  together  with a
statement of the action such  Consolidated  Company intends to take with respect
thereto  and (ii) has any  actual or  alleged  spill,  leak,  disposal  or other
release  of any  waste,  petroleum  product,  or  hazardous  waste or  Hazardous
Materials which could result in penalties, fines, claims or other liabilities to
any Consolidated Company in amounts in excess of $500,000 individually or in the
aggregate;

         (h)  ERISA.

              (A) Promptly after the occurrence thereof with respect to any Plan
    of any  Consolidated  Company or any ERISA Affiliate  thereof,  or any trust
    established  thereunder,  written  notice  of (x) a  "Reportable  Event"  as
    defined in Section  404 of ERISA,  if a notice of such  Reportable  event is
    required  under ERISA to be  delivered  to the PBGC within 30 days after the
    occurrence thereof, together with a description of such Reportable Event and
    a  statement  of the  action  that the  Consolidated  Company  or such ERISA
    Affiliate intends to take with respect thereto,  together with a copy of the
    notice thereof given to the PBGC, or (y) any other event which could subject
    any  Consolidated  Company to any tax, penalty or liability under Title I or
    Title IV of ERISA or Chapter 43 of the Code, or any tax or penalty resulting
    from a loss of deduction  under Sections 162, 404 or 419 of the Code,  where
    any such taxes,  penalties or liabilities exceed or could exceed $250,000 in
    the aggregate;

              (B) Promptly after such notice must be provided to the PBGC, or to
    a Plan  participant,  beneficiary or alternative  payee, any notice required
    under Section 101(d), 302(f)(4), 303, 307, 4041(b)(1)(A) or 4041(c)(1)(A) of
    ERISA or under  Section  401(a)(29)  or 412 of the Code with  respect to any
    Plan of any Consolidated Company or any ERISA Affiliate thereof;

              (C)  Promptly   after   receipt,   any  notice   received  by  any
    Consolidated  Company or any ERISA  Affiliate  thereof  (i)  concerning  the
    intent of the PBGC or any other  Governmental  Agency to terminate a Plan of
    such  Company  or ERISA  Affiliate  thereof  which is subject to Title IV of
    ERISA, or which will impose any liability on such Company or ERISA Affiliate
    under Title IV of ERISA or Chapter 43 of the Code or (ii) an  assessment  of
    withdrawal  liability in  connection  with a complete or partial  withdrawal
    with  respect  to  any  Plan,  and  a  statement  of  the  action  that  the
    Consolidated  Company or such ERISA  Affiliate  intends to take with respect
    thereto;

              (D) Upon the request of the  Administrative  Agent,  promptly upon
    the  filing  thereof  with  the  Internal  Revenue  Service  ("IRS")  or the
    Department  of Labor  ("DOL"),  a copy of IRS Form 5500 or annual report for
    each Plan of any  Consolidated  Company or ERISA Affiliate  thereof which is
    subject to Title IV of ERISA;

              (E) Upon the  request of the  Administrative  Agent,  (A) true and
    complete  copies  of any  and  all  documents,  government  reports  and IRS
    determination or opinion letters or rulings for any Plan of any Consolidated
    Company from the IRS,  PBGC or DOL, (B) any reports filed with the IRS, PBGC
    or DOL with  respect to a Plan of the  Consolidated  Companies  or any ERISA
    Affiliate  thereof,  or (C) a current statement of withdrawal  liability for
    each Multiemployer  Plan of any Consolidated  Company or any ERISA Affiliate
    thereof;

     (i) Liens.  Promptly upon any Consolidated  Company becoming aware thereof,
notice of the filing of any federal  statutory Lien, tax or other state or local
government Lien or any other Lien affecting their respective  properties,  other
than those Liens expressly permitted by Section 7.02;

     (j) Public  Filings,  Etc.  Promptly  upon the filing  thereof or otherwise
becoming available,  copies of all financial statements,  annual,  quarterly and

<PAGE>

special reports,  proxy statements and notices sent or made available  generally
by Borrower to its public security holders,  of all regular and periodic reports
and all registration  statements and prospectuses,  if any, filed by any of them
with any securities  exchange,  and of all press  releases and other  statements
made available generally to the public containing  material  developments in the
business  or  financial   condition  of  Borrower  and  the  other  Consolidated
Companies;

     (k)  Accountants'  Reports.  Promptly upon receipt  thereof,  copies of all
financial  statements  of, and all  reports  submitted  by,  independent  public
accountants  to Borrower in  connection  with each annual,  interim,  or special
audit of Borrower's consolidated financial statements;

     (l) Burdensome Restrictions, Etc. Promptly upon the existence or occurrence
thereof, notice of the existence or occurrence of (i) any Contractual Obligation
or  Requirement  of  Law  described  in  Section  5.13,   (ii)  failure  of  any
Consolidated Company to hold in full force and effect those material trademarks,
service marks,  patents,  trade names,  copyrights,  licenses and similar rights
necessary in the normal  conduct of its  business,  and (iii) any strike,  labor
dispute, slow down or work stoppage as described in Section 5.22;

     (m) New  Significant  Subsidiaries.  Within 30 days after the  formation or
acquisition of any Significant  Subsidiary,  or any other event resulting in the
creation of a new Significant Subsidiary, notice of the formation or acquisition
of such Significant  Subsidiary or such  occurrence,  including a description of
the assets of such entity, the activities in which it will be engaged,  and such
other information as the Agent may request;

     (n)  Intercompany  Asset Transfers.  Promptly upon the occurrence  thereof,
notice of the transfer of any assets from Borrower or any Guarantor to any other
Consolidated  Company that is not Borrower or a Guarantor (in any transaction or
series of related transactions), excluding sales or other transfers of assets in
the ordinary course of business, where the Asset Value of such assets is greater
than $500,000;

     (o)  Subordinated   Lenders.   Concurrently   with   dissemination  to  the
Subordinated  Lenders,  all other  reports as the Borrower  shall,  from time to
time, disseminate to the Subordinated Lenders; and


<PAGE>

     (p) Other Information.  With reasonable promptness,  such other information
about the  Consolidated  Companies  as the Agent or any  Lender  may  reasonably
request from time to time.

         Section 6.08.  Financial Covenants.

     (a) Debt Service Coverage Ratio. Maintain as of the last day of each fiscal
quarter of the Borrower,  commencing with the fiscal quarter ending on September
30, 1996, a minimum Debt Service Coverage Ratio,  calculated for the immediately
preceding four fiscal quarters, of at least:

<TABLE>
<CAPTION>
         Fiscal Quarter                               Required
             Ending On                                   Ratio

         <S>                                          <C>
         September 30, 1996                           1.00 to 1.0
         December 31, 1996                            1.40 to 1.0
         March 31, 1997 and thereafter                1.50 to 1.0
</TABLE>

     (b) Leverage  Ratio.  Maintain as of the last day of each fiscal quarter of
the Borrower  ending on December 31, June 30 and September 30,  commencing  with
the fiscal quarter ending on June 30, 1996, a maximum  Leverage Ratio of no more
than  0.45:1.0,  and  maintain as of the last day of each fiscal  quarter of the
Borrower ending on March 31,  commencing with the fiscal quarter ending on March
31, 1996, a maximum Leverage Ratio of not more than 0.50:1.0.

     (c) Fixed Charge Coverage Ratio. Maintain as of the last day of each fiscal
quarter of the Borrower,  commencing with the fiscal quarter ending on September
30, 1996, a minimum Fixed Charge Coverage Ratio,  calculated for the immediately
preceding four fiscal quarters, of at least:

<TABLE>
<CAPTION>
         Fiscal Quarter                               Required
             Ending On                                   Ratio

         <S>                                          <C>
         September 30, 1996                           0.85 to 1.0
         December 31, 1996 and                        1.50 to 1.0
          thereafter
</TABLE>

     (d) Current  Ratio.  Maintain as of the last day of each fiscal  quarter of
the Borrower,  commencing with the fiscal quarter ending as of March 31, 1996, a
minimum Current Ratio of at least 2.0 to 1.0.

     (e) Funded Debt Coverage Ratio.  Maintain as of the last day of each fiscal
quarter of the Borrower, commencing on September 30, 1996, a maximum Funded Debt
Coverage Ratio,  calculated for the immediately  preceding four fiscal quarters,
of no more than (i) 4.0 to 1.0 for the fiscal  quarter  ending on September  30,
1996; and (ii) 3.0 to 1.0 for each fiscal quarter  thereafter ending on December
31, June 30 or  September 30 and 3.5 to 1.0 for each fiscal  quarter  thereafter
ending on March 31.

     Section  6.09.  Notices Under  Certain  Other  Indebtedness.  Promptly upon
receipt thereof, furnish to the Agent a copy of any notice received by it or any
other  Consolidated  Company  from  the  holder(s)  of any  Indebtedness  of the
Borrower (or from any trustee,  agent, attorney, or other party acting on behalf
of such holder(s)) in an amount which, in the aggregate, exceeds $100,000, where
such notice  states or claims (i) the  existence or occurrence of any default or
event of default with respect to such  Indebtedness  under the terms of any Debt
Instrument  evidencing or governing such Indebtedness,  or (ii) the existence or
occurrence of any event or condition which requires or permits  holder(s) of any
Indebtedness  to exercise  rights under any "change in control"  provision under
any Debt  Instrument,  in each case  regardless  of whether  the holders of such
Indebtedness  waive,  or amend  any Debt  Instrument  the  effect of which is to
waive,  such default or event of default.  Borrower  also agrees,  promptly upon
receipt  thereof,  to furnish to the Agent a copy of any waiver or  amendment to
any Debt  Instrument  which  waives or has the effect of waiving  any default or
event of default thereunder. Borrower further agrees to take such actions as may
be necessary to require the  holder(s)  of any  Indebtedness  (or any trustee or
agent acting on their behalf) incurred pursuant to Debt Instruments  executed or
amended and  restated  after the  Closing  Date,  to furnish  copies of all such
notices,  waivers and amendments  directly to the Agent  simultaneously with the
furnishing thereof to Borrower,  and that such requirement may not be altered or
rescinded without the prior written consent of the Agent.

