EXHIBIT 10.1


                          Dated as of February 27, 1998

                                 by and between

                         BAGCRAFT CORPORATION OF AMERICA
                                   as Borrower

                                       and

                      GENERAL ELECTRIC CAPITAL CORPORATION
                             as Agent and as Lender




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                                TABLE OF CONTENTS

1.       AMOUNT AND TERMS OF CREDIT........................................1
         1.1      Revolving Credit Advances................................1
         1.2      Term Loans...............................................2
         1.3      Capital Expenditure Loan.................................5
         1.4      Swing Line Facility......................................6
         1.5      Letters of Credit........................................7
         1.6      Prepayment...............................................7
         1.7      Single Loan..............................................9
         1.8      Use of Proceeds..........................................9
         1.9      Interest.................................................9
         1.10     Eligible Accounts.......................................12
         1.11     Eligible Inventory......................................12
         1.12     Fees....................................................12
         1.13     Cash Management Systems.................................12
         1.14     Receipt of Payments.....................................12
         1.15     Application and Allocation of Payments..................13
         1.16     Loan Account and Accounting.............................14
         1.17     Indemnity...............................................14
         1.18     Access..................................................15
         1.19     Taxes...................................................16
         1.20     Capital Adequacy and Other Adjustments..................16
         1.21     Amendment and Restatement...............................18

2.       CONDITIONS PRECEDENT.............................................18
         2.1      Conditions to Initial Loans, Advances
                  and Letter of Credit Obligations........................18
         2.2      Further Conditions to each Loan,
                  Advance and Letter of Credit Obligation.................19
         2.3      Further Conditions to Each
                  Capital Expenditure Advance.............................20

3.       REPRESENTATIONS AND WARRANTIES...................................22
         3.1      Corporate Existence; Compliance with Law................22
         3.2      Executive Offices.......................................22
         3.3      Corporate Power Authorization,
                  Enforceable Obligations.................................22
         3.4      Financial Statements and Projections....................23
         3.5      Collateral Reports......................................23
         3.6      Material Adverse Effect.................................23
         3.7      Ownership of Property; Liens............................23
         3.8      Restrictions; No Default................................24
         3.9      Labor Matters...........................................24
         3.10     Ventures, Subsidiaries and Affiliates;
                  Outstanding Stock and Indebtedness......................24
         3.11     Government Regulation...................................25
         3.12     Margin Regulations......................................25
         3.13     Taxes...................................................25
         3.14     ERISA...................................................26
         3.15     No Litigation...........................................27



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         3.16     Brokers.................................................27
         3.17     Employment Matters......................................27
         3.18     Patents, Trademarks, Copyrights and Licenses............28
         3.19     Full Disclosure.........................................28
         3.20     Hazardous Materials.....................................28
         3.21     Insurance Policies......................................29
         3.22     Deposit and Disbursement Accounts.......................29
         3.23     Government Contracts....................................29
         3.24     Customer and Trade Relations............................29
         3.25     Agreements and Other Documents..........................29
         3.26     Kansas Indebtedness.....................................29

4.       FINANCIAL STATEMENTS AND INFORMATION.............................30
         4.1      Reports and Notices.....................................30
         4.2      Communication with Accountants..........................30

5.       AFFIRMATIVE COVENANTS............................................30
         5.1      Maintenance of Existence and Conduct of Business........30
         5.2      Payment of Obligations..................................30
         5.3      Books and Records.......................................31
         5.4      Litigation..............................................31
         5.5      Insurance...............................................31
         5.6      Compliance with Laws....................................32
         5.7      Agreements..............................................32
         5.8      Supplemental Disclosure.................................32
         5.9      Employee Plans..........................................33
         5.10     Environmental Matters...................................33
         5.11     Landlords' Agreements, Bailee Letters
                  and Mortgagee Agreements................................33
         5.12     Leased Locations of Collateral..........................34
         5.13     Subsidiaries............................................34
         5.14     Maintenance of Equipment and Fixtures...................34
         5.15     Purchase Offers.........................................34
         5.16     Board of Directors......................................34
         5.17     ARTRA Tax Loss Carryforwards............................34

6.       NEGATIVE COVENANTS...............................................34
6.1      Mergers, Etc.....................................................35
         6.2      Investments; Loans and Advances.........................35
         6.3      Indebtedness............................................35
         6.4      Employee Loans and Transactions.........................35
         6.5      Capital Structure and Business..........................36
         6.6      Guaranteed Indebtedness.................................36
         6.7      Liens...................................................36
         6.8      Sale of Assets..........................................36
         6.9      Events of Default.......................................37




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<PAGE>

         6.10     ERISA...................................................37
         6.11     Financial Covenants.....................................37
         6.12     Hazardous Materials.....................................37
         6.13     SaleLeasebacks..........................................38
         6.14     Cancellation of Indebtedness............................38
         6.15     Restricted Payments.....................................38
         6.16     Leases..................................................38
         6.17     Composition.............................................38
         6.18     Accounting Changes......................................38
         6.19     Change of Corporate Name................................38
         6.20     Sale of Stock...........................................38
         6.21     Cash Management.........................................38
         6.22     No Impairment of Upstreaming............................39
         6.23     No Amendment............................................39
         6.24     No Change in Management.................................39
         6.25     Management Agreements...................................39
         6.26     Overriding Agreements...................................39

7.       TERM.............................................................39
         7.1      Termination.............................................39
         7.2      Survival of Obligations Upon Termination
                  of Financing Arrangements...............................39

8.       EVENTS OF DEFAULT: RIGHTS AND REMEDIES...........................40
         8.1      Events of Default.......................................40
         8.2      Remedies................................................43
         8.3      Waivers by Borrower.....................................43

9.       ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT..............44
         9.1      Assignment and Participations...........................44
         9.2      Appointment of Agent....................................45
         9.3      Agent's Reliance, Etc...................................46
         9.4      GE Capital and Affiliates...............................47
         9.5      Lender Credit Decision..................................47
         9.6      Indemnification.........................................47
         9.7      Successor Agent.........................................48
         9.8      Setoff and Sharing of Payments..........................48
         9.9      Advances; Payments; NonFunding Lenders;
                  Information.............................................49

10.      MISCELLANEOUS....................................................51
         10.1     Successors and Assigns..................................51
         10.2     Complete Agreement; Modification of Agreement...........51
         10.3     Amendments and Waivers..................................51
         10.4     Fees and Expenses.......................................54
         10.5     No Waiver...............................................55
         10.6     Remedies................................................55





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         10.7     Severability............................................55
         10.8     Conflict of Terms.......................................55
         10.9     Authorized Signature....................................56
         10.10    GOVERNING LAW...........................................56
         10.11    Notices.................................................57
         10.12    Section Titles..........................................57
         10.13    Counterparts............................................57
         10.14    MUTUAL WAIVER OF JURY TRIAL.............................57
         10.15    Reinstatement...........................................58
         10.16    Advice of Counsel.......................................58
         10.17    Confidentiality.........................................58


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                    INDEX OF EXHIBITS, SCHEDULES AND ANNEXES

Exhibit A          -   Form of Notice of Revolving Credit Advance
Exhibit B          -   Form of Borrowing Base Certificate
Exhibit C          -   Form of Revolving Credit Note
Exhibit D          -   Form of Term Note
Exhibit E          -   Form of Notice of Capital Expenditure Advance
Exhibit F          -   Form of Capital Expenditure Advance
                       Compliance Certificate
Exhibit G          -   Form of Capital Expenditure Loan Note
Exhibit H          -   Form of Swing Line Note
Exhibit I          -   Form of Notice of Conversion/Continuation
Exhibit J          -   Form of Assignment Agreement

Schedule  3.2      -   Executive Offices
Schedule  3.7      -   Real Estate and Leases
Schedule  3.9      -   Labor Matters
Schedule  3.10     -   Ventures, Subsidiaries, Affiliates;
                       Outstanding Stock and Indebtedness
Schedule  3.13     -   Tax Matters
Schedule  3.14     -   ERISA Plans
Schedule  3.15     -   Litigation
Schedule  3.17     -   Employment Matters
Schedule  3.18     -   Intellectual Property
Schedule  3.20     -   Hazardous Materials
Schedule  3.21     -   Insurance Policies
Schedule  3.22     -   Deposit and Disbursement Accounts
Schedule  3.23     -   Government Contracts
Schedule  5.1      -   Trade Names
Schedule  6.3      -   Indebtedness
Schedule  6.4      -   Affiliate and Employee Loans, Transactions and Agreements
Schedule  10.8     -   Authorized Signatures

Annex A            -   Definitions
Annex B            -   Letters of Credit
Annex C            -   Cash Management Systems
Annex D            -   Schedule of Documents
Annex E            -   Responsible Individual
Annex F            -   Eligible Accounts
Annex G            -   Eligible Inventory
Annex H            -   Insurance Standards
Annex I            -   Financial Statements and Projections
Annex J            -   Collateral Reports
Annex K            -   Financial Covenants
Annex L            -   Notice Addresses
Annex M            -   Wire Transfer information
Annex N            -   Commitments



                                        v
<PAGE>



                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                  This SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
February 27, 1998, is by and between BAGCRAFT CORPORATION OF AMERICA, a Delaware
corporation ("Borrower"),  and GENERAL ELECTRIC CAPITAL CORPORATION,  a New York
corporation (in its individual capacity,  "GE Capital"),  for itself, as Lender,
and as Agent for Lenders.

                                    RECITALS

A. The parties  hereto are parties to an Amended and Restated  Credit  Agreement
dated as of December 30, 1996 (as heretofore amended,  supplemented or otherwise
modified,  the "Prior Credit  Agreement")  pursuant to which Lenders provided to
Borrower  aggregate  commitments  of up to Fifty  Million Five Hundred  Thousand
Dollars ($50,500,000), subject to the terms and conditions set forth therein.

B. The parties hereto desire to amend and restate the Prior Credit Agreement and
the  "Obligations"   (as  defined  therein)  to  reflect   continued   aggregate
commitments of up to Fifty Million Five Hundred Thousand  Dollars  ($50,500,000)
provided by Lenders to Borrower,  subject to the terms and  conditions set forth
herein.

C.  Capitalized  terms used in this Agreement and not otherwise  defined in this
Agreement  shall have the meanings  ascribed to them in Annex A. All  Schedules,
Exhibits,  Annexes and other attachments hereto, or expressly identified to this
Agreement,  are incorporated  herein by reference,  and taken together with this
Agreement,  shall  constitute  but a single  agreement.  These Recitals shall be
construed as part of the Agreement.

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
mutual covenants hereinafter contained, the parties hereto agree as follows:

1.       AMOUNT AND TERMS OF CREDIT

              1.1  Revolving Credit Advances.  Upon and subject to the terms and
conditions  hereof,  each Lender  agrees to make  available,  from time to time,
until the Commitment  Termination  Date, for Borrower's use and upon the request
of Borrower  therefor,  advances (each, a "Revolving  Credit  Advance")  against
Eligible  Accounts and Eligible  Inventory  in an aggregate  amount  outstanding
which, pursuant to Section 1.1(b), shall not at any given time exceed the lesser
at  such  time  of (i)  the  Maximum  Revolving  Credit  Loan  minus  the sum of
outstanding  Letter  of  Credit  Obligations,  and (ii) an  amount  equal to the
Borrowing  Base  minus  the sum of  outstanding  Letter  of  Credit  Obligations
("Borrowing Availability"), in each case less the Swing Line Loan outstanding at
such time and such reserves as Agent may deem  appropriate  from time to time in
its sole and absolute  discretion.  Until all amounts  outstanding in respect of
the  Revolving  Credit  Loan  shall  become due and  payable  on the  Commitment
Termination  Date,  Borrower  may from time to time  borrow,  repay and reborrow
under this Section 1.1(a). Each Revolving Credit Advance shall be made on notice
by Borrower to the individual  responsible for Borrower as identified on Annex E
at the address  specified  thereon,  given no later than (1) 11:30 a.m. (Chicago
time) on the Business Day of the proposed Revolving Credit Advance,  in the case
of an Index Rate Loan and (2) 11:30


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a.m.  (Chicago  time) on the date  which is  three  Business  Days  prior to the
proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice
(a "Notice of Revolving  Credit  Advance") shall be substantially in the form of
Exhibit A,  specifying  therein the requested date, the amount of such Revolving
Credit Advance, and such other information as may be required by Agent and shall
be given in writing  (by  telecopy,  telex or cable) or by  telephone  confirmed
immediately in writing. If Borrower desires to have the Revolving Credit Advance
bear interest by reference to a LIBOR Rate, it must comply with Section  1.9(f).
Agent shall be entitled to rely upon,  and shall be fully  protected  under this
Agreement in relying upon, any Notice of Revolving  Credit  Advance  believed by
Agent to be genuine and to assume that each Person  executing and delivering the
same was duly  authorized  unless  the  responsible  individual,  or a  designee
thereof,  acting thereon for Agent shall have, at the time of reliance  thereon,
actual knowledge to the contrary.

              (b)  Borrower  shall  execute and deliver to each Lender a note to
evidence the Revolving  Credit Loan, such note to be in the principal  amount of
the  Revolving  Loan  Commitment  of such  Lender,  dated the  Closing  Date and
substantially  in the form of  Exhibit  C (each,  as  executed  and as it may be
amended,  restated,  supplemented  or  otherwise  modified  from time to time, a
"Revolving Credit Note" and,  collectively,  the "Revolving Credit Notes").  The
Revolving  Credit Notes shall  represent  the  obligation of Borrower to pay the
amount of the Maximum  Revolving  Credit Loan or, if less, the aggregate  unpaid
principal  amount of all Revolving  Credit  Advances made by Lenders to Borrower
and all other  Obligations  with interest  thereon as prescribed in Section 1.9.
The date and  amount  of each  Revolving  Credit  Advance  and each  payment  of
principal  with  respect  thereto  shall be recorded on the books and records of
Agent,  which books and records  shall  constitute  prima facie  evidence of the
accuracy of the information  therein recorded.  The entire unpaid balance of the
Revolving  Credit Loan shall be  immediately  due and payable on the  Commitment
Termination Date.

              1.2 Term Loans.  (a) Upon and subject to the terms and  conditions
hereof,  each  Lender  agrees to  provide  its Pro Rata  Share of a term loan to
Borrower  on  the  Closing  Date,  in  the  amount  of  Twenty  Million  Dollars
($20,000,000)  ("Term  Loan  A").  Amounts  repaid  under  Term  Loan A may  not
thereafter be reborrowed. Borrower shall pay the principal amount of Term Loan A
in consecutive  installments on the twentieth day of March, June,  September and
December of each year (each, a "Payment  Date"),  commencing  March 20, 1998, as
follows:

                           Payment Date              Installment Amount

                           Each of the four (4)             $300,000
                           Payment Dates occurring
                           from March 20, 1998
                           through December 20, 1998

                           Each of the four (4)             $450,000
                           Payment Dates occurring
                           from March 20, 1999
                           through December 20, 1999


                                        2

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                           Each of the four (4)             $1,375,000
                           Payment Dates occurring
                           from March 20, 2000
                           through December 20, 2000

                           Each of the four (4)             $1,375,000
                           Payment Dates occurring
                           from March 20, 2001
                           through December 20, 2001

                           Each of the four (4)             $1,500,000
                           Payment Dates occurring
                           from March 20, 2002
                           through December 20, 2002

Notwithstanding  anything to the contrary contained herein or in the Term Loan A
Notes,  the then entire unpaid balance of Term Loan A shall be  immediately  due
and payable upon the first to occur of the (i) Commitment  Termination  Date and
(ii) acceleration of the Revolving Credit Loan.

                  Borrower  shall  execute  and deliver to each Lender a note to
evidence Term Loan A, such note to be in a principal  amount equal to the amount
of Term Loan A provided by such Lender, dated the Closing Date and substantially
in the form of Exhibit D (each, as executed and as it may be amended,  restated,
supplemented or otherwise modified and in effect from time to time, a "Term Loan
A Note" and, collectively, the "Term Loan A Notes"). The Term Loan A Notes shall
represent  the  obligation  of Borrower to pay the amount of Term Loan A and all
other  obligations  with interest thereon as prescribed in Section 1.9. The date
and amount of each  payment of  principal  and  interest on Term Loan A shall be
recorded  on the books and  records  of Agent,  which  books and  records  shall
constitute  prima facie  evidence of the  accuracy  of the  information  therein
recorded.

                  (b) Upon and subject to the terms and conditions hereof,  each
Lender  agrees to provide  its Pro Rata Share of a term loan to  Borrower on the
Closing Date,  in the amount of Five Million  Dollars  ($5,000,000)  ("Term Loan
B"). Amounts repaid under Term Loan B may not thereafter be reborrowed. Borrower
shall pay the principal  amount of Term Loan B in  consecutive  installments  on
each Payment Date, commencing March 20, 1998, as follows:

                           Payment Date              Installment Amount

                           Each of the twenty (20)          $12,500
                           Payment  Dates
                           occurring from March 20, 1998
                           through  December 20, 2002

                           Each of the four (4)             $1,187,500
                           Payment Dates occurring
                           from March 20, 2003
                           through December 20, 2003



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Notwithstanding  anything to the contrary contained herein or in the Term Loan B
Notes,  the then entire unpaid balance of Term Loan B shall be  immediately  due
and payable upon the first to occur of the (i) Commitment  Termination  Date and
(ii) acceleration of the Revolving Credit Loan.

                  Borrower  shall  execute  and deliver to each Lender a note to
evidence Term Loan B, such note to be in a principal  amount equal to the amount
of Term Loan B provided by such Lender, dated the Closing Date and substantially
in the form of Exhibit D (each, as executed and as it may be amended,  restated,
supplemented or otherwise modified and in effect from time to time, a "Term Loan
B Note" and, collectively, the "Term Loan B Notes"). The Term Loan B Notes shall
represent  the  obligation  of Borrower to pay the amount of Term Loan B and all
other  obligations  with interest thereon as prescribed in Section 1.9. The date
and amount of each  payment of  principal  and  interest on Term Loan B shall be
recorded  on the books and  records  of Agent,  which  books and  records  shall
constitute  prima facie  evidence of the  accuracy  of the  information  therein
recorded.

                  (c) Upon and subject to the terms and conditions hereof,  each
Lender  agrees to provide  its Pro Rata Share of a term loan to  Borrower on the
Closing  Date,  in the amount of Seven  Million  Five Hundred  Thousand  Dollars
($7,500,000)  ("Term  Loan  C").  Amounts  repaid  under  Term  Loan  C may  not
thereafter be reborrowed. Borrower shall pay the principal amount of Term Loan C
in consecutive  installments on each Payment Date, commencing March 20, 1998, as
follows:

                           Payment Date                     Installment Amount

                           Each of the twenty-four (24)          $18,750
                           Payment Dates
                           occurring  from March 20, 1998
                           through  December 20, 2003

                           Each of the four (4)                  $1,762,500
                           Payment Dates occurring
                           from March 20, 2004
                           through December 20, 2004

Notwithstanding  anything to the contrary contained herein or in the Term Loan C
Notes,  the then entire unpaid balance of Term Loan C shall be  immediately  due
and payable upon the first to occur of the (i) Commitment  Termination  Date and
(ii) acceleration of the Revolving Credit Loan.

                  Borrower  shall  execute  and deliver to each Lender a note to
evidence Term Loan C, such note to be in a principal  amount equal to the amount
of Term Loan C provided by such Lender, dated the Closing Date and substantially
in the form of Exhibit D (each, as executed and as it may be amended,  restated,
supplemented or otherwise modified and in effect from time to time, a "Term Loan
C Note" and, collectively, the "Term Loan C Notes"). The Term Loan C Notes shall
represent  the  obligation  of Borrower to pay the amount of Term Loan C and all
other  obligations  with interest thereon as prescribed in Section 1.9. The date
and amount of each payment of principal and interest




                                        4

<PAGE>



on Term Loan C shall be recorded on the books and records of Agent,  which books
and  records  shall  constitute  prima  facie  evidence  of the  accuracy of the
information therein recorded.

                   1.3 Capital  Expenditure  Loan.  (a) Subject to the terms and
conditions hereof, each Lender agrees to make available from time to time, until
December 31, 1999,  in  connection  with the  financing of Capital  Expenditures
constituting the acquisition  cost of Equipment,  its Pro Rata Share of advances
(each, a "Capital Expenditure  Advance") under the Capital Expenditure Loan. The
aggregate  Capital  Expenditure  Advances  incurred  during  the  term  of  this
Agreement shall not exceed the Capital Expenditure Loan Commitment. In addition,
each Capital  Expenditure Advance shall not exceed the lesser of (x) the Maximum
Capital  Expenditure Advance Amount or (y) Capital Expenditure Loan Availability
as of the date of such Capital  Expenditure  Advance.  Amounts from time to time
borrowed  under this  Section  1.3(a) and  repaid  may not be  reborrowed.  Each
Capital Expenditure Advance must be in a minimum amount of $500,000 and integral
multiples  of  $500,000  in excess of such  amount.  Subject  to the  additional
advance notice  requirements set forth in Section 2.3, each Capital  Expenditure
Advance shall be made on notice by Borrower to the  individual  responsible  for
Borrower as identified  on Annex E at the address  specified  thereon,  given no
later than (1) 11:30 a.m.  (Chicago  time) on the  Business  Day of the proposed
Capital  Expenditure  Advance,  in the case of an Index  Rate Loan and (2) 11:30
a.m. (Chicago time) on the date which is two Business Days prior to the proposed
Capital  Expenditure  Advance,  in the case of a LIBOR Loan. Each such notice (a
"Notice of Capital  Expenditure  Advance") shall be substantially in the form of
Exhibit E,  specifying  therein the requested  date,  the amount of such Capital
Expenditure  Advance, and such other information as may be required by Agent and
shall be  given in  writing  (by  telecopy,  telex  or  cable)  or by  telephone
confirmed  immediately  in  writing.  If  Borrower  desires to have the  Capital
Expenditure  Advance bear  interest by reference to a LIBOR Rate, it must comply
with Section  1.9(f).  Agent shall be entitled to rely upon,  and shall be fully
protected   under  this  Agreement  in  relying  upon,  any  Notice  of  Capital
Expenditure  Advance  believed  by Agent to be genuine  and to assume  that each
Person  executing  and  delivering  the  same  was duly  authorized  unless  the
responsible  individual,  or a designee thereof,  acting thereon for Agent shall
have, at the time of reliance thereon, actual knowledge to the contrary.

                  (b) Borrower  shall  execute and deliver to each Lender a note
to  evidence  the  Capital  Expenditure  Loan,  such  note to be in the  maximum
principal  amount of the Capital  Expenditure  Loan  Commitment  of such Lender,
dated the  Closing  Date and  substantially  in the form of Exhibit G (each,  as
executed and as it may be amended, restated,  supplemented or otherwise modified
from time to time,  a "Capital  Expenditure  Loan Note" and,  collectively,  the
"Capital  Expenditure  Loan Notes").  The Capital  Expenditure  Loan Notes shall
represent  the  obligation  of  Borrower  to  pay  the  amount  of  the  Capital
Expenditure  Loan Commitment or, if less, the aggregate  unpaid principal amount
of the  Capital  Expenditure  Loan made by  Lenders  to  Borrower  and all other
Obligations with interest  thereon as prescribed in Section 1.9.  Borrower shall
pay  the  principal  amount  of  each  Capital   Expenditure  Advance  in  equal
installments on twelve (12) consecutive Payment Dates, commencing with the first
Payment Date to occur after the making of such Capital Expenditure  Advance. The
date  and  amount  of each  Capital  Expenditure  Advance  and each  payment  of
principal  with  respect  thereto  shall be recorded on the books and records of
Agent,  which books and records  shall  constitute  prima facie  evidence of the
accuracy of the information therein recorded. Notwithstanding the foregoing, the
entire unpaid balance of the Capital


                                        5

<PAGE>



Expenditure  Loan  shall  be  immediately  due  and  payable  on the  Commitment
Termination Date, if not sooner paid in full.

                   1.4 Swing Line  Facility.  (a) Agent  shall  notify the Swing
Line Lender upon  Agent's  receipt of any Notice of  Revolving  Credit  Advance.
Subject to the terms and  conditions  hereof,  the Swing Line Lender may, in its
discretion,  make available  from time to time until the Commitment  Termination
Date advances (each, a "Swing Line Advance") in accordance with any such notice.
The  aggregate  amount of Swing Line Advances  outstanding  shall not exceed the
lesser of (i) the Borrowing Base minus the sum of the Revolving  Credit Loan and
Letter of Credit Obligations  outstanding at such time and reserves  established
by Agent in accordance  with this  Agreement and (ii) the Swing Line  Commitment
("Swing Line Availability"). Until the Commitment Termination Date, Borrower may
from time to time borrow,  repay and reborrow  under this Section  1.4(a).  Each
Swing  Line  Advance  shall be made  pursuant  to a Notice of  Revolving  Credit
advance delivered by Borrower to Agent in accordance with Section 1.1(a).  Those
notices  must be given no later than 11:30 a.m.  (Chicago  time) on the Business
Day of the proposed Swing Line Advance.  Notwithstanding  any other provision of
this Agreement or the other Loan Documents, the Swing Line Loan shall constitute
an Index Rate Loan.  Borrower  shall repay the aggregate  outstanding  principal
amount of the Swing Line Loan upon demand therefor by Agent.

                  (b)  Borrower  shall  execute  and  deliver  to the Swing Line
Lender a note to  evidence  the Swing  Line  Commitment,  such note to be in the
principal  amount of the Swing Line  Commitment of the Swing Line Lender,  dated
the Closing Date and  substantially in the form of Exhibit H (as executed and as
it may be amended,  restated,  supplemented  or otherwise  modified from time to
time, the "Swing Line Note"). The Swing Line Note shall represent the obligation
of  Borrower  to pay the amount of the Swing Line  Commitment  or, if less,  the
aggregate  unpaid  principal  amount of all Swing Line Advances made to Borrower
with interest  thereon as prescribed in Section 1.9. The date and amount of each
Swing Line Advance and each payment of principal  with respect  thereto shall be
recorded  on the books and  records  of Agent,  which  books and  records  shall
constitute  prima facie  evidence of the  accuracy  of the  information  therein
recorded.  The entire unpaid balance of the Swing Line Loan shall be immediately
due and payable on the Commitment Termination Date if not sooner paid in full.

                  (c) Refunding of Swing Line Loans.  The Swing Line Lender,  at
any time and from  time to time in its  sole  and  absolute  discretion,  may on
behalf of Borrower (and Borrower  hereby  irrevocably  authorizes the Swing Line
Lender to so act on its behalf)  request each Lender  (including  the Swing Line
Lender) with a Revolving Loan Commitment (each, a "Revolving  Lender") to make a
Revolving  Credit Advance to Borrower  (which shall be an Index Rate Loan) in an
amount equal to such Revolving  Lender's Pro Rata Share of the principal  amount
of the Swing Line Loan (the "Refunded Swing Line Loan")  outstanding on the date
such notice is given.  Unless any of the events  described  in Sections  8.1(g),
8.1(h) or 8.1(i) shall have  occurred (in which event the  procedures of Section
1.4(d) shall apply) and regardless of whether the conditions precedent set forth
in  this  Agreement  to the  making  of a  Revolving  Credit  Advance  are  then
satisfied,  each Revolving Lender shall disburse directly to Agent, its Pro Rata
Share of a Revolving Credit Advance on behalf of the Swing Line Lender, prior to
2:00 p.m.  (Chicago  time),  in immediately  available funds on the Business Day
next succeeding the date such notice is given. The proceeds of such


                                        6

<PAGE>



Revolving Credit Advances shall be immediately paid to the Swing Line Lender and
applied to repay the Refunded Swing Line Loan.

                  (d)  Participation in Swing Line Loans. If, prior to refunding
a Swing Line Loan with a Revolving  Credit Advance  pursuant to Section  1.4(c),
one of the events  described  in Sections  8.1(g),  8.1(h) or 8.1(i)  shall have
occurred,  then,  subject to the  provisions of Section  1.4(e),  each Revolving
Lender will, on the date such Revolving Credit Advance was to have been made for
the  benefit  of  Borrower,  purchase  from the Swing Line  Lender an  undivided
participation interest in the Swing Line Loan in an amount equal to its Pro Rata
Share of such Swing Line Loan. Upon request, each Revolving Lender will promptly
transfer to the Swing Line Lender, in immediately available funds, the amount of
its participation.

                  (e)  Revolving  Lenders'   Obligations   Unconditional.   Each
Revolving  Lender's  obligation to make Revolving  Credit Advances in accordance
with Section 1.4(c) and to purchase  participating  interests in accordance with
Section 1.4(d) shall be absolute and  unconditional and shall not be affected by
any circumstance, including (A) any setoff, counterclaim, recoupment, defense or
other right which such Revolving  Lender may have against the Swing Line Lender,
Borrower or any other Person for any reason  whatsoever;  (B) the  occurrence or
continuance of any Default or Event of Default; (C) any inability of Borrower to
satisfy the conditions precedent to borrowing set forth in this Agreement on the
date upon which such participating  interest is to be purchased or (D) any other
circumstance,  happening or event  whatsoever,  whether or not similar to any of
the foregoing.  If any Revolving  Lender does not make available to Agent or the
Swing Line Lender, as applicable, the amount required pursuant to Section 1.4(c)
or 1.4(d),  as the case may be,  the Swing  Line  Lender  shall be  entitled  to
recover such amount on demand from such Revolving Lender, together with interest
thereon for each day from the date of  non-payment  until such amount is paid in
full at the Federal  Funds Rate for the first two Business Days and at the Index
Rate thereafter.

                   1.5 Letters of Credit. Subject to the terms and conditions of
this Agreement, including Annex B, Borrower shall have the right to request, and
each Lender agrees to incur or purchase participations in its Pro Rata Share of,
Letter of Credit Obligations in accordance with Annex B.

                   1.6 Prepayment.  In the event that the outstanding balance of
the Revolving Credit Loan shall, at any time,  exceed the lesser at such time of
(i) the  Maximum  Revolving  Credit  Loan  minus  the sum of  Letter  of  Credit
Obligations then outstanding and (ii) the Borrowing Base minus the sum of Letter
of Credit  Obligations then  outstanding,  in each case less the Swing Line Loan
then  outstanding and reserves  established by Agent pursuant to this Agreement,
Borrower shall immediately repay the Revolving Credit Loan in the amount of such
excess.

                   (b) Borrower  shall have the right at any time on thirty (30)
days' prior written notice to Agent to terminate and prepay the entire Revolving
Credit Loan.  Upon any such  termination  and  prepayment,  Borrower's  right to
receive Advances or request the incurrence of Letter of Credit Obligations shall
simultaneously terminate and, notwithstanding anything to the contrary contained
herein or the Notes, the entire outstanding balances of the Term Loans and the



                                        7

<PAGE>



Capital  Expenditure  Loan  shall be  immediately  due and  payable.  Each  such
prepayment  and  termination  shall be accompanied by the payment of all accrued
and unpaid interest and all Fees and other remaining Obligations,  including the
Letter of Credit Obligations and the then outstanding balances of the Term Loans
and the Capital  Expenditure  Loan. Any prepayment made pursuant hereto shall be
accompanied  by the payment of Fees in  accordance  with  Section 1.12 and LIBOR
funding breakage costs in accordance with Section 1.17(b).

                   (c) Borrower  shall have the right at any time on thirty (30)
days' prior written notice to Agent to voluntarily  prepay all or any portion of
any Term Loan or the Capital  Expenditure Loan. Any prepayments of less than all
of the  outstanding  balance of any Term Loan or the  Capital  Expenditure  Loan
shall be applied to the then remaining  installments of such Loan in the inverse
order of maturity until paid in full. Any prepayment  made pursuant hereto shall
be accompanied by the payment of Fees in accordance  with Section 1.12 and LIBOR
funding breakage costs in accordance with Section 1.17(b).

                   (d)  Immediately  upon receipt by Borrower of Net Proceeds of
any Asset  Disposition,  Borrower  shall  apply all of such Net  Proceeds in the
order set forth in Section 1.15(a);  provided,  however, the foregoing shall not
apply to an Asset  Disposition  to the extent the Net  Proceeds  thereof are (i)
used to refund or fund Borrower's  purchase within sixty (60) days prior to such
Asset  Disposition  of capital  assets for use in its  business  or (ii) used by
Borrower within  one-hundred  eighty (180) days following such Asset Disposition
to purchase  capital  assets for use in its business (and to the extent such Net
Proceeds  exceed the costs of any of the  foregoing  purchases,  such excess Net
Proceeds  shall  be  governed  by  this  Section  1.6(d)).  Notwithstanding  the
preceding  sentence,  immediately upon Borrower's  receipt of Net Proceeds to be
utilized pursuant to the foregoing  proviso,  such Net Proceeds shall be applied
to the  outstanding  principal  amount of the  Revolving  Credit  Loan  (without
permanent  reduction of the Revolving Loan  Commitment);  provided,  that if the
purchases  referred  to in such  proviso are not made by the  expiration  of the
applicable  time periods  indicated  therein,  such Net  Proceeds  shall then be
applied in the order set forth in Section  1.15(a).  All sales or  purchases  of
assets  referred to herein (A) shall be subject to the provisions of Section 6.8
and (B) shall be, or shall have been, as the case may be, offered or sold to, or
purchased  from,  a Person  that is not an  Affiliate  of Borrower or any of its
Subsidiaries on an arms' length basis.

                   (e)  Immediately  upon receipt by Borrower of the proceeds of
any  issuance  of Stock or debt  securities,  Borrower  shall  apply all of such
proceeds,  net of underwriting  discounts and  commissions and other  reasonable
costs paid to non-Affiliates in connection therewith,  in the order set forth in
Section 1.15(a).

                   (f) Within sixty (60) days  following  the end of each Fiscal
Year,  Borrower shall prepay the Loans in an amount equal to fifty percent (50%)
of Excess Cash Flow for such Fiscal Year  calculated  on the basis of Borrower's
financial statements for such Fiscal Year delivered to Agent pursuant to Section
4.1.  All such  prepayments  from Excess Cash Flow shall be applied in the order
set forth in Section 1.15(a).  Concurrently with the making of any such payment,
Borrower shall deliver to Agent a certificate of its chief executive  officer or
chief financial officer  demonstrating its calculation of the amount required to
be paid.

                                        8

<PAGE>




                   1.7  Single  Loan.  All  Loans,  Advances,  Letter  of Credit
Obligations and other Obligations of Borrower under this Agreement and the other
Loan Documents shall  constitute one (1) obligation of Borrower  secured,  until
repaid  in  full  and  Commitments  therefor  are  terminated,  by  all  of  the
Collateral.

                   1.8 Use of Proceeds.  Borrower  shall utilize the proceeds of
all Revolving  Credit  Advances,  Swing Line Advances and the Term Loans for the
financing of ordinary  working  capital  needs and Capital  Expenditures  to the
extent permitted  hereunder.  Borrower shall utilize the proceeds of all Capital
Expenditure  Advances for the  financing of Capital  Expenditures  to the extent
permitted hereunder.

