CREDIT AGREEMENT


                          Dated as of December 1, 1997


                                      among


                                 WORLDTEX, INC.,
                                  as Borrower,


                      CERTAIN SUBSIDIARIES OF THE BORROWER,
                                 as Guarantors,


                                   THE LENDERS


                                       AND


                               NATIONSBANK, N.A.,
                                    as Agent



<PAGE>







                                TABLE OF CONTENTS



SECTION 1 DEFINITIONS..........................................................1
    1.1 DEFINITIONS............................................................1
    1.2 COMPUTATION OF TIME PERIODS...........................................26
    1.3 ACCOUNTING TERMS......................................................27

SECTION 2 CREDIT FACILITIES...................................................27
    2.1 REVOLVING LOANS.......................................................27
    2.2 LETTER OF CREDIT SUBFACILITY..........................................29
    2.3 FOREIGN CURRENCY LOAN SUBFACILITY.....................................34
    2.4 SWINGLINE LOANS.......................................................36

SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES......................38
    3.1 DEFAULT RATE..........................................................38
    3.2 EXTENSION AND CONVERSION..............................................38
    3.3 PREPAYMENTS...........................................................39
    3.4 REDUCTIONS IN COMMITMENTS.............................................40
    3.5 FEES..................................................................40
    3.6 CAPITAL ADEQUACY......................................................41
    3.7 INABILITY TO DETERMINE INTEREST RATE..................................41
    3.8 ILLEGALITY............................................................42
    3.9 REQUIREMENTS OF LAW...................................................42
    3.10 TAXES................................................................43
    3.11 INDEMNITY............................................................46
    3.12 PRO RATA TREATMENT...................................................46
    3.13 SHARING OF PAYMENTS..................................................47
    3.14 PAYMENTS, COMPUTATIONS, ETC..........................................47
    3.15 EVIDENCE OF DEBT.....................................................50
    3.16 REPLACEMENT OF LENDERS...............................................50

SECTION 4 GUARANTY............................................................51
    4.1 THE GUARANTEE.........................................................51
    4.2 OBLIGATIONS UNCONDITIONAL.............................................51
    4.3 REINSTATEMENT.........................................................53
    4.4 REMEDIES..............................................................53
    4.5 RIGHTS OF CONTRIBUTION................................................53
    4.6 CONTINUING GUARANTEE..................................................54
    4.7 CERTAIN ADDITIONAL WAIVERS............................................54
    4.8 RELEASE OF GUARANTOR..................................................54


<PAGE>

SECTION 5 CONDITIONS..........................................................55
    5.1 CONDITIONS TO CLOSING.................................................55
    5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT................................57

SECTION 6 REPRESENTATIONS AND WARRANTIES......................................58
    6.1 FINANCIAL CONDITION...................................................58
    6.2 NO CHANGES OR RESTRICTED PAYMENTS.....................................58
    6.3 ORGANIZATION; EXISTENCE; COMPLIANCE WITH LAW..........................59
    6.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.........................59
    6.5 NO LEGAL BAR..........................................................59
    6.6 NO MATERIAL LITIGATION................................................60
    6.7 NO DEFAULT............................................................60
    6.8 OWNERSHIP OF PROPERTY; LIENS..........................................60
    6.9 INTELLECTUAL PROPERTY.................................................60
    6.10 NO BURDENSOME RESTRICTIONS...........................................60
    6.11 TAXES................................................................61
    6.12 ERISA................................................................61
    6.13 GOVERNMENTAL REGULATIONS, ETC........................................62
    6.14 PURPOSE OF EXTENSIONS OF CREDIT......................................63
    6.15 ENVIRONMENTAL MATTERS................................................63
    6.16 FIRST PRIORITY LIEN..................................................64
    6.17 SUBSIDIARIES.........................................................64

SECTION 7 AFFIRMATIVE COVENANTS...............................................64
    7.1 FINANCIAL STATEMENTS..................................................65
    7.2 CERTIFICATES; OTHER INFORMATION.......................................65
    7.3 NOTICES...............................................................66
    7.4 PAYMENT OF OBLIGATIONS................................................67
    7.5 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE......................68
    7.6 MAINTENANCE OF PROPERTY; INSURANCE....................................68
    7.7 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS................68
    7.8 ENVIRONMENTAL LAWS....................................................69
    7.9 FINANCIAL COVENANTS...................................................70
    7.10 USE OF PROCEEDS......................................................71
    7.11 ADDITIONAL GUARANTIES AND STOCK PLEDGES..............................71

SECTION 8 NEGATIVE COVENANTS..................................................72
    8.1 INDEBTEDNESS..........................................................72
    8.2 LIENS.................................................................73
    8.3 NATURE OF BUSINESS....................................................73
    8.4 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, CREATION OF
        SUBSIDIARIES..........................................................73
    8.5 TRANSFER OF ASSETS....................................................74
    8.6 ADVANCES, INVESTMENTS AND LOANS.......................................74
    8.7 RESTRICTED PAYMENTS...................................................74
    8.8 TRANSACTIONS WITH AFFILIATES; MODIFICATION OF DOCUMENTATION...........76

<PAGE>

    8.9 FISCAL YEAR...........................................................77
    8.10 LIMITATION ON RESTRICTIONS...........................................77
    8.11 SALE LEASEBACKS......................................................78
    8.12 CAPITAL EXPENDITURES.................................................78
    8.13 FACTORING AGREEMENT..................................................78

SECTION 9 EVENTS OF DEFAULT...................................................78
    9.1 EVENTS OF DEFAULT.....................................................78
    9.2 ACCELERATION; REMEDIES................................................80

SECTION 10 AGENCY PROVISIONS..................................................81
    10.1 APPOINTMENT..........................................................81
    10.2 DELEGATION OF DUTIES.................................................82
    10.3 EXCULPATORY PROVISIONS...............................................82
    10.4 RELIANCE ON COMMUNICATIONS...........................................82
    10.5 NOTICE OF DEFAULT....................................................83
    10.6 NON-RELIANCE ON AGENT AND OTHER LENDERS..............................83
    10.7 INDEMNIFICATION......................................................84
    10.8 AGENT IN ITS INDIVIDUAL CAPACITY.....................................84
    10.9 SUCCESSOR AGENT......................................................84

SECTION 11 MISCELLANEOUS......................................................85
    11.1 NOTICES..............................................................85
    11.2 RIGHT OF SET-OFF.....................................................86
    11.3 BENEFIT OF AGREEMENT.................................................87
    11.4 NO WAIVER; REMEDIES CUMULATIVE.......................................89
    11.5 PAYMENT OF EXPENSES, ETC.............................................89
    11.6 AMENDMENTS, WAIVERS AND CONSENTS.....................................90
    11.7 COUNTERPARTS.........................................................91
    11.8 HEADINGS.............................................................91
    11.9 SURVIVAL.............................................................91
    11.10 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE....................91
    11.11 SEVERABILITY........................................................92
    11.12 ENTIRETY............................................................92
    11.13 BINDING EFFECT; TERMINATION.........................................92
    11.14 CONFIDENTIALITY.....................................................92
    11.15 CONFLICT............................................................93



<PAGE>
                                    SCHEDULES

Schedule 1.1(a)     Investments
Schedule 1.1(b)     Liens
Schedule 2.1(a)     Schedule of Lenders and Commitments
Schedule 2.1(b)(i)  Form of Notice of Borrowing for Revolving Loans
Schedule 2.1(e)     Form of Revolving Note
Schedule 2.2(b)     Notice of Request for Letter of Credit
Schedule 2.3(b)(i)  Form of Notice of Borrowing for Foreign Currency Loans
Schedule 2.4(d)     Form of Swingline Note
Schedule 3.2        Form of Notice of Extension/Conversion
Schedule 6.17       Subsidiaries
Schedule 7.2(b)     Form of Officer's Compliance Certificate
Schedule 7.2(e)     Form of Borrowing Base Certificate
Schedule 7.12       Form of Joinder Agreement
Schedule 8.1        Indebtedness
Schedule 11.1       Notice
Schedule 11.3(b)    Form of Assignment and Acceptance



<PAGE>



                                CREDIT AGREEMENT


     THIS  CREDIT   AGREEMENT   dated  as  of  December  1,  1997  (the  "CREDIT
AGREEMENT"),  is by and  among  WORLDTEX,  INC.,  a  Delaware  corporation  (the
"BORROWER"),  the  subsidiaries  of the Borrower  listed on the signature  pages
hereto  and such  other  subsidiaries  as may from  time to time  after the date
hereof become guarantors hereunder in accordance with the provisions hereof (the
"GUARANTORS"),  the lenders  named herein and such other lenders as may become a
party hereto (the "LENDERS"),  and  NATIONSBANK,  N.A., as Agent for the Lenders
(in such capacity, the "AGENT").


                               W I T N E S S E T H

     WHEREAS,  the Borrower has requested that the Lenders provide a $25,000,000
credit facility for the purposes hereinafter set forth;

     WHEREAS,  the Lenders  have agreed to make the  requested  credit  facility
available to the Borrower on the terms and conditions hereinafter set forth;

     NOW,  THEREFORE,  IN  CONSIDERATION  of the  premises  and  other  good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged, the parties hereto agree as follows:


                                    SECTION 1
                                   DEFINITIONS
                                   -----------


          1.1 DEFINITIONS.
              -----------

          As used in this Credit  Agreement,  the following terms shall have the
meanings specified below unless the context otherwise requires:

          "ACQUIRED ASSETS" means, collectively, those assets acquired under and
     pursuant to the Purchase Agreement.

          "ADJUSTED CD RATE RESERVE  PERCENTAGE"  means for the Interest  Period
     for each CD Rate  Loan  comprising  part of the same  borrowing  (including
     conversions and extensions) the reserve percentage  applicable on the first
     day of such Interest Period under  regulations  issued from time to time by
     the Board of Governors of the Federal Reserve System (or any successor) for
     determining the maximum reserve requirement (including, but not limited to,
     any emergency,  supplemental or other marginal  reserve  requirement) for a
     member bank of the Federal  Reserve  System in New York City with  deposits
     exceeding one billion dollars with respect to liabilities  consisting of or

<PAGE>

     including (among other liabilities) Dollar nonpersonal time deposits in the
     United States with a maturity equal to such Interest Period.

          "AFFILIATE"  means,  with respect to any Person,  any other Person (i)
     directly or  indirectly  controlling  or  controlled  by or under direct or
     indirect  common  control with such Person or (ii)  directly or  indirectly
     owning or holding five percent (5%) or more of the equity  interest in such
     Person.  For purposes of this definition,  "control" when used with respect
     to any Person means the power to direct the management and policies of such
     Person,  directly or  indirectly,  whether  through the ownership of voting
     securities,  by  contract or  otherwise;  and the terms  "controlling"  and
     "controlled" have meanings correlative to the foregoing.

          "AGENCY SERVICES ADDRESS" means NationsBank, N.A., NC1-001-15-04,  101
     North Tryon Street, Charlotte, North Carolina 28255, Attn: Agency Services,
     or such other address as may be identified by written notice from the Agent
     to the Borrower.

          "AGENT"  shall have the  meaning  assigned to such term in the heading
     hereof, together with any successors or assigns.

          "AGENT'S FEE LETTER" means that certain letter agreement,  dated as of
     October 27, 1997, between the Agent and the Borrower, as amended, modified,
     supplemented or replaced from time to time.

          "AGENT'S FEES" shall have the meaning assigned to such term in Section
     3.5(c).

          "AGGREGATE  REVOLVING  COMMITTED AMOUNT" means the aggregate amount of
     Revolving  Commitments in effect from time to time,  being initially TWENTY
     FIVE MILLION DOLLARS  ($25,000,000)  (such aggregate  maximum amount may be
     reduced or increased from time to time as provided in Section 3.4).

          "APPLICABLE  PERCENTAGE" means for the Loans, Letter of Credit Fee and
     the Unused Fee, the appropriate applicable percentages corresponding to the
     Leverage Ratio in effect as of the most recent  determination date as shown
     below:

<TABLE>
<CAPTION>

=========================================================================================================================
          |                           |      Applicable      |                  |                    |
          |                           |    Percentage For    |                  |                    |
          |                           |      Eurodollar      |     Applicable   |                    |
 Pricing  |         Leverage          |     Loans and CD     |   Percentage For |     Applicable     |     Applicable
  Level   |          Ratio            |      Rate Loans      |     Base Rate    |   Percentage For   |   Percentage For
          |                           |    and Swingline     |       Loans      |   Letter of Credit |     Unused Fees
          |                           |        Loans         |                  |       Fees         |
----------|---------------------------|----------------------|------------------|--------------------|--------------------
  <S>        <C>                              <C>                  <C>                   <C>                  <C>
   I      |  greater than 4.25 to 1.0 |       1.75%          |     .75%         |        1.75%       |        .375%
==========================================================================================================================

<PAGE>

==========================================================================================================================
   II     |  less than or equal to    |       1.50%          |     .50%         |        1.50%       |        .30%
          |  4.25 to 1.0 but          |                      |                  |                    |
          |  greater than 3.0 to 1.0  |                      |                  |                    |
          |                           |                      |                  |                    |
----------|---------------------------|----------------------|------------------|--------------------|--------------------
   III    |  less than or equal to    |       1.25%          |     .25%         |        1.25%       |        .25%
          |  3.0 to 1.0 but           |                      |                  |                    |
          |  greater than 2.0 to 1.0  |                      |                  |                    |
          |                           |                      |                  |                    |
----------|---------------------------|----------------------|------------------|--------------------|--------------------
   IV     |  less than or equal to    |                      |                  |                    |
          |  2.0 to 1.0               |       1.00%          |      0%          |        1.00%       |        .20%
          |                           |                      |                  |                    |
==========================================================================================================================
</TABLE>

     The Applicable  Percentages  shall be determined and adjusted  quarterly on
     the date (each a  "CALCULATION  DATE") five Business Days after the date by
     which the  Borrower is required to provide  the  officer's  certificate  in
     accordance with the provisions of Section 7.1(b);  PROVIDED,  HOWEVER, that
     (i) the initial  Applicable  Percentages shall be based on Pricing Level II
     until the first  Calculation  Date to occur  after the Closing  Date,  and,
     thereafter,  the Applicable Percentages shall be determined by the Leverage
     Ratio as of the fiscal  quarter end  immediately  preceding the  applicable
     Calculation  Date,  and (ii) if the Borrower fails to provide the officer's
     certificate  to the Agent as  required  by Section  7.1(b) on or before the
     most  recent  Calculation  Date,  the  Applicable   Percentages  from  such
     Calculation  Date shall be based on  Pricing  Level I until such time as an
     appropriate officer's certificate is provided,  whereupon the Pricing Level
     shall be  determined  by the  Leverage  Ratio as of the fiscal  quarter end
     immediately preceding the applicable  Calculation Date. Except as set forth
     above,  each Applicable  Percentage shall be effective from one Calculation
     Date until the next  Calculation  Date.  Any  adjustment in the  Applicable
     Percentages shall be applicable to all existing Loans and Letters of Credit
     as well as any new Loans  made or Letters of Credit  issued.  The  Borrower
     shall  promptly  deliver to the Agent at the  address  set forth in Section
     11.1 and at the Agency Services Address the information required by Section
     7.2(b) in accordance with the terms of Section 7.2(b).

          "ASSIGNMENT  OF  FACTORING   PROCEEDS"  means,  with  respect  to  any
     Factoring  Agreement,  an assignment of factoring  proceeds consented to in
     writing  by the  applicable  Factor  and  otherwise  in form and  substance
     satisfactory to the Agent.

          "ASSESSMENT  RATE" means for the Interest Period for each CD Rate Loan
     comprising   part  of  the  same  borrowing   (including   conversions  and
     extensions) the annual assessment rate (rounded upward to the nearest 1/100
     of 1% per annum)  estimated by the Agent on the first day of such  Interest
     Period for  determining the then current annual  assessment  payable by the
     Agent to the Federal Deposit  Insurance  Corporation (or any successor) for
     insuring Dollar deposits of the Agent in the United States.

          "AVAILABLE FOREIGN CURRENCY" means (i) British Pounds Sterling, French
     Francs,  Swiss Francs,  Deutsche  Marks,  Japanese Yen and Italian Lire and
     (ii) any other freely available  currency which is freely  transferable and
     freely  convertible  into  Dollars and in which  dealings  in deposits  are
     carried on in the London interbank market,  which shall be requested by the
     Borrower and approved by each Lender.

<PAGE>

          "BANKRUPTCY  CODE" means the Bankruptcy Code in Title 11 of the United
     States Code, as amended, modified, succeeded or replaced from time to time.

          "BANKRUPTCY  EVENT" means, with respect to any Person,  the occurrence
     of any of the  following  with  respect  to such  Person:  (i) a  court  or
     governmental  agency  having  jurisdiction  in the  premises  shall enter a
     decree or order for relief in respect of such Person in an involuntary case
     under any  applicable  bankruptcy,  insolvency  or other similar law now or
     hereafter  in effect,  or  appointing  a  receiver,  liquidator,  assignee,
     custodian,  trustee,  sequestrator (or similar  official) of such Person or
     for any  substantial  part of its  Property or  ordering  the winding up or
     liquidation of its affairs;  or (ii) there shall be commenced  against such
     Person an involuntary case under any applicable  bankruptcy,  insolvency or
     other  similar law now or hereafter in effect,  or any case,  proceeding or
     other  action for the  appointment  of a  receiver,  liquidator,  assignee,
     custodian,  trustee,  sequestrator (or similar  official) of such Person or
     for  any  substantial  part  of its  Property  or  for  the  winding  up or
     liquidation  of its  affairs  and  such  involuntary  case or  other  case,
     proceeding  or other  action  shall  remain  undismissed,  undischarged  or
     unbonded for a period of ninety (90) consecutive days; or (iii) such Person
     shall commence a voluntary case under any applicable bankruptcy, insolvency
     or other similar law now or hereafter in effect, or consent to the entry of
     an order for relief in an  involuntary  case under any such law, or consent
     to  the  appointment  or  taking  possession  by  a  receiver,  liquidator,
     assignee,  custodian,  trustee,  sequestrator (or similar official) of such
     Person  or for  substantially  all of its  Property  or  make  any  general
     assignment  for the  benefit of  creditors;  or (iv) such  Person  shall be
     unable  to, or shall  admit in  writing  its  inability  to,  pay its debts
     generally as they become due.

          "BASE RATE" means,  for any day, the rate per annum (rounded  upwards,
     if necessary,  to the nearest  whole  multiple of 1/100 of 1%) equal to the
     greater of (i) the Federal  Funds Rate in effect on such day PLUS 1/2 of 1%
     or (ii) the Prime  Rate in effect on such day.  If for any reason the Agent
     shall have  determined  (which  determination  shall be  conclusive  absent
     manifest  error)  that it is unable  after due  inquiry  to  ascertain  the
     Federal  Funds Rate for any reason,  including  the inability or failure of
     the Agent to obtain  sufficient  quotations  in  accordance  with the terms
     hereof,  the Base Rate shall be determined  without regard to clause (i) of
     the first sentence of this definition until the  circumstances  giving rise
     to such  inability  no longer  exist.  Any change in the Base Rate due to a
     change in the Prime Rate or the Federal  Funds Rate shall be  effective  on
     the  effective  date of such change in the Prime Rate or the Federal  Funds
     Rate, respectively.

          "BASE RATE LOAN" means any Loan bearing  interest at a rate determined
     by reference to the Base Rate.

          "BORROWER" means Worldtex, Inc., a Delaware corporation.

          "BORROWING  BASE" means,  at any time,  the sum of (a) 85% of Eligible
     Receivables PLUS (b) 50% of Eligible Inventory.


<PAGE>

          "BORROWING  BASE  CERTIFICATE"  means  a  Borrowing  Base  Certificate
     substantially in the form of SCHEDULE 7.2(E).

          "BUSINESS DAY" means a day other than a Saturday,  Sunday or other day
     on which  commercial  banks in Charlotte,  North  Carolina or New York, New
     York are authorized or required by law to close, EXCEPT THAT, (i) when used
     in connection with a Eurodollar Loan, such day shall also be a day on which
     dealings  between  banks are carried on in U.S.  dollar  deposits in London
     interbank  market and (ii) when used in connection with a Foreign  Currency
     Loan,  such day shall  also be a day on which  dealings  between  banks are
     carried on in deposits in Available Foreign  Currencies in London interbank
     market.

          "CAPITAL EXPENDITURES" means all expenditures which in accordance with
     GAAP  would be  classified  as  capital  expenditures,  including,  without
     limitation, Capital Leases.

          "CAPITAL  LEASE"  means,  as applied to any  Person,  any lease of any
     Property (whether real,  personal or mixed) by that Person as lessee which,
     in  accordance  with GAAP, is or should be accounted for as a capital lease
     on the balance sheet of that Person.

          "CAPITAL  LEASE   OBLIGATION"  means  the  capital  lease  obligations
     relating to a Capital Lease determined in accordance with GAAP.

          "CASH  EQUIVALENTS"  means  (a)  Dollars,  (b)  securities  issued  or
     directly and fully guaranteed or insured by the United States of America or
     any agency or  instrumentality  thereof  (provided  that the full faith and
     credit of the United  States of  America  is  pledged  in support  thereof)
     having maturities of not more than six months from the date of acquisition,
     (c) certificates of deposit and eurodollar time deposits with maturities of
     six months or less from the date of acquisition,  bankers' acceptances with
     maturities not exceeding six months and overnight  bank  deposits,  in each
     case with any Lender or with any domestic  commercial  bank having  capital
     and surplus in excess of  $500,000,000  and a Thompson Bank Watch Rating of
     "B" or  better,  (d)  repurchase  obligations  with a term of not more than
     seven days for underlying  securities of the types described in clauses (b)
     and (c) above  entered  into with any  financial  institution  meeting  the
     qualifications  specified in clause (c) above,  (e) commercial paper having
     the highest rating obtainable from Moody's or S&P and in each case maturing
     within six months after the date of acquisition  and (f) money market funds
     at least 95% of the  assets of which  constitute  Cash  Equivalents  of the
     kinds described in clauses (a)-(e) of this definition.

          "CD  RATE"  means  for the  Interest  Period  for  each  CD Rate  Loan
     comprising   part  of  the  same  borrowing   (including   conversions  and
     extensions), a per annum interest rate equal to the sum of:

               (a) the  rate  obtained  by  dividing  (i) the  rate of  interest
          determined  by the Agent to be (rounded  upward to the  nearest  whole
          multiple  of 1/100 of 1% per annum)  the bid rate per annum,  at 10:00
          A.M. (or as soon  thereafter  as is  practicable)  on the first day of
          such Interest Period, of NationsBank for the purchase at face value of
<PAGE>

          certificates  of  deposit in an amount  substantially  equal to the CD
          Rate  Loan  comprising  such  borrowing   (including   extensions  and
          continuations)  and with a maturity equal to such Interest Period,  by
          (ii) a  percentage  equal to 100% minus the  Adjusted CD Rate  Reserve
          Percentage for such Interest Period; plus

               (b) the Assessment Rate for such Interest Period.

          "CD RATE LOAN" means any loan bearing interest at the CD Rate PLUS the
     Applicable Percentage.

          "CHANGE  OF  CONTROL"  means the  occurrence  of any of the  following
     events:  (i)  the  adoption  of a  plan  relating  to  the  liquidation  of
     dissolution of the Borrower,  (ii) any Person or two or more Persons acting
     in  concert  shall  have  acquired  "beneficial   ownership,"  directly  or
     indirectly,  of, or shall have acquired by contract or otherwise,  or shall
     have entered into a contract or arrangement that, upon  consummation,  will
     result in its or their  acquisition  of, control over,  Voting Stock of the
     Borrower  (or  other   securities   convertible  into  such  Voting  Stock)
     representing  50% or more of the combined  voting power of all Voting Stock
     of the Borrower,  (iii) during any period of up to 24  consecutive  months,
     commencing after the Closing Date, individuals who at the beginning of such
     24 month  period were  directors  of the  Borrower  (together  with any new
     director  whose  election by the  Borrower's  Board of  Directors  or whose
     nomination  for election by the Borrower's  shareholders  was approved by a
     vote of at least a  majority  of the  directors  then  still in office  who
     either were  directors at the beginning of such period or whose election or
     nomination for election was previously so approved) cease for any reason to
     constitute a majority of the directors of the Borrower  then in office,  or
     (iv) the  occurrence  of a "Change of Control"  under and as defined in the
     Senior Note Indenture.  As used herein,  "beneficial  ownership" shall have
     the  meaning  provided  in  Rule  13d-3  of  the  Securities  and  Exchange
     Commission under the Securities Act of 1934.

          "CLOSING DATE" means the date hereof.

          "CODE" means the Internal  Revenue Code of 1986,  as amended,  and any
     successor  statute  thereto,  as interpreted  by the rules and  regulations
     issued thereunder,  in each case as in effect from time to time. References
     to sections of the Code shall be construed  also to refer to any  successor
     sections.

          "COLLATERAL"  means all  collateral  referred to in and covered by the
     Security Agreement and the Pledge Agreement.

          "COMMITMENT" means the Revolving Commitment, the Swingline Commitment,
     the Foreign Currency Commitment and the LOC Commitment.

          "COMMITMENT  PERIOD"  means the period from and  including the Closing
     Date to but not including the earlier of (i) the Maturity Date, or (ii) the

<PAGE>

     date on which the Revolving  Commitments  terminate in accordance  with the
     provisions of this Credit Agreement.

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

          "CREDIT  DOCUMENTS"  means  a  collective  reference  to  this  Credit
     Agreement, the Notes, the LOC Documents, the Security Agreement, the Pledge
     Agreement,  the  Agent's  Fee  Letter,  and  all  other  related  financing
     statements.

          "CREDIT PARTY" means any of the Borrower and the Guarantors.

          "CURRENT  ASSETS" means,  as of the date of  determination,  the total
     amount  of  current  assets  of the  Borrower  and  its  Subsidiaries  on a
     consolidated  basis  determined  in  accordance  with  GAAP  applied  on  a
     consistent basis.

          "CURRENT  LIABILITIES"  means,  as of the date of  determination,  the
     total amount of current liabilities of the Borrower and its Subsidiaries on
     a  consolidated  basis  determined  in  accordance  with GAAP  applied on a
     consistent basis.

          "CURRENT   RATIO"  means,   with  respect  to  the  Borrower  and  its
     Subsidiaries  on a  consolidated  basis,  the  ratio of  Current  Assets to
     Current Liabilities.

          "DEFAULT" means any event, act or condition which with notice or lapse
     of time, or both, would constitute an Event of Default.

          "DEFAULTING LENDER" means, at any time, any Lender that, at such time,
     (i) has failed to make an  Extension  of Credit  required  pursuant  to the
     terms of this Credit Agreement,  (ii) has failed to pay to the Agent or any
     Lender an amount  owed by such  Lender  pursuant to the terms of the Credit
     Agreement  or any other of the Credit  Documents,  or (iii) has been deemed
     insolvent or has become subject to a bankruptcy or insolvency proceeding or
     to a receiver, trustee or similar proceeding.

          "DETERMINATION DATE" means, with respect to any Foreign Currency Loan:

               (a) in connection with any origination of such Loan, the Business
          Day  which is the  earliest  of the date such Loan is made or the date
          the interest rate is set;

               (b) in connection with any extension or conversion of an existing
          Foreign  Currency  Loan,  the Business Day which is the earlier of the
          date such Loan is extended or converted, or the date the interest rate
          is set, as applicable, in connection with any extension or conversion;
          or

 <PAGE>

               (c) the date of any reduction of the Revolving  Committed  Amount
          pursuant to the terms of Section 3.4.

          "DISQUALIFIED STOCK" means any capital stock that, by its terms (or by
     the terms of any security into which it is convertible,  or for which it is
     exchangeable,  at the option of the holder thereof),  or upon the happening
     of any event, matures or is mandatorily  redeemable,  pursuant to a sinking
     fund  obligation  or  otherwise,  or redeemable at the option of the holder
     thereof, in whole or in part, on or prior to the date that is 91 days after
     the Maturity  Date,  PROVIDED,  HOWEVER,  that any capital stock that would
     constitute  Disqualified  Stock solely because the holders thereof have the
     right to require the Borrower to  repurchase  such  capital  stock upon the
     occurrence  of a Change of Control  or an asset  sale shall not  constitute
     Disqualified  Stock if the terms of such  capital  stock  provide  that the
     Borrower may not  repurchase or redeem any such capital  stock  pursuant to
     such provisions unless such repurchase or redemption  complies with Section
     4.07 of the Senior Note Indenture.

          "DOLLAR  AMOUNT"  means  (a) with  respect  to  Dollars  or an  amount
     denominated  in Dollars,  such amount and (b) with  respect to an amount of
     any Available  Foreign Currency or an amount  denominated in such Available
     Foreign  Currency,  the Dollar  Equivalent of such amount on the applicable
     date contemplated in the Credit Agreement.

          "DOLLAR  EQUIVALENT"  means,  on any date,  with respect to any amount
     denominated in an Available  Foreign  Currency,  the amount of Dollars into
     which the Agent could, in accordance with its practice from time to time in
     the interbank  foreign  exchange  market,  convert such amount of Available
     Foreign Currency at its spot rate of exchange  (inclusive of all reasonable
     related costs of conversion)  applicable to the relevant  transaction at or
     about 10:00 A.M., Charlotte, North Carolina time, on such date.

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

          "DOMESTIC  SUBSIDIARY"  means any Subsidiary  which is incorporated or
     organized  under  the laws of any  state  of the  United  States  or of the
     District of Columbia.

          "EBITDA"  means for any period with  respect to the  Borrower  and its
     Subsidiaries  on a  consolidated  basis the sum of Net Income PLUS Interest
     Expense PLUS all  provisions  for any Federal,  state or other domestic and
     foreign  income taxes PLUS  depreciation,  amortization  and other non-cash
     charges,  in each case  determined  in  accordance  with GAAP  applied on a
     consistent basis.  Except as expressly provided  otherwise,  the applicable
     period shall be for the four consecutive  quarters ending as of the date of
     determination.

          "ECA"  means  Elastic   Corporation  of  America,   Inc.,  a  Delaware
     corporation.

          "ELIGIBLE INVENTORY" means, as of the date of determination, the gross
     dollar value  (valued at the lower of cost (on a FIFO basis) or fair market
     value of all finished goods, work in process and raw materials inventory of
     the  Borrower  and its  Domestic  Subsidiaries  LESS  appropriate  reserves

<PAGE>

     determined  in  accordance  with GAAP  applied on a consistent  basis,  but
     excluding  in any event (i)  inventory  subject  to a Lien other than Liens
     referred  to in  clauses  (i),  (ii),  (iii),  (iv),  (v)  and  (vi) of the
     definition of Permitted Liens, (ii) inventory upon which the Agent does not
     have a first priority perfected  security  interest,  (iii) inventory which
     fails to meet standards for sale or use imposed by Governmental Authorities
     in the United States,  (iv)  inventory  which is not useable or saleable at
     prices  approximating  their  cost  (after  taking  into  account,  without
     duplication, the amount of any reserves for obsolescence,  unsaleability or
     decline  in  value),  (v)  inventory  having  a book  value  of  more  than
     $1,000,000  in the  aggregate,  which is  leased  or on  consignment,  (vi)
     packaging  materials  and  supplies  and  (vii)  inventory  of any  Foreign
     Subsidiaries.

          "ELIGIBLE  RECEIVABLES"  means,  as of any date of  determination  and
     without duplication, (A) all amounts owing to any Credit Party at such time
     under  all  Factoring  Agreements  for  which  the  Agent  has  received  a
     satisfactory Assignment of Factoring Proceeds (net of any amounts (i) which
     the Factors  are  entitled to offset  against  amounts  owing to any Credit
     Party under such  Factoring  Agreements  and (ii) owing by account  debtors
     located  outside of the United States and Canada (except to the extent that
     (a) payment for the goods  shipped is secured by an  irrevocable  letter of
     credit in a form and from an institution reasonably acceptable to the Agent
     or (b) a  Factor  has  assumed  the  credit  risk of the  related  accounts
     receivable))  and (B) the aggregate book value of all accounts  receivable,
     receivables,  and  obligations for payment created or arising from the sale
     of  inventory  or the  rendering  of  services  in the  ordinary  course of
     business  (collectively,  the  "RECEIVABLES"),  owned  by or  owing  to the
     Borrower  or any of its  Domestic  Subsidiaries,  net of accrued  incentive
     amounts, allowances and reserves for doubtful or uncollectible accounts and
     sales adjustments  consistent with the Borrower's  internal policies and in
     any  event  in  accordance  with  GAAP,  but  excluding  in any  event  (i)
     Receivables  subject to any Lien,  other than Liens  referred  to in clause
     (i), (ii), (iii),  (iv), (v) and (vi) of the definition of Permitted Liens,
     (ii)  Receivables  upon  which  the  Agent  does not have a first  priority
     perfected security interest,  (iii) Receivables which are more than 90 days
     from the date of invoice,  (iv) any  Receivable  not otherwise  excluded by
     clause  (iii) above but owing from an account  debtor  which is the account
     debtor on existing  Receivables more than 50% of which are then excluded by
     such clause  (iii),  (v)  Receivables  owing by an account  debtor which is
     subject  to any  bankruptcy  or  insolvency  proceeding  of any kind,  (vi)
     Receivables owing by an account debtor located outside of the United States
     or Canada  (unless  payment for the goods  shipped is either (A) covered by
     credit  insurance  in form and  substance  acceptable  to the  Agent or (B)
     secured  by  an  irrevocable  letter  of  credit  in a  form  and  from  an
     institution  acceptable to the Agent);  PROVIDED that, at any time, no more
     than $3,000,000 in aggregate Receivables owing by account debtors in Canada
     may be  included  in  Eligible  Receivables,  (vii)  Receivables  which are
     contingent or subject to offset, deduction,  counterclaim,  credit, dispute
     or other  defense to  payment,  in each case to the extent of such  offset,
     deduction,  counterclaim,  dispute or other defense, (viii) Receivables for
     which any direct or indirect Subsidiary of the Borrower or any Affiliate of
     the Borrower is the account debtor, (ix) Receivables representing a sale to
     the government of the United States of America or any  subdivision  thereof

<PAGE>

     unless the Borrower or its  Subsidiaries,  as applicable  have complied (to
     the satisfaction of the Agent),  with respect to the granting of a security
     interest in such Receivable,  with the Federal  Assignment of Claims Act or
     other similar  applicable  law, and (x) Receivables (if any), to the extent
     exceeding  $100,000 in the aggregate at any one time, created in connection
     with any sale where payment is due on delivery of inventory sold.