     Section 6.10. Additional Significant  Subsidiaries.  Promptly after (i) the
formation or acquisition  (provided that nothing in this Section shall be deemed

<PAGE>

to authorize the  acquisition of any entity) of any  Significant  Subsidiary not
listed on Schedule 5.01, (ii) the transfer of assets to any Consolidated Company
if notice thereof is required to be given  pursuant to Section  4.07(q) and as a
result  thereof the recipient of such assets  becomes a Significant  Subsidiary,
(iii) the occurrence of any other event creating a new  Significant  Subsidiary,
Borrower  shall  execute and  deliver,  and cause to be executed  and  delivered
documents of the kind  described in Schedule  6.10, all of which must be in form
and substance satisfactory to the Agent and the Required Lenders.

     Section  6.11.   Ownership  of  Significant   Subsidiaries.   Maintain  its
percentage  of  ownership  existing  as of the date  hereof  of all  Significant
Subsidiaries,  and shall not decrease its  ownership  percentage  in each Person
which  becomes  a  Significant  Subsidiaries  after  the  date  hereof,  as such
ownership exists at the time such Person becomes a Significant Subsidiary.

     Section  6.12.  Insurance.  (a)  Maintain  or cause to be  maintained  with
financially sound and reputable insurance  companies  acceptable to the Lenders,
such  insurance  on such of its  properties  and  business,  in such amounts and
against such risks as is customarily maintained by similar businesses; (ii) file
with the Agent upon its request a detailed list of the insurance then in effect,
stating  the names of the  insurance  companies,  the  amounts  and rates of the
insurance,  the dates of the  expiration  thereof and the  properties  and risks
covered thereby; and (iii) within ten (10) days after notice in writing from the
Agent,  obtain such additional  insurance as the Required Lenders may reasonably
request;  provided,  that, the Borrower may maintain  self-insurance  consistent
with its past  practices  and policies;  and (b) carry all  insurance  available
through the PBGC or any private insurance  companies covering its obligations to
the PBGC.

     Section 6.13. Copies of Corporate Documents.  Promptly deliver to the Agent
copies of any  amendments or  modifications  to the  certificate  or articles of
incorporation and by-laws of the Borrower or any of its Subsidiaries,  certified
with respect to the certificate or articles of incorporation by the Secretary of
State of the state of incorporation of the Borrower or such Subsidiary and, with
respect to the by-laws,  by the secretary or assistant secretary of the Borrower
or such Subsidiary.

<PAGE>

                                   ARTICLE VII

                               NEGATIVE COVENANTS

     Borrower  covenants  and agrees  that,  so long as it may borrow under this
Agreement or so long as any Indebtedness  remains  outstanding  under the Notes,
the Borrower shall not, and shall cause each of its Subsidiaries not to:

         Section 7.01.  Reserved.

     Section 7.02. Liens.  Create, or assume or permit to exist, any Lien on any
of the properties of the Consolidated  Companies  whether now owned or hereafter
acquired, except:

         (a)  Permitted Liens;

     (b) Liens existing on the date hereof disclosed on Schedule 7.02 (excluding
Liens securing Refinanced Indebtedness);

     (c) any Lien on any property securing  Indebtedness incurred or assumed for
the purpose of financing all or a part of the acquisition  cost of such property
and any refinancing thereof;  provided that such Lien secures only the repayment
of the  purchase  price of such  property  and such Lien does not  extend to any
other property;

     (d)  Liens  securing  a cash  management  line of  credit  in  favor of the
Borrower in a principal amount not to exceed $2,500,000; provided, however, that
(1) the value of the  collateral  subject to such Liens does not exceed  143% of
the principal  amount of such  Indebtedness  and (2) such  collateral  shall not
include,  in whole or in part, the Collateral as defined in the Company Security
Agreement or the Guarantor Security Agreement;

     (e) Liens granted in "Assigned  Accounts" pursuant to and as defined in the
Non-Notification Factoring Agreement; and

     (f) Liens securing any Indebtedness  other than the cash management line of
credit described in clause (d) above; provided,  however, that (1) sixty-six and
two-thirds  percent  (66.66%) of the  proceeds  from such  Indebtedness  must be
applied to repay Indebtedness  outstanding hereunder,  (2) the Commitments shall
be permanently  reduced by an amount equal to sixty-six and  two-thirds  percent
(66.66%) of the proceeds from such  Indebtedness and (3) the collateral  secured
by such Liens shall not include,  in whole or in part, the Collateral as defined
in the Company Security Agreement or the Guarantor Security Agreement.


<PAGE>

     Section 7.03. Mergers,  Acquisitions.  Merge or consolidate with any Person
(whether or not the Borrower or any  Subsidiary  is the  surviving  entity),  or
acquire all or  substantially  all of the assets or any of the capital  stock of
any  Person,  except  (a) any  Subsidiary  may  merge  with or  into  any  other
Subsidiary or the Borrower (so long as the Borrower is the surviving entity) and
(b) as permitted pursuant to Section 7.04 hereof.

     Section  7.04.  Investments,  Loans,  Etc.  Make,  or suffer to exist,  any
Investment  in any  Person,  including,  without  limitation,  any  shareholder,
director, officer or employee of any Consolidated Company, except Investments:

         (a)  Investments in:

         (i)  obligations issued or guaranteed by the United
    States of America;

         (ii)  certificates  of deposit,  bankers  acceptances  and other "money
    market  instruments" issued by any bank or trust company organized under the
    United States of America or any State thereof and having capital and surplus
    in an aggregate amount of not less than $200,000,000;

         (iii) open market  commercial  paper bearing the highest  credit rating
    issued by Standard & Poor's Corporation or by another nationally  recognized
    credit rating agency;

         (iv) repurchase  agreements entered into with any bank or trust company
    organized  under  the laws of the  United  States  of  America  or any state
    thereof and having  capital and surplus in an  aggregate  amount of not less
    than   $200,000,000   relating  to  United  States  of  America   government
    obligations; and

         (v)  shares of "money market funds", each having net
    assets of not less than $100,000,000;


<PAGE>

    in each case maturing or being due or payable in full not more than 180 days
    after the acquisition thereof.

     (b) Investments by the Borrower in entities  related to the business of the
Borrower in an aggregate amount not to exceed $1,000,000;

     (c) Investments by the Borrower in its  Subsidiaries  which are outstanding
on the Closing Date;

     (d)  Investments  in the form of loans or advances to  employees;  provided
that such Investments do not exceed $1,000,000 in the aggregate; and

     (e) Investments  consisting of the remainder of the  outstanding  shares of
stock of  Oneita-Strathleven  Limited  which it does  not  currently  own for an
aggregate purchase price not to exceed $300,000.

     Section  7.05.  Capital   Expenditures.   Make  any  Capital  Expenditures,
excluding Fayette Alabama Plant Expenditures, (i) in excess of $9,000,000 during
the 1996 fiscal year of the Borrower,  of which no more than  $6,000,000  may be
used for capital expenditures on property, plant and equipment, the remainder to
be used for other capital  expenditures,  including capital expenditures related
to transaction costs for this transaction, the Subordinated Debt transaction and
the  rights  offering  contemplated  to be made by the  Borrower,  and (ii) such
amount as the parties shall mutually and reasonably  agree upon for fiscal years
1997 and 1998 fiscal years of the  Borrower;  the Borrower and the Lenders agree
to negotiate such cap on Capital  Expenditures  for the Borrower's 1997 and 1998
fiscal  years in good faith  prior to the end of July of each of the  Borrower's
1996 and 1997 fiscal years, respectively.

     Section 7.06. Minimum Tangible Net Worth. Permit the Consolidated  Tangible
Net Worth at the end of any fiscal  quarter of the Borrower,  plus the amount of
all  Subordinated  Debt  then  outstanding,  to be  less  than  the  sum  of (i)
$82,000,000  plus (ii) (A) $2,000,000 at the end of the fiscal quarter ending on
June 30,  1996,  (B)  $4,000,000  at the end of the  fiscal  quarter  ending  on
September 30, 1996 and (C)  $6,000,000 at the end of each fiscal  quarter ending
on December 31, 1996 and  thereafter,  plus (iii) for each fiscal quarter ending
on March 31, 1997 and thereafter,  50% of Consolidated Net Income (but not loss)

<PAGE>

for the  period  beginning  October  1, 1996 and  ending on the last day of such
fiscal  quarter  plus (iv) 100% of the  proceeds  of all  Subordinated  Debt and
equity  offerings  by the Borrower  (in each case,  net of taxes and  reasonable
transactional costs incurred in connection therewith).

     Section  7.07.  Sale  and  Leaseback  Transactions.  Sell or  transfer  any
property,  real or  personal,  whether  now  owned or  hereafter  acquired,  and
thereafter rent or lease such property or other property which any  Consolidated
Company  intends to use for  substantially  the same  purpose or purposes as the
property being sold or transferred, to the extent that the aggregate fair market
value of any such  property sold or  transferred  and then rented or leased back
does not exceed $5,000,000 per fiscal year of the Borrower.

     Section 7.08.  Transactions with Affiliates.  Except as expressly permitted
by this  Agreement,  directly  or  indirectly:  (a)  make any  Investment  in an
Affiliate;  (b) transfer, sell, lease, assign or otherwise dispose of any assets
to an  Affiliate;  (c) merge into or  consolidate  with or  purchase  or acquire
assets from an Affiliate;  or (d) enter into any other  transaction  directly or
indirectly  with  or for  the  benefit  of  any  Affiliate  (including,  without
limitation,   guarantees  and  assumptions  of  obligations  of  an  Affiliate);
provided,  however, that: (i) any Affiliate who is a natural person may serve as
an employee or director of the Borrower and receive reasonable  compensation for
his services in such capacity,  (ii) the Borrower may enter into any transaction
with an  Affiliate  providing  for the leasing of  property,  the  rendering  or
receipt of services or the  purchase  or sale of  product,  inventory  and other
assets  in  the  ordinary  course  of  business  if  the  monetary  or  business
consideration  arising  therefrom would be  substantially as advantageous to the
Borrower  as the  monetary  or  business  consideration  that would  obtain in a
comparable arm's length  transaction  with a Person not an Affiliate,  (iii) the
Borrower may issue the Gintel Notes,  the Gintel Warrant,  the Avondale Note and
the Convertible Notes and enter into and perform the  Avondale/Gintel  Documents
and (iv) for purposes of this Section 7.08, an Affiliate  shall not be deemed to
include a Significant Subsidiary of the Borrower.