                   1.9 Interest.  Borrower shall pay interest to Agent,  for the
ratable  benefit of Lenders,  in arrears  (i) as to any Index Rate Loan,  on the
first day of each calendar month to occur while such Loan is  outstanding,  (ii)
as to any LIBOR Loan,  on the last day of the LIBOR Period  applicable  thereto,
(iii) on the Commitment  Termination  Date, and (iv) if any interest  accrues or
remains payable after the Commitment Termination Date, upon demand by Agent.

                   (b) If any interest or other  payment on any Loan becomes due
and payable on a day other than a Business  Day, the maturity  thereof  shall be
extended  to the  next  succeeding  Business  Day  (except  as set  forth in the
definition of LIBOR Period) and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.

                   (c) Borrower shall be obligated to pay interest to Agent, for
the ratable  benefit of Lenders,  at a rate equal to (i) the Index Rate plus the
applicable  per annum rate (the "Index  Margin") set forth in the following grid
or (ii) at Borrower's election in accordance with Section 1.9(f), the applicable
LIBOR Rate plus the  applicable  per annum rate (the "LIBOR  Margin";  the Index
Margin and LIBOR  Margin,  each a  "Margin"),  in each case based on the amounts
outstanding from time to time under the applicable Loan.


                                           > 1.5
     Margin Ratio              < 1.5       but < 1.75     > 1.75
     ------------              -----       ----------     ------

Revolving Credit Loan
         LIBOR Margin          2.50            2.25        2.00
         Index Margin          0.00            0.00        0.00

Swing Line Loan
         LIBOR Margin          n.a.            n.a.        n.a.
         Index Margin          0.00            0.00        0.00

Term Loan A
         LIBOR Margin          3.00            2.75        2.50
         Index Margin          0.25            0.00        0.00




                                        9
<PAGE>

Term Loan B
         LIBOR Margin          3.50            3.50        3.50
         Index Margin          0.75            0.75        0.75

Term Loan C
         LIBOR Margin          3.75            3.75         3.75
         Index Margin          1.00            1.00         1.00

Capital Expenditure Loan
         LIBOR Margin           3.00           2.75         2.50
         Index Margin           0.25           0.00         0.00



Initially,  the  applicable  Margin for each Loan shall be the highest rates set
forth in the foregoing grid for such Loan.  Thereafter,  all  determinations  of
each Margin will be based on the ratio of (1) EBITDA to (2) the sum of (A) Fixed
Charges  plus  (B) the  greater  of (I)  actual  Capital  Expenditures  and (II)
$2,500,000  (collectively,  the "Margin Ratio"),  all as determined for Borrower
and its  Subsidiaries on a consolidated  basis as of the last day of each Fiscal
Quarter for the trailing  twelve (12) Fiscal Months then ended.  All adjustments
(up or down) in the Margins  will be  implemented  prospectively  on a quarterly
basis,  effective on the first day of the first Fiscal  Quarter that occurs more
than five (5) days after delivery of Borrower's  quarterly Financial  Statements
for  the  preceding  Fiscal  Quarter  to  Lenders,   commencing  with  Financial
Statements  delivered for the fourth Fiscal Quarter of 1997.  Concurrently  with
the delivery of such Financial  Statements,  Borrower shall deliver to Agent and
Lenders a certificate,  signed by its chief financial officer,  setting forth in
reasonable  detail the basis for the  determination of each Margin. If a Default
or an Event of Default shall have  occurred or be  continuing  at the time,  the
applicable  Margin  for each  Loan  shall be the  highest  rate set forth in the
foregoing  grid for such Loan  until the first day of the first  calendar  month
following the date on which such Default or Event of Default is waived or cured.
Thereafter, each Margin shall be as determined based on the foregoing grid.

                   (d) All  computations  of interest  shall be made by Agent on
the  basis of a three  hundred  and sixty  (360) day year,  in each case for the
actual  number of days  occurring  in the  period  for which  such  interest  is
payable.  The  Index  Rate  applicable  during  each  calendar  month  shall  be
determined on the last day of the  preceding  calendar  month,  and the interest
rate  applicable  during each calendar  month shall be  calculated  based on the
Index Rate as in effect for that calendar month. Each  determination by Agent of
an interest rate  hereunder  shall be  conclusive  and binding for all purposes,
absent manifest error or bad faith.

                   (e)  (i) So long as any  Default  or  Event  of  Default  not
described in the following clause (ii) shall have occurred and be continuing, at
the  election  of Agent  (or upon the  written  request  of  Requisite  Lenders)
confirmed by written notice from Agent to Borrower and (ii) so long as any Event
of Default  specified in Section  8.1(g),  (h) or (i) shall have occurred and be
continuing,  the interest rate applicable to the Loans and all other Obligations
shall be  increased  by two  percent  (2%) per annum above the rates of interest
otherwise applicable hereunder ("Default Rate").


                                       10

<PAGE>



                   (f) So long as no  Default  or Event of  Default  shall  have
occurred and be continuing,  and subject to the additional  conditions precedent
set forth in Section 2.2, Borrower shall have the option to (i) request that any
Revolving  Credit  Advances or Capital  Expenditure  Loan  Advances be made as a
LIBOR Loan, (ii) convert at any time all or any part of outstanding Loans (other
than the Swing Line Loan) from Index Rate Loans to LIBOR  Loans,  (iii)  convert
any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR breakage costs
in  accordance  with  Section  1.17(b) if such  conversion  is made prior to the
expiration of the LIBOR Period applicable  thereto,  or (iv) continue all or any
portion  of any Loan  (other  than the Swing Line Loan) as a LIBOR Loan upon the
expiration of the applicable  LIBOR Period,  in which case the succeeding  LIBOR
Period of that continued Loan shall commence on the last day of the LIBOR Period
of the Loan to be  continued.  Any Loan to be made or continued as, or converted
into,  a LIBOR  Loan must be in a  minimum  amount of  $1,000,000  and  integral
multiples of $500,000 in excess of such amount.  Any such  election must be made
by 11:30 a.m.  (Chicago  time) on the third (3rd)  Business Day prior to (1) the
date of any proposed  Advance which is to bear  interest at the LIBOR Rate,  (2)
the end of each LIBOR  Period with respect to any LIBOR Loans to be continued as
such, or (3) the date on which Borrower wishes to convert any Index Rate Loan to
a LIBOR Loan for a LIBOR Period  designated by Borrower in such election.  If no
election is received with respect to a LIBOR Loan by 11:30 a.m.  (Chicago  time)
on the  third  (3rd)  Business  Day prior to the end of the  LIBOR  Period  with
respect  thereto (or if a Default or an Event of Default shall have occurred and
be continuing or the additional conditions precedent set forth in Section 2.2 or
2.3, as  applicable,  shall not have been  satisfied),  that LIBOR Loan shall be
converted to an Index Rate Loan at the end of its LIBOR  Period.  Borrower  must
make such  election  by notice to Agent in writing,  by  telecopy  or  overnight
courier.  In the case of any conversion or  continuation,  such election must be
made pursuant to a written notice (a "Notice of Conversion/Continuation") in the
form of Exhibit I.

                   (g)  Notwithstanding  anything to the  contrary  set forth in
this  Section  1.9,  if,  at  any  time  until  payment  in  full  of all of the
Obligations,  any rate of interest payable hereunder exceeds the highest rate of
interest  permissible  under  any law  which a court of  competent  jurisdiction
shall, in a final  determination,  deem  applicable  hereto (the "Maximum Lawful
Rate"),  then in such event and so long as the  Maximum  Lawful Rate would be so
exceeded,  such rate of interest payable  hereunder shall be reduced to be equal
to the Maximum Lawful Rate;  provided,  however,  that if at any time thereafter
the rate of interest  payable  hereunder  is less than the Maximum  Lawful Rate,
Borrower  shall  continue to pay interest  hereunder at the Maximum  Lawful Rate
until such time as the total interest  received by Agent,  on behalf of Lenders,
from the making of such advances  hereunder is equal to the total interest which
would have been received had the interest rate payable  hereunder  been (but for
the  operation of this  paragraph)  the interest  rate payable since the Closing
Date, as otherwise  provided in this  Agreement.  Thereafter,  the interest rate
payable  hereunder shall be the applicable rate of interest  provided in Section
1.9(c) or (e) of this  Agreement,  unless and until the rate of  interest  again
exceeds the Maximum  Lawful  Rate,  in which  event this  paragraph  shall again
apply.  In no event shall the total interest  received by any Lender pursuant to
the terms  hereof  exceed  the amount  which such  Lender  could  lawfully  have
received had the interest due hereunder been calculated for the full term hereof
at the Maximum  Lawful Rate. In the event the Maximum  Lawful Rate is calculated
pursuant to this  paragraph,  such interest  shall be calculated at a daily rate
equal to the Maximum  Lawful  Rate  divided by the number of days in the year in
which  such  calculation  is  made.  In the  event  that a  court  of  competent
jurisdiction,

                                       11

<PAGE>



notwithstanding  the  provisions  of this  Section  1.9 (g),  shall make a final
determination  that a Lender has received interest hereunder or under any of the
other Loan Documents in excess of the Maximum Lawful Rate,  Agent shall,  to the
extent permitted by applicable law,  promptly apply such excess in the order set
forth in  Section  1.15(a)  and,  thereafter,  with  respect to any  excess,  to
Borrower or as a court of competent jurisdiction may otherwise order.

                   1.1 Eligible  Accounts.  Based on the most recent Schedule of
Accounts  delivered by Borrower to Agent and on other  information  available to
Agent,  Agent shall at its sole  discretion  determine  which  Accounts shall be
deemed to be "Eligible  Accounts" for purposes of  determining  the amounts,  if
any, to be advanced to Borrower under the Revolving  Credit Loan. In determining
whether a particular  Account  constitutes an Eligible Account,  Agent shall not
include any such Account which is excluded by the criteria set forth on Annex F.

                   1.11 Eligible Inventory. Based on the most recent Schedule of
Inventory  delivered by Borrower to Agent and on other information  available to
Agent,  Agent shall in its sole  discretion  determine  which Inventory shall be
deemed to be "Eligible  Inventory" for purposes of determining  the amounts,  if
any, to be advanced to Borrower under the Revolving  Credit Loan. In determining
whether any particular Inventory constitutes Eligible Inventory, Agent shall not
include Inventory which is excluded by the criteria set forth on Annex G.

                   1.12 Fees.  Borrower  shall pay to GE Capital,  individually,
the fees specified in that certain Fee Letter,  dated as of the Closing Date (as
from time to time amended, restated, supplemented or otherwise modified, the "GE
Capital Fee Letter"), at the times specified for payment therein.

                   (b) As additional  compensation  for Lenders' costs and risks
in making the Revolving  Credit Loan available to Borrower,  Borrower  agrees to
pay to Agent,  for the  ratable  benefit of Lenders,  in  arrears,  on the first
Business Day of each month prior to the Commitment  Termination  Date and on the
Commitment  Termination  Date, a fee for Borrower's  non-use of available  funds
(the "Non-use Fee") in an amount equal to  three-eighths  of one percent (.375%)
per annum  (calculated  on the basis of a three hundred and sixty (360) day year
and actual days elapsed) of the difference between the respective daily averages
of (i) the Maximum  Revolving  Credit Loan (as it may be adjusted  and in effect
from time to time  hereunder)  and (ii) the amount of the Revolving  Credit Loan
plus the  Swing  Line Loan plus the  Letter  of Credit  Obligations  outstanding
during the period for which the Non-Use Fee is due.

                   1.13 Cash  Management  Systems.  Prior to the  Closing  Date,
Borrower  shall  have  established  and  will at all  times  maintain  the  cash
management systems described on Annex C.

                   1.14  Receipt of Payments.  Borrower  shall make each payment
under this  Agreement not later than 12:00 noon  (Chicago  time) on the day when
due in lawful  money of the United  States of America in  immediately  available
funds to the Collection Account. For purposes of computing interest and fees and
determining  the amount of funds  available  for  borrowing  pursuant to Section
1.1(a) and 1.3(a), (a) all payments  (including cash sweeps) consisting of cash,
wire or  electronic  transfers in  immediately  available  funds shall be deemed
received on the date of


                                       12

<PAGE>



deposit  thereof in the Collection  Account and notice to Agent of such deposit,
and (b) all payments  consisting of checks,  drafts,  or similar  non-cash items
shall be deemed  received one (1) Business Day after the date of receipt of good
funds following deposit of any such payment in the Collection Account and notice
to Agent of such deposit.

                   1.15  Application  and Allocation of Payments.  So long as no
Default or Event of Default shall have occurred and be continuing,  (i) payments
consisting of proceeds of Accounts  received in the ordinary  course of business
shall be applied  to the Swing Line Loan and the  Revolving  Credit  Loan,  (ii)
payments matching specific scheduled payments then due shall be applied to those
scheduled payments, (iii) voluntary prepayments shall be applied as set forth in
Section 1.6(b) or 1.6(c), as applicable and (iv) mandatory  prepayments shall be
applied as set forth in Sections 1.6(d), 1.6(e) or 1.6(f), as applicable.  As to
each  other  payment,  and as to all  payments  made when a Default  or Event or
Default  shall have  occurred  and be  continuing  or following  the  Commitment
Termination  Date,  Borrower hereby  irrevocably  waives the right to direct the
application of any and all payments at any time or times hereafter received from
or on behalf of Borrower and Borrower hereby irrevocably agrees that Agent shall
have the continuing  exclusive right to apply any and all such payments  against
the then due and payable Obligations as Agent may deem advisable notwithstanding
any  previous  entry by Agent  upon the Loan  Account  or any  other  books  and
records.  In the  absence of a  specific  determination  by Agent  with  respect
thereto,  the same shall be applied in the following  order:  (1) to unpaid Fees
and expenses;  (2) to any interest due and not yet paid  hereunder in respect of
Term Loan A; (3) to any  interest  due and not yet paid  hereunder in respect of
the Capital Expenditure Loan; (4) to any interest due and not yet paid hereunder
in  respect of the Swing Line  Loan;  (5) to any  interest  due and not yet paid
hereunder in respect of the Revolving  Credit Loan;  (6) to any interest due and
not yet paid  hereunder  in respect of Term Loan B; (7) to any  interest due and
not yet paid  hereunder  in  respect  of Term Loan C; (8) to the then  remaining
installments  of Term Loan A in the inverse  order of maturity;  (9) to the then
remaining  installments of the Capital  Expenditure Loan in the inverse order of
maturity  (and  thereupon  the  Capital  Expenditure  Loan  Commitment  shall be
permanently  reduced by the amount of such prepayment);  (10) to the outstanding
principal  of the Swing  Line Loan;  (11) to the  outstanding  principal  of the
Revolving  Credit Loan (and  thereupon the Revolving  Loan  Commitment  shall be
permanently  reduced  by the amount of such  prepayment);  (12) to any Letter of
Credit  Obligations  to  provide  cash  collateral  therefor,  until  fully cash
collateralized,  in the manner set forth in Annex B; (13) to the then  remaining
outstanding  balance  of Term  Loan B;  (14) to the then  remaining  outstanding
balance of Term Loan C; and  (xiii) to all other  unpaid  Obligations.  Agent is
authorized to, and, upon the expiration of the applicable  time period,  if any,
set forth in Section 8.1, at its option may, make or cause to be made  Revolving
Credit  Advances  on behalf  of  Borrower  for  payment  of all Fees,  expenses,
Charges,  costs,  principal,  interest,  or other  Obligations owing by Borrower
under this  Agreement  or any of the other Loan  Documents  if and to the extent
Borrower  fails to promptly pay any such  amounts as and when due,  even if such
Revolving  Credit Advance would cause total Revolving  Credit Advances and Swing
Line Advances to exceed Borrowing  Availability or the Maximum  Revolving Credit
Loan amount.  At Agent's option and to the extent permitted by law, any advances
so made  shall be deemed  Revolving  Credit  Advances  constituting  part of the
Revolving Credit Loan hereunder.


                                       13

<PAGE>



                   1.16 Loan Account and Accounting. Agent shall maintain a loan
account (the "Loan  Account") on its books to record:  all Advances and payments
made under Letter of Credit  Obligations,  all payments made by Borrower and all
other appropriate  debits and credits as provided in this Agreement with respect
to the Obligations.  All entries in the Loan Account shall be made in accordance
with  Agent's  customary  accounting  practices  as in effect from time to time.
Borrower  shall pay all  Obligations  as such amounts become due or are declared
due pursuant to the terms of this Agreement.

                  The balance in the Loan  Account,  as recorded on Agent's most
recent printout or other written statement, shall be presumptive evidence of the
amounts  due and owing to Agent and Lenders by  Borrower;  provided,  that,  any
failure to so record or any error in so  recording  shall not limit or otherwise
affect  Borrower's  obligations  to pay the  Obligations.  Agent shall render to
Borrower a monthly accounting of transactions under the Loans, setting forth the
balance  of the Loan  Account.  Each and every  such  accounting  shall  (absent
manifest  error) be deemed final,  binding and  conclusive  upon Borrower in all
respects as to all matters  reflected  therein,  unless Borrower,  within thirty
(30) days after the date any such accounting is rendered,  shall notify Agent in
writing  of any  objection  which  Borrower  may  have to any  such  accounting,
describing the basis for such objection with  specificity.  In that event,  only
those items expressly  objected to in such notice shall be deemed to be disputed
by Borrower. Agent's determination,  based upon the facts available, of any item
objected to by Borrower in such notice shall be  presumptively  correct,  unless
Borrower shall further object to such  determination  within a reasonable period
of time thereafter.

                   1.17  Indemnity.  Borrower  shall  indemnify and hold each of
Agent, Lenders and their respective Affiliates,  officers, directors, employees,
attorneys,  agents and representatives (each, an "Indemnified Person"), harmless
from and  against  any and all suits,  actions,  proceedings,  claims,  damages,
losses,  liabilities and expenses  (including  attorneys' fees and disbursements
and other costs of investigation  or defense,  including those incurred upon any
appeal)  which may be  instituted  or  asserted  against or incurred by any such
Indemnified  Person as the  result of credit  having  been  extended  under this
Agreement and the other Loan  Documents or in connection  with or arising out of
the transactions  contemplated  hereunder and thereunder,  including any and all
Environmental Liabilities and costs; provided, that Borrower shall not be liable
for any  indemnification  to such Indemnified Person to the extent that any such
suit, action,  proceeding,  claim,  damage,  loss,  liability or expense results
solely from such Indemnified Person's gross negligence or willful misconduct, as
finally  determined  by a court of  competent  jurisdiction  after all  possible
appeals have been exhausted. NEITHER AGENT, ANY LENDER NOR ANY OTHER INDEMNIFIED
PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY HERETO,  ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING
CLAIMS  DERIVATIVELY  THROUGH SUCH PARTY, FOR INDIRECT,  PUNITIVE,  EXEMPLARY OR
CONSEQUENTIAL  DAMAGES  IN  CONNECTION  WITH THIS  AGREEMENT  AND THE OTHER LOAN
DOCUMENTS.

                   (b) To induce Lenders to provide the LIBOR Rate option on the
terms  provided  herein,  if (i) any LIBOR  Loans are repaid in whole or in part
prior to the last day of any applicable  LIBOR Period (whether that repayment is
made pursuant to any provision of this Agreement or any

                                       14

<PAGE>



other Loan  Document or is the result of  acceleration,  by  operation of law or
otherwise);  (ii)  Borrower  shall  default in payment when due of the principal
amount of or interest on any LIBOR Loan;  (iii) Borrower shall default in making
any borrowing of,  conversion into or continuation of LIBOR Loans after Borrower
has given notice  requesting the same in accordance  herewith;  or (iv) Borrower
shall fail to make any  prepayment  of a LIBOR Loan after  Borrower  has given a
notice  thereof  in  accordance  herewith,  Borrower  shall  indemnify  and hold
harmless each Lender from and against all losses,  costs and expenses  resulting
from or arising from any of the foregoing.  Such  indemnification  shall include
any loss (including loss of margin) or expense arising from the  reemployment of
funds obtained by it or from fees payable to terminate  deposits from which such
funds were obtained.  For the purpose of calculating amounts payable to a Lender
under this Section 1.17(b),  each Lender shall be deemed to have actually funded
its relevant  LIBOR Loan through the purchase of a deposit  bearing  interest at
the LIBOR Rate in an amount  equal to the amount of that LIBOR Loan and having a
maturity  comparable to the relevant Interest Period;  provided,  however,  that
each Lender may fund each of its LIBOR Loans in any manner it sees fit,  and the
foregoing  assumption  shall be  utilized  only for the  calculation  of amounts
payable under this Section 1.17(b).  This covenant shall survive the termination
of this  Agreement  and the payment of the Notes and all other  amounts  payable
hereunder. As promptly as practicable under the circumstances, each Lender shall
provide Borrower with its written calculation of all amounts payable pursuant to
this  Section  1.17(b),  and such  calculation  shall be binding on the  parties
hereto unless  Borrower shall object in writing within ten (10) Business Days of
receipt thereof, specifying the basis for such objection in detail.

                   (c) Borrower hereby acknowledges and agrees that Agent (i) is
not now,  and has not ever  been,  in  control  of any of the Real  Estate or of
Borrower's  affairs,  and (ii) does not have the capacity through the provisions
of the Loan  Documents  to  influence  Borrower's  conduct  with  respect to the
ownership, operation or management of any of its real property, including any of
its Real Estate.

                   1.18 Access.  Borrower  shall (i) provide full access  during
normal  business  hours,  from time to time upon five (5)  Business  Days' prior
notice, to Agent and any of its officers, employees and agents, as frequently as
Agent determines, in its sole discretion, to be appropriate (unless a Default or
Event of Default shall have occurred and be continuing or if access is necessary
to protect or preserve the  Collateral,  as determined by Agent, in any of which
events Agent and Lenders, and their respective officers,  employees,  designees,
agents and  representatives  shall have  access at any and all times and without
any  notice),  to  the  properties,   facilities,   books,  records,  suppliers,
customers,  advisors  and  employees  (including  officers)  of Borrower and its
Subsidiaries,  to the  Collateral,  to  the  accountants  of  Borrower  and  its
Subsidiaries  and to the work papers of such  accountants.  Without limiting the
generality  of the  foregoing,  Borrower  shall  permit  Agent,  and  any of its
officers,  employees, agents and representatives,  on two (2) separate occasions
per  annum  (unless  a  Default  or an  Event of  Default  has  occurred  and is
continuing or if access is necessary to protect or preserve the  Collateral,  as
determined  by Agent,  then,  in any of such  cases,  with  respect to Agent and
Lenders,  at any and all times)  determined by Agent in its sole discretion,  to
(i)  inspect,   audit  and  make  extracts  from  all  of  Borrower's   and  its
Subsidiaries' records,  files and books of account and (ii) inspect,  review and
evaluate the Accounts,  Inventory at Borrower's and its Subsidiaries'  locations
and at premises not owned by or leased to Borrower or any Subsidiary of


                                       15

<PAGE>



Borrower. Representatives of other Lenders may accompany Agent's representatives
on  regularly  scheduled  audits at no charge to Borrower.  Borrower  shall make
available to Agent,  its counsel and advisors,  immediately upon Agent's request
therefor,  originals or copies of all books, records, board minutes,  contracts,
insurance  policies,  environmental  audits,  business plans,  files,  financial
statements  (actual  and pro  forma),  filings  with  federal,  state  and local
regulatory  agencies,  and  other  instruments  and  documents  which  Agent may
request.  Borrower shall deliver any document or instrument necessary for Agent,
as it may from time to time request,  to obtain  records from any service bureau
or other  Person  which  maintains  records  for  Borrower,  and shall  maintain
duplicate records or supporting documentation on media, including computer tapes
and discs owned by  Borrower.  Borrower  shall  instruct  its  certified  public
accountants and its banking and other  financial  institutions to make available
to Agent  such  information  and  records  as Agent  may  request.  Confidential
information obtained by Agent and Lenders pursuant to this Section 1.18 shall be
subject to Section 10.14.

                   1.19 Taxes.  Any and all  payments by Borrower  hereunder  or
under the Notes shall be made,  in accordance  with this Section 1.19,  free and
clear of and  without  deduction  for any and all  present or future  Taxes.  If
Borrower  shall be required by law to deduct any Taxes from or in respect of any
sum payable  hereunder or under any Note, (i) the sum payable shall be increased
as much as shall be  necessary  so that  after  making all  required  deductions
(including  deductions  applicable to additional sums payable under this Section
1.19) Agent or Lenders,  as applicable,  receive an amount equal to the sum they
would have received had no such  deductions  been made, (ii) Borrower shall make
such  deductions,  and (iii) Borrower shall pay the full amount  deducted to the
relevant taxing or other authority in accordance with applicable law.

                   (b) Borrower shall indemnify and pay, within ten (10) days of
demand  therefor,  Agent and each Lender for the full amount of Taxes (including
any Taxes  imposed by any  jurisdiction  on amounts  payable  under this Section
1.19) paid by Agent or such Lender, as appropriate, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.

                   (c) Within  thirty (30) days after the date of any payment of
Taxes,  Borrower shall furnish to Agent,  at its address  referred to in Section
10.10, the original or a certified copy of a receipt evidencing payment thereof.

                   1.20 Capital Adequacy and Other Adjustments.

                  (a) In the event that any Lender  shall have  determined  that
any  law,  treaty,   governmental  (or  quasi-governmental)   rule,  regulation,
guideline or order regarding capital adequacy,  reserve  requirements or similar
requirements or compliance by any Lender with any request or directive regarding
capital adequacy,  reserve requirements or similar requirements  (whether or not
having the force of law and whether or not failure to comply  therewith would be
unlawful), in each case adopted after the Closing Date, from any central bank or
governmental agency or body having jurisdiction does or would have the effect of
increasing  the  amount of  capital,  reserves  or other  funds  required  to be
maintained  by such  Lender  and  thereby  reducing  the rate of  return on such
Lender's  capital as a consequence of its obligations  hereunder,  then Borrower
shall

                                       16

<PAGE>



from time to time  within  fifteen  (15) days after  notice and demand from such
Lender (together with the certificate  referred to in the next sentence and with
a copy to Agent)  pay to  Agent,  for the  account  of such  Lender,  additional
amounts  sufficient  to  compensate  such Lender for such  reduction;  provided,
however, that, notwithstanding the foregoing,  Borrower shall have no obligation
to make any such payment in the event,  if any,  that such notice and demand was
sent by such Lender  more than  ninety  (90) days after it became  aware of such
law, treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order.  A certificate as to the amount of such cost and showing the basis of the
computation  of such cost  submitted by such Lender to Borrower and Agent shall,
absent manifest error, be final, conclusive and binding for all purposes.

                  (b) Each  Lender  organized  under the laws of a  jurisdiction
outside the United States (a "Foreign  Lender") as to which  payments to be made
under  this  Agreement  or  under  the  Notes  are  exempt  from  United  States
withholding  tax under an  applicable  statute  or tax treaty  shall  provide to
Borrower and Agent a properly  completed and executed IRS Form 4224 or Form 1001
or other applicable form,  certificate or document  prescribed by the IRS or the
United  States  certifying  as to  such  Foreign  Lender's  entitlement  to such
exemption (a "Certificate of Exemption").  Prior to becoming a Lender under this
Agreement  and within  fifteen (15) days after a reasonable  written  request of
Agent or Borrower from time to time thereafter, each Foreign Lender that becomes
a Lender  under this  Agreement  shall  provide a  Certificate  of  Exemption to
Borrower  and Agent.  No foreign  Person may become a Lender  hereunder  if such
Person is unable to deliver a Certificate of Exemption. If a Foreign Lender does
not provide a  Certificate  of Exemption  to Agent and Borrower  within the time
periods set forth above,  Borrower  shall  withhold  taxes from payments to such
Foreign  Lender  at the  applicable  statutory  rate and  Borrower  shall not be
required  to pay  any  additional  amounts  as a  result  of  such  withholding;
provided,  that all such  withholding  shall cease upon delivery by such Foreign
Lender of a Certificate of Exemption to Agent and Borrower.

                  (c) In  the  event  Borrower  shall  be  required  to pay  any
increased  cost to any Lender  pursuant to Section  1.20(a),  Borrower  shall be
entitled,  by so notifying  Agent and such Lender  within thirty (30) days after
such Lender  notifies  Borrower of any such  increased  cost, to arrange for the
substitution  of a new lender for such Lender within sixty (60) days  thereafter
pursuant  to the  relevant  provisions  of  Section  9.1,  whereupon,  upon  the
effectiveness of such substitution, all of such Lender's Pro Rata Share shall be
assigned to such new lender;  provided,  however, that: (i) such Lender shall be
entitled to withdraw  its notice of  increased  costs  within a period of thirty
(30) days from the date of Borrower's notice of substitution, whereupon Borrower
shall no longer be entitled to  substitute  for such Lender as described  above;
(ii) in no event shall  Borrower be entitled to substitute for any Lender unless
the net present  value of the  additional  cost to Borrower  (including  closing
costs) of such substitution is less than the net present value of the additional
cost referred to in this Section 1.20 to Borrower of  maintaining  such Lender's
Pro Rata Share;  and (iii) in all events  (other than those  described in clause
(i) above),  Borrower shall remain liable for the increased costs of such Lender
for the period prior to the actual repayment of such Lender's Pro Rata Share.

                  (d) Notwithstanding anything to the contrary contained herein,
if the  introduction of or any change in any law or regulation (or any change in
the interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, in



                                       17

<PAGE>



each case, after the Closing Date, for any Lender to make or to continue to fund
or  maintain  any LIBOR  Loan,  then,  unless  that Lender is able to make or to
continue to fund or to maintain  such LIBOR Loan at another  branch or office of
that Lender without,  in that Lender's  opinion,  adversely  affecting it or its
Loans or the income obtained therefrom, on notice thereof and demand therefor by
such Lender to Borrower through Agent, (i) the obligation of such Lender to make
or to continue to fund or maintain LIBOR Loans shall terminate and (ii) Borrower
shall forthwith prepay in full all outstanding LIBOR Loans owing to such Lender,
together  with  interest  accrued  thereon,  unless  Borrower,  within  five (5)
Business  Days after the  delivery of such notice and demand,  converts all such
Loans into a Loan bearing interest based on the Index Rate.

                   1.21 Amendment and Restatement. (a) This Agreement amends and
restates in its entirety the Prior Credit  Agreement and, upon  effectiveness of
this Agreement,  the terms and provisions of the Prior Credit  Agreement  shall,
subject to this Section 1.21, be superseded  hereby.  All  references to "Credit
Agreement"  contained in the Loan  Documents  delivered in  connection  with the
Prior   Credit   Agreement   shall  be  deemed  to  refer  to  this   Agreement.
Notwithstanding  the amendment and restatement of the Prior Credit  Agreement by
this Agreement,  the Obligations outstanding under the Prior Credit Agreement as
of  the  Closing  Date  shall  remain  outstanding  and  constitute   continuing
Obligations  hereunder and shall continue to be secured by the Collateral.  Such
outstanding  Obligations  and the Liens  securing  payment  thereof shall in all
respects be continuing,  and this  Agreement  shall not be deemed to evidence or
result in a novation or  repayment  and re-  borrowing of such  Obligations.  In
furtherance of and without  limiting the  foregoing,  from and after the Closing
Date and  except as  expressly  specified  herein,  the terms,  conditions,  and
covenants governing the Obligations outstanding under the Prior Credit Agreement
shall be solely as set forth in this Agreement,  which shall supersede the Prior
Credit Agreement in its entirety.

                  (b) This is the final  expression of a credit  agreement among
Borrower,  Agent and Lenders.  This Agreement cannot be contradicted by evidence
of any prior oral credit agreement or of a contemporaneous oral credit agreement
among Borrower,  Agent and Lenders.  Borrower and Agent affirm that they have no
oral  agreement  or  agreement  by course of dealing with respect to the subject
matter hereof.

2.       CONDITIONS PRECEDENT

                   2.1  Conditions  to  Initial  Loans,  Advances  and Letter of
Credit  Obligations.  Notwithstanding  any other provision of this Agreement and
without  affecting  in any  manner the  rights of Agent and  Lenders  hereunder,
Borrower  shall  have no  rights  under  this  Agreement  (but  shall  have  all
applicable obligations hereunder),  and no Lender shall be obligated to make any
Advance or Loan or incur any Letter of Credit Obligation,  or to take,  fulfill,
or perform any other action hereunder,  until the following conditions have been
satisfied,  in Agent's sole and reasonable  discretion,  or waived in writing by
Agent:

                   (a) This  Agreement  or  counterparts  hereof shall have been
duly executed by, and delivered to, Borrower, Agent and Lenders.


                                       18

<PAGE>



                   (b) Agent shall have  received  such  guaranties,  documents,
instruments, agreements and amendments thereto and legal opinions as Agent shall
request in connection with the  transactions  contemplated by this Agreement and
the other Loan  Documents,  including all  guaranties,  documents,  instruments,
agreements  and legal  opinions  listed  in Annex D, each in form and  substance
satisfactory to Agent.

                   (c) Agent shall have  received  evidence  satisfactory  to it
that  Borrower has obtained  consents and  acknowledgments  of all Persons whose
consents and acknowledgments may be required, including, but not limited to, all
requisite  Governmental  Authorities,  to the terms,  and to the  execution  and
delivery,  of this Agreement,  the other Loan Documents and the  consummation of
the transactions contemplated hereby and thereby.

                   (d) Borrower  shall have paid to GE Capital all Fees required
to be paid at or prior to the Closing Date under the terms of the GE Capital Fee
Letter.

                   (e) Since  December 31, 1996,  there shall have been:  (i) no
Material  Adverse  Effect  on the  business,  operations,  financial  condition,
prospects or projections of Borrower,  the industries in which it operates,  the
Collateral,  or any of its Subsidiaries;  (ii) no litigation will have commenced
which,  if  successful,  could have any such  Material  Adverse  Effect or could
challenge any of the  transactions  contemplated by this Agreement and the other
Loan Documents; (iii) except as expressly permitted in accordance with the Prior
Credit Agreement, no dividends,  distributions,  payments, loans, contributions,
fees or other transfers of cash, property or other assets to any stockholders or
Affiliate of Borrower, including ARTRA or its employees,  directors, officers or
Affiliates;  and  (iv)  no  material  increase  in  liabilities,  liquidated  or
contingent,  and no  material  decrease  in  assets  of  Borrower  or any of its
Subsidiaries.

                   (f) Agent shall have  completed  its  business  and legal due
diligence  with  respect  to  Borrower  and its  Subsidiaries  and the legal and
corporate  structure  thereof  and the  results of such due  diligence  shall be
satisfactory to Agent, in its sole discretion.

                   (g) Agent shall have received  such other  documents as Agent
or any  Lender  may  reasonably  request  in  connection  with the  transactions
contemplated by this Agreement and the other Loan Documents.

                   2.2 Further  Conditions  to each Loan,  Advance and Letter of
Credit  Obligation.  It shall  be a  further  condition  to the  making  of each
Advance,  the incurrence of each Letter of Credit Obligation and the continuance
of each  Term Loan that the  following  statements  shall be true on the date of
each such advance,  incurrence or funding (or any conversion or  continuation of
any Loan into or as a LIBOR Loan), as the case may be:

                   (a)  All  of  Borrower's   representations   and   warranties
contained herein or in any of the other Loan Documents shall be true and correct
on and as of the Closing Date and the date on which each such Advance is made or
such  Letter of Credit  Advance is  incurred,  as though  made on and as of such
date, except to the extent that any such  representation  or warranty  expressly
relates


                                       19

<PAGE>



to an  earlier  date and except  for  changes  therein  expressly  permitted  or
expressly contemplated by this Agreement.