          "ENVIRONMENTAL  LAWS" means any and all lawful and applicable Federal,
     state, local and foreign statutes,  laws, regulations,  ordinances,  rules,
     judgments,  orders,  decrees,  permits,  concessions,  grants,  franchises,
     licenses,  agreements or other  governmental  restrictions  relating to the
     environment or to emissions, discharges, releases or threatened releases of
     pollutants,  contaminants,  chemicals,  or  industrial,  toxic or hazardous
     substances or wastes into the environment  including,  without  limitation,
     ambient air, surface water, ground water, or land, or otherwise relating to
     the  manufacture,   processing,   distribution,  use,  treatment,  storage,
     disposal, transport, or handling of pollutants, contaminants, chemicals, or
     industrial, toxic or hazardous substances or wastes.

          "EQUITY  INTERESTS"  means capital stock and all warrants,  options or
     other rights to acquire capital stock (but excluding any debt security that
     is convertible into, or exchangeable for, capital stock).

          "EQUITY  TRANSACTION" means any issuance by the Borrower to any Person
     of shares of its capital stock or other equity interest.

          "ERISA" means the Employee  Retirement Income Security Act of 1974, as
     amended, and any successor statute thereto, as interpreted by the rules and
     regulations thereunder, all as the same may be in effect from time to time.
     References  to sections of ERISA  shall be  construed  also to refer to any
     successor sections.

          "ERISA  AFFILIATE"  means an entity which is under common control with
     the Borrower  within the meaning of Section  4001(a)(14) of ERISA,  or is a
     member of a group which  includes  the  Borrower  and which is treated as a
     single employer under Sections 414(b) or (c) of the Code.

          "ERISA EVENT" means (i) with respect to any Plan,  the occurrence of a
     Reportable  Event or the  substantial  cessation of operations  (within the
     meaning of Section 4062(e) of ERISA);  (ii) the withdrawal by the Borrower,
     any  Subsidiary  of the  Borrower  or any ERISA  Affiliate  from a Multiple
     Employer Plan during a plan year in which it was a substantial employer (as
     such term is defined in Section 4001(a)(2) of ERISA), or the termination of
     a Multiple  Employer Plan;  (iii) the distribution of a notice of intent to
     terminate or the actual  termination of a Plan pursuant to Section  4041(c)
     or 4041A of ERISA;  (iv) the institution of proceedings to terminate or the
     actual  termination of a Plan by the PBGC under Section 4042 of ERISA;  (v)
     any event or condition  which could  reasonably  be expected to  constitute
     grounds  under  Section  4042 of  ERISA  for  the  termination  of,  or the
     appointment  of a trustee to  administer,  any Plan;  (vi) the  complete or

<PAGE>

     partial  withdrawal of the Borrower,  any Subsidiary of the Borrower or any
     ERISA  Affiliate  from a  Multiemployer  Plan;  (vii)  the  conditions  for
     imposition  of a lien under  Section  302(f) of ERISA exist with respect to
     any Plan;  or (vii) the adoption of an amendment to any Plan  requiring the
     provision of security to such Plan pursuant to Section 307 of ERISA.

          "EURODOLLAR LOAN" means any Loan bearing interest at a rate determined
     by reference to the Eurodollar Rate.

          "EURODOLLAR  RATE" means,  for the Interest Period for each Eurodollar
     Loan  comprising  part  of  the  same  borrowing  (including   conversions,
     extensions and renewals),  a per annum interest rate determined pursuant to
     the following formula:


       Eurodollar Rate  =       INTERBANK OFFERED RATE
                            --------------------------
                            1 - Eurodollar Reserve Percentage


          "EURODOLLAR  RESERVE  PERCENTAGE"  means for any day, that  percentage
     (expressed  as a  decimal)  which  is in  effect  from  time to time  under
     Regulation D of the Board of Governors  of the Federal  Reserve  System (or
     any successor),  as such regulation may be amended from time to time or any
     successor  regulation,  as  the  maximum  reserve  requirement  (including,
     without  limitation,  any  basic,  supplemental,   emergency,  special,  or
     marginal reserves)  applicable with respect to Eurocurrency  liabilities as
     that term is defined in  Regulation  D (or  against  any other  category of
     liabilities that includes  deposits by reference to which the interest rate
     of  Eurodollar  Loans  is  determined),  whether  or  not  Lender  has  any
     Eurocurrency  liabilities subject to such reserve requirement at that time.
     Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities and
     as such shall be deemed subject to reserve requirements without benefits of
     credits for  proration,  exceptions  or offsets that may be available  from
     time  to  time  to  a  Lender.   The  Eurodollar  Rate  shall  be  adjusted
     automatically  on  and as of  the  effective  date  of  any  change  in the
     Eurodollar Reserve Percentage.

          "EVENT OF DEFAULT" means such term as defined in Section 9.1.

          "EXISTING INDEBTEDNESS" means such term as defined in Section 8.1(b).

          "EXTENSION  OF  CREDIT"  means,  as to any  Lender,  the making of, or
     participation in, a Loan by such Lender or the issuance or extension of, or
     participation in, a Letter of Credit.

          "FACTOR"  means such term as defined in the  definition  of "FACTORING
     AGREEMENT" set forth in this Section 1.1.

          "FACTORING AGREEMENT" means each agreement between the Borrower or any
     of its Subsidiaries and Republic  Business Credit  Corporation or any other

<PAGE>

     Person (each of Republic  Business  Credit  Corporation and each such other
     Person, in such capacity, a "FACTOR") providing for credit,  collection and
     application  services to be  performed by a Factor with respect to accounts
     receivable  of the  Borrower or any of such  Subsidiaries,  as  applicable,
     and/or for the purchase by a Factor,  subject to the terms thereof, of some
     or all of such  accounts  receivable,  and  which  may  grant to a Factor a
     security  interest in the factored  accounts  receivable of the Borrower or
     any of such Subsidiaries, as applicable.

          "FEES" means all fees payable pursuant to Section 3.5.

          "FEDERAL  FUNDS RATE"  means,  for any day,  the rate of interest  per
     annum  (rounded  upwards,  if necessary,  to the nearest whole  multiple of
     1/100 of 1%)  equal  to the  weighted  average  of the  rates on  overnight
     Federal  funds  transactions  with  members of the Federal  Reserve  System
     arranged by Federal  funds brokers on such day, as published by the Federal
     Reserve  Bank of New York on the  Business  Day next  succeeding  such day,
     PROVIDED that (i) if such day is not a Business Day, the Federal Funds Rate
     for such day shall be such rate on such  transactions on the next preceding
     Business  Day and  (ii)  if no  such  rate  is so  published  on such  next
     preceding  Business  Day, the Federal  Funds Rate for such day shall be the
     average  rate  quoted  to the  Agent  on such day on such  transactions  as
     determined by the Agent.

          "FLOATING CD RATE" means,  for each Swingline  Loan, the interest rate
     per annum at which  deposits  in Dollars  are  available  to the  Swingline
     Lender for 90 days in the form of negotiable certificates of deposit in the
     secondary  certificate of deposit market (the "90 Day CD rate") on or about
     10:00  A.M.  (Charlotte,  North  Carolina  time) on the date of making  the
     Swingline Loan, in an amount substantially the same as such Swingline Loan,
     as  adjusted to reflect the cost of any  applicable  reserve  requirements,
     assessments of the Federal Deposit Insurance Corporation (or any successor)
     and other  assessments,  which Floating CD Rate shall change as of the date
     that the 90 Day CD rate shall  change  and shall  change as often as the 90
     Day CD rate shall change.

          "FOREIGN CURRENCY" means the Available Foreign Currency.

          "FOREIGN CURRENCY  COMMITMENT" means, with respect to each Lender, the
     commitment  of such Lender to make Foreign  Currency  Loans in an aggregate
     principal  amount at any time  outstanding  of up to such Lender's  Foreign
     Currency Commitment Percentage of the Foreign Currency Committed Amount.

          "FOREIGN CURRENCY  COMMITMENT  PERCENTAGE"  means, for any Lender, the
     percentage  identified  as its Foreign  Currency  Commitment  Percentage on
     SCHEDULE 2.1(A),  as such percentage may be modified in connection with any
     assignment made in accordance with the provisions of Section 11.3.

          "FOREIGN CURRENCY COMMITTED AMOUNT" means, collectively, the aggregate
     amount of all Foreign Currency  Commitments as referenced in Section 2.3(a)
     and, individually,  the amount of each Lender's Foreign Currency Commitment
     as specified on SCHEDULE 2.1(A).


<PAGE>

          "FOREIGN CURRENCY  EQUIVALENT"  means, on any date, with respect to an
     amount  denominated  in  Dollars,  the amount of any  applicable  Available
     Foreign  Currency  into  which  the Agent  could,  in  accordance  with its
     practice  from  time to  time in the  interbank  foreign  exchange  market,
     convert such amount of Dollars at its spot rate of exchange  (inclusive  of
     all  reasonable  related  costs of  conversion)  applicable to the relevant
     transaction on or about 10:00 A.M. (Charlotte, North Carolina time) on such
     date.

          "FOREIGN  CURRENCY LOANS" shall have the meaning assigned to such term
     in Section 2.3(a).

          "FOREIGN SUBSIDIARY" means any Subsidiary of the Borrower which is not
     a Domestic Subsidiary.

          "FUNDED DEBT" means, with respect to any Person,  without duplication,
     (i) all  Indebtedness of such Person for borrowed money,  (ii) all purchase
     money  Indebtedness  of  such  Person,  including  without  limitation  the
     principal  portion of all  obligations of such Person under Capital Leases,
     (iii) all Guaranty  Obligations  of such Person with respect to Funded Debt
     of another Person, (iv) the maximum available amount of all standby letters
     of credit or acceptances  issued or created for the account of such Person,
     (v) all Funded Debt of another  Person secured by a Lien on any Property of
     such  Person,  whether or not such Funded Debt has been  assumed,  PROVIDED
     that for purposes hereof the amount of such Funded Debt shall be limited to
     the  greater of (A) the  amount of such  Funded  Debt as to which  there is
     recourse to such Person and (B) the fair market value of the property which
     is subject to the Lien, (vi) the principal  balance  outstanding  under any
     synthetic lease, tax retention  operating lease,  off-balance sheet loan or
     similar  off-balance  sheet  financing  product to which  such  Person is a
     party, where such transaction is considered borrowed money indebtedness for
     tax purposes but is  classified as an operating  lease in  accordance  with
     GAAP.  The Funded Debt of any Person  shall  include the Funded Debt of any
     partnership  or joint venture in which such Person is a general  partner or
     joint  venturer,  but only to the extent to which there is recourse to such
     Person for the payment of such Funded Debt.

          "GAAP" means generally  accepted  accounting  principles in the United
     States  applied on a  consistent  basis and subject to the terms of Section
     1.3 hereof.

          "GOVERNMENTAL  AUTHORITY" means any Federal,  state,  local or foreign
     court or  governmental  agency,  authority,  instrumentality  or regulatory
     body.

          "GUARANTEED   OBLIGATIONS"  means,  as  to  each  Guarantor,   without
     duplication,  (i) all obligations of the Borrower to the Lenders (including
     the Issuing  Lender)  and the Agent,  whenever  arising,  under this Credit
     Agreement,  the Notes or the Credit  Documents  relating to the Obligations
     hereunder  (including,  but not limited to, any interest accruing after the
     occurrence  of a  Bankruptcy  Event  with  respect  to  any  Credit  Party,
     regardless  of  whether  such  interest  is  an  allowed  claim  under  the
     Bankruptcy  Code),  and  (ii) all  liabilities  and  obligations,  whenever

<PAGE>

     arising,  owing from the  Borrower to any  Lender,  or any  Affiliate  of a
     Lender,  arising  under  any  Hedging  Agreement  relating  to the Loans or
     Obligations hereunder.

          "GUARANTOR" means such term as defined in the first paragraph hereof.

          "GUARANTY  OBLIGATIONS"  means,  with  respect to any Person,  without
     duplication, any obligations of such Person (other than endorsements in the
     ordinary  course of  business  of  negotiable  instruments  for  deposit or
     collection)  guaranteeing or intended to guarantee any  Indebtedness of any
     other Person in any manner,  whether direct or indirect,  including without
     limitation any such obligation,  whether or not contingent, (i) to purchase
     any such Indebtedness or any Property constituting security therefor,  (ii)
     to advance or provide funds or other support for the payment or purchase of
     any such  Indebtedness or to maintain  working  capital,  solvency or other
     balance sheet condition of such other Person (including  without limitation
     keep well  agreements,  maintenance  agreements,  or similar  agreements or
     arrangements)  for the benefit of any holder of  Indebtedness of such other
     Person,  (iii)  to lease  or  purchase  Property,  securities  or  services
     primarily for the purpose of assuring the holder of such  Indebtedness,  or
     (iv) to otherwise  assure or hold harmless the holder of such  Indebtedness
     against  loss in respect  thereof.  The amount of any  Guaranty  Obligation
     hereunder shall (subject to any limitations set forth therein) be deemed to
     be an amount equal to the outstanding  principal amount of the Indebtedness
     in respect of which such Guaranty Obligation is made.

          "HEDGING  AGREEMENTS" means any interest rate protection  agreement or
     foreign currency exchange agreement between the Borrower and any Lender, or
     any Affiliate of a Lender.

          "INDEBTEDNESS"  of any Person means (i) all obligations of such Person
     for borrowed money, (ii) all obligations of such Person evidenced by bonds,
     debentures,  notes or similar instruments,  or upon which interest payments
     are  customarily   made,   (iii)  all  obligations  of  such  Person  under
     conditional sale or other title retention  agreements  relating to Property
     purchased by such Person (other than customary  reservations  or retentions
     of title under  agreements  with  suppliers  entered  into in the  ordinary
     course of business),  (iv) all obligations of such Person issued or assumed
     as the deferred  purchase  price of Property or services  purchased by such
     Person (other than trade debt  incurred in the ordinary  course of business
     and due within six months of the incurrence  thereof) which would appear as
     liabilities  on a balance  sheet of such Person,  (v) all  Indebtedness  of
     others  secured  by (or for which the  holder of such  Indebtedness  has an
     existing right,  contingent or otherwise, to be secured by) any Lien on, or
     payable out of the proceeds of production from,  Property owned or acquired
     by such Person,  whether or not the  obligations  secured thereby have been
     assumed,  (vi) all Guaranty Obligations of such Person, (vii) the principal
     portion of all obligations of such Person under Capital Leases,  (viii) all
     obligations  of  such  Person  in  respect  of  interest  rate   protection
     agreements,  foreign currency exchange  agreements,  commodity  purchase or
     option  agreements or other  interest or exchange  rate or commodity  price
     hedging agreements (including, but not limited to, the Hedging Agreements),

<PAGE>

     (ix) the maximum amount of all standby letters of credit issued or bankers'
     acceptances  facilities created for the account of such Person and, without
     duplication, all drafts drawn thereunder (to the extent unreimbursed),  (x)
     all preferred stock issued by such Person and required by the terms thereof
     to be redeemed,  or for which mandatory sinking fund payments are due, by a
     fixed date, and (xi) the principal balance  outstanding under any synthetic
     lease,  tax retention  operating lease,  off-balance  sheet loan or similar
     off-balance sheet financing product to which such Person is a party,  where
     such transaction is considered borrowed money indebtedness for tax purposes
     but is  classified  as an  operating  lease in  accordance  with GAAP.  The
     Indebtedness   of  any  Person  shall  include  the   Indebtedness  of  any
     partnership or joint venture in which such Person is a general partner or a
     joint  venturer,  but only to the extent to which there is recourse to such
     Person for payment of such Indebtedness.

          "INTERBANK  OFFERED  RATE"  means,  for the  Interest  Period for each
     Eurodollar  Loan   comprising   part  of  the  same  borrowing   (including
     conversions,  extensions and renewals),  a per annum interest rate (rounded
     upwards, if necessary,  to the nearest whole multiple of 1/100 of 1%) equal
     to the  rate of  interest,  determined  by the  Agent  on the  basis of the
     offered  rates for  deposits  in dollars or  applicable  Available  Foreign
     Currency, for whichever of such currencies such Loan is denominated,  for a
     period of time corresponding to such Interest Period (and commencing on the
     first day of such  Interest  Period),  appearing on Telerate Page 3750 (or,
     if, for any reason, Telerate Page 3750 is not available, the Reuters Screen
     LIBO Page) as of  approximately  11:00 A.M.  (London time) two (2) Business
     Days  before  the  first  day of such  Interest  Period.  As  used  herein,
     "Telerate Page 3750" means the display designated as page 3750 by Dow Jones
     Telerate, Inc. (or such other page as may replace such page on that service
     for the  purpose of  displaying  the  British  Bankers  Association  London
     interbank  offered rates) and "Reuters  Screen LIBO Page" means the display
     designated  as page "LIBO" on the Reuters  Monitor  Money Rates Service (or
     such  other  page as may  replace  the LIBO  page on that  service  for the
     purpose of displaying London interbank offered rates of major banks).

          "INTEREST  COVERAGE RATIO" means, as of the end of each fiscal quarter
     of the Borrower for the Borrower  and its  Subsidiaries  on a  consolidated
     basis for the four  consecutive  quarters ending on such date, the ratio of
     (a)  EBITDA  for the  applicable  period to (b)  Interest  Expense  for the
     applicable period.

          "INTEREST  EXPENSE"  means for any period with respect to the Borrower
     and  its  Subsidiaries  on  a  consolidated  basis  all  interest  expense,
     including  the  amortization  of debt discount and premium and the interest
     component under Capital Leases,  in each case determined in accordance with
     GAAP applied on a consistent basis. Except as expressly provided otherwise,
     the applicable period shall be for the four consecutive  quarters ending as
     of the date of determination.

          "INTEREST  PAYMENT DATE" means (i) as to any Base Rate Loan,  the last
     Business Day of each calendar quarter (March, June, September and December)
     of the Borrower and the Maturity Date and (ii) as to any Eurodollar Loan or
     any CD Rate Loan,  the last day of each  Interest  Period for such Loan and

<PAGE>

     the Maturity Date, and in addition if the Interest  Period for a Eurodollar
     Loan is more  than 3  months,  then  also on the  date 3  months  from  the
     beginning of the Interest  Period,  or if the Interest Period for a CD Rate
     Loan is  greater  than 90  days,  then  also on the  date 90 days  from the
     beginning of the Interest  Period.  If an Interest  Payment Date falls on a
     date which is not a  Business  Day,  such  Interest  Payment  Date shall be
     deemed to be the next  succeeding  Business Day, EXCEPT THAT in the case of
     Eurodollar  Loans where the next succeeding  Business Day falls in the next
     succeeding calendar month, then on the next preceding Business Day.

          "INTEREST  PERIOD"  means (i) as to any  Eurodollar  Loan, a period of
     one,  two,  three or six  month's  duration,  as the  Borrower  may  elect,
     commencing  in  each  case,  on  the  date  of  the  borrowing   (including
     conversions,  extensions  and  renewals)  and (ii) with  respect to CD Rate
     Loans,  a period of 30, 60, 90 or 180 days'  duration,  as the Borrower may
     elect,  commencing in each case,  on the date of the  borrowing  (including
     conversions,  extensions  and  renewals);  PROVIDED,  HOWEVER,  (A)  if any
     Interest  Period  would  end on a day  which is not a  Business  Day,  such
     Interest  Period  shall be extended  to the next  succeeding  Business  Day
     (except  that in the case of  Eurodollar  Loans  where the next  succeeding
     Business Day falls in the next succeeding  calendar month, then on the next
     preceding  Business  Day),  (B) no Interest  Period shall extend beyond the
     Maturity Date, and (C) in the case of Eurodollar  Loans,  where an Interest
     Period begins on a day for which there is no numerically  corresponding day
     in the calendar month in which the Interest Period is to end, such Interest
     Period shall end on the last day of such calendar month.

          "INVESTMENT"  means (i) any loan or  advance to any  Person,  (ii) any
     purchase or other  acquisition  of any  capital  stock,  warrants,  rights,
     options,  obligations or other  securities  of, or equity  interest in, any
     Person  or (iii)  any  capital  contribution  to any  Person  or any  other
     investment  in any Person,  including,  without  limitation,  any  Guaranty
     Obligation incurred for the benefit of such Person.

          "ISSUING LENDER" means NationsBank, N.A.

          "ISSUING LENDER FEES" shall have the meaning  assigned to such term in
     Section 3.5(b)(ii).

          "JOINDER  AGREEMENT"  means a joinder  agreement  substantially in the
     form of SCHEDULE 7.12.

          "LENDERS"  means each of the Persons  identified  as a "Lender" on the
     signature pages hereto, and their successors and assigns.

          "LETTER OF CREDIT"  means any letter of credit  issued by the  Issuing
     Lender for the  account of the  Borrower  in  accordance  with the terms of
     Section 2.3.

          "LETTER  OF CREDIT  FEE"  shall  have the  meaning  given such term in
     Section 3.5(b).


<PAGE>

          "LEVERAGE  RATIO" means,  as of the last day of any fiscal  quarter of
     the  Borrower,  with  respect to the  Borrower  and its  Subsidiaries  on a
     consolidated  basis, the ratio of Funded Debt on such day to EBITDA for the
     period of four consecutive fiscal quarters ending as of such day.

          "LIEN"  means  any   mortgage,   pledge,   hypothecation,   collateral
     assignment,  security interest, encumbrance, lien (statutory or otherwise),
     preference, priority or charge of any kind (including any agreement to give
     any of the  foregoing,  any  conditional  sale  or  other  title  retention
     agreement, and any lease in the nature thereof).

          "LOAN" or  "LOANS"  means  the  Revolving  Loans (or a portion  of any
     Revolving Loan bearing interest at the Base Rate, CD Rate or the Eurodollar
     Rate and  referred  to as a Base Rate  Loan,  CD Rate Loan or a  Eurodollar
     Loan),  and/or any Swingline Loans and/or any Foreign Currency Loan (or any
     Foreign  Currency Loan referred to as a Eurodollar  Loan),  individually or
     collectively, as appropriate.

          "LOC COMMITMENT"  means the commitment of the Issuing Lender to issue,
     and to honor payment  obligations  under,  Letters of Credit  hereunder and
     with  respect to each  Lender,  the  commitment  of each Lender to purchase
     participation  interests  in the Letters of Credit up to such  Lender's LOC
     Committed  Amount as  specified in SCHEDULE  2.1(A),  as such amount may be
     reduced from time to time in accordance with the provisions hereof.

          "LOC COMMITTED  AMOUNT" means,  collectively,  the aggregate amount of
     all of the LOC  Commitments  of the  Lenders  to issue and  participate  in
     Letters of Credit as referenced in Section  2.3(a) and,  individually,  the
     amount of each Lender's LOC Commitment as specified in SCHEDULE 2.1(A).

          "LOC  DOCUMENTS"  means,  with  respect to any Letter of Credit,  such
     Letter of Credit,  any  amendments  thereto,  any  documents  delivered  in
     connection  therewith,   any  application  therefor,  and  any  agreements,
     instruments,  guarantees or other documents (whether general in application
     or applicable only to such Letter of Credit) governing or providing for (i)
     the rights and obligations of the parties  concerned or at risk or (ii) any
     collateral security for such obligations.

          "LOC  OBLIGATIONS"  means,  at any  time,  the sum of (i) the  maximum
     amount  which is, or at any time  thereafter  may become,  available  to be
     drawn under Letters of Credit then  outstanding,  assuming  compliance with
     all  requirements  for drawings  referred to in such Letters of Credit PLUS
     (ii) the aggregate  amount of all drawings  under Letters of Credit honored
     by the Issuing Lender but not theretofore reimbursed.

          "MATERIAL  ADVERSE EFFECT" means a material  adverse effect on (i) the
     condition   (financial  or  otherwise),   operations,   business,   assets,
     liabilities  or prospects of the Borrower and its  Subsidiaries  taken as a
     whole,  (ii) the ability of the Borrower and its Subsidiaries as a whole to

<PAGE>

     perform any material obligation under the Credit Documents to which it is a
     party or (iii) the  rights and  remedies  of the  Lenders  under the Credit
     Documents.

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

          "MATURITY DATE" means December 1, 2002.

          "MOODY'S" means Moody's Investors  Service,  Inc., or any successor or
     assignee  of the  business  of  such  company  in the  business  of  rating
     securities.

          "MULTIEMPLOYER  PLAN"  means a Plan which is a  multiemployer  plan as
     defined in Sections 3(37) or 4001(a)(3) of ERISA.

          "MULTIPLE  EMPLOYER  PLAN"  means  a  Plan  which  the  Borrower,  any
     Subsidiary of the Borrower or any ERISA Affiliate and at least one employer
     other  than the  Borrower,  any  Subsidiary  of the  Borrower  or any ERISA
     Affiliate are contributing sponsors.

          "NATIONSBANK" means NationsBank, N.A. and its successors.

          "NET CASH  PROCEEDS"  means gross cash  proceeds  (including  any cash
     received  by  way  of  deferred  payment  pursuant  to a  promissory  note,
     receivable  or  otherwise,  but  only as and  when  received)  received  in
     connection  with an  Equity  Transaction  net of  actual  costs  and  taxes
     incurred by such Person in connection with and  attributable to such Equity
     Transaction.

          "NET INCOME" means for any period , the net income with respect to the
     Borrower and its  Subsidiaries  on a  consolidated  basis as  determined in
     accordance  with GAAP  applied on a consistent  basis,  but  excluding  for
     purposes of determining the Leverage Ratio and the Interest Coverage Ratio,
     any extraordinary  gains or losses and any taxes on such excluded gains and
     any tax deductions or credits on account of any such excluded gains and any
     tax deductions or credits on account of any such excluded losses.

          "NET WORTH" means, as of any date,  shareholders'  equity or net worth
     of the Borrower and its Subsidiaries on a consolidated basis, as determined
     in  accordance  with GAAP;  PROVIDED,  HOWEVER,  that (A) foreign  currency
     translation   adjustments  under  Financial   Accounting   Standards  Board
     Statement No. 52, "Foreign Currency  Translation" and (B) items reported in
     comprehensive  income and  accumulated  other  comprehensive  income  under
     Financial Accounting Standards Statement No. 130 (including but not limited
     to gains or losses for  derivatives  designated  as a hedge of  exposure to
     variable cash flows of forecasted  transactions and derivatives  designated

<PAGE>

     as a hedge of foreign  currency  exposure of a net  investment in a foreign
     operation),  shall not in either case be taken into account in  calculating
     Net Worth.

          "NON-EXCLUDED TAXES" means such term as is defined in Section 3.10.

          "NOTE" or  "NOTES"  means  any  Revolving  Note,  as the  context  may
     require.

          "NOTICE  OF  BORROWING"   means  a  written  notice  of  borrowing  in
     substantially  the form of  SCHEDULE  2.1(B)(I),  as  required  by  Section
     2.1(b)(i) in the case of Revolving Loans or Schedule 2.3(b)(i), as required
     by Section 2.3(b)(i) in the case of Foreign Currency Loans.

          "NOTICE OF EXTENSION/CONVERSION" means the written notice of extension
     or  conversion  in  substantially  the form of SCHEDULE 3.2, as required by
     Section 3.2.

          "NFA INDUSTRIAL  DEVELOPMENT  BOND DOCUMENTS"  means those  agreements
     executed  in  connection  with the  $8,100,000  Revenue  Bonds  (NFA  Corp.
     Project),  Series 1992-A, issued by the Industrial Development Board of the
     City of Columbiana,  Alabama,  under that certain Trust Indenture date June
     1, 1992,  as amended by First  Supplemental  Trust  Indenture  dated May 1,
     1997, as amended in connection  with the  assumption of such  agreements by
     ECA pursuant to the terms of the Purchase Agreement.

          "OBLIGATIONS"  means,  collectively,  the Revolving Loans, the Foreign
     Currency Loans, the Swingline Loans and the LOC Obligations.

          "OPERATING  LEASE"  means,  as  applied  to  any  Person,   any  lease
     (including,  without  limitation,  leases  which may be  terminated  by the
     lessee at any time) of any Property (whether real, personal or mixed) which
     is not a Capital  Lease  other than any such lease in which that  Person is
     the lessor.

          "PARTICIPATION   INTEREST"  means  the  purchase  by  a  Lender  of  a
     participation  in Letters  of Credit and LOC  Obligations  as  provided  in
     Section 2.2(c),  in Swingline Loans as provided in Section  2.4(b)(iii) and
     in Revolving Loans as provided in Section 3.13.

          "PBGC"  means the Pension  Benefit  Guaranty  Corporation  established
     pursuant to Subtitle A of Title IV of ERISA and any successor thereof.

          "PERMITTED BUSINESS" means the same or similar line of business as the
     Borrower or any of its Subsidiaries is engaged in as of the Closing Date.

          "PERMITTED HEDGING  OBLIGATIONS" means such term as defined in Section
     8.1(d).

          "PERMITTED  INVESTMENTS"  means  Investments which are either (i) cash
     and Cash Equivalents, (ii) accounts receivable created, acquired or made in
     the ordinary course of business and payable or  dischargeable in accordance
     with  customary  trade  terms,  (iii)  Investments   consisting  of  stock,

<PAGE>

     obligations,  securities  or  other  property  received  in  settlement  of
     accounts  receivable  (created in the  ordinary  course of  business)  from
     defaulting  obligors,  (iv) Investments existing as of the Closing Date and
     set  forth in  SCHEDULE  1.1(A),  (v)  Investments  made as a result of the
     receipt of non-cash consideration from an asset sale that was made pursuant
     to and in compliance  with Section 8.5; (vi)  Investments in any Subsidiary
     or in the Borrower,  (vii)  Investments in any joint ventures or Affiliates
     in an  amount  not to  exceed  $10,000,000  in the  aggregate  at any  time
     outstanding;  (viii) the  acquisition  of the  assets or  capital  stock of
     another Person  provided that (A) the purchase  price of such  acquisition,
     when taken together with all other Investments made pursuant to this clause
     (viii)  during  the  term  of  this  Credit  Agreement,  shall  not  exceed
     $25,000,000 plus, after such $25,000,000 has been expended,  the amount (if
     any)  permitted  to be invested  for such  purpose  pursuant to Section 8.7
     hereof  and (B) if the  acquisition  is of the  capital  stock  of  another
     Person, such Person shall become a Subsidiary upon the consummation of such
     acquisition and (ix) advances to employees,  with respect to salary, bonus,
     travel, relocation and similar matters in an aggregate amount not to exceed
     $1,000,000 at any time outstanding.

          "PERMITTED LIENS" means:

               (i)   Liens in favor of the Agent on behalf of the Lenders;

               (ii)  Liens (other than Liens created or imposed under ERISA) for
          taxes,  assessments or  governmental  charges or levies not yet due or
          Liens  for  taxes  being   contested  in  good  faith  by  appropriate
          proceedings for which adequate reserves  determined in accordance with
          GAAP have been  established  (and as to which the Property  subject to
          any  such  Lien is not yet  subject  to  foreclosure,  sale or loss on
          account thereof);

               (iii) statutory  Liens  of  landlords  and  Liens  of  carriers,
          warehousemen,  mechanics,  materialmen  and  suppliers and other Liens
          imposed by law or pursuant to customary  reservations or retentions of
          title arising in the ordinary  course of business,  PROVIDED that such
          Liens  secure  only  amounts  not yet due and  payable  or, if due and
          payable, are unfiled and no other action has been taken to enforce the
          same or are being  contested in good faith by appropriate  proceedings
          for which adequate  reserves  determined in accordance  with GAAP have
          been  established  (and as to which the  Property  subject to any such
          Lien is not  yet  subject  to  foreclosure,  sale  or loss on  account
          thereof);

               (iv)  Liens (other  than Liens  created or imposed  under  ERISA)
          incurred or deposits made by the Borrower and its  Subsidiaries in the
          ordinary course of business in connection with workers'  compensation,
          unemployment  insurance  and  other  types of social  security,  or to
          secure  the  performance  of  tenders,  statutory  obligations,  bids,
          leases,  government  contracts,  performance and return-of-money bonds
          and  other  similar  obligations  (exclusive  of  obligations  for the
          payment of borrowed money);

<PAGE>

               (v)  Liens in connection with attachments or judgments (including
          judgment or appeal bonds)  PROVIDED that the judgments  secured shall,
          within 30 days  after  the entry  thereof,  have  been  discharged  or
          execution thereof stayed pending appeal, or shall have been discharged
          within 30 days after the expiration of any such stay;

               (vi)  easements,  rights-of-way,  restrictions (including  zoning
          restrictions),  minor  defects  or  irregularities  in title and other
          similar  charges  or  encumbrances   not,  in  any  material  respect,
          impairing  the  use  of  the  encumbered  Property  for  its  intended
          purposes;

               (vii)  Liens  (a)  which   exist  on  Property  at  the  time  of
          acquisition  thereof by the Borrower or any of its  Subsidiaries,  (b)
          which  exist on the  Property  of any  Person at the time such  Person
          becomes a Subsidiary  of the Borrower or merges or  consolidates  with
          the  Borrower or any of its  Subsidiaries,  or (c)  created  solely to
          secure  the  purchase  price of  property  or to  secure  Indebtedness
          (including Capital Lease Obligations)  incurred solely for the purpose
          of  acquiring,  constructing  or  improving  property  to  the  extent
          permitted under Section 8.1(c), PROVIDED that no such Lien shall cover
          any property other than the particular  property (or proceeds thereof)
          being acquired or improved or previously subject to a Lien;

               (viii) leases or subleases  granted to others not  interfering in
          any  material  respect with the business of the Borrower or any of its
          Subsidiaries;

               (ix)  any interest of title of a lessor under,  and Liens arising
          from UCC financing statements (or equivalent filings, registrations or
          agreements in foreign jurisdictions)  relating to, leases permitted by
          this Credit Agreement;

               (x)  normal and customary  rights of setoff upon deposits of cash
          in favor of banks or other depository institutions;

               (xi) inchoate Liens arising under ERISA to secure current service
          pension  liabilities  as they are incurred under the provisions of any
          Plan;

               (xii) Liens  existing  as of the  Closing  Date and set forth on
          SCHEDULE 1.1(B);

              (xiii) Liens  in connection  with a Factoring  Agreement,  but (i)
          only to the extent of the applicable  accounts  receivable  subject to
          such  Factoring  Agreement  and  (ii)  only  if the  proceeds  payable
          thereunder  have been  assigned  to the Agent for the  benefit  of the
          Lenders in a manner reasonably acceptable to the Agent;


<PAGE>

               (xiv) Liens  to  secure  Permitted   Refinancing   Indebtedness,
          provided  that such Liens  extend only to the assets that  secured the
          Indebtedness   refinanced   with  the   proceeds  of  such   Permitted
          Refinancing Indebtedness;

               (xv) Liens securing Permitted Hedging Obligations;

               (xvi)   Liens  on  assets  of   Foreign   Subsidiaries   securing
          Indebtedness of any such Person where such  Indebtedness was permitted
          to be incurred by the terms of this Credit Agreement; and

               (xvii) additional Liens securing Indebtedness in an amount not to
          exceed $5 million in the aggregate at any time outstanding.