     Section 7.09. Optional Prepayments.  Directly or indirectly,  prepay (other
than mandatory prepayments required under the Prudential  Agreement),  purchase,
redeem,  retire (other than at scheduled  maturity dates),  defease or otherwise

<PAGE>

acquire,  or make any optional  payment on account of any principal of, interest
on, or premium payable in connection with the optional prepayment, redemption or
retirement  of, any of its  Indebtedness,  or give a notice of  redemption  with
respect to any such  Indebtedness,  or prepay any accounts payable other than in
the  ordinary  course of  business,  or make any  payment  in  violation  of the
subordination  provisions of any  Subordinated  Debt,  except that the following
shall be permitted:  (1) prepayments of the Obligations under this Agreement and
the Notes, (2) prepayments of the Indebtedness and Capitalized Lease Obligations
described on Schedule 5.12 hereof owed to City of Fayette, Alabama (with respect
to the HUD UDAG loan of $353,077), Chase Home Mortgage Corporation (with respect
to the Mortgage Note of $57,131 and  Spartanburg  County,  South  Carolina (with
respect to the  Industrial  Revenue Bond of $270,000),  (3)  replacement  of the
Avondale Note and one of the Gintel Notes with promissory notes convertible into
shares of common stock of the Borrower but which  otherwise  have  substantially
the same  terms as the  promissory  notes  being  replaced  (including,  without
limitation,  with  the  same  principal,   interest  rate,  scheduled  principal
payments,  maturity date, on an unsecured  basis and subject to the terms of the
Agreement) (the  "Convertible  Notes"),  (4) conversion of the Convertible Notes
into, and the exercise of the Gintel Warrant for,  shares of common stock of the
Borrower  pursuant to their terms, (5) prepayment of any  Subordinated  Debt but
solely with,  and in an amount  equal to, the proceeds  received by the Borrower
from the  Rights  Offering  and (6) offset of the  Avondale  Note and one of the
Gintel Notes against the obligations of Avondale and Gintel, respectively, under
the Standby Agreement.

     Section  7.10.  Changes in Business;  Sales or Pledges of Assets.  Make any
material change in its business on a consolidated basis, or in the nature of its
operation,  or  liquidate  or  dissolve  itself (or suffer  any  liquidation  or
dissolution),  or make any Asset  Sales  except  (i) a sale of the  Fingerville,
South  Carolina  plant,  (ii) a sale of the  corporate  condominium  located  in
Georgetown  County,  South  Carolina,  (iii)  sales in the  ordinary  course  of
business and (iv) sales in connection with a transaction permitted under Section
7.07 hereof and in each case for a fair consideration;  or dispose of any shares
of stock or any  Indebtedness,  whether  now  owned or  hereafter  acquired,  or
discount, sell, pledge, hypothecate or otherwise dispose of accounts receivable,
except pursuant to the Security  Agreements and except to SunTrust Bank, Atlanta
pursuant to the Non-Notification  Factoring  Agreement,  so long as the proceeds
received therefrom are used to prepay Indebtedness outstanding hereunder.


<PAGE>

     Section  7.11.  ERISA  Obligations.   (a)  Permit  the  occurrence  of  any
Termination Event, or the occurrence of a termination or partial  termination of
a Defined  Contribution Plan which would have a Materially Adverse Effect on the
Borrower; or

     (b) permit any  accumulated  deficiency (as defined in Section 302 of ERISA
and Section 412 of the Code) with  respect to any Pension  Plan,  whether or not
waived; or

     (c) engage, or permit the Borrower or any ERISA Affiliate to engage, in any
prohibited  transaction  under  Section 406 of ERISA or Section 4975 of the Code
for which a civil penalty  pursuant to Section 502(i) of ERISA or a tax pursuant
to Section 4975 of the Code which would have a Materially  Adverse Effect on the
Borrower; or

     (d) engage or permit the Borrower or any ERISA Affiliate to engage,  in any
breach of  fiduciary  duty under Part 4 of Title I of ERISA for which 20 percent
of the applicable recovery amount under Section 502(l) of ERISA which would have
a Materially Adverse Effect on the Borrower; or

     (e) fail, or permit any ERISA Affiliate to fail, to establish, maintain and
operate each Employee  Benefit Plan in compliance in all material  respects with
the  provisions  of  ERISA,  the  Code  and all  other  applicable  laws and the
regulations and interpretations thereof.

     Section 7.12.  Additional  Negative  Pledges.  Create or otherwise cause or
suffer to exist or become effective,  directly or indirectly, any prohibition or
restriction  on the  creation  or  existence  of any Lien  upon any asset of any
Consolidated  Company,  other than pursuant to (i) any requirement of Applicable
Law or any regulatory authority having jurisdiction over any of the Consolidated
Companies or (ii) the Prudential Agreement.

     Section 7.13.  Limitation on Payment  Restrictions  Affecting  Consolidated
Companies.  Create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of any Consolidated Company
to (i) pay  dividends  or make  any  other  distributions  on such  Consolidated

<PAGE>

Company's  stock,  or (ii) pay any  indebtedness  owed to  Borrower or any other
Consolidated  Company,  or (iii)  transfer  any of its  property  or  assets  to
Borrower or any other Consolidated Company, except any consensual encumbrance or
restriction  existing under the Credit Documents and the Prudential Agreement as
in effect on the Closing Date.

     Section 7.14. Actions Under Certain  Documents.  Modify,  amend,  cancel or
rescind any agreements or documents  evidencing or governing  Subordinated Debt,
the Indebtedness  outstanding to Prudential or any other Indebtedness secured by
a Lien permitted under clause (d) or (f) of Section 7.02 hereof.

         Section 7.15.  Redemptions, Distributions.

     (a) Purchase,  redeem, retire or otherwise acquire, directly or indirectly,
or make any  sinking  fund  payments  with  respect to, or set apart any sum for
payment with respect to, the Subordinated  Debt, any shares of any capital stock
of the  Borrower,  any  options,  warrants,  or other  rights  to  acquire  such
Subordinated  Debt or  capital  stock,  whether  now or  hereafter  outstanding;
provided, however, that (i) the Avondale Note and one of the Gintel Notes may be
replaced with  Convertible  Notes,  (ii) the Convertible  Notes may be converted
into, and the Gintel Warrant may be exercised for, shares of common stock of the
Borrower pursuant to their terms, (iii) the Borrower may prepay any Subordinated
Debt but solely with,  and in an amount  equal to, the proceeds  received by the
Borrower  from an  Rights  Offering  and (iv) the  Avondale  Note and one of the
Gintel  Notes may be offset  against the  obligations  of  Avondale  and Gintel,
respectively,  under the Standby Agreement,  and tendered for credit against the
subscription price pursuant thereto; or

     (b) Declare or pay any  dividends or make any  distribution  of any kind on
the  Borrower's  outstanding  capital  stock,  or set aside any sum for any such
purpose, except that the Borrower may declare or pay any dividend payable solely
in shares of its capital stock or the Borrower may distribute rights to purchase
its shares of common stock in the Rights Offering.

         Section 7.16. Stock Issuance.  Issue any additional shares or any right
or option to acquire any shares, or any security convertible into any shares, of
the capital  stock of any  Subsidiary,  except to the  Borrower or a directly or
indirectly wholly owned Subsidiary.


<PAGE>

         Section 7.17.  Fiscal Year.  Change its fiscal year.

     Section  7.18.  Hazardous  Material.  Cause  or  permit  (i) any  Hazardous
Materials to be placed,  held,  located or disposed of, on, under or at any real
property used in  connection  with the operation of the business of the Borrower
or any of its  Subsidiaries  ("Real  Property") or any part thereof,  except for
such Hazardous Materials which are necessary for the Borrower's operation of its
business  thereon and which shall be used,  stored and disposed of in compliance
with all  applicable  Environmental  Laws or (ii) such Real Property or any part
thereof  to be used as a  collection,  storage  or dump  site for any  Hazardous
Material.


                                  ARTICLE VIII

                                EVENTS OF DEFAULT

     Upon the  occurrence  and during the  continuance  of any of the  following
specified events (each, an "Event of Default"):

     Section  8.01.  Payments.  Borrower  shall fail to make  promptly  when due
(including,   without  limitation,  by  mandatory  prepayment)  any  payment  of
principal or interest with respect to the Notes,  or Borrower shall fail to make
within three (3) days after the due date thereof any payment of any fee or other
amount payable hereunder;

     Section 8.02.  Covenants Without Notice.  Borrower shall fail to observe or
perform any covenant or agreement contained in Section 6.08 or in Article 7;

     Section 8.03.  Other  Covenants.  Borrower shall fail to perform or observe
any other term,  condition,  covenant or agreement  contained in this Agreement,
other than those  referred to in Sections  8.01 and 8.02, or of any of the other
Credit  Documents to which it is a party,  which shall remain  unremedied  for a
period of 15 days after the earlier of (i) any of the executive  officers of the
Borrower obtaining actual knowledge  thereof,  or (ii) notice thereof shall have
been given to Borrower by Agent or any Lender;


<PAGE>

     Section  8.04.  Representations.  Any  representation  or warranty  made or
deemed to have been made to the Lenders under this Agreement or any other Credit
Document  (including  the  Schedules  attached  thereto),  or  any  certificate,
statement or report made or delivered in compliance  with this  Agreement or any
other  Credit  Document,  shall have been false or  misleading  in any  material
respect when made or deemed to be made or delivered;