                   (b)  Borrower  and  each  of  its  Subsidiaries  shall  be in
compliance  in  all  material  respects  with  all of the  covenants  and  other
agreements contained herein or in any of the other Loan Documents.

                   (c) No event shall have occurred and be continuing,  or would
result from the making of any Advance,  the  incurrence  of any Letter of Credit
Obligation  or  the  funding  of any  Term  Loan,  as the  case  may  be,  which
constitutes or would constitute a Default or an Event of Default.

                   (d) After giving effect to such  Revolving  Credit Advance or
Swing Line Advance or the incurrence of such Letter of Credit Obligation, as the
case may be, the aggregate  principal  amount of the Revolving Credit Loan shall
not exceed the maximum amount permitted by Section 1.6(a).

                   (e) After giving effect to such Capital Expenditure  Advance,
the aggregate  principal amount of the Capital Expenditure Loan shall not exceed
the maximum amount permitted by Section 1.3(a).

                   (f) After  giving  effect to such  Swing  Line  Advance,  the
aggregate  principal  amount of the Swing Line Loan shall not exceed the maximum
amount permitted by Section 1.4(a).

                   (g) Each of the  conditions  set forth in  Section  2.1 shall
continue to be satisfied as of such date.

The request  and  acceptance  by Borrower of the  proceeds of any Advance or any
Term Loan,  or the  request by  Borrower  for the  incurrence  by Lenders of any
Letter of Credit Obligation, or the conversion or continuation of any Loan into,
or as, a LIBOR Loan,  as the case may be, shall be deemed to  constitute,  as of
the date of such request or  acceptance,  (i) a  representation  and warranty by
Borrower that the  conditions in this Section 2.2 have been satisfied and (ii) a
reaffirmation  by Borrower of the granting and  continuance of Agent's Liens, on
behalf of itself and Lenders, pursuant to the Collateral Documents.

                   2.3 Further Conditions to Each Capital  Expenditure  Advance.
It shall be a further  condition  to the  initial  and each  subsequent  Capital
Expenditure  Advance  that  each of the  following  conditions  shall  have been
satisfied:

                   (a) Capital  Expenditure Advance Compliance  Certificate.  At
least  five  (5)  Business  Days  prior  to  the  funding  of any  such  Capital
Expenditure  Advance,  Borrower  shall  deliver  to Agent a Capital  Expenditure
Advance Compliance Certificate, fully executed by the chief financial officer or
chief executive  officer of Borrower.  Such  Certificate  must be in the form of
Exhibit F and must  describe the nature and amount of  Equipment  proposed to be
acquired in connection with a Capital  Expenditure  Advance and certify that (i)
the proceeds of such Capital


                                       20

<PAGE>



Expenditure   Advance  shall  be  used  solely  to  fund  Capital   Expenditures
constituting the Hard Costs of such Equipment, (ii) the aggregate amount of such
Capital  Expenditure  Advance  does not  exceed  the  lesser of (x) the  Maximum
Capital  Expenditure Advance Amount or (y) Capital Expenditure Loan Availability
as of such date, (iii) after giving effect to such Capital Expenditure  Advance,
the aggregate principal amount of the Capital  Expenditure  Advances made during
the term of this  Agreement  shall  not  exceed  the  Capital  Expenditure  Loan
Commitment  and (iv) such  Equipment  can and shall be used by  Borrower  in the
ordinary course of its business consistent with past practices.

     (b)          Additional  Requirements.  Concurrently  with the  delivery of
each Capital  Expenditure  Advance  Compliance  Certificate  (or, in the case of
clause (iv) below, promptly upon receipt by Borrower), Borrower shall deliver to
Agent:

                   (i) to the extent  necessary or requested by Agent,  evidence
of the  proper  filing in all  required  filing  offices of duly  executed  Code
financing statements or amendments to existing financing statements with respect
to the Equipment  acquired with the proceeds of such Advance (and termination or
partial  release  statements,  as required to  terminate or release any Liens on
such  Equipment at the time of the  acquisition  thereof by Borrower),  and such
other documents, instruments and agreements as Agent may request, including duly
endorsed   certificates  of  title  for  all  titled  Equipment,   all  in  form
satisfactory to Agent and perfecting first priority security  interests of Agent
on behalf of Lenders in such Equipment.

                  (ii) if  requested  by Agent,  copies of policies of insurance
and loss  payable  endorsements  in form  and  substance  satisfactory  to Agent
regarding the Equipment  acquired with the proceeds of such Capital  Expenditure
Advance, duly executed, and evidence of the payment of the premiums therefor;

                  (iii) duly  executed  originals of a letter of direction  from
Borrower  addressed to Agent with respect to the  disbursement on the applicable
funding  date  of the  proceeds  of  such  Capital  Expenditure  Advance,  which
disbursement shall be made by Agent directly to the seller of the Equipment;

                  (iv) stamped  invoices,  delivery and acceptance  certificates
and other documentary  evidence  satisfactory to Agent evidencing the acceptance
and purchase of the applicable Equipment by Borrower; and

                  (v) such other documents as Agent or any Lender may reasonably
request in connection with such Capital Expenditure Advance.

The  request  and  acceptance  by  Borrower  of  the  proceeds  of  any  Capital
Expenditure  Advance  shall  be  deemed  to  constitute,  as of the date of such
request,  (i) a  representation  and warranty by Borrower that the conditions in
this Section 2.3 have been satisfied and (ii) a reaffirmation by Borrower of the
granting  and  continuance  of Agent's  Liens,  on behalf of itself and Lenders,
pursuant to the Collateral Documents.


                                       21

<PAGE>



         REPRESENTATIONS AND WARRANTIES

                  To induce  Lenders to make the Loans and Advances and to incur
the Letter of Credit Obligations,  Borrower makes the following  representations
and warranties to Agent and each Lender, each and all of which shall be true and
correct as of the date of execution  and delivery of this  Agreement,  and shall
survive the execution and delivery of this Agreement:

                   3.1 Corporate  Existence;  Compliance with Law.  Borrower and
each of its Subsidiaries  (i) is a corporation duly organized,  validly existing
and in good standing under the laws of its jurisdiction of incorporation and has
been duly  qualified to conduct  business and is in good  standing in each other
jurisdiction  where its  ownership  or lease of  property  or the conduct of its
business requires such  qualification,  where failure to so qualify could have a
Material  Adverse Effect;  (ii) has the requisite  corporate power and authority
and the legal right to own, pledge,  mortgage or otherwise  encumber and operate
its properties, to lease the property it operates under lease and to conduct its
business  as  now,  heretofore  and  proposed  to be  conducted;  (iii)  has all
licenses,  permits,  consents or approvals  from or by, and has made all filings
with,  and has  given  all  notices  to,  all  Governmental  Authorities  having
jurisdiction, to the extent required for such ownership,  operation and conduct,
where  failure  to do so  could  have a  Material  Adverse  Effect;  (iv)  is in
compliance with its certificate or articles of  incorporation  and by-laws;  and
(v) is in compliance with all applicable  provisions of law, where failure to so
comply could have a Material Adverse Effect.

                   3.2  Executive  Offices.  The current  location of Borrower's
executive  office and  principal  place of business is set forth on Schedule 3.2
and,  except as set forth on Schedule 3.2, none of such  locations  have changed
within the past six (6) months.

                   3.3 Corporate Power Authorization,  Enforceable  Obligations.
The  execution,  delivery and  performance by Borrower of the Loan Documents and
all instruments and documents to be delivered by Borrower, to the extent it is a
party  thereto,  hereunder and thereunder and the creation of all Liens provided
for herein and therein:  (i) are within  Borrower's  corporate power;  (ii) have
been duly  authorized  by all  necessary  or proper  corporate  and  shareholder
action;   (iii)  are  not  in  contravention  of  any  provision  of  Borrower's
certificate or articles or  incorporation  or bylaws;  (iv) will not violate any
law  or  regulation,  or any  order  or  decree  of any  court  or  governmental
instrumentality;  (v)  will  not  conflict  with  or  result  in the  breach  or
termination  of,  constitute  a  default  under or  accelerate  any  performance
required by, any indenture,  mortgage,  deed of trust, lease, agreement or other
instrument  to which  Borrower  is a party or by  which  Borrower  or any of its
property is bound,  including,  without  limitation,  the Kansas Loan documents;
(vi) will not result in the creation or  imposition  of any Lien upon any of the
property of Borrower other than those in favor of Agent, on behalf of itself and
Lender, all pursuant to the Loan Documents; and (vii) do not require the consent
or approval of any  Governmental  Authority  or any other  Person,  except those
referred to in Section 2.1(d),  all of which will have been duly obtained,  made
or complied  with prior to the Closing  Date.  At or prior to the Closing  Date,
each of the Loan  Documents  shall have been duly executed and delivered for the
benefit of or on behalf of  Borrower  and each shall  then  constitute  a legal,
valid and binding  obligation of Borrower,  to the extent it is a party thereto,
enforceable  against it in accordance with its terms,  except as  enforceability
may be limited by



                                       22

<PAGE>



bankruptcy,  insolvency or other similar laws  affecting the rights of creditors
generally or by application of general principles of equity.

                   3.4  Financial  Statements  and  Projections.   Borrower  has
delivered  to Agent the  Financial  Statements  and  Projections  most  recently
required to be delivered  to Agent as of the Closing Date  pursuant to the Prior
Credit Agreement.

                   3.5 Collateral  Reports.  Borrower has delivered to Agent all
Collateral  Reports  most  recently  required to be delivered to Agent as of the
Closing Date pursuant to the Prior Credit Agreement.

                   3.6 Material Adverse Effect.  Neither Borrower nor any of its
Subsidiaries,  as  of  December  31,  1996,  had  any  obligations,   contingent
liabilities,  or liabilities for Charges, long-term leases or unusual forward or
long-term   commitments  which  are  not  reflected  in  the  audited  Financial
Statements  of Borrower  and its  Subsidiaries  as of such date and which could,
alone or in the aggregate,  have or result in a Material  Adverse Effect.  There
has  been no  material  adverse  change  in the  business,  assets,  operations,
prospects, projections or financial or other condition of Borrower or any of its
Subsidiaries  since December 31, 1996.  Except as expressly  permitted under the
Prior Credit  Agreement prior to the Closing Date or under this Agreement (a) no
dividends, advances or other distributions have been declared, paid or made upon
any Stock of Borrower or any of its  Subsidiaries  and (b) no shares of Stock of
Borrower  have been,  or are  required to be,  redeemed,  retired,  purchased or
otherwise acquired for value.

                   3.7  Ownership  of  Property;  Liens.  Except as described on
Schedule 3.7, the real estate listed on Schedule 3.7 constitutes all of the real
property owned, leased, or used in its business by Borrower or its Subsidiaries.
Borrower and each of its  Subsidiaries  own good and marketable fee simple title
to:  (i) all of its Real  Estate,  subject  to no  Liens  other  than  Permitted
Encumbrances,  and has valid and  marketable  leasehold  interests in all of its
Leases (both as lessor and lessee,  sublessee or assignee),  all as described on
Schedule  3.7,  and (ii)  good  and  marketable  title  to,  or valid  leasehold
interests in, all of its other properties and assets, and none of the properties
and assets of  Borrower  or any of its  Subsidiaries  are  subject to any Liens,
except Permitted Encumbrances;  and Borrower or such Subsidiary has received all
deeds,  assignments,  waivers,  consents,  non-disturbance  and  recognition  or
similar  agreements,  bills of sale and other  documents,  and duly effected all
recordings,  filings and other actions necessary to perfect and, in all material
respects,  establish and protect,  Borrower's or such Subsidiary's  right, title
and  interest  in and to all such  real  estate  and other  assets or  property.
Neither Borrower,  any of its Subsidiaries nor any other party to any such Lease
described  on  Schedule  3.7  is in any  material  default  of  its  obligations
thereunder  or has  delivered or received  any notice of default  under any such
Lease, and no event has occurred which,  with the giving of notice,  the passage
of time or both,  would  constitute  a default  under any such Lease.  Except as
described on Schedule 3.7, (i) neither Borrower nor any of its Subsidiaries owns
or holds or is obligated under or a party to, any option, right of first refusal
or any other contractual right to purchase,  acquire, sell, assign or dispose of
any real property  owned or leased by Borrower or such  Subsidiary;  and (ii) no
portion  of  any  real  property  owned  or  leased  by  Borrower  or any of its
Subsidiaries  has suffered any material damage by fire or other casualty loss or
a Release which has not heretofore been completely  repaired and restored to its
original condition



                                       23

<PAGE>



or is being remedied.  To the best of Borrower's  knowledge after good faith and
diligent  investigation,  except  as  disclosed  on  Schedule  3.20 as  required
pursuant to Section 3.20,  all permits,  including  environmental  air and waste
permits, required to have been issued or appropriate to enable the real property
owned or leased by Borrower or such Subsidiary to be lawfully  occupied and used
for all of the purposes  for which they are  currently  occupied and used,  have
been lawfully issued and are, as of the Closing Date, in full force and effect.

                   3.8 Restrictions;  No Default. No contract,  lease, agreement
or other  instrument to which Borrower or any of its  Subsidiaries is a party or
by which it or any of its  properties  or  assets  is bound or  affected  and no
provision  of  applicable  law or  governmental  regulation  has or results in a
Material  Adverse Effect,  or could have or result in a Material Adverse Effect.
Neither Borrower nor any of its Subsidiaries is in default, and to Borrower's or
such Subsidiary's  knowledge no third party is in default, under or with respect
to any contract, agreement, lease or other instrument to which it is a party. No
Default or Event of Default has occurred and is  continuing  or will result from
the consummation of the transactions contemplated by the Loan Documents.

                   3.9  Labor  Matters.  There  are no  strikes  or other  labor
disputes  against  Borrower  or any of its  Subsidiaries  that  are  pending  or
threatened.  Hours  worked by and payment  made to employees of Borrower and its
Subsidiaries  have not been in violation of the Fair Labor  Standards Act or any
other applicable federal, state, local or foreign law dealing with such matters.
All payments due from Borrower or any of its Subsidiaries on account of employee
health and welfare  insurance  have been paid or accrued as a  liability  on the
books of Borrower. Except as set forth on Schedule 3.9, neither Borrower nor any
of its Subsidiaries has any obligation under any collective bargaining agreement
or any employment agreement.  There is no organizing activity involving Borrower
or any of its Subsidiaries  pending or threatened by any labor union or group of
employees.  Except as set forth on  Schedule  3.9,  there are no  representation
proceedings  pending or threatened with the National Labor Relations  Board, and
no  labor  organization  or  group  of  employees  of  Borrower  or  any  of its
Subsidiaries has made a pending demand for recognition.  There are no complaints
or charges against Borrower or any of its Subsidiaries  pending or threatened to
be filed with any federal, state, local or foreign court, governmental agency or
arbitrator based on, arising out of, in connection  with, or otherwise  relating
to the  employment or termination of employment of any individual by Borrower or
any of its  Subsidiaries.  Neither  Borrower  nor any of its  Subsidiaries  is a
contractor or  subcontractor  and, except as set forth on Schedule 3.9,  neither
Borrower nor any  Subsidiary  has a legal  obligation  to engage in  affirmative
action.

                   3.10 Ventures, Subsidiaries and Affiliates; Outstanding Stock
and  Indebtedness.  Except as set forth on Schedule  3.10,  (i)  Borrower has no
subsidiaries,  is not engaged in any joint venture or partnership with any other
Person,  and or an Affiliate of any other Person,  (ii) there are no outstanding
rights to purchase,  options,  warrants or similar rights or agreements pursuant
to which any Person may be required  to issue or sell any Stock or other  equity
security of Borrower,  and there are no outstanding stock appreciation rights or
similar  arrangements,  and  (iii)  Borrower  is the  sole  direct  or  indirect
beneficial  owner of all of the outstanding  capital stock of its  Subsidiaries.
All of the issued and  outstanding  Stock of Borrower  is owned,  and all of the
stock appreciation rights and similar arrangements granted by Borrower are held,
by each of the Persons named on Schedule  3.10.  Except as set forth on Schedule
3.10, there are no outstanding rights to



                                       24

<PAGE>



purchase,  options,  warrants or similar rights or agreements  pursuant to which
any Person may be required to issue or sell any Stock or other  equity  security
of any Subsidiary of Borrower,  and there are no outstanding stock  appreciation
rights  or  similar  arrangements.  As of  the  Closing  Date,  all  outstanding
Indebtedness  and all Liens of Borrower and its  Subsidiaries  are  described in
Section 6.3 (including Schedule 6.3) and 6.7, respectively.

                   3.11 Government  Regulation.  Neither Borrower nor any of its
Subsidiaries  is an  "investment  company"  or an  "affiliated  person"  of,  or
"promoter"  or "principal  underwriter"  for, an  "investment  company," as such
terms are defined in the  Investment  Company  Act of 1940 as  amended.  Neither
Borrower nor any of its  Subsidiaries is subject to regulation  under the Public
Utility  Holding  Company Act of 1935,  the Federal  Power Act,  the  Interstate
Commerce Act or any other federal or state statute that  restricts or limits its
ability to incur Indebtedness or to perform its obligations  hereunder,  and the
making  of the  Advances  and  Loans,  and the  incurrence  of  Letter of Credit
Obligations,  in each case by  Lenders,  the  application  of the  proceeds  and
repayment  thereof by Borrower or such  Subsidiary and the  consummation  of the
transactions  contemplated  by this  Agreement and the other Loan Documents will
not violate any  provision of any such statute or any rule,  regulation or order
issued by the Securities and Exchange Commission.

                   3.12  Margin  Regulations.  Neither  Borrower  nor any of its
Subsidiaries  is  engaged,  nor  will it  engage,  principally  or as one of its
important  activities,  in the business of  extending  credit for the purpose of
"purchasing" or "carrying" any "margin security" within the respective  meanings
of each of the quoted terms under Regulation U or G of the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board") as now and from time to
time hereafter in effect.  Neither Borrower nor any of its Subsidiaries owns any
"margin  security",  as that term is defined in Regulations G and U of the Board
of Governors of the Federal Reserve Board, and none of the proceeds of any Loan,
Advance  or Letter of  Credit  will be used,  directly  or  indirectly,  for the
purpose of  purchasing  or  carrying  any margin  security,  for the  purpose of
reducing or retiring any indebtedness which was originally  incurred to purchase
or carry any margin  security or for any other  purpose which might cause any of
the loans or other  extensions of credit under this Agreement to be considered a
"purpose  credit"  within the meaning of  Regulation G, T, U or X of the Federal
Reserve Board.  Neither Borrower nor any of its Subsidiaries will take or permit
any agent  acting on its  behalf  to take any  action  which  might  cause  this
Agreement  or any other Loan  Document or any document or  instrument  delivered
pursuant hereto to violate any regulation of the Federal Reserve Board.

                   3.13  Taxes.  All  federal,  state,  local  and  foreign  tax
returns,  reports and  statements,  including,  but not limited to,  information
returns  (Form  1120-S)  required  to  be  filed  by  Borrower  or  any  of  its
Subsidiaries,  have been filed with the appropriate  Governmental  Authority and
all Charges and other  impositions shown thereon to be due and payable have been
paid prior to the date on which any fine,  penalty,  interest or late charge may
be added thereto for nonpayment thereof,  or any such fine,  penalty,  interest,
late charge or loss has been paid;  provided,  that,  Borrower may in good faith
contest,  by proper legal action or  proceedings,  the validity or amount of any
such  Charges or  claims,  so long as, at the time of  commencement  of any such
action or proceeding, and during the pendency thereof (i) adequate reserves with
respect  thereto are  maintained on the books of Borrower,  in  accordance  with
GAAP, (ii) such contest operates to suspend collection of such




                                       25

<PAGE>



Charges or claims and such contest is maintained and prosecuted continuously and
with diligence,  and (iii) Agent has not advised  Borrower in writing that Agent
reasonably believes that nonpayment or nondischarge thereof could have or result
in a Material  Adverse Effect.  Borrower and each of its  Subsidiaries  has paid
when due and payable all Charges  required to be paid by it. Proper and accurate
amounts have been withheld by Borrower and its Subsidiaries  from its respective
employees for all periods in full  compliance in all material  respects with the
tax,  social  security and  unemployment  withholding  provisions  of applicable
federal,  state,  local and foreign law and such  withholdings  have been timely
paid to the respective Governmental Authorities.  Schedule 3.13 sets forth those
taxable years for which  Borrower's  tax returns are currently  being audited by
the IRS or any other  applicable  Governmental  Authority and any assessments or
threatened  assessments in connection  with such audit,  or otherwise  currently
outstanding.  Except as described on Schedule 3.13,  neither Borrower nor any of
its  Subsidiaries  has executed or filed with the IRS or any other  Governmental
Authority any  agreement or other  document  extending,  or having the effect of
extending,  the period for  assessment  or  collection  of any Charges.  Neither
Borrower nor any of its Subsidiaries has filed a consent pursuant to IRC Section
341(f) or agreed to have IRC  Section  341(f) (2) apply to any  dispositions  of
subsection (f) assets (as such term is defined in IRC Section  341(f)(4)).  None
of the property owned by Borrower or any of its  Subsidiaries  is property which
Borrower  or such  Subsidiary  is  required to treat as being owned by any other
Person  pursuant to the  provisions  of IRC Section  168(f)(8)  of the  Internal
Revenue  Code of  1954,  as  amended,  and in  effect  immediately  prior to the
enactment of the Tax Reform Act of 1986 or is "tax-exempt  use property"  within
the  meaning  of the  IRC  Section  168  (h).  Neither  Borrower  nor any of its
Subsidiaries  has  agreed or been  requested  to make any  adjustment  under IRC
Section 481(a) by reason of a change in accounting method or otherwise.  Neither
Borrower nor any of its  Subsidiaries  have any obligation under any written tax
sharing agreement, except, subject to Section 6.15, the Tax Sharing Agreement.

                   3.14 ERISA.  Neither Borrower nor any of its Subsidiaries has
now, or has ever had,  any Pension  Plans and  neither  Borrower  nor any of its
Subsidiaries  has any  liabilities  with respect to any Pension Plans.  Schedule
3.14 lists all Plans  maintained  or  contributed  to by  Borrower or any of its
Subsidiaries  and all Qualified Plans  maintained or contributed to by any ERISA
Affiliate,  and separately  identifies the Title IV Plans,  Multiemployer Plans,
any multiple  employer plans subject to Section 4064 of ERISA,  unfunded Pension
Plans,  Welfare Plans and Retiree  Welfare  Plans.  Each Qualified Plan has been
determined  by the IRS to qualify  under  Section 401 of the IRC, and the trusts
created  thereunder  have  been  determined  to be  exempt  from tax  under  the
provisions  of Section  501 of the IRC,  and to the best  knowledge  of Borrower
nothing  has  occurred  which  would  cause  the loss of such  qualification  or
tax-exempt status. Each Plan is in compliance with the applicable  provisions of
ERISA and the IRC,  including  the filing of reports  required  under the IRC or
ERISA which are true and correct as of the date filed,  and with respect to each
Plan, other than a Qualified Plan, all required  contributions and benefits have
been paid in accordance  with the provisions of each such Plan.  With respect to
any Qualified Plan,  neither  Borrower,  any of its  Subsidiaries  nor any ERISA
Affiliate has failed to make any  contribution or pay any amount due as required
by Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan.
With  respect  to all  Retiree  Welfare  Plans,  the  present  value  of  future
anticipated expenses pursuant to the latest actuarial projections of liabilities
does not exceed  Fifty  Thousand  Dollars  ($50,000),  and copies of such latest
projections have been provided to Agent. Neither Borrower nor any of its



                                       26

<PAGE>



Subsidiaries has engaged in a prohibited transaction, as defined in Section 4975
of the IRC or Section 406 of ERISA,  in  connection  with any Plan,  which would
subject Borrower or such Subsidiary  (after giving effect to any exemption) to a
material tax on  prohibited  transactions  imposed by Section 4975 of the IRC or
any other material liability.

                   (b)  Except as set forth on  Schedule  3.14:  (i) no Title IV
Plan has any Unfunded Pension Liability;  (ii) No ERISA Event or event described
in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
Borrower  or any of its  Subsidiaries,  threatened  claims,  actions or lawsuits
(other than claims for benefits in the normal  course),  asserted or  instituted
against (x) any Plan or its assets,  (y) any fiduciary  with respect to any Plan
or (z) Borrower,  any of its Subsidiaries or any ERISA Affiliate with respect to
any  Plan;  (iv)  neither  Borrower,  any of its  Subsidiaries,  nor  any  ERISA
Affiliate has incurred or reasonably  expects to incur any Withdrawal  Liability
(and no event has occurred  which,  with the giving of notice under Section 4219
of ERISA,  would  result in such  liability)  under  Section  4201 of ERISA as a
result of a complete or partial withdrawal from a Multiemployer Plan; (v) within
the last five years neither  Borrower,  any of its  Subsidiaries,  nor any ERISA
Affiliate  has engaged in a transaction  which  resulted in a Title IV Plan with
Unfunded Liabilities being transferred outside of the "controlled group" (within
the meaning of Section  4001(a)(14) of ERISA) of any such entity; (vi) Borrower,
each of its  Subsidiaries and each ERISA Affiliate have complied with the notice
and  continuation  coverage  requirements  of  Section  4980B of the IRC and the
regulations  thereunder  except  where the  failure to comply  could not have or
result in any Material Adverse Effect; and (vii) no liability under any Plan has
been funded,  nor has such  obligation  been  satisfied,  with the purchase of a
contract  from an  insurance  company  that is not rated AAA by the  Standard  &
Poor's Corporation and the equivalent by each other nationally recognized rating
agency.

                   3.15 No Litigation.  Except as set forth on Schedule 3.15, no
action,  claim or  proceeding is now pending or, to the knowledge of Borrower or
any of its Subsidiaries, threatened against Borrower or such Subsidiary, at law,
in  equity  or  otherwise,  before  any  court,  board,  commission,  agency  or
instrumentality  of any federal,  state,  local or foreign  government or of any
agency or subdivision thereof, or before any arbitrator or panel of arbitrators,
(i) which challenges  Borrower's or such Subsidiary's right, power or competence
to enter into or perform any of its obligations under the Loan Documents, or the
validity or  enforceability of any Loan Document or any action taken thereunder,
or (ii)  which if  determined  adversely,  could  have or result  in a  Material
Adverse Effect,  nor to the best knowledge of Borrower or such Subsidiary does a
state  of  facts  exist  which  is  reasonably  likely  to  give  rise  to  such
proceedings.

                   3.16  Brokers.  No  broker  or  finder  acting  on  behalf of
Borrower  or any of its  Subsidiaries  brought  about the  obtaining,  making or
closing  of the  loans  made  pursuant  to this  Agreement  or the  transactions
contemplated  by  the  Loan  Documents  and  neither  Borrower  nor  any  of its
Subsidiaries  has any  obligation  to any Person in respect of any  finder's  or
brokerage fees in connection therewith.

                   3.17  Employment  Matters.  Except as set  forth on  Schedule
3.17, there are no (i) employment,  consulting or management agreements covering
management of Borrower or any of



                                       27

<PAGE>



its  Subsidiaries,  or (ii)  collective  bargaining  agreements  or other  labor
agreements covering any employees of Borrower or any of its Subsidiaries. Except
as furnished pursuant to the Prior Credit Agreement, a true and complete copy of
each such agreement has been furnished to Agent as of the Closing Date.

                   3.18 Patents, Trademarks,  Copyrights and Licenses. Except as
otherwise set forth on Schedule 3.18, Borrower and each of its Subsidiaries owns
all material licenses, patents, patent applications,  copyrights, service marks,
trademarks,  trademark  applications,  and trade names  necessary to continue to
conduct its  business as  heretofore  conducted  by it, now  conducted by it and
proposed to be conducted by it, each of which is listed, together with Copyright
Office or Patent and Trademark Office application or registration numbers, where
applicable,  on Schedule 3.18. Schedule 3.18 lists all tradenames or other names
under which Borrower and each of its Subsidiaries  conducts  business.  Borrower
and each of its  Subsidiaries  conducts  (or has  within  the past six (6) years
conducted) its business  without  infringement  or claim of  infringement of any
license, patent, copyright, service mark, trademark, trade name, trade secret or
other intellectual  property right of others.  There is no infringement or claim
of  infringement  by others of any license,  patent,  copyright,  service  mark,
trademark,  trade name,  trade secret or other  intellectual  property  right of
Borrower or any of its Subsidiaries.

                   3.19  Full  Disclosure.  No  information  contained  in  this
Agreement,  any of the other Loan  Documents,  the  Projections,  the  Financial
Statements,  the Collateral Reports or any written statement  furnished by or on
behalf of  Borrower  or any of its  Subsidiaries  pursuant  to the terms of this
Agreement, which has previously been, or is currently being, delivered to Agent,
contains any untrue  statement  of a material  fact or omits to state a material
fact necessary to make the statements contained herein or therein not misleading
in light of the  circumstances  under which they were made. The Liens granted to
Agent, on behalf of itself and Lenders, pursuant to the Collateral Documents are
fully perfected first priority Liens in and to the Collateral  described therein
and the Liens granted to Agent, on behalf of itself and Lenders, pursuant to the
Mortgages  are fully  perfected  first  priority  Liens in and to the  Mortgaged
Property  described  therein,   subject  only  to  Permitted  Encumbrances  then
existing. Since December 31, 1996, no event has occurred and is continuing which
has had or could have or result in a Material Adverse Effect.

                   3.20  Hazardous  Materials.  Except as set forth on  Schedule
3.20, the Real Property is free of contamination from any Hazardous Material. In
addition,  Schedule 3.20 discloses potential material environmental  liabilities
of Borrower or any of its  Subsidiaries  of which any of them have knowledge (i)
related to noncompliance  with the  Environmental  Laws, or (ii) associated with
the Real  Estate.  Neither  Borrower nor any of its  Subsidiaries  has caused or
suffered to occur any Release with respect to any Hazardous  Material at, under,
above or within any real property which it owns or leases.  Neither Borrower nor
any of its  Subsidiaries  is  involved  in  operations  which  could lead to the
imposition of any liability or Lien on it, or any owner of any premises which it
occupies,  under any  Environmental  Law,  and neither  Borrower  nor any of its
Subsidiaries  has permitted any tenant or occupant of such premises to engage in
any such  activity.  Borrower  has  provided  to Agent  copies  of all  existing
environmental reports, reviews and audits and all written information pertaining
to  actual  or  potential  Environmental  Liabilities  and  Costs,  in each case
relating to Borrower and each of its Subsidiaries.



                                       28

<PAGE>




                   3.21 Insurance Policies. Schedule 3.21 lists all insurance of
any nature maintained for current  occurrences by Borrower and its Subsidiaries,
as well as a summary of the terms of such  insurance.  Borrower  covenants  that
such  Insurance  complies  with and shall at all times comply with the standards
set forth on Annex H.

                   3.22 Deposit and Disbursement  Accounts.  Schedule 3.22 lists
all banks and other financial institutions at which Borrower or its Subsidiaries
maintains deposits and/or other accounts,  including any disbursement  accounts,
and such Schedule correctly identifies the name, address and telephone number of
each  depository,  the name in which the account is held, a  description  of the
purpose of the account, and the complete account number.

                   3.23  Government  Contracts.  Except as set forth on Schedule
3.23, neither Borrower nor any of its Subsidiaries is a party to any contract or
agreement  with the federal  government  and none of the Accounts are subject to
the Federal  Assignment of Claims Act (31 U.S.C.  Section 3727)  relative to the
assignment of such Accounts.

                   3.24 Customer and Trade Relations.  There exists no actual or
threatened  termination or cancellation of, or any material adverse modification
or change in: the business  relationship of Borrower or any of its  Subsidiaries
with any customer or group of customers whose  purchases  individually or in the
aggregate  are material to the  operations  of  Borrower,  such  Subsidiary,  or
Borrower and its Subsidiaries taken as a whole; or the business  relationship of
Borrower or any of its Subsidiaries with any supplier material to the operations
of Borrower, such Subsidiary, or Borrower and its Subsidiaries taken as a whole.

                   3.25 Agreements and Other Documents.  As of the Closing Date,
Borrower has provided  (except as provided under the Prior Credit  Agreement) to
Agent, on behalf of Lenders,  accurate and complete copies (or summaries) of all
of the  following  agreements  or  documents  to  which  Borrower  or any of its
Subsidiaries is subject: each Plan; supply agreements not terminable by Borrower
or such  Subsidiary,  as appropriate,  within sixty (60) days following  written
notice issued by Borrower or such Subsidiary; purchase agreements not terminable
by Borrower or such Subsidiary, as appropriate, within sixty (60) days following
written notice issued by Borrower or such  Subsidiary;  leases of real property;
any lease of  equipment  having a  remaining  term of one (1) year or longer and
requiring  aggregate  rental  and other  payments  in  excess of Fifty  Thousand
Dollars  ($50,000) per annum;  licenses and permits necessary for the conduct of
Borrower's or such Subsidiary's businesses;  employment,  consulting, severance,
"golden  parachute" and other similar agreements with any officer of Borrower or
such Subsidiary; instruments or documents evidencing Indebtedness of Borrower or
such Subsidiary and any security interest granted by Borrower or such Subsidiary
with respect thereto; and instruments and agreements  evidencing the issuance of
any equity securities, warrants, rights or options to purchase equity securities
of Borrower or such Subsidiary.

                   3.26 Kansas Indebtedness.  No default or event of default has
occurred  and is  continuing  under the Kansas  Loan  Documents  or will  result
thereunder from the  consummation of the  transactions  contemplated by the Loan
Documents.


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<PAGE>



         FINANCIAL STATEMENTS AND INFORMATION

                   4.1 Reports and Notices.  Borrower  covenants and agrees that
from and after the Closing Date and until the  Commitment  Termination  Date, it
shall deliver to Agent and/or Lenders,  as required,  the Financial  Statements,
notices and Projections at the times, to the Persons and in the manner set forth
on Annex I.

                   (b)  Borrower  covenants  and agrees  that from and after the
Closing Date, it shall deliver to Agent and/or Lenders, as required, the various
Collateral  Reports at the times,  to the Persons and in the manner set forth on
Annex J.

                   4.2 Communication with Accountants. Borrower authorizes Agent
to communicate  directly with its independent  certified public  accountants and
tax advisors,  including Coopers & Lybrand, and authorizes those accountants and
advisors  to  disclose  to Agent  any and all  financial  statements  and  other
supporting  financial documents and schedules including copies of any management
letter with respect to the  business,  financial  condition and other affairs of
Borrower or any of its Subsidiaries.  To permit Borrower's  attendance  thereat,
Agent  shall  provide  one (1)  day's  prior  notice  to  Borrower  of any  such
communications between Agent and the foregoing persons.