          "PERMITTED  REFINANCING  INDEBTEDNESS"  means any  Indebtedness of the
     Borrower  or any of its  Subsidiaries  issued in  exchange  for, or the net
     proceeds of which are used to extend, refinance, renew, replace, defease or
     refund other Indebtedness of the Borrower or any of its Subsidiaries (other
     than intercompany  Indebtedness);  PROVIDED, that: (i) the principal amount
     (or  accreted   value,   if  applicable)  of  such  Permitted   Refinancing
     Indebtedness does not exceed the principal amount of (or accreted value, if
     applicable),  plus  accrued  interest  on, the  Indebtedness  so  extended,
     refinanced,  renewed,  replaced,  defeased or refunded  (plus the amount of
     reasonable expenses incurred in connection therewith);  (ii) such Permitted
     Refinancing  Indebtedness  has a final  maturity  date later than the final
     maturity date of, and has a Weighted  Average Life to Maturity  equal to or
     greater  than the Weighted  Average  Life to Maturity of, the  Indebtedness
     being extended,  refinanced,  or greater than the Weighted  Average Life to
     Maturity  of,  the  Indebtedness  being  extended,   refinanced,   renewed,
     replaced,  defeased or refunded,  (iii) if the Indebtedness being extended,
     refinanced,  renewed,  replaced,  defeased or refunded is  subordinated  in
     right  of  payment  to  the   Obligations,   such   Permitted   Refinancing
     Indebtedness  has a final  maturity date later than the final maturity date
     of, and is subordinated in right of payment to, the Obligations on terms at
     least as favorable to the Lenders as those  contained in the  documentation
     governing the Indebtedness being extended,  refinanced,  renewed, replaced,
     defeased or refunded;  and (iv) such Indebtedness is incurred either by the
     Borrower or by a Subsidiary  who is the obligor on the  Indebtedness  being
     extended, refinanced, renewed, replaced, defeased or refunded.

          "PERSON"  means any  individual,  partnership,  joint  venture,  firm,
     corporation,   limited  liability  company,  association,  trust  or  other
     enterprise (whether or not incorporated) or any Governmental Authority.

          "PLAN" means any employee  benefit plan (as defined in Section 3(3) of
     ERISA)  which is covered by ERISA and with  respect to which the  Borrower,
     any Subsidiary of the Borrower or any ERISA  Affiliate is (or, if such plan
     were  terminated at such time,  would under Section 4069 of ERISA be deemed
     to be) an "employer" within the meaning of Section 3(5) of ERISA.


<PAGE>

          "PLEDGE  AGREEMENT"  means the Pledge  Agreement  dated as of the date
     hereof  entered  into by the Borrower in favor of the Agent for the benefit
     of the Lenders (and affiliates of Lenders as to certain  obligations  under
     Hedge Agreements), as amended and modified.

          "PRIME RATE" means the rate of interest per annum  publicly  announced
     from time to time by  NationsBank,  N.A. as its prime rate in effect at its
     principal  office in  Charlotte,  North  Carolina,  with each change in the
     Prime Rate being effective on the date such change is publicly announced as
     effective  (it  being  understood  and  agreed  that  the  Prime  Rate is a
     reference rate used by NationsBank,  N.A. in determining  interest rates on
     certain loans and is not intended to be the lowest rate of interest charged
     on any extension of credit by NationsBank, N.A. to any debtor).

          "PRIOR CREDIT AGREEMENT" means that certain Credit Agreement among the
     Borrower (as assignee of Willcox & Gibbs,  Inc.),  certain  Subsidiaries of
     the  Borrower,  NationsBank,  N.A.,  as Agent (f/k/a  NationsBank  of North
     Carolina,  N.A.) and the lenders  party  thereto  dated as of November  12,
     1992, as amended or modified from time to time.

          "PROPERTY"  means  any  interest  in any kind of  property  or  asset,
     whether real, personal or mixed, or tangible or intangible.

          "PURCHASE AGREEMENT" means that certain Asset Purchase Agreement dated
     as  of  October  29,  1997  among  ECA,  the  Borrower  and  NFA  Corp.,  a
     Massachusetts corporation.

          "REGISTER" shall have the meaning given such term in Section 11.3(c).

          "REGULATION  G,  T,  U,  OR  X"  means   Regulation  G,  T,  U  or  X,
     respectively,  of the Board of Governors of the Federal  Reserve  System as
     from time to time in effect and any successor to all or a portion thereof.

          "RELEASE" means any spilling,  leaking,  pumping,  pouring,  emitting,
     emptying, discharging,  injecting, escaping, leaching, dumping or disposing
     into the  environment  (including the abandonment or discarding of barrels,
     containers  and  other  closed  receptacles  containing  any  Materials  of
     Environmental Concern).

          "REPORTABLE  EVENT"  means  any of the  events  set  forth in  Section
     4043(c)  of  ERISA,  other  than  those  events  as  to  which  the  notice
     requirement has been waived by regulation.

          "REQUIRED  LENDERS"  means,  at any  time,  Lenders  which are then in
     compliance  with their  obligations  hereunder (as determined by the Agent)
     and holding in the aggregate at least 67% of (i) the Commitments,  and (ii)
     if  the  Commitments  have  been  terminated,  the  outstanding  Loans  and
     Participation  Interests  (including  the  Participation  Interests  of the
     Issuing Lender in any Letters of Credit).


<PAGE>

          "REQUIREMENT  OF LAW" means,  as to any  Person,  the  certificate  of
     incorporation and by-laws or other organizational or governing documents of
     such Person, and any law, treaty, rule or regulation or determination of an
     arbitrator  or a court  or  other  Governmental  Authority,  in  each  case
     applicable  to or binding upon such Person or any of its material  property
     is subject.

          "RESPONSIBLE  OFFICER"  means the  Chairman  of the  Board,  the Chief
     Executive Officer,  the President,  the Chief Financial  Officer,  any Vice
     President or other duly authorized officer.

          "RESTRICTED PAYMENT" means such term as defined in Section 8.7.

          "REVOLVING  COMMITMENT"  means,  with  respect  to  each  Lender,  the
     commitment of such Lender to make Revolving Loans in an aggregate principal
     amount at any time outstanding of up to such Lender's Revolving  Commitment
     Percentage  of the  Aggregate  Revolving  Committed  Amount as specified in
     SCHEDULE  2.1(A),  as  such  amount  may be  reduced  from  time to time in
     accordance with the provisions hereof.

          "REVOLVING  COMMITMENT  PERCENTAGE" means, for each Lender, a fraction
     (expressed as a decimal) the numerator of which is the Revolving Commitment
     of such Lender at such time and the  denominator  of which is the Aggregate
     Revolving  Committed Amount at such time. The initial Revolving  Commitment
     Percentages are set out on SCHEDULE 2.1(A).

          "REVOLVING COMMITTED AMOUNT" means, collectively, the aggregate amount
     of all of the Revolving  Commitments  as referenced in Section  2.1(a) and,
     individually, the amount of each Lender's Revolving Commitment as specified
     in SCHEDULE 2.1(A).

          "REVOLVING  LOANS"  shall have the  meaning  assigned  to such term in
     Section 2.1(a).

          "REVOLVING  NOTE" or "REVOLVING  NOTES" means the promissory  notes of
     the Borrower in favor of each of the Lenders evidencing the Revolving Loans
     and the  Foreign  Currency  Loans in  substantially  the form  attached  as
     SCHEDULE  2.1(E),  individually or  collectively,  as appropriate,  as such
     promissory notes may be amended, modified, supplemented,  extended, renewed
     or replaced from time to time.

          "REVOLVING OBLIGATIONS" means, collectively,  Revolving Loans, Foreign
     Currency Loans, Swingline Loans and LOC Obligations.

          "S&P"  means  Standard & Poor's  Ratings  Group,  a division of McGraw
     Hill,  Inc.,  or any successor or assignee of the business of such division
     in the business of rating securities.

          "SECURITY AGREEMENT" means the Security Agreement dated as of the date
     hereof  entered  into by the Borrower  and certain of its  Subsidiaries  in

<PAGE>

     favor of the  Agent for the  benefit  of the  Lenders  (and  affiliates  of
     Lenders as to certain  obligations under Hedge Agreements),  as amended and
     modified.

          "SENIOR  NOTE" means any of the 95/8%  Senior Notes due 2007 issued by
     the Borrower in favor of the Senior Noteholders pursuant to the Senior Note
     Indenture,  as such  Senior  Notes may be  amended,  modified,  restated or
     supplemented and in effect from time to time.

          "SENIOR NOTE INDENTURE"  means that certain  Indenture dated as of the
     Closing Date among the  Borrower,  the  Guarantors  and IBJ Schroder Bank &
     Trust Company,  in its capacity as trustee for the Senior  Noteholders,  as
     the same may be amended,  modified,  restated or supplemented and in effect
     from time to time.

          "SENIOR  NOTEHOLDER" means any one of the holders from time to time of
     the Senior Notes.

          "SINGLE  EMPLOYER PLAN" means any Plan which is covered by Title IV of
     ERISA, but which is not a Multiemployer Plan or a Multiple Employer Plan.

          "SOLVENT"  or  "SOLVENCY"  means,  with  respect to any Person as of a
     particular  date, that on such date (i) such Person is able to realize upon
     its assets and pay its debts and other liabilities,  contingent obligations
     and other commitments as they mature in the normal course of business, (ii)
     such Person does not intend to, and does not  believe  that it will,  incur
     debts or liabilities  beyond such Person's ability to pay as such debts and
     liabilities  mature in their  ordinary  course,  (iii)  such  Person is not
     engaged in a  business  or a  transaction,  and is not about to engage in a
     business  or  a  transaction,   for  which  such  Person's  Property  would
     constitute unreasonably small capital after giving due consideration to the
     prevailing  practice in the  industry in which such Person is engaged or is
     to engage,  (iv) the fair value of the  Property  of such Person is greater
     than the  total  amount  of  liabilities,  including,  without  limitation,
     contingent  liabilities,  of such Person and (v) the present fair  saleable
     value of the assets of such Person is not less than the amount that will be
     required to pay the probable  liability of such Person on its debts as they
     become  absolute  and  matured.  In  computing  the  amount  of  contingent
     liabilities  at any time,  it is  intended  that such  liabilities  will be
     computed at the amount which,  in light of all the facts and  circumstances
     existing  at such  time,  represents  the  amount  that can  reasonably  be
     expected to become an actual or matured liability.

          "SUBORDINATED   INDEBTEDNESS"   means   any   Indebtedness   which  is
     subordinate  under  instruments in form and substance  satisfactory  to the
     Required Lenders to the Obligations.

          "SUBSIDIARY"  means, as to any Person,  (a) any corporation  more than
     50% of whose  stock of any class or  classes  having  by the terms  thereof
     ordinary  voting  power  to  elect  a  majority  of the  directors  of such
     corporation  (irrespective  of  whether  or not at the  time,  any class or
     classes of such corporation shall have or might have voting power by reason

<PAGE>

     of the  happening of any  contingency)  is at the time owned by such Person
     directly  or  indirectly  through  Subsidiaries,  and (b) any  partnership,
     association, joint venture or other entity in which such Person directly or
     indirectly  through  Subsidiaries has more than 50% of the voting interests
     at any time.  Unless otherwise  identified,  "Subsidiary" or "Subsidiaries"
     shall mean Subsidiaries of the Borrower.

          "SWINGLINE COMMITMENT" means the commitment of the Swingline Lender to
     make  Swingline  Loans  in  an  aggregate  principal  amount  at  any  time
     outstanding of up to the Swingline Committed Amount.

          "SWINGLINE  COMMITTED  AMOUNT" shall have the meaning assigned to such
     term in Section 2.4(a).

          "SWINGLINE LENDER" means NationsBank, N.A.

          "SWINGLINE  LOAN"  shall  have the  meaning  assigned  to such term in
     Section 2.4(a).

          "SWINGLINE NOTE" means the promissory note of the Borrower in favor of
     the Swingline  Lender in the original  principal  amount of $5,000,000,  as
     such  promissory note may be amended,  modified,  restated or replaced from
     time to time.

          "UNUSED FEE" shall have the meaning given such term in Section 3.5(a).

          "VOTING STOCK" means, with respect to any Person, capital stock issued
     by such  Person the  holders  of which are  ordinarily,  in the  absence of
     contingencies,  entitled to vote for the election of directors  (or persons
     performing similar  functions) of such Person,  even though the right so to
     vote has been suspended by the happening of such a contingency.

          "WEIGHTED  AVERAGE  LIFE  TO  MATURITY"  means,  when  applied  to any
     Indebtedness  at any date, the number of years obtained by dividing (i) the
     sum of the  products  obtained by  multiplying  (a) the amount of each then
     remaining  installment,  sinking fund,  serial  maturity or other  required
     payments of  principal,  including  payment at final  maturity,  in respect
     thereof, by (b) the number of years (calculated to the nearest one-twelfth)
     that will elapse between such date and the making of such payment,  by (ii)
     the then outstanding principal amount of such Indebtedness.


          1.2 COMPUTATION OF TIME PERIODS.
              ---------------------------

          For purposes of  computation  of periods of time  hereunder,  the word
"from" means "from and  including"  and the words "to" and "until" each mean "to
but excluding."

<PAGE>

          1.3  ACCOUNTING TERMS.
               -----------------

          Except as otherwise  expressly  provided herein,  all accounting terms
used herein shall be interpreted,  and all financial statements and certificates
and reports as to  financial  matters  required to be  delivered  to the Lenders
hereunder shall be prepared,  in accordance with GAAP. All calculations made for
the purposes of determining  compliance with this Credit Agreement shall (except
as otherwise  expressly  provided herein) be made by application of GAAP applied
on a basis  consistent  with the  most  recent  annual  or  quarterly  financial
statements  delivered  pursuant to Section 7.1 hereof (or, prior to the delivery
of the first  financial  statements  pursuant to Section 7.1 hereof,  consistent
with the  annual  audited  financial  statements  referenced  in  Section  6.1);
PROVIDED,  HOWEVER,  if (a)  the  Borrower  shall  object  to  determining  such
compliance  on such basis at the time of delivery of such  financial  statements
due to any change in GAAP or the rules  promulgated  with respect thereto or (b)
the Agent or the  Required  Lenders  shall so object in  writing  within 30 days
after delivery of such financial  statements,  then such  calculations  shall be
made on a basis consistent with the most recent financial  statements  delivered
by the  Borrower  to the Lenders as to which no such  objection  shall have been
made.

          Notwithstanding  the above,  the parties hereto  acknowledge and agree
that, for purposes of all calculations  made in determining  compliance with the
financial  covenants set forth in Section 7.9 and for purposes of the definition
of "Applicable  Percentage"  set forth in Section 1.1,  income  statement  items
(whether  negative or  positive)  attributable  to the  Acquired  Assets and any
Property acquired in any Investment described in clause (viii) of the definition
of "Permitted  Investment" and any Indebtedness  incurred by the Borrower or any
of its  Subsidiaries in order to consummate such acquisition or Investment shall
be included to the extent relating to any period applicable in such calculations
occurring after the date of such Investment (and, notwithstanding the foregoing,
during the first four fiscal  quarters  following the date of the acquisition of
the Acquired Assets or of such  Investment,  such  acquisition or Investment and
any Indebtedness incurred by the Borrower or any of its Subsidiaries in order to
consummate  such  acquisition or Investment (A) shall be deemed to have occurred
on the first day of the four fiscal  quarter  period  immediately  preceding the
date of such  acquisition  or  Investment  and  (B) if such  Indebtedness  has a
floating  or  formula  rate,   then  the  implied  rate  of  interest  for  such
Indebtedness for the applicable period shall be determined by utilizing the rate
which is or would be in  effect  with  respect  to such  Indebtedness  as at the
relevant date of determination).



                                    SECTION 2
                                CREDIT FACILITIES
                                -----------------


          2.1 REVOLVING LOANS.
              ---------------

     (a)  REVOLVING COMMITMENT.  During the  Commitment  Period,  subject to the
terms and conditions hereof, each Lender severally agrees to make revolving

<PAGE>

credit loans in Dollars  (the  "REVOLVING  LOANS") to the Borrower  from time to
time in the amount of such  Lender's  Revolving  Commitment  Percentage  of such
Revolving Loans for the purposes  hereinafter set forth;  PROVIDED that (i) with
regard to the  Lenders  collectively,  the amount of the  Revolving  Obligations
outstanding  (including  the Dollar  Amount  (determined  as of the most  recent
Determination  Date) of the outstanding Foreign Currency Loans) shall not exceed
the lesser of (A) the Aggregate Revolving Committed Amount and (B) the Borrowing
Base,  and (ii) with  regard to each  Lender  individually,  the  amount of such
Lender's Revolving Commitment  Percentage of the sum of the Revolving Loans PLUS
the Dollar Amount (determined as of the most recent  Determination  Date) of the
Foreign  Currency Loans PLUS LOC Obligations  PLUS Swingline  Loans  outstanding
shall not exceed such Lender's Revolving  Committed Amount.  Revolving Loans may
consist of Base Rate Loans, CD Rate Loans or Eurodollar  Loans, or a combination
thereof,  as the  Borrower  may  request,  and may be repaid and  reborrowed  in
accordance with the provisions hereof.

     (b) REVOLVING LOAN BORROWINGS.

          (i) NOTICE OF BORROWING.  The Borrower  shall request a Revolving Loan
     borrowing by written  notice (or  telephone  notice  promptly  confirmed in
     writing) to the Agent not later than 11:00 A.M. (Charlotte,  North Carolina
     time) on the  Business Day of the  requested  borrowing in the case of Base
     Rate  Loans,  on the  Business  Day  prior  to the  date  of the  requested
     borrowing in the case of CD Rate Loans, and on the third Business Day prior
     to the date of the  requested  borrowing  in the case of  Eurodollar  Loans
     denominated  in  Dollars.   Each  such  request  for  borrowing   shall  be
     irrevocable  and shall specify (A) that a Revolving Loan is requested,  (B)
     the date of the requested  borrowing  (which shall be a Business  Day), (C)
     the  aggregate  principal  amount  to be  borrowed,  and  (D)  whether  the
     borrowing shall be comprised of Base Rate Loans, CD Rate Loans,  Eurodollar
     Loans or a combination  thereof,  and if Eurodollar  Loans or CD Rate Loans
     are requested,  the Interest Period(s) therefor. If the Borrower shall fail
     to specify  in any such  Notice of  Borrowing  (I) an  applicable  Interest
     Period in the case of a Eurodollar  Loan,  then such notice shall be deemed
     to be a request  for an Interest  Period of one month,  or (II) the type of
     Revolving Loan requested,  then such notice shall be deemed to be a request
     for a Base Rate Loan hereunder.  The Agent shall give notice to each Lender
     promptly upon receipt of each Notice of Borrowing  pursuant to this Section
     2.1(b)(i),  the  contents  thereof  and  each  such  Lender's  share of any
     borrowing to be made pursuant thereto.

          (ii)  MINIMUM  AMOUNTS.  Each  Revolving  Loan  shall be in a  minimum
     aggregate  principal amount of $1,000,000,  in the case of Eurodollar Loans
     and CD Rate  Loans,  or  $500,000  (or the  remaining  Revolving  Committed
     Amount, if less), in the case of Base Rate Loans, and integral multiples of
     $100,000 in excess thereof.

          (iii)  ADVANCES.  Each  Lender  will  make  its  Revolving  Commitment
     Percentage of each Revolving Loan borrowing  available to the Agent for the
     account of the Borrower as specified in Section  3.14(b),  or in such other
     manner as the Agent may specify in writing, by 1:00 P.M. (Charlotte,  North
     Carolina time) on the date specified in the applicable  Notice of Borrowing
     in Dollars and in funds immediately  available to the Agent. Such borrowing

<PAGE>

     will then be made  available to the Borrower by the Agent by crediting  the
     account of the  Borrower on the books of such office with the  aggregate of
     the amounts made available to the Agent by the Lenders and in like funds as
     received by the Agent.

     (c) REPAYMENT. The principal amount of all Revolving Loans shall be due and
payable in full on the Maturity Date.

     (d) INTEREST. Subject to the provisions of Section 3.1,

          (i) BASE RATE LOANS.  During such periods as Revolving  Loans shall be
     comprised  in whole or in part of Base Rate  Loans,  such  Base Rate  Loans
     shall  bear  interest  at a per annum  rate equal to the Base Rate PLUS the
     Applicable Percentage;

          (ii) CD RATE LOANS.  During such periods as  Revolving  Loans shall be
     comprised  in whole or in part of CD Rate  Loans,  such CD Rate Loans shall
     bear interest at a per annum rate equal to the CD Rate PLUS the  Applicable
     Percentage;

          (iii) EURODOLLAR  LOANS.  During such periods as Revolving Loans shall
     be comprised in whole or in part of Eurodollar Loans, such Eurodollar Loans
     shall bear interest at a per annum rate equal to the  Eurodollar  Rate PLUS
     the Applicable Percentage.

Interest  on  Revolving  Loans  shall be payable  in arrears on each  applicable
Interest Payment Date (or at such other times as may be specified herein).

     (e)  REVOLVING  NOTES.  The  Revolving  Loans shall be  evidenced by a duly
executed  Revolving  Note in favor of each Lender  substantially  in the form of
SCHEDULE 2.1(E).

     (f) MAXIMUM NUMBER OF EURODOLLAR  LOANS.  The Borrower will be limited to a
maximum  number of seven  (7)  Eurodollar  Loans  outstanding  at any time.  For
purposes hereof,  Eurodollar  Loans with separate or different  Interest Periods
will be considered as separate  Eurodollar  Loans even if their Interest Periods
expire on the same date.


          2.2 LETTER OF CREDIT SUBFACILITY.
              ----------------------------

     (a)  ISSUANCE.  During  the  Commitment  Period,  subject  to the terms and
conditions  hereof and of the LOC  Documents,  if any, the Issuing  Lender shall
upon the request of the Borrower  issue,  and the Lenders shall  participate in,
such  Letters of Credit in  Dollars,  for the  purposes  hereinafter  set forth;
PROVIDED  that (i) the  aggregate  Dollar  Amount of LOC  Obligations  shall not
exceed SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($7,500,000) at any time (the
"LOC COMMITTED AMOUNT"),  (ii) with regard to the Lenders collectively,  (A) the
amount of the Revolving  Obligations  outstanding  (including  the Dollar Amount
(determined as of the most recent  Determination  Date) of the Foreign  Currency
Loans)  shall not  exceed the lesser of (I) the  Aggregate  Revolving  Committed
Amount,  as reduced from time to time,  and (II) the Borrowing  Base and (B) the
Dollar Amount (determined as of the most recent  Determination  Date) of the sum

<PAGE>

of  Foreign  Currency  Loans  shall not exceed the  Foreign  Currency  Committed
Amount,  and (iii) with  regard to each Lender  individually,  (A) the amount of
such Lender's Revolving Commitment Percentage of the sum of Revolving Loans PLUS
LOC  Obligations  PLUS  Swingline  Loans  outstanding  PLUS  the  Dollar  Amount
(determined as of the most recent  Determination  Date) of the Foreign  Currency
Loans  shall not exceed such  Lender's  Revolving  Committed  Amount and (B) the
Dollar  Amount  (determined  as of the most recent  Determination  Date) of such
Lender's  portion  (including  participation  interests  therein)  of the sum of
Foreign Currency Loans shall not exceed such Lender's Foreign Currency Committed
Amount.  Letters of Credit issued  hereunder  shall not have an original  expiry
date more than one year from the date of  issuance or  extension,  nor an expiry
date,  whether  as  originally  issued or by  extension,  extending  beyond  the
Maturity Date. Each Letter of Credit shall comply with the related LOC Documents
and  shall be either  (x) a standby  letter  of  credit  issued to  support  the
obligations  (including  pension  or  insurance   obligations),   contingent  or
otherwise,  of the  Borrower  or any of its  Subsidiaries,  or (y) a  commercial
letter of credit in respect of the purchase of goods or services by the Borrower
or any of its Subsidiaries in the ordinary course of business. The issuance date
of each Letter of Credit shall be a Business Day.

     (b) NOTICE AND REPORTS.  The request for the issuance of a Letter of Credit
shall be  submitted  by the  Borrower to the  Issuing  Lender at least three (3)
Business Days prior to the requested date of issuance (or such shorter period as
may be agreed by the Issuing Lender).  A form of Notice of Request for Letter of
Credit is attached as SCHEDULE  2.2(B).  The Issuing  Lender will provide to the
Agent at least monthly,  and more  frequently upon request,  a detailed  summary
report on its Letters of Credit and the activity thereon,  in form and substance
acceptable  to the Agent.  In addition,  the Issuing  Lender will provide to the
Agent for  dissemination to the Lenders at least quarterly,  and more frequently
upon  request,  a  detailed  summary  report on its  Letters  of Credit  and the
activity  thereon,  including,  among other things,  the  beneficiary,  the face
amount and the expiry  date.  The  Issuing  Lender  will  provide  copies of the
Letters of Credit to the Agent and the Lenders promptly upon request.

     (c) PARTICIPATION.  Each Lender, upon issuance of a Letter of Credit, shall
be deemed to have  purchased  without  recourse  a risk  participation  from the
Issuing Lender in such Letter of Credit and the obligations  arising thereunder,
in each case in an amount equal to its  Revolving  Commitment  Percentage of the
obligations  under such Letter of Credit and shall  absolutely,  unconditionally
and irrevocably  assume, as primary obligor and not as surety,  and be obligated
to pay to the Issuing Lender therefor and discharge when due, its pro rata share
of the  obligations  arising under such Letter of Credit.  Without  limiting the
scope and nature of each Lender's  participation in any Letter of Credit, to the
extent that the Issuing Lender has not been reimbursed as required  hereunder or
under any such  Letter of  Credit,  each such  Lender  shall pay to the  Issuing
Lender its Revolving Commitment  Percentage of such unreimbursed drawing in same
day funds on the day of  notification  by the Issuing Lender of an  unreimbursed
drawing  pursuant to the provisions of subsection (d) hereof.  The obligation of
each  Lender  to  so  reimburse  the  Issuing   Lender  shall  be  absolute  and
unconditional and shall not be affected by the occurrence of a Default, an Event
of Default or any other  occurrence or event. Any such  reimbursement  shall not
relieve or otherwise  impair the  obligation  of the  Borrower to reimburse  the
Issuing Lender under any Letter of Credit, together with interest as hereinafter
provided.


<PAGE>

     (d) REIMBURSEMENT.  In the event of any drawing under any Letter of Credit,
the Issuing Lender will promptly notify the Borrower.  Unless the Borrower shall
immediately  notify the Issuing  Lender that the  Borrower  intends to otherwise
reimburse the Issuing  Lender for such drawing,  the Borrower shall be deemed to
have  requested  that the Lenders make a Revolving  Loan in the Dollar Amount of
the  drawing as  provided  in  subsection  (e) hereof on the  related  Letter of
Credit, the proceeds of which will be used to satisfy the related  reimbursement
obligations. The Borrower promises to reimburse the Issuing Lender on the day of
drawing under any Letter of Credit (either with the proceeds of a Revolving Loan
obtained  hereunder or otherwise) in same day funds.  If the Borrower shall fail
to reimburse the Issuing Lender as provided hereinabove, the unreimbursed Dollar
Amount of such drawing shall bear interest at a per annum rate equal to the Base
Rate plus two percent (2%). The Borrower's  reimbursement  obligations hereunder
shall be absolute and unconditional under all circumstances  irrespective of any
rights of setoff,  counterclaim  or defense to payment the Borrower may claim or
have against the Issuing Lender, the Agent, the Lenders,  the beneficiary of the
Letter of Credit drawn upon or any other Person,  including  without  limitation
any defense based on any failure of the Borrower to receive consideration or the
legality, validity,  regularity or unenforceability of the Letter of Credit. The
Issuing  Lender  will  promptly  notify  the other  Lenders of the amount of any
unreimbursed  drawing and each Lender  shall  promptly  pay to the Agent for the
account of the Issuing Lender in immediately available funds, the amount of such
Lender's pro rata share of such unreimbursed drawing. Such payment shall be made
on the day such notice is  received  by such  Lender from the Issuing  Lender if
such notice is received at or before 2:00 P.M. (Charlotte,  North Carolina time)
otherwise such payment shall be made at or before 12:00 Noon  (Charlotte,  North
Carolina  time) on the  Business  Day next  succeeding  the day such  notice  is
received.  If such Lender does not pay such amount to the Issuing Lender in full
upon such  request,  such  Lender  shall,  on  demand,  pay to the Agent for the
account of the Issuing  Lender  interest on the unpaid  Dollar Amount during the
period from the date of such  drawing  until such Lender pays such amount to the
Issuing  Lender in full at a rate per annum  equal  to, if paid  within  two (2)
Business  Days of the date that such Lender is required to make payments of such
amount pursuant to the preceding sentence, the Federal Funds Rate and thereafter
at a rate equal to the Base Rate. Each Lender's  obligation to make such payment
to the Issuing Lender,  and the right of the Issuing Lender to receive the same,
shall be absolute and  unconditional,  shall not be affected by any circumstance
whatsoever and without regard to the termination of this Credit Agreement or the
Commitments  hereunder,  the  existence  of a Default or Event of Default or the
acceleration  of the  obligations  of the Borrower  hereunder  and shall be made
without  any   offset,   abatement,   withholding   or   reduction   whatsoever.
Simultaneously  with the making of each such  payment by a Lender to the Issuing
Lender,  such Lender shall,  automatically and without any further action on the
part of the Issuing Lender or such Lender,  acquire a participation in an amount
equal to such  payment  (excluding  the  portion  of such  payment  constituting
interest  owing to the  Issuing  Lender)  in the  related  unreimbursed  drawing
portion of the LOC Obligation and in the interest thereon and in the related LOC
Documents, and shall have a claim against the Borrower with respect thereto.

     (e) REPAYMENT WITH REVOLVING  LOANS. On any day on which the Borrower shall
have requested,  or been deemed to have  requested,  a Revolving Loan advance to
reimburse a drawing under a Letter of Credit, the Agent shall give notice to the


<PAGE>

Lenders  that a Revolving  Loan has been  requested  or deemed  requested by the
Borrower to be made in connection  with a drawing  under a Letter of Credit,  in
which case a Revolving Loan advance  comprised of Base Rate Loans (or Eurodollar
Loans to the extent the  Borrower has complied  with the  procedures  of Section
2.1(b)(i) with respect thereto) shall be immediately made to the Borrower by all
Lenders  (notwithstanding any termination of the Commitments pursuant to Section
9.2) PRO RATA based on the respective  Revolving  Commitment  Percentages of the
Lenders  (determined  before giving effect to any termination of the Commitments
pursuant to Section 9.2) and the proceeds  thereof shall be paid directly to the
Issuing Lender for  application to the  respective  LOC  Obligations.  Each such
Lender  hereby  irrevocably  agrees  to make  its pro rata  share  of each  such
Revolving  Loan  immediately  upon any such  request  or deemed  request  in the
amount,  in the  manner  and on the date  specified  in the  preceding  sentence
NOTWITHSTANDING (i) the amount of such borrowing may not comply with the minimum
amount for  advances of  Revolving  Loans  otherwise  required  hereunder,  (ii)
whether  any  conditions  specified  in Section  5.2 are then  satisfied,  (iii)
whether a Default or an Event of Default then exists,  (iv) failure for any such
request or deemed  request for Revolving  Loan to be made by the time  otherwise
required  hereunder,  (v) whether the date of such  borrowing is a date on which
Revolving  Loans  are  otherwise  permitted  to be made  hereunder  or (vi)  any
termination  of  the  Commitments  relating  thereto  immediately  prior  to  or
contemporaneously  with such  borrowing.  In the event that any  Revolving  Loan
cannot for any reason be made on the date otherwise  required above  (including,
without  limitation,  as a result of the  commencement of a proceeding under the
Bankruptcy  Code with  respect to the  Borrower),  then each such Lender  hereby
agrees that it shall  forthwith  purchase (as of the date such  borrowing  would
otherwise  have  occurred,  but  adjusted  for any  payments  received  from the
Borrower  on or after  such date and prior to such  purchase)  from the  Issuing
Lender  such  participation  in the  outstanding  LOC  Obligations  as  shall be
necessary  to cause each such  Lender to share in such LOC  Obligations  ratably
(based  upon the  respective  Revolving  Commitment  Percentages  of the Lenders
(determined before giving effect to any termination of the Commitments  pursuant
to Section 9.2)), PROVIDED that in the event such payment is not made on the day
of drawing,  such Lender shall pay in addition to the Issuing Lender interest on
the Dollar Amount of its unfunded  Participation Interest at a rate equal to, if
paid  within two (2)  Business  Days of the date of drawing,  the Federal  Funds
Rate, and thereafter at the Base Rate.

     (f)  RENEWAL,  EXTENSION.  The renewal or extension of any Letter of Credit
shall, for purposes hereof,  be treated in all respects the same as the issuance
of a new Letter of Credit hereunder.

     (g) UNIFORM CUSTOMS AND PRACTICES.  The Issuing Lender may have the Letters
of Credit be  subject  to The  Uniform  Customs  and  Practice  for  Documentary
Credits,  as published as of the date of issue by the  International  Chamber of
Commerce  (the  "UCP"),  in which case the UCP may be  incorporated  therein and
deemed in all respects to be a part thereof.

     (h) INDEMNIFICATION; NATURE OF ISSUING LENDER'S DUTIES.