     Section 8.05. Non-Payments of Other Indebtedness.  Any Consolidated Company
shall fail to make when due (whether at stated  maturity,  by  acceleration,  on
demand or otherwise, and after giving effect to any applicable grace period) any
payment of  principal  of or  interest on any  Indebtedness  (other than (i) the
Obligations,  (ii) any of the  Borrower's  accounts  payable or (iii) any taxes,
assessments, governmental charges, accrued liabilities and deferred liabilities,
other than Indebtedness for borrowed money or Capitalized Lease Obligations,  to
the extent that any dispute  regarding such failure to pay is being contested in
good faith by appropriate  proceedings and for which adequate reserves are being
maintained to the extent required by GAAP) exceeding $500,000 in the aggregate;

     Section 8.06. Defaults Under Other Agreements. (a) Any Consolidated Company
shall fail to perform or observe any term,  condition  or covenant of any of its
Debt  Instruments,  so that,  as a result  of any such  failure  to  perform  or
observe,  the  Indebtedness  included  therein or secured or covered  thereby is
accelerated,  or the holder of such  Indebtedness  or any other  Person would be
permitted to accelerate the maturity of such Indebtedness;


     (b) Any  event  or  condition  referred  to in any Debt  Instrument  of any
Consolidated  Company shall occur or fail to occur, so that as a result thereof,
the Indebtedness  included therein or secured or covered thereby is accelerated,
or the  holder  of  such  Indebtedness  or any  other  Person  is  permitted  to
accelerate the maturity of such Indebtedness;

     (c) Failure to pay any Indebtedness for borrowed money when due;

provided,  however,  that the  provisions  of this  Section  8.06  shall  not be
applicable to any Debt Instrument of any  Consolidated  Company that relating to
or evidencing  Indebtedness  in a principal  amount of less than $500,000 in the
aggregate;


<PAGE>

     Section 8.07. Bankruptcy.  (a) The Borrower or any Subsidiary shall make an
assignment  for the  benefit of  creditors,  file a petition in  bankruptcy,  be
adjudicated insolvent,  petition or apply to any tribunal for the appointment of
a  receiver,  custodian,  or any  trustee  for it or a  substantial  part of its
assets,  or shall commence any proceeding under any bankruptcy,  reorganization,
arrangement,  readjustment of debt, dissolution or liquidation law or statute of
any  jurisdiction,  whether now or hereafter  in effect,  or the Borrower or any
Subsidiary  shall take any  corporate  action to authorize  any of the foregoing
actions; or there shall have been filed any such petition or application, or any
such proceeding shall have been commenced  against it, that remains  undismissed
for a period of  thirty  (30) days or more;  or any  order for  relief  shall be
entered in any such proceeding;  or the Borrower or any Subsidiary by any act or
omission shall indicate its consent to,  approval of or acquiescence in any such
petition,  application or proceeding or the appointment of a custodian, receiver
or any trustee for it or any substantial part of any of its properties, or shall
suffer any custodianship,  receivership or trusteeship to continue  undischarged
for a period of thirty (30) days or more;

     (b) The Borrower or any  Subsidiary  shall  generally  not pay its debts as
such debts become due; or

     (c) The  Borrower  or any  Subsidiary  shall have  concealed,  removed,  or
permitted to be concealed or removed,  any part of its property,  with intent to
hinder,  delay or defraud  its  creditors  or any of them or made or  suffered a
transfer of any of its property  that may be  fraudulent  under any  bankruptcy,
fraudulent  conveyance  or similar  law; or shall have made any  transfer of its
property  to or for the  benefit  of a creditor  at a time when other  creditors
similarly  situated  have not been paid;  or shall have  suffered or  permitted,
while insolvent,  any creditor to obtain a Lien upon any of its property through
legal  proceedings or distraint that is not vacated within thirty (30) days from
the date thereof; or

     Section  8.08.  Judgment.  A judgment  or order for the payment of money in
excess of $500,000 or a non-monetary judgment having a Materially Adverse Effect
shall be rendered  against Borrower or any other  Consolidated  Company and such

<PAGE>

judgment or order shall continue  unsatisfied  (in the case of a money judgment)
and in  effect  for a period  of 30 days  during  which  execution  shall not be
effectively  stayed or deferred  (whether by action of a court,  by agreement or
otherwise);

     Section 8.09. Attachments. An attachment, levy, execution or similar action
shall be made on or taken against any of the assets of any Consolidated  Company
for any  amount in excess  of  $500,000  in the  aggregate  and is not  removed,
suspended  or  enjoined  within  thirty  (30) days of the same being made or any
suspension or injunction being lifted;

         Section 8.10.  ERISA.

     (a) The  termination of any Pension Plan or the  institution by the PBGC of
proceedings for the involuntary termination of any Pension Plan, in either case,
by reason of, or that results in, a "material  accumulated  funding  deficiency"
under Section 412 of the Code;

     (b) Failure by the Borrower to make required  contributions,  in accordance
with the applicable  provisions of ERISA, to each of the Pension Plans hereafter
established or assumed by it;

     Section 8.11. Ownership of Credit Parties and Pledged Entities. If Borrower
shall at any time fail to own and control the required  percentage of the voting
stock of any Significant  Subsidiary,  either  directly or indirectly  through a
Wholly Owned Subsidiary of Borrower;

     Section  8.12.  Change in Control of Borrower.  (a) Any "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange  Act),  other
than Gintel,  shall become the  "beneficial  owner(s)"  (as defined in said Rule
13d-3) of more than  twenty-five  percent (25%) of the shares of the outstanding
common  stock of Borrower  entitled to vote for members of  Borrower's  board of
directors, or (b) any event or condition shall occur or exist which, pursuant to
the terms of any change in control provision,  requires or permits the holder(s)
of Indebtedness of any Consolidated Company to require that such Indebtedness be
redeemed, repurchased,  defeased, prepaid or repaid, in whole or in part, or the
maturity of such Indebtedness to be accelerated in any respect; or


<PAGE>

     Section 8.13.  Credit  Documents.  Any Credit Document ceases to be in full
force and effect or the validity or enforceability  thereof is disaffirmed by or
on behalf of Borrower or any other Credit Party, or at any time it is or becomes
unlawful  for  Borrower or any other  Credit Party to perform or comply with its
obligations  under any Credit  Document,  or the  obligations of Borrower or any
other Credit Party under any Credit Document are not or cease to be legal, valid
and binding on Borrower or any such Credit Party;

then, and in any such event,  and at any time thereafter if any Event of Default
shall then be  continuing,  the Agent may,  and upon the written  request of the
Required Lenders,  shall, by written notice to Borrower,  take any or all of the
following  actions,  without prejudice to the rights of the Agent, any Lender or
the  holder of any Note to  enforce  its claims  against  Borrower  or any other
Credit Party: (i) declare all Commitments  terminated,  whereupon the Commitment
of each  Lender  shall  terminate  immediately  and  any  commitment  fee  shall
forthwith  become due and payable without any other notice of any kind; and (ii)
declare the  principal of and any accrued  interest on the Loans,  and all other
Obligations owing hereunder,  to be, whereupon the same shall become,  forthwith
due and payable  without  presentment,  demand,  protest or other  notice of any
kind, all of which are hereby waived by Borrower; provided, that, if an Event of
Default specified in Section 8.07 shall occur, the result which would occur upon
the giving of written  notice by the Agent to any Credit Party,  as specified in
clauses (i) and (ii) above, shall occur automatically  without the giving of any
such notice.


                                   ARTICLE IX

                                    THE AGENT

     Section  9.01.  Appointment  of Agent and the  Administrative  Agent.  Each
Lender  hereby  designates  SunTrust  and First Union as Agent,  and SunTrust as
Administrative  Agent to administer all matters  concerning the Loans and to act
as herein specified. Each Lender hereby irrevocably authorizes,  and each holder
of any  Note  by the  acceptance  of a  Note  shall  be  deemed  irrevocably  to
authorize, the Agent and Administrative Agent to take such actions on its behalf
under the  provisions of this  Agreement,  the other Credit  Documents,  and all

<PAGE>

other instruments and agreements referred to herein or therein,  and to exercise
such  powers  and  to  perform  such  duties  hereunder  and  thereunder  as are
specifically  delegated to or required of the Agent and Administrative  Agent by
the terms hereof and thereof and such other powers as are reasonably  incidental
thereto.  Each  Agent and  Administrative  Agent may  perform  any of its duties
hereunder  by or through  their  agents or  employees.  The  provisions  of this
Section 9.01 are solely for the benefit of Agent and the  Administrative  Agent,
and Borrower and the other  Consolidated  Companies shall not have any rights as
third party  beneficiaries  of any of the provisions  hereof.  In performing its
functions  and duties under this  Agreement,  each Agent and the  Administrative
Agent, as the case may be, shall act solely as agent of the Lenders and does not
assume  and shall  not be deemed to have  assumed  any  obligations  towards  or
relationship  of  agency  or  trust  with or for  the  Borrower  and  the  other
Consolidated Companies.

     Section 9.02. Nature of Duties of Agent and the  Administrative  Agent. The
Agent and Administrative  Agent shall have no duties or responsibilities  except
those expressly set forth in this Agreement and the other Credit Documents. None
of the Agent and  Administrative  Agent  nor any of their  respective  officers,
directors,  employees  or agents shall be liable for any action taken or omitted
by it as such hereunder or in connection herewith, unless caused by its or their
gross   negligence  or  willful   misconduct.   The  duties  of  the  Agent  and
Administrative  Agent shall be ministerial  and  administrative  in nature;  the
Agent and  Administrative  Agent  shall not have by reason of this  Agreement  a
fiduciary  relationship in respect of any Lender; and nothing in this Agreement,
express or implied,  is intended to or shall be so  construed  as to impose upon
the Agent or  Administrative  Agent any obligations in respect of this Agreement
or the other Credit Documents except as expressly set forth herein.

     Section 9.03. Lack of Reliance on the Agent and the Administrative Agent.