  5.     AFFIRMATIVE COVENANTS

                  Borrower   covenants  and  agrees  that,  unless  Agent  shall
otherwise  consent in  writing,  from and after the  Closing  Date and until the
Commitment Termination Date:

                   5.1   Maintenance  of  Existence  and  Conduct  of  Business.
Borrower shall,  and shall cause each of its  Subsidiaries to: do or cause to be
done all  things  necessary  to  preserve  and keep in full force and effect its
corporate  existence  and its rights and  franchises;  continue  to conduct  its
business substantially as now conducted or as otherwise permitted hereunder;  at
all  times  maintain,  preserve  and  protect  all of its  copyrights,  patents,
trademarks,  trade  names  and all other  intellectual  property  and  rights as
licensee  or licensor  thereof in use or useful in the conduct of its  business,
preserve all the remainder of its  property,  in use or useful in the conduct of
its  business  and  keep  each of the same in good  repair,  working  order  and
condition  (taking into  consideration  ordinary wear and tear) and from time to
time  make,  or  cause  to  be  made,  all  necessary  or  appropriate  repairs,
replacements and improvements  thereto  consistent with industry  practices,  so
that the  business  carried  on in  connection  therewith  may be  properly  and
advantageously  conducted at all times; and transact business only in such names
as are set forth on Schedule 5.1.

                   5.2  Payment  of  Obligations.  Borrower  shall:  (i) pay and
discharge or cause to be paid and discharged all Obligations;  and (ii) prior to
an Event of Default, pay and discharge, or cause to be paid and discharged,  its
Indebtedness  other than the  Obligations  at the time such  amounts are due and
payable,  and, subject to Section 5.2(b),  pay and discharge or cause to be paid
and discharged promptly all (A) Charges imposed upon it, its income and profits,
or any of its  property  (real,  personal or mixed),  and (B) lawful  claims for
labor, materials,  supplies and services or otherwise,  before any thereof shall
become in default.


                                       30

<PAGE>



                   (b)  Borrower  may in  good  faith  contest,  by  appropriate
proceedings,  the validity or amount of any Charges described in Section 5.2 (a)
(ii);  provided,  that (i)  adequate  reserves  with respect to such contest are
maintained on the books of Borrower, in accordance with GAAP, (ii) no Lien shall
be imposed to secure payment of such Charges other than  Permitted  Encumbrances
and such contest is maintained  and prosecuted  continuously  and with diligence
and operates to suspend collection or enforcement of such Charges, (iii) none of
the  Collateral  becomes  subject  to  forfeiture  or loss as a  result  of such
contest, (iv) Borrower shall promptly pay or discharge such contested Charges or
claims and all additional charges, interest, penalties and expenses, if any, and
shall deliver to Agent evidence acceptable to Agent of such compliance,  payment
or  discharge,  if such  contest is  terminated  or  discontinued  adversely  to
Borrower or the  conditions  set forth in this Section 5.2(b) are no longer met,
and (v) Agent has not advised Borrower in writing that Agent reasonably believes
that  nonpayment  or  nondischarge  thereof  could  have or result in a Material
Adverse Effect.

                   5.3 Books and Records.  Borrower shall keep adequate  records
and books of account with respect to  Borrower's  and each of its  Subsidiaries'
business  activities,   in  which  proper  entries,   reflecting  all  financial
transactions,  are made in accordance  with GAAP and on a basis  consistent with
the Financial Statements referred to in Section 3.4.

                   5.4  Litigation.  Borrower  shall  notify  Agent in  writing,
promptly  upon  learning  thereof,  of any  litigation  commenced or  threatened
against Borrower or any of its Subsidiaries,  and of the institution  against it
of any suit or administrative proceeding that may involve an amount in excess of
One Hundred Thousand Dollars ($100,000) or seeks injunctive relief or could have
or result in a Material Adverse Effect if adversely determined.

                   5.5  Insurance.  Borrower  shall  maintain  the  policies  of
insurance  described on Schedule  3.21 in form and with  insurers  recognized as
adequate by Agent.  Except to the extent permitted under Section 6.15,  Borrower
shall  maintain such policies at its sole cost and expense.  Such policies shall
be in such amounts as are set forth on Schedule 3.21 and, in no event, less than
the amounts  maintained on the Closing Date,  except for appropriate  changes in
such amounts resulting from acquisitions or dispositions made in accordance with
this Agreement. Borrower shall notify Agent promptly of any occurrence causing a
material  loss or  decline  in value of any real or  personal  property  and the
estimated (or actual,  if available)  amount of such loss or decline.  Except as
otherwise  specified on Schedule 3.21,  Borrower  hereby directs all present and
future  insurers  under its "All Risk" policies of insurance to pay all proceeds
payable thereunder directly to Agent, on behalf of itself and Lenders.  Borrower
irrevocably makes,  constitutes and appoints Agent (and all officers,  employees
or  agents  designated  by  Agent)  as  Borrower's  true and  lawful  agent  and
attorney-in-fact for the purpose, upon the occurrence and during the continuance
of a Default or an Event of Default,  of making,  settling and adjusting  claims
under the "All Risk"  policies of  insurance,  endorsing the name of Borrower on
any check,  draft,  instrument or other item of payment for the proceeds of such
"All  Risk"  policies  of  insurance,  and for  making  all  determinations  and
decisions  with  respect  to such "All Risk"  policies  of  insurance.  Unless a
Default  or an Event of  Default  shall  have  occurred  and be  continuing,  at
Borrower's request,  Agent shall release casualty insurance proceeds to Borrower
necessary to pay for the repair,  replacement  or  reconstruction  of the assets
subject to such casualty,  provided that Agent reasonably  believes that, in the
event that the  reasonably  anticipated  costs of such  repair,  replacement  or
reconstruction will exceed the amount


                                       31

<PAGE>



of such insurance proceeds, Borrower is and will be able to meet such additional
cost. In the event Borrower at any time or times  hereafter shall fail to obtain
or  maintain  any of the  policies  of  insurance  required  above or to pay any
premium  in  whole  or in part  relating  thereto,  Agent,  without  waiving  or
releasing any Obligations or Default or Event of Default  hereunder,  may at any
time or times  thereafter  (but shall not be  obligated  to) obtain and maintain
such  policies of insurance  and pay such premium and take any other action with
respect thereto which Agent deems  advisable.  All sums so disbursed,  including
attorneys,  fees,  court  costs  and other  charges  related  thereto,  shall be
payable,  on demand,  by Borrower to Agent and shall be  additional  Obligations
hereunder  secured  by the  Collateral,  provided,  that,  if and to the  extent
Borrower fails to promptly pay any of such sums upon demand  therefor,  Agent is
authorized to, and at its option may, make or cause to be made Revolving  Credit
Advances on behalf of Borrower for payment thereof.

                   (b) Agent  reserves  the right at any  time,  upon  review of
Borrower's risk profile, to require additional forms and limits of insurance to,
in Agent's sole opinion, adequately protect both Agent and Lenders' interests in
all or any portion of the Collateral and to ensure that Borrower and each of its
Subsidiaries  is protected by insurance in amounts and with  coverage  customary
for businesses  engaged in their businesses.  Upon the occurrence and during the
continuance of any Default or Event of Default,  Agent reserves the right at any
time, upon review of Borrower's and/or any of its Subsidiaries' risk profile, to
require  additional  forms and limits of insurance  to, in Agent's sole opinion,
adequately protect Agent's and Lenders'  interests,  including,  but not limited
to, their interests in the Collateral. Borrower shall, if so requested by Agent,
deliver  to  Agent,  from  time to time upon  request  of  Agent,  a report of a
reputable insurance broker, satisfactory to Agent, with respect to its insurance
policies.

                   (c) On the Closing Date and from time to time thereafter,  as
requested by Agent, Borrower shall deliver to Agent endorsements to all (i) "All
Risk" and business interruption  insurance naming Agent, on behalf of itself and
Lenders,  as loss payee, and (ii) general liability and other liability policies
naming Agent, on behalf of itself and Lenders, as additional insured.

                   5.6   Compliance   with  Laws.   Borrower  and  each  of  its
Subsidiaries  shall comply in all material respects with all federal,  state and
local  laws,   regulations,   orders  and  agreements  (including   conciliation
agreements)   applicable  to  it,   including   those   relating  to  licensing,
environmental, consumer credit, truth-in-lending, ERISA and labor matters.

                   5.7 Agreements.  Borrower and each of its Subsidiaries  shall
perform in all material respects, within all required time periods (after giving
effect to any applicable grace periods),  all of its obligations and enforce all
of its rights under each  agreement to which it is a party,  including any lease
or  customer  contracts  to  which  it  is a  party.  Borrower  or  any  of  its
Subsidiaries  may terminate or modify any provision of any agreement to which it
is a party, so long as such termination or modification could not have or result
in a Material Adverse Effect.

                   5.8 Supplemental Disclosure.  On the request of Agent (in the
event that such  information  is not  otherwise  delivered  by Borrower to Agent
pursuant  to this  Agreement),  so long as  there  are  Obligations  outstanding
hereunder,  and with  reasonable  frequency  (unless  a  Default  or an Event of
Default has occurred and is  continuing,  then,  in such case,  as frequently as
requested

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<PAGE>



by Agent),  Borrower will supplement each schedule or representation herein with
respect to any matter  hereafter  arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
such schedule or as an exception to such representation or which is necessary to
correct  any  information  in such  schedule  or  representation  which has been
rendered inaccurate  thereby;  provided,  however,  that such supplement to such
schedule  or  representation  shall not be deemed an  amendment  thereof  unless
expressly  consented to in writing by Agent and Requisite  Lenders,  and no such
supplements, except as the same may be consented to in a writing which expressly
includes  a waiver,  shall be or be deemed a waiver of any  Default  or Event of
Default disclosed therein.

                   5.9 Employee  Plans.  Borrower  shall notify Agent of (i) any
and  all  claims,  actions,  or  lawsuits  asserted  or  instituted,  and of any
threatened litigation or claims, against Borrower,  any of its Subsidiaries,  or
against any ERISA Affiliate in connection with any Plan or Qualified Plan or/and
against any such Plan itself, or against any fiduciary of or service provided to
any such Plan and (ii) the  occurrence of any  Reportable  Event with respect to
any Pension Plan.

                   5.10 Environmental  Matters.  Borrower shall, and shall cause
all of its  Subsidiaries  to, (i) comply in all respects with the  Environmental
Laws  applicable  to it,  (ii)  notify  Agent  promptly  after  Borrower or such
Subsidiary  becomes aware of any Release upon any premises  owned or occupied by
it, and (iii)  promptly  forward to Agent a copy of any order,  notice,  permit,
application,  or any  communication  or  report  received  by  Borrower  or such
Subsidiary in connection  with any such Release or any other matter  relating to
the  Environmental  Laws that may  affect  such  premises  or  Borrower  or such
Subsidiary.  The  provisions of this Section 5.10 shall apply whether or not the
Environmental Protection Agency, any other federal agency or any state, local or
foreign  environmental  agency has taken or threatened  any action in connection
with any Release or the presence of any Hazardous Materials.

                   5.11  Landlords'  Agreements,  Bailee  Letters and  Mortgagee
Agreements.  Borrower  shall have  obtained as of the Closing  Date a landlord's
agreement  in form and  substance  acceptable  to Agent  from the lessor of each
leased premise  currently being used by Borrower or any of its  Subsidiaries and
shall obtain such an agreement  from the lessor of each premise leased after the
Closing  Date,  in each case where  Collateral  is  currently or may be located.
Borrower  shall have obtained as of the Closing Date a bailee letter in form and
substance acceptable to Agent with respect to any warehouse currently being used
by  Borrower  or any of its  Subsidiaries  and shall  obtain  such a letter with
respect to each warehouse established after the Closing Date, in each case where
Collateral  is currently or may be located.  Borrower  shall have obtained as of
the Closing Date a  mortgagee's  agreement in form and  substance  acceptable to
Agent from the mortgagee of each owned property currently being used by Borrower
or any of its Subsidiaries and shall obtain such an agreement from the mortgagee
of each property mortgaged after the Closing Date, in each case where Collateral
is currently or may be located. No real property shall be leased, established as
a warehouse or acquired by Borrower or any of its Subsidiaries after the Closing
Date,  unless  and  until a  landlord  agreement,  bailee  letter  or  mortgagee
agreement, as appropriate,  shall first have been obtained in form and substance
acceptable to Agent with respect to such location.


                                       33

<PAGE>



                   5.12 Leased  Locations of  Collateral.  Borrower shall timely
and fully pay and perform in all  material  respects its  obligations  under all
leases and other  agreements  with  respect to each  leased  location  or public
warehouse  where any  Collateral is or may be located.  Borrower  shall promptly
deliver to Agent  copies of (a) any and all default  notices  received  under or
with respect to any such leased location or public warehouse and (b) any and all
other  notices  received  under  or with  respect  to any  such  lease  or other
agreement. Upon Agent's request, Borrower shall promptly deliver to Agent copies
of (i) all  invoices  received  by  Borrower  for the  payment  of rent or other
obligations  with respect to any such leased  location or warehouse and (ii) all
cancelled checks evidencing payment of such rent and other obligations.

                   5.13 Subsidiaries.  Prior to forming any Subsidiary, Borrower
shall  provide  not less than thirty  (30) days prior  written  notice to Agent,
receive the prior written  consent of Agent,  (c) enter into a pledge  agreement
with Agent, for the benefit of Agent and Lenders,  pledging the capital stock of
such  Subsidiary as additional  security for the  Obligations and (d) cause such
Subsidiary to enter into a guaranty, security agreement and all other mortgages,
deeds of trust and other  documents,  instruments  and  agreements  as Agent may
request with Agent,  for the benefit of Agent and  Lenders,  securing all of the
assets of such Subsidiary as additional security for the Obligations.

                   5.14  Maintenance  of Equipment and Fixtures.  Borrower shall
keep and  maintain  its  Equipment  and  Fixtures  in good  operating  condition
sufficient  for the  continuation  of Borrower's  business  conducted on a basis
consistent  with past  practices,  and Borrower shall provide or arrange for all
maintenance and service and all repairs necessary for such purpose.

                   5.15 Purchase Offers. Promptly upon Borrower's receipt of any
offer by any Person to acquire all or  substantially  all of Borrower's  capital
stock or assets,  prior to  execution or delivery of any document in response to
such  offer  Borrower  shall  deliver a copy of such  offer,  together  with all
supporting documentation received by Borrower with respect thereto, to Agent for
its review. Confidential information received by Agent and Lenders from Borrower
pursuant to this Section 5.15 shall be subject to Section 10.14.

                   5.16 Board of Directors.  Immediately  upon any change in the
composition of Borrower's board of directors, Borrower shall notify Agent of the
same.

                   5.17 ARTRA Tax Loss Carryforwards. Borrower shall cause ARTRA
to offset tax loss carryforwards  available to ARTRA  ("Carryforwards")  against
all potential tax liabilities  (including  Borrower's  obligations under the Tax
Sharing  Agreement (the "Tax Sharing  Obligations"))  attributable to Borrower's
change of its Inventory accounting from a last-in first-out method to a first-in
first-out method (the "Conversion")  and, pursuant thereto,  Borrower may permit
ARTRA to offset up to $1,820,000 of  Carryforwards so applied to the Tax Sharing
Obligations against the outstanding  balance of all intercompany  accounts owing
from ARTRA to Borrower on the date of the  Conversion as indicated on Borrower's
financial statements prepared pursuant to this Agreement.



                                       34

<PAGE>




         NEGATIVE COVENANTS

                  Borrower  covenants  and agrees that,  without  Agent's  prior
written  consent,   from  and  after  the  Closing  Date  until  the  Commitment
Termination Date:

                   6.1 Mergers,  Etc.  Borrower  shall not,  nor shall  Borrower
permit any of its Subsidiaries  to, directly or indirectly,  by operation of law
or otherwise,  merge with, consolidate with, acquire all or substantially all of
the assets or capital stock of, or otherwise combine with, any Person or, except
as otherwise permitted by Section 5.13, form any Subsidiary.

                   6.2  Investments;  Loans and  Advances.  Except as  otherwise
permitted by Sections 6.3 or 6.4, or by the Security  Agreement,  Borrower shall
not, nor shall Borrower permit any of its  Subsidiaries  to, make any investment
in, or make or accrue  loans or  advances  of money to any  Person,  through the
direct or  indirect  lending  of money,  holding  of  securities  or  otherwise;
provided  that not more  than  (a)  $12,500,000  of  intercompany  demand  loans
advanced  by  Borrower  to ARTRA  prior to the  Closing  Date  (which  shall not
increase but rather  amortize in accordance  with the terms  thereof) may remain
outstanding until the first to occur of the (i) Commitment  Termination Date and
(ii)  acceleration  of the  Revolving  Credit  Loan,  so long as such  loans are
evidenced by demand  promissory notes in form and substance  acceptable to Agent
and pledged to Agent as additional  Collateral  securing the Obligations and (b)
the  intercompany  loan  advanced by Borrower to ARTRA prior to the Closing Date
and described in Section 8.1(q) may remain  outstanding  in accordance  with the
terms of such Section 8.1(q).

                   6.3  Indebtedness.  Borrower  shall not,  nor shall  Borrower
permit any of its Subsidiaries to, create,  incur, assume or permit to exist any
Indebtedness,  except (i) Indebtedness  secured by Liens described in clause (x)
of the  definition  of  Permitted  Encumbrances,  (ii)  the  Obligations,  (iii)
unfunded   pension  fund  and  other  employee   benefit  plan  obligations  and
liabilities not to exceed One Million Five Hundred Thousand Dollars ($1,500,000)
in the  aggregate  and then  only to the  extent  they are  permitted  to remain
unfunded  under  applicable law and (vi) the Kansas  Indebtedness,  all of which
shall be described separately on Schedule 6.3 in detail reasonably  satisfactory
to  Agent,  indicating,  without  limitation,  the  respective  amounts  thereof
outstanding as of the Closing Date, the amortization  schedules relating thereto
and the documents pursuant to which such Indebtedness was incurred.

                   6.4 Employee Loans and Transactions.  Borrower shall not, nor
shall Borrower permit any of its Subsidiaries to, except as otherwise  expressly
permitted  hereunder,  enter into any  lending,  borrowing  or other  commercial
transaction  with  any  of its  employees,  officers,  directors,  Subsidiaries,
Affiliates  or  related  parties  without  the prior  written  consent of Agent,
including (i)  downstreaming or upstreaming of cash or intercompany  advances or
guarantees  and (ii) payment of any management  consulting,  advisory or similar
fee based on or related to Borrower's or such Subsidiary's operating performance
or income or any percentage thereof other than full-time  employment  agreements
and incentive  compensation  programs with current  employees in accordance with
the agreements  described on Schedule 6.4, and (iii) payment of all or a portion
of the  salaries or  compensation  to any Person  employed by any  Affiliate  of
Borrower, including ARTRA and its Affiliates;  provided, that in the case of the
foregoing clause (iii) Borrower may


                                       35

<PAGE>



make  payments  on  behalf  of  ARTRA  in  respect  of  "BMS  Healthcare"  (or a
replacement  primary health care insurance provider) premiums and claims so long
as the amount of such payments is fully reimbursed as an offset against payments
(to the  fullest  extent  of such  payments  in the  consecutive  order of their
occurrence)  owing by Borrower to ARTRA  pursuant to the Tax Sharing  Agreement.
Borrower shall not: (a) permit the direct and indirect  compensation  of its ten
(10) most highly compensated  employees to exceed, in the aggregate,  during any
Fiscal  Year one  hundred  twenty-five  percent  (125%)  of the  amount  of such
compensation  during the immediately  preceding Fiscal Year; or (b) amend, alter
or  otherwise  modify  Borrower's  incentive  or other  compensation  plans,  or
establish  other such plans,  except as required in accordance  with  Borrower's
1996 Bonus Incentive Program, as restated on an annual basis, provided that such
program  shall not permit  Borrower to increase the amount of such  compensation
provided to its ten (10)  highest  paid  employees  above the amounts  otherwise
permitted in  accordance  with the  foregoing  clause (a).  Notwithstanding  the
foregoing,  ARTRA shall be  permitted  to offer  compensation  to  directors  or
employees  of  Borrower  pursuant  to an  equity  incentive  plan,  in form  and
substance reasonably satisfactory to Agent.

                   6.5 Capital  Structure and Business.  Borrower shall not, nor
shall Borrower permit any of its Subsidiaries to: (i) make any changes in any of
its  business  objectives,  purposes  or  operations  which  could  in  any  way
materially  adversely  affect the repayment of the  Obligations or could have or
result in a Material Adverse Effect,  (ii) make or permit to exist any change in
its capital  structure as described on Schedule 3.10  (including the issuance of
any  shares  of Stock,  options,  warrants  or other  securities  or  agreements
convertible  into Stock or any  revision of the terms of its  outstanding  Stock
other than pursuant to the Warrant),  or (iii) amend its certificate or articles
of incorporation or bylaws.  Neither Borrower nor any of its Subsidiaries  shall
engage  in any  business  other  than the  businesses  currently  engaged  in by
Borrower  or  such  Subsidiary  or  businesses  in  industries  related  to  the
businesses currently engaged in by Borrower or such Subsidiary. Parent shall not
engage in any business  activities  other than the ownership of Borrower's Stock
and  those  activities  incidental  to  Parent's  corporate  existence  and good
standing.

                   6.6  Guaranteed  Indebtedness.  Borrower shall not, nor shall
Borrower permit any of its  Subsidiaries  to, incur any Guaranteed  Indebtedness
except by  endorsement  of  instruments  or items of payment  for deposit to the
general account of Borrower,  and for Guaranteed  Indebtedness  incurred for the
benefit of Borrower or such  Subsidiary  if the primary  obligation is expressly
permitted by this Agreement.

                   6.7 Liens.  Borrower shall not, nor shall Borrower permit any
of its Subsidiaries to, create,  incur, assume or permit to exist any Lien on or
with respect to any properties or assets  (including any documents or instrument
with  respect to Goods or  Accounts)  of  Borrower  or any of its  Subsidiaries,
whether now owned or  hereafter  acquired,  or any income or profits  therefrom,
except  Permitted  Encumbrances.  In addition,  neither  Borrower nor any of its
Subsidiaries  shall  become  a  party  to  any  agreement,  note,  indenture  or
instrument,  or take any other  action,  which would  prohibit the creation of a
Lien on any of its  properties  or other assets in favor of Agent,  on behalf of
itself and Lenders, as additional collateral for the Obligations.

                   6.8 Sale of Assets.  Borrower  shall not, nor shall  Borrower
permit any of its Subsidiaries to, sell, transfer,  convey,  assign or otherwise
dispose of any of its properties or other


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<PAGE>



assets,  including the capital  stock of any  Subsidiary or any of its Accounts;
provided,  however,  that  the  foregoing  shall  not  prohibit  (a) the sale of
Inventory in the  ordinary  course of business or (b) the  disposition  of other
assets  (excluding  dispositions  of Accounts and  dispositions of Inventory not
sold in the ordinary course of Business) which are no longer in use or useful to
Borrower  or such  Subsidiary  in the  conduct of its  business  in an amount or
amounts not exceeding One Million Five Hundred Thousand Dollars  ($1,500,000) in
the aggregate per annum.

                   6.9 Events of Default. Borrower shall not, nor shall Borrower
permit any of its  Subsidiaries  to, take any action or omit to take any action,
which act or omission  would  constitute a Default or an Event of Default under,
pursuant to, or noncompliance with any of, the terms of this Agreement or any of
the other Loan  Documents or a default or an event of default  which could cause
or result in a Material Adverse Effect pursuant to, or  noncompliance  with, any
other contract,  lease,  mortgage,  deed of trust or instrument to which it is a
party or by which it or any of its property is bound, or any document creating a
Lien.

                   6.10 ERISA.  Neither Borrower,  any of its Subsidiaries,  nor
any ERISA  Affiliate shall without Agent's prior written consent acquire any new
ERISA  Affiliate  that maintains or has an obligation to contribute to a Pension
Plan that has either an "accumulated funding deficiency",  as defined in Section
302 of  ERISA,  or  any  "unfunded  vested  benefits",  as  defined  in  Section
4006(a)(3)(e)(iii)  of ERISA, in the case of any plan other than a Multiemployer
Plan,  and in  Section  4211  of  ERISA  in the  case of a  Multiemployer  Plan.
Additionally, neither Borrower, any of its Subsidiaries, nor any ERISA Affiliate
shall, without Agent's prior written consent, permit or suffer any condition set
forth on Schedule 3.13 to cease to be met and  satisfied at any time;  terminate
any  Pension  Plan that is subject to Title IV of ERISA  where such  termination
could  reasonably be anticipated  to result in liability to such Person;  permit
any accumulated funding deficiency, as defined in Section 302(a)(2) of ERISA, to
be incurred with respect to any Pension Plan; fail to make any  contributions or
fail to pay any  amounts  due and  owing as  required  by the  terms of any Plan
before  such  contributions  or amounts  become  delinquent;  make a complete or
partial  withdrawal  (within  the  meaning  of Section  4201 of ERISA)  from any
Multiemployer Plan; or at any time fail to provide Agent with copies of any Plan
documents or  governmental  reports or filings,  if requested by Agent.  Neither
Borrower, any of its Subsidiaries, nor any ERISA Affiliate shall cause or permit
to occur any event  described  in Section  4062(e) of ERISA with  respect to any
Title IV Plan or any ERISA Event to the extent such ERISA Event could reasonably
be expected to have a Material Adverse Effect.

                   6.11 Financial  Covenants.  Borrower shall not breach or fail
to comply with any of the Financial  Covenants (the  "Financial  Covenants") set
forth on Annex K.

                   6.12  Hazardous  Materials.  Except as set forth on  Schedule
3.20,  Borrower shall not, nor shall Borrower permit any of its  Subsidiaries or
any other  Person  within  its  control  to,  cause or  permit a Release  or the
presence,  use,  generation,  manufacture,   installation,  Release,  discharge,
storage or disposal of any Hazardous Materials on, under, in, above or about any
of its real estate or the  transportation of any Hazardous  Materials to or from
any  real  estate  where  such  Release  or  such  presence,   use,  generation,
manufacture, installation, Release, discharge, storage or disposal would violate
or form the basis for liability  under any  Environmental  Laws. If a Default or
Event



                                       37

<PAGE>



of Default shall have occurred and be continuing,  Borrower, at its own expense,
shall cause the performance of such environmental audits and preparation of such
environmental  reports as Agent may from time to time request as to any location
at which Collateral is then located, by reputable environmental consulting firms
acceptable to Agent, and in form and substance acceptable to Agent.

                   6.13  Sale-Leasebacks.   Neither  Borrower  nor  any  of  its
Subsidiaries shall engage in any sale-leaseback or similar transaction involving
any of its assets.

                   6.14  Cancellation of Indebtedness.  Neither Borrower nor any
of its  Subsidiaries  shall  cancel  any claim or debt  owing to it,  except for
reasonable consideration negotiated on an arm's-length basis and in the ordinary
course of its business.

                   6.15  Restricted  Payments.  Borrower  shall  not,  nor shall
Borrower  cause or  permit  any of its  Subsidiaries  to,  make  any  Restricted
Payment; provided,  however, that, so long as no Default or Event of Default has
occurred and is continuing or would result therefrom, Borrower may make payments
pursuant to the Tax Sharing Agreement and the Services  Agreement,  in each case
not to  exceed  the  lesser of (a)  Borrower's  allocated  portion  of the items
respectively  covered  by each such  agreement  and (b) the  actual  cost  which
Borrower would incur for each such respective item  independently  of Borrower's
affiliation with ARTRA or any other Person party to either such agreement.

                   6.16 Leases.  Borrower shall not, nor shall Borrower cause or
permit any of its  Subsidiaries  to,  enter into any lease of real  property  or
similar agreement or arrangement,  if the aggregate payment for Borrower and its
Subsidiaries  under all such leases,  agreements and  arrangements  would exceed
Five Hundred  Thousand Dollars  ($500,000) for any successive  twelve (12) month
period.

                   6.17  Composition.  Borrower  shall not,  nor shall  Borrower
cause or permit any of its  Subsidiaries  to, cause or suffer the  occurrence of
any change in the composition of its Stockholders as of the Closing Date.

                   6.18  Accounting  Changes.  Borrower  shall  not,  nor  shall
Borrower  cause  or  permit  any of its  Subsidiaries  to,  make any  change  in
accounting  treatment or  reporting  practices,  except as required by GAAP,  or
change its Fiscal Year.

                   6.19 Change of Corporate Name.  Borrower shall not, nor shall
Borrower cause or permit any of its Subsidiaries to, change its corporate name.

                   6.20 Sale of Stock.  Borrower  shall not, nor shall  Borrower
cause or permit any of its Subsidiaries to, sell (whether in a public or private
offering or  otherwise)  or otherwise  provide  rights to any Person (other than
rights  provided  to  Borrower  or Parent as of the  Closing  Date which are not
otherwise  prohibited  by any Loan  Document)  with respect to any of its Stock,
except pursuant to the exercise of the Warrant.



                                       38

<PAGE>



                   6.21  Cash   Management.   Except  for  petty  cash  accounts
described in the  following  sentence,  Borrower  shall not, nor shall  Borrower
permit  or cause any of its  Subsidiaries  to,  maintain  any bank  account  not
expressly  permitted to be maintained by Annex C and identified on Schedule 3.22
as  required  by Annex C.  Except  for  petty  cash  accounts  (all of which are
identified on Schedule  3.22) with an aggregate  balance not in excess of Twenty
Five Thousand Dollars ($25,000) at any time,  collectively,  Borrower shall not,
nor shall Borrower cause or permit any of its  Subsidiaries  to, maintain a cash
balance in any bank account which, as of any date,  exceeds the amount necessary
to cover  outstanding  checks to be drawn  against  such account in the ordinary
course of business on such date.

                   6.22 No Impairment of  Upstreaming.  Borrower  shall not, nor
shall  Borrower  permit  or  cause  any  of its  Subsidiaries  to,  directly  or
indirectly, enter into or become bound by any agreement,  instrument,  indenture
or other  obligation  which could directly or indirectly  restrict,  prohibit or
require the consent of any Person with  respect to the payment of  dividends  or
distributions or the making of Intercompany Loans by any Subsidiary to Borrower.

                   6.23 No  Amendment.  Borrower  shall not, nor shall  Borrower
permit or cause any of its  Subsidiaries  to,  directly  or  indirectly,  amend,
restate,  supplement  or  otherwise  modify  the Tax  Sharing  Agreement  or the
Services  Agreement.  None  of the  Kansas  Loan  Documents  shall  be  amended,
restated, supplemented or otherwise modified.

                   6.24 No Change  in  Management.  Borrower  shall not cause or
suffer the  occurrence  of any change in its senior  management  (including  its
chief executive officer, chief financial officer and chief operating officer) as
of the Closing Date; provided, that, in the event of the resignation, retirement
or death of any of the foregoing,  Borrower shall replace the same with a Person
reasonably acceptable to Agent.

                   6.25  Management  Agreements.  Except to the extent  that the
annual  payments  under all  management,  consulting,  advisory or other similar
agreements of Borrower do not exceed  $250,000 in the aggregate,  Borrower shall
not enter into any such agreement or amend,  alter or otherwise modify, or renew
or extend,  any such  agreement  to which it is a party as of the Closing  Date.
Notwithstanding  the  foregoing,   Borrower  may  compensate  its  employees  in
accordance with Section 6.4.

                   6.26 Overriding Agreements.  Except as expressly specified in
this  Agreement,  Borrower  shall not pay,  make,  declare or guaranty or become
obligated to pay, make, declare or guaranty, whether directly or indirectly, any
dividend,  distribution,  payment,  loan or advance,  contribution,  investment,
Restricted Payment or other transfer of cash,  property or other assets to or in
respect of Parent,  ARTRA,  any  Subsidiary  of any of the  foregoing,  Peter R.
Harvey or any of his family members,  or any  stockholder,  employee,  director,
officer or Affiliate of any of the foregoing.




                                       39

<PAGE>

7.   TERM

                   7.1  Termination.  The  financing  arrangements  contemplated
hereby shall be in effect until, and the Loans, Letter of Credit Obligations and
all other  Obligations  shall be  automatically  due and payable in full on, the
Commitment Termination Date.

                   7.2 Survival of  Obligations  Upon  Termination  of Financing
Arrangements.  Except as otherwise expressly provided for in the Loan Documents,
no  termination  or  cancellation  (regardless  of  cause or  procedure)  of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations,  duties  and  liabilities  of  Borrower  or the rights of Agent and
Lenders relating to any unpaid portion of any Loan, Letter of Credit Obligations
or any other Obligation, due or not due, liquidated,  contingent or unliquidated
or any  transaction  or  event  occurring  prior  to  such  termination,  or any
transaction or event,  the  performance of which is not required until after the
Commitment Termination Date. Except as otherwise expressly provided herein or in
any other Loan Document, all undertakings, agreements, covenants, warranties and
representations  of or  binding  upon  Borrower,  and all  rights  of Agent  and
Lenders,  all as contained in the Loan Documents  shall not terminate or expire,
but rather shall survive such  termination or cancellation and shall continue in
full force and effect until such time as the Loans, Letter of Credit Obligations
and all other Obligations have been indefeasibly paid in full in accordance with
the terms of the agreements creating such Obligations.

8.  EVENTS OF DEFAULT: RIGHTS AND REMEDIES

                   8.1 Events of Default.  The  occurrence of any one or more of
the following  events  (regardless of the reason  therefor) shall  constitute an
"Event of Default" hereunder:

                   (a) (i) Borrower shall fail to make any payment  hereunder or
under any of the other Loan  Documents  when due and payable or declared due and
payable,  consisting  of principal  of,  interest on or Fees with respect to the
Obligations.

                      (ii)  Borrower shall fail to make any payment hereunder or
under any of the other Loan  Documents  when due and payable or declared due and
payable,  consisting  of a payment not  described in clause (i) above,  and such
payment  shall remain  unremedied  for a period  ending on the first to occur of
three (3) Business Days after Borrower shall (A) receive  written notice of such
failure from Agent or (B) become aware of such failure.

                   (b)  Borrower  shall  fail or  neglect  to  perform,  keep or
observe any of the provisions of Section 1.13 or Section 6, including any of the
provisions set forth on Annexes C and K, respectively,  or there shall exist any
agreement or other document  accomplishing or purporting to accomplish  (whether
on a conditional  basis or otherwise) any event,  condition or other  occurrence
prohibited by any Loan Document.

                   (c)  Borrower  shall  fail or  neglect  to  perform,  keep or
observe any term or  provision  of this  Agreement  (other than any such term or
provision  referred to in other paragraphs of this Section 8.1) or of any of the
other Loan Documents,  and the same shall remain  unremedied for a period ending
on the  first to occur of thirty  (30) days  after  Borrower  shall (i)  receive
written notice of any such failure from Agent or (ii) become aware thereof.


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<PAGE>



                   (d)  Borrower  shall,  or shall  cause or  permit  any of its
Subsidiaries to, fail to timely and fully pay and perform its obligations in all
material  respects  under all leases and other  agreements  with respect to each
leased location or public  warehouse,  if any, at which Collateral is located or
shall fail or neglect to  perform,  keep or  observe  any of the  provisions  of
Section 5.12;  provided,  that,  Borrower may in good faith  contest,  by proper
legal action or  proceedings,  the validity,  amount or  enforcement of any such
obligation or  provision,  so long as, at the time of  commencement  of any such
action or proceeding, and during the pendency thereof (i) no Default or Event of
Default shall have  occurred,  (ii) adequate  reserves with respect  thereto are
maintained on the books of Borrower, in accordance with GAAP, (iii) such contest
operates to suspend collection of the contested  obligations,  or enforcement of
the  contested  provisions,  and  such  contest  is  maintained  and  prosecuted
continuously  and with  diligence,  and (iv) Agent has not  advised  Borrower in
writing that Agent reasonably  believes that nonpayment or nondischarge  thereof
could have or result in a Material Adverse Effect.