          (i) In addition to its other  obligations  under this  Section 2.2 but
     without  duplication of Section 10.7 hereof,  the Borrower hereby agrees to
     protect,  indemnify,  pay and save the  Issuing  Lender  harmless  from and
     against any and all claims, demands,  liabilities,  damages, losses, costs,

<PAGE>

     charges  and  expenses  (including   reasonable  attorneys'  fees  actually
     incurred)  that  the  Issuing  Lender  may  incur  or  be  subject  to as a
     consequence,  direct or  indirect,  of (A) the  issuance  of any  Letter of
     Credit or (B) the failure of the Issuing  Lender to honor a drawing under a
     Letter of Credit as a result of any act or  omission,  whether  rightful or
     wrongful, of any present or future Governmental Authority (all such acts or
     omissions, herein called "GOVERNMENT ACTS").

          (ii) As between the  Borrower  and the Issuing  Lender,  the  Borrower
     shall  assume all risks of the acts,  omissions  or misuse of any Letter of
     Credit  by  the  beneficiary  thereof.  The  Issuing  Lender  shall  not be
     responsible: (A) for the form, validity, sufficiency, accuracy, genuineness
     or legal effect of any document  submitted by any party in connection  with
     the application for and issuance of any Letter of Credit, even if it should
     in  fact  prove  to  be in  any  or  all  respects  invalid,  insufficient,
     inaccurate,  fraudulent or forged;  (B) for the validity or  sufficiency of
     any  instrument  transferring  or  assigning or  purporting  to transfer or
     assign  any  Letter of  Credit or the  rights  or  benefits  thereunder  or
     proceeds  thereof,  in whole or in part,  that may prove to be  invalid  or
     ineffective for any reason;  (C) for errors,  omissions,  interruptions  or
     delays  in  transmission  or  delivery  of any  messages,  by mail,  cable,
     telegraph,  telex or otherwise,  whether or not they be in cipher;  (D) for
     any loss or delay in the transmission or otherwise of any document required
     in order to make a drawing  under a Letter  of  Credit  or of the  proceeds
     thereof;  and (E) for any  consequences  arising  from  causes  beyond  the
     control  of  the  Issuing  Lender,  including,   without  limitation,   any
     Government  Acts.  None of the above shall affect,  impair,  or prevent the
     vesting of the Issuing Lender's rights or powers hereunder.

          (iii)  In  furtherance  and  extension  and not in  limitation  of the
     specific  provisions  hereinabove set forth, any action taken or omitted by
     the Issuing Lender, under or in connection with any Letter of Credit or the
     related certificates, if taken or omitted in good faith, shall not put such
     Issuing  Lender under any resulting  liability to the  Borrower.  It is the
     intention of the parties that this Credit  Agreement shall be construed and
     applied to protect and  indemnify  the Issuing  Lender  against any and all
     risks involved in the issuance of the Letters of Credit, all of which risks
     are hereby assumed by the Borrower,  including, without limitation, any and
     all  Government  Acts.  The Issuing Lender shall not, in any way, be liable
     for any  failure by the  Issuing  Lender or anyone  else to pay any drawing
     under any Letter of Credit as a result of any Government  Acts or any other
     cause beyond the control of the Issuing Lender.

          (iv)  Nothing  in  this  subsection  (h)  is  intended  to  limit  the
     reimbursement  obligations  of the  Borrower  contained in  subsection  (d)
     above.  The  obligations  of the Borrower  under this  subsection (h) shall
     survive the  termination of this Credit  Agreement.  No act or omissions of
     any  current or prior  beneficiary  of a Letter of Credit  shall in any way
     affect or impair the  rights of the  Issuing  Lender to enforce  any right,
     power or benefit under this Credit Agreement.

          (v)  Notwithstanding  anything  to  the  contrary  contained  in  this
     subsection  (h), the Borrower  shall have no  obligation  to indemnify  the
     Issuing  Lender in respect of any liability  incurred by the Issuing Lender

<PAGE>

     (A) arising solely out of the gross negligence or willful misconduct of the
     Issuing Lender, as determined by a court of competent jurisdiction,  or (B)
     caused by the  Issuing  Lender's  failure to pay under any Letter of Credit
     after presentation to it of a request strictly complying with the terms and
     conditions of such Letter of Credit,  as determined by a court of competent
     jurisdiction,  unless such payment is  prohibited  by any law,  regulation,
     court order or decree.

     (i) RESPONSIBILITY OF ISSUING LENDER. It is expressly understood and agreed
that the  obligations  of the Issuing  Lender  hereunder to the Lenders are only
those  expressly set forth in this Credit  Agreement and that the Issuing Lender
shall be entitled to assume that the  conditions  precedent set forth in Section
5.2 have been satisfied  unless it shall have acquired actual knowledge that any
such condition precedent has not been satisfied; PROVIDED, HOWEVER, that nothing
set forth in this  Section  2.2 shall be  deemed to  prejudice  the right of any
Lender to recover  from the Issuing  Lender any amounts  made  available by such
Lender to the Issuing  Lender  pursuant to this Section 2.2 in the event that it
is determined by a court of competent jurisdiction that the payment with respect
to a Letter of Credit  constituted gross negligence or willful misconduct on the
part of the Issuing Lender.

     (j) CONFLICT WITH LOC DOCUMENTS.  In the event of any conflict between this
Credit  Agreement  and  any  LOC  Document   (including  any  letter  of  credit
application), this Credit Agreement shall control.


          2.3  FOREIGN CURRENCY LOAN SUBFACILITY.
               ---------------------------------

           (a) FOREIGN CURRENCY  COMMITMENT.  During the Commitment Period, each
Lender  severally  agrees to make certain  foreign  currency  revolving loans in
Available  Foreign  Currencies  ("FOREIGN  CURRENCY LOANS") to the Borrower from
time  to  time  in the  amount  of such  Lender's  Foreign  Currency  Commitment
Percentage of such Foreign Currency Loans;  PROVIDED,  HOWEVER,  that the Dollar
Amount (as  determined as of the most recent  Determination  Date) of the sum of
Foreign  Currency  Loans  outstanding  at any time shall not exceed FIVE MILLION
DOLLARS  ($5,000,000)  (the  "FOREIGN  CURRENCY  COMMITTED  AMOUNT");  PROVIDED,
FURTHER,  (i) with  regard to each Lender  individually,  (A) the amount of such
Lender's Revolving Commitment  Percentage of the sum of the Revolving Loans PLUS
the Dollar Amount (determined as of the most recent  Determination  Date) of the
Foreign  Currency Loans PLUS LOC Obligations  PLUS Swingline  Loans  Outstanding
shall not exceed such Lender's Revolving Commitment  Percentage of the Revolving
Committed  Amount,  and  (B)  the  amount  of such  Revolving  Lender's  portion
(including  participation interests therein) of the Dollar Amount (determined as
of the most recent Determination Date) of the Foreign Currency Loans outstanding
shall not exceed such Lender's  Foreign  Currency  Commitment  Percentage of the
Foreign  Currency   Committed  Amount  and  (ii)  with  regard  to  the  Lenders
collectively, the amount of the Revolving Obligations outstanding (including the
Dollar  Amount (as  determined as of the most recent  Determination  Date of the
Foreign  Currency  Loans  outstanding)  shall not  exceed  the lesser of (I) the
Aggregate Revolving  Committed Amount, as reduced,  and (II) the Borrowing Base.
Foreign  Currency  Loans shall  consist  solely of  Eurodollar  Loans and may be
repaid and  reborrowed in accordance  with the provisions  hereof.  For purposes

<PAGE>

hereof,  Eurodollar  Loans with different  Interest  Periods and/or in different
currencies shall be considered as separate  Eurodollar Loans, even if they begin
on the same date,  although  borrowings,  extensions  and  conversions  may,  in
accordance  with the  provisions  hereof,  be  combined  at the end of  existing
Interest  Periods to  constitute a new  Eurodollar  Loan with a single  Interest
Period and in the same currency.

     (b) FOREIGN CURRENCY LOAN BORROWINGS.
         --------------------------------

          (i) NOTICE OF BORROWING. The Borrower shall request a Foreign Currency
     Loan borrowing by written notice (or telephone notice promptly confirmed in
     writing) to the Agent not later than 11:00 A.M. (Charlotte,  North Carolina
     time)  on the  third  Business  Day  prior  to the  date  of the  requested
     borrowing.  Each such request for borrowing  shall be irrevocable and shall
     specify (A) that a Foreign  Currency Loan is  requested,  (B) the requested
     Available Foreign Currency,  (C) the date of the requested borrowing (which
     shall be a Business Day), (D) the aggregate principal amount to be borrowed
     and (E) the Interest  Period(s)  therefor.  If the  Borrower  shall fail to
     specify in any such Notice of Borrowing an applicable Interest Period, then
     such notice  shall be deemed to be a request for an Interest  Period of one
     month.  The Agent shall give notice to each Lender promptly upon receipt of
     each Notice of Borrowing, the contents thereof and each such Lender's share
     of any borrowing to be made pursuant thereto.

          (ii) MINIMUM AMOUNTS. Each Foreign Currency Loan shall be in a minimum
     aggregate  principal  amount  equal  to  the  applicable  Foreign  Currency
     Equivalent of $1,000,000 and integral  multiples of the applicable  Foreign
     Currency  Equivalent of $100,000 in excess thereof (or the remaining amount
     of the Foreign Currency Commitment, if less).

          (iii) ADVANCES.  Each Lender will make its Foreign Currency Commitment
     Percentage of each Foreign  Currency Loan borrowing  available to the Agent
     by 1:00 P.M.,  local time in the place where such deposit is required to be
     made  by  the  succeeding  terms  hereof,  on  the  date  specified  in the
     applicable Notice of Borrowing by deposit with the Agent, at the same place
     and same account  specified in Section 3.14(b) for payments by the Borrower
     in the  applicable  Available  Foreign  Currency,  of same day funds in the
     applicable  Available Foreign  Currency.  Such deposit will be made to such
     accounts in the primary  market for such  Foreign  Currencies  as the Agent
     shall  specify  from time to time by notice to the  Lenders.  To the extent
     funds are received  from the Lenders,  the Agent shall  promptly  make such
     funds  available to the Borrower by wire  transfer to such  accounts as the
     Borrower shall have specified to the Agent.

     (c) REPAYMENT.  The principal amount of all Foreign Currency Loans shall be
due and  payable in full in the  applicable  Available  Foreign  Currency on the
Maturity Date.

     (d) INTEREST.  Subject to the provisions of Section 3.1,  Foreign  Currency
Loans shall bear interest at a per annum rate equal to the Eurodollar  Rate PLUS
the Applicable  Percentage.  Interest on Foreign Currency Loans shall be payable

<PAGE>

(in the applicable  Available  Foreign  Currency) in arrears on each  applicable
Interest Payment Date (or at such other times as may be specified herein).

     (e) FOREIGN  CURRENCY NOTES.  The Foreign Currency Loans shall be evidenced
by a Revolving Note duly executed by the Borrower in favor of each Lender.


          2.4  SWINGLINE LOANS.
               ---------------

     (a) SWINGLINE  COMMITMENT.  During the  Commitment  Period,  subject to the
terms and conditions hereof,  the Swingline Lender, in its individual  capacity,
agrees to make certain revolving credit loans to the Borrower (each a "SWINGLINE
LOAN"  and,  collectively,  the  "SWINGLINE  LOANS")  from time to time from the
Closing Date until the Maturity  Date for the  purposes  hereinafter  set forth;
PROVIDED,  HOWEVER,  (i) the  aggregate  principal  amount  of  Swingline  Loans
outstanding at any time shall not exceed FIVE MILLION DOLLARS  ($5,000,000) (the
"SWINGLINE COMMITTED AMOUNT"), and (ii) with regard to the Lenders collectively,
the amount of  outstanding  Revolving  Obligations  outstanding  (including  the
Dollar  Amount  (determined  as of the most  recent  Determination  Date) of the
outstanding  Foreign  Currency  Loans)  shall not  exceed  the lesser of (A) the
Aggregate Revolving Committed Amount and (B) the Borrowing Base. Swingline Loans
hereunder  shall  bear  interest  at the  Floating  CD Rate plus the  Applicable
Percentage,  and may be repaid and reborrowed in accordance  with the provisions
hereof.

     (b) SWINGLINE LOAN ADVANCES.
         -----------------------

          (i) NOTICES;  DISBURSEMENT.  Whenever the Borrower desires a Swingline
     Loan advance  hereunder it shall give written  notice (or telephone  notice
     promptly confirmed in writing) to the Swingline Lender not later than 11:00
     a.m. (Charlotte,  North Carolina time) on the Business Day of the requested
     Swingline  Loan advance.  Each such notice shall be  irrevocable  and shall
     specify (A) that a Swingline Loan advance is requested, (B) the date of the
     requested  Swingline  Loan advance  (which shall be a Business Day) and (C)
     the  principal  amount  of  the  Swingline  Loan  advance  requested.  Each
     Swingline  Loan shall have such maturity  date as the Swingline  Lender and
     the Borrower  shall agree upon receipt by the Swingline  Lender of any such
     notice from the Borrower.  The Swingline Lender shall initiate the transfer
     of funds  representing  the Swingline  Loan advance to the Borrower by 3:00
     p.m. (Charlotte,  North Carolina time) on the Business Day of the requested
     borrowing.

          (ii)  MINIMUM  AMOUNT.  Each  Swingline  Loan  shall  be in a  minimum
     principal  amount of  $100,000  and in  integral  multiples  of $100,000 in
     excess thereof (or the remaining amount of the Swingline  Committed Amount,
     if less).

          (iii)  REPAYMENT  OF  SWINGLINE  LOANS.  The  principal  amount of all
     Swingline  Loans  shall  be due  and  payable  on the  Maturity  Date.  The
     Swingline  Lender  may,  at any time,  in its sole  discretion,  by written
     notice to the Borrower and the Lenders,  demand  repayment of its Swingline
     Loans by way of a Revolving Loan advance,  in which case the Borrower shall

<PAGE>

     be deemed to have  requested a Revolving Loan advance  comprised  solely of
     Base Rate Loans in the amount of such Swingline Loans;  PROVIDED,  HOWEVER,
     that any such demand  shall be deemed to have been given one  Business  Day
     prior to the Maturity  Date and on the date of the  occurrence of any Event
     of  Default   described  in  Section  9.1  and  upon  acceleration  of  the
     indebtedness  hereunder and the exercise of remedies in accordance with the
     provisions of Section 9.2. Each Lender  hereby  irrevocably  agrees to make
     its pro rata share of each such Revolving Loan in the amount, in the manner
     and on the date specified in the preceding sentence NOTWITHSTANDING (I) the
     amount  of such  borrowing  may not  comply  with the  minimum  amount  for
     advances of Revolving Loans otherwise required hereunder,  (II) whether any
     conditions  specified in Section 5.2 are then  satisfied,  (III)  whether a
     Default or Event of Default then  exists,  (IV) failure of any such request
     or  deemed  request  for  Revolving  Loan to be made by the time  otherwise
     required  hereunder,  (V) whether the date of such  borrowing  is a date on
     which Revolving Loans are otherwise  permitted to be made hereunder or (VI)
     any termination of the Commitments relating thereto immediately prior to or
     contemporaneously with such borrowing. In the event that any Revolving Loan
     cannot  for any  reason  be  made  on the  date  otherwise  required  above
     (including,  without  limitation,  as a  result  of the  commencement  of a
     proceeding  under the  Bankruptcy  Code with respect to the Borrower or any
     other Credit Party), then each Lender hereby agrees that it shall forthwith
     purchase (as of the date such borrowing would otherwise have occurred,  but
     adjusted for any payments  received from the Borrower on or after such date
     and prior to such purchase) from the Swingline  Lender such  participations
     in the outstanding Swingline Loans as shall be necessary to cause each such
     Lender to share in such  Swingline  Loans ratably based upon its Commitment
     Percentage  of the Revolving  Committed  Amount  (determined  before giving
     effect to any  termination  of the  Commitments  pursuant to Section  3.4),
     PROVIDED that (A) all interest  payable on the Swingline Loans shall be for
     the  account  of the  Swingline  Lender  until  the  date as of  which  the
     respective  participation  is purchased and (B) at the time any purchase of
     participations  pursuant to this sentence is actually  made, the purchasing
     Lender shall be required to pay to the Swingline  Lender in accordance with
     the terms of subsection (c)(ii) hereof, interest on the principal amount of
     participation  purchased for each day from and including the date of demand
     therefor but excluding the date of payment for such  participation,  at the
     rate equal to the Federal Funds Rate.

     (c) INTEREST ON SWINGLINE LOANS.

          (i) Subject to the  provisions  of Section 3.1,  each  Swingline  Loan
     shall  bear  interest  at a per annum  rate  (computed  on the basis of the
     actual  number  of days  elapsed  over a year  of 365  days)  equal  to the
     Floating CD Rate PLUS the Applicable Percentage.

          (ii)  Interest on Swingline  Loans shall be payable in arrears on each
     applicable  Interest  Payment  Date  (or  at  such  other  times  as may be
     specified herein).

     (d)  SWINGLINE  NOTE.  The  Swingline  Loans shall be  evidenced  by a duly
executed   promissory   note  of  the  Borrower  to  the  Swingline   Lender  in
substantially the form of SCHEDULE 2.4(D).

<PAGE>


                                    SECTION 3
                 OTHER PROVISIONS RELATING TO CREDIT FACILITIES
                 ----------------------------------------------

          3.1 DEFAULT RATE.
              ------------

     If the  principal  of,  interest  on the Loans or any other  amounts  owing
hereunder or under the other Credit  Documents  shall not be paid when due, such
amount shall thereafter bear interest, payable on demand, at a per annum rate 2%
greater  than the rate which would  otherwise  be  applicable  (or if no rate is
applicable,  whether in  respect of  interest,  fees or other  amounts,  then 2%
greater than the Base Rate).


          3.2  EXTENSION AND CONVERSION.
               ------------------------

     Subject to the terms of Section 5.2, the Borrower shall have the option, on
any  Business  Day,  to extend  existing  Loans  into a  subsequent  permissible
Interest  Period or to convert  Loans into Loans of another  interest rate type;
PROVIDED,  HOWEVER, that (i) except as provided in Section 3.8, Eurodollar Loans
may be  converted  into Base Rate Loans or CD Rate Loans only on the last day of
the Interest Period applicable thereto, (ii) CD Rate Loans may be converted into
Eurodollar  Loans or Base Rate Loans only on the last day of the Interest Period
applicable thereto, (iii) Eurodollar Loans and CD Rate Loans may be extended (or
converted to CD Rate Loans or Eurodollar  Loans, as  applicable),  and Base Rate
Loans  may be  converted  into  Eurodollar  Loans or CD Rate  Loans,  only if no
Default  or  Event of  Default  is in  existence  on the  date of  extension  or
conversion and the conditions set forth in subsections  (a), (b), (c) and (d) of
Section 5.2 have been  satisfied,  (iv) Loans  extended as, or  converted  into,
Eurodollar  Loans  or CD  Rate  Loans  shall  be  subject  to the  terms  of the
definition  of  "INTEREST  PERIOD" set forth in Section 1.1 and shall be in such
minimum  amounts as  provided  in,  with  respect to  Revolving  Loans,  Section
2.1(b)(ii) or, with respect to Foreign  Currency Loans,  Section  2.3(b)(ii) and
(v) any request for  extension or  conversion  of a  Eurodollar  Loan or CD Rate
Loans  which shall fail to specify an  Interest  Period  shall be deemed to be a
request for an Interest Period of one month or 30 days, as applicable. Each such
extension or conversion  shall be effected by the Borrower by giving a Notice of
Extension/Conversion  (or telephone notice promptly confirmed in writing) to the
Agent prior to 11:00 A.M.  (Charlotte,  North Carolina time) on the Business Day
of, in the case of the  conversion  of a Eurodollar  Loan or CD Rate Loan into a
Base Rate Loan, on the third Business Day prior to, in the case of the extension
of a  Eurodollar  Loan as, or  conversion  of a Base Rate Loan or a CD Rate Loan
into,  a  Eurodollar  Loan,  or on the Business Day prior to, in the case of the
extension of a CD Rate Loan as, or  conversion of a Base Rate Loan or Eurodollar
Loan into,  a CD Rate Loan,  the date of the proposed  extension or  conversion,
specifying the date of the proposed extension or conversion,  the Loans to be so
extended  or  converted,  the types of Loans  into  which  such  Loans are to be

<PAGE>

converted  and, if  appropriate,  the applicable  Interest  Periods with respect
thereto. Each request for extension or conversion shall be irrevocable and shall
constitute  a  representation  and  warranty  by the  Borrower  of  the  matters
specified  in  subsections  (a)  through  (d) of Section  5.2.  In the event the
Borrower fails to request  extension or conversion of any Eurodollar  Loan or CD
Rate Loan in accordance  with this Section,  or any such conversion or extension
is not  permitted  or  required  by this  Section,  then  (i) in the case of any
Eurodollar Loan which is not a Foreign Currency Loan, such Eurodollar Loan shall
be  automatically  converted  into a Base Rate  Loan at the end of the  Interest
Period applicable  thereto,  (ii) in the case of any Foreign Currency Loan, such
Eurodollar  Loan shall be  automatically  continued as a Eurodollar  Loan in the
same Available Foreign Currency for an Interest Period of one month and (iii) in
the case of any CD Rate Loan, such CD Rate Loan shall be automatically converted
into a Base Rate Loan at the end of the Interest Period applicable thereto.  The
Agent shall give each  Lender  notice as  promptly  as  practicable  of any such
proposed extension or conversion affecting any Loan.


          3.3 PREPAYMENTS.
              -----------

     (a) VOLUNTARY PREPAYMENTS.  Loans may be repaid in whole or in part without
premium or penalty;  PROVIDED  that (i)  Eurodollar  Loans and CD Rate Loans may
only be prepaid after the Borrower has provided  three (3) Business  Days' prior
written notice to the Agent (ii) any  prepayment of Eurodollar  Loans or CD Rate
Loans other than at the end of the Interest Period applicable  thereto,  will be
subject to Section 3.11, (iii) Base Rate Loans may be prepaid by the Borrower by
giving notice to the Agent prior to 11:00 a.m. (Charlotte,  North Carolina time)
of the requested prepayment, and (iv) each such partial prepayment shall be in a
minimum  principal Dollar Amount of $1,000,000,  in the case of Eurodollar Loans
or CD Rate Loans, and $500,000,  in the case of Base Rate Loans, and in integral
multiples  of  $100,00  in excess  thereof.  Amounts  prepaid  hereunder  may be
reborrowed  in  accordance  with  the  provisions  hereof.  Any  such  voluntary
prepayments  shall be applied first to Base Rate Loans, then to CD Rate Loans in
the direct order of their  Interest  Period  maturities  and then to  Eurodollar
Loans in direct order of their Interest Period maturities.

     (b) MANDATORY  PREPAYMENTS.  If at any time (i) the amount of the Revolving
Obligations then outstanding  (including the Dollar Amount (determined as of the
most recent Determination Date) of the Foreign Currency Loans outstanding) shall
exceed the LESSER of (A) the Aggregate  Revolving  Committed  Amount, as reduced
from time to time and (B) the Borrowing Base,  (ii) the aggregate  amount of LOC
Obligations  outstanding shall exceed the LOC Committed Amount, or (iii) the sum
of the Dollar Amounts  (determined as of the most recent  Determination Date) of
the  Foreign  Currency  Loans  outstanding  shall  exceed the  Foreign  Currency
Committed  Amount,  the  Borrower  shall  immediately  make payment on the Loans
and/or to a cash  collateral  account in respect of the LOC  Obligations,  in an
amount  sufficient to eliminate the deficiency.  Any such mandatory  prepayments
shall be  applied  first  to Loans in the  currency  in which  such  payment  is
received,  and FIRST to Base Rate  Loans,  SECOND to CD Rate Loans in the direct
order of their Interest Period  maturities,  then to Eurodollar  Loans in direct
order of their Interest Period maturities and then to a cash collateral  account

<PAGE>

to secure LOC  Obligations.  Amounts  prepaid  hereunder  may be  reborrowed  in
accordance with the provisions hereof.


          3.4  REDUCTIONS IN COMMITMENTS.
               -------------------------

     The Borrower may from time to time permanently  reduce the aggregate amount
of the  Revolving  Commitments  in whole or in part  without  premium or penalty
except as provided in Section 3.11 upon three (3) Business  Days' prior  written
notice to the Agent,  PROVIDED  that (i) after  giving  effect to any  voluntary
reduction the amount of the Revolving  Obligations then  outstanding  (including
the Dollar Amount (determined as of the most recent  Determination  Date) of the
Foreign  Currency  Loans  outstanding)  shall not  exceed  the lesser of (a) the
Aggregate  Revolving  Committed Amount, as reduced from time to time and (b) the
Borrowing  Base,  and (ii) partial  reductions  shall be in a minimum  principal
amount of $1,000,000, and in integral multiples of $500,000 in excess thereof.


          3.5  FEES.
               ----

     (a) UNUSED FEE. In  consideration of the Revolving  Commitments  hereunder,
the Borrower agrees to pay to the Agent, for the ratable benefit of the Lenders,
an unused fee (the "UNUSED FEE") equal to the  Applicable  Percentage  per annum
for Unused Fees then in effect (calculated on the basis of actual number of days
elapsed  in a year of 360  days) on the  average  daily  unused  portion  of the
Revolving   Committed  Amount  (excluding  any  amounts  outstanding  under  the
Swingline  facility) for the applicable period. The Unused Fee shall accrue from
the  Closing  Date and shall be  payable  quarterly  in  arrears on the 15th day
following the last day of each calendar  quarter for the  immediately  preceding
quarter (or portion  thereof)  beginning with the first such date to occur after
the Closing Date.

     (b) LETTER OF CREDIT FEES.
         ---------------------

          (i) LETTER OF CREDIT ISSUANCE FEE. In consideration of the issuance of
     Letters of Credit hereunder, the Borrower promises to pay to the Agent, for
     the  account  of each  Lender a fee (the  "LETTER  OF CREDIT  FEE") on such
     Lender's  Revolving  Commitment  Percentage  of the average  daily  maximum
     amount available to be drawn under each such Letter of Credit computed at a
     per  annum  rate for each  day  from  the date of  issuance  to the date of
     expiration equal to the Applicable Percentage for the Letter of Credit Fee.
     The Letter of Credit Fee will be payable  quarterly  in arrears on the last
     Business  Day  of  each  March,  June,   September  and  December  for  the
     immediately preceding quarter (or a portion thereof).

          (ii)  ISSUING  LENDER  FEE.  In  addition  to the Letter of Credit Fee
     payable pursuant to clause (i) above,  the Borrower  promises to pay to the
     Issuing Lender for its own account without sharing by the other Lenders (A)
     a letter of credit  fronting fee of one-eighth  percent (1/8%) per annum on
     the average daily maximum  amount  available to be drawn under  outstanding

<PAGE>

     Letters of Credit  payable  quarterly  in arrears with the Letter of Credit
     Fee, and (B) customary charges from time to time of the Issuing Lender with
     respect to the issuance, amendment, transfer, administration,  cancellation
     and   conversion   of,  and   drawings   under,   such  Letters  of  Credit
     (collectively, the "ISSUING LENDER FEES").

          (c) ADMINISTRATIVE  FEES. The Borrower agrees to pay to the Agent, for
     its own account, an annual  administrative fee and such other fees, if any,
     referred to in the Agent's Fee Letter (collectively, the "AGENT FEES").


          3.6 CAPITAL ADEQUACY.
              ----------------

     If any Lender has determined,  after the date hereof,  that the adoption or
the becoming  effective of, or any change in, or any change by any  Governmental
Authority,  central bank or comparable agency charged with the interpretation or
administration   thereof  in  the   interpretation  or  administration  of,  any
applicable law, rule or regulation regarding capital adequacy,  or compliance by
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such  authority,  central bank or comparable
agency,  has or would  have the  effect of  reducing  the rate of return on such
Lender's  capital or assets as a consequence  of its  commitments or obligations
hereunder  to a level below that which such Lender  could have  achieved but for
such adoption,  effectiveness,  change or compliance  (taking into consideration
such Lender's policies with respect to capital adequacy), then, upon notice from
such Lender to the  Borrower,  the  Borrower  shall be  obligated to pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction;  PROVIDED  that (i) if any Lender fails to give such notice within 90
days after it obtains actual knowledge of such an event, such Lender shall, with
respect to compensation  payable  pursuant to this Section 3.6 in respect of any
costs resulting from such event,  only be entitled to payment under this Section
3.6 for costs  incurred  from and after the date 90 days  prior to the date that
such  Lender  does give  such  notice  and (ii) each  Lender  will  designate  a
different applicable lending office with respect to the matters affected by such
event if such designation will avoid the need for, or reduce the amount of, such
compensation   and  will  not,  in  the  sole   opinion  of  such   Lender,   be
disadvantageous to such Lender. Each determination by any such Lender of amounts
owing under this Section shall, absent manifest error, be conclusive and binding
on the parties hereto.


          3.7  INABILITY TO DETERMINE INTEREST RATE.
               ------------------------------------

     If prior to the first day of any  Interest  Period,  the Agent  shall  have
determined  (which  determination  shall  be  conclusive  and  binding  upon the
Borrower)  that,  by reason of  circumstances  affecting  the  relevant  market,
adequate and reasonable  means do not exist for ascertaining the Eurodollar Rate
or CD Rate for such Interest Period, the Agent shall give telecopy or telephonic
notice  thereof  to  the  Borrower  and  the  Lenders  as  soon  as  practicable
thereafter.  If such notice is given (a) any  Eurodollar  Loans or CD Rate Loans
requested to be made on the first day of such  Interest  Period shall be made as
Base Rate Loans and (b) any Loans that were to have been  converted on the first
day of such Interest Period to or continued as Eurodollar Loans or CD Rate Loans

<PAGE>

shall be converted  to or  continued  as Base Rate Loans.  Until such notice has
been withdrawn by the Agent, no further  Eurodollar Loans or CD Rate Loans shall
be made or continued as such,  nor shall the Borrower  have the right to convert
Base Rate Loans to Eurodollar Loans or CD Rate Loans.


          3.8  ILLEGALITY.
               ----------

     Notwithstanding  any other  provision  herein,  if the  adoption  of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring  after the Closing  Date shall make it unlawful for any Lender to make
or maintain  Eurodollar  Loans or Foreign Currency Loans as contemplated by this
Credit  Agreement,  (a) such Lender shall  promptly give written  notice of such
circumstances  to the Borrower  and the Agent  (which  notice shall be withdrawn
whenever such  circumstances no longer exist), (b) the commitment of such Lender
hereunder  to  make  Eurodollar  Loans  or  Foreign  Currency  Loans,   continue
Eurodollar  Loans or Foreign Currency Loans as such and convert a Base Rate Loan
to Eurodollar Loans or Foreign Currency Loans,  shall forthwith be canceled and,
until  such time as it shall no longer be  unlawful  for such  Lender to make or
maintain Eurodollar Loans or Foreign Currency Loans, such Lender shall then have
a  commitment  only to make a Base Rate Loan when a  Eurodollar  Loan or Foreign
Currency  Loan is requested  and (c) such  Lender's  Loans then  outstanding  as
Eurodollar  Loans  or  Foreign  Currency  Loans,  if  any,  shall  be  converted
automatically to Base Rate Loans on the respective last days of the then current
Interest  Periods with  respect to such Loans or within such  earlier  period as
required by law. If any such conversion of a Eurodollar Loan or Foreign Currency
Loan  occurs  on a day  which is not the last day of the then  current  Interest
Period with respect thereto, the Borrower shall pay to such Lender such amounts,
if any, as may be required pursuant to Section 3.11.


          3.9  REQUIREMENTS OF LAW.
               -------------------

     If, after the date hereof, the adoption of or any change in any Requirement
of Law or in the interpretation or application thereof applicable to any Lender,
or compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority, in each
case made  subsequent to the Closing Date (or, if later,  the date on which such
Lender becomes a Lender):

     (a)  shall  subject  such  Lender  to any tax of any kind  whatsoever  with
respect  to any  Letter  of  Credit,  any  Eurodollar  Loans  made  by it or its
obligation to make Eurodollar Loans, or change the basis of taxation of payments
to such Lender in respect thereof (except for (i) Non-Excluded  Taxes covered by
Section  3.10  (including  Non-Excluded  Taxes  imposed  solely by reason of any
failure of such Lender to comply with its obligations under Section 3.10(b)) and
(ii)  changes in taxes  measured by or imposed  upon the overall net income,  or
franchise  tax (imposed in lieu of such net income  tax),  of such Lender or its
applicable lending office, branch, or any affiliate thereof));


<PAGE>

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

     (c) shall impose on such Lender any other  condition  (excluding any tax of
any kind whatsoever);

and the result of any of the  foregoing  is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing  or  maintaining  Eurodollar  Loans or  issuing or  participating  in
Letters  of Credit or to reduce  any  amount  receivable  hereunder  in  respect
thereof,  then, in any such case,  upon notice to the Borrower from such Lender,
through the Agent,  in accordance  herewith,  the Borrower shall be obligated to
promptly pay such Lender,  upon its demand,  any additional amounts necessary to
compensate  such Lender for such increased  cost or reduced  amount  receivable,
PROVIDED  that,  in any  such  case,  the  Borrower  may  elect to  convert  the
Eurodollar  Loans made by such Lender hereunder to Base Rate Loans by giving the
Agent at least one  Business  Day's notice of such  election,  in which case the
Borrower shall promptly pay to such Lender,  upon demand,  without  duplication,
such amounts, if any, as may be required pursuant to Section 3.11. If any Lender
becomes entitled to claim any additional amounts pursuant to this subsection, it
shall  provide  prompt  notice  thereof  to the  Borrower,  through  the  Agent,
certifying  (x) that  one of the  events  described  in this  paragraph  (a) has
occurred and describing in reasonable detail the nature of such event, (y) as to
the increased cost or reduced amount resulting from such event and (z) as to the
additional amount demanded by such Lender and a reasonably detailed  explanation
of the calculation  thereof;  PROVIDED that (i) if any Lender fails to give such
notice within 90 days after it obtains actual  knowledge of such an event,  such
Lender shall, with respect to compensation  payable pursuant to this Section 3.9
in respect of any costs  resulting from such event,  only be entitled to payment
under this Section 3.9 for costs  incurred from and after the date 90 days prior
to the date that such  Lender  does give such  notice and (ii) each  Lender will
designate a different  applicable  lending office with respect to the Letters of
Credit and/or  Eurodollar  Loans affected by such event if such designation will
avoid the need for, or reduce the amount of, such  compensation and will not, in
the sole  opinion of such Lender,  be  disadvantageous  to such  Lender.  Such a
certificate as to any additional  amounts  payable  pursuant to this  subsection
submitted by such Lender, through the Agent, to the Borrower shall be conclusive
and  binding on the  parties  hereto in the  absence  of  manifest  error.  This
covenant shall survive the termination of this Credit  Agreement and the payment
of the Loans and all other amounts payable hereunder.