     (a) Independently and without reliance upon the Agent or the Administrative
Agent,  each  Lender,  to the  extent it deems  appropriate,  has made and shall
continue  to  make  (i)  its  own  independent  investigation  of the  financial
condition and affairs of the Credit Parties in connection with the taking or not
taking of any action in connection  herewith,  and (ii) its own appraisal of the
creditworthiness  of the Credit Parties,  and,  except as expressly  provided in

<PAGE>

this  Agreement,  the Agent and the  Administrative  Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other  information with respect thereto,  whether coming into
its  possession  before  the  making  of the  Loans  or at  any  time  or  times
thereafter.

     (b) The Agent and  Administrative  Agent  shall not be  responsible  to any
Lender for any recitals, statements, information,  representations or warranties
herein or in any document,  certificate or other writing delivered in connection
herewith   or  for  the   execution,   effectiveness,   genuineness,   validity,
enforceability,  collectibility,  priority or sufficiency of this Agreement, the
Notes, the Guaranty  Agreement,  or any other documents  contemplated  hereby or
thereby,  or the financial  condition of the Credit  Parties,  or be required to
make any inquiry  concerning  either the performance or observance of any of the
terms,  provisions  or  conditions of this  Agreement,  the Notes,  the Guaranty
Agreement,  or the  other  documents  contemplated  hereby  or  thereby,  or the
financial  condition  of the  Credit  Parties,  or  the  existence  or  possible
existence of any Default or Event of Default;  provided,  however, to the extent
that the Agent or the  Administrative  Agent has been  advised that a Lender has
not  received  any   information   formally   delivered  to  the  Agent  or  the
Administrative  Agent pursuant to Section 6.07, the Agent or the  Administrative
Agent,  as the  case  may be,  shall  deliver  or  cause  to be  delivered  such
information to such Lender.

     Section 9.04. Certain Rights of the Agent and the Administrative  Agent. If
the  Agent or the  Administrative  Agent  shall  request  instructions  from the
Required Lenders with respect to any action or actions (including the failure to
act) in connection with this Agreement,  the Agent or the  Administrative  Agent
shall be entitled to refrain from such act or taking such act,  unless and until
it shall have received instructions from the Required Lenders; and the Agent and
the Administrative Agent shall not incur liability in any Person by reason of so
refraining.  Without  limiting the foregoing,  no Lender shall have any right of
action whatsoever against the Agent or the  Administrative  Agent as a result of
the Agent or the Administrative Agent acting or refraining from acting hereunder
in accordance with the instructions of the Required Lenders.


<PAGE>

     Section 9.05. Reliance by Agent and Administrative Agent. The Agent and the
Administrative  Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing,  resolution,  notice,  statement,  certificate,
telex,  teletype or telecopier message,  cable gram,  radiogram,  order or other
documentary,  teletransmission or telephone message believed by it to be genuine
and  correct and to have been  signed,  sent or made by the proper  Person.  The
Agent and the  Administrative  Agent may consult with legal  counsel  (including
counsel for any Credit Party),  independent public accountants and other experts
selected  by it and shall not be liable  for any  action  taken or omitted to be
taken  by it in good  faith  in  accordance  with the  advice  of such  counsel,
accountants or experts.

     Section 9.06. Indemnification of the Agent and the Administrative Agent. To
the  extent  the  Agent and the  Administrative  Agent  are not  reimbursed  and
indemnified by the Credit Parties,  each Lender will reimburse and indemnify the
Agent and the Administrative  Agent, ratably according to the respective amounts
of the Loans outstanding under all Facilities (or if no amounts are outstanding,
ratably in  accordance  with the Total  Commitments),  in either  case,  for and
against  any and  all  liabilities,  obligations,  losses,  damages,  penalties,
actions,   judgments,   suits,  costs,  expenses  (including  counsel  fees  and
disbursements)  or disbursements  of any kind or nature  whatsoever which may be
imposed on,  incurred by or  asserted  against the Agent and the  Administrative
Agent in performing its duties hereunder,  in any way relating to or arising out
of this Agreement or the other Credit  Documents;  provided that no Lender shall
be liable  to the Agent or the  Administrative  Agent  for any  portion  of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,   expenses   or   disbursements   resulting   from  the  Agent's  or  the
Administrative Agent's gross negligence or willful misconduct.

     Section  9.07.  The  Agent  and  Administrative  Agent in their  Individual
Capacities.  With respect to its  obligation to lend under this  Agreement,  the
Loans made by it and the Notes  issued to it,  the Agent and the  Administrative
Agent shall have the same  rights and powers  hereunder  as any other  Lender or
holder of a Note and may exercise the same as though it were not  performing the
duties specified herein; and the terms "Lenders",  "Required Lenders",  "holders
of Notes",  or any similar  terms shall,  unless the context  clearly  otherwise
indicates,  include  either  the  Agent  or  the  Administrative  Agent  in  its

<PAGE>

individual capacity.  The Agent and the Administrative Agent may accept deposits
from,  lend  money  to,  and  generally  engage in any kind of  banking,  trust,
financial  advisory or other  business  with the  Consolidated  Companies or any
affiliate of the Consolidated  Companies as if it were not performing the duties
specified  herein,  and  may  accept  fees  and  other  consideration  from  the
Consolidated  Companies  for  services in  connection  with this  Agreement  and
otherwise without having to account for the same to the Lenders.

     Section 9.08. Holders of Notes. The Agent and the Administrative  Agent may
deem and  treat  the payee of any Note as the  owner  thereof  for all  purposes
hereof unless and until a written notice of the  assignment or transfer  thereof
shall have been filed with the Agent and the Administrative  Agent. Any request,
authority  or consent of any Person who,  at the time of making such  request or
giving such authority or consent,  is the holder of any Note shall be conclusive
and binding on any subsequent holder,  transferee or assignee of such Note or of
any Note or Notes issued in exchange therefor.

     Section 9.09. Successor Agent; Successor Administrative Agent.

     (a) The Agent and the Administrative Agent may resign at any time by giving
written  notice  thereof to the Lenders and  Borrower  and may be removed at any
time with or without cause by the Required Lenders; provided, however, the Agent
and the  Administrative  Agent may not  resign or be removed  until a  successor
Agent or  Administrative  Agent has been  appointed and shall have accepted such
appointment.  Upon any such  resignation or removal,  the Required Lenders shall
have the right to appoint a successor Agent or  Administrative  Agent subject to
Borrower's prior written approval. If no successor Agent or Administrative Agent
shall have been so appointed by the Required  Lenders,  and shall have  accepted
such  appointment,  within 30 days after the retiring Agent's or  Administrative
Agent's giving of notice of resignation or the Required  Lenders' removal of the
retiring   Agent  or   Administrative   Agent,   then  the  retiring   Agent  or
Administrative Agent may, on behalf of the Lenders, appoint a successor Agent or
Administrative  Agent subject to Borrower's prior written approval,  which shall
be a bank which  maintains an office in the United States,  or a commercial bank
organized  under the laws of the United States of America or any State  thereof,

<PAGE>

or any Affiliate of such bank, having a combined capital and surplus of at least
$100,000,000.  If at any time  SunTrust is removed as a Lender,  SunTrust  shall
simultaneously  resign as Agent and  Administrative  Agent. If at any time First
Union is removed as a Lender, First Union shall simultaneously resign as Agent.

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


                                    ARTICLE X

                                  MISCELLANEOUS

     Section 10.01.  Notices. All notices,  requests and other communications to
any party  hereunder  shall be in  writing  (including  bank wire,  telecopy  or
similar  teletransmission  or  writing)  and shall be given to such party at its
address or applicable  teletransmission  number set forth on the signature pages
hereof,  or such other  address or  applicable  teletransmission  number as such
party may hereafter specify by notice to the Administrative Agent, the Agent and
Borrower.  Each such notice,  request or other  communication shall be effective
(i) if given by mail,  72 hours after such  communication  is  deposited  in the
mails with first class postage prepaid, addressed as aforesaid, (ii) if given by
telecopy,  when such telecopy is transmitted to the telecopy number specified in
this Section and the appropriate  confirmation is received, or (iii) if given by
any other means (including,  without limitation, by air courier), when delivered
or received at the address  specified in this Section;  provided that notices to
the Agent and the Administrative Agent shall not be effective until received.

     Section 10.02. Amendments,  Etc. No amendment or waiver of any provision of
this  Agreement or the other Credit  Documents,  nor consent to any departure by

<PAGE>

any Credit  Party  therefrom,  shall in any event be  effective  unless the same
shall be in writing and signed by the Required Lenders,  and then such waiver or
consent  shall be effective  only in the specific  instance and for the specific
purpose for which given;  provided that no amendment,  waiver or consent  shall,
unless in writing  and signed by all the  Lenders do any of the  following:  (i)
increase the Commitments or other contractual obligations to Borrower under this
Agreement,  (ii) reduce the  principal of, or interest on, the Notes or any fees
hereunder (other than fees required under Section  3.05(c)),  (iii) postpone any
date fixed for the payment in respect of principal of, or interest on, the Notes
or the fees owed pursuant to Section 3.05 hereof, including, without limitation,
the  Termination  Date,  (iv) change the percentage of the Commitments or of the
aggregate  unpaid  principal  amount of the Notes,  or the number or identity of
Lenders  which  shall be  required  for the  Lenders  or any of them to take any
action  hereunder,  (v) release any  Guarantor  from its  obligations  under any
Guaranty  Agreement or release any of the  collateral  securing  the Loans,  the
Notes or other obligations of the Borrower or any Significant  Subsidiary to the
Lenders, whether granted pursuant to the Security Agreements or otherwise,  (vi)
modify the definition of "Required  Lenders" or "Borrowing Base" or (vii) modify
this Section  10.02.  Notwithstanding  the  foregoing,  no amendment,  waiver or
consent shall,  unless in writing and signed by the Agent and the Administrative
Agent in addition  to the  Lenders  required  hereinabove  to take such  action,
affect the rights or duties of the Agent and the Administrative Agent under this
Agreement or under any other Credit Document.