                   (e) A default shall occur under any other agreement, document
or  instrument to which  Borrower is a party or by which  Borrower or Borrower's
property is bound and such  default (i) involves the failure to make any payment
(whether  of  principal,  interest  or  otherwise)  due  (whether  by  scheduled
maturity, required prepayment,  acceleration, demand or otherwise) in respect of
any  Indebtedness  of  Borrower in an  aggregate  amount  exceeding  One Hundred
Thousand  Dollars  ($100,000)  or (ii)  causes  (or  permits  any holder of such
Indebtedness or a trustee to cause) such  Indebtedness,  or a portion thereof in
an aggregate amount exceeding One Hundred Thousand Dollars  ($100,000) to become
due prior to its stated  maturity or prior to its regularly  scheduled  dates of
payment.

                   (f) Any  representation  or  warranty  herein or in any other
Loan Document or in any written  statement  pursuant  thereto or hereto,  or any
report,  financial  statement or  certificate  made or delivered to Agent or any
Lenders by Borrower shall be untrue or incorrect in any material respect,  as of
the date when made or deemed made (including  those made or deemed made pursuant
to Section 2.2).

                   (g) Any  material  amount of the assets of Borrower or any of
its Subsidiaries shall be attached,  seized,  levied upon or subjected to a writ
or distress  warrant,  or come within the  possession of any receiver,  trustee,
custodian  or  assignee  for  the  benefit  of  creditors  of  Borrower  or such
Subsidiary,  as the case may be, and shall remain  unstayed or  undismissed  for
sixty (60)  consecutive  days; or any Person other than Borrower shall apply for
the appointment of a receiver, trustee or custodian for any of Borrower's assets
and shall remain  unstayed or undismissed  for sixty (60)  consecutive  days; or
Borrower or such Subsidiary,  as the case may be, shall have concealed,  removed
or permitted to be concealed or removed,  any part of its property,  with intent
to hinder,  delay or defraud its  creditors or any of them or made or suffered a
transfer of any of its property or the incurring of an  obligation  which may be
fraudulent under any bankruptcy, fraudulent conveyance or other similar law.

                   (h) A case or proceeding  shall have been  commenced  against
Borrower or any of its  Subsidiaries  in a court having  competent  jurisdiction
seeking a decree or order (i) under Title 11 of the United  States Code,  as now
constituted or hereafter amended, or any other applicable



                                       41

<PAGE>



federal,  state or foreign  bankruptcy or other  similar law, (ii)  appointing a
custodian, receiver,  liquidator,  assignee, trustee or sequestrator (or similar
official) of Borrower or any of its  Subsidiaries or of any substantial  part of
any of their properties,  or (iii) ordering the winding up or liquidation of the
affairs of Borrower or such Subsidiary and such case or proceeding  shall remain
undismissed  or unstayed  for thirty (30)  consecutive  days or such court shall
enter a decree or order granting the relief sought in such case or proceeding.

                   (i)  Borrower  or any of its  Subsidiaries  shall  (i) file a
petition  seeking  relief  under  Title 11 of the  United  States  Code,  as now
constituted or hereafter  amended,  or any other  applicable  federal,  state or
foreign  bankruptcy  or other similar law,  (ii) consent to the  institution  of
proceedings  thereunder  or to  the  filing  of  any  such  petition  or to  the
appointment  of or  taking  possession  by a  custodian,  receiver,  liquidator,
assignee,  trustee or sequestrator  (or similar  official) of Borrower or any of
its  Subsidiaries or of any substantial part of any of their  properties,  (iii)
fail  generally  to pay its debts as such  debts  become  due,  or (iv) take any
corporate action in furtherance of any such action.

                   (j) A final  judgment or judgments  (after the  expiration of
all times to appeal therefrom) for the payment of money in excess of One Hundred
Thousand Dollars  ($100,000) in the aggregate shall be rendered against Borrower
or any of its  Subsidiaries  unless  the same  shall  be (i)  fully  covered  by
insurance in accordance with Section 5.5 or (ii) vacated,  stayed,  bonded, paid
or  discharged  within  a  period  of  thirty  (30)  days  from the date of such
judgment.

                   (k) Any  event not  specified  in this  Section 8 shall  have
occurred  which  Agent  reasonably  believes  could  have or could  result  in a
Material  Adverse  Effect and Agent shall have given  Borrower at least ten (10)
days notice thereof.

                   (l) Any provisions of any Collateral Document,  including the
Security  Agreement or any Mortgage,  after delivery thereof pursuant to Section
2.1,  shall  for any  reason  cease to be  valid,  binding  and  enforceable  in
accordance  with its  terms in a manner  which,  in  Agent's  sole and  absolute
discretion,  could adversely  affect Agent,  Lenders or the  Collateral,  or any
security interest created under any Collateral Document,  including the Security
Agreement  or any  Mortgage,  shall cease to be a valid and  perfected  security
interest or Lien having the first priority in any of the Collateral purported to
be covered thereby (subject only to Permitted Encumbrances).

                   (m) Without  Agent's prior written  consent,  (i) there shall
occur any Change in Control.

                   (n) Without Agent's prior written consent,  there shall occur
any (i) merger,  acquisition or consolidation  transaction involving Borrower or
(ii) sale of all or substantially all of the assets of Borrower.

                   (p) Any determination  or notice is received by Borrower from
the United States (or any department or agency  thereof) with respect to a claim
or other assertion for damages or any other amounts resulting from any violation
of the Davis-Bacon Act by Borrower in the  construction of its Kansas  Facility,
which claim or other assertion could, in the sole and absolute discretion of


                                       42

<PAGE>



Agent,  result in a  Material  Adverse  Affect  or  otherwise  adversely  affect
Borrower's  ability to repay the  Obligations  pursuant to the Loan Documents or
the rights and privileges of Agent or Lenders thereunder.

                  (q) ARTRA  shall fail to repay in full to  Borrower as soon as
possible  and, in any event,  in  individual  increments of at least $50,000 not
later than March,  June,  September and December of 1998, the $200,000 principal
balance of the loan outstanding as of the Closing Date made by Borrower to ARTRA
pursuant to the Acknowledgment and Consent dated as of December 28, 1994 between
Borrower and Agent.

                   8.2 Remedies. If any Event of Default shall have occurred and
be continuing  or if a Default  shall have  occurred and be  continuing  and (i)
Agent or  Requisite  Revolving  Lenders  shall have  determined  not to make any
Revolving  Credit  Advances  or incur any Letter of Credit  Obligations  or (ii)
Agent or Requisite Capital Expenditure Lenders shall have determined not to make
any  Capital  Expenditure   Advances,  so  long  as  that  specific  Default  is
continuing,  Agent may (and shall,  at the written  request of the (i) Requisite
Revolving Lenders with respect to Revolving Credit Advances and Letter of Credit
Obligations  and (ii)  Requisite  Capital  Expenditure  Lenders  with respect to
Capital  Expenditure  Advances),  without  notice,  suspend this  facility  with
respect to, further Revolving Credit Advances,  the incurrence of further Letter
of  Credit  Obligations  and/or  further  Capital   Expenditure   Advances,   as
applicable,  whereupon any further  Revolving Credit Advances,  Letter of Credit
Obligations and Capital Expenditure  Advances,  as applicable,  shall be made or
extended in Agent's sole  discretion (or in the sole discretion of (i) Requisite
Revolving Lenders or (ii) Requisite Capital Expenditure  Lenders, as applicable,
if such  suspension  occurred  at their  respective  direction)  so long as such
Default or Event of Default is  continuing.  If any  Default or Event of Default
shall have  occurred  and be  continuing,  Agent may (and shall,  at the written
request of the Requisite Revolving Lenders),  without notice except as otherwise
expressly provided herein, increase the rate of interest applicable to the Loans
and the Fees applicable to Letters of Credit to the Default Rate.

                   (b) If any  Event  of  Default  shall  have  occurred  and be
continuing,  Agent may (and at the  written  request  of the  Requisite  Lenders
shall),  without  notice,  (i)  terminate  this facility with respect to further
Advances  and the  incurrence  of  further  Letter of Credit  Obligations;  (ii)
declare all or any portion of the  Obligations,  including all or any portion of
any Loan to be forthwith due and payable,  and require that all Letter of Credit
Obligations  be  cash  collateralized  as  provided  in  Annex  B,  all  without
presentment,  demand,  protest or further  notice of any kind,  all of which are
expressly  waived by  Borrower;  and (iii)  exercise  any  rights  and  remedies
provided to Agent under the Loan  Documents  and/or at law or equity,  including
all  remedies  provided  under  the  Code;  provided,  however,  that  upon  the
occurrence of an Event of Default specified in Sections 8.1(g),  (h) or (i), all
of the Obligations,  including the aggregate Revolving Credit Loan, shall become
immediately due and payable without declaration, notice or demand by any Person.

                   8.3 Waivers by Borrower.  Except as otherwise provided for in
this Agreement or by applicable law, Borrower waives):  (a) presentment,  demand
and protest and notice of presentment, dishonor, notice of intent to accelerate,
notice  of  acceleration,   protest,  default,  nonpayment,  maturity,  release,
compromise, settlement, extension or renewal of any or all


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<PAGE>



commercial paper, accounts,  contract rights,  documents,  instruments,  chattel
paper and  guaranties at any time held by Agent on which Borrower may in any way
be liable,  and  hereby  ratifies  and  confirms  whatever  Agent may do in this
regard,  (b) all  rights  to  notice  and a  hearing  prior  to  Agent's  taking
possession or control of, or to Agent's  replevy,  attachment or levy upon,  the
Collateral or any bond or security which might be required by any court prior to
allowing  Agent to  exercise  any of its  remedies,  and (c) the  benefit of all
valuation, appraisal, marshalling and exemption laws. Borrower acknowledges that
it has been advised by counsel of its choice with respect to this Agreement, the
other Loan  Documents and the  transactions  evidenced by this Agreement and the
other  Loan  Documents  and   understands   fully  the  terms,   conditions  and
implications of each of the foregoing.

9.       ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT

                   9.1 Assignment and  Participations.  The Borrower consents to
any Lender's  assignment  of, and/or sale of  participations  in, at any time or
times,  the  Loan  Documents,  Loans,  Letter  of  Credit  Obligations  and  any
Commitment or of any portion thereof or interest therein, including any Lender's
rights,  title,  interests,  remedies,  powers  or  duties  thereunder,  whether
evidenced by a writing or not. Any  assignment by a Lender shall (i) require the
consent of Agent (which shall not be  unreasonably  withheld or delayed) and the
execution of an assignment  agreement  substantially in the form attached hereto
as  Exhibit  J  and  otherwise  in  form  and  substance  satisfactory  to,  and
acknowledged by, Agent (an "Assignment Agreement");  (ii) be conditioned on such
assignee  Lender  representing  to the  assigning  Lender  and Agent  that it is
purchasing  the applicable  Loans to be assigned to it for its own account,  for
investment purposes and not with a view to the distribution thereof;  (iii) if a
partial  assignment,  be in an amount at least equal to  $5,000,000  and,  after
giving effect to any such partial  assignment,  the assigning  Lender shall have
retained Commitments in an amount at least equal to $5,000,000; and (iv) include
a payment to Agent of an assignment fee of $3,500.  In the case of an assignment
by a Lender under this Section  9.1, the assignee  shall have,  to the extent of
such  assignment,  the same rights,  benefits and  obligations as it would if it
were  a  Lender  hereunder.  The  assigning  Lender  shall  be  relieved  of its
obligations  hereunder  with  respect to its  Commitments  or  assigned  portion
thereof from and after the date of such assignment. Borrower hereby acknowledges
and agrees that any assignment will give rise to a direct obligation of Borrower
to the  assignee  and that the assignee  shall be  considered  to be a "Lender".
Agent shall deliver a copy of each executed Assignment Agreement to Borrower. In
all instances,  each Lender's liability to make Loans hereunder shall be several
and not  joint and  shall be  limited  to such  Lender's  Pro Rata  Share of the
applicable  Commitment.  In the event Agent or any Lender  assigns or  otherwise
transfers  all or any part of a Note,  Agent or any such Lender  shall so notify
Borrower and Borrower shall,  upon the request of Agent or such Lender,  execute
new  Notes  in  exchange  for the  Notes  being  assigned.  Notwithstanding  the
foregoing  provisions of this Section 9.1(a),  any Lender may at any time pledge
or assign all or any portion of such  Lender's  rights under this  Agreement and
the other Loan Documents to a Federal Reserve Bank; provided,  however,  that no
such  pledge  or  assignment  shall  release  such  Lender  from  such  Lender's
obligations hereunder or under any other Loan Document.

                   (b) Any  participation  by a Lender of all or any part of its
Commitments  shall be made with the  understanding  that all amounts  payable by
Borrower hereunder shall be determined


                                       44

<PAGE>



as if that  Lender had not sold such  participation,  and that the holder of any
such participation  shall not be entitled to require such Lender to take or omit
to take any action hereunder except actions directly affecting (i) any reduction
in the  principal  amount of, or interest  rate or Fees payable with respect to,
any Loan in which such holder participates,  (ii) any extension of the scheduled
amortization  of  the  principal  amount  of  any  Loan  in  which  such  holder
participates or the final maturity date thereof, and (iii) any release of all or
substantially  all of the Collateral (other than in accordance with the terms of
this Agreement,  the Collateral  Documents or the other Loan Documents).  Solely
for purposes of Sections 1.17,  1.19, 1.20 and 9.8,  Borrower  acknowledges  and
agrees that a participation  shall give rise to a direct  obligation of Borrower
to the  participant  and the  participant  shall be considered to be a "Lender".
Except  as set  forth in the  preceding  sentence,  Borrower  shall not have any
obligation or duty to any participant.  Neither Agent nor any Lender (other than
the Lender selling a  participation)  shall have any duty to any participant and
may  continue to deal solely with the Lender  selling a  participation  as if no
such sale had occurred.

                   (c) Except as  expressly  provided  in this  Section  9.1, no
Lender shall, as between Borrower and that Lender,  or Agent and that Lender, be
relieved  of  any  of  its  obligations  hereunder  as a  result  of  any  sale,
assignment,  transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.

                   (d)  Borrower  shall  assist  any  Lender  permitted  to sell
assignments or participations  under this Section 9.1 as reasonably  required to
enable  the  assigning  or  selling  Lender to  effect  any such  assignment  or
participation,  including the execution and delivery of any and all  agreements,
notes  and  other  documents  and  instruments  as  shall be  requested  and the
preparation of informational  materials for, and the participation of management
in meetings with,  potential  assignees or participants.  Borrower shall certify
the  correctness,  completeness and accuracy of all descriptions of Borrower and
its  affairs  contained  in any selling  materials  provided by it and all other
information  provided  by it and  included  in such  materials,  except that any
Projections  delivered  by Borrower  shall only be  certified by Borrower as (i)
having been prepared by Borrower in light of the past operations of its business
(but including  future  payments of known  contingent  liabilities),  based upon
estimates and assumptions  stated therein (all of which Borrower  believes to be
reasonable  and fair in light of current  conditions  and current facts known to
Borrower) and (ii) reflecting, as of the Closing Date, Borrower's good faith and
reasonable  estimates  of its  future  financial  performance  and of the  other
information projected therein for the period set forth therein.

                   (e) A Lender may furnish any information  concerning Borrower
in the possession of such Lender from time to time to assignees and participants
(including  prospective  assignees and  participants).  Each Lender shall obtain
from  assignees  or   participants   confidentiality   covenants   substantially
equivalent to those contained in Section 10.17.

                   (f) So long as no Event of Default shall have occurred and be
continuing,  no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed  assignment or sale, the assignee  Lender or  participant  would be
subject to capital  adequacy  or similar  requirements  under  Section  1.20(a),
increased  costs under Section  1.20(c),  an inability to fund LIBOR Loans under
Section 1.20(d), or withholding taxes in accordance with Section 1.20(b).


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<PAGE>




                   9.2 Appointment of Agent.  GE Capital is hereby  appointed to
act on behalf of all  Lenders as Agent under this  Agreement  and the other Loan
Documents.  The  provisions  of this  Section  9.2 are solely for the benefit of
Agent and Lenders  and  neither  Borrower  nor any other  Person  shall have any
rights  as a  third  party  beneficiary  of  any of the  provisions  hereof.  In
performing  its  functions  and duties under this  Agreement  and the other Loan
Documents, Agent shall act solely as an agent of Lenders and does not assume and
shall not be deemed to have assumed any  obligation  toward or  relationship  of
agency or trust with or for  Borrower or any other  Person.  Agent shall have no
duties  or  responsibilities  except  for  those  expressly  set  forth  in this
Agreement and the other Loan Documents.  The duties of Agent shall be mechanical
and  administrative in nature and Agent shall not have, or be deemed to have, by
reason of this  Agreement,  any other Loan  Document  or  otherwise  a fiduciary
relationship  in respect of any Lender.  Neither Agent nor any of its Affiliates
nor  any  of  their  respective  officers,   directors,   employees,  agents  or
representatives shall be liable to any Lender for any action taken or omitted to
be taken by it  hereunder  or under any other Loan  Document,  or in  connection
herewith  or  therewith,  except for damages  solely  caused by its or their own
gross  negligence  or willful  misconduct  as finally  determined  by a court of
competent jurisdiction.

                  If Agent shall request  instructions  from Requisite  Lenders,
Requisite   Capital   Expenditure   Lenders,    Requisite   Revolving   Lenders,
Supermajority  Revolving Lenders or all affected Lenders with respect to any act
or action  (including  failure to act) in connection  with this Agreement or any
other Loan  Document,  then Agent shall be entitled to refrain  from such act or
taking such action unless and until Agent shall have received  instructions from
Requisite Lenders,  Requisite Capital Expenditure  Lenders,  Requisite Revolving
Lenders,  Supermajority  Revolving Lenders, or all affected Lenders, as the case
may be,  and  Agent  shall  not incur  liability  to any  Person by reason of so
refraining.  Agent shall be fully  justified  in failing or refusing to take any
action  hereunder or under any other Loan Document (a) if such action would,  in
the opinion of Agent,  be contrary to law or the terms of this  Agreement or any
other Loan Document,  (b) if such action would, in the opinion of Agent,  expose
Agent  to  Environmental  Liabilities  or  (c)  if  Agent  shall  not  first  be
indemnified to its satisfaction  against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Without  limiting  the  foregoing,  no  Lender  shall  have any  right of action
whatsoever  against Agent as a result of Agent acting or refraining  from acting
hereunder or under any other Loan Document in accordance  with the  instructions
of Requisite Lenders, Requisite Capital Expenditure Lenders, Requisite Revolving
Lenders, Supermajority Revolving Lenders or all affected Lenders, as applicable.

                   9.3  Agent's  Reliance,  Etc.  Neither  Agent  nor any of its
Affiliates nor any of their respective directors,  officers, agents or employees
shall be liable for any action  taken or omitted to be taken by it or them under
or in connection  with this  Agreement or the other Loan  Documents,  except for
damages solely caused by its or their own gross negligence or willful misconduct
as finally determined by a court of competent  jurisdiction.  Without limitation
of the generality of the foregoing,  Agent:  (a) may treat the payee of any Note
as the holder thereof until Agent  receives  written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to Agent; (b) may
consult with legal counsel,  independent  public  accountants  and other experts
selected  by it and shall not be liable  for any  action  taken or omitted to be
taken  in good  faith  by it in  accordance  with the  advice  of such  counsel,
accountants or experts; (c) makes no warranty or


                                       46

<PAGE>



representation  to any Lender and shall not be responsible to any Lender for any
statements,  warranties or  representations  made in or in connection  with this
Agreement or the other Loan Documents;  (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or  conditions  of this  Agreement  or the other Loan  Documents  on the part of
Borrower  or to inspect  the  Collateral  (including  the books and  records) of
Borrower;  (e) shall not be  responsible  to any Lender  for the due  execution,
legality, validity,  enforceability,  genuineness,  sufficiency or value of this
Agreement  or the other  Loan  Documents  or any other  instrument  or  document
furnished pursuant hereto or thereto;  and (f) shall incur no liability under or
in respect of this  Agreement  or the other Loan  Documents  by acting  upon any
notice,  consent,  certificate  or other  instrument or writing (which may be by
telecopy,  telegram,  cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.

                   9.4  GE  Capital  and   Affiliates.   With   respect  to  its
Commitments  hereunder,  GE Capital  shall have the same rights and powers under
this Agreement and the other Loan Documents as any other Lender and may exercise
the same as though it were not Agent;  and the term "Lender" or "Lenders" shall,
unless  otherwise  expressly  indicated,  include GE  Capital in its  individual
capacity.  GE  Capital  and its  Affiliates  may lend  money to,  invest in, and
generally engage in any kind of business with,  Borrower,  any of its Affiliates
and any Person who may do  business  with or own  securities  of Borrower or any
such  Affiliate,  all as if GE Capital  were not Agent and  without  any duty to
account  therefor to Lenders.  GE Capital and its Affiliates may accept fees and
other consideration from Borrower for services in connection with this Agreement
or otherwise  without having to account for the same to Lenders.  GE Capital has
also received a warrant from Borrower.  Each Lender  acknowledges  the potential
conflict of  interest  between GE Capital as a Lender  holding  disproportionate
interests in the Loans,  GE Capital as a warrant holder of Borrower,  GE Capital
as a stockholder of Borrower and GE Capital as Agent.

                   9.5 Lender Credit Decision.  Each Lender acknowledges that it
has, independently and without reliance upon Agent or any other Lender and based
on the Financial  Statements referred to in Section 3.4 and such other documents
and information as it has deemed appropriate,  made its own credit and financial
analysis of Borrower  and its own  decision to enter into this  Agreement.  Each
Lender also acknowledges  that it will,  independently and without reliance upon
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 decisions in
taking or not taking action under this Agreement.  Each Lender  acknowledges the
potential  conflict  of  interest  of each  other  Lender as a result of Lenders
holding disproportionate  interests in the Loans, and expressly consents to, and
waives any claim based upon, such conflict of interest.

                   9.6 Indemnification. Lenders agree to indemnify Agent (to the
extent not  reimbursed  by Borrower  and without  limiting  the  obligations  of
Borrower hereunder), ratably according to their respective Pro Rata Shares, from
and against any and all liabilities,  obligations,  losses, damages,  penalties,
actions,  judgments,  suits,  costs,  expenses or  disbursements  of any kind or
nature  whatsoever  which may be imposed on,  incurred  by, or asserted  against
Agent in any way relating to or arising out of this  Agreement or any other Loan
Document  or any  action  taken or  omitted  by Agent in  connection  therewith;
provided,  however,  that no Lender  shall be  liable  for any  portion  of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,


                                       47
<PAGE>



expenses or  disbursements  resulting  solely from Agent's  gross  negligence or
wilful  misconduct as finally  determined by a court of competent  jurisdiction.
Without  limiting the foregoing,  each Lender agrees to reimburse Agent promptly
upon  demand for its  ratable  share of any  out-of-pocket  expenses  (including
counsel fees) incurred by Agent in connection with the  preparation,  execution,
delivery,  administration,   modification,  amendment  or  enforcement  (whether
through  negotiations,  legal  proceedings  or otherwise) of, or legal advice in
respect of rights or responsibilities  under, this Agreement and each other Loan
Document,  to the  extent  that Agent is not  reimbursed  for such  expenses  by
Borrower.

                   9.7 Successor  Agent.  Agent may resign at any time by giving
not less than  thirty  (30) days' prior  written  notice  thereof to Lenders and
Borrower. Upon any such resignation,  the Requisite Lenders shall have the right
to appoint a successor Agent. If no successor Agent shall have been so appointed
by the Requisite Lenders and shall have accepted such appointment within 30 days
after the resigning  Agent's  giving notice of  resignation,  then the resigning
Agent may, on behalf of Lenders,  appoint a  successor  Agent,  which shall be a
Lender, if a Lender is willing to accept such appointment, or otherwise shall be
a commercial bank or financial  institution or a subsidiary of a commercial bank
or financial  institution if such  commercial  bank or financial  institution is
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 $300,000,000. If no successor
Agent has been appointed  pursuant to the  foregoing,  by the 30th day after the
date  such  notice  of  resignation  was  given  by the  resigning  Agent,  such
resignation  shall become  effective and the Requisite  Lenders shall thereafter
perform  all the  duties of Agent  hereunder  until such  time,  if any,  as the
Requisite  Lenders appoint a successor  Agent as provided  above.  Any successor
Agent appointed by Requisite  Lenders hereunder shall be subject to the approval
of Borrower, such approval not to be unreasonably withheld or delayed;  provided
that such  approval  shall not be  required  if a Default or an Event of Default
shall have occurred and be continuing. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent,  such successor Agent shall succeed to and
become  vested  with  all the  rights,  powers,  privileges  and  duties  of the
resigning Agent.  Upon the earlier of the acceptance of any appointment as Agent
hereunder by a successor  Agent or the effective  date of the resigning  Agent's
resignation,  the  resigning  Agent  shall be  discharged  from its  duties  and
obligations  under this Agreement and the other Loan Documents,  except that any
indemnity  rights  or  other  rights  in  favor of such  resigning  Agent  shall
continue.  After any resigning Agent's resignation hereunder,  the provisions of
this Section 9 shall inure to its benefit as to any actions  taken or omitted to
be taken by it while it was  Agent  under  this  Agreement  and the  other  Loan
Documents.  Agent may be  removed at the  written  direction  of the  holders of
fifty-one  percent or more of the Commitments  (including  Agent's  Commitment);
provided  that in so doing,  such  Lenders  shall be deemed to have  waived  and
released any and all claims they may have against Agent.

                   9.8 Setoff and Sharing of Payments. In addition to any rights
now or hereafter  granted under  applicable  law and not by way of limitation of
any such rights,  upon the occurrence and during the continuance of any Event of
Default,  each  Lender and each holder of any Note is hereby  authorized  at any
time or from time to time,  without  notice to Borrower or to any other  Person,
any such notice being hereby expressly waived, to set off and to appropriate and
to apply any and all  balances  held by it at any of its offices for the account
of Borrower  (regardless  of whether such balances are then due to Borrower) and
any other properties or assets any time held


                                       48

<PAGE>



or owing by that  Lender or that  holder to or for the credit or for the account
of Borrower against and on account of any of the Obligations  which are not paid
when due.  Any  Lender or  holder of any Note  exercising  a right to set off or
otherwise  receiving any payment on account of the  Obligations in excess of its
Pro Rata Share thereof shall purchase for cash (and the other Lenders or holders
shall sell) such participations in each such other Lender's or holder's Pro Rata
Share of the Obligations as would be necessary to cause such Lender to share the
amount so set off or  otherwise  received  with each  other  Lender or holder in
accordance with their respective Pro Rata Shares. Each Lender's obligation under
this  Section  9.8  shall  be in  addition  to  and  not  in  limitation  of its
obligations to purchase a participation in an amount equal to its Pro Rata Share
of the Swing Line Loans  under  Section  1.4.  Borrower  agrees,  to the fullest
extent permitted by law, that (a) any Lender or holder may exercise its right to
set off  with  respect  to  amounts  in  excess  of its Pro  Rata  Share  of the
Obligations  and may  sell  participations  in such  amount  so set off to other
Lenders and holders and (b) any Lender or holders so purchasing a  participation
in the Loans made or other  Obligations  held by other  Lenders  or holders  may
exercise all rights of set-off,  bankers' lien,  counterclaim  or similar rights
with respect to such  participation  as fully as if such Lender or holder were a
direct  holder  of the Loans and the  other  Obligations  in the  amount of such
participation.  Notwithstanding  the  foregoing,  if all or any  portion  of the
set-off amount or payment  otherwise  received is thereafter  recovered from the
Lender that has exercised the right of set-off,  the purchase of  participations
by that Lender  shall be  rescinded  and the  purchase  price  restored  without
interest.

                   9.9 Advances;  Payments;  Non-Funding  Lenders;  Information;
Actions in Concert.

                   (a) Advances; Payments. (i) Revolving Lenders shall refund or
participate  in the Swing Line Loan in  accordance  with  clauses (c) and (d) of
Section  1.4. If the Swing Line Lender  declines to make a Swing Line Loan or if
Swing Line Availability is zero, Agent shall notify Revolving Lenders,  promptly
after  receipt of a Notice of Revolving  Advance and in any event prior to 12:00
noon (Chicago time) on the date such Notice of Revolving Advance is received, by
telecopy,  telephone or other  similar form of  transmission.  Each Lender shall
make the amount of such Lender's Pro Rata Share of each Revolving Credit Advance
and Capital  Expenditure  Advance  available  to Agent in same day funds by wire
transfer  to  Agent's  account  as set forth in Annex H not later than 2:00 p.m.
(Chicago time) on the requested  funding date, in the case of an Index Rate Loan
and not later than 10:00 a.m.  (Chicago  time) on the requested  funding date in
the case of a LIBOR  Loan.  After  receipt of such wire  transfers  (or,  in the
Agent's sole discretion, before receipt of such wire transfers),  subject to the
terms hereof, Agent shall make the requested Revolving Credit Advance or Capital
Expenditure Advance to Borrower.  All such payments by each Lender shall be made
without setoff, counterclaim or deduction of any kind.

             (ii) On the second (2nd) Business Day of each calendar week or more
frequently as aggregate cumulative payments in excess of $3,000,000 are received
with respect to all Loans (each,  a "Settlement  Date"),  Agent will advise each
Lender by  telephone,  or telecopy of the amount of such Lender's Pro Rata Share
of principal,  interest and Fees paid for the benefit of Lenders with respect to
each applicable Loan.  Provided that such Lender has made all payments  required
to be made by it and purchased all participations required to be purchased by it
under this  Agreement and the other Loan Documents as of such  Settlement  Date,
Agent  will  pay to each  Lender  such  Lender's  Pro Rata  Share of  principal,
interest and Fees paid by Borrower since the


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<PAGE>



previous Settlement Date for the benefit of that Lender on the Loans held by it.
Such  payments  shall be made by wire  transfer  to such  Lender's  account  (as
specified by such Lender in Annex M or the applicable  Assignment Agreement) not
later than 1:00 p.m.  (Chicago  time) on the next  Business Day  following  each
Settlement Date.

                   (b) Availability of Lender's Pro Rata Share. Agent may assume
that each Lender will make its Pro Rata Share of each  Revolving  Credit Advance
and Capital Expenditure Advance available to Agent on each funding date. If such
Pro Rata Share is not, in fact,  paid to Agent by such  Lender  when due,  Agent
will be  entitled to recover  such  amount on demand  from such  Lender  without
set-off,  counterclaim  or deduction of any kind. If any Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly
notify  Borrower  and  Borrower  shall  immediately  repay such amount to Agent.
Nothing in this Section  9.9(b) or elsewhere in this Agreement or the other Loan
Documents  shall be deemed to require  Agent to  advance  funds on behalf of any
Lender or to relieve any Lender from its  obligation to fulfill its  Commitments
hereunder or to prejudice  any rights that  Borrower may have against any Lender
as a result of any  default by such Lender  hereunder.  To the extent that Agent
advances  funds to  Borrower  on  behalf  of any  Lender  and is not  reimbursed
therefor  on the same  Business  Day as such  advance  is made,  Agent  shall be
entitled to retain for its account all interest  accrued on such  advance  until
reimbursed by the applicable Lender.

                   (c)  Return  of  Payments.  (i) If Agent  pays an amount to a
Lender under this Agreement in the belief or expectation  that a related payment
has been or will be received by Agent from Borrower and such related  payment is
not  received by Agent,  then Agent will be entitled to recover such amount from
such Lender on demand without set-off, counterclaim or deduction of any kind.

                  (ii) If Agent  determines at any time that any amount received
by Agent under this  Agreement must be returned to Borrower or paid to any other
Person pursuant to any insolvency law or otherwise,  then,  notwithstanding  any
other term or condition of this Agreement or any other Loan Document, Agent will
not be required to distribute  any portion  thereof to any Lender.  In addition,
each  Lender will repay to Agent on demand any portion of such amount that Agent
has distributed to such Lender,  together with interest at such rate, if any, as
Agent is  required to pay to Borrower  or such other  Person,  without  set-off,
counterclaim or deduction of any kind.

                   (d)  Non-Funding  Lenders.  The  failure of any Lender  (such
Lender,  a "Non- Funding Lender") to make any Advance to be made or purchased by
it on the date specified  therefor shall not relieve any other Lender (each such
other  Lender,  an "Other  Lender") of its  obligations  to make such Advance or
purchase such participation on such date, but neither any Other Lender nor Agent
shall be  responsible  for the  failure  of any  Non-Funding  Lender  to make an
Advance  to  be  made,  or  to  purchase  a  participation  required  hereunder.
Notwithstanding  anything set forth herein to the contrary, a Non-Funding Lender
shall not have any voting or consent  rights  under or with  respect to any Loan
Document  or  constitute  a  "Lender"  (or be  included  in the  calculation  of
"Requisite  Lenders",   "Requisite  Capital  Expenditure  Lenders",   "Requisite
Revolving  Lenders" or  "Supermajority  Revolving  Lenders"  hereunder)  for any
voting or consent rights under or with respect to any Loan Document.


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<PAGE>




                   (e)  Dissemination of Information.  Agent will use reasonable
efforts  to  provide  Lenders  with any  notice of  Default  or Event of Default
received by Agent from, or delivered by Agent to, any Credit Party,  with notice
of any Event of Default of which Agent has actually become aware and with notice
of any action taken by Agent following any Event of Default; provided,  however,
that Agent shall not be liable to any Lender for any failure to do so, except to
the extent that such failure is attributable  solely to Agent's gross negligence
or  willful   misconduct   as  finally   determined  by  a  court  of  competent
jurisdiction. Lenders acknowledge that Borrower is required to provide Financial
Statements and Collateral  Reports to Lenders in accordance with Annexes I and J
hereto and agree that Agent shall have no duty to provide the same to Lenders.

                   (f) Actions in Concert.  Anything  in this  Agreement  to the
contrary notwithstanding,  each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights  arising out of
this Agreement or the Notes (including exercising any rights of set-off) without
first  obtaining the prior  written  consent of Agent or Requisite  Lenders,  it
being the intent of Lenders  that any such  action to protect or enforce  rights
under  this  Agreement  and the  Notes  shall  be taken  in  concert  and at the
direction or with the consent of Agent.