          3.10 TAXES.
               -----

     (a) Except as provided below in this  subsection,  all payments made by the
Borrower under this Credit  Agreement and any Notes shall be made free and clear
of, and without  deduction or  withholding  for or on account of, any present or
future income, stamp or other taxes, levies,  imposts,  duties,  charges,  fees,
deductions  or  withholdings,  now  or  hereafter  imposed,  levied,  collected,

<PAGE>

withheld  or  assessed  by any  court,  or  governmental  body,  agency or other
official,  excluding  taxes  measured  by or imposed  upon the net income of any
Lender or its applicable lending office, or any branch or affiliate thereof, and
all  franchise  taxes,  branch  taxes,  taxes on doing  business or taxes on the
capital  or net worth of any Lender or its  applicable  lending  office,  or any
branch or affiliate thereof,  imposed: (i) by any jurisdiction under the laws of
which such Lender,  applicable lending office,  branch or affiliate is organized
or is located,  or in which its principal  executive  office is located,  or any
nation  within  which  such  any   jurisdiction  is  located  or  any  political
subdivision   thereof;   or  (ii)  by  reason  of  any  connection  between  the
jurisdiction  imposing  such tax and such  Lender,  applicable  lending  office,
branch or  affiliate  other than a  connection  arising  solely from such Lender
having  executed,  delivered or performed its  obligations,  or received payment
under or enforced,  this Credit Agreement or any Notes. If any such non-excluded
taxes,  levies,  imposts,  duties,  charges,  fees,  deductions or  withholdings
("NON-EXCLUDED  TAXES") are required to be withheld from any amounts  payable to
the Agent or any Lender hereunder or under any Notes, (A) the amounts so payable
to the Agent or such Lender shall be increased to the extent  necessary to yield
to the Agent or such Lender (after payment of all  Non-Excluded  Taxes) interest
or any such  other  amounts  payable  hereunder  at the rates or in the  amounts
specified in this Credit Agreement and any Notes,  PROVIDED,  HOWEVER,  that the
Borrower  shall be entitled to deduct and  withhold any  Non-Excluded  Taxes and
shall not be required to increase any such amounts payable to any Lender that is
not organized  under the laws of the United States of America or a state thereof
if such Lender (I) fails to comply with the requirements of subsection (b) below
whenever  any  Non-Excluded  Taxes are payable by the Borrower or (II) any forms
described in subsection (b) below become in applicable or cannot be completed or
delivered  as a result of (x) any  addition  to or  change  in a treaty,  law or
regulation  in the  nature of a  limitation  on  benefits  provision  or similar
provision  restricting  eligibility  for  treaty  benefits  or (y) any change in
treaty,  law or  regulation  that was  pending on the date on which such  Lender
becomes a Lender, and (B) as promptly as possible  thereafter the Borrower shall
send to the Agent for its own account or for the account of such Lender,  as the
case may be, a certified copy of any original official receipt or other evidence
received by the Borrower showing payment  thereof.  If the Borrower fails to pay
any Non-Excluded  Taxes when due to the appropriate taxing authority or fails to
remit to the Agent the required receipts or other required documentary evidence,
the  Borrower  shall  indemnify  the Agent and the Lenders  for any  incremental
taxes,  interest or penalties that may become payable by the Agent or any Lender
as a result of any such failure. The agreements in this subsection shall survive
the  termination  of this Credit  Agreement and the payment of the Loans and all
other amounts payable hereunder.

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

          (X) (i) on or before  the date of any  payment by the  Borrower  under
          this Credit Agreement or Notes to such Lender, deliver to the Borrower
          and the Agent  (A) two (2) duly  completed  copies  of  United  States
          Internal  Revenue  Service Form 1001 or 4224, or successor  applicable
          form,  as the case may be,  certifying  that it is entitled to receive
          payments under this Credit  Agreement and any Notes without  deduction
          or  withholding  of any United States  federal income taxes and (B) an
          Internal  Revenue  Service  Form W-8 or W-9, or  successor  applicable

<PAGE>

          form,  as the  case  may  be,  certifying  that it is  entitled  to an
          exemption from United States backup withholding tax;

               (ii) deliver to the Borrower and the Agent two (2) further copies
          of any such form or  certification on or before the date that any such
          form or  certification  expires  or  becomes  obsolete  and  after the
          occurrence  of any event  requiring  a change in the most  recent form
          previously delivered by it to the Borrower; and

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

          (Y) in the case of any such  Lender  that is not a "bank"  within  the
     meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (i) represent
     to the Borrower  (for the benefit of the Borrower and the Agent) that it is
     not a bank  within  the  meaning of Section  881(c)(3)(A)  of the  Internal
     Revenue  Code,  (ii)  furnish to the  Borrower on or before the date of any
     payment  by the  Borrower,  with a copy to the Agent two (2)  accurate  and
     complete  original  signed copies of Internal  Revenue Service Form W-8, or
     successor  applicable form certifying to such Lender's legal entitlement at
     the date of such  certificate  to an exemption  from U.S.  withholding  tax
     under the  provisions of Section  881(c) of the Internal  Revenue Code with
     respect to payments to be made under this  Credit  Agreement  and any Notes
     (and to deliver to the  Borrower  and the Agent two (2)  further  copies of
     such form on or before the date it expires  or becomes  obsolete  and after
     the  occurrence  of any  event  requiring  a change  in the  most  recently
     provided form and, if necessary,  obtain any extensions of time  reasonably
     requested  by the  Borrower  or the Agent for  filing and  completing  such
     forms),  and (iii) to the extent legally entitled to do so, upon reasonable
     request by the  Borrower,  provide to the Borrower  (for the benefit of the
     Borrower and the Agent) such other forms as may be  reasonably  required in
     order to  establish  the legal  entitlement  of such Lender to an exemption
     from  withholding  with respect to payments under this Credit Agreement and
     any Notes;

unless in any such case any change in treaty,  law or  regulation  has  occurred
after the date such Person  becomes a Lender  hereunder  which  renders all such
forms  inapplicable  or which would prevent such Lender from duly completing and
delivering  any such form with  respect  to it and such  Lender so  advises  the
Borrower and the Agent.  Each Person that shall become a Lender or a participant
of a Lender pursuant to subsection  11.3 shall,  upon the  effectiveness  of the
related transfer,  be required to provide all of the forms,  certifications  and
statements required pursuant to this subsection,  PROVIDED that in the case of a
participant of a Lender the obligations of such participant of a Lender pursuant
to this  subsection  (b) shall be determined as if the  participant  of a Lender
were a Lender  except that such  participant  of a Lender shall furnish all such
required  forms,  certifications  and  statements  to the Lender  from which the
related participation shall have been purchased and the Borrower and the Agent.

<PAGE>

          3.11 INDEMNITY.
               ---------

     The  Borrower  promises  to  indemnify  each Lender and to hold each Lender
harmless  from any loss or expense which such Lender may sustain or incur (other
than  through  such  Lender's  gross  negligence  or  willful  misconduct)  as a
consequence of (a) default by the Borrower in making a borrowing of,  conversion
into or continuation of Eurodollar Loans or CD Rate Loans after the Borrower has
given a notice  requesting  the same in accordance  with the  provisions of this
Credit  Agreement,  (b) default by the  Borrower in making any  prepayment  of a
Eurodollar  Loan or a CD Rate Loan after the Borrower has given a notice thereof
in accordance with the provisions of this Credit  Agreement or (c) the making of
a prepayment of Eurodollar Loans or CD Rate Loans on a day which is not the last
day of an Interest Period with respect thereto. With respect to Eurodollar Loans
and CD Rate  Loans,  such  indemnification  may  include an amount  equal to the
excess,  if any, of (i) the amount of interest  which would have  accrued on the
amount so prepaid,  or not so borrowed,  converted or continued,  for the period
from the date of such  prepayment  or of such  failure  to  borrow,  convert  or
continue to the last day of the applicable Interest Period (or, in the case of a
failure to borrow,  convert or  continue,  the  Interest  Period that would have
commenced on the date of such  failure) in each case at the  applicable  rate of
interest  for such  Eurodollar  Loans or CD Rate Loans  provided for herein over
(ii) with respect to  Eurodollar  Loans,  the amount of interest (as  reasonably
determined  by such  Lender)  which  would have  accrued to such  Lender on such
amount by placing  such amount on deposit for a  comparable  period with leading
banks in the interbank  Eurodollar  market, or with respect to CD Rate Loans the
amount of interest (as  reasonably  determined  by such Lender) which would have
accrued to such Lender on such amount by placing such amount as a certificate of
deposit.  The  covenants  of the  Borrower  set forth in this Section 3.11 shall
survive the  termination  of this Credit  Agreement and the payment of the Loans
and all other amounts payable hereunder.


          3.12 PRO RATA TREATMENT.
               ------------------

     Except to the extent otherwise provided herein:

     (a) LOANS. Each Extension of Credit in respect of Revolving Loans,  Foreign
Currency Loans and LOC Obligations and payments of principal,  interest and fees
(including  Unused Fee and Letter of Credit  Fee) on or in respect  thereof  and
each  reduction  in  Commitments,  relating  thereto,  and  each  conversion  or
extension of such Loans and  Obligations,  shall be allocated pro rata among the
Lenders in accordance with the respective principal amounts of their outstanding
Revolving Loans or Foreign Currency Loans and Participation Interests.

     (b)  ADVANCES.  Unless the Agent shall have been notified in writing by any
Lender prior to a borrowing that such Lender will not make the amount that would
constitute its ratable share of such borrowing available to the Agent, the Agent
may assume that such Lender is making such amount  available  to the Agent,  and
the Agent may, in reliance upon such assumption,  make available to the Borrower
a  corresponding  amount.  If such amount is not made  available to the Agent by
such Lender within the time period  specified  therefor  hereunder,  such Lender
shall pay to the Agent, on demand, such amount with interest thereon (or, in the

<PAGE>

case of a Foreign Currency Loan interest on the daily Dollar Equivalent thereof)
at a rate equal to the Federal Funds Rate for the period until such Lender makes
such amount  immediately  available  to the Agent.  A  certificate  of the Agent
submitted to any Lender with respect to any amounts owing under this  subsection
shall be conclusive in the absence of manifest error.


          3.13 SHARING OF PAYMENTS.
               -------------------

     The Lenders agree among themselves that, in the event that any Lender shall
obtain payment in respect of any Loan, LOC  Obligations or any other  obligation
owing to such Lender under this Credit Agreement through the exercise of a right
of setoff,  banker's lien or counterclaim,  or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other  security or interest
arising from, or in lieu of, such secured  claim,  received by such Lender under
any applicable bankruptcy,  insolvency or other similar law or otherwise,  or by
any other means, in excess of its pro rata share of such payment as provided for
in this Credit  Agreement,  such Lender shall  promptly  purchase from the other
Lenders a participation in such Loans, LOC Obligations and other  obligations in
such  amounts,  and make such other  adjustments  from time to time, as shall be
equitable  to the end that all Lenders  share such  payment in  accordance  with
their respective  ratable shares as provided for in this Credit  Agreement.  The
Lenders  further agree among  themselves that if payment to a Lender obtained by
such  Lender  through  the  exercise  of  a  right  of  setoff,  banker's  lien,
counterclaim or other event as aforesaid shall be rescinded or must otherwise be
restored, each Lender which shall have shared the benefit of such payment shall,
by  repurchase of a  participation  theretofore  sold,  return its share of that
benefit  (together with its share of any accrued  interest  payable with respect
thereto) to each Lender  whose  payment  shall have been  rescinded or otherwise
restored. The Borrower agrees that any Lender so purchasing such a participation
may, to the fullest  extent  permitted  by law,  exercise all rights of payment,
including  setoff,   banker's  lien  or  counterclaim,   with  respect  to  such
participation  as  fully  as if such  Lender  were a holder  of such  Loan,  LOC
Obligations or other obligation in the amount of such  participation.  Except as
otherwise  expressly  provided  in this Credit  Agreement,  if any Lender or the
Agent shall fail to remit to the Agent or any other Lender an amount  payable by
such  Lender or the Agent to the Agent or such  other  Lender  pursuant  to this
Credit  Agreement on the date when such amount is due,  such  payments  shall be
made together  with interest  thereon for each date from the date such amount is
due until the date such  amount is paid to the Agent or such  other  Lender at a
rate per  annum  equal to the  Federal  Funds  Rate.  If  under  any  applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a setoff to which this Section 3.13 applies,  such Lender  shall,  to
the extent practicable,  exercise its rights in respect of such secured claim in
a manner  consistent  with the rights of the Lenders  under this Section 3.13 to
share in the benefits of any recovery on such secured claim.


          3.14 PAYMENTS, COMPUTATIONS, ETC.
               ---------------------------

     (a) Each payment on account of an amount due from the Borrower hereunder or
under  any  other  Credit  Document  shall  be  made  by  the  Borrower  to  the
Administrative Agent for the PRO RATA account of the Lenders entitled to receive

<PAGE>

such  payment  as  provided  herein  in the  currency  in which  such  amount is
denominated  and in such funds as are customary at the place and time of payment
for the settlement of international payments in such currency.  Without limiting
the terms of the preceding  sentence,  accrued interest on any Loans denominated
in a Foreign  Currency  shall be payable in the same  Foreign  Currency  as such
Loan.  Upon  request,  the Agent will give the Borrower a statement  showing the
computation used in calculating such amount, which statement shall be conclusive
in the absence of manifest  error.  The  obligation of the Borrower to make each
payment on  account  of such  amount in the  currency  in which  such  amount is
denominated  shall not be discharged or satisfied by any tender, or any recovery
pursuant to any  judgment,  which is expressed  in or  converted  into any other
currency,  except to the extent  such  tender or  recovery  shall  result in the
actual  receipt  by the  Agent of the full  amount in the  appropriate  currency
payable hereunder.  The Borrower agrees that its obligation to make each payment
on account of such amount in the  currency  in which such amount is  denominated
shall be enforceable as an additional or alternative  claim for recovery in such
currency of the amount (if any) by which such actual receipt shall fall short of
the full amount of such currency payable hereunder, and shall not be affected by
judgment being obtained for such amount.

     (b)  Except  as  otherwise   specifically  provided  herein,  all  payments
hereunder shall be made to the Agent in dollars in immediately  available funds,
without  offset,  deduction,  counterclaim  or  withholding  of any kind, at the
Agent's  office  specified in Section 11.1 not later than 2:00 P.M.  (Charlotte,
North  Carolina  time) on the date when due.  Payments  received after such time
shall be deemed to have been received on the next  succeeding  Business Day. The
Agent may (but shall not be  obligated  to) debit the amount of any such payment
which is not made by such time to any ordinary  deposit  account of the Borrower
maintained with the Agent (with notice to the Borrower).  The Borrower shall, at
the time it makes any payment under this Credit Agreement,  specify to the Agent
the Loans,  LOC  Obligations,  Fees,  interest or other  amounts  payable by the
Borrower hereunder to which such payment is to be applied (and in the event that
it fails so to specify,  or if such application  would be inconsistent  with the
terms  hereof,  the Agent shall  distribute  such payment to the Lenders in such
manner as the Agent may determine to be  appropriate  in respect of  obligations
owing by the Borrower hereunder,  subject to the terms of Section 3.12(a)).  The
Agent will distribute such payments to such Lenders, if such payment is received
prior to 12:00 Noon  (Charlotte,  North Carolina time) on a Business Day in like
funds as received  prior to the end of such Business Day and otherwise the Agent
will  distribute  such payment to such Lenders on the next  succeeding  Business
Day.  Whenever any payment hereunder 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 (subject to accrual of interest and Fees for the period
of  such  extension),  except  that  in the  case of  Eurodollar  Loans,  if the
extension  would  cause the  payment to be made in the next  following  calendar
month,  then such payment shall instead be made on the next  preceding  Business
Day. Except as expressly provided otherwise herein, all computations of interest
and fees shall be made on the basis of actual number of days elapsed over a year
of 360 days,  except with respect to  computation of interest on Base Rate Loans
which  (unless the Base Rate is  determined  by reference  to the Federal  Funds
Rate) shall be calculated  based on a year of 365 or 366 days,  as  appropriate.
Interest  shall accrue from and include the date of  borrowing,  but exclude the
date of payment.


<PAGE>

     (c)  ALLOCATION  OF PAYMENTS  AFTER EVENT OF DEFAULT.  Notwithstanding  any
other provisions of this Credit Agreement to the contrary,  after the occurrence
and during the  continuance  of an Event of Default,  all amounts  collected  or
received by the Agent or any Lender on account of the  Obligations  or any other
amounts  outstanding  under any of the  Credit  Documents  shall be paid over or
delivered as follows:

          FIRST,  to the  payment  of all  reasonable  out-of-pocket  costs  and
     expenses (including without limitation  reasonable attorneys' fees actually
     incurred)  of the Agent in  connection  with  enforcing  the  rights of the
     Lenders under the Credit Documents;

          SECOND, to payment of any fees owed to the Agent;

          THIRD,  to the  payment  of all  reasonable  out-of-pocket  costs  and
     expenses (including without limitation, reasonable attorneys' fees actually
     incurred) of each of the Lenders in  connection  with  enforcing its rights
     under the Credit  Documents  or otherwise  with respect to the  Obligations
     owing to such Lender;

          FOURTH,  to the  payment  of all  accrued  interest  and fees on or in
     respect of the Obligations;

          FIFTH,  to the  payment  of the  outstanding  principal  amount of the
     Obligations  (including  the  payment  or  cash  collateralization  of  the
     outstanding LOC Obligations);

          SIXTH, to all other Obligations and other obligations which shall have
     become due and payable  under the Credit  Documents  or  otherwise  and not
     repaid pursuant to clauses "FIRST" through "FIFTH" above; and

          SEVENTH,  to the  payment of the  surplus,  if any,  to whoever may be
     lawfully entitled to receive such surplus.

In carrying  out the  foregoing,  (i) amounts  received  shall be applied in the
numerical  order  provided  until  exhausted  prior to  application  to the next
succeeding category;  and (ii) each of the Lenders shall receive an amount equal
to its pro rata  share  (based  on the  proportion  that  the  then  outstanding
Obligations  held  by  such  Lender  bears  to the  aggregate  then  outstanding
Obligations)  of amounts  available to be applied  pursuant to clauses  "THIRD",
"FOURTH",  "FIFTH" and "SIXTH"  above;  and (iii) to the extent that any amounts
available for distribution  pursuant to clause "FIFTH" above are attributable to
the issued but undrawn  amount of  outstanding  Letters of Credit,  such amounts
shall be held by the Agent in a cash  collateral  account and applied (A) first,
to reimburse  the Issuing  Lender for any drawings  under such Letters of Credit
and (B) then, following the expiration or earlier cancellation of all Letters of
Credit,  to all other  obligations of the types described in clauses "FIFTH" and
"SIXTH" above in the manner provided in this Section 3.14(c).


<PAGE>
          3.15 EVIDENCE OF DEBT.
               ----------------

     (a) Each Lender shall maintain an account or accounts  evidencing each Loan
made by such Lender to the Borrower from time to time,  including the amounts of
principal  and interest  payable and paid to such Lender from time to time under
this Credit Agreement.  Each Lender will make reasonable efforts to maintain the
accuracy  of its  account or  accounts  and to  promptly  update its  account or
accounts from time to time, as necessary.

     (b) The Agent shall  maintain  the  Register  pursuant  to Section  11.3(c)
hereof,  and a subaccount  for each Lender,  in which  Register and  subaccounts
(taken  together) shall be recorded (i) the amount,  type and Interest Period of
each such Loan  hereunder,  (ii) the amount of any principal or interest due and
payable or to become  due and  payable to each  Lender  hereunder  and (iii) the
amount of any sum received by the Agent hereunder from or for the account of the
Borrower and each Lender's share thereof. The Agent will make reasonable efforts
to  maintain  the  accuracy  of the  subaccounts  referred  to in the  preceding
sentence  and to  promptly  update  such  subaccounts  from  time  to  time,  as
necessary.

     (c) The entries made in the accounts,  Register and subaccounts  maintained
pursuant to subsection  (b) of this Section 3.15 (and,  if  consistent  with the
entries  of the Agent,  subsection  (a)) shall be prima  facie  evidence  of the
existence  and amounts of the  obligations  of the  Borrower  therein  recorded;
PROVIDED,  HOWEVER,  that the failure of any Lender or the Agent to maintain any
such account,  such Register or such  subaccount,  as  applicable,  or any error
therein,  shall not in any manner affect the obligation of the Borrower to repay
the Loans made by such Lender in accordance with the terms hereof.


          3.16 REPLACEMENT OF LENDERS.
               ----------------------

     If any Lender  requests  compensation  pursuant to Section 3.6, 3.8, 3.9 or
3.10 hereof,  or any Lender's  obligation to make,  convert into, or to continue
Eurodollar  Loans shall be suspended  pursuant to Section 3.8 or 3.9 hereof (any
such Lender being herein called a "REQUESTING LENDER"),  the Borrower,  upon ten
(10) Business  Days' notice to the Agent and the  Requesting  Lender may require
that such Requesting Lender execute and deliver an Assignment  Agreement whereby
the  Requesting  Lender shall assign its entire  Commitment to any bank or other
financial  institution (a "PROPOSED LENDER")  identified by the Borrower that is
reasonably  satisfactory  to the Agent  (i) if such  Proposed  Lender  agrees to
assume  all of the  obligations  of such  Requesting  Lender  hereunder,  and to
purchase all of such Requesting Lender's Loans hereunder for consideration equal
to the aggregate outstanding principal amount of such Requesting Lender's Loans,
together with interest  thereon to the date of such purchase,  and  satisfactory
arrangements  are made for payment to such Requesting  Lender of all other costs
and amounts payable  hereunder to such Requesting Lender on or prior to the date
of such  transfer  (including  any fees accrued  hereunder  and any amounts that
would  be  payable  under  Section  3.11  hereof,  as if all of such  Requesting
Lender's  Loans  were  being  prepaid  in full on such  date)  and  (ii) if such
Requesting Lender has requested  compensation  pursuant to Section 3.6, 3.8, 3.9
or 3.10 hereof, such Proposed Lender's aggregate requested compensation, if any,
pursuant to said Section 3.6,  3.8, 3.9 or 3.10 with respect to such  Requesting

<PAGE>

Lender's Loans is lower than that of the Requesting Lender;  PROVIDED that in no
event will (a) the Agent or any Lender be  obligated  to assist the  Borrower in
identifying  any entity  that is willing to become a Proposed  Lender or (b) any
such  assignment  be required if the  consummation  thereof  conflicts  with any
Requirement  of Law. Such  Proposed  Lender shall be a "Lender" for all purposes
hereunder.


                                    SECTION 4
                                    GUARANTY
                                    --------

          4.1 THE GUARANTEE.
              ------------- 

     Each of the  Guarantors  hereby  jointly and  severally  guarantees to each
Lender,  to each Affiliate of a Lender that enters into a Hedging  Agreement and
to the Agent as  hereinafter  provided  the  prompt  payment  of the  Guaranteed
Obligations  in full  when due  (whether  at  stated  maturity,  as a  mandatory
prepayment,  by acceleration,  a mandatory cash  collateralization or otherwise)
strictly in accordance  with the terms thereof.  The  Guarantors  hereby further
agree that if any of the  Guaranteed  Obligations  are not paid in full when due
(whether at stated maturity,  as a mandatory  prepayment,  by  acceleration,  as
mandatory cash collateralization or otherwise), the Guarantors will, jointly and
severally,  promptly pay the same, without any demand or notice whatsoever,  and
that in the case of any  extension  of time of  payment or renewal of any of the
Guaranteed Obligations, the same will be promptly paid in full when due (whether
at extended maturity, as a mandatory  prepayment,  by acceleration or otherwise)
in accordance with the terms of such extension or renewal.

     Notwithstanding  any provision to the contrary  contained  herein or in any
other  of  the  Credit  Documents  or  Hedging  Agreements,  to the  extent  the
obligations of a Guarantor  shall be adjudicated to be invalid or  unenforceable
for any reason (including,  without limitation,  because of any applicable state
or federal  law  relating  to  fraudulent  conveyances  or  transfers)  then the
obligations of each Guarantor  hereunder  shall be limited to the maximum amount
that  is  permissible  under  applicable  law  (whether  federal  or  state  and
including, without limitation, the Bankruptcy Code).


          4.2 OBLIGATIONS UNCONDITIONAL.
              -------------------------

     The  obligations of the  Guarantors  under Section 4.1 hereof are joint and
several,  absolute and  unconditional,  irrespective of the value,  genuineness,
validity, regularity or enforceability of any of the Credit Documents or Hedging
Agreements,  or any other  agreement or instrument  referred to therein,  or any
substitution,  release or exchange of any other guarantee of or security for any
of  the  Guaranteed  Obligations,  and,  to  the  fullest  extent  permitted  by
applicable law,  irrespective of any other  circumstance  whatsoever which might
otherwise  constitute a legal or  equitable  discharge or defense of a surety or
guarantor,  it being the intent of this Section 4.2 that the  obligations of the

<PAGE>

Guarantors  hereunder  shall be  absolute  and  unconditional  under any and all
circumstances.  Each Guarantor agrees that such Guarantor shall have no right of
subrogation,  indemnity,  reimbursement or contribution  against the Borrower or
any other  Guarantor of the Guaranteed  Obligations  for amounts paid under this
Guaranty until such time as the Lenders (and any Affiliates of Lenders  entering
into  Hedging  Agreements)  have been paid in full,  all  Commitments  under the
Credit  Agreement have been terminated and no Person or  Governmental  Authority
shall have any right to request  any return or  reimbursement  of funds from the
Lenders in connection with monies received under the Credit Documents or Hedging
Agreements. Without limiting the generality of the foregoing, it is agreed that,
to the fullest extent permitted by law, the occurrence of any one or more of the
following  shall not alter or impair the  liability of any  Guarantor  hereunder
which shall remain absolute and unconditional as described above:

          (i) at any time or from time to time, without notice to any Guarantor,
     the time for any  performance  of or compliance  with any of the Guaranteed
     Obligations  shall be extended,  or such performance or compliance shall be
     waived;

          (ii) any of the acts  mentioned in any of the provisions of any of the
     Credit  Documents,   any  Hedging  Agreement  or  any  other  agreement  or
     instrument  referred to in the Credit Documents or Hedging Agreements shall
     be done or omitted;

          (iii)  the  maturity  of any of the  Guaranteed  Obligations  shall be
     accelerated,  or any of  the  Guaranteed  Obligations  shall  be  modified,
     supplemented  or  amended  in any  respect,  or any right  under any of the
     Credit  Documents,   any  Hedging  Agreement  or  any  other  agreement  or
     instrument  referred to in the Credit Documents or Hedging Agreements shall
     be waived or any other  guarantee of any of the  Guaranteed  Obligations or
     any security therefor shall be released or exchanged in whole or in part or
     otherwise dealt with;

          (iv) any Lien  granted  to, or in favor of, the Agent or any Lender or
     Lenders as security  for any of the  Guaranteed  Obligations  shall fail to
     attach or be perfected; or

          (v) any of the Guaranteed  Obligations  shall be determined to be void
     or voidable (including, without limitation, for the benefit of any creditor
     of any  Guarantor)  or shall be  subordinated  to the  claims of any Person
     (including, without limitation, any creditor of any Guarantor).

With respect to its  obligations  hereunder,  each  Guarantor  hereby  expressly
waives  diligence,  presentment,  demand of  payment,  protest  and all  notices
whatsoever,  and any requirement that the Agent or any Lender exhaust any right,
power or remedy or proceed against any Person under any of the Credit Documents,
any Hedging  Agreement or any other  agreement or instrument  referred to in the
Credit  Documents or Hedging  Agreements,  or against any other Person under any
other guarantee of, or security for, any of the Guaranteed Obligations.


<PAGE>

          4.3 REINSTATEMENT.
              -------------

     The   obligations  of  the  Guarantors   under  this  Section  4  shall  be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Guaranteed Obligations is rescinded
or  must  be  otherwise  restored  by  any  holder  of  any  of  the  Guaranteed
Obligations,   whether  as  a  result  of  any   proceedings  in  bankruptcy  or
reorganization  or otherwise,  and each Guarantor  agrees that it will indemnify
the  Agent  and each  Lender on demand  for all  reasonable  costs and  expenses
(including,  without  limitation,  reasonable  fees  and  expenses  of  counsel)
incurred  by the Agent or such  Lender in  connection  with such  rescission  or
restoration, including any such costs and expenses incurred in defending against
any claim  alleging  that such  payment  constituted  a  preference,  fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.

          4.4 REMEDIES.
              --------

     The  Guarantors  agree that,  to the fullest  extent  permitted  by law, as
between the Guarantors,  on the one hand, and the Agent and the Lenders,  on the
other hand, the Guaranteed  Obligations  may be declared to be forthwith due and
payable as  provided  in Section  9.2 hereof (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section 9.2)
for purposes of Section 4.1 hereof notwithstanding any stay, injunction or other
prohibition   preventing   such   declaration   (or  preventing  the  Guaranteed
Obligations  from becoming  automatically  due and payable) as against any other
Person and that, in the event of such declaration (or the Guaranteed Obligations
being  deemed to have become  automatically  due and  payable),  the  Guaranteed
Obligations (whether or not due and payable by any other Person) shall forthwith
become due and payable by the Guarantors for purposes of said Section 4.1.

          4.5 RIGHTS OF CONTRIBUTION.
              ----------------------

     The Guarantors  hereby agree,  as among  themselves,  that if any Guarantor
shall  become an  Excess  Funding  Guarantor  (as  defined  below),  each  other
Guarantor shall, on demand of such Excess Funding  Guarantor (but subject to the
succeeding provisions of this Section 4.5), pay to such Excess Funding Guarantor
an  amount  equal to such  Guarantor's  Pro Rata  Share  (as  defined  below and
determined,  for this  purpose,  without  reference to the  properties,  assets,
liabilities  and debts of such Excess Funding  Guarantor) of such Excess Payment
(as  defined  below).  The payment  obligation  of any  Guarantor  to any Excess
Funding  Guarantor  under this Section 4.5 shall be  subordinate  and subject in
right  of  payment  to the  prior  payment  in full of the  obligations  of such
Guarantor under the other  provisions of this Section 4, and such Excess Funding
Guarantor  shall not  exercise  any right or remedy with  respect to such excess
until payment and satisfaction in full of all of such obligations.  For purposes
hereof, (i) "EXCESS FUNDING Guarantor" shall mean, in respect of any obligations
arising under the other provisions of this Section 4 (hereafter, the "GUARANTIED
OBLIGATIONS"),  a  Guarantor  that has paid an  amount in excess of its Pro Rata
Share of the  Guarantied  Obligations;  (ii)  "EXCESS  PAYMENT"  shall mean,  in
respect of any  Guarantied  Obligations,  the amount  paid by an Excess  Funding
Guarantor in excess of its Pro Rata Share of such  Guarantied  Obligations;  and

<PAGE>

(iii) "PRO RATA SHARE",  for the purposes of this Section 4.5,  shall mean,  for
any Guarantor,  the ratio (expressed as a percentage) of (a) the amount by which
the aggregate  present fair saleable  value of all of its assets and  properties
exceeds the amount of all debts and  liabilities  of such  Guarantor  (including
contingent, subordinated, unmatured, and unliquidated liabilities, but excluding
the  obligations  of such  Guarantor  hereunder)  to (b) the amount by which the
aggregate  present fair saleable value of all assets and other properties of the
Borrower  and all of the  Guarantors  exceeds the amount of all of the debts and
liabilities (including  contingent,  subordinated,  unmatured,  and unliquidated
liabilities,  but excluding the  obligations  of the Borrower and the Guarantors
hereunder) of the Borrower and all of the Guarantors, all as of the Closing Date
(if any Guarantor  becomes a party hereto  subsequent to the Closing Date,  then
for the purposes of this Section 4.5 such  subsequent  Guarantor shall be deemed
to have been a Guarantor as of the Closing Date and the  information  pertaining
to, and only pertaining to, such Guarantor as of the date such Guarantor  became
a Guarantor shall be deemed true as of the Closing Date).

          4.6 CONTINUING GUARANTEE.
              --------------------

     The guarantee in this Section 4 is a continuing guarantee,  and shall apply
to all Guaranteed Obligations whenever arising.

          4.7 CERTAIN ADDITIONAL WAIVERS.
              --------------------------

     Without  limiting the  generality of the provisions of this Section 4, each
Guarantor hereby  specifically  waives the benefits of N.C. Gen. Stat.  Sections
26-7 through 26-9, inclusive,  to the extent applicable.  Each Guarantor further
agrees that such  Guarantor  shall have no right of recourse to security for the
Guaranteed Obligations, except through the exercise of the rights of subrogation
pursuant  to Section 4.2 and  through  the  exercise  of rights of  contribution
pursuant to Section 4.5.

          4.8 RELEASE OF GUARANTOR.
              --------------------

     In the event of a sale or other  disposition of all of the capital stock of
any  Guarantor,  by way of a  merger,  consolidation  or  otherwise,  then  such
Guarantor (in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise,  of all of the capital stock of such Guarantor) will
be released and relieved of any obligations  under the guarantee in this Section
4; PROVIDED that at the time of such  disposition no Default or Event of Default
(i) shall have  occurred and is  continuing or (ii) would occur as a result from
such  disposition.  Upon request of the  Borrower,  the Agent shall  execute and
deliver to Borrower an instrument evidencing any such release in accordance with
this Section 4.8.


<PAGE>

                                    SECTION 5
                                   CONDITIONS
                                   ----------

          5.1 CONDITIONS TO CLOSING.
              ---------------------

     This Credit Agreement shall become effective, and the initial Extensions of
Credit may be made, upon the satisfaction of the following conditions precedent:

     (a)  EXECUTION OF CREDIT  AGREEMENT  AND CREDIT  DOCUMENTS.  Receipt of (i)
multiple  counterparts of this Credit Agreement,  (ii) a Revolving Note for each
Lender,  and  a  Swingline  Note  for  the  Swingline  Lender,   (iii)  multiple
counterparts of the Pledge Agreement, (iv) multiple counterparts of the Security
Agreement and UCC financing  statements  relating thereto, if any, executed by a
duly authorized officer of each party thereto and in each case conforming to the
requirements of this Credit Agreement.