     Section 10.03. No Waiver;  Remedies Cumulative.  No failure or delay on the
part of the Administrative  Agent, the Agent, any Lender or any holder of a Note
in exercising any right or remedy  hereunder or under any other Credit Document,
and no course of dealing between any Credit Party and the Administrative  Agent,
the  Agent,  any  Lender or the  holder of any Note  shall  operate  as a waiver
thereof,  nor  shall  any  single  or  partial  exercise  of any right or remedy
hereunder  or under any other  Credit  Document  preclude  any other or  further
exercise  thereof or the  exercise  of any other  right or remedy  hereunder  or
thereunder. The rights and remedies herein expressly provided are cumulative and
not  exclusive of any rights or remedies  which the  Administrative  Agent,  the
Agent,  any Lender or the holder of any Note would  otherwise have. No notice to
or demand on any Credit Party not  required  hereunder or under any other Credit
Document  in any case shall  entitle  any  Credit  Party to any other or further

<PAGE>

notice or demand in similar or other circumstances or constitute a waiver of the
rights of the Administrative  Agent, the Agent, the Lenders or the holder of any
Note to any other or  further  action  in any  circumstances  without  notice or
demand.

     Section 10.04. Payment of Expenses, Indemnity, Etc. Borrower shall:

                  (a) whether or not the  transactions  hereby  contemplated are
    consummated,  pay all  reasonable,  out-of-pocket  costs and expenses of the
    Agent and the Administrative  Agent in the  administration  (both before and
    after the  execution  hereof  and  including  reasonable  expenses  actually
    incurred  relating  to advice of  counsel as to the rights and duties of the
    Agent and the Administrative Agent and the Lenders with respect thereto) of,
    and  in  connection  with  the  preparation,   execution  and  delivery  of,
    preservation of rights under,  enforcement of, and, after a Default or Event
    of Default,  refinancing,  renegotiation or restructuring of, this Agreement
    and the other Credit Documents and the documents and instruments referred to
    therein,  and any amendment,  waiver or consent relating thereto (including,
    without limitation,  the reasonable fees actually incurred and disbursements
    of counsel for the Agent and the  Administrative  Agent), and in the case of
    enforcement  of this  Agreement  or any  Credit  Document  after an Event of
    Default,  all such reasonable,  out-of-pocket costs and expenses (including,
    without limitation,  the reasonable fees actually incurred and disbursements
    of counsel), for any of the Lenders;

                  (b) subject,  in the case of certain Taxes,  to the applicable
    provisions  of Section  3.07(b),  pay and hold each of the Lenders  harmless
    from and  against any and all present  and future  stamp,  documentary,  and
    other similar Taxes with respect to this Agreement,  the Notes and any other
    Credit  Documents,  any collateral  described  therein,  or any payments due
    thereunder,  and save each  Lender  harmless  from and  against  any and all
    liabilities  with respect to or resulting  from any delay or omission to pay
    such Taxes; and

                  (c)  protect,  indemnify  and save  harmless  the  Agent,  the
    Administrative  Agent  and  each  Lender,  and  their  respective  officers,
    directors, employees, representatives and agents from, and hold each of them

<PAGE>

    harmless against, any and all costs, losses, liabilities, claims, damages or
    expenses incurred by any of them (whether or not any of them is designated a
    party  thereto)  (an  "Indemnitee")  arising  out  of or by  reason  of  any
    investigation,  litigation  or other  proceeding  related  to any  actual or
    proposed  use of the  proceeds  of any of the  Loans or any  Credit  Party's
    entering  into and  performing  of the  Agreement,  the Notes,  or the other
    Credit  Documents,   including,  without  limitation,  the  reasonable  fees
    actually incurred and disbursements of counsel  (including  foreign counsel)
    incurred in  connection  with any such  investigation,  litigation  or other
    proceeding;  provided, however, Borrower shall not be obligated to indemnify
    any  Indemnitee  for any of the foregoing  arising out of such  Indemnitee's
    gross negligence or willful misconduct;

                  (d) without  limiting the  indemnities set forth in subsection
    (iii) above,  indemnify  each  Indemnitee for any and all expenses and costs
    (including  without  limitation,  remedial,  removal,  response,  abatement,
    cleanup,  investigative,  closure  and  monitoring  costs),  losses,  claims
    (including  claims for  contribution  or indemnity and including the cost of
    investigating  or  defending  any claim  and  whether  or not such  claim is
    ultimately  defeated,  and whether such claim arose before,  during or after
    any  Credit  Party's  ownership,  operation,  possession  or  control of its
    business, property or facilities or before, on or after the date hereof, and
    including  also any amounts paid  incidental to any compromise or settlement
    by the  Indemnitee  or  Indemnitees  to the  holders  of  any  such  claim),
    lawsuits,    liabilities,    obligations,    actions,    judgments,   suits,
    disbursements,  encumbrances,  liens,  damages (including without limitation
    damages for  contamination or destruction of natural  resources),  penalties
    and fines of any kind or nature whatsoever  (including without limitation in
    all  cases  the  reasonable  fees  actually  incurred,   other  charges  and
    disbursements  of counsel in  connection  therewith)  incurred,  suffered or
    sustained  by that  Indemnitee  based  upon,  arising  under or  relating to
    Environmental  Laws based on,  arising  out of or relating to in whole or in
    part,  the existence or exercise of any rights or remedies by any Indemnitee
    under this  Agreement,  any other Credit  Document or any related  documents
    (but excluding those incurred,  suffered or sustained by any Indemnitee as a
    result of any action  taken by or on behalf of the Lenders  with  respect to

<PAGE>

    any  Subsidiary of Borrower (or the assets  thereof)  owned or controlled by
    the Lenders.

 If and to the extent that the  obligations of Borrower under this Section 10.04
are  unenforceable  for any reason,  Borrower  hereby agrees to make the maximum
contribution  to the  payment  and  satisfaction  of such  obligations  which is
permissible under applicable law.

     Section 10.05. Right of Setoff. In addition to and not in limitation of all
rights  of offset  that any  Lender  or other  holder  of a Note may have  under
applicable law, each Lender or other holder of a Note shall, upon the occurrence
of any Event of Default  and  whether or not such Lender or such holder has made
any demand or any Credit  Party's  obligations  are  matured,  have the right to
appropriate and apply to the payment of any Credit Party's obligations hereunder
and under the other Credit Documents,  all deposits of any Credit Party (general
or special, time or demand, provisional or final) then or thereafter held by and
other  indebtedness or property then or thereafter owing by such Lender or other
holder to any Credit  Party,  whether or not  related to this  Agreement  or any
transaction hereunder.  Each Lender shall promptly notify Borrower of any offset
hereunder.

         Section 10.06.  Benefit of Agreement.

     (a) This Agreement shall be binding upon and inure to the benefit of and be
enforceable  by the  respective  successors  and assigns of the parties  hereto,
provided that Borrower may not assign or transfer any of its interest  hereunder
without the prior written consent of the Lenders.

     (b) Any Lender may make,  carry or transfer Loans at, to or for the account
of, any of its branch offices or the office of an Affiliate of such Lender.

     (c) Each  Lender may assign all or a portion of its  interests,  rights and
obligations  under  this  Agreement  (including  all or a portion  of any of its
Commitments  and the Loans at the time  owing to it and the Notes held by it) to
any Eligible Assignee; provided, however, that (i) the Administrative Agent and,
so long as no Default or Event of Default exists or is continuing, Borrower must
give their prior written consent to such assignment  (which consent shall not be
unreasonably  withheld or delayed) unless such assignment is an Affiliate of the

<PAGE>

assigning Lender (in which case no consent from the Administrative  Agent or the
Borrower is required),  (ii) the amount of the Commitments or Loans, in the case
of  assignment  of Loans,  of the assigning  Lender  subject to each  assignment
(determined as of the date the  assignment  and acceptance  with respect to such
assignment  is  delivered  to the  Administrative  Agent) shall not be less than
$5,000,000,  unless such amount constitutes the entire remaining  Commitment and
Loans of the assigning  Lender,  (iii) the parties to each such assignment shall
execute and deliver to the  Administrative  Agent an Assignment and  Acceptance,
together  with a Note or Notes  subject  to such  assignment  and,  unless  such
assignment is to an Affiliate of such Lender,  a processing and  recordation fee
of $2500,  (iv) so long as no Default has occurred  hereunder and is continuing,
each of SunTrust  and First Union  agrees that it shall  maintain at all times a
Commitment at least equal to the lesser of (A) $20,000,000 and (B) the amount of
the largest Commitment of any other Lender,  unless the Borrower shall otherwise
give its  consent  to a  Commitment  in a lesser  amount,  and (v) so long as no
Default has occurred hereunder and is continuing,  there may be no more than six
(6)  Lenders  under  this  Agreement  at any one  time.  Borrower  shall  not be
responsible  for such  processing and  recordation  fee or any costs or expenses
incurred  by any  Lender or the  Administrative  Agent in  connection  with such
assignment.  From and after the effective date specified in each  Assignment and
Acceptance,  which effective date shall be at least five (5) Business Days after
the execution  thereof,  the assignee  thereunder shall be a party hereto and to
the extent of the interest assigned by such Assignment and Acceptance,  have the
rights  and  obligations  of a Lender  under  this  Agreement.  Within  five (5)
Business Days after  receipt of the notice and the  Assignment  and  Acceptance,
Borrower,  at its own expense,  shall execute and deliver to the  Administrative
Agent, in exchange for the surrendered Note or Notes, a new Note or Notes to the
order of such assignee in a principal amount equal to the applicable Commitments
or Loans  assumed by it  pursuant  to such  Assignment  and  Acceptance  and, if
applicable,  new Note or Notes to the  assigning  Lender  in the  amount  of its
retained  Commitment or  Commitments or amount of its retained  Loans.  Such new
Note or Notes shall be in an aggregate  principal  amount equal to the aggregate
principal amount of such  surrendered Note or Notes,  shall be dated the date of
the  surrendered  Note or Notes which they  replace,  and shall  otherwise be in
substantially the form attached hereto.