 MISCELLANEOUS

                   10.1  Successors  and Assigns.  This  Agreement and the other
Loan  Documents  shall be binding on and shall inure to the benefit of Borrower,
Agent, Lenders and their respective successors and assigns,  except as otherwise
provided herein or therein.  Borrower may not assign,  transfer,  hypothecate or
otherwise convey its rights, benefits,  obligations or duties hereunder or under
any of the other Loan  Documents  without the prior express  written  consent of
Agent  and  Requisite  Lenders.   Any  such  purported   assignment,   transfer,
hypothecation  or other conveyance by Borrower without the prior express written
consent  of Agent  shall be null and  void,  as if the  same  shall  have  never
occurred.  The terms and  provisions  of this  Agreement  are for the purpose of
defining the relative rights and obligations of Borrower, Agent and Lenders with
respect to the  transactions  contemplated  hereby  and there  shall be no third
party  beneficiaries of any of the terms and provisions of this Agreement or any
of the other Loan Documents.

                   10.2 Complete Agreement;  Modification of Agreement. The Loan
Documents  constitute the complete agreement between the parties with respect to
the subject matter thereof and may not be modified, altered or amended except as
set forth in Section 10.2. Any Letter of Interest,  Commitment Letter,  proposal
or other similar letter or  understanding  between  Borrower and Agent or any of
its  affiliates,  predating  this  Agreement  and  relating  to a  financing  of
substantially  similar form, purpose or effect shall be merged with and into and
superseded by this Agreement.

                   10.3  Amendments  and Waivers.  Except for actions  expressly
permitted  to be taken by Agent,  no  amendment,  modification,  termination  or
waiver of any provision of this Agreement or any of the Notes, or any consent to
any  departure by Borrower or any of its  Subsidiaries  therefrom,  shall in any
event be  effective  unless the same shall be in writing and signed by Agent and
Borrower,  and by Requisite  Lenders,  Requisite  Capital  Expenditure  Lenders,
Requisite  Revolving  Lenders,  Supermajority  Revolving Lenders or all affected
Lenders, as applicable. Except


                                       51

<PAGE>



as set forth in clauses (b) and (c) below, all such  amendments,  modifications,
terminations  or waivers  requiring the consent of any Lenders shall require the
written consent of Requisite Lenders.

                   (b) No amendment,  modification,  termination or waiver of or
consent with respect to any  provision of this  Agreement  which  increases  the
percentage  advance rates set forth in the definition of the Borrowing  Base, or
which makes less  restrictive the  nondiscretionary  criteria for exclusion from
Eligible  Accounts and Eligible  Inventory  set forth in Annex F and G, shall be
effective unless the same shall be in writing and signed by Agent, Supermajority
Revolving  Lenders and Borrower.  No  amendment,  modification,  termination  or
waiver of or consent  with  respect to any  provision  of this  Agreement  which
waives compliance with the conditions  precedent set forth in Section 2.2 to the
making of any Revolving Credit Advance or the incurrence of any Letter of Credit
Obligations shall be effective unless the same shall be in writing and signed by
Agent,  Requisite  Revolving Lenders and Borrower.  No amendment,  modification,
termination  or waiver of or  consent  with  respect  to any  provision  of this
Agreement  which waives  compliance  with the conditions  precedent set forth in
Sections 2.2 or 2.3 to the making of any Capital  Expenditure  Advance  shall be
effective  unless the same shall be in  writing  and signed by Agent,  Requisite
Capital Expenditure Lenders and Borrower.  Notwithstanding anything contained in
this  Agreement  to the  contrary  (i) no waiver or consent  with respect to any
Default (if in connection therewith Agent or Requisite Revolving Lenders, as the
case  may be,  have  exercised  its or their  right to  suspend  the  making  or
incurrence of further Revolving Credit Advances or Letter of Credit  Obligations
pursuant  to  Section  8.2(a)) or any Event of Default  shall be  effective  for
purposes of the conditions  precedent to the making of Revolving Credit Advances
or the  incurrence  of Letter of Credit  Obligations  set forth in  Section  2.2
unless  the same shall be in writing  and signed by Agent,  Requisite  Revolving
Lenders and  Borrower  and (ii) no waiver or consent with respect to any Default
(if in connection  therewith Agent or Requisite Capital Expenditure  Lenders, as
the case may be,  have  exercised  its or their  right to suspend  the making or
incurrence of further Capital  Expenditure  Advances pursuant to Section 8.2(a))
or any Event of  Default  shall be  effective  for  purposes  of the  conditions
precedent  to the making of Capital  Expenditure  Advances set forth in Sections
2.2 or 2.3 unless the same  shall be in writing  and signed by Agent,  Requisite
Capital Expenditure Lenders and Borrower.

                   (c) No amendment, modification,  termination or waiver shall,
unless in writing and signed by Agent and each Lender directly affected thereby,
do any of the  following:  (i)  increase  the  principal  amount of any Lender's
Commitment  (which action shall be deemed to directly affect all Lenders);  (ii)
reduce the principal of, rate of interest on or Fees payable with respect to any
Loan or Letter of Credit  Obligations of any affected  Lender;  (iii) extend any
scheduled  payment date or final  maturity date of the  principal  amount of any
Loan of any affected Lender; (iv) waive, forgive,  defer, extend or postpone any
payment of interest or Fees as to any affected Lender;  (v) release any Guaranty
or Pledge Agreement,  except as otherwise  permitted herein or in the other Loan
Documents,  release or permit any Credit Party to sell or  otherwise  dispose of
any Collateral with a value exceeding  $5,000,000 in the aggregate (which action
shall be deemed to directly  affect all Lenders);  (vi) change the percentage of
the Commitments or of the aggregate  unpaid  principal amount of the Loans which
shall be required for Lenders or any of them to take any action  hereunder;  and
(vii)  amend  or  waive  this  Section  10.3  or the  definitions  of the  terms
"Requisite  Lenders",   "Requisite  Capital  Expenditure  Lenders",   "Requisite
Revolving  Lenders"  or  "Supermajority   Revolving  Lenders"  insofar  as  such
definitions affect the substance of this Section


                                       52

<PAGE>



10.3. Furthermore, no amendment,  modification,  termination or waiver affecting
the rights or duties of Agent under this  Agreement  or any other Loan  Document
shall be effective unless in writing and signed by Agent, in addition to Lenders
required  hereinabove  to  take  such  action.  Each  amendment,   modification,
termination or waiver shall be effective  only in the specific  instance and for
the  specific  purpose  for  which it was  given.  No  amendment,  modification,
termination or waiver shall be required for Agent to take additional  Collateral
pursuant to any Loan Document. No amendment, modification, termination or waiver
of any provision of any Note shall be effective without the written  concurrence
of the  holder of that Note.  No notice to or demand on any Credit  Party in any
case shall  entitle  such Credit Party or any other Credit Party to any other or
further  notice or demand in  similar  or other  circumstances.  Any  amendment,
modification,  termination,  waiver or consent  effected in accordance with this
Section  10.3  shall  be  binding  upon  each  holder  of the  Notes at the time
outstanding and each future holder of the Notes.

                   (d)  If,  in   connection   with  any   proposed   amendment,
modification, waiver or termination:

                           (i)  requiring  the consent of all affected  Lenders,
                  the consent of Requisite Lenders is obtained,  but the consent
                  of other  Lenders  whose  consent is required is not  obtained
                  (any such Lender  whose  consent is not  obtained as described
                  this  clause  (i) and in  clauses  (ii),  (iii) and (iv) below
                  being referred to as a Non-Consenting Lender), or

                           (ii) requiring the consent of Supermajority Revolving
                  Lenders,   the  consent  of  Requisite  Revolving  Lenders  is
                  obtained,  but the consent of Supermajority  Revolving Lenders
                  is not obtained, or

                           (iii)   requiring   the  consent  of  (a)   Requisite
                  Revolving Lenders,  the consent of Lenders holding 51% or more
                  of the aggregate  Revolving Loan Commitments is obtained,  but
                  the consent of Requisite  Revolving Lenders is not obtained or
                  (b)  Requisite  Capital  Expenditure  Lenders,  the consent of
                  Lenders   holding  51%  or  more  of  the  aggregate   Capital
                  Expenditure Loan  Commitments is obtained,  but the consent of
                  Requisite Capital Expenditure Lenders is not obtained, or

                           (iv) requiring the consent of Requisite Lenders,  the
                  consent  of  Lenders  holding  51% or  more  of the  aggregate
                  Commitments is obtained,  but the consent of Requisite Lenders
                  is not obtained,

then,  so  long  as  Agent  is  not  a   Non-Consenting   Lender,   at  Borrower
Representative's  request,  Agent or a Person acceptable to Agent shall have the
right with  Agent's  consent and in Agent's sole  discretion  (but shall have no
obligation)   to   purchase   from  such   Non-Consenting   Lenders,   and  such
Non-Consenting  Lenders agree that they shall,  upon Agent's  request,  sell and
assign to Agent or such Person,  all of the  Commitments of such  Non-Consenting
Lender  for an amount  equal to the  principal  balance of all Loans held by the
Non-Consenting  Lender and all accrued  interest and Fees with  respect  thereto
through the date of sale,  such purchase and sale to be consummated  pursuant to
an executed Assignment Agreement.


                                       53

<PAGE>




                   (e) Upon indefeasible payment in full in cash and performance
of all of the  Obligations,  termination of the Commitments and a release of all
claims against Agent and Lenders,  and so long as no suits, actions proceedings,
or claims are pending or threatened against any Indemnified Person asserting any
damages,  losses or liabilities  that are Indemnified  Liabilities,  Agent shall
deliver (and Lenders shall deliver, to the extent not delivered by the Agent and
legally required to be delivered by Lenders) to Borrower termination statements,
mortgage  releases and other documents  necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations.

                   10.4 Fees and Expenses.  Borrower shall  reimburse  Agent for
all reasonable out-of-pocket expenses reasonably incurred in connection with (a)
the  preparation  of the  Loan  Documents  (including  the  reasonable  fees and
expenses of all of its special loan counsel, advisors,  consultants and auditors
retained in connection with the Loan Documents and the transactions contemplated
thereby and advice in connection  therewith),  (b) wire transfers to the account
of Borrower and (c) Letter of Credit Obligations. Borrower shall reimburse Agent
(and,  with respect to clauses (c) and (d) below,  Lenders)  for all  reasonable
fees,  costs and expenses  reasonably  incurred,  including the fees,  costs and
expenses of counsel or other advisors  (including  environmental  and management
consultants) for advice, assistance, or other representation in connection with:

                   (a) the  forwarding to Borrower or any other Person on behalf
of Borrower by Lender of the proceeds of the Loans;

                   (b) any amendment, modification or waiver of, or consent with
respect  to,  any of the  Loan  Documents  or  advice  in  connection  with  the
administration  of the loans made  pursuant  hereto or its rights  hereunder  or
thereunder;

                   (c) any litigation,  contest,  dispute,  suit,  proceeding or
action (whether  instituted by Agent, any Lender,  Borrower or any other Person)
in any way relating to the  Collateral,  any of the Loan  Documents or any other
agreement  to be executed or  delivered  in  connection  therewith  or herewith,
whether as party,  witness,  or otherwise,  including any  litigation,  contest,
dispute,  suit, case, proceeding or action, and any appeal or review thereof, in
connection with a case commenced by or against Borrower or any other Person that
may be obligated to Agent by virtue of the Loan Documents;

                   (d) any  attempt to enforce any rights of Agent or any Lender
against  Borrower  or any other  Person  that may be  obligated  to Agent or any
Lender by virtue of any of the Loan Documents;

                   (e) any work-out  or  restructuring  of the Loans  during the
pendency of one or more Events of Default;

                   (f)  any   attempt  to  (i)   monitor   the  Loans  or  other
Obligations, (ii) evaluate, observe, assess Borrower, any of its Subsidiaries or
their respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;


                                       54

<PAGE>




in each of clauses (a) through (f) above, including all the attorneys' and other
professional and service  providers' fees arising from such services,  including
those in connection  with any appellate  proceedings;  and all expenses,  costs,
charges and other fees incurred by such counsel and others in any way or respect
arising in connection with or relating to any of the events or actions described
in this Section 10.3 shall be payable, on demand, by Borrower to Agent.  Without
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include:  fees, costs and expenses of accountants,  environmental  advisors,
appraisers, investment bankers, management and other consultants and paralegals;
court costs and expenses;  photocopying and duplication expenses; court reporter
fees, costs and expenses;  long distance telephone charges; air express charges;
telegram charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection  with the  performance  of such legal or
other advisory  services.  Notwithstanding  the foregoing (a) Agent shall charge
Borrower according to Agent's policy in effect from time to time and on the same
basis that Agent  charges its other  borrowers  with respect to fees,  costs and
expenses of photocopying and duplication,  long distance telephone charges,  air
express charges,  telegram charges, and secretarial overtime charges and (b) all
fees,  costs and expenses  incurred in connection  with any valuation  performed
pursuant to the Warrant shall be governed by the terms of the Warrant.

                   10.5 No Waiver.  Agent's or any Lender's failure, at any time
or times,  to require  strict  performance  by Borrower of any provision of this
Agreement  and any of the  other  Loan  Documents  shall  not  waive,  affect or
diminish  any  right  of  Agent  or such  Lender  thereafter  to  demand  strict
compliance and  performance  therewith.  Any suspension or waiver of an Event of
Default  under  this  Agreement  or any of the other  Loan  Documents  shall not
suspend, waive or affect any other Event of Default under this Agreement and any
of the other Loan Documents whether the same is prior or subsequent  thereto and
whether  of  the  same  or  of a  different  type.  None  of  the  undertakings,
agreements,  warranties,  covenants and representations of Borrower contained in
this  Agreement  or any of the other Loan  Documents  and no Default or Event of
Default by Borrower  under this  Agreement and no defaults by Borrower under any
of the other Loan Documents  shall be deemed to have been suspended or waived by
Agent or any Lender,  unless such waiver or  suspension  is by an  instrument in
writing  signed  by an  officer  of or other  authorized  employee  of Agent and
Requisite Lenders and directed to Borrower specifying such suspension or waiver.

                   10.6 Remedies. Agent's and Lenders' rights and remedies under
this  Agreement  shall be cumulative  and  nonexclusive  of any other rights and
remedies which Agent or any Lender may have under any other agreement, including
the other Loan  Documents,  by  operation of law or  otherwise.  Recourse to the
Collateral shall not be required.

                   10.7 Severability.  Wherever possible, each provision of this
Agreement and the other Loan Documents  shall be interpreted in such a manner as
to be effective  and valid under  applicable  law, but if any  provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be  ineffective to the extent of such  prohibition or invalidity,  without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

                   10.8 Conflict of Terms.  Except as otherwise provided in this
Agreement  or any of the other  Loan  Documents  by  specific  reference  to the
applicable provisions of this Agreement,


                                       55

<PAGE>



if  any  provision   contained  in  this  Agreement  is  in  conflict  with,  or
inconsistent  with,  any  provision  in any of the  other  Loan  Documents,  the
provision contained in this Agreement shall govern and control.

                   10.9 Authorized  Signature.  Until Agent shall be notified by
Borrower  to the  contrary,  the  signature  upon  any  document  or  instrument
delivered  pursuant  hereto of an officer of Borrower  listed on  Schedule  10.8
shall bind Borrower and be deemed to be the act of Borrower  affixed pursuant to
and  in  accordance  with  resolutions  duly  adopted  by  Borrower's  Board  of
Directors.

                   10.10 GOVERNING LAW. EXCEPT AS OTHERWISE  EXPRESSLY  PROVIDED
IN ANY  OF THE  LOAN  DOCUMENTS,  IN ALL  RESPECTS,  INCLUDING  ALL  MATTERS  OF
CONSTRUCTION,  VALIDITY AND  PERFORMANCE,  THIS  AGREEMENT  AND THE  OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH,  THE LAWS AND  DECISIONS OF THE STATE OF ILLINOIS  APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE,  AND ANY APPLICABLE  LAWS OF THE UNITED STATES
OF AMERICA.  BORROWER, AGENT AND LENDERS HEREBY CONSENT AND AGREE THAT THE STATE
OR FEDERAL  COURTS  LOCATED IN THE COUNTY OF COOK,  CITY OF  CHICAGO,  ILLINOIS,
SHALL HAVE EXCLUSIVE  JURISDICTION  TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN BORROWER,  AGENT AND LENDERS  PERTAINING TO THIS AGREEMENT OR ANY OF THE
OTHER  LOAN  DOCUMENTS  OR TO ANY  MATTER  ARISING  OUT OF OR  RELATING  TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,  PROVIDED, THAT AGENT, LENDERS AND
BORROWER  ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY
A COURT LOCATED  OUTSIDE OF THE COUNTY OF COOK,  CITY OF CHICAGO,  ILLINOIS AND,
PROVIDED,  FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE  AGENT FROM  BRINGING  SUIT OR TAKING  OTHER LEGAL  ACTION IN ANY OTHER
JURISDICTION  TO  REALIZE  ON THE  COLLATERAL  OR ANY  OTHER  SECURITY  FOR  THE
OBLIGATIONS,  OR TO ENFORCE A JUDGMENT  OR OTHER  COURT ORDER IN FAVOR OF AGENT.
BORROWER  EXPRESSLY  SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT  COMMENCED  IN ANY SUCH COURT,  AND  BORROWER  HEREBY  WAIVES ANY
OBJECTION  WHICH  BORROWER  MAY HAVE BASED UPON LACK OF  PERSONAL  JURISDICTION,
IMPROPER VENUE OR FORUM NON  CONVENIENS  AND HEREBY  CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.  BORROWER
HEREBY  WAIVES  PERSONAL  SERVICE OF THE SUMMONS,  COMPLAINT  AND OTHER  PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND  BORROWER  HEREBY  AGREES THAT  SERVICE OF
SUCH  SUMMONS,  COMPLAINTS  AND OTHER  PROCESS  MAY BE MADE UPON CT  CORPORATION
SYSTEM,  208 SOUTH  LASALLE  STREET,  CHICAGO,  ILLINOIS  60604,  AND SUCH OTHER
PERSONS AS MAY  HEREAFTER  BE SELECTED BY BORROWER  WHICH  IRREVOCABLY  AGREE IN
WRITING TO SO SERVE AS ITS AGENT TO RECEIVE ON ITS BEHALF


                                       56

<PAGE>



SERVICE OF ALL PROCESS IN ANY SUCH ACTION OR SUIT,  SUCH  SERVICE  BEING  HEREBY
ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A
COPY OF ANY SUCH PROCESS SO SERVED MAY BE MADE BY REGISTERED  OR CERTIFIED  MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH ON ANNEX L OF THIS  AGREEMENT AND
THAT SERVICE SO MADE SHALL BE DEEMED  COMPLETED  UPON THE EARLIER OF  BORROWER'S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID,  EXCEPT THAT UNLESS  OTHERWISE  PROVIDED BY APPLICABLE LAW, ANY
FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE  VALIDITY  OF SERVICE OF PROCESS.
IF ANY AGENT APPOINTED BY BORROWER  REFUSES TO ACCEPT  SERVICE,  BORROWER HEREBY
AGREES THAT THE FOREGOING  SERVICE UPON IT BY MAIL SHALL  CONSTITUTE  SUFFICIENT
NOTICE.  NOTHING  HEREIN  SHALL  AFFECT THE RIGHT TO SERVE  PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.

                   10.11 Notices.  Except as otherwise provided herein, whenever
it is provided  herein  that any notice,  demand,  request,  consent,  approval,
declaration  or other  communication  shall or may be  given to or  served  upon
either of the  parties by the other  party,  or  whenever  either of the parties
desires to give or serve upon the other party any communication  with respect to
this  Agreement,   each  such  notice,  demand,  request,   consent,   approval,
declaration  or other  communication  shall be in writing and shall be deemed to
have been  validly  served,  given or  delivered  (i) upon the earlier of actual
receipt and three (3) days after deposit in the United  States Mail,  registered
or certified mail, return receipt requested,  with proper postage prepaid,  (ii)
upon transmission, when sent by telecopy or other similar facsimile transmission
(with such  telecopy or  facsimile  promptly  confirmed by delivery of a copy by
personal  delivery or United  States Mail as otherwise  provided in this Section
10.10),  (iii) one (1)  Business Day after  deposit  with a reputable  overnight
courier with all charges prepaid or (iv) when delivered,  if  hand-delivered  by
messenger,  all of which shall be addressed to the party to be notified and sent
to the address or facsimile number indicated on Annex L or to such other address
(or facsimile  number) as may be substituted by notice given as herein provided.
The  giving of any  notice  required  hereunder  may be waived in writing by the
party entitled to receive such notice.  Failure or delay in delivering copies of
any  notice,  demand,   request,   consent,   approval,   declaration  or  other
communication to any Person (other than Borrower or Agent) designated on Annex L
to receive  copies shall in no way adversely  affect the  effectiveness  of such
notice, demand, request, consent, approval, declaration or other communication.

                   10.12  Section  Titles.  The  Section  titles  and  Table  of
Contents  contained  in this  Agreement  are and  shall be  without  substantive
meaning or content of any kind  whatsoever  and are not a part of the  agreement
between the parties hereto.

                   10.13  Counterparts.  This  Agreement  may be executed in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement.

                   10.14 MUTUAL WAIVER OF JURY TRIAL.  BECAUSE  DISPUTES ARISING
IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST



                                       57

<PAGE>



QUICKLY AND  ECONOMICALLY  RESOLVED BY AN EXPERIENCED  AND EXPERT PERSON AND THE
PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION
RULES),  THE PARTIES  DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING
SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER  SOUNDING IN  CONTRACT,  TORT OR  OTHERWISE,  AMONG  AGENT,  LENDERS AND
BORROWER  ARISING  OUT OF,  CONNECTED  WITH,  RELATED TO, OR  INCIDENTAL  TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS  RELATED  THERETO.  BORROWER WAIVES
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY  LITIGATION  REFERRED TO IN THE
PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY,  PUNITIVE OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.

                   10.15  Reinstatement.  This  Agreement  shall  remain in full
force and effect and continue to be effective should any petition be filed by or
against  Borrower for  liquidation or  reorganization,  should  Borrower  become
insolvent or make an assignment  for the benefit of any creditor or creditors or
should a receiver or trustee be  appointed  for all or any  significant  part of
Borrower's  assets,  and shall continue to be effective or to be reinstated,  as
the case may be, if at any time payment and performance of the  Obligations,  or
any part  thereof,  is,  pursuant to  applicable  law,  rescinded  or reduced in
amount,  or must  otherwise  be  restored  or  returned  by any  obligee  of the
Obligations,  whether as a "voidable  preference,"  "fraudulent  conveyance," or
otherwise,  all as though such payment or performance  had not been made. In the
event that any payment, or any part thereof, is rescinded,  reduced, restored or
returned,  the  Obligations  shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.

                   10.16 Advice of Counsel.  Each of the parties  represents  to
each other party hereto that it has discussed this Agreement and,  specifically,
the provisions of Sections 10.10 and 10.14, with its counsel.

                   10.17  Confidentiality.  So long as no  Default  or  Event of
Default  has  occurred,  Agent and each  Lender  agrees to  exercise  reasonable
efforts to keep any  non-public  information  delivered or made  available to it
pursuant  to this  Agreement  or any other Loan  Document,  which  Borrower  has
identified as confidential information, confidential from all Persons other than
(a) officers,  employees,  agents,  designees,  representatives or affiliates of
Agent or Lenders, (b) bona fide prospective or actual assignees,  transferees or
participants  of Agent or  Lenders  pursuant  to  Section  1.20(b)  or 9.1,  (c)
consultants  or advisors  that have agreed to comply with this Section  10.14 on
terms and  conditions  conforming to Agent's policy in effect from time to time,
or (d) as required or requested by any Governmental  Authority or representative
thereof or pursuant to a legal  process or as  required in  connection  with the
exercise of any remedy under this Agreement or any of the other Loan  Documents.
[signature page follows]



                                       58

<PAGE>



                  IN WITNESS  WHEREOF,  this Agreement has been duly executed as
of the date first written above.

                                           BAGCRAFT CORPORATION OF AMERICA


                                           By:  _______________________________

                                           Title:  ____________________________



                                           GENERAL ELECTRIC CAPITAL
                                           CORPORATION, as Agent and as Lender


                                           By:  _______________________________

                                           Title:  Duly Authorized Signatory



<PAGE>



                                     ANNEX A
                                       TO
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                                   DEFINITIONS

                  Capitalized  terms used in the  Agreement  shall have  (unless
otherwise provided elsewhere in the Agreement) the following respective meanings
and all section references in the following  definitions shall refer to sections
of the Agreement:

                  "Account   Debtor"  shall  mean  any  Person  who  may  become
obligated to Borrower,  or any of its Subsidiaries under, with respect to, or on
account of, an Account.

                  "Accounts"  shall mean all "accounts," as such term is defined
in  the  Code,  now  owned  or  hereafter  acquired  by  Borrower  or any of its
Subsidiaries,  and, in any event,  including (a) all accounts receivable,  other
receivables,  book debts and other  forms of  obligations  (other  than forms of
obligations  evidenced by chattel paper,  documents or instruments) now owned or
hereafter  received or acquired by or  belonging  or owing to Borrower or any of
its  Subsidiaries,  whether arising out of goods sold or services rendered by it
or from any  other  transaction  (including  any such  obligations  which may be
characterized  as an  account or  contract  right  under the  Code),  (b) all of
Borrower's  and each of its  Subsidiaries'  rights in, to and under all purchase
orders or receipts now owned or hereafter  acquired by it for goods or services,
(c)  all of  Borrower's  and  each  of its  Subsidiaries'  rights  to any  goods
represented  by  any of the  foregoing  (including  unpaid  sellers'  rights  of
rescission,  replevin,  reclamation  and  stoppage  in  transit  and  rights  to
returned,  reclaimed or repossessed  goods), (d) all monies due or to become due
to Borrower, or any of its Subsidiaries, under all purchase orders and contracts
for the sale of goods or the  performance of services or both by Borrower or any
of its Subsidiaries or in connection with any other transaction  (whether or not
yet  earned  by  performance  on the part of  Borrower  or such  Subsidiary,  as
appropriate)  now or hereafter in existence,  including the right to receive the
proceeds of said purchase orders and contracts,  and (e) all collateral security
and guarantees of any kind,  now or hereafter in existence,  given by any Person
with respect to any of the foregoing.

                  "Advance" shall mean any Revolving Credit Advance,  Swing Line
Advance or Capital Expenditure Advance, as the context may require.

                  "Affiliate"  shall mean, with respect to any Person,  (i) each
Person that, directly or indirectly, owns or controls, whether beneficially,  or
as a  trustee,  guardian  or other  fiduciary,  5% or more of the  Stock  having
ordinary  voting power in the  election of  directors of such Person,  (ii) each
Person that  controls,  is  controlled  by or is under common  control with such
Person or any Affiliate of such Person or (iii) each of such Person's  officers,
directors,  joint venturers and partners.  For the purposes of this  definition,
"control" of a Person shall mean the possession,  directly or indirectly, of the
power to direct or cause the direction of its  management  or policies,  whether
through the ownership of voting securities, by contract or otherwise.

                  "Agent"  shall  mean GE  Capital  or its  successor  appointed
pursuant to Section 9.2.

                                        1

<PAGE>




                  "Agreement"  shall mean the Second Amended and Restated Credit
Agreement dated as of the Closing Date by and among Borrower, Agent and Lenders,
including  all  restatements  and  modifications   thereof  and  amendments  and
supplements thereto and any appendices, exhibits, schedules or annexes to any of
the foregoing,  and shall refer to the Agreement as the same may be in effect at
any and all times such reference becomes operative.

                  "ARTRA" shall mean ARTRA GROUP  Incorporated,  a  Pennsylvania
corporation.

                  "Asset Disposition" shall mean the sale, transfer, conveyance,
assignment,  sale and leaseback or other disposition or the pledge,  mortgage or
other  encumbrance  by  Borrower  of any  of its  properties  or  other  assets,
including the capital stock of any Subsidiary or any of its Accounts, except for
the sale of  inventory  in the  ordinary  course  pursuant  to the  terms of the
Agreement.

                  "Assignment  Agreement"  shall have the meaning assigned to it
in Section 9.1(a).

                  "Borrower"  shall mean  Bagcraft  Corporation  of  America,  a
Delaware corporation.

                  "Borrowing Availability" shall have the meaning assigned to it
in Section 1.1(a).

                  "Borrowing  Base" shall mean at any time an amount  determined
by Agent from time to time, equal to the sum at such time of:

                  (a) Up to eighty-five percent (85%) of Eligible Accounts; and

                  (b) up to (i) fifty-five  percent (55%) of Eligible  Inventory
         not  consisting  of Min- Max  Inventory and (ii) sixty percent (60%) of
         Eligible  Inventory  consisting of Min-Max  Inventory,  valued, in each
         case, on a first-in, first-out basis (at the lower of cost or market).

                  "Borrowing Base  Certificate"  shall mean a certificate in the
form attached to the Agreement as Exhibit B.

                  "Business  Day" shall mean any day that is not a  Saturday,  a
Sunday or a day on which  banks are  required or  permitted  to be closed in the
State of New York or the State of Illinois and in reference to LIBOR Loans shall
mean any such day that is also a LIBOR Business Day.

                  "Capital  Expenditure Advance" shall have the meaning assigned
to it in Section 1.3(a).

                  "Capital  Expenditure Loan" shall mean the aggregate amount of
Capital Expenditure Advances outstanding at any time.

                  "Capital  Expenditure Loan Availability" shall mean, as of any
date of determination, the lesser of (a) the Capital Expenditure Loan Commitment
as of such date less the aggregate  amount of all Capital  Expenditure  Advances
made under this Agreement  through such date of  determination  and (b) the Term
Loan A Commitment less the sum of (i) aggregate amount of all


                                        2

<PAGE>



Capital  Expenditure  Advances  made under this  Agreement  through such date of
determination and (ii) the then outstanding  aggregate  principal amount of Term
Loan A, all of the foregoing calculated without giving effect to any payments or
prepayments  of principal in respect of the Capital  Expenditure  Loan which may
have  been  made at any time or from  time to time on or  prior to such  date of
determination.

                  "Capital Expenditure Loan Commitment" shall mean (a) as to any
Lender with a Capital Expenditure Loan Commitment,  the aggregate  commitment of
such Lender to make the Capital Expenditure  Advances as set forth on Annex N or
in the most recent Lender Addition  Agreement executed by such Lender and (b) as
to all  Lenders  with a  Capital  Expenditure  Loan  Commitment,  the  aggregate
commitment of all Lenders to make Capital Expenditure Advances,  which aggregate
commitment  shall be the lesser of (i) the Maximum Capital  Expenditure Loan and
(ii) eighty percent (80%) of the aggregate Hard Costs of all Equipment  acquired
with proceeds of the Capital Expenditure Loan.

                  "Capital   Expenditure  Loan  Note"  shall  have  the  meaning
assigned to it in Section 1.3(b).

                  "Capital  Expenditures" shall mean all payments (including all
payments under Capital Leases, installment purchase agreements and other similar
purchase money financing  arrangements)  for any fixed assets or improvements or
for replacements, substitutions or additions thereto, that have a useful life of
more than one (1) year and that are required to be  capitalized  under GAAP,  to
the extent so required.

                  "Capital  Lease" shall mean,  with respect to any Person,  any
lease of any property (whether real, personal or mixed) by such Person as lessee
that, in  accordance  with GAAP,  either would be required to be classified  and
accounted  for as a capital lease on a balance sheet of such Person or otherwise
be disclosed as such in a note to such balance sheet,  other than,  with respect
to such Person, any such lease under which such Person is the lessor.

                  "Capital  Lease  Obligation"  shall mean,  with respect to any
Capital Lease,  the amount of the obligation of the lessee  thereunder  that, in
accordance with GAAP,  would appear on a balance sheet of such lessee in respect
of such Capital Lease or otherwise be disclosed in a note to such balance sheet.

                  "Change  in  Control"  shall mean any  event,  transaction  or
occurrence  as a result  of which  (a) after the  Closing  Date,  any  Person or
"group" shall acquire  "beneficial  ownership"  (as such terms are defined under
Section 13d-3 of and Regulation  13D under the Securities  Exchange Act of 1934,
as amended),  either directly or indirectly,  of more than  twenty-five  percent
(25%) of the  outstanding  shares of Stock of ARTRA having the right to vote for
the election of directors of ARTRA under ordinary circumstances, (b) ARTRA shall
cease to own and control all of the economic and voting rights  associated  with
all  outstanding  shares  of each  class of  capital  Stock of Parent on a fully
diluted basis, (c) Parent shall cease to own and control all of the economic and
voting rights  associated with all  outstanding  shares of each class of capital
Stock of Borrower on a


                                        3

<PAGE>



fully  diluted  basis or (d) the  existence of any  agreement or other  document
accomplishing  or purporting to  accomplish  (whether on a conditional  basis or
otherwise) any of the foregoing.

                  "Charges"  shall  mean  all  federal,   state,  county,  city,
municipal,  local,  foreign or other governmental taxes (including taxes owed to
the PBGC at the time due and  payable),  levies,  assessments,  charges,  liens,
claims  or  encumbrances  upon or  relating  to (i)  the  Collateral,  (ii)  the
Obligations,  (iii) the employees, payroll, income or gross receipts of Borrower
or  any of  its  Subsidiaries,  (iv)  Borrower's  or  any  of its  Subsidiaries'
ownership  or use of any of its  properties  or other  assets,  or (v) any other
aspect of Borrower's or any of its Subsidiaries' businesses.

                  "Chattel  Paper" shall mean any "chattel  paper," as such term
is defined in the Code,  now owned or  hereafter  acquired by Borrower or any of
its Subsidiaries, wherever located.

                  "Closing  Date"  shall  mean  the  date  of  execution  of the
Agreement.

                  "Code" shall mean the Uniform Commercial Code as the same may,
from time to time, be in effect in the State of Illinois;  provided, however, in
the event that,  by reason of  mandatory  provisions  of law,  any or all of the
attachment,  perfection or priority of Agent's or any Lender's security interest
in any Collateral is governed by the Uniform  Commercial  Code as in effect in a
jurisdiction  other than the State of  Illinois,  the term "Code" shall mean the
Uniform  Commercial  Code as in effect in such  other  jurisdiction  solely  for
purposes of the  provisions of the Loan Documents  relating to such  attachment,
perfection  or  priority  and  for  purposes  of  definitions  related  to  such
provisions.

                  "Collateral" shall mean the property covered by the Collateral
Documents  and any  other  property,  real  or  personal  (including  Investment
Property),  tangible or intangible, now existing or hereafter acquired, that may
at any time be or become  subject  to a  security  interest  or Lien in favor of
Agent, on behalf of itself and Lenders, to secure the Obligations.

                  "Collateral Documents" shall mean the Security Agreement,  the
Pledge  Agreement,  the  Mortgages,  the Copyright  Assignments,  the Patent and
Trademark  Assignments  and any other  agreement or other  document  pursuant to
which a security  interest  or Lien is  granted in favor of Agent,  on behalf of
itself and Lenders, to secure the Obligations.

                  "Collateral  Reports"  shall mean the reports  with respect to
the Collateral referred to in Section 3.5.

                  "Collection Account" shall mean that certain account of Agent,
account number 502 328 54 in the name of General Electric  Capital  Corporation,
Commercial  Finance Group, at Bankers Trust Company,  17 Wall Street,  New York,
New York ABA number 021 001 033.