     (b)  ABSENCE  OF LEGAL  PROCEEDINGS.  There  shall not exist any (i) order,
decree,  judgment,  ruling or injunction which restrains the consummation of the
acquisition of the Acquired  Assets in the manner  contemplated  by the Purchase
Agreement  or  (ii)  pending  or  threatened  action,  suit,   investigation  or
proceeding  which if  adversely  determined  against the  Borrower or any of its
Subsidiaries  would  have or would  reasonably  be  expected  to have a Material
Adverse Effect.

     (c) LEGAL  OPINIONS.  Receipt of opinions of counsel for the Credit Parties
relating to the Credit Documents and the transactions  contemplated  herein,  in
form and substance satisfactory to the Agent and the Required Lenders.

     (d) BORROWING  BASE  CERTIFICATE.  Receipt by the Agent of a Borrowing Base
Certificate  dated as of the date hereof in form and substance  satisfactory  to
the Agent.

     (e)  CORPORATE  DOCUMENTS.  Receipt of the following for each of the Credit
Parties:

          (i) ARTICLES OF INCORPORATION. Copies of the articles of incorporation
     or charter documents  certified to be true and complete as of a recent date
     by  the   appropriate   governmental   authority   of  the   state  of  its
     incorporation.

          (ii)  RESOLUTIONS.  Copies of  resolutions  of the Board of  Directors
     approving and adopting the respective  Credit  Documents,  the transactions
     contemplated  therein  and  authorizing  execution  and  delivery  thereof,
     certified by a secretary  or assistant  secretary as of the Closing Date to
     be true and correct and in force and effect as of such date.

          (iii)  BYLAWS.  Copies  of the  bylaws  certified  by a  secretary  or
     assistant  secretary  as of the Closing  Date to be true and correct and in
     force and effect as of such date.


<PAGE>

          (iv) GOOD STANDING.  Copies, where applicable, of certificates of good
     standing,  existence or its equivalent certified as of a recent date by the
     appropriate governmental authorities of the state of incorporation.

          (v)  INCUMBENCY.  An  incumbency  certificate  of  each  Credit  Party
     certified by a secretary  or assistant  secretary to be true and correct as
     of the Closing Date.

     (f)  PERSONAL  PROPERTY  COLLATERAL.  Receipt of the  following in form and
substance satisfactory to the Agent:

          (i)  searches  of  Uniform  Commercial  Code  ("UCC")  filings  in the
     jurisdiction  of the chief  executive  office of the each Credit  Party and
     each  jurisdiction  where any Collateral is located or where a filing would
     need to be made in order to perfect the Agents' security interest,  for the
     behalf of Lenders, in the Collateral, copies of the financing statements on
     file in such  jurisdictions  and  evidence  that no Liens  exist other than
     Permitted Liens; and

          (ii) duly  executed  UCC  financing  statements  for each  appropriate
     jurisdiction as is necessary,  in the Agent's sole  discretion,  to perfect
     the  Lenders'  security  interest,  for the behalf of the  Lenders,  in the
     Collateral.

     (g)  EVIDENCE  OF  INSURANCE.  Receipt by the Agent of copies of  insurance
policies or  certificates  of  insurance  of the  Borrower  evidencing  casualty
insurance meeting the requirements set forth in the Credit Documents, including,
but not limited to, naming the Agent as sole loss payee on behalf of the Lenders
with respect to the Collateral.

     (h) SENIOR DEBT.  (i) The Borrower  shall have entered into the Senior Note
Indenture,  (ii) the Borrower  shall have executed the Senior  Notes,  (iii) the
Agent shall have  received a copy,  certified  by an officer of the  Borrower as
true and complete,  of the Senior Note Indenture and each of the Senior Notes as
originally  executed and  delivered,  and no amendment or  modification  thereof
shall have been  entered  into on or prior to the  Closing  Date which shall not
have been  approved  by each of the  Lenders  and (iv) the  Borrower  shall have
received proceeds from the sale of Senior Notes in an aggregate principal amount
of $175,000,000.00.

     (i) OFFICER'S  CERTIFICATE.  The Agent shall have received a certificate or
certificates  executed  by an officer of the  Borrower  as of the  Closing  Date
stating  that (A) the Borrower and each of the  Borrower's  Subsidiaries  are in
compliance  with  all  existing   material   financial   obligations,   (B)  all
governmental,  shareholder and third party consents and approvals,  if any, with
respect to the Credit Documents and the transactions  contemplated  thereby have
been obtained,  (C) no action,  suit,  investigation or proceeding is pending or
threatened in any court or before any arbitrator or governmental instrumentality
that purports to effect the Borrower, any of the Borrower's  Subsidiaries or any
transaction  contemplated  by the  Credit  Documents,  or could have or might be
reasonably  expected to have a Material  Adverse  Effect,  (D) the  transactions
contemplated by the Purchase  Agreement have been consummated in accordance with
the terms  thereof  and (E)  immediately  after  giving  effect  to this  Credit

<PAGE>

Agreement,  the other Credit  Documents  and all the  transactions  contemplated
herein  or  therein  to occur on such  date,  (1) the  Borrower  and each of the
Borrower's  Subsidiaries is Solvent,  (2) no Default or Event of Default exists,
(3) all representations and warranties  contained herein and in the other Credit
Documents are true and correct in all material respects, and (4) the Borrower is
in compliance with each of the financial covenants set forth in Section 7.9.

     (j) PURCHASE  AGREEMENT.  The acquisition of the Acquired Assets shall have
been consummated in accordance with the terms of the Purchase  Agreement and all
applicable law.

     (k) FEES.  Receipt of all fees and  expenses  owed to the  Lenders  and the
Agent,  including,  without  limitation,  any fees set forth in the  Agent's Fee
Letter.

     (l) FIRST PRIORITY LIEN.  Receipt by the Agent of evidence  satisfactory in
form and substance to the Agent, that the Agent, on behalf of the Lenders, holds
a  perfected,  first  priority  lien,  subject to no other  Liens other than the
Permitted Liens, in the Collateral.

     (m) PAYMENT OF PRIOR CREDIT FACILITY. Receipt by the Agent of evidence that
all indebtedness  under the Prior Credit Agreement has been paid in full and all
obligations  thereunder  (other than those  indemnifications  that  specifically
survive) have been terminated.

     (n) ADDITIONAL MATTERS. All other documents and legal matters in connection
with the transactions  contemplated by this Credit Agreement shall be reasonably
satisfactory in form and substance to the Agent and the Required Lenders.

          5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
              --------------------------------------

     The  obligation  of each Lender to make any  Extension of Credit  hereunder
(including the initial  Extension of Credit to be made  hereunder) is subject to
the  satisfaction  of the following  conditions  precedent on the date of making
such Extension of Credit:

     (a) NOTICE.  The Borrower  shall have  delivered (i) in the case of any new
Revolving Loan or Foreign  Currency  Loan, a Notice of Borrowing,  duly executed
and  completed in  accordance  with the terms hereof and (ii) in the case of any
extension or  conversion  of a Loan, a duly  executed  and  completed  Notice of
Extension/Conversion by the time specified in Section 3.2.

     (b) REPRESENTATIONS AND WARRANTIES. The representations and warranties made
by the Borrower  herein or in any other Credit  Documents or which are contained
in any certificate  furnished at any time under or in connection  herewith shall
be true  and  correct  in all  material  respects  on and as of the date of such
Extension  of Credit as if made on and as of such date  (except  for those which
expressly relate to an earlier date).


<PAGE>

     (c) NO DEFAULT OR EVENT OF  DEFAULT.  No Default or Event of Default  shall
have  occurred  and be  continuing  on such date or after  giving  effect to the
Extension  of Credit to be made on such date  unless  such  Default  or Event of
Default shall have been waived in accordance with this Credit Agreement.

     (d) NO MATERIAL  ADVERSE  EFFECT.  No  circumstances,  events or conditions
shall  have  occurred  since  the  date  of  the  audited  financial  statements
referenced in Section 6.1 which would have a Material Adverse Effect.

     Each request for Extension of Credit (including extensions and conversions)
and each  acceptance  by the  Borrower  of an  Extension  of  Credit  (including
extensions and conversions)  shall be deemed to constitute a representation  and
warranty  by the  Borrower as of the date of such  Extension  of Credit that the
applicable  conditions in paragraphs  (b), (c) and (d) of this  subsection  have
been satisfied.


                                    SECTION 6
                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

     To induce  the  Lenders  to enter into this  Credit  Agreement  and to make
Extensions  of Credit herein  provided for, each Credit Party hereby  represents
and warrants to the Agent and to each Lender that:

          6.1 FINANCIAL CONDITION.
              -------------------

     The financial  statements of the Borrower and its Subsidiaries set forth on
pages F-3 through  F-43 of the  Offering  Memorandum  dated  November  20, 1997,
relating  to the  Senior  Notes  have  been  prepared  in  accordance  with GAAP
consistently applied throughout the periods covered thereby (except as otherwise
stated therein and except that the interim  financial  statements do not include
all footnotes required by GAAP), and present fairly in all material respects the
financial  condition  and results  from  operations  of the entities and for the
periods specified, subject in the case of interim company-prepared statements to
normal year-end adjustments.

          6.2 NO CHANGES OR RESTRICTED PAYMENTS.
              --------------------------------- 

     Since the date of the audited  financial  statements  referenced in Section
6.1, (a) there has been no  circumstance,  development  or event  relating to or
affecting  the  Borrower  or any of its  Subsidiaries  which has had or would be
reasonably  expected  to have a  Material  Adverse  Effect,  and (b)  except  as
permitted  herein,  no  Restricted  Payments  have been made or  declared or are
contemplated by the Borrower or any of its Subsidiaries.


<PAGE>

          6.3 ORGANIZATION; EXISTENCE; COMPLIANCE WITH LAW.
              --------------------------------------------

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

          6.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
              ---------------------------------------------

     Each Credit Party has the corporate or other necessary power and authority,
and the legal right, to make,  deliver and perform the Credit Documents to which
it is a party and has taken all  necessary  corporate  action to  authorize  the
execution, delivery and performance by it of the Credit Documents to which it is
a party. No consent or authorization  of, filing with, notice to or other act by
or in respect of, any Governmental  Authority or any other Person is required in
connection  with the  borrowings  hereunder or with the  execution,  delivery or
performance of any Credit  Documents by any Credit Party (other than those which
have  been  obtained)  or with the  validity  or  enforceability  of any  Credit
Document  against  such Credit Party  (except  such filings as are  necessary in
connection  with the perfection of the Liens created by such Credit  Documents).
Each  Credit  Document  to which it is a party  constitutes  a legal,  valid and
binding obligation of each Credit Party enforceable against such Credit Party in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general  equitable  principles
(whether enforcement is sought by proceedings in equity or at law).

          6.5 NO LEGAL BAR.
              ------------

     The  execution,  delivery  and  performance  of the Credit  Documents,  the
borrowings  hereunder  and the use of the  Extensions of Credit will not violate
any Requirement of Law or any Contractual  Obligation of any Credit Party or any
of its  Subsidiaries.  None of the Credit Parties nor any of its Subsidiaries is
in default under or with respect to any of its  Contractual  Obligations  in any
respect which would reasonably be expected to have a Material Adverse Effect.


<PAGE>

          6.6 NO MATERIAL LITIGATION.
              ----------------------

     No  claim,  litigation,  investigation  or  proceeding  of  or  before  any
arbitrator or Governmental Authority is pending or, to the best knowledge of any
Credit Party,  threatened by or against, the Borrower or any of its Subsidiaries
or against any of their  respective  properties or revenues  which (a) relate to
the Credit Documents or any of the transactions  contemplated hereby or thereby,
or (b) would reasonably be expected to have a Material Adverse Effect.

          6.7 NO DEFAULT.
              ---------- 

     No Default or Event of Default has occurred and is continuing.

          6.8 OWNERSHIP OF PROPERTY; LIENS.
              ----------------------------

     The Borrower and each of its  Subsidiaries  has good record and  marketable
title in fee simple to, or a valid leasehold  interest in, all its material real
property,  and good title to, or a valid  leasehold  interest  in, all its other
material property,  and none of such property is subject to any Lien, except for
Permitted Liens.

          6.9 INTELLECTUAL PROPERTY.
              ---------------------

     The Borrower and each of its  Subsidiaries  owns, or has the legal right to
use, all United States trademarks,  tradenames, copyrights, technology, know-how
and  processes,  if any,  necessary  for each of them to conduct its business as
currently  conducted (the "INTELLECTUAL  PROPERTY") except for those the failure
to own or have such legal right to use would not be reasonably  expected to have
a Material  Adverse  Effect.  No claim has been  asserted  and is pending by any
Person  challenging or questioning the use of any such Intellectual  Property or
the validity or effectiveness of any such  Intellectual  Property,  nor does any
Credit Party know of any such claim, and the use of such  Intellectual  Property
by the  Borrower or any of its  Subsidiaries  does not infringe on the rights of
any Person,  except for such  claims and  infringements  that in the  aggregate,
would not be reasonably expected to have a Material Adverse Effect.

          6.10 NO BURDENSOME RESTRICTIONS.
               --------------------------

     No Requirement  of Law or Contractual  Obligation of the Borrower or any of
its Subsidiaries would be reasonably expected to have a Material Adverse Effect.


<PAGE>

          6.11 TAXES.
               -----

     The  Borrower  and each of its  Subsidiaries  (a) has filed or caused to be
filed all United States  federal  income tax returns and all other  material tax
returns  required to be filed and (b) has paid (i) all taxes shown to be due and
payable  on said  returns,  (ii) all taxes  shown to be due and  payable  on any
assessments  of which  it has  received  notice  made  against  it or any of its
property and (iii) all other taxes,  fees or other charges  imposed on it or any
of its property by any Governmental Authority (other than in the case of (b)(i),
(ii) and (iii) above, any (x) taxes, fees or other charges with respect to which
the failure to pay, in the aggregate,  would not have a Material Adverse Effect,
(y) taxes,  fees or other  charges the amount or validity of which are currently
being  contested and with respect to which reserves in conformity with GAAP have
been  provided on the books of such Person or (z) taxes,  fees or other  charges
which are not past due),  and (c) no tax Lien has been  filed,  and, to the best
knowledge of the Credit Parties, no claim is being asserted, with respect to any
such tax, fee or other charge other than any tax Liens,  which in the aggregate,
would not have a Material Adverse Effect.

          6.12 ERISA
               -----

     Except as would not  reasonably  be  expected  to have a  Material  Adverse
Effect:

     (a)  During  the  five-year   period  prior  to  the  date  on  which  this
representation is made or deemed made: (i) no ERISA Event has occurred,  and, to
the best knowledge of the Credit Parties,  no event or condition has occurred or
exists as a result of which any ERISA  Event  could  reasonably  be  expected to
occur,  with respect to any Plan; (ii) no "accumulated  funding  deficiency," as
such  term is  defined  in  Section  302 of ERISA and  Section  412 of the Code,
whether or not waived,  has occurred  with respect to any Plan;  (iii) each Plan
has been maintained,  operated,  and funded in compliance with its own terms and
in material  compliance  with the  provisions of ERISA,  the Code, and any other
applicable  federal  or state  laws;  and (iv) no lien in favor of the PBGC or a
Plan has arisen or is reasonably likely to arise on account of any Plan.

     (b) The actuarial present value of all "benefit liabilities" (as defined in
Section 4001(a)(16) of ERISA), whether or not vested, under each Single Employer
Plan,  as of the last  annual  valuation  date  prior to the date on which  this
representation is made or deemed made  (determined,  in each case, in accordance
with Financial  Accounting Standards Board Statement 87, utilizing the actuarial
assumptions used in such Plan's most recent actuarial valuation report), did not
exceed as of such  valuation  date the fair  market  value of the assets of such
Plan.

     (c)  Neither  the  Borrower,  nor any of its  Subsidiaries  nor  any  ERISA
Affiliate has incurred,  or, to the best knowledge of the Credit Parties,  could
be reasonably  expected to incur,  any withdrawal  liability  under ERISA to any
Multiemployer Plan or Multiple Employer Plan.  Neither the Borrower,  nor any of
its  Subsidiaries nor any ERISA Affiliate would become subject to any withdrawal
liability  under ERISA if the  Borrower,  any of its  Subsidiaries  or any ERISA

<PAGE>

Affiliate were to withdraw  completely from all Multiemployer Plans and Multiple
Employer Plans as of the valuation date most closely preceding the date on which
this representation is made or deemed made. Neither the Borrower, nor any of its
Subsidiaries  nor any ERISA  Affiliate  has received any  notification  that any
Multiemployer  Plan is in reorganization  (within the meaning of Section 4241 of
ERISA),  is insolvent (within the meaning of Section 4245 of ERISA), or has been
terminated  (within the meaning of Title IV of ERISA), and no Multiemployer Plan
is, to the best knowledge of the Credit  Parties,  reasonably  expected to be in
reorganization, insolvent, or terminated.

     (d) No prohibited  transaction  (within the meaning of Section 406 of ERISA
or Section 4975 of the Code) or breach of fiduciary  responsibility has occurred
with respect to a Plan which has subjected or may subject the  Borrower,  any of
its  Subsidiaries  or any ERISA  Affiliate to any liability  under Sections 406,
409,  502(i),  or 502(l)  of ERISA or  Section  4975 of the  Code,  or under any
agreement  or other  instrument  pursuant  to  which  the  Borrower,  any of its
Subsidiaries  or any ERISA  Affiliate has agreed or is required to indemnify any
person against any such liability.

     (e)  Neither  the  Borrower,  nor any of its  Subsidiaries,  nor any  ERISA
Affiliates has any material liability with respect to "expected  post-retirement
benefit  obligations" within the meaning of the Financial  Accounting  Standards
Board  Statement  106.  Each Plan which is a welfare plan (as defined in Section
3(1) of ERISA) to which Sections  601-609 of ERISA and Section 4980B of the Code
apply has been  administered  in  compliance  in all  material  respects of such
sections.

          6.13 GOVERNMENTAL REGULATIONS, ETC.
               -----------------------------

     (a) No  part  of the  proceeds  of the  Loans  will be  used,  directly  or
indirectly,  for the purpose of purchasing or carrying any "margin stock" within
the meaning of Regulation G or Regulation U, or for the purpose of purchasing or
carrying or trading in any securities.  If requested by any Lender or the Agent,
the  Borrower  will  furnish  to the Agent and each  Lender a  statement  to the
foregoing  effect in conformity with the requirements of FR Form U-1 referred to
in said  Regulation  U. No  indebtedness  being  reduced or  retired  out of the
proceeds of the Loans was or will be incurred for the purpose of  purchasing  or
carrying  any margin  stock  within the meaning of  Regulation  U or any "margin
security"  within  the  meaning  of  Regulation  T.  None  of  the  transactions
contemplated by this Credit Agreement (including, without limitation, the direct
or  indirect  use of the  proceeds  of the  Loans)  will  violate or result in a
violation of the Securities Act of 1933, as amended,  or the Securities Exchange
Act of 1934, as amended,  or regulations issued pursuant thereto,  or Regulation
G, T, U or X.

     (b)  Neither  the  Borrower,  nor any of its  Subsidiaries,  is  subject to
regulation  under the Public  Utility  Holding  Company Act of 1935, the Federal
Power Act or the Investment  Company Act of 1940, each as amended.  In addition,
neither  the  Borrower,  nor  any of  its  Subsidiaries,  is (i) an  "investment
company"  registered or required to be registered  under the Investment  Company
Act of 1940,  as amended,  and is not  controlled  by such a company,  or (ii) a
"holding  company",  or a  "subsidiary  company" of a "holding  company",  or an
"affiliate" of a "holding company" or of a "subsidiary" of a "holding  company",
within  the  meaning of the  Public  Utility  Holding  Company  Act of 1935,  as
amended.


<PAGE>

     (c) The  Borrower  and each of its  Subsidiaries  has obtained all material
licenses,  permits, franchises or other governmental authorizations necessary to
the ownership of its respective Property and to the conduct of its business.

     (d) Neither the Borrower,  nor any of its  Subsidiaries  is in violation of
any applicable statute, regulation or ordinance of the United States of America,
or of any state, city, town, municipality,  county or any other jurisdiction, or
of any agency thereof  (including  without  limitation,  environmental  laws and
regulations),  which violation  could  reasonably be expected to have a Material
Adverse Effect.

     (e) The Borrower and each of its  Subsidiaries is current with all material
reports and  documents,  if any,  required to be filed with any state or federal
securities  commission  or  similar  agency  and is in  full  compliance  in all
material respects with all applicable rules and regulations of such commissions.

          6.14 PURPOSE OF EXTENSIONS OF CREDIT.
               -------------------------------

     The Loans will be used solely (a) to repay existing indebtedness and/or (b)
for other general corporate  purposes.  The Letters of Credit shall be used only
for the purposes set forth in Section 2.2(a).

          6.15 ENVIRONMENTAL MATTERS.
               ---------------------

     Except as would not  reasonably  be  expected  to have a  Material  Adverse
Effect:

     (a) Each of the facilities and properties owned,  leased or operated by the
Borrower or any of its Subsidiaries (the "PROPERTIES") and all operations at the
Properties are in compliance with all applicable  Environmental  Laws, and there
is no violation of any  Environmental  Law with respect to the Properties or the
businesses   operated  by  the  Borrower  or  any  of  its   Subsidiaries   (the
"BUSINESSES"),  and  there  are no  conditions  relating  to the  Businesses  or
Properties that could give rise to liability under any applicable  Environmental
Laws.

     (b) None of the Properties contains any Materials of Environmental  Concern
at, on or under the Properties in amounts or  concentrations  that constitute or
constituted a violation of, or could give rise to liability under, Environmental
Laws.

     (c) Neither the  Borrower  nor any of its  Subsidiaries  has  received  any
written notice from any Governmental Authority regarding, any violation, alleged
violation,   non-compliance,   liability   or  potential   liability   regarding
environmental  matters or compliance with  Environmental Laws with regard to any
of the Properties or the Businesses.


<PAGE>

     (d)  Materials  of  Environmental  Concern  have  not been  transported  or
disposed of from the Properties,  or generated,  treated,  stored or disposed of
at, on or under any of the Properties or any other location,  in each case by or
on behalf of the Borrower or any of its  Subsidiaries  in violation  of, or in a
manner that would be  reasonably  likely to give rise to  liability  under,  any
applicable Environmental Law.

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

     (f)  There has been no  release  or,  threat of  release  of  Materials  of
Environmental  Concern at or from the Properties,  or arising from or related to
the operations (including, without limitation,  disposal) of the Borrower or any
of its Subsidiaries in connection with the Properties or otherwise in connection
with the  Businesses,  in  violation  of or in amounts or in a manner that could
give rise to liability under Environmental Laws.

          6.16 FIRST PRIORITY LIEN.
               -------------------

     The Agent, on behalf of the Lenders,  holds a first priority lien,  subject
to no other Liens other than the Permitted Liens, in the Collateral.

          6.17 SUBSIDIARIES.
               ------------

     Set  forth  on  SCHEDULE  6.17  is a  complete  and  accurate  list  of all
Subsidiaries of the Borrower. Information on SCHEDULE 6.17 includes jurisdiction
of  incorporation,  the  number  of  shares  of  each  class  of  capital  stock
outstanding  and the number and percentage of  outstanding  shares of each class
owned  (directly  or  indirectly)  by the  Borrower.  There  are no  outstanding
options,  warrants, rights of conversion or purchase or any other similar rights
with  respect  to  shares  of any  of the  Subsidiaries  of  the  Borrower.  The
outstanding capital stock of each such Subsidiary is validly issued,  fully paid
and  non-assessable and is owned by the Borrower,  directly or indirectly,  free
and clear of all Liens  (other  than  those  arising  under or  contemplated  in
connection with the Credit Documents).


                                    SECTION 7
                              AFFIRMATIVE COVENANTS
                              ---------------------

     Each  Credit  Party  covenants  and  agrees  that so  long  as this  Credit
Agreement  is in effect  and  until the  Commitments  have been  terminated,  no

<PAGE>

Obligations  remain  outstanding  and all amounts due hereunder or in connection
herewith  have  been paid in full,  the  Borrower  and each of its  Subsidiaries
shall:

          7.1 FINANCIAL STATEMENTS.
              --------------------

     Furnish, or cause to be furnished, to each of the Lenders:

     (a) AUDITED FINANCIAL  STATEMENTS.  As soon as available,  but in any event
within  105 days after the end of each  fiscal  year,  an  audited  consolidated
balance sheet of the Borrower and its  Subsidiaries  as of the end of the fiscal
year and the related consolidated statements of income, shareholders' equity and
cash flows for the year, audited by independent  certified public accountants of
nationally  recognized standing,  setting forth in each case in comparative form
the figures for the previous year,  reported  without a "going  concern" or like
qualification or exception,  or  qualification  indicating that the scope of the
audit was inadequate to permit such independent  certified public accountants to
certify such financial  statements without such  qualification,  together with a
schedule setting forth the unaudited consolidating balance sheet and the related
consolidating  statements of income,  shareholders equity and cash flows for the
Borrower  and its  Subsidiaries  in a  format  and  with  detail  sufficient  to
calculate the applicable financial covenants.

     (b) COMPANY-PREPARED FINANCIAL STATEMENTS. As soon as available, but in any
event  within 60 days after the end of the first three  fiscal  quarters of each
fiscal year, a company-prepared  consolidated and consolidating balance sheet of
the Borrower and its  Subsidiaries  and the Borrower and its  Subsidiaries as of
the  end  of  such  quarter  and  related   company-prepared   consolidated  and
consolidating  statements of income and shareholders' equity for such period and
for the fiscal year to date in a format and with detail  sufficient to calculate
the  applicable  financial  covenants in each case setting forth in  comparative
form the  consolidated  figures for the  corresponding  period or periods of the
preceding fiscal year or the portion of the fiscal year ending with such period,
as  applicable,  in  each  case  subject  to  normal  recurring  year-end  audit
adjustments.

All such financial  statements  will be prepared in accordance with GAAP applied
consistently  throughout the periods reflected therein except as otherwise noted
therein  and,  in the case of  quarterly  financial  statements,  except for the
absence  of all  footnotes  required  by  GAAP)  and  further  accompanied  by a
description  of, and an estimation of the effect on the financial  statements on
account of, a change in the application of accounting  principles as provided in
Section 1.3.

          7.2 CERTIFICATES; OTHER INFORMATION.
              -------------------------------

     Furnish,  or cause to be furnished,  to the Agent for  distribution  to the
Lenders:


<PAGE>

     (a) ACCOUNTANT'S CERTIFICATE AND REPORTS. Concurrently with the delivery of
the financial  statements  referred to in subsection 7.1(a) above, a certificate
of the  independent  certified  public  accountants  reporting on such financial
statements  stating  that  in  making  the  examination  necessary  therefor  no
knowledge  was obtained of any Default or Event of Default,  except as specified
in such certificate.

     (b) OFFICER'S CERTIFICATE.  Concurrently with the delivery of the financial
statements  referred to in Sections  7.1(a) and 7.1(b) above, a certificate of a
Responsible  Officer  demonstrating  compliance  with  the  financial  covenants
contained  in Section  7.9 and  stating  that,  to the best of such  Responsible
Officer's  knowledge and belief, (i) the financial  statements fairly present in
all material  respects the  financial  condition of the parties  covered by such
financial statements,  (ii) during such period the Borrower and its Subsidiaries
have  observed or  performed in all material  respects the  covenants  and other
agreements  hereunder and under the other Credit Documents relating to them, and
satisfied in all  material  respects  the  conditions,  contained in this Credit
Agreement  to be observed,  performed or satisfied by them,  except as stated in
the certificate, and (iii) such Responsible Officer has obtained no knowledge of
the  occurrence  during such period of any Default or Event of Default except as
specified in such  certificate.  A form of Officer's  Certificate is attached as
SCHEDULE 7.2(B).

     (c) ACCOUNTANTS' REPORTS. Promptly upon the request of the Agent, a copy of
any final (as distinguished  from a preliminary or discussion draft) "management
letter" or other similar  report  submitted by  independent  accountants  to the
Borrower or any of its  Subsidiaries in connection  with any annual,  interim or
special audit.

     (d) PUBLIC INFORMATION.  Within thirty days after the same are sent, copies
of all reports (other than those otherwise  provided pursuant to subsection 7.1)
and other financial  information  which the Borrower or any of its  Subsidiaries
sends to its  public  stockholders,  and within  thirty  days after the same are
filed, copies of all financial statements and non-confidential reports which the
Borrower or any of its  Subsidiaries  may make to, or file with,  the Securities
and Exchange Commission or any successor or analogous Governmental Authority.

     (e)  BORROWING  BASE  CERTIFICATE.  Within  30 days  after  the end of each
calendar month, a Borrowing Base Certificate  (including an accounts  receivable
detail  and an  inventory  detail)  as of the end of the  immediately  preceding
month,  substantially  in  the  form  of  SCHEDULE  7.2(E)  and  certified  by a
Responsible Officer of the Borrower to be true and correct as of such date.

     (f)  OTHER  INFORMATION.  Promptly,  such  additional  financial  and other
information  as the Agent,  at the request of any Lender,  may from time to time
reasonably request.

          7.3 NOTICES.
              -------

     Give notice to the Agent (which shall promptly transmit such notice to each
Lender) of:


<PAGE>

     (a)  DEFAULTS.  Immediately  after any Credit  Party knows or has reason to
know thereof, the occurrence of any Default or Event of Default.

     (b)  CONTRACTUAL  OBLIGATIONS.  Promptly,  the initiation of any default or
event of default under any Contractual  Obligation of the Borrower or any of its
Subsidiaries  which would  reasonably  be  expected  to have a Material  Adverse
Effect.

     (c) LEGAL PROCEEDINGS.  Promptly,  any litigation,  or any investigation or
proceeding (including without limitation, any environmental proceeding) known to
the Borrower or any of its Subsidiaries,  or any material development in respect
thereof,  affecting  the  Borrower  or  any  of  its  Subsidiaries  which  would
reasonably be expected to have a Material Adverse Effect.

     (d) ERISA.  Promptly,  after any  Responsible  Officer of any Credit  Party
knows or has reason to know of (i) any event or  condition,  including,  but not
limited to, any Reportable Event, that constitutes, or might reasonably lead to,
an ERISA Event;  (ii) with  respect to any  Multiemployer  Plan,  the receipt of
notice as prescribed in ERISA or otherwise of any withdrawal  liability assessed
against  any  of  their  ERISA  Affiliates,  or  of  a  determination  that  any
Multiemployer Plan is in reorganization or insolvent (both within the meaning of
Title IV of ERISA);  (iii) the failure to make full payment on or before the due
date (including  extensions) thereof of all amounts which the Borrower or any of
its  Subsidiaries or any ERISA Affiliate are required to contribute to each Plan
pursuant to its terms and as required to meet the minimum  funding  standard set
forth in ERISA  and the Code with  respect;  or (iv) any  change in the  funding
status of any Plan that reasonably  could be expected to have a Material Adverse
Effect;  together with a description of any such event or condition or a copy of
any such notice and a  statement  by the chief  financial  officer of the Credit
Parties briefly setting forth the details  regarding such event,  condition,  or
notice,  and the action, if any, which has been or is being taken or is proposed
to be taken by the Credit Parties with respect  thereto.  Promptly upon request,
the Borrower or any of its Subsidiaries  shall furnish the Agent and the Lenders
with  such  additional  information  concerning  any  Plan as may be  reasonably
requested,  including,  but not limited to, copies of each annual  report/return
(Form 5500 series), as well as all schedules and attachments thereto required to
be filed with the  Department  of Labor  and/or  the  Internal  Revenue  Service
pursuant to ERISA and the Code,  respectively,  for each "plan year" (within the
meaning of Section 3(39) of ERISA).

     (e) OTHER.  Promptly,  any other  development  or event which a Responsible
Officer  determines  could  reasonably  be expected  to have a Material  Adverse
Effect.

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

          7.4 PAYMENT OF OBLIGATIONS.
              ----------------------

     Pay,  discharge or otherwise  satisfy at or before  maturity or before they
become  delinquent,  as the case may be, in  accordance  with  prudent  business
practice  (subject,  where applicable,  to specified grace periods) all material

<PAGE>

obligations  of the  Borrower  or any of its  Subsidiaries  of  whatever  nature
(including without limitation all taxes, assessments and governmental charges or
levies) and any additional  costs that are imposed as a result of any failure to
so pay, discharge or otherwise satisfy such obligations,  except when the amount
or validity of such  obligations  and costs is currently being contested in good
faith by appropriate proceedings and reserves, if applicable, in conformity with
GAAP with respect thereto have been provided on the books of the Borrower or any
of its Subsidiaries, as the case may be.

          7.5 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.
              ------------------------------------------------

     Continue to engage in a Permitted Business and preserve,  renew and keep in
full force and effect its corporate  existence and take all reasonable action to
maintain all material rights,  privileges,  licenses and franchises necessary or
desirable in the normal  conduct of its  business;  comply with all  Contractual
Obligations  and  Requirements of Law applicable to it except to the extent that
failure to comply therewith would not, in the aggregate, have a Material Adverse
Effect.

          7.6 MAINTENANCE OF PROPERTY; INSURANCE.
              ----------------------------------

     Keep  all  material  property  useful  and  necessary  in its  business  in
reasonably  good working order and condition  (ordinary wear and tear excepted);
maintain with  financially  sound and reputable  insurance  companies  casualty,
liability and such other insurance  (which may include plans of  self-insurance)
with such  coverage and  deductibles,  and in such amounts as may be  consistent
with prudent business  practice and in any event consistent with normal industry
practice (except to any greater extent as may be required by the terms of any of
the other Credit  Documents);  and furnish to the Agent,  upon written  request,
full information as to the insurance carried.