<PAGE>

     (d) Each Lender may,  without the consent of Borrower,  the  Administrative
Agent or the Agent,  sell  participations to one or more banks or other entities
in  all  or a  portion  of its  rights  and  obligations  under  this  Agreement
(including all or a portion of its  Commitments in the Loans owing to it and the
Notes held by it), (ii) such Lender's  obligations  under this  Agreement  shall
remain unchanged, (iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such  obligations,  (iv) the participating
bank or other  entity shall not be entitled to the benefit  (except  through its
selling  Lender) of the cost  protection  provisions  contained in Article IV of
this Agreement,  and (v) Borrower,  the Agent, the Administrative  Agent and the
other  Lenders  shall  continue to deal solely and directly  with each Lender in
connection with such Lender's  rights and  obligations  under this Agreement and
the other  Credit  Documents,  and such  Lender  shall  retain the sole right to
enforce the  obligations  of  Borrower  relating to the Loans and to approve any
amendment,  modification  or waiver of any  provisions  of this  Agreement.  Any
Lender selling a participation  hereunder shall provide prompt written notice to
Borrower of the name of such participant.

     (e) Any Lender or  participant  may, in connection  with the  assignment or
participation or proposed assignment or participation, pursuant to this Section,
disclose to the assignee or participant or proposed  assignee or participant any
information  relating to Borrower or the other Consolidated  Companies furnished
to such Lender by or on behalf of Borrower  or any other  Consolidated  Company.
With  respect  to  any  disclosure  of  confidential,   non-public,  proprietary
information,  such  proposed  assignee  or  participant  shall  agree to use the
information  only for the purpose of making any necessary  credit judgments with
respect to this credit  facility  and not to use the  information  in any manner
prohibited by any law, including without limitation,  the securities laws of the
United States. The proposed  participant or assignee shall agree not to disclose
any of such information except (i) to directors, employees, auditors, affiliates
or counsel to whom it is necessary to show such information,  each of whom shall
be informed of the confidential nature of the information, (ii) in any statement
or testimony pursuant to a subpoena or order by any court or Governmental Agency
asserting  jurisdiction  over such entity,  or as  otherwise  required by law or
regulatory   process   (provided   prior  notice  is  given  to  Borrower,   the
Administrative  Agent and the Agent unless otherwise prohibited by the subpoena,
order or law and except for routine  bank  regulatory  examinations),  and (iii)

<PAGE>

upon the request or demand of any  regulatory  agency or  authority  with proper
jurisdiction.  The  proposed  participant  or assignee  shall  further  agree to
return, upon request, all documents or other written material and copies thereof
received  from any  Lender,  the Agent,  the  Administrative  Agent or  Borrower
relating to such confidential  information unless otherwise properly disposed of
or safeguarded by such entity.

     (f) Any Lender may at any time  assign all or any  portion of its rights in
this  Agreement and the Notes issued to it to a Federal  Reserve Bank;  provided
that no such  assignment  shall  release the Lender from any of its  obligations
hereunder.

     (g) If (i) any Taxes  referred  to in Section  3.07(b)  have been levied or
imposed so as to require  withholdings  or deductions by Borrower and payment by
Borrower  of  additional  amounts  to any Lender as a result  thereof,  (ii) any
Lender  shall make  demand for  payment of any  material  additional  amounts as
compensation  for  increased  costs  pursuant to Section 3.10 or for its reduced
rate of return  pursuant to Section  3.16,  or (iii) any Lender shall decline to
consent to a modification  or waiver of the terms of this Agreement or the other
Credit  Documents  requested by Borrower,  then and in such event,  upon request
from Borrower delivered to such Lender, the Administrative  Agent and the Agent,
such Lender shall assign, in accordance with the provisions of Section 10.06(c),
all of its rights and  obligations  under this  Agreement  and the other  Credit
Documents to another  Lender or an Eligible  Assignee  selected by Borrower,  in
consideration  for the payment by such  assignee to the Lender of the  principal
of,  and  interest  on,  the  outstanding  Loans  accrued  to the  date  of such
assignment,  and the  assumption of such Lender's  Total  Commitment  hereunder,
together  with  any  and all  other  amounts  owing  to such  Lender  under  any
provisions of this Agreement or the other Credit  Documents  accrued to the date
of such assignment.

     Section 10.07. Governing Law; Submission to Jurisdiction.

         (a) THIS  AGREEMENT  AND THE  RIGHTS  AND  OBLIGATIONS  OF THE  PARTIES
HEREUNDER  AND UNDER THE NOTES  SHALL BE  CONSTRUED  IN  ACCORDANCE  WITH AND BE
GOVERNED BY THE LAW (WITHOUT  GIVING  EFFECT TO THE  CONFLICT OF LAW  PRINCIPLES
THEREOF) OF THE STATE OF GEORGIA.


<PAGE>

         (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT,  THE
NOTES OR ANY OTHER  CREDIT  DOCUMENT  MAY BE  BROUGHT IN THE  SUPERIOR  COURT OF
FULTON  COUNTY,  GEORGIA,  OR ANY OTHER  COURT OF THE STATE OF GEORGIA OR OF THE
UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION
AND  DELIVERY  OF THIS  AGREEMENT,  BORROWER  HEREBY  ACCEPTS  FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,  THE JURISDICTION OF THE
AFORESAID  COURTS.  TO THE FULLEST  EXTENT  PERMITTED BY LAW, THE PARTIES HERETO
HEREBY  IRREVOCABLY WAIVE TRIAL BY JURY, AND BORROWER HEREBY  IRREVOCABLY WAIVES
ANY OBJECTION,  INCLUDING,  WITHOUT  LIMITATION,  ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE  GROUNDS  OF  FORUM  NON  CONVENIENS,  WHICH IT MAY NOW OR
HEREAFTER  HAVE  TO THE  BRINGING  OF ANY  SUCH  ACTION  OR  PROCEEDING  IN SUCH
RESPECTIVE JURISDICTIONS.

         (c) BORROWER HEREBY IRREVOCABLY DESIGNATES THE CT CORPORATION, ATLANTA,
GEORGIA,  AS ITS  DESIGNEE,  APPOINTEE  AND LOCAL AGENT TO  RECEIVE,  FOR AND ON
BEHALF OF BORROWER,  SERVICE OF PROCESS IN SUCH RESPECTIVE  JURISDICTIONS IN ANY
LEGAL ACTION OR  PROCEEDING  WITH RESPECT TO THIS  AGREEMENT OR THE NOTES OR ANY
DOCUMENT RELATED THERETO. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON
SUCH  LOCAL  AGENT WILL BE  PROMPTLY  FORWARDED  BY SUCH LOCAL  AGENT AND BY THE
SERVER OF SUCH PROCESS BY MAIL TO BORROWER AT ITS ADDRESS SET FORTH OPPOSITE ITS
SIGNATURE  BELOW,  BUT THE FAILURE OF  BORROWER  TO RECEIVE  SUCH COPY SHALL NOT
AFFECT IN ANY WAY THE  SERVICE OF SUCH  PROCESS.  BORROWER  FURTHER  IRREVOCABLY
CONSENTS  TO THE SERVICE OF PROCESS OF ANY OF THE  AFOREMENTIONED  COURTS IN ANY
SUCH ACTION OR  PROCEEDING  BY THE MAILING OF COPIES  THEREOF BY  REGISTERED  OR
CERTIFIED MAIL, POSTAGE PREPAID,  TO BORROWER AT ITS SAID ADDRESS,  SUCH SERVICE
TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.

     (d) Nothing herein shall affect the right of the Agent, the  Administrative
Agent, any Lender,  any holder of a Note or any Credit Party to serve process in
any other manner permitted by law or to commence legal  proceedings or otherwise
proceed against Borrower in any other jurisdiction.

     Section 10.08.  Independent  Nature of Lenders' Rights. The amounts payable
at any time hereunder to each Lender shall be a separate and  independent  debt,
and each Lender shall be entitled to protect and enforce its rights  pursuant to
this Agreement and its Notes, and it shall not be necessary for any other Lender
to be joined as an additional party in any proceeding for such purpose.


<PAGE>

     Section 10.09.  Counterparts.  This Agreement may be executed in any number
of counterparts  and by the different  parties hereto on separate  counterparts,
each of which when so executed and  delivered  shall be an original,  but all of
which shall together constitute one and the same instrument.

         Section 10.10. Effectiveness; Survival.

     (a) This  Agreement  shall  become  effective  on the date (the  "Effective
Date") on which all of the parties hereto shall have signed a counterpart hereof
(whether the same or different  counterparts)  and shall have delivered the same
to the  Administrative  Agent  pursuant to Section  10.01 or, in the case of the
Lenders,  shall  have  given to the Agent or the  Administrative  Agent  written
notice (actually received) that the same has been signed and mailed to them.

     (b) The obligations of Borrower under Sections  3.07(b),  3.10, 3.12, 3.13,
3.16,  and 10.04 hereof shall  survive for ninety (90) days after the payment in
full of the  Notes  after the  Final  Maturity  Date.  All  representations  and
warranties  made  herein,  in the  certificates,  reports,  notices,  and  other
documents  delivered  pursuant to this Agreement shall survive the execution and
delivery  of  this  Agreement,  the  other  Credit  Documents,  and  such  other
agreements and documents,  the making of the Loans hereunder,  and the execution
and delivery of the Notes.

     Section 10.11.  Severability.  In case any provision in or obligation under
this  Agreement  or the other  Credit  Documents  shall be  invalid,  illegal or
unenforceable,  in whole or in part, in any jurisdiction, the validity, legality
and  enforceability  of the  remaining  provisions  or  obligations,  or of such
provision  or  obligation  in any  other  jurisdiction,  shall not in any way be
affected or impaired thereby.

     Section 10.12.  Independence of Covenants. All covenants hereunder shall be
given  independent  effect so that if a  particular  action or  condition is not
permitted  by any of such  covenants,  the fact that it would be permitted by an
exception to, or be otherwise within the limitation of, another covenant,  shall
not avoid the  occurrence  of a Default or an Event of Default if such action is
taken or condition exists.