                  "Commitment" or "Commitments" shall mean (a) as to any Lender,
the aggregate of such Lender's  Revolving  Loan  Commitment  (including  without
duplication,  in the case of the Swing Line Lender, the Swing Line Commitment as
a subset of its Revolving Loan  Commitment),  Term Loan  Commitments and Capital
Expenditure Loan Commitment and (b) as to all Lenders, the

                                        4

<PAGE>



aggregate  of  all  Lenders'  Revolving  Loan  Commitments   (including  without
duplication  the Swing Line  Lender's  Swing Line  Commitment as a subset of its
Revolving Loan Commitment),  Term Loan Commitments and Capital  Expenditure Loan
Commitments,  which  aggregate  commitment  shall not exceed Fifty  Million Five
Hundred Thousand  Dollars  ($50,500,000) on the Closing Date, as such amount may
be adjusted, if at all, from time to time in accordance with the Agreement.

                  "Commitment  Termination  Date" shall mean the earliest of (i)
September 30, 2002,  (ii) the date of  termination  of Lenders'  obligations  to
advance  funds or permit  existing  advances to remain  outstanding  pursuant to
Section 8.2, and (iii) the date of  indefeasible  prepayment in full by Borrower
of all Loans in accordance  with the  provisions of Section 1.6 and discharge of
all Letter of Credit  Obligations and all other  Obligations under the Agreement
and the other Loan Documents.

                  "Concentration  Account" shall have the meaning assigned to it
in Annex C.

                  "Contracts"  shall  mean  all  "contracts,"  as  such  term is
defined in the Code,  now owned or hereafter  acquired by Borrower or any of its
Subsidiaries,  and, in any event,  including  all  contracts,  undertakings,  or
agreements  (other  than  rights  evidenced  by  Chattel  Paper,   Documents  or
Instruments)  in or under which Borrower or any of its  Subsidiaries  may now or
hereafter have any right, title or interest, including any agreement relating to
the terms of payment or the terms of performance of any Account.

                  "Copyright  Assignments"  shall  mean the  Copyright  Security
Agreements made in favor of Agent, on behalf of itself and Lenders,  by Borrower
and  its  Subsidiaries,  as  each  may be  amended,  restated,  supplemented  or
otherwise modified from time to time.

                  "Copyright License" shall mean any and all rights now owned or
hereafter  acquired  by Borrower  or any of its  Subsidiaries  under any written
agreement granting any right to use any Copyright or Copyright registration,  as
the same may be amended, restated,  supplemented or otherwise modified from time
to time.

                  "Copyrights"  shall  mean all of the  following  now  owned or
hereafter  acquired by Borrower or any of its  Subsidiaries:  (i) all copyrights
and general intangibles of like nature (whether registered or unregistered), now
owned or  existing or  hereafter  adopted or  acquired,  all  registrations  and
recordings thereof, and all applications in connection therewith,  including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States,  any state or territory
thereof, or any other country or any political subdivision thereof, and (ii) all
reissues, extensions or renewals thereof.

                  "Default" shall mean any event which, with the passage of time
or notice or both, would, unless cured or waived, become an Event of Default.

                  "Default  Rate"  shall  have  the  meaning  assigned  to it in
Section 1.9(e).

                  "Disbursement  Account" shall have the meaning  assigned to it
in Annex C.


                                        5

<PAGE>



                  "Distributable  Cash"  shall  mean,  for  any  Fiscal  Year of
Borrower,  an amount equal to EBITDA minus the sum of (i) Interest Expense, (ii)
Capital  Expenditures  incurred  (but  not in  excess  of  Capital  Expenditures
permitted  for such  Fiscal  Year  under the Loan  Documents),  (iii)  scheduled
payments  of  principal  paid on Funded  Debt,  and (iv)  taxes  paid in cash by
Borrower  or any of its  Subsidiaries,  including  payments  made  under the Tax
Sharing Agreement pursuant to Section 6.15.

                  "DOL" shall mean the United States  Department of Labor or any
successor thereto.

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

                  "EBITDA"  shall mean for any fiscal  period of  Borrower,  Net
Income before interest,  taxes,  depreciation,  amortization  and, to the extent
recognized in determining  such Net Income,  extraordinary  items, as defined by
GAAP.

                  "Eligible  Accounts" shall have the meaning  assigned to it in
Annex F.

                  "Eligible  Inventory" shall have the meaning assigned to it in
Annex G.

                  "Environmental Laws" shall mean all federal,  state, local and
foreign laws, statutes,  ordinances and regulations, now or hereafter in effect,
and in each  case  as  amended  or  supplemented  from  time  to  time,  and any
applicable  judicial or  administrative  interpretation  thereof,  including any
applicable  judicial  or  administrative  order,  consent  decree  or  judgment,
relative  to  the  applicable  real  estate,  relating  to  the  regulation  and
protection  of human  health,  safety,  the  environment  and natural  resources
(including ambient air, surface water,  groundwater,  wetlands,  land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws
include,  but are not  limited  to, the  Comprehensive  Environmental  Response,
Compensation,  and Liability Act of 1980, as amended (42 U.S.C.  ss.ss.  9601 et
seq.)  ("CERCLA");  the Hazardous  Material  Transportation  Act, as amended (49
U.S.C. ss.ss. 1801 et seq.); the Federal Insecticide, Fungicide, and Rodenticide
Act, as amended (7 U.S.C.  ss.ss.  136 et seq.);  the Resource  Conservation and
Recovery Act, as amended (42 U.S.C.  ss.ss.  6901 et seq.)  ("RCRA");  the Toxic
Substance Control Act, as amended (15 U.S.C. ss.ss. 2601 et seq.); the Clean Air
Act, as amended (42 U.S.C.  ss.ss.  740 et seq.);  the Federal  Water  Pollution
Control Act, as amended (33 U.S.C. ss.ss. 1251 et seq.); the Occupational Safety
and Health Act, as amended (29 U.S.C. ss.ss. 651 et seq.) ("OSHA"); and the Safe
Drinking Water Act, as amended (42 U.S.C.  ss.ss.  300(f) et seq.),  and any and
all  regulations  promulgated  thereunder,  and all analogous  state,  local and
foreign  counterparts or equivalents and any transfer of ownership  notification
or approval statutes.

                  "Environmental   Liabilities   and   Costs"   shall  mean  all
liabilities, obligations,  responsibilities,  remedial actions, removal actions,
losses, damages, punitive damages,  consequential damages, treble damages, costs
and expenses (including all fees, disbursements and expenses of counsel, experts
and consultants and costs of  investigation  and  feasibility  studies),  fines,
penalties,  sanctions  and  interest  incurred  as a result of any claim,  suit,
action or demand by any  person or  entity,  whether  based in  contract,  tort,
implied or express warranty, strict liability, criminal or civil

                                        6

<PAGE>



statute or common law  (including  any thereof  arising under any  Environmental
Law,  permit,  order or agreement  with any  Governmental  Authority)  and which
relate to any health or safety condition  regulated under any  Environmental Law
or in  connection  with any other  environmental  matter or Release,  threatened
Release or the  presence of a  Hazardous  Material  or  threatened  Release of a
Hazardous Material.

                  "Equipment"  shall  mean  all  "equipment,"  as  such  term is
defined in the Code,  now owned or hereafter  acquired by Borrower or any of its
Subsidiaries,  wherever located and, in any event,  including all Borrower's and
each  of  its  Subsidiaries'  machinery  and  equipment,   including  processing
equipment, conveyors, machine tools, data processing and computer equipment with
software and peripheral equipment (other than software  constituting part of the
Accounts), and all engineering,  processing and manufacturing equipment,  office
machinery,   furniture,   materials  handling  equipment,   tools,  attachments,
accessories,  automotive equipment,  trailers,  trucks, forklifts,  molds, dies,
stamps,  motor  vehicles,  rolling  stock and other  equipment of every kind and
nature,  trade  fixtures and fixtures not forming a part of real  property,  all
whether now owned or hereafter  acquired,  and wherever situated,  together with
all additions and accessions thereto, replacements therefor, all parts therefor,
all  substitutes  for any of the  foregoing,  fuel  therefor,  and all  manuals,
drawings,  instructions,  warranties  and rights with respect  thereto,  and all
products and proceeds  thereof and  condemnation  awards and insurance  proceeds
with respect thereto.

                  "ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor  legislation  thereto),  as amended from time to time,
and any regulations promulgated thereunder.

                  "ERISA  Affiliate" shall mean, with respect to Borrower or any
of its Subsidiaries,  any trade or business (whether or not incorporated)  under
common  control with Borrower or such  Subsidiary,  as  appropriate,  and which,
together  with Borrower or such  Subsidiary,  as  appropriate,  are treated as a
single  employer within the meaning of Sections  414(b),  (c), (m) or (o) of the
IRC.

                  "ERISA Event" shall mean, with respect to Borrower, any of its
Subsidiaries or any ERISA  Affiliate,  (i) a Reportable  Event with respect to a
Title IV Plan or a Multiemployer  Plan; (ii) the withdrawal of Borrower,  any of
its  Subsidiaries or any ERISA Affiliate from a Title IV Plan subject to Section
4063 of ERISA  during a plan  year in which it was a  substantial  employer,  as
defined in Section 4001(a)(2) of ERISA; (iii) the complete or partial withdrawal
of  Borrower,   any  of  its  Subsidiaries  or  any  ERISA  Affiliate  from  any
Multiemployer  Plan;  (iv) the filing of a notice of intent to terminate a Title
IV Plan or the treatment of a plan amendment as a termination under Section 4041
of ERISA;  (v) the  institution  of  proceedings to terminate a Title IV Plan or
Multiemployer Plan by the PBGC; (vi) the failure to make required  contributions
to a  Qualified  Plan;  or (vii)  any  other  event  or  condition  which  might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Title IV Plan
or  Multiemployer  Plan or the  imposition  of any  liability  under Title IV of
ERISA,  other than PBGC  premiums due but not  delinquent  under Section 4007 of
ERISA.

                  "Event of Default"  shall have the  meaning  assigned to it in
Section 8.1.


                                        7

<PAGE>



                  "Excess  Cash  Flow"  shall  mean the  total of the  following
(without duplication) with respect to Borrower (i) Distributable Cash, plus (ii)
the net after-tax  gains arising from  extraordinary  items, as defined by GAAP,
minus  (iii)  income  attributable  to Asset  Dispositions  (other than sales of
inventory in the ordinary course).

                  "Federal  Funds Rate" shall mean, for any day, a floating rate
equal  to  the  weighted  average  of  the  rates  on  overnight  federal  funds
transactions  among  members of the Federal  Reserve  System,  as  determined by
Agent.

                  "Federal  Reserve Board" shall have the meaning assigned to it
in Section 3.11.

                  "Fees"  shall mean any and all fees due to Agent or any Lender
pursuant to the Agreement or any of the other Loan Documents.

                  "Financial  Statements"  shall mean the  financial  statements
referred to in Section 3.4.

                  "Fiscal  Month"  shall  mean  any  of the  monthly  accounting
periods of Borrower ending on the Saturday  occurring closest to the last day of
each calendar month, except that the last such period occurring in each calendar
year shall end on the last Saturday of such calendar year.

                  "Fiscal  Quarter"  shall mean any of the quarterly  accounting
periods of Borrower.

                  "Fiscal Year" shall mean any of the annual  fiscal  accounting
periods of Borrower.

                  "Fixed Charges" shall mean, for any fiscal period of Borrower,
the sum of (i) cash  interest  expense  (whether  paid or accrued) in respect of
Funded Debt (excluding, with respect to the Obligations,  the difference between
interest  charged at the normal  rates set forth in the  Agreement  and interest
charged  at the  Default  Rate),  plus  (ii)  regularly  scheduled  payments  of
principal (whether paid or accrued) on Funded Debt for such fiscal period.

                  "Funded  Debt" shall mean,  with  respect to Borrower  and its
Subsidiaries, on a consolidated and consolidating basis, all of its Indebtedness
which by the terms of the  agreement  governing or  instrument  evidencing  such
Indebtedness  matures more than one (1) year from,  or is directly or indirectly
renewable  or  extendible  at its  option  under a  revolving  credit or similar
agreement  obligating  the lender or lenders to extend  credit  over a period of
more  than  one  year  from  the date of  creation  thereof,  including  current
maturities of long-term  debt,  revolving  credit and short-term debt extendible
beyond one year at the option of the debtor,  and shall also  include the Loans,
Letter of Credit Obligations and other Obligations.

                  "GAAP" shall mean generally accepted accounting  principles in
the  United  States  of  America  as in effect  from time to time,  consistently
applied.

                  "GE Capital" shall mean General Electric Capital  Corporation,
a New York  corporation  having  an  office at 201 High  Ridge  Road,  Stanford,
Connecticut 06927-5100.


                                        8

<PAGE>



                  "GE Capital Fee Letter" shall have the meaning  assigned to it
in Section 1.12(a).

                  "General Intangibles" shall mean any "general intangibles," as
such term is defined in the Code, now owned or hereafter acquired by Borrower or
any of its  Subsidiaries  and,  in any event,  including  all  right,  title and
interest which Borrower or any of its  Subsidiaries may now or hereafter have in
or under any Contract,  all customer  lists,  Copyrights,  Trademarks,  Patents,
service marks, trade names, business names, corporate names, trade styles, logos
and other  source or business  identifiers,  and all  applications  therefor and
reissues,  extensions  or renewals  thereof,  rights in  intellectual  property,
interests  in  partnerships,  joint  ventures and other  business  associations,
licenses,  permits,  copyrights,  trade  secrets,  proprietary  or  confidential
information,  inventions  (whether  or not  patented or  patentable),  technical
information,  procedures,  designs, knowledge,  know-how,  software, data bases,
data, skill, expertise,  experience,  processes, models, drawings, materials and
records,  goodwill  (including  the  goodwill  associated  with  any  Trademark,
Trademark  registration or Trademark licensed under any Trademark license),  all
rights and claims in or under insurance policies (including  insurance for fire,
damage,  loss and casualty,  whether covering personal property,  real property,
tangible  rights  or  intangible  rights,  all  liability,   life  and  business
interruption insurance, and all unearned premiums),  uncertificated  securities,
choses in action, deposit,  checking and other bank accounts,  rights to receive
tax refunds and other payments and rights of indemnification.

                  "Goods"  shall mean all "goods" as such term is defined in the
Code,  now owned or hereafter  acquired by Borrower or any of its  Subsidiaries,
wherever located.

                  "Governmental  Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any agency,  department or
other  entity  exercising  executive,   legislative,   judicial,  regulatory  or
administrative functions of or pertaining to government.

                  "Guaranteed  Indebtedness"  shall mean, as to any Person,  any
obligation of such Person  guaranteeing any indebtedness,  lease,  dividend,  or
other  obligation  ("primary  obligations")  of any other  Person (the  "primary
obligor") in any manner,  including any obligation or arrangement of such Person
(i) to purchase or repurchase  any such primary  obligation,  (ii) to advance or
supply funds (a) for the purchase or payment of any such primary  obligation  or
(b) to maintain  working  capital or equity  capital of the  primary  obligor or
otherwise to maintain the net worth or solvency or any balance  sheet  condition
of the primary  obligor,  (iii) to  purchase  property,  securities  or services
primarily  for the purpose of assuring the owner of any such primary  obligation
of  the  ability  of the  primary  obligor  to  make  payment  of  such  primary
obligation,  or (iv) to indemnify the owner of such primary  obligation  against
loss in respect thereof.

                  "Hard Costs" shall mean the aggregate cash purchase price paid
or payable by Borrower for the Equipment to which a Capital  Expenditure Advance
relates,  excluding  amounts paid or payable in  connection  with such assets in
respect of  insurance,  taxes,  tariffs,  levies,  freight,  delivery,  crating,
installation,   packing,   service,   maintenance   or  similar   contracts   or
arrangements,  warranties,  software,  financing costs,  and/or similar costs or
charges so paid or payable.


                                        9

<PAGE>



                  "Hazardous  Material"  shall mean any  substance,  material or
waste,  the  generation,  handling,  storage,  treatment or disposal of which is
regulated  by or forms  the  basis of  liability  now or  hereafter  under,  any
Government  Authority  in  any  jurisdiction  in  which  Borrower  or any of its
Subsidiaries  has owned,  leased,  or  operated  real  property  or  disposed of
hazardous  materials,  or by any Federal  government  authority,  including  any
material  or  substance  which is (i)  defined as a "solid  waste"  (other  than
non-hazardous  waste which is routinely  disposed of in the  ordinary  course of
Borrower's  business),   "hazardous  waste,"  "hazardous  material,"  "hazardous
substance," "extremely hazardous waste" or "restricted hazardous waste" or other
similar  term or phrase  under any  Environmental  Laws,  (ii)  petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), any
radioactive substance, methane, volative hydrocarbons or any industrial solvent,
(iii) designated as a "hazardous substance" pursuant to Section 311 of the Clean
Water Act,  33 U.S.C.  ss.ss.  1251 et seq.  (33 U.S.C.  ss.ss.  1321) or listed
pursuant  to Section  307 of the Clean  Water Act (33  U.S.C.  ss.  1317),  (iv)
defined  as a  "hazardous  waste"  pursuant  to  Section  1004  of the  Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq. (42 U.S.C. ss. 6903),
or (v)  defined as a  "hazardous  substance"  pursuant  to  Section  1012 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
ss. 9601 et seq. (42 U.S.C. ss. 9601).

                  "Indebtedness"  of any Person shall mean (i) all  indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services  (including  reimbursement and all other obligations with respect to
surety  bonds,  letters  of credit  and  bankers'  acceptances,  whether  or not
matured,  but excluding  obligations to trade creditors incurred in the ordinary
course of business),  (ii) all obligations evidenced by notes, bonds, debentures
or similar  instruments,  (iii) all  indebtedness  created or arising  under any
conditional  sale or other title  retention  agreement  with respect to property
acquired by such Person  (even  though the rights and  remedies of the seller or
lender under such agreement in the event of default are limited to  repossession
or sale of such  property),  (iv) all Capital Lease  Obligations and the present
value  (discounted at the Index Rate as in effect on the Closing Date) of future
rental  payments under synthetic  leases,  (v) all  Indebtedness  referred to in
clause  (i),  (ii),  (iii) or (iv) above  secured by (or for which the holder of
such Indebtedness has an existing right,  contingent or otherwise, to be secured
by) any  Lien  upon or in  property  or other  assets  (including  accounts  and
contract  rights) owned by such Person,  even though such Person has not assumed
or become liable for the payment of such Indebtedness, (vi) the Obligations, and
(vii) all liabilities under Title IV of ERISA.

                  "Indemnified  Person" shall have the meaning assigned to it in
Section 1.17(a).

                  "Index  Margin"  shall  have  the  meaning  assigned  to it in
Section 1.9(c).

                  "Index Rate" shall mean, for any day, a floating rate equal to
the higher of (i) the rate publicly  quoted from time to time by The Wall Street
Journal  as the  "base  rate on  corporate  loans at  large  U.S.  money  center
commercial  banks" (or, if The Wall Street Journal ceases quoting a base rate of
the type  described,  the highest per annum rate of  interest  published  by the
Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected  Interest Rates" as the Bank prime loan rate or its  equivalent),  and
(ii) the Federal Funds Rate plus fifty (50) basis points per

                                       10

<PAGE>



annum. Each change in any interest rate provided for in the Agreement based upon
the Index Rate shall take effect at the time of such change in the Index Rate.

                  "Index Rate Loan" shall mean a Loan or portion thereof bearing
interest by reference to the Index Rate.

                  "Instruments"  shall  mean any  "instrument,"  as such term is
defined in the Code,  now owned or hereafter  acquired by Borrower or any of its
Subsidiaries,  wherever located,  and, in any event,  including all certificated
securities, all certificates of deposit, including all notes and other evidences
of indebtedness,  other than  instruments  that  constitute,  or are a part of a
group of writings that constitute, Chattel Paper.

                  "Interest  Expense"  shall  mean,  for any  fiscal  period (a)
interest expense (whether cash or non-cash) of Borrower determined in accordance
with  GAAP for the  relevant  period  ended on such date (i)  including,  in any
event,  interest expense with respect to any Funded Debt of such Person and (ii)
excluding,  in any event non-cash  interest expense  (including  amortization of
original issue discount) less (b) to the extent included in the determination of
interest  expense  pursuant to the foregoing  clause (a),  cash interest  income
received by Borrower from ARTRA for the relevant period.

                  "Inventory"  shall  mean  any  "inventory,"  as  such  term is
defined in the Code, now or hereafter  owned or acquired by,  Borrower or any of
its Subsidiaries,  wherever  located,  and, in any event,  including  inventory,
merchandise, goods and other personal property which are held by or on behalf of
Borrower or any of its  Subsidiaries,  for sale or lease or are furnished or are
to be furnished  under a contract of service or which  constitute raw materials,
work in process or  materials  used or  consumed  or to be used or  consumed  in
Borrower's  or  any  of  its  Subsidiaries'  businesses  or in  the  processing,
production,  packaging,  promotion,  delivery or shipping of the same, including
other supplies.

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

                  "IRC"  shall  mean  the  Internal  Revenue  Code of  1986,  as
amended, and any successor --- thereto.

                  "IRS"  shall  mean  the  Internal  Revenue  Service,   or  any
successor thereto.


                                       11

<PAGE>



                  "Kansas  Collateral"  shall mean the (a)  business  machinery,
equipment,  furnishings and fixtures of Borrower  located at the Kansas Facility
and subject to a second Lien (first Lien, in the case of that certain  "sheeter"
identified as "machine #141" and located at the Kansas  Faciliy) in favor of the
Kansas Lender, which second Lien is fully subordinated to Agent's first priority
Lien  pursuant  to the terms of the Kansas  Loan  Documents  and (b) Real Estate
constituting  the Kansas  Facility  and  subject to a first Lien in favor of the
Kansas Lender pursuant to the Kansas Loan Documents.

                  "Kansas  Facility"  shall mean  Borrower's  owned  facility in
Baxter Springs, Kansas.

                  "Kansas   Indebtedness"   shall   mean,   collectively,    the
subordinated  secured  loans made by the Kansas  Lender to Borrower on the dates
indicated on Schedule 6.3,  consisting of (a) one (1) term loan made by the City
of Baxter  Springs,  Kansas,  in the original  maximum  principal  amount of Two
Hundred Fifty Thousand Dollars ($250,000),  (b) a six (6) year term loan made by
the City of Baxter Springs,  Kansas in an original  maximum  principal amount of
Five Million Dollars ($5,000,000) and (c) a minimum five (5) year term loan made
by the City of Baxter Springs, Kansas in an original maximum principal amount of
Seven Million Dollars ($7,000,000) and guaranteed by the State of Kansas and the
United States Department of Housing and Urban Development,  all of the foregoing
in  form  and  substance  satisfactory  to  Agent  in its  sole  discretion  and
identified on Schedule 6.3 in the manner required by Section 6.3.

                  "Kansas Lender" shall mean the City of Baxter Springs, Kansas.

                  "Kansas  Loan  Documents"  shall  mean  the  loan  agreements,
security  agreements,  guarantees,  notes  and  other  instruments,   documents,
certificates  and agreements  executed by Borrower and evidencing or relating to
the Kansas  Indebtedness and the Kansas Collateral,  including the subordination
provisions contained therein and the Kansas Intercreditor Agreements, as each of
the same may be amended,  restated,  supplemented  or otherwise  modified and in
effect  from  time  to  time,  all  of  the  foregoing  in  form  and  substance
satisfactory to Agent in its sole discretion.

                  "Kansas Intercreditor Agreements" shall mean the Intercreditor
Agreements  entered into among Agent, on behalf of itself and Lenders (as senior
lenders),  Kansas Lender (as subordinated  lender), and Borrower,  including all
amendments,  modifications  and supplements  thereto,  all in form and substance
satisfactory  to  Agent  in  its  sole  discretion,   and  shall  refer  to  the
Intercreditor Agreements as the same may be in effect at the time such reference
becomes operative.

                  "Leases" shall mean all leasehold estates in real property now
owned or hereafter  acquired by Borrower or any of its Subsidiaries,  as lessee,
as each may be amended,  restated,  supplemented or otherwise modified from time
to time.

                  "Lenders" shall mean GE Capital and, if at any time GE Capital
shall decide to assign or syndicate all or any portion of the Obligations,  such
term shall include such assignee or such other members of the syndicate.


                                       12

<PAGE>



                  "Letter  of Credit  Obligations"  shall  mean all  outstanding
obligations  incurred by Lenders at the request of Borrower,  whether  direct or
indirect,  contingent  or  otherwise,  due or not due,  in  connection  with the
issuance or guarantee or purchase of a participation,  by Lenders or another, of
letters of credit. The amount of Letter of Credit Obligations outstanding at any
time shall equal the maximum amount which may be payable by Lenders thereupon or
pursuant thereto at such time.

                  "Letters of Credit" shall mean  commercial or standby  letters
of credit  issued at the  request  and for the  account  of  Borrower  for which
Lenders  have  incurred  Letter of Credit  Obligations,  as each may be amended,
restated, supplemented or otherwise modified from time to time.

                  "LIBOR  Business Day" shall mean a Business Day on which banks
in the city of London are  generally  open for  interbank  or  foreign  exchange
transactions.

                  "LIBOR Loan" shall mean a Loan or any portion  thereof bearing
interest by reference to the LIBOR Rate.

                  "LIBOR  Margin"  shall  have  the  meaning  assigned  to it in
Section 1.9(c).

                  "LIBOR  Period"  shall mean,  with  respect to any LIBOR Loan,
each period  commencing on a LIBOR Business Day selected by Borrower pursuant to
the  Agreement  and ending one, two or three months  thereafter,  as selected by
Borrower's irrevocable notice to Agent as set forth in Section 1.9(f);  provided
that the  foregoing  provision  relating  to LIBOR  Periods  is  subject  to the
following:

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

                  (b) any LIBOR Period that would  otherwise  extend  beyond the
         Commitment Termination Date shall end two (2) LIBOR Business Days prior
         to such date;

                  (c) any LIBOR Period pertaining to a LIBOR Loan that begins on
         the last LIBOR  Business Day of a calendar month (or on a day for which
         there is no numerically  corresponding day in the calendar month at the
         end of such LIBOR Period) shall end on the last LIBOR Business Day of a
         calendar month;

                  (d) Borrower shall select LIBOR Periods so as not to require a
         payment or  prepayment of any LIBOR Loan during a LIBOR Period for such
         Loan; and

                  (e) Borrower shall select LIBOR Periods so that there shall be
         no more than three (3)  separate  LIBOR Loans in  existence  at any one
         time.

                                       13

<PAGE>




                  "LIBOR  Rate"  shall  mean for each  LIBOR  Period,  a rate of
interest determined by Agent equal to:

                  (a) the offered rate for deposits in United States Dollars for
         the  applicable  LIBOR Period which appears on Telerate Page 3750 as of
         11:00 a.m.,  London  time,  on the second full LIBOR  Business Day next
         preceding the first day of each LIBOR Period (unless such date is not a
         Business Day, in which event the next  succeeding  Business Day will be
         used); divided by

                  (b) a number  equal to 1.0 minus the  aggregate  (but  without
         duplication) of the rates (expressed as a decimal  fraction) of reserve
         requirements  in effect on the day which is two (2) LIBOR Business Days
         prior  to  the  beginning  of  such  LIBOR  Period   (including  basic,
         supplemental,  marginal and emergency reserves under any regulations of
         the  Board  of  Governors  of  the  Federal  Reserve  system  or  other
         governmental authority having jurisdiction with respect thereto, as now
         and from time to time in effect) for  Eurocurrency  funding  (currently
         referred to as "Eurocurrency liabilities" in Regulation D of such Board
         which are  required  to be  maintained  by a member bank of the Federal
         Reserve  System (such rate to be adjusted to the nearest one  sixteenth
         of one  percent  (1/16th  of 1%) or,  if  there  is not a  nearest  one
         sixteenth  of one  percent  (1/16th  of 1%),  to the next  highest  one
         sixteenth of one percent (1/16th of 1%).

                  If such  interest  rates  shall  cease  to be  available  from
         Telerate  News Service,  the LIBOR Rate shall be  determined  from such
         financial  reporting  service or other information as shall be mutually
         acceptable to Agent and Borrower.

                  "License"  shall mean any Copyright  License,  Patent License,
Trademark  License or other license of rights or interests now held or hereafter
acquired by Borrower or any of its Subsidiaries.

                  "Lien"  shall  mean any  mortgage  or deed of  trust,  pledge,
hypothecation,  assignment,  deposit arrangement,  lien, charge, claim, security
interest,  easement or  encumbrance,  or preference,  priority or other security
agreement  or  preferential   arrangement  of  any  kind  or  nature  whatsoever
(including any lease or title  retention  agreement,  any financing lease having
substantially  the same economic effect as any of the foregoing,  and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any  jurisdiction),  any right of any Person
(other than Agent or Lenders) with respect to Collateral not expressly permitted
in accordance with the specific terms of the Loan Documents, or the existence of
any  agreement or other  document  accomplishing  or  purporting  to  accomplish
(whether on a conditional basis or otherwise) any of the foregoing.

                  "Loan  Account"  shall  have  the  meaning  assigned  to it in
Section 1.16.

                  "Loan  Documents"  shall mean the  Agreement,  the Notes,  the
Collateral  Documents,  the  Warrant  and  all  other  agreements,  instruments,
documents  and  certificates  identified  in Annex D in  favor  of Agent  and/or
Lenders and including all other pledges, powers of attorney, consents,

                                       14

<PAGE>



assignments,   contracts,   notices,   and  all  other  written  matter  whether
heretofore,  now or hereafter executed by or on behalf of Borrower or any of its
Affiliates, or any employee of Borrower, or any of its Affiliates, and delivered
to Agent or any Lender in  connection  with the  Agreement  or the  transactions
contemplated  hereby,  together with all documents  delivered in connection with
the Prior Credit  Agreement,  to the extent not amended and restated pursuant to
the  Agreement,  as each may be amended,  restated,  supplemented  or  otherwise
modified from time to time.

                  "Loans" shall mean the Revolving  Credit Loan,  the Swing Line
Loan, the Term Loans and the Capital Expenditure Loan, collectively.

                  "Lock Box  Account"  shall have the meaning  assigned to it in
Annex C.

                  "Margin  Ratio"  shall  have  the  meaning  assigned  to it in
Section 1.9(c).

                  "Margins"  means  collectively  the Index Margin and the LIBOR
Margin.

                  "Material  Adverse  Effect" shall mean (a) a material  adverse
effect on (i) the business,  assets,  operations or financial or other condition
of  Borrower  or  Borrower  and its  Subsidiaries  considered  as a whole,  (ii)
Borrower's  ability to pay any Loan,  Advance,  Letter of Credit  Obligation  or
other  Obligation in accordance with the terms thereof,  (iii) the Collateral or
Agent's  Liens,  on behalf of  itself  and  Lenders,  on the  Collateral  or the
priority of any such Lien,  or (iv) Agent's or any Lender's  rights and remedies
under the  Agreement  and the other Loan  Documents  or (b) except as  otherwise
permitted  under the Agreement or the other Loan  Documents,  the  incurrence by
Borrower of any material liability, contingent or liquidated.

                  "Maximum Capital  Expenditure Advance Amount" shall mean, with
respect to any Capital  Expenditure  Advance,  an amount not in excess of 80% of
the Hard  Costs of the  Equipment  to be  acquired  with  the  proceeds  of such
Advance.

                  "Maximum  Capital   Expenditure   Loan"  shall  mean,  at  any
particular time, an amount equal to Three Million Dollars ($3,000,000),  as such
amount may be  adjusted,  if at all,  from time to time in  accordance  with the
Agreement.

 "Maximum Lawful Rate" shall have the meaning assigned to it in Section 1.9(g).

                  "Maximum  Revolving Credit Loan" shall mean, at any particular
time, an amount equal to Eighteen Million Dollars ($18,000,000),  as such amount
may be adjusted, if at all, from time to time in accordance with the Agreement.

                  "Min-Max  Contract"  shall  mean a written  agreement  between
Borrower  and a  customer  of  Borrower  containing  a firm  obligation  of such
customer to purchase an amount of  Inventory  which is not less than the minimum
amount specified therein and not more than the maximum amount specified therein.


                                       15

<PAGE>



                  "Min-Max Inventory" shall mean Eligible Inventory which is the
subject of a Min- Max Contract, but only to the extent not exceeding the maximum
amount prescribed by the relevant Min-Max Contract.

                  "Mortgaged  Properties"  shall mean all Real  Estate  owned by
Borrower.

                  "Mortgages" shall mean each of the mortgages,  deeds of trust,
leasehold mortgages,  leasehold deeds of trust, collateral assignments of leases
or other real estate  security  documents  delivered by Borrower to Agent,  with
respect to the Mortgaged Properties,  all in form and substance  satisfactory to
Agent, as each may be amended, restated, supplemented or otherwise modified from
time to time.

                  "Multiemployer  Plan" shall mean a  "multiemployer  plan",  as
defined  in  Section  4001(a)(3)  of  ERISA,  to  which  Borrower,  any  of  its
Subsidiaries or any ERISA  Affiliate is making,  is obligated to make, or within
the last six (6)  years has made or been  obligated  to make,  contributions  on
behalf of participants who are or were employed by any of them.

                  "Net Income" shall mean for any period Borrower's consolidated
net income (or loss) after income and franchise taxes and shall have the meaning
given such term by GAAP;  provided,  that, there shall be specifically  excluded
therefrom the net after-tax gains and losses arising from  extraordinary  items,
as defined by GAAP.

                  "Net  Proceeds"  shall  mean all  cash  proceeds  received  by
Borrower from any Asset Disposition  (including insurance proceeds and awards of
compensation  and all  payments  in  respect  of any  promissory  notes or other
non-cash  consideration  taken as  consideration),  net of the direct  taxes and
reasonable  costs and expenses of such Asset  Disposition  and amounts,  if any,
required to be applied to repayment of Indebtedness (other than the Obligations)
secured by any lien,  security  interest,  claim or  encumbrance on the asset or
assets so disposed of.

                  "Non-use Fee" shall have the meaning assigned to it in Section
1.12(b).

                  "Notes" shall mean the Revolving  Credit Notes, the Swing Line
Note, the Term Loan Notes and the Capital Expenditure Loan Notes, collectively.

                  "Notice of Capital Expenditure Advance" shall have the meaning
assigned to it in Section 1.3(a).

                  "Notice of Revolving  Credit  Advance"  shall have the meaning
assigned to it in Section 1.1(a).

                  "Obligations"   shall   mean  all  loans,   advances,   debts,
liabilities and obligations,  for the performance of covenants,  tasks or duties
or for payment of monetary  amounts  (whether  or not such  performance  is then
required or  contingent,  or amounts are  liquidated or  determinable)  owing by
Borrower to Agent or any Lender,  and all  covenants and duties  regarding  such
amounts, of any kind or nature,  present or future,  whether or not evidenced by
any note, agreement or other

                                       16

<PAGE>



instrument, arising under the Agreement or any of the other Loan Documents. This
term includes all principal,  interest, Fees, Charges, expenses, attorneys' fees
and any other sum chargeable to Borrower under the Agreement or any of the other
Loan Documents.

                  "Other Taxes" shall have the meaning assigned to it in Section
1.19.

                  "Parent"   shall   mean  BCA   Holdings,   Inc.,   a  Delaware
corporation.