          7.7 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
              ------------------------------------------------------

     (a) Keep proper books of records and accounts in  conformity  with GAAP and
all  Requirements  of Law; and permit,  during  regular  business hours and upon
reasonable  notice  by the  Agent,  the Agent to visit  and  inspect  any of its
properties and examine and make abstracts  (including  photocopies)  from any of
its books and records  (other than  materials  protected by the  attorney-client
privilege  and  materials  which the Credit  Parties  may not  disclose  without
violation of a confidentiality  obligation  binding upon them) at any reasonable
time,  and to discuss the  business,  operations,  properties  and financial and
other  condition of the Borrower and any of its  Subsidiaries  with officers and
employees of the Borrower and any of its Subsidiaries and with their independent
certified  public  accountants.  The cost of the  inspection  referred to in the
preceding  sentence shall be for the account of the Lenders,  unless an Event of
Default  has  occurred  and is  continuing,  in  which  case  the  cost  of such
inspection shall be for the account of the Credit Parties.


<PAGE>

     (b) In addition to the foregoing  subsection  (a), permit the Agent to have
agents or representatives conduct a "field audit" of its inventory and accounts,
including inspection of the inventory and account records and a right to examine
and make abstracts  (including  photocopies) from its books and records relating
to its inventory and accounts on a semi-annual  basis, and more frequently after
the  occurrence  of an Event of  Default.  After the  occurrence  and during the
continuance  of an Event of  Default,  the cost of such "field  audits"  will be
promptly paid by the Borrower.

          7.8 ENVIRONMENTAL LAWS.
              ------------------

     (a) Comply in all material  respects with, and take  reasonable  actions to
ensure  compliance in all material  respects by all tenants and  subtenants,  if
any,  with,  all  applicable  Environmental  Laws and  obtain  and comply in all
material respects with and maintain,  and take reasonable actions to ensure that
all tenants and subtenants  obtain and comply in all material  respects with and
maintain,  any and all  licenses,  approvals,  notifications,  registrations  or
permits  required  by  applicable  Environmental  Laws except to the extent that
failure to do so would not  reasonably  be expected  to have a Material  Adverse
Effect;

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

     (c) Defend,  indemnify  and hold  harmless the Agent and the  Lenders,  and
their respective employees, agents, officers and directors, from and against any
and all claims, demands,  penalties, fines, liabilities,  settlements,  damages,
costs and expenses of whatever  kind or nature known or unknown,  contingent  or
otherwise,  arising  out  of,  or in  any  way  relating  to the  violation  of,
noncompliance  with or liability under, any  Environmental Law applicable to the
operations of the Borrower or any of its Subsidiaries or the Properties,  or any
orders,  requirements or demands of Governmental  Authorities  related  thereto,
including,  without  limitation,  reasonable  attorney's and consultant's  fees,
investigation  and laboratory fees,  response costs,  court costs and litigation
expenses,  except to the extent that any of the foregoing arise out of the gross
negligence or willful misconduct of the party seeking indemnification  therefor.
The  agreements in this paragraph  shall survive  repayment of the Loans and all
other amounts payable hereunder, and termination of the Commitments.


<PAGE>

          7.9 FINANCIAL COVENANTS.
              -------------------

     (a) LEVERAGE RATIO.  There shall be maintained with respect to the Borrower
and its  Subsidiaries  as of the end of each fiscal  quarter to occur during the
periods shown, a Leverage Ratio less than:

          (i)   From  the  Closing Date to  and including June 29, 1998, 4.9  to
     1.0;

          (ii)  From June 30, 1998  to and including  September  29, 1998,  4.8 
     to 1.0;

          (iii) From September 30, 1998 to and including  December 30, 1998, 4.7
     to 1.0;

          (iv)  From  December 31, 1998 to and including  March 30,  1999,  4.5 
     to 1.0;

          (v)   From March 31, 1999 to and including June 29, 1999, 4.3 to 1.0;

          (vi)  From June 30, 1999 to  and  including  December 30,  1999,  4.2 
     to 1.0;

          (vii) From  December 31, 1999 to and including  June 29, 2000,  4.0 to
     1.0;

         (viii) From June 30, 2000  to and including  December 30, 2000, 3.75 to
     1.0; and

          (ix)  From December 31, 2000 and thereafter, 3.6 to 1.0.

     (b) INTEREST COVERAGE RATIO.  There shall be maintained with respect to the
Borrower  and its  Subsidiaries  as of the end of each  fiscal  quarter to occur
during the periods shown, a Interest Coverage Ratio greater than:

          (i)   From the Closing Date to  and  including  March 30,  1998,  1.75
     to 1.0;

          (ii)  From March 31, 1998 to and including June 29, 1998, 1.9 to 1.0;

          (iii) From June 30, 1998 to and  including  December 30, 1998,  2.0 to
     1.0;

          (iv)  From December 31, 1998 to and including  March 30, 1999,  2.1 to
     1.0;

          (v)   From March 31, 1999 to and  including  December 30, 1999,  2.25 
     to 1.0;

          (vi)  From December 31, 1999 to and including March 30, 2000, 2.35 to
     1.0;

          (vii) From March 31, 2000 to and including  September 29, 2000, 2.5 to
     1.0; and

         (viii) From September 30, 2000 and thereafter, 2.6 to 1.0.


                                       
<PAGE>

     (c) CURRENT RATIO.  There shall be maintained  with respect to the Borrower
and its Subsidiaries at all times a Current Ratio of greater than:

          (i)  From the Closing Date to and including  December 30, 1998, 2.5 to
     1.0; and

          (ii) From December 31, 1998 and thereafter, 2.75 to 1.0.

     (d) NET  WORTH.  At all times Net Worth  shall be no less than  $87,000,000
increased on a cumulative basis by an amount equal to, (i) as of the last day of
each  fiscal  quarter,  50% of Net  Income  for the  fiscal  quarter  then ended
(without deductions for losses) PLUS (ii) 100% of the Net Cash Proceeds from any
Equity Transaction subsequent to the Closing Date.

          7.10 USE OF PROCEEDS.
               ---------------

     Extensions  of Credit  will be used  solely for the  purposes  provided  in
Section 6.14.

          7.11 ADDITIONAL GUARANTIES AND STOCK PLEDGES.
               ---------------------------------------

     (a)  DOMESTIC  SUBSIDIARIES.  At any time any  Person  becomes  a  Domestic
Subsidiary,  the Borrower will promptly  notify the Agent thereof and cause such
Domestic  Subsidiary  to become a  Guarantor  hereunder  by (i)  execution  of a
Joinder Agreement,  (ii) execution of a Security Agreement granting the Agent on
behalf  of the  Lenders a  security  interest  in all  accounts  receivable  and
inventory of such Person, together with UCC financing statements required by the
Agent,  (iii)  delivery  of  supporting  resolutions,  incumbency  certificates,
corporation  formation and organizational  documentation and opinions of counsel
as the Agent may reasonably request, and (iv) delivery of stock certificates and
a related pledge agreement or pledge joinder agreement  evidencing the pledge of
100% of the Voting Stock of such Domestic  Subsidiary  and of 100% of the Voting
Stock of each of such Person's Domestic Subsidiaries and 66% of the Voting Stock
of each  of its  Foreign  Subsidiaries  held by it  and/or  any of its  Domestic
Subsidiaries,  together in each case with undated stock transfer powers executed
in blank and UCC financing statements requested by the Agent.

     (b) FOREIGN  SUBSIDIARIES.  Within  sixty (60) days after the Closing  Date
with respect to the Foreign  Subsidiaries  owned directly as of the Closing Date
by a  Credit  Party,  and at any  time  any  Credit  Party  acquires  a  Foreign
Subsidiary,  the Borrower will  promptly  notify the Agent thereof and cause (i)
delivery  of  supporting  resolutions,   incumbency  certificates,   corporation
formation and organizational  documentation and opinions of counsel as the Agent
may reasonably request,  and (ii) delivery of stock certificates (where required
for perfection under local law) and a related pledge agreement or pledge joinder
agreement  evidencing  the  pledge of 66% of the  Voting  Stock of such  Foreign
Subsidiary, together in each case with undated stock transfer powers executed in
blank and UCC financing statements requested by the Agent.


<PAGE>

                                    SECTION 8
                               NEGATIVE COVENANTS
                               ------------------

     Each  Credit  Party  covenants  and  agrees  that so  long  as this  Credit
Agreement  is in effect  and  until the  Commitments  have been  terminated,  no
Obligations  remain  outstanding  and all amounts due hereunder or in connection
herewith,  have  been  paid  in  full,  neither  the  Borrower  nor  any  of its
Subsidiaries shall:

          8.1 INDEBTEDNESS.
              ------------

     Contract,  create,  incur,  assume or  permit  to exist  any  Indebtedness,
except:

          (a)  Indebtedness  arising or existing under this Credit Agreement and
     the other Credit Documents;

          (b) Indebtedness set forth in SCHEDULE 8.1 ("Existing Indebtedness");

          (c) Capital Lease Obligations and Indebtedness incurred, in each case,
     to provide all or a portion of the purchase price or costs of  construction
     or improvement of an asset, PROVIDED that the total principal amount of all
     such Indebtedness shall not exceed $5,000,000 at any time outstanding;

          (d) Indebtedness and obligations  owing under interest rate protection
     agreements  relating to the Obligations  hereunder and under interest rate,
     commodities and foreign currency  exchange  protection  agreements  entered
     into in the ordinary  course of business to manage  existing or anticipated
     risks and not for speculative purposes ("Permitted Hedging Obligations");

          (e)  Indebtedness  of the  Borrower  arising  under  the  Senior  Note
     Indenture  and the Senior Notes and Guaranty  Obligations  of any Guarantor
     with respect thereto.

          (f) the Permitted  Refinancing  Indebtedness of the Borrower or any of
     its  Subsidiaries in exchange for, or the net proceeds of which are used to
     extend,  refinance,  renew, replace,  defease or refund Indebtedness (other
     than intercompany Indebtedness) permitted by Section 8.1(b), (c) or (f);

          (g) intercompany  Indebtedness between or among the Borrower or any of
     its  Subsidiaries;  PROVIDED,  HOWEVER,  that  (i) if the  Borrower  is the
     obligor on such Indebtedness,  such Indebtedness is expressly  subordinated
     to the prior  payment in full in cash of the  Obligations  and (ii) (A) any
     subsequent  issuance or transfer of Equity  Interests  that  results in any
     such  Indebtedness  being  held by a Person  other than the  Borrower  or a

<PAGE>

     Subsidiary  thereof  and  (B)  any  sale  or  other  transfer  of any  such
     Indebtedness  to a Person that is not either the  Borrower or a  Subsidiary
     thereof  shall be deemed,  in each case,  to  constitute  an  incurrence of
     Indebtedness by the Borrower or such  Subsidiary,  as the case may be, that
     was not permitted by this clause (g);

          (h) the  guarantee by the Borrower or any of its  Subsidiaries  of any
     Indebtedness  of the  Borrower or a  Subsidiary  of the  Borrower  that was
     permitted to be incurred pursuant to this Section 8.1;

          (i) Indebtedness in respect of bid, performance or surety bonds issued
     for the account of the Borrower or any Subsidiary in the ordinary course of
     business; and

          (j) additional Indebtedness of the Borrower or any of its Subsidiaries
     in an aggregate  principal amount (or accreted value, as applicable) at any
     time outstanding, including all Permitted Refinancing Indebtedness incurred
     to refund,  refinance or replace any Indebtedness incurred pursuant to this
     clause (j), not to exceed $15,000,000.

     For purposes of determining  compliance with this Section 8.1, in the event
that an  item of  Indebtedness  meets  the  criteria  of  more  than  one of the
categories of permitted Indebtedness described in clauses (a) through (j) above,
the Borrower shall, in its sole discretion, determine under which of the clauses
(a) through (j) above such Indebtedness will be counted.

          8.2 LIENS.
              -----

     Contract, create, incur, assume or permit to exist any Lien with respect to
any of  their  respective  property  or  assets  of any  kind  (whether  real or
personal,  tangible or  intangible),  whether now owned or  hereafter  acquired,
except for Permitted Liens.

          8.3 NATURE OF BUSINESS.
              ------------------

     Engage in any business other than a Permitted Business.

          8.4 CONSOLIDATION, MERGER, SALE OR  PURCHASE OF ASSETS,
              CREATION OF SUBSIDIARIES.
              --------------------------------------------------

     Merge or consolidate with or into, or convey,  transfer,  lease (as lessor)
or  otherwise  dispose  of  (whether  in  one  transaction  or  in a  series  of
transactions)  all or  substantially  all of its  assets  (whether  now owned or
hereafter  acquired) to, any Person,  except that (i) any Guarantor may merge or
consolidate with or into, or transfer assets to, any other  Guarantor,  (ii) any
Guarantor may merge into or transfer  assets to the Borrower,  (iii) any Foreign
Subsidiary  may merge or  consolidate  with or into, or transfer  assets to, the

<PAGE>

Borrower,  a Guarantor or another Foreign  Subsidiary,  and (iv) any transaction
that is permitted under Section 8.5 is permitted hereunder.

          8.5 TRANSFER OF ASSETS.
              ------------------

     Sell,  lease (as  lessor),  transfer  or  otherwise  dispose of any item of
property  or asset  (including  by way of merger or  consolidation)  other  than
sales, leases, transfers or other dispositions;

     (a) in the ordinary course of business;

     (b) among the Guarantors, among the Foreign Subsidiaries or by a Subsidiary
to the Borrower or by the Borrower to a Guarantor;

     (c) of assets or property which are obsolete,  worn out or no longer useful
in Borrower's or any Subsidiary's business;

     (d) if, after  giving  effect  thereto,  (i) no Default or Event of Default
exists,  (ii) the  properties  and assets  disposed  of during the then  current
fiscal  year of  Borrower  pursuant  to this  Section  8.5(d)  would not have an
aggregate book value,  each determined at the time of disposition,  in excess of
ten percent (10%) of Borrower's  consolidated  total assets as calculated at the
end of the  immediately  preceding full fiscal year and (iii) the properties and
assets in the  aggregate  disposed of subsequent to the Closing Date pursuant to
this Section  8.5(d) would not have an aggregate  book value in excess of twenty
percent (20%) of the Borrower's  consolidated total assets calculated at the end
of the immediately preceding full fiscal year;

     (e)  consisting of the use of cash in a manner not  prohibited by the terms
of this Credit Agreement; or

     (f)  consisting of the sale of accounts  receivable to the Factor under the
Factor Agreement.

          8.6 ADVANCES, INVESTMENTS AND LOANS.
              -------------------------------

     Lend money or extend credit or make advances to any Person,  or purchase or
acquire any stock,  obligations  or securities  of, or any other interest in, or
make any capital contribution to, or otherwise make an Investment in, any Person
except for Permitted Investments.


<PAGE>

          8.7 RESTRICTED PAYMENTS.
              -------------------

     (a)  Directly or  indirectly:  (i) declare or pay any  dividend or make any
other  payment  or  distribution  on  account  of the  Borrower's  or any of its
Subsidiaries'  Equity Interest  (including,  without limitation,  any payment in
connection with any merger or consolidation involving the Borrower or any of its
Subsidiaries)  or to the direct or indirect  holders of the Borrower's or any of
its  Subsidiaries'  Equity  Interests  in their  capacity  as such  (other  than
dividends  or  distributions   payable  (x)  in  Equity  Interests  (other  than
Disqualified  Stock) of the Borrower or (y) to the  Borrower or a Subsidiary  of
the Borrower);  (ii) purchase,  redeem or otherwise  acquire or retire for value
(including,  without limitation,  in connection with any merger or consolidation
involving  the  Borrower)  any Equity  Interest of the Borrower or any direct or
indirect  parent of the Borrower or other  Affiliate of the Borrower (other than
any such Equity Interest owned by the Borrower or any Wholly Owned Subsidiary of
the  Borrower);  (iii) make any  payment  on or with  respect  to, or  purchase,
redeem,  defease  or  otherwise  acquire  or retire  for value any  Subordinated
Indebtedness except a payment of interest or principal at Stated Maturity;  (iv)
make any  acquisition  of the assets or capital  stock of another  Person if the
aggregate  purchase  price for all  transactions  during the term of this Credit
Agreement  exceeds  $25,000,000 (all such payment and other actions set forth in
clauses (i) through  (iv) above being  collectively  referred to as  "Restricted
Payments"),  unless,  at the time of and after giving effect to such  Restricted
Payment:

          (A) no  Default  or  Event  of  Default  shall  have  occurred  and be
     continuing or would occur as a consequence thereof; and

          (B) the Borrower  would,  at the time of such  Restricted  Payment and
     after giving pro forma  effect  thereto as if such  Restricted  Payment had
     been made at the beginning of the applicable four-quarter period, have been
     permitted to incur at least $1.00 of  additional  Indebtedness  pursuant to
     the Senior Note Indenture; and

          (C) such Restricted Payment, together with the aggregate amount of all
     other Restricted  Payments made by the Borrower and its Subsidiaries  after
     the date of this Credit Agreement (excluding  Restricted Payments permitted
     by clauses (ii), (iii) and (iv) of the next succeeding paragraph),  is less
     than the sum, without duplication, of (i) 50% of Net Income of the Borrower
     for the period (taken as one accounting period) from October 1, 1997 to the
     end of the Borrower's most recently ended fiscal quarter for which internal
     financial  statements are available at the time of such Restricted  Payment
     (or,  if such Net  Income for such  period is a deficit,  less 100% of such
     deficit), plus (ii) 100% of the aggregate net cash proceeds received by the
     Borrower since the date of this Credit  Agreement as a contribution  to its
     common equity capital or from the issue or sale of Equity  Interests of the
     Borrower  (other  than  Disqualified  Stock)  or from the  issue or sale of
     Disqualified  Stock or debt  securities  of the  Borrower  that  have  been
     converted  into such  Equity  Interest  (other than  Equity  Interests  (or
     Disqualified  Stock or convertible debt securities) sold to a Subsidiary of
     the Borrower), plus (iii) $2.0 million; and

          (D) if such  Restricted  Payment is in connection with the acquisition
     of the  capital  stock  of  another  Person,  such  Person  shall  become a
     Subsidiary upon the consummation of such acquisition.


<PAGE>

     The foregoing  provisions will not prohibit (i) the payment of any dividend
within  60 days  after  the  date of  declaration  thereof,  if at said  date of
declaration  such payment would have complied with the provisions of this Credit
Agreement  (ii) the  redemption,  repurchase,  retirement,  defeasance  or other
acquisition of any Subordinated  Indebtedness or Equity Interest of the Borrower
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of the  Borrower) of, other Equity  Interest of
the Borrower (other than any  Disqualified  Stock);  provided that the amount of
any  such  net  cash  proceeds  that  are  utilized  for  any  such  redemption,
repurchase,  retirement,  defeasance or other acquisition shall be excluded from
clause (C) (ii) of the preceding  paragraph;  (iii) the defeasance,  redemption,
repurchase or other  acquisition of Subordinated  Indebtedness with the net cash
proceeds  from an  incurrence of Permitted  Refinancing  Indebtedness;  (iv) the
payment of any  dividend by a  Subsidiary  of the Borrower to the holders of its
common Equity Interests on a pro rata basis; and (v) the repurchase,  redemption
or other  acquisition  or  retirement  for value of any Equity  Interests of the
Borrower or any  Subsidiary  of the Borrower held by any employee or director of
the Borrower or any  Subsidiary of the Borrower held by any employee or director
of the Borrower (or any of its  Subsidiaries)  pursuant to any management equity
subscription  agreement  or stock  option  agreement  approved  by the  Board of
Directors of the Borrower,  provided that the aggregate  price paid for all such
repurchased,  redeemed,  acquired or retired Equity  Interests  shall not exceed
$250,000  in any  twelve-month  period and no Default or Event of Default  shall
have occurred and be continuing immediately after such transaction.

     The amount of all Restricted  Payments  (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Borrower or such Subsidiary,  as the
case may be,  pursuant to the Restricted  Payment.  The fair market value of any
non-cash  Restricted Payment shall be determined by the Board of Directors whose
resolution  with respect  thereto shall be conclusive  and shall be delivered to
the  Agent.  Not  later  than the date of making  any  Restricted  Payment,  the
Borrower shall deliver to the Agent an Officers'  Certificate  stating that such
Restricted  Payment  is  permitted  and  setting  forth the basis upon which the
calculations required by this Section 8.7 were computed.

     (b) Make any  prepayment,  redemption,  defeasance or acquisition for value
(including without limitation, by way of depositing money or securities with the
trustee with respect  thereto  before due with the purpose of payment when due),
or refund,  refinance or exchange any Indebtedness arising under the Senior Note
Indenture  and the Senior  Notes  except as  required by the terms of the Senior
Note Indenture.

          8.8 TRANSACTIONS WITH AFFILIATES; MODIFICATION OF DOCUMENTATION.
              -----------------------------------------------------------

     Enter into or permit to exist any  transaction  or series of  transactions,
whether or not in the ordinary course of business, with any officer, director or
Affiliate  which is not a Subsidiary  other than (i) customary fees and expenses
paid to  directors,  (ii)  reasonable  employee  compensation  and other benefit
arrangements  approved by the disinterested members of the Board of Directors of

<PAGE>

the Borrower,  (iii)  payment of  reasonable  directors  fees,  (iv)  reasonable
indemnities  of  officers,  directors  and  employees  of  the  Borrower  or any
Subsidiary  permitted  by  applicable  law,  (v)  Restricted  Payments  that are
permitted by the provisions of Section 8.7 and (v) where such  transactions  are
on terms and conditions  substantially  as favorable as would be obtainable in a
comparable  arm's-length  transaction  with a  Person  other  than  an  officer,
director, or Affiliate which is not a Subsidiary.

          8.9 FISCAL YEAR.
              -----------

     Change its fiscal year.

          8.10 LIMITATION ON RESTRICTIONS.
               --------------------------

     Create or permit to exist any restriction of any kind on the ability of any
Subsidiary to (i) pay dividends or make any other distributions to the Borrower,
(ii) pay Indebtedness owed to the Borrower,  (iii) make loans or advances to the
Borrower or (iv) transfer any of its properties or assets to the Borrower except
(in respect of any of the matters referred to in clauses (i) through (iv) above)
for such  restrictions  existing under or by reason of (A) this Credit Agreement
and the other Credit  Documents and (B) (I) the NFA Industrial  Development Bond
Documents or (II) the Senior Note Indenture and the Senior Notes, (C) applicable
law, (D) any instrument governing  Indebtedness or the capital stock of a Person
acquired by the Borrower or any of its  Subsidiaries as in effect at the time of
such  acquisition  (except to the  extent  such  Indebtedness  was  incurred  in
connection with or in contemplation of such  acquisition),  which encumbrance or
restriction is not applicable to any Person,  or the properties or assets of any
Person,  other than the Person,  or the  property  or assets of the  Person,  so
acquired,  PROVIDED  that, in the case of  Indebtedness,  such  Indebtedness  is
permitted by the terms of the Credit  Agreement,  (E)  customary  non-assignment
provisions  in  leases  entered  into in the  ordinary  course of  business  and
consistent  with past  practices,  (F) purchase money  obligations  for property
acquired in the  ordinary  course of business  that impose  restrictions  of the
nature  described  in clause  (iv) above on the  property so  acquired,  (G) any
agreement  for the sale of a Subsidiary  that  restricts  distributions  by that
Subsidiary pending its sale, (H) Permitted  Refinancing  Indebtedness,  PROVIDED
that the  restrictions  contained in the  agreements  governing  such  Permitted
Refinancing  Indebtedness are no more restrictive,  taken as a whole, than those
contained in the agreements  governing the Indebtedness  being  refinanced,  (I)
Liens securing  Indebtedness  otherwise permitted to be incurred pursuant to the
provisions  of Section 8.2 that limits the right of the debtor to dispose of the
assets  securing  such   Indebtedness,   (J)  provisions  with  respect  to  the
disposition or  distribution  of assets or property in joint venture  agreements
and other similar agreements entered into in the ordinary course of business and
(K)  restrictions  on cash or other  deposits or net worth  imposed by customers
under contracts entered into in the ordinary course of business.


<PAGE>

          8.11 SALE LEASEBACKS.
               ---------------

     Except for any  Capital  Lease  permitted  by Section  8.1(c),  directly or
indirectly,  become or remain  liable as lessee or as  guarantor or other surety
with respect to any lease, whether an Operating Lease or a Capital Lease, of any
Property  (whether  real or personal or mixed),  whether now owned or  hereafter
acquired, (i) which such Person  contemporaneously has sold or transferred or is
to sell or transfer to any other  Person  other than the  Borrower or (ii) which
such  Person  intends  to use for  substantially  the same  purpose as any other
Property which  contemporaneously  has been sold or is to be sold or transferred
by such Person to any other Person in connection with such lease.

          8.12 CAPITAL EXPENDITURES.
               --------------------

     Make or  incur  Capital  Expenditures  in any  fiscal  year  of  more  than
$17,500,000.

          8.13 FACTORING AGREEMENT.
               -------------------

     The Borrower  will not, and will not permit its  Subsidiaries  to, incur or
permit  to  exist  any  loans or  advances  from a Factor  under  any  Factoring
Agreement.

                                    SECTION 9
                                EVENTS OF DEFAULT
                                -----------------

          9.1 EVENTS OF DEFAULT.
              -----------------

     An Event of Default shall exist upon the occurrence of any of the following
specified events (each an "EVENT OF DEFAULT"):

     (a) PAYMENT. The Borrower shall

               (i) default in the payment  when due of any  principal  of any of
          the Loans or any principal of any  reimbursement  obligations  arising
          from drawings under Letters of Credit, or

               (ii) default,  and such defaults  shall  continue for five (5) or
          more  Business  Days,  in the payment  when due of any interest on the
          Loans  or any  interest  on  reimbursement  obligations  arising  from
          drawings  under  Letters  of Credit,  or of any Fees or other  amounts
          owing  hereunder,  under  any  of the  other  Credit  Documents  or in
          connection herewith or therewith; or


<PAGE>

     (b) REPRESENTATIONS.  Any representation or warranty of the Borrower or any
Subsidiary  made  or  deemed  to be  made  herein,  in any of the  other  Credit
Documents,  or in any certificate delivered or required to be delivered pursuant
hereto or thereto  shall prove untrue in any material  respect on the date as of
which it was deemed to have been made; or

     (c) COVENANTS.

          (i) a  default  in the due  performance  or  observance  of any  term,
     covenant or agreement contained in Section 7.2(e),  7.3(a), 7.9, 7.10, 8.1,
     8.2, 8.4, 8.5, 8.6, 8.7, 8.8, 8.10, or 8.12, or

          (ii) a default in the due performance or observance by it of any term,
     covenant or agreement (other than those referred to in subsections (a), (b)
     or (c)(i) of this Section 9.1) contained in this Credit  Agreement and such
     default shall  continue  unremedied  for a period of at least 30 days after
     notice thereof by the Agent; or

     (d) OTHER CREDIT  DOCUMENTS.  (i) Any Credit Party shall default in the due
performance or observance of any term, covenant or agreement in any of the other
Credit Documents (subject to applicable grace or cure periods,  if any), or (ii)
any  Credit  Document  shall  fail to be in full force and effect or to give the
Agent  and/or the Lenders any  material  part of the Liens,  rights,  powers and
privileges purported to be created thereby; or

     (e) BANKRUPTCY,  ETC. Any Bankruptcy  Event shall occur with respect to the
Borrower or any of its Subsidiaries; or

     (f) DEFAULTS  UNDER OTHER  AGREEMENTS.  With respect to other  Indebtedness
(other  than  Indebtedness  outstanding  under  this  Credit  Agreement)  of the
Borrower  or any  of its  Subsidiaries  in an  aggregate  amount  in  excess  of
$1,000,000, (A) (1) the Borrower or any of its Subsidiaries shall default in any
payment of  principal,  interest or premium  (and such  default  shall  continue
unwaived beyond the applicable  grace period and after giving of required notice
with respect thereto, if any) with respect to any such Indebtedness,  or (2) the
occurrence  and  continuance  of a  default  in the  observance  or  performance
relating to such  Indebtedness  or  contained  in any  instrument  or  agreement
evidencing,  securing or relating thereto, or any other event or condition shall
occur or  condition  exist,  the  effect  of  which  default  or other  event or
condition is to cause, or permit, the holder or holders of such Indebtedness (or
trustee or agent on behalf of such holders) to cause (after the giving of notice
or lapse of time if required),  any such Indebtedness to become due prior to its
stated maturity; or (B) any such Indebtedness shall be declared due and payable,
or  required  to  be  prepaid  other  than  by a  regularly  scheduled  required
prepayment, prior to the stated maturity thereof; or

     (g) JUDGMENTS.  One or more  judgments or decrees shall be entered  against
one or more of the Borrower or any of its Subsidiaries  involving a liability of
$1,000,000  or more in the aggregate (to the extent not paid or fully covered by
insurance  provided  by a  carrier  who has  acknowledged  coverage  and has the
ability  to  perform)  and any such  judgments  or  decrees  shall not have been

<PAGE>

vacated,  discharged or stayed or bonded  pending appeal within 30 days from the
entry thereof; or

     (h) ERISA.  Any of the  following  events or  conditions,  if such event or
condition could  reasonably be expected to have a Material  Adverse Effect:  (1)
any "accumulated  funding deficiency," as such term is defined in Section 302 of
ERISA and  Section  412 of the Code,  whether or not  waived,  shall  exist with
respect to any Plan,  or any lien shall  arise on the assets of the  Borrower or
any of its  Subsidiaries  or any ERISA Affiliate in favor of the PBGC or a Plan;
(2) an ERISA Event shall occur with respect to a Single Employer Plan, which is,
in the reasonable  opinion of the Agent,  likely to result in the termination of
such Plan for purposes of Title IV of ERISA; (3) an ERISA Event shall occur with
respect to a  Multiemployer  Plan or Multiple  Employer  Plan,  which is, in the
reasonable opinion of the Agent, likely to result in (i) the termination of such
Plan for  purposes  of Title IV of  ERISA,  or (ii) the  Borrower  or any of its
Subsidiaries or any ERISA Affiliate incurring any liability in connection with a
withdrawal  from,  reorganization  of (within  the  meaning  of Section  4241 of
ERISA),  or  insolvency  of (within the  meaning of Section  4245 of ERISA) such
Plan; or (4) any  prohibited  transaction  (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary  responsibility  shall
occur  which may subject the  Borrower or any of its  Subsidiaries  or any ERISA
Affiliate to any liability under Sections 406, 409,  502(i),  or 502(l) of ERISA
or Section 4975 of the Code, or under any agreement or other instrument pursuant
to which the  Borrower or any of its  Subsidiaries  or any ERISA  Affiliate  has
agreed or is required to indemnify any person against any such liability; or

     (i) SENIOR NOTE INDENTURE.  There shall occur an Event of Default under and
as defined in the Senior Note Indenture.

     (j) OWNERSHIP. There shall occur a Change of Control.

          9.2 ACCELERATION; REMEDIES.
              ----------------------

     Upon the occurrence of an Event of Default, and at any time thereafter, the
Agent shall, upon the request and direction of the Required Lenders,  by written
notice to the Borrower take any of the following actions:

          (i)  TERMINATION OF COMMITMENTS.  Declare the  Commitments  terminated
     whereupon the Commitments shall be immediately terminated.

          (ii)  ACCELERATION.  Declare the unpaid  principal  of and any accrued
     interest in respect of all Loans,  any  reimbursement  obligations  arising
     from drawings under Letters of Credit and any and all other indebtedness or
     obligations of any and every kind owing by the Borrower to the Agent and/or
     any of the  Lenders  hereunder  to be  due  whereupon  the  same  shall  be
     immediately due and payable without presentment,  demand,  protest or other
     notice of any kind, all of which are hereby waived by the Borrower.


<PAGE>

          (iii) CASH  COLLATERAL.  Direct the  Borrower to pay (and the Borrower
     agrees that upon receipt of such notice, or upon the occurrence of an Event
     of Default  under Section  9.1(e),  it will  immediately  pay) to the Agent
     additional  cash, to be held by the Agent,  for the benefit of the Lenders,
     in a cash collateral account as additional security for the LOC Obligations
     in respect of subsequent  drawings  under all then  outstanding  Letters of
     Credit in an amount  equal to the  maximum  aggregate  amount  which may be
     drawn under all Letters of Credits then outstanding.

          (iv)  ENFORCEMENT OF RIGHTS.  Enforce any and all rights and interests
     created and existing under the Credit Documents and all rights of set-off.

Notwithstanding  the  foregoing,  if an Event of  Default  specified  in Section
9.1(e) shall occur, then the Commitments shall  automatically  terminate and all
Loans,  all  reimbursement  obligations  arising from drawings  under Letters of
Credit, all accrued interest in respect thereof, all accrued and unpaid Fees and
other  indebtedness or obligations  owing to the Agent and/or any of the Lenders
hereunder  automatically  shall  immediately  become  due  and  payable  without
presentment,  demand, protest or the giving of any notice or other action by the
Agent or the Lenders, all of which are hereby waived by the Borrower.

                                   SECTION 10
                                AGENCY PROVISIONS
                                -----------------

          10.1 APPOINTMENT.
               -----------

     Each Lender hereby designates and appoints  NationsBank,  N.A. as Agent (in
such  capacity,  the "Agent") of such Lender to act as specified  herein and the
other Credit Documents,  and each such Lender hereby authorizes the Agent as the
Agent for such Lender, to take such action on its behalf under the provisions of
this Credit Agreement and the other Credit Documents and to exercise such powers
and perform  such duties as are  expressly  delegated by the terms hereof and of
the other Credit  Documents,  together with such other powers as are  reasonably
incidental  thereto.  Notwithstanding  any  provision to the contrary  elsewhere
herein and in the other Credit Documents, the Agent shall not have any duties or
responsibilities,  except those  expressly set forth herein and therein,  or any
fiduciary  relationship with any Lender,  and no implied  covenants,  functions,
responsibilities,  duties,  obligations or  liabilities  shall be read into this
Credit Agreement or any of the other Credit Documents,  or shall otherwise exist
against the Agent.  The provisions of this Section are solely for the benefit of
the Agent and the  Lenders  and the  Borrower  shall  have any rights as a third
party  beneficiary  of the  provisions  hereof.  In performing its functions and
duties under this Credit  Agreement  and the other Credit  Documents,  the Agent
shall act  solely as Agent of the  Lenders  and does not assume and shall not be
deemed to have assumed any obligation or relationship of agency or trust with or
for the Borrower or any of its Affiliates.


<PAGE>

          10.2 DELEGATION OF DUTIES.
               --------------------

     The Agent may execute any of their respective duties hereunder or under the
other Credit  Documents by or through agents or  attorneys-in-fact  and shall be
entitled to advice of counsel  concerning all matters pertaining to such duties.
The Agent shall not be  responsible  for the  negligence  or  misconduct  of any
agents or attorneys-in-fact selected by it with reasonable care.