<PAGE>

     Section 10.13. Change in Accounting Principles, Fiscal Year or Tax Laws. If
(i) any  preparation  of the  financial  statements  referred to in Section 6.07
hereafter occasioned by the promulgation of rules,  regulations,  pronouncements
and opinions by or required by the Financial  Accounting  Standards Board or the
American  Institute  of Certified  Public  Accounts  (or  successors  thereto or
agencies  with  similar  functions)  (other than  changes  mandated by FASB 106)
result in a material change in the method of calculation of financial covenants,
standards  or terms  found  in this  Agreement,  (ii)  there  is any  change  in
Borrower's fiscal quarter or fiscal year, or (iii) there is a material change in
federal tax laws which  materially  affects any of the  Consolidated  Companies'
ability to comply with the financial covenants, standards or terms found in this
Agreement, Borrower and the Required Lenders agree to enter into negotiations in
order to amend such provisions so as to equitably  reflect such changes with the
desired  result  that  the  criteria  for  evaluating  any of  the  Consolidated
Companies'  financial  condition shall be the same after such changes as if such
changes  had not been  made.  Unless  and  until  such  provisions  have been so
amended, the provisions of this Agreement shall govern.

     Section 10.14. Headings Descriptive;  Entire Agreement. The headings of the
several  sections and subsections of this Agreement are inserted for convenience
only  and  shall  not in any way  affect  the  meaning  or  construction  of any
provision of this Agreement. This Agreement, the other Credit Documents, and the
agreements and documents  required to be delivered pursuant to the terms of this
Agreement  constitute the entire  agreement among the parties hereto and thereto
regarding  the  subject  matters  hereof and  thereof  and  supersede  all prior
agreements, representations and understandings related to such subject matters.

     Section  10.15.  Time  is of  the  Essence.  Time  is  of  the  essence  in
interpreting and performing this Agreement and all other Credit Documents.

     Section 10.16. Usury. It is the intent of the parties hereto not to violate
any federal or state law,  rule or regulation  pertaining  either to usury or to
the  contracting  for or charging or  collecting  of interest,  and Borrower and
Lenders agree that,  should any provision of this Agreement or of the Notes,  or
any act  performed  hereunder  or  thereunder,  violate  any such  law,  rule or
regulation,  then the excess of interest  contracted for or charged or collected

<PAGE>

over the maximum  lawful rate of  interest  shall be applied to the  outstanding
principal indebtedness due to Lenders by Borrower under this Agreement.

     Section 10.17. Construction. Should any provision of this Agreement require
judicial interpretation, the parties hereto agree that the court interpreting or
construing the same shall not apply a presumption that the terms hereof shall be
more strictly  construed against one party by reason of the rule of construction
that a document is to be more strictly construed against the party who itself or
through its agents  prepared  the same,  it being agreed that  Borrower,  Agent,
Administrative  Agent,  Lenders and their respective agents have participated in
the preparation hereof.

     Section 10.18. Release of Collateral.  At any time that no Default or Event
of Default has  occurred  and is  continuing,  the Borrower may request that the
Lenders  release  the  collateral  securing  its  obligations  and  those of the
Guarantors to the Lenders.  The Lenders shall have no obligation to release such
collateral  and  will do so only in  their  sole and  absolute  discretion.  The
Borrower  acknowledges  that release of such collateral will require the consent
of all  Lenders  holding  all  Commitments,  and will  require  the  consent  of
Prudential  independently of this Agreement.  In considering such request by the
Borrower,  the Lenders will take into consideration the operating performance of
the Consolidated  Companies,  the balance sheet leverage at the time the request
is made  and the  ability  of the  Consolidated  Companies  to  issue  unsecured
Long-term Indebtedness in the institutional market.

     Section  10.19.  Confidentiality.  Each Lender  agrees to exercise its best
efforts to keep any  information  delivered or made available by the Borrower to
it  which  is  either   financial  or  clearly   indicated  to  be  confidential
information,  confidential  from any one other than persons employed or retained
by  such  Lender  who are or are  expected  to  become  engaged  in  evaluating,
approving,  structuring or  administering  the Loans;  provided,  however,  that
nothing herein shall prevent any Lender from disclosing such  information (i) to
any other  Lender,  (ii) upon the order of any court or  administrative  agency,
(iii) upon the request or demand of any  regulatory  agency or authority  having
jurisdiction  over  such  Lender,  (iv) to the  extent  reasonably  required  in
connection with any litigation to which the Agent, the Administrative Agent, any
Lender  or  their  respective  Affiliates  may be a  party,  (v)  to the  extent

<PAGE>

reasonably  required in  connection  with the exercise of any remedy  hereunder,
(vi) to such Lender's  legal counsel and  independent  auditors and (vii) to any
actual  or  proposed  participants  or  assignee  of all or part  of its  rights
hereunder  which has  agreed in writing  to be bound by the  provisions  of this
Section 10.19.

     Section 10.20. Provisions relating to the Refinanced Indebtedness. Upon the
fulfillment of all  conditions  precedent to this Agreement set forth in Section
4.01 and  4.02 and  after  the  application  of the  proceeds  from the  initial
Borrowing to repay the  Refinanced  Indebtedness  and to repurchase the Factored
Receivables,  (1) the  promissory  notes and  other  agreements  relating  to or
evidencing or governing the Refinanced  Indebtedness  shall be deemed terminated
and (2) that certain Factoring Agreement, dated as of December 27, 1995, between
the  Borrower  and  SunTrust   Bank,   Atlanta  (the  "December  1995  Factoring
Agreement")  shall be deemed  terminated,  and SunTrust  shall be deemed to have
sold to the Borrower,  and the Borrower  shall be deemed to have  purchased from
SunTrust,  the  Factored  Receivables  for an amount equal to the face amount of
such  Factored  Receivables,  discounted  by the same  discount  rate applied by
SunTrust when it purchased such Factored Receivables from the Borrower under the
December 1995 Factoring Agreement.

<PAGE>

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


                                        BORROWER:

                                        ONEITA INDUSTRIES, INC.


Address for Notices:                    By: /s/ James L. Ford
4130 Faber Place Drive                  James L. Ford
Suite 200                               Chief Financial Officer
Charleston, SC  29405
Attn:  James L. Ford

                                        Attest:/s/ Edward I. Kramer
                                        Name: Edward I. Kramer
                                        Secretary


                                        [CORPORATE SEAL]


<PAGE>



Address for Notices:                    SUNTRUST BANK, ATLANTA,
P. O. Box 4418                          individually, as Agent and as
Atlanta, Georgia 30302                  Administrative Agent
Attn: Mr. David Westerfield
      and Mr. Tom Matthesen

                                        By: /s/ David Westerfield
                                        Title: Group Vice President

Telecopy No. 404/332-3940
                                        By: /s/ Thomas S. Matthesen
Payment Office:
                                        Title:____________________________
55 Park Place
Atlanta, Georgia  30303

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

Commitment:  $25,000,000

Pro Rata Share of Commitment:  41.67%

<PAGE>


Address for Notices:                    FIRST UNION NATIONAL BANK
                                        OF SOUTH CAROLINA,
P. O. Box 1329                          individually and as Agent
Greenville, SC 29602
Attn: Mr. Frank R. Wrenn, III           By: /s/ Frank R. Wrenn
                                        Title: Senior Vice President
Telecopier No: 803/255-8357

Payment Office:

P. O. Box 1329
Greenville, SC 29602

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

Commitment:  $25,000,000

Pro Rata Share of Commitment:  41.67%

<PAGE>

Address for Notices:                    NATWEST BANK N.A.

100 Jericho Quadrangle                  By: /s/ Chris Mendelsohn
Jericho, New York 11753
Attn: Christopher J.                    Title: Vice President
      Mendelsohn

Telecopy No. 516/349-2098

Payment Office:

100 Jericho Quadrangle
Jericho, New York 11753

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

Commitment:  $10,000,000

Pro Rata Share of Commitment:  16.66%


<PAGE>

         Schedule 1.01 to the Revolving Credit Agreement


<TABLE>
<CAPTION>
                                               Applicable         Applicable
Funded Debt        Funded Debt                 Margin for         Margin for
to Total           to EBITDA                   Eurodollar         Base Rate
Capital Ratio      Ratio                       Advances           Advances


<S>                <C>                        <C>                     <C>
Less than 0.25     Less than 1.5
  to 1.00                 to 1.0              1.25                    0.00

                        Greater than or
                         equal to 1.5 to
                         1.0, but less
                         than 2.5 to 1.0      1.50                    0.00

                        Greater than or
                         equal to 2.5         1.75                    0.00


Greater than or    Less than 1.5              1.50                    0.00
 equal to .25 to     to 1.0
 1.00, but less
 than .35 to 1.00

                        Greater than or       2.00                    0.25
                         equal to 1.5 to
                         1.0, but less
                         than 2.5 to 1.0

                        Greater than or       2.25                    0.50
                         equal to 2.5


Greater than or    Less than 1.5              1.75                    0.00
  equal to .35      to 1.0
  to 1.00
                        Greater than or       2.25                    0.50
                         equal to 1.5 to
                         1.0, but less
                         than 2.5 to 1.0

                        Greater than or       2.75                    0.75
                         equal to 2.5
</TABLE>

<PAGE>

         Schedule 6.10 to the Revolving Credit Agreement

        Additional Significant Subsidiaries Documentation


         1.   Supplement to Guarantor Security Agreement (as defined in
              the Credit Agreement)

         2.   Supplement to Guaranty Agreement (as defined in the
              Credit Agreement)

         3.   Lien Search Results in such locations as the Secured
              Parties shall require

         4.   UCC Financing Statements in such locations as the Secured
              Parties shall require

         5.   Opinions of Counsel as the Secured Parties shall require

         6.   Corporate Authority Documents (article of incorporation,
              bylaws, resolutions of the Board of Directors,
              incumbency)

         7.   Such other documents, instruments and certificates as the
              Secured Parties shall reasonably require consistent with
              the Credit Agreement

<PAGE>


         Schedule 7.02 to the Revolving Credit Agreement


                      [Attach Lien Summary]