          10.3 EXCULPATORY PROVISIONS.
               ----------------------

     The Agent and its officers, directors, employees, agents, attorneys-in-fact
or affiliates  shall not be (i) liable for any action  lawfully taken or omitted
to be  taken  by it or  such  Person  under  or  in  connection  herewith  or in
connection  with  any of the  other  Credit  Documents  (except  for its or such
Person's own gross negligence or willful misconduct), or (ii) responsible in any
manner to any of the Lenders for any recitals,  statements,  representations  or
warranties made by any of the Credit Parties  contained  herein or in any of the
other  Credit  Documents  or in any  certificate,  report,  document,  financial
statement or other written or oral statement  referred to or provided for in, or
received by the Agent under or in connection  herewith or in connection with the
other Credit Documents,  or enforceability or sufficiency therefor of any of the
other  Credit  Documents,  or for any  failure of the  Borrower  to perform  its
obligations  hereunder or thereunder.  The Agent shall not be responsible to any
Lender   for   the   effectiveness,   genuineness,   validity,   enforceability,
collectibility  or  sufficiency  of this Credit  Agreement,  or any of the other
Credit Documents or for any representations,  warranties, recitals or statements
made herein or therein or made by the Borrower in any written or oral  statement
or in any financial or other statements,  instruments,  reports, certificates or
any other documents in connection herewith or therewith furnished or made by the
Agent to the  Lenders  or by or on  behalf of the  Borrower  to the Agent or any
Lender  or be  required  to  ascertain  or  inquire  as to  the  performance  or
observance of any of the terms, conditions,  provisions, covenants or agreements
contained herein or therein or as to the use of the proceeds of the Loans or the
use of the Letters of Credit or of the  existence  or possible  existence of any
Default or Event of Default or to inspect  the  properties,  books or records of
the Borrower or its Affiliates.

          10.4 RELIANCE ON COMMUNICATIONS.
               --------------------------

     The  Agent  shall be  entitled  to rely,  and shall be fully  protected  in
relying,  upon any note,  writing,  resolution,  notice,  consent,  certificate,
affidavit,  letter,  cablegram,  telegram,  telecopy, telex or teletype message,
statement,  order or other document or conversation believed by it to be genuine
and  correct  and to have  been  signed,  sent or made by the  proper  Person or
Persons and upon advice and  statements  of legal  counsel  (including,  without
limitation,  counsel to the Borrower,  independent accountants and other experts
selected by the Agent with  reasonable  care).  The Agent may deem and treat the
Lenders as the owner of their  respective  interests  hereunder for all purposes
unless a written  notice of assignment,  negotiation  or transfer  thereof shall
have been filed with the Agent in accordance with Section  11.3(b)  hereof.  The
Agent shall be fully  justified  in failing or refusing to take any action under
this Credit Agreement or under any of the other Credit Documents unless it shall
first  receive such advice or  concurrence  of the Required  Lenders as it deems

<PAGE>

appropriate or it shall first be indemnified to its  satisfaction by the Lenders
against any and all  liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting,  hereunder or under any
of the other  Credit  Documents  in  accordance  with a request of the  Required
Lenders  (or to the  extent  specifically  provided  in  Section  11.6,  all the
Lenders)  and such  request  and any action  taken or  failure  to act  pursuant
thereto shall be binding upon all the Lenders  (including  their  successors and
assigns).

          10.5 NOTICE OF DEFAULT.
               -----------------

     The Agent shall not be deemed to have knowledge or notice of the occurrence
of any  Default or Event of  Default  hereunder  unless  the Agent has  received
notice  from a  Lender  or  the  Borrower  referring  to  the  Credit  Document,
describing  such  Default or Event of Default and stating  that such notice is a
"notice of default."  In the event that the Agent  receives  such a notice,  the
Agent shall give prompt notice thereof to the Lenders. The Agent shall take such
action with respect to such  Default or Event of Default as shall be  reasonably
directed by the Required Lenders.

          10.6 NON-RELIANCE ON AGENT AND OTHER LENDERS.
               ---------------------------------------

     Each Lender expressly acknowledges that each of the Agent and its officers,
directors,  employees, agents,  attorneys-in-fact or affiliates has not made any
representations  or  warranties  to it and  that  no act  by  the  Agent  or any
affiliate thereof hereinafter taken,  including any review of the affairs of the
Borrower  or  any  of  its  Affiliates,   shall  be  deemed  to  constitute  any
representation or warranty by the Agent to any Lender. Each Lender represents to
the Agent that it has,  independently and without reliance upon the Agent or any
other  Lender,  and based on such  documents  and  information  as it has deemed
appropriate,  made its own  appraisal of and  investigation  into the  business,
assets,  operations,  property,  financial and other  conditions,  prospects and
creditworthiness  of the Borrower or its Affiliates and made its own decision to
make its Loans hereunder and enter into this Credit Agreement.  Each Lender also
represents that it will,  independently  and without  reliance upon the Agent or
any other Lender,  and based on such documents and  information as it shall deem
appropriate at the time,  continue to make its own credit  analysis,  appraisals
and decisions in taking or not taking action under this Credit Agreement, and to
make  such  investigation  as it deems  necessary  to  inform  itself  as to the
business,  assets,  operations,   property,   financial  and  other  conditions,
prospects and  creditworthiness  of the Borrower and its Affiliates.  Except for
notices,  reports and other documents  expressly required to be furnished to the
Lenders  by  the  Agent  hereunder,  the  Agent  shall  not  have  any  duty  or
responsibility  to  provide  any  Lender  with any  credit or other  information
concerning  the  business,  operations,  assets,  property,  financial  or other
conditions,  prospects or  creditworthiness  of the  Borrower or its  respective
Affiliates  which  may  come  into  the  possession  of the  Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.


<PAGE>

          10.7 INDEMNIFICATION.
               ---------------

     The Lenders  agree to  indemnify  the Agent in its capacity as such (to the
extent not reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to their respective Commitments (or if the
Commitments have expired or been  terminated,  in accordance with the respective
principal  amounts  of  outstanding  Loans and  Participation  Interests  of the
Lenders),  from  and  against  any and  all  liabilities,  obligations,  losses,
damages, penalties,  actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever  which may at any time (including  without  limitation at
any time  following the final payment of all of the  obligations of the Borrower
hereunder and under the other Credit  Documents)  be imposed on,  incurred by or
asserted  against the Agent in its  capacity  as such in any way  relating to or
arising  out of this  Credit  Agreement  or the other  Credit  Documents  or any
documents  contemplated by or referred to herein or therein or the  transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in  connection  with any of the  foregoing;  PROVIDED that no Lender shall be
liable for the payment of any portion of such liabilities,  obligations, losses,
damages, penalties,  actions, judgments, suits, costs, expenses or disbursements
resulting from the gross  negligence or willful  misconduct of the Agent. If any
indemnity  furnished to the Agent for any purpose  shall,  in the opinion of the
Agent,  be insufficient  or become  impaired,  the Agent may call for additional
indemnity and cease, or not commence,  to do the acts indemnified  against until
such  additional  indemnity is furnished.  The  agreements in this Section shall
survive the repayment of the Loans, LOC Obligations and other  obligations under
the Credit Documents and the termination of the Commitments hereunder.

          10.8 AGENT IN ITS INDIVIDUAL CAPACITY.
               --------------------------------

     The Agent and its  affiliates  may make loans to, accept  deposits from and
generally engage in any kind of business with the Borrower,  its Subsidiaries or
their  respective  Affiliates as though the Agent were not the Agent  hereunder.
With respect to the Loans made by and all obligations of the Borrower  hereunder
and under the other Credit  Documents,  the Agent shall have the same rights and
powers  under this Credit  Agreement  as any Lender and may exercise the same as
though it were not the Agent, and the terms "Lender" and "Lenders" shall include
the Agent in its individual capacity.

          10.9 SUCCESSOR AGENT.
               ---------------

     The Agent may, at any time, resign upon twenty (20) days' written notice to
the Borrower and the Lenders.  Upon any such  resignation,  the Required Lenders
shall have the right to appoint a successor  Agent.  If no successor Agent shall
have been so appointed by the Required  Lenders,  and shall have  accepted  such
appointment,  within 30 days after the notice of resignation,  then the retiring
Agent  shall  select a  successor  Agent  provided  such  successor  is a Lender
hereunder or a commercial  bank organized under the laws of the United States of
America or of any State  thereof  and has a combined  capital  and surplus of at
least $400,000,000. Upon the acceptance of any appointment as Agent hereunder by
a successor,  such successor Agent shall thereupon  succeed to and become vested

<PAGE>

with all the rights,  powers,  privileges and duties of the retiring Agent,  and
the retiring Agent shall be discharged from its duties and obligations as Agent,
as appropriate,  under this Credit  Agreement and the other Credit Documents and
the provisions of this Section 10.9 shall inure to its benefit as to any actions
taken  or  omitted  to be  taken by it while  it was  Agent  under  this  Credit
Agreement.

                                   SECTION 11
                                  MISCELLANEOUS
                                  -------------

          11.1 NOTICES.
               -------

     Except as  otherwise  expressly  provided  herein,  all  notices  and other
communications  shall  have been duly  given  and  shall be  effective  (i) when
delivered,  (ii) when transmitted via telecopy (or other facsimile  device) with
receipt confirmed,  to the number set out below, (iii) the day following the day
on which the same has been delivered prepaid to a reputable  national  overnight
air courier  service,  or (iv) the third Business Day following the day on which
the same is sent by certified or registered mail, postage prepaid,  in each case
to the  respective  parties at the address,  in the case of any Credit Party and
the  Agent,  set forth  below,  and,  in the case of the  Lenders,  set forth on
SCHEDULE  11.1,  or at such other  address as such party may  specify by written
notice to the other parties hereto:

     if to the Borrower:

               WORLDTEX, INC.
               212 12th Avenue NE
               P.O. Box 2363
               Hickory, North Carolina  28603
               Attn:  Barry D. Setzer
                       President and Chief Executive Officer
               Telephone:  (704) 328-5381
               Telecopy:   (704) 328-6172


<PAGE>

     if to any Guarantor:

               [NAME OF GUARANTOR]
               c/o Worldtex, Inc.
               212 12th Avenue NE
               P.O. Box 2363
               Hickory, North Carolina  28603
               Attn:  Barry D. Setzer
                       President and Chief Executive Officer
               Telephone:  (704) 328-5381
               Telecopy:   (704) 328-6172

     if to the Agent:

               NATIONSBANK, N.A.
               NationsBank Corporate Center, 8th Floor
               100 North Tryon Street
               Charlotte, North Carolina  28255
               Attn:  E. Phifer Helms
               Telephone:  (704) 386-5358
               Telecopy:   (704) 386-1270

          11.2 RIGHT OF SET-OFF.
               ----------------

     In addition to any rights now or hereafter  granted under applicable law or
otherwise,  and not by way of limitation of any such rights, upon the occurrence
of an Event of Default,  each Lender is  authorized at any time and from time to
time, without presentment,  demand,  protest or other notice of any kind (all of
which rights being hereby expressly  waived),  to set-off and to appropriate and
apply any and all deposits  (general or special) and any other  indebtedness  at
any time held or owing by such Lender (including,  without limitation  branches,
agencies or Affiliates of such Lender wherever  located) to or for the credit or
the account of the Borrower  against  obligations and liabilities of such Person
to such  Lender  hereunder,  under the  Notes,  the other  Credit  Documents  or
otherwise,  irrespective  of  whether  such  Lender  shall  have made any demand
hereunder and although such obligations,  liabilities or claims, or any of them,
may be  contingent  or  unmatured,  and any such set-off shall be deemed to have
been made  immediately  upon the  occurrence  of an Event of Default even though
such charge is made or entered on the books of such Lender  subsequent  thereto.
Any Person  purchasing a participation  in the Loans and  Commitments  hereunder
pursuant to Section  3.13 or Section  11.3(d) may exercise all rights of set-off
with  respect to its  participation  interest  as fully as if such Person were a
Lender hereunder to the fullest extent permitted by law.


<PAGE>

          11.3 BENEFIT OF AGREEMENT.
               --------------------

     (a) GENERALLY. This Credit 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 the Borrower may not assign or transfer any of its
interests  without prior written consent of the Lenders;  PROVIDED  FURTHER that
the rights of each Lender to  transfer,  assign or grant  participations  in its
rights  and/or  obligations  hereunder  shall be  limited  as set  forth in this
Section 11.3, PROVIDED however that nothing herein shall prevent or prohibit any
Lender  from (i)  pledging  its Loans  hereunder  to a Federal  Reserve  Bank in
support of  borrowings  made by such Lender from such Federal  Reserve  Bank, or
(ii) granting  assignments  or selling  participations  in such  Lender's  Loans
and/or  Commitments  hereunder to its parent  company and/or to any Affiliate or
Subsidiary of such Lender.

     (b) ASSIGNMENTS.  Each Lender may assign all or a portion of its rights and
obligations hereunder,  pursuant to an assignment agreement substantially in the
form of SCHEDULE 11.3(B),  to (i) any Lender or any Affiliate or Subsidiary of a
Lender, or (ii) any other commercial bank, financial  institution or "accredited
investor" (as defined in Regulation D of the Securities and Exchange Commission)
reasonably  acceptable  to the  Agent  and,  so long as no  Default  or Event of
Default has occurred and is continuing, the Borrower; PROVIDED that (i) any such
assignment  (other  than any  assignment  to an existing  Lender)  shall be in a
minimum aggregate amount of $5,000,000 (or, if less, the remaining amount of the
Commitment  being  assigned by such Lender) of the  Commitments  and in integral
multiples of $1,000,000 above such amount and (ii) each such assignment shall be
of a  constant,  not  varying,  percentage  of  all  such  Lender's  rights  and
obligations  under this Credit  Agreement.  Any  assignment  hereunder  shall be
effective  upon  delivery  to the  Agent of  written  notice  of the  assignment
together with a transfer fee of $3,500  payable to the Agent for its own account
from and after the later of (i) the effective  date  specified in the applicable
assignment  agreement  and (ii) the date of recording of such  assignment in the
Register  pursuant to the terms of subsection  (c) below.  The assigning  Lender
will give prompt  notice to the Agent and the  Borrower of any such  assignment.
Upon the  effectiveness of any such assignment (and after notice to, and (to the
extent required pursuant to the terms hereof), with the consent of, the Borrower
as provided  herein),  the assignee  shall become a "Lender" for all purposes of
this Credit  Agreement and the other Credit Documents and, to the extent of such
assignment,  the assigning Lender shall be relieved of its obligations hereunder
to the extent of the Loans and Commitment components being assigned.  Along such
lines the Borrower  agrees that upon notice of any such assignment and surrender
of the  appropriate  Note or Notes,  it will  promptly  provide to the assigning
Lender  and to the  assignee  separate  promissory  notes in the amount of their
respective  interests  substantially  in the form of the original Note (but with
notation  thereon that it is given in  substitution  for and  replacement of the
original Note or any replacement notes thereof).  By executing and delivering an
assignment  agreement in  accordance  with this Section  11.3(b),  the assigning
Lender thereunder and the assignee  thereunder shall be deemed to confirm to and
agree  with each  other  and the  other  parties  hereto  as  follows:  (i) such
assigning  Lender  warrants  that it is the  legal and  beneficial  owner of the
interest being assigned thereby free and clear of any adverse claim; (ii) except
as set forth in clause (i) above,  such assigning Lender makes no representation
or  warranty  and  assumes no  responsibility  with  respect to any  statements,
warranties  or  representations  made  in  or in  connection  with  this  Credit
Agreement, any of the other Credit Documents or any other instrument or document

<PAGE>

furnished  pursuant  hereto or thereto,  or the execution,  legality,  validity,
enforceability,  genuineness, sufficiency or value of this Credit Agreement, any
of the other Credit  Documents  or any other  instrument  or document  furnished
pursuant hereto or thereto or the financial  condition of the Borrower or any of
its  Affiliates or the  performance  or observance by the Borrower of any of its
obligations  under this Credit  Agreement,  any of the other Credit Documents or
any other  instrument or document  furnished  pursuant hereto or thereto;  (iii)
such assignee  represents  and warrants  that it is legally  authorized to enter
into such assignment agreement; (iv) such assignee confirms that it has received
a copy of this  Credit  Agreement,  the other  Credit  Documents  and such other
documents and  information  as it has deemed  appropriate to make its own credit
analysis and decision to enter into such assignment agreement; (v) such assignee
will independently and without reliance upon the Agent, such assigning Lender or
any other Lender,  and based on such documents and  information as it shall deem
appropriate at the time,  continue to make its own credit decisions in taking or
not taking action under this Credit  Agreement  and the other Credit  Documents;
(vi) such assignee  appoints and authorizes the Agent to take such action on its
behalf and to exercise  such powers  under this  Credit  Agreement  or any other
Credit  Document as are  delegated  to the Agent by the terms hereof or thereof,
together with such powers as are reasonably  incidental thereto;  and (vii) such
assignee  agrees  that it will  perform in  accordance  with their terms all the
obligations  which by the terms of this Credit  Agreement  and the other  Credit
Documents are required to be performed by it as a Lender.

     (c) MAINTENANCE OF REGISTER. The Agent shall maintain at one of its offices
in  Charlotte,  North  Carolina  a copy  of  each  Lender  assignment  agreement
delivered  to it in  accordance  with the  terms of  subsection  (b) above and a
register for the recordation of the identity of the principal  amount,  type and
Interest Period of each Loan outstanding hereunder, the names, addresses and the
Commitments  of the Lenders  pursuant to the terms hereof from time to time (the
"REGISTER").  The Agent will make reasonable efforts to maintain the accuracy of
the  Register  and to  promptly  update  the  Register  from  time to  time,  as
necessary.  The entries in the Register  shall be  conclusive  in the absence of
manifest error and the Borrower, the Agent and the Lenders may treat each Person
whose name is recorded in the Register  pursuant to the terms hereof as a Lender
hereunder  for all  purposes of this Credit  Agreement.  The  Register  shall be
available for inspection by the Borrower and each Lender, at any reasonable time
and from time to time upon reasonable prior notice.

     (d)  PARTICIPATIONS.  Each  Lender  may  sell,  transfer,  grant or  assign
participations  in all or any part of such Lender's  interests  and  obligations
hereunder; PROVIDED that (i) such selling Lender shall remain a "Lender" for all
purposes under this Credit  Agreement (such selling Lender's  obligations  under
the  Credit  Documents  remaining  unchanged)  and  the  participant  shall  not
constitute  a Lender  hereunder,  (ii) no such  participant  shall  have,  or be
granted,  rights to approve  any  amendment  or waiver  relating  to this Credit
Agreement or the other Credit  Documents except to the extent any such amendment
or waiver  would (A) reduce the  principal  of or rate of interest on or Fees in
respect of any Loans in which the participant is  participating  or (B) postpone
the date fixed for any payment of principal (including extension of the Maturity
Date or the date of any  mandatory  prepayment),  interest  or Fees in which the
participant is participating,  and (iii)  sub-participations  by the participant
(except to an affiliate,  parent company or affiliate of a parent company of the
participant)  shall be prohibited.  In the case of any such  participation,  the
participant  shall not have any rights under this Credit  Agreement or the other

<PAGE>

Credit Documents (the participant's rights against the selling Lender in respect
of such participation to be those set forth in the participation  agreement with
such Lender creating such participation) and all amounts payable by the Borrower
hereunder shall be determined as if such Lender had not sold such participation,
PROVIDED, however, that such participant shall be entitled to receive additional
amounts under Sections 3.8, 3.9, 3.10 and 3.11 on the same basis as if it were a
Lender.  Notwithstanding the foregoing,  (i) a participant shall not be entitled
to  receive  any  greater  payment  under  Sections  3.8,  3.9 and 3.10 than the
applicable  Lender  would  have been  entitled  to receive  with  respect to the
participation sold to such participant,  unless the sale of the participation to
such  participant is made with the Borrower's  prior written  consent and (ii) a
participant  that is not  incorporated  under the laws of the  United  States of
America or a state thereof shall not be entitled to the benefits of Section 3.10
unless the Borrower is notified of the  participation  sold to such  participant
and such  participant  agrees,  for the benefit of the Borrower,  to comply with
Section 3.10.

          11.4 NO WAIVER; REMEDIES CUMULATIVE.
               ------------------------------

     No failure  or delay on the part of the Agent or any  Lender in  exercising
any right,  power or privilege  hereunder or under any other Credit Document and
no course of dealing  between  the Agent or any Lender  and the  Borrower  shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of any
right, power or privilege  hereunder or under any other Credit Document preclude
any other or further exercise thereof or the exercise of any other right,  power
or privilege  hereunder or thereunder.  The rights and remedies  provided herein
are  cumulative  and not exclusive of any rights or remedies  which the Agent or
any Lender would  otherwise  have. No notice to or demand on the Borrower in any
case shall  entitle  the  Borrower  to any other or further  notice or demand in
similar or other circumstances or constitute a waiver of the rights of the Agent
or the  Lenders  to any other or  further  action in any  circumstances  without
notice or demand.

          11.5 PAYMENT OF EXPENSES, ETC.
               ------------------------

     The  Borrower  agrees to: (i) pay all  reasonable  out-of-pocket  costs and
expenses  (A) of the  Agent in  connection  with the  negotiation,  preparation,
execution and delivery of this Credit  Agreement and the other Credit  Documents
and the  documents  and  instruments  referred  to therein  (including,  without
limitation, the reasonable fees and expenses of Moore & Van Allen, PLLC, special
counsel to the Agent), and any amendment,  waiver or consent relating hereto and
thereto including, but not limited to, any such amendments,  waivers or consents
resulting from or related to any work-out, renegotiation or restructure relating
to the  performance by the Borrower  under this Credit  Agreement and (B) of the
Agent and the Lenders in connection with enforcement of the Credit Documents and
the  documents  and  instruments   referred  to  therein   (including,   without
limitation,  in connection  with any such  enforcement,  the reasonable fees and
disbursements  of counsel for the Agent and each of the  Lenders);  (ii) pay and
hold each of the  Lenders  harmless  from and  against  any and all  present and
future stamp and other similar  taxes with respect to the foregoing  matters and
save each of the Lenders  harmless from and against any and all liabilities with

<PAGE>

respect to or  resulting  from any delay or  omission  (other than to the extent
attributable to such Lender) to pay such taxes; and (iii) indemnify each Lender,
its officers,  directors,  employees,  representatives  and Agents from and hold
each of them harmless against any and all losses,  liabilities,  claims, damages
or expenses incurred by any of them as a result of, or arising out of, or in any
way  related  to,  or by reason of (A) any  investigation,  litigation  or other
proceeding  (whether  or not any  Lender  is a  party  thereto)  related  to the
entering into and/or  performance of any Credit  Document or the use of proceeds
of  any  Loans  (including   other  extensions  of  credit)   hereunder  or  the
consummation  of any other  transactions  contemplated  in any Credit  Document,
including,  without limitation, the reasonable fees and disbursements of counsel
incurred  in  connection  with  any  such  investigation,  litigation  or  other
proceeding  or (B) the  presence or Release of any  Materials  of  Environmental
Concern at, under or from any Property owned, operated or leased by the Borrower
or  any of  its  Subsidiaries,  or the  failure  by the  Borrower  or any of its
Subsidiaries to comply with any Environmental Law (but excluding, in the case of
either of clause (A) or (B) above, any such losses, liabilities, claims, damages
or expenses  to the extent  incurred  by reason of gross  negligence  or willful
misconduct on the part of the Person to be indemnified).

          11.6 AMENDMENTS, WAIVERS AND CONSENTS.
               --------------------------------

     Neither this Credit  Agreement nor any of the other Credit  Documents,  nor
any of the terms hereof or thereof may be amended,  changed, waived,  discharged
or terminated unless such amendment, change, waiver, discharge or termination is
in writing entered into by, or approved in writing by, the Required  Lenders and
the Borrower, PROVIDED, HOWEVER, that:

     (a) no such  amendment,  change,  waiver,  discharge or termination  shall,
without the consent of each Lender  directly  affected  thereby,  (i) reduce the
rate or  extend  the time of  payment  of  interest  (other  than as a result of
waiving the applicability of any post-default increase in interest rates) on any
Loan or fees hereunder,  (ii) extend (A) the Commitments of the Lenders, (B) the
final maturity of any Loan, or any portion  thereof,  or (C) the time of payment
of any reimbursement  obligation,  or any portion thereof, arising from drawings
under  Letters of Credit,  (iii) reduce the principal  amount on any Loan;  (iv)
increase the  Commitments  of the Lenders over the amount  thereof in effect (it
being  understood and agreed that a waiver of any Default or Event of Default or
of a mandatory  reduction in the total commitments shall not constitute a change
in the terms of any Commitment of any Lender),  (v) release all or substantially
all of the Collateral,  (vi) release all or substantially  all of the Guarantors
from the Guaranty Obligations  hereunder (vii) release any of ECA, Elastex, Inc.
or Regal Manufacturing  Company, Inc. from their respective Guaranty Obligations
hereunder,  (viii)amend,  modify or waive any  provision of this Section 11.6 or
Section 3.6, 3.10,  3.11,  3.12,  3.13,  9.1(a),  11.2, 11.3, 11.5 or 11.9, (ix)
reduce any  percentage  specified  in, or otherwise  modify,  the  definition of
"Required Lenders," or (x) consent to the assignment or transfer by the Borrower
of any of its  rights  and  obligations  under  (or in  respect  of) the  Credit
Documents to which it is a party; and

     (b) no provision  of Section 2.2 may be amended  without the consent of the
Issuing Lender and no provision of Section 10 may be amended without the consent
of the Agent.


<PAGE>

          11.7 COUNTERPARTS.
               ------------

     This Credit Agreement may be executed in any number of  counterparts,  each
of which when so executed and delivered  shall be an original,  but all of which
shall  constitute  one and the same  instrument.  It shall not be  necessary  in
making  proof of this Credit  Agreement  to produce or account for more than one
such counterpart.

          11.8 HEADINGS.
               --------

     The  headings of the  sections  and  subsections  hereof are  provided  for
convenience  only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.

          11.9 SURVIVAL.
               --------

     All indemnities set forth herein, including, without limitation, in Section
2.2(h), 3.9, 3.11, 10.7 or 11.5 shall survive the execution and delivery of this
Credit  Agreement,  the  making of the Loans,  the  issuance  of the  Letters of
Credit,  the repayment of the Loans, LOC Obligations and other obligations under
the Credit Documents and the termination of the Commitments  hereunder,  and all
representations  and  warranties  made  by the  Borrower  herein  shall  survive
delivery of the Notes and the making of the Loans hereunder.

          11.10 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
                ------------------------------------------------

     (a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS  OF THE PARTIES  HEREUNDER AND  THEREUNDER  SHALL BE GOVERNED BY AND
CONSTRUED  AND  INTERPRETED  IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NORTH
CAROLINA.  Any legal action or proceeding with respect to this Credit  Agreement
or any other Credit  Document may be brought in the courts of the State of North
Carolina,  or of the United  States for the Middle  District of North  Carolina,
and, by execution  and delivery of this Credit  Agreement,  the Borrower  hereby
irrevocably  accepts for itself and in respect of its  property,  generally  and
unconditionally,  the  nonexclusive  jurisdiction  of such courts.  The Borrower
further  irrevocably  consents  to  the  service  of  process  out 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 it at the address
set out for notices  pursuant to Section 11.1, such service to become  effective
three (3)  Business  Days after such  mailing.  Nothing  herein shall affect the
right of the Agent to serve  process in any other manner  permitted by law or to
commence legal  proceedings or to otherwise  proceed against the Borrower in any
other jurisdiction.

     (b) The Borrower hereby  irrevocably  waives any objection which it may now
or  hereafter  have to the  laying of venue of any of the  aforesaid  actions or
proceedings  arising out of or in connection  with this Credit  Agreement or any
other Credit Document brought in the courts referred to in subsection (a) hereof
and hereby  further  irrevocably  waives and agrees not to plead or claim in any

<PAGE>

such court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.

     (c) TO THE EXTENT  PERMITTED BY LAW, EACH OF THE AGENT, THE LENDERS AND THE
BORROWER  HEREBY  IRREVOCABLY  WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY  ACTION,
PROCEEDING OR COUNTERCLAIM  ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT,
ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.

          11.11 SEVERABILITY.
                ------------

     If any  provision  of  any of the  Credit  Documents  is  determined  to be
illegal,  invalid or unenforceable,  such provision shall be fully severable and
the  remaining  provisions  shall  remain in full  force and effect and shall be
construed  without  giving  effect  to the  illegal,  invalid  or  unenforceable
provisions.

          11.12 ENTIRETY.
                --------

     This Credit Agreement  together with the other Credit  Documents  represent
the entire agreement of the parties hereto and thereto,  and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or  correspondence  relating to the Credit Documents or the transactions
contemplated herein and therein.

          11.13 BINDING EFFECT; TERMINATION.
                ---------------------------

     (a) This Credit  Agreement shall become  effective at such time on or after
the Closing Date when it shall have been executed by the Borrower and the Agent,
and the Agent shall have received copies hereof  (telefaxed or otherwise) which,
when taken  together,  bear the signatures of each Lender,  and thereafter  this
Credit Agreement shall be binding upon and inure to the benefit of the Borrower,
the Agent and each Lender and their respective successors and assigns.

     (b) The  term of this  Credit  Agreement  shall  be  until  no  Loans,  LOC
Obligations  or any other  amounts  payable  hereunder or under any of the other
Credit  Documents  shall  remain  outstanding  and until all of the  Commitments
hereunder shall have expired or been terminated.

          11.14 CONFIDENTIALITY.
                ---------------

     The Agent and the Lenders  agree to keep  confidential  (and to cause their
respective   affiliates,    officers,    directors,    employees,   agents   and
representatives to keep  confidential) all information,  materials and documents
furnished  to the  Agent or any such  Lender  by or on  behalf  of the  Borrower
(whether  before or after the Closing Date) which relates to the Borrower or any

<PAGE>

of its Subsidiaries  (the  "INFORMATION").  Notwithstanding  the foregoing,  the
Agent and each Lender  shall be  permitted  to disclose  Information  (i) to its
affiliates,  officers,  directors,  employees,  agents  and  representatives  in
connection with its  participation in any of the transactions  evidenced by this
Credit  Agreement or any other Credit  Documents or the  administration  of this
Credit Agreement or any other Credit  Documents;  (ii) to the extent required by
applicable laws and regulations or by any subpoena or similar legal process,  or
requested by any  Governmental  Authority;  (iii) to the extent such Information
(A) becomes publicly available other than as a result of a breach of this Credit
Agreement  or any  agreement  entered  into  pursuant to clause (iv) below,  (B)
becomes available to the Agent or such Lender on a non-confidential basis from a
source other than the Borrower or any of its  Subsidiaries  or (C) was available
to the Agent or such Lender on a non-confidential  basis prior to its disclosure
to the Agent or such Lender by the Borrower or any of its Subsidiaries;  (iv) to
any assignee or participant (or prospective  assignee or participant) so long as
such assignee or participant  (or  prospective  assignee or  participant)  first
specifically  agrees  in a  writing  furnished  to and  for the  benefit  of the
Borrower to be bound by the terms of this  Section  11.14;  or (v) to the extent
that the Borrower  shall have consented in writing to such  disclosure.  Nothing
set forth in this Section 11.14 shall obligate the Agent or any Lender to return
any materials furnished by the Borrower.

          11.15 CONFLICT.
                --------

     To the  extent  that  there is a  conflict  or  inconsistency  between  any
provision hereof, on the one hand, and any provision of any Credit Document,  on
the other hand, this Credit Agreement shall control.

                           [Signature Page to Follow]



<PAGE>

Signature  Page to  Credit  Agreement,  dated  as of  December  1,  1997,  among
Worldtex,  Inc., as Borrower,  certain Subsidiaries of the Borrower, the Lenders
and NationsBank, N.A., as Agent.


     IN WITNESS WHEREOF,  each of the parties hereto has caused a counterpart of
this Credit  Agreement to be duly  executed  and  delivered as of the date first
above written.

BORROWER:                          WORLDTEX, INC.,
--------                           a Delaware corporation


                                   By:______________________________________
                                   Name:____________________________________
                                   Title:___________________________________


GUARANTORS:                        REGAL MANUFACTURING COMPANY, INC.,
----------                         a Delaware corporation


                                   By:______________________________________
                                   Name:____________________________________
                                   Title:___________________________________


                                   ELASTIC CORPORATION OF AMERICA, INC.,
                                   a Delaware corporation


                                   By:______________________________________
                                   Name:____________________________________
                                   Title:___________________________________


                                   ELASTEX, INC.,
                                   a Delaware corporation


                                   By:______________________________________
                                   Name:____________________________________
                                   Title:___________________________________


                                   WTX COLOMBIA I, INC.,
                                   a Delaware corporation


                                   By:______________________________________
                                   Name:____________________________________
                                   Title:___________________________________


<PAGE>


Signature  Page to  Credit  Agreement,  dated  as of  December  1,  1997,  among
Worldtex,  Inc., as Borrower,  certain Subsidiaries of the Borrower, the Lenders
and NationsBank, N.A., as Agent.

                                   
                                   WTX COLOMBIA II, INC.,
                                   a Delaware corporation


                                   By:______________________________________
                                   Name:____________________________________
                                   Title:___________________________________


                                   WILLCOX & GIBBS FILIX OF DELAWARE,
                                   INC., a Delaware corporation


                                   By:______________________________________
                                   Name:____________________________________
                                   Title:___________________________________


                                   REGAL YARNS OF ARGENTINA, INC.,
                                   a North Carolina corporation


                                   By:______________________________________
                                   Name:____________________________________
                                   Title:___________________________________


LENDERS:                           NATIONSBANK, N.A.,
-------                            individually in its capacity as a
                                   Lender and in its capacity as Agent


                                   By:______________________________________
                                   Name:____________________________________
                                   Title:___________________________________


<PAGE>

Signature  Page to  Credit  Agreement,  dated  as of  December  1,  1997,  among
Worldtex,  Inc., as Borrower,  certain Subsidiaries of the Borrower, the Lenders
and NationsBank, N.A., as Agent.


                                   BANQUE NATIONALE DE PARIS

                                   

                                   By:______________________________________
                                   Name:____________________________________
                                   Title:___________________________________