                  "Patent and Trademark  Assignments"  shall mean the patent and
trademark  assignments  made in favor of Agent, on behalf of itself and Lenders,
by Borrower and its Subsidiaries, as each may be amended, restated, supplemented
or otherwise modified from time to time.

                  "Patent License" shall mean rights under any written agreement
now owned or hereafter acquired by Borrower or any of its Subsidiaries  granting
any right with respect to any  invention on which a Patent is in  existence,  as
the same may be amended, restated,  supplemented or otherwise modified from time
to time.

                  "Patents" shall mean all of the following in which Borrower or
any of its  Subsidiaries now holds or hereafter  acquires any interest:  (i) all
letters patent of the United States or any other country,  all registrations and
recordings thereof, and all applications for letters patent of the United States
or any other country,  including  registrations,  recordings and applications in
the United States Patent and Trademark Office or in any similar office or agency
of the United States, any State or Territory thereof, or any other country,  and
(ii) all reissues, continuations, continuations-in-part or extensions thereof.

                  "Payment  Date"  shall  have  the  meaning  assigned  to it in
Section 1.2(a).

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

                  "Pension Plan" shall mean an employee pension benefit plan, as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan), which is not
an individual  account  plan,  as defined in Section  3(34) of ERISA,  and which
Borrower or any of its  Subsidiaries or, if a Title IV Plan, any ERISA Affiliate
maintains,  contributes  to or has an  obligation  to contribute to on behalf of
participants who are or were employed by any of them.

                  "Permitted    Encumbrances"    shall   mean   the    following
encumbrances:  (i) Liens for taxes or assessments or other governmental  Charges
or levies,  either not yet due and  payable  or to the  extent  that  nonpayment
thereof is permitted by the terms of Section 5.2(b); (ii) pledges or deposits of
money securing statutory obligations under workmen's compensation,  unemployment
insurance,  social  security  or public  liability  laws or similar  legislation
(excluding Liens under ERISA); (iii) pledges or deposits of money securing bids,
tenders,  contracts (other than contracts for the payment of money) or leases to
which  Borrower is a party as lessee made in the  ordinary  course of  business;
(iv) inchoate and unperfected workers', mechanics', suppliers' or similar Liens

                                       17

<PAGE>



arising in the ordinary  course of business;  (v) carriers',  warehousemen's  or
other similar  possessory  liens arising in the ordinary  course of business and
securing indebtedness not yet due and payable in an outstanding aggregate amount
not in excess of Ten  Thousand  Dollars  ($10,000)  at any time;  (vi)  deposits
securing, or in lieu of, surety, appeal or customs bonds in proceedings to which
Borrower is a party;  (vii) any attachment or judgment Lien, unless the judgment
it secures shall not, within thirty (30) days after the entry thereof, have been
discharged or execution  thereof stayed pending  appeal,  or shall not have been
discharged within thirty (30) days after the expiration of any such stay; (viii)
zoning restrictions,  easements,  licenses,  or other restrictions on the use of
real property or other minor irregularities in title (including leasehold title)
thereto,  so long as the  same do not  materially  impair  the  use,  value,  or
marketability of such real property,  lease or leasehold  estate;  (ix) purchase
money  Liens with  respect  to  Equipment  acquired  in the  ordinary  course of
business in accordance with past practice (subject to the limitations on Capital
Expenditures set forth in the Agreement,  including Annex K thereto), so long as
such liens attach only to the Equipment so acquired  without the proceeds of any
Loan or Advance;  and (x) Liens on the Kansas Collateral  securing,  and granted
upon the  incurrence  of,  the  Kansas  Indebtedness  in  accordance  with  this
Agreement and the Kansas Loan Documents.

                  "Person"  shall  mean  any  individual,  sole  proprietorship,
partnership,  joint venture, trust,  unincorporated  organization,  association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal,  state,  county,  city,  municipal,
local, foreign, or otherwise,  including any instrumentality,  division, agency,
body or department thereof).

                  "Plan"  shall mean an  employee  benefit  plan,  as defined in
Section 3(3) of ERISA,  which Borrower or any of its Subsidiaries,  on behalf of
participants  who are or were employed by any of them (a)  currently  maintains,
contributes  to or has an obligation to contribute to or (b) within the last six
(6) years has maintained, contributed to or had an obligation to contribute to.

                  "Pledge  Agreement"  shall mean the Pledge  Agreement  made by
Parent  in favor of  Agent,  on behalf of  itself  and  Lenders,  including  all
amendments,  restatements and modifications thereof and supplements thereto, and
shall  refer to the  Pledge  Agreement  as the same may be in effect at the time
such reference becomes operative.

                  "Proceeds"  shall mean  "proceeds," as such term is defined in
the Code and,  in any  event,  shall  include  (i) any and all  proceeds  of any
insurance,  indemnity,  warranty or  guaranty  payable to Borrower or any of its
Subsidiaries  from time to time with respect to any of the Collateral,  (ii) any
and all payments (in any form whatsoever) made or due and payable to Borrower or
any of its  Subsidiaries  from time to time in connection with any  requisition,
confiscation,  condemnation,  seizure  or  forfeiture  of all or any part of the
Collateral by any governmental body, authority,  bureau or agency (or any person
acting under color of  governmental  authority),  (iii) any claim of Borrower or
any of its  Subsidiaries  against third parties (a) for past,  present or future
infringement  of any Patent or Patent License,  (b) for past,  present or future
infringement or dilution of any Copyright or Copyright  License or (c) for past,
present or future infringement or dilution of any Trademark or Trademark License
or  for  injury  to  the  goodwill  associated  with  any  Trademark,  Trademark
registration  or  Trademark  licensed  under  any  Trademark  License,  (iv) any
recoveries by

                                       18

<PAGE>



Borrower or any of its  Subsidiaries  against  third parties with respect to any
litigation  or dispute  concerning  any of the  Collateral,  and (v) any and all
other amounts from time to time paid or payable under or in connection  with any
of the Collateral, upon disposition or otherwise.

                  "Projections"  shall  mean any and all  projections  delivered
pursuant to or in connection with the Agreement.

                  "Pro Rata Share" shall mean with  respect to matters  relating
to (a) a Lender's  portion of Term Loan A, the  percentage  obtained by dividing
(i) the  portion  of Term Loan A held by such  Lender,  by (ii) the  outstanding
amount of Term Loan A, (b) a  Lender's  portion  of Term Loan B, the  percentage
obtained by dividing (i) the portion of Term Loan B held by such Lender, by (ii)
the  outstanding  amount of Term Loan B, (c) a Lender's  portion of Term Loan C,
the percentage  obtained by dividing (i) the portion of Term Loan C held by such
Lender, by (ii) the outstanding amount of Term Loan C, (d) a Lender's Commitment
with respect to Capital Expenditure  Advances (including the making or repayment
of Capital Expenditure Advances pursuant to those Commitments) and, with respect
to all other  matters,  the  percentage  obtained  by  dividing  (i) the Capital
Expenditure  Loan  Commitment  of that  Lender  by (ii)  the  aggregate  Capital
Expenditure  Loan  Commitments of all Lenders,  (e) a Lender's  Commitment  with
respect to Revolving Credit  Advances,  Swing Line Advances and Letter of Credit
Obligations  (including the making or repayment of Revolving Credit Advances and
Swing Line Advances and incurrence of Letter of Credit  Obligations  pursuant to
those  Commitments)  and,  with  respect to all other  matters,  the  percentage
obtained by dividing (i) the Revolving Loan Commitment (including the Swing Line
Commitment as a subset of the Swing Line Lender's  Revolving Loan Commitment) of
that Lender by (ii) the aggregate  Revolving Loan Commitments of all Lenders, as
each of the  foregoing  percentages  may be  adjusted by  assignments  permitted
pursuant to Section 9.1,  (f) a Lender's  portion of all Loans,  the  percentage
obtained by dividing  (i) the  aggregate  Commitment  of such Lender by (ii) the
aggregate  Commitments of all Lenders and (g) a Lender's portion of all Loans on
and after the Commitment  Termination Date, the percentage  obtained by dividing
(i) the aggregate outstanding principal balance of the Loans held by such Lender
by (ii) the  aggregate  outstanding  principal  balance of the Loans held by all
Lenders.

                  "Qualified  Plan" shall mean an employee pension benefit plan,
as defined in Section 3(2) of ERISA, which is intended to be tax-qualified under
Section 401(a) of the IRC, and which  Borrower,  any of its  Subsidiaries or any
ERISA  Affiliate,  on behalf of participants  who are or were employed by any of
them (a) currently maintains,  contributes to or has an obligation to contribute
to or (b) within the last six (6) years has maintained, contributed to or had an
obligation to contribute to.

                  "Real  Estate"  shall mean all of the real  estate of Borrower
listed in Schedule 3.7.

                  "Refunded Swing Line Loan" shall have the meaning  assigned to
it in Section 1.4(c).

                  "Release"  shall mean, as to any Person,  any release,  spill,
emission, leaking, pumping, injection, deposit, disposal, discharge,  dispersal,
dumping, leaching or migration of

                                       19

<PAGE>



Hazardous  Materials  in the  indoor  or  outdoor  environment  by such  Person,
including  the  movement of  Hazardous  Materials  through or in the air,  soil,
surface water, ground water or property.

                  "Reportable  Event" shall mean any of the events  described in
Section 4043(b) (1), (2), (3), (5), (6), (8) or (9) of ERISA.

                  "Requisite  Lenders"  shall mean (a) Lenders  having more than
sixty-six and two-thirds percent (66 2/3%) of the Commitments of all Lenders, or
(b) if the Commitments have been terminated,  more than sixty-six and two-thirds
percent (66 2/3%) of the aggregate outstanding amount of all Loans and Letter of
Credit Obligations.

                  "Requisite Capital Expenditure Lenders" shall mean (a) Lenders
having  more than  sixty-six  and  two-thirds  percent  (66 2/3%) of the Capital
Expenditure Loan Commitments of all Lenders,  or (b) if the Capital  Expenditure
Loan  Commitments  have been  terminated,  more than  sixty-six  and  two-thirds
percent (66 2/3%) of the aggregate outstanding amount of the Capital Expenditure
Loan.

                  "Requisite  Revolving  Lenders"  shall mean (a) Lenders having
more than  sixty-six  and  two-thirds  percent (66 2/3%) of the  Revolving  Loan
Commitments of all Lenders,  or (b) if the Revolving Loan  Commitments have been
terminated,  more  than  sixty-six  and  two-thirds  percent  (66  2/3%)  of the
aggregate  outstanding  amount of the Revolving Credit Loan and Letter of Credit
Obligations.

                  "Restricted Payment" shall mean (i) the declaration or payment
of any dividend or the  incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's Stock,
(ii) any payment on account of the  purchase,  redemption,  defeasance  or other
retirement  of a Person's  Stock or any other  payment or  distribution  made in
respect  thereof,  either  directly  or  indirectly,  (iii) any  payment,  loan,
contribution, or other transfer of funds or other property to any Stockholder of
such Person, (iv) any dividend,  distribution,  payment, loan, contribution, fee
or other  transfer  of cash,  property  or other  assets to any  stockholder  or
Affiliate  of  Borrower,  including  ARTRA  or any of its  employees,  officers,
directors or Affiliates,  including Peter R. Harvey or any of his family members
or  Affiliates  or  (v)  the  existence  of  any  agreement  or  other  document
accomplishing  or purporting to  accomplish  (whether on a conditional  basis or
otherwise) any of the foregoing.

                  "Retiree  Welfare Plan" shall mean any Welfare Plan  providing
for continuing  coverage or benefits for any participant or any beneficiary of a
participant  after such  participant's  termination  of  employment,  other than
continuation  coverage  provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.

                  "Revolving  Credit Advance" shall have the meaning assigned to
it in Section 1.1(a).

                  "Revolving  Credit  Loan" shall mean the  aggregate  amount of
Revolving Credit Advances outstanding at any time.


                                       20

<PAGE>



                  "Revolving  Credit Note" shall have the meaning assigned to it
in Section 1.1(b).

                  "Revolving  Lender"  shall have the meaning  assigned to it in
Section 1.4(c).

                  "Revolving Loan Commitment" shall mean (a) as to any Revolving
Lender,  the  aggregate  commitment  of such  Lender  to make  Revolving  Credit
Advances  (including without  duplication Swing Line Advances as a subset of the
Swing  Line  Lender's  Revolving  Loan  Commitment)  and incur  Letter of Credit
Obligations  as set  forth  on  Annex N or in the most  recent  Lender  Addition
Agreement  executed  by such  Lender and (b) as to all  Revolving  Lenders,  the
aggregate commitment of all Lenders to make Revolving Credit Advances (including
without duplication Swing Line Advances) and incur Letter of Credit Obligations,
which  maximum  aggregate  commitment  shall be equal to the  Maximum  Revolving
Credit Loan.

                  "Schedule of Accounts" shall mean the schedules of Accounts to
be delivered by Borrower to Agent pursuant to Annex F.

                  "Schedule of Documents" shall mean the schedule, including all
appendices,  exhibits,  schedules or annexes thereto,  listing certain documents
and information to be delivered in connection with the Agreement, the other Loan
Documents and the  transactions  contemplated  thereunder,  substantially in the
form attached as Annex D to the Agreement.

                  "Schedule of Inventory"  shall mean the schedules of Inventory
to be delivered by Borrower to Agent pursuant to Annex G,  including  Borrower's
internal reports classifying and valuing Inventory.

                  "Security Agreement" shall mean the Security Agreement entered
into among Agent,  on behalf of itself and Lenders and  Borrower,  including all
amendments,  restatements and modifications thereof and supplements thereto, and
shall refer to the  Security  Agreement as the same may be in effect at the time
such reference becomes operative.

                  "Services  Agreement"  shall mean the  agreement  pursuant  to
which  Borrower and ARTRA each share  certain  costs and expenses of  insurance,
including all amendments, modifications and supplements thereto, all in form and
substance satisfactory to Agent in its sole discretion,  and shall refer to such
agreement  as the  same may be in  effect  at the time  such  reference  becomes
operative.

                  "Stock" shall mean all shares, options,  warrants,  general or
limited   partnership   interests  or  other  equivalents   (regardless  of  how
designated)  of or in a corporation,  partnership  or equivalent  entity whether
voting  or  nonvoting,  including  common  stock,  preferred  stock or any other
"equity  security"  (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations  promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended).

                  "Stockholder"  shall mean each  holder of Stock of Borrower or
any of its Subsidiaries, as the context may require.

                                       21

<PAGE>




                  "Subsidiary"  shall mean, with respect to any Person,  (i) any
corporation  of which an  aggregate  of more  than  fifty  percent  (50%) of the
outstanding  Stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time, Stock of
any other class or classes of such  corporation  shall have or might have voting
power by reason of the happening of any contingency) is at the time, directly or
indirectly,  owned  legally or  beneficially  by such Person  and/or one or more
Subsidiaries  of such  Person,  or with respect to which any such Person has the
right to vote or designate the vote of fifty percent (50%) or more of such Stock
whether  by  proxy,  agreement,  operation  of law or  otherwise  and  (ii)  any
partnership in which such Person and/or one or more  Subsidiaries of such Person
shall  have an  interest  (whether  in the form of  voting or  participation  in
profits or capital  contribution)  of more than fifty  percent (50%) or of which
any such  Person is a general  partner or may  exercise  the powers of a general
partner.

                  "Supermajority  Revolving  Lenders"  shall  mean  (a)  Lenders
having eighty  percent (80%) or more of the Revolving  Loan  Commitments  of all
Lenders,  or (b) if the Revolving Loan Commitments have been terminated,  eighty
percent  (80%) or more of the  aggregate  outstanding  amount  of the  Revolving
Credit Loan (with the Swing Line Loan being attributed to the Lender making such
Loan) and Letter of Credit Obligations.

                  "Swing Line Advance" has the meaning assigned to it in Section
1.4(a).

                  "Swing Line  Availability"  has the meaning  assigned to it in
Section 1.4(a).

                  "Swing  Line  Commitment"  shall  mean,  as to the Swing  Line
Lender,  the commitment of the Swing Line Lender to make Swing Line Loans as set
forth on Annex N, which  commitment  constitutes a subfacility  of the Revolving
Loan Commitment of the Swing Line Lender.

                  "Swing Line Lender" shall mean GE Capital.

                  "Swing Line Loan" shall mean at any time, the aggregate amount
of Swing Line Advances outstanding to Borrower.

                  "Swing  Line Note" has the  meaning  assigned to it in Section
1.4(b).

                  "Tangible  Net  Worth"  shall  mean the (a)  total  assets  of
Borrower on a consolidated  basis (less  applicable  reserves and other properly
deductible items), after deducting therefrom  organizational  expenses,  General
Intangibles, goodwill, covenants not to compete, research and development costs,
training costs, and all unamortized debt discount,  deferred charges (other than
prepaid  insurance and deferred  financing fees relating to the  Obligations and
the Kansas Indebtedness) and all receivables from Affiliates, including Peter R.
Harvey and ARTRA,  less (b) total  liabilities  of  Borrower  on a  consolidated
basis, which, in the case of all of the foregoing items, would be reflected on a
consolidated balance sheet of Borrower and its Subsidiaries under GAAP.

                  "Tax  Sharing  Agreement"  shall mean,  collectively,  each of
those certain Tax Sharing  Agreements by and between ARTRA,  Borrower and Parent
dated as of  January  1, 1991 and March 7,  1991,  respectively,  including  all
amendments, modifications and supplements thereto, all in form


                                       22

<PAGE>



and substance  satisfactory to Agent in its sole discretion,  and shall refer to
the Tax  Sharing  Agreement  as the  same  may be in  effect  at the  time  such
reference becomes operative.

                  "Taxes" shall mean taxes, levies, imposts, deductions, Charges
or  withholdings,  and all  liabilities  with respect  thereto,  excluding taxes
imposed  on or  measured  by  the  net  income  of  Agent  or a  Lender  by  the
jurisdictions  under the laws of which Agent and Lenders  are  organized  or any
political subdivision thereof.

                  "Term Loan A" shall have the meaning assigned to it in Section
1.2(a).

                  "Term Loan A Commitment" shall mean (a) as to any Lender,  the
aggregate  commitment of such Lender to make Term Loan A as set forth on Annex N
or in the most recent Lender Addition  Agreement executed by such Lender and (b)
as to all Lenders,  the aggregate commitment of all Lenders to make Term Loan A,
which   maximum   aggregate   commitment   shall  be  Twenty   Million   Dollars
($20,000,000).

                  "Term Loan A Note"  shall have the  meaning  assigned to it in
Section 1.2(c).

                  "Term Loan B" shall have the meaning assigned to it in Section
1.2(d).

                  "Term Loan B  Commitment"shall  mean (a) as to any Lender, the
aggregate  commitment of such Lender to make Term Loan B as set forth on Annex N
or in the most recent Lender Addition  Agreement executed by such Lender and (b)
as to all Lenders,  the aggregate commitment of all Lenders to make Term Loan B,
which maximum aggregate commitment shall be Five Million Dollars ($5,000,000).

                  "Term Loan B Note"  shall have the  meaning  assigned to it in
Section 1.2(f).

                  "Term Loan C" shall have the meaning assigned to it in Section
1.2(g).

                  "Term Loan C Commitment" shall mean (a) as to any Lender,  the
aggregate  commitment of such Lender to make Term Loan C as set forth on Annex N
or in the most recent Lender Addition  Agreement executed by such Lender and (b)
as to all Lenders,  the aggregate commitment of all Lenders to make Term Loan C,
which maximum aggregate  commitment shall be Seven Million Five Hundred Thousand
Dollars ($7,500,000).

                  "Term Loan C Note"  shall have the  meaning  assigned to it in
Section 1.2(i).

                  "Term Loan  Commitment"  shall mean (a) as to any Lender,  the
aggregate  commitment  of such  Lender to make the Term  Loans and (b) as to all
Lenders, the aggregate commitment of all Lenders to make the Term Loans.

                  "Term Loan Notes"  shall mean,  collectively,  the Term Loan A
Notes, the Term Loan B Notes and the Term Loan C Notes.


                                       23

<PAGE>



                  "Term Loans" shall mean, collectively,  Term Loan A, Term Loan
B and Term Loan C.

                  "Title  IV Plan"  shall  mean a  Pension  Plan,  other  than a
Multiemployer Plan, which is covered by Title IV of ERISA.

                  "Trademark  License"  shall  mean  rights  under  any  written
agreement now owned or hereafter acquired by Borrower or any of its Subsidiaries
granting any right to use any Trademark or Trademark  registration,  as the same
may be amended, restated, supplemented or otherwise modified from time to time.

                  "Trademarks"  shall  mean all of the  following  now  owned or
hereafter  acquired by Borrower or any of its Subsidiaries:  (i) all trademarks,
trade names,  corporate  names,  business  names,  trade styles,  service marks,
logos, other source or business  identifiers,  prints and labels on which any of
the foregoing have appeared or appear,  designs and general  intangibles of like
nature (whether registered or unregistered),  now owned or existing or hereafter
adopted  or  acquired,   all  registrations  and  recordings  thereof,  and  all
applications in connection therewith,  including  registrations,  recordings and
applications in the United States Patent and Trademark  Office or in any similar
office or agency of the United States,  any state or territory  thereof,  or any
other  country or any  political  subdivision  thereof;  and (ii) all  reissues,
extensions or renewals thereof.

                  "Unfunded  Pension  Liability"  shall mean,  at any time,  the
aggregate  amount,  if any,  of the sum of (i) the  amount by which the  present
value of all accrued  benefits  under each Title IV Plan exceeds the fair market
value  of all  assets  of such  Title  IV Plan  allocable  to such  benefits  in
accordance  with  Title  IV of  ERISA,  all  determined  as of the  most  recent
valuation  date for each such Title IV Plan using the actuarial  assumptions  in
effect  under  such  Title IV Plan,  and  (ii)  for a period  of five (5)  years
following  a  transaction  reasonably  likely to be covered  by Section  4069 of
ERISA,  the  liabilities  (whether  or not  accrued)  that  could be  avoided by
Borrower,  any of its  Subsidiaries  or any ERISA  Affiliate as a result of such
transaction.

                  "Warrant"  shall mean the Warrant  issued as of  December  17,
1993  by  Borrower  in  favor  of GE  Capital,  as  heretofore  amended,  and as
substituted   as  of  the  Closing  Date,   including   all  other   amendments,
restatements,  substitutions and modifications  thereof and supplements thereto,
all in form and  substance  satisfactory  to Agent in its sole  discretion,  and
shall  refer  to the  Warrant  as the  same may be in  effect  at the time  such
reference becomes operative.

                  "Welfare  Plan"  shall mean any  welfare  plan,  as defined in
Section 3(1) of ERISA,  which is maintained or contributed to by Borrower or any
of its Subsidiaries.

                  "Withdrawal  Liability" shall mean, at any time, the aggregate
amount of the  liabilities,  if any,  pursuant to Section 4201 of ERISA, and any
increase in contributions pursuant to Section 4243 of ERISA, with respect to all
Multiemployer Plans.

                  Any accounting term used in the Agreement  shall have,  unless
otherwise  specifically provided herein, the meaning customarily given such term
in accordance with GAAP, and all

                                       24

<PAGE>



financial   computations   hereunder   shall  be  computed,   unless   otherwise
specifically provided herein, in accordance with GAAP consistently applied. That
certain  items  or  computations  are  explicitly  modified  by the  phrase  "in
accordance  with GAAP" shall in no way be construed to limit the  foregoing.  In
the event  that any  "Accounting  Changes"  (as  defined  below)  occur and such
changes  result  in a change  in the  calculation  of the  financial  covenants,
standards  or terms  used in the  Agreement  or any other  Loan  Document,  then
Borrower,  Agent and Lenders agree to enter into  negotiations in order to amend
such  provisions of this  Agreement so as to equitably  reflect such  Accounting
Changes with the desired result that the criteria for evaluating  Borrower's and
its  Subsidiaries'  financial  condition shall be the same after such Accounting
Changes as if such Accounting Changes had not been made; provided, further, that
the agreement of Requisite Lenders to any required amendments of such provisions
shall be sufficient to bind all Lenders.  "Accounting Changes" means (a) changes
in accounting  principles required by the promulgation of any rule,  regulation,
pronouncement  or opinion by the  Financial  Accounting  Standards  Board of the
American  Institute of Certified Public Accountants (or successor thereto or any
agency  with  similar  functions),  and (b)  changes  in  accounting  principles
concurred in by Borrower's  certified public accountants.  In the event, if any,
that Agent,  Borrower and Requisite  Lenders shall have agreed upon the required
amendments,  then after such  agreement  has been  evidenced  in writing and the
underlying  Accounting  Change with respect  thereto has been  implemented,  any
reference  to GAAP  contained in this  Agreement  or in any other Loan  Document
shall, only to the extent of such Accounting Change, refer to GAAP, consistently
applied after giving effect to the  implementation of such Accounting Change. If
Agent,  Borrower and Requisite Lenders cannot agree upon the required amendments
within sixty (60) days  following the date of  implementation  of any Accounting
Change,  then  all  financial  statements  delivered  and  all  calculations  of
financial  covenants  and  other  standards  and  terms in  accordance  with the
Agreement  and the other Loan  Documents  shall be prepared,  delivered and made
without regard to the underlying Accounting Change.

                  All other undefined terms contained in the Agreement or any of
the other Loan Documents shall, unless the context indicates otherwise, have the
meanings  provided  for by the Code as in effect in the State of Illinois to the
extent the same are used or defined  therein.  The words "herein,"  "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole,
including the Exhibits, Schedules and Annexes thereto, as the same may from time
to time be amended, modified or supplemented, and not to any particular section,
subsection or clause contained in the Agreement.

                  Wherever  from the context it appears  appropriate,  each term
stated in either the  singular  or plural  shall  include the  singular  and the
plural,  and pronouns  stated in the masculine,  feminine or neuter gender shall
include the  masculine,  feminine  and neuter  genders.  The words  "including",
"includes"  and "include"  shall be deemed to be followed by the words  "without
limitation";  references to Persons  include  their  respective  successors  and
assigns (to the extent and only to the extent  permitted by the Loan  Documents)
or, in the case of  governmental  Persons,  Persons  succeeding  to the relevant
functions  of  such  Persons;   and  all  references  to  statutes  and  related
regulations shall include any amendments of the same and any successor  statutes
and regulations.


                                       25

<PAGE>



                                     ANNEX B
                                       to
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                                LETTERS OF CREDIT

                  (a) Subject to the terms and conditions of this Agreement, the
Revolving Loan  Commitment  may, in addition to Revolving  Credit  Advances,  be
utilized, upon the request of Borrower, for the issuance of Letters of Credit or
guaranties  thereof by Agent so long as GE  Capital is Agent,  on behalf of each
Lender (severally and not jointly)  according to such Lender's Pro Rata Share of
the Revolving Loan Commitment to guaranty  payment to banks (whether or not such
banks are  Lenders)  which issue  Letters of Credit for the account of Borrower.
The aggregate amount of all Letter of Credit  Obligations  incurred by Agent and
Lenders  pursuant to this paragraph (a) shall not exceed the lesser of (i) Three
Million Dollars  ($3,000,000),  (ii) the Maximum Revolving Credit Loan minus the
sum of the  Revolving  Credit  Loan,  Swing  Line  Loan  and  Letter  of  Credit
Obligations  then  outstanding and (iii) the Borrowing Base minus the sum of the
Revolving  Credit Loan,  Swing Line Loan and Letter of Credit  Obligations  then
outstanding  and,  in the case of the  foregoing  clauses  (ii) and (iii),  less
reserves  established  by Agent  pursuant to this  Agreement.  No such Letter of
Credit shall have an expiry date which is more than one year  following the date
of issuance  thereof and Agent and Lenders shall be under no obligation to incur
Letter  of Credit  Obligations  in  respect  of any  Letter of Credit  having an
initial or extended  expiry date, or extension  option,  which is later than the
Commitment  Termination  Date. It is  understood  that the bank or other legally
authorized  Person (including any Lender) which shall issue any Letter of Credit
contemplated  by this paragraph (a) shall be selected by Borrower and acceptable
to Agent, in its sole discretion.

                  (b) In the event that any Lender  shall make any payment on or
pursuant to any Letter of Credit  Obligation,  such payment shall then be deemed
automatically  to constitute a Revolving  Credit Advance under Section 1.1(a) of
the Agreement.

                  (c) In the event that any Letter of Credit Obligation, whether
or not  then  due and  payable,  shall  for any  reason  be  outstanding  on the
Commitment  Termination  Date,  Borrower  will pay to Agent for the  benefit  of
Lenders cash or cash equivalents  acceptable to Agent ("Cash Equivalents") in an
amount  equal  to the  maximum  amount  then  available  to be drawn  under  the
applicable  Letter of Credit plus all  outstanding  fees and  expenses  relating
thereto.  Such  funds  or Cash  Equivalents  shall  be held by  Agent  in a cash
collateral account (the "Cash Collateral  Account")  maintained at Bankers Trust
Company,  17 Wall Street,  New York, New York, ABA#: 021 001 033, in the name of
General Electric Capital Corporation,  Commercial Finance Group, Acct.#: 502 328
54.  The Cash  Collateral  Account  shall  be in the  name of  Agent  (as a cash
collateral  account),  and shall be under the sole dominion and control of Agent
and subject to the terms of this Annex B. Borrower hereby pledges, and grants to
Lender a security  interest in, all such funds and Cash  Equivalents held in the
Cash Collateral Account from time to time and all proceeds thereof,  as security
for  the  payment  of  all  amounts  due in  respect  of the  Letter  of  Credit
Obligations, whether or not then due. This Agreement shall constitute a security
agreement under applicable law.


                                        1

<PAGE>



                  From  time to time  after  funds  are  deposited  in the  Cash
Collateral Account,  Agent may apply such funds or Cash Equivalents then held in
the Cash  Collateral  Account to the  payment of any  amounts,  in such order as
Agent may elect,  as shall be or shall  become due and  payable by  Borrower  to
Lenders with respect to such Letter of Credit Obligations.

                  Neither  Borrower  nor any  Person  claiming  on  behalf of or
through  Borrower  shall  have any  right to  withdraw  any of the funds or Cash
Equivalents  held  in  the  Cash  Collateral  Account,   except  that  upon  the
termination of all Letter of Credit  Obligations  and the payment of all amounts
payable by Borrower to Lenders in respect  thereof,  any funds  remaining in the
Cash  Collateral  Account  in  excess  of the then  remaining  Letter  of Credit
Obligations shall be returned to Borrower.

                  Agent shall not have any obligation to invest the funds in the
Cash Collateral  Account or deposit such funds in an interest  bearing  account,
and interest and earnings thereon, if any, shall be the property of Lenders.

                  (d) In the event that Lenders shall incur any Letter of Credit
Obligation  pursuant  hereto at the request or on behalf of  Borrower,  Borrower
agrees to pay to Agent for the benefit of Lenders,  as  compensation  to Lenders
for such Letter of Obligation, (i) all costs and expenses incurred by any Lender
on account of such  Letter of Credit  Obligation  and (ii)  commencing  with the
month in which such  Letter of Credit  Obligation  is  incurred  by Lenders  and
monthly  thereafter for each month during which such Letter of Credit Obligation
shall remain  outstanding,  a fee in an amount  equal to two percent  (2.0%) per
annum of the maximum  amount  available  from time to time to be drawn under the
applicable  Letter of Credit,  calculated on the basis of a 360-day year and the
actual  number  of days  elapsed;  provided,  however,  that  (A) so long as any
Default or Event of Default not described in the following clause (B) shall have
occurred  and be  continuing,  at the  election  of Agent  (or upon the  written
request of Requisite Lenders) confirmed by written notice from Agent to Borrower
and (B) so long as any Event of Default specified in Section 8.1(g),  (h) or (i)
shall have  occurred  and be  continuing,  such fee shall be  increased  to four
percent  (4.0%) per  annum,  calculated  on the basis of a 360-day  year and the
actual  number of days  elapsed.  Fees  payable  in  respect of Letter of Credit
Obligations shall be paid to Agent for the benefit of Lenders in arrears, on the
first day of each  month.  The fees,  costs and  expenses  provided  for in this
paragraph  (d) are in addition to any fees,  costs and  expenses  payable to the
issuers of the  Letters of  Credit,  all of which are solely for the  account of
Borrower.

                  (e) Request for Lender  Guaranties.  Borrower shall give Agent
at least two (2) days prior  written  notice as to the  issuance  of a Letter of
Credit or letter credit  guaranty,  specifying the date such Letter of Credit or
guaranty is to be issued,  identifying the beneficiary and describing the nature
of the  transactions  proposed  to be  supported  thereby.  The notice  shall be
accompanied  by the form of the Letter of Credit to be  guarantied  and,  to the
extent  not  previously  delivered  to Agent,  copies of all  agreement  between
Borrower the issuer of the Letter of Credit to be  guarantied  pertaining to the
issuance of Letters of Credit.


                                        2

<PAGE>



                  (f) The  obligation  of  Borrower  to  reimburse  Lenders  for
payments  made  with  respect  to any  Letter  of  Credit  Obligation  shall  be
unconditional  and irrevocable and shall be paid strictly in accordance with the
terms hereof under all circumstances including the following circumstances:

                  (1) any lack of  validity or  enforceability  of any Letter of
Credit or any other agreement;

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

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

                  (4) payment by Agent,  any Lender,  or the issuing  bank under
any Letter of Credit against  presentation of a demand,  draft or certificate or
other  document  which does not comply  with the terms of such Letter of Credit,
provided  that,  in the case of any  payment  by Agent or any  Lender  under any
Letter of Credit,  Agent or such Lender has not acted with gross  negligence  or
willful misconduct (as finally determined by a court of competent  jurisdiction)
in  determining  that the demand  for  payment  under  such  Letter of Credit or
guaranty  thereof  complies on its face with any applicable  requirements  for a
demand for payment under such Letter of Credit or guaranty thereof;

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

                  (6) the fact that a Default or an Event of Default  shall have
occurred and be continuing.

                  (g) Indemnification; Nature of Lenders' Duties. In addition to
amounts payable as elsewhere provided in this Agreement,  Borrower hereby agrees
to  protect,  indemnify,  pay and save Agent and each Lender  harmless  from and
against  any and all  claims,  demands,  liabilities,  damages,  losses,  costs,
charges and expenses (including  reasonable  attorneys' fees and allocated costs
of internal  counsel)  which Agent or any Lender may incur or be subject to as a
consequence,  direct or indirect, of (1) the issuance of any Letter of Credit or
guaranty  thereof,  other  than as a result of the gross  negligence  or willful
misconduct of Agent or such Lender as finally determined by a court of competent
jurisdiction  or (2) the  failure  of Agent or any  Lender to honor a demand for
payment under any Letter of Credit or guaranty thereof as a result of any act or
omission,  whether rightful or wrongful,  of any present or future de jure or de
facto government or governmental authority.


                                        3

<PAGE>



                  As between  Agent and  Borrower  and any Lender and  Borrower,
Borrower assumes all risks of the acts and omissions of, or misuse of any Letter
of Credit by  beneficiaries  of any Letter of Credit.  In furtherance and not in
limitation of the foregoing,  neither Agent nor any Lender shall be responsible:
(i) for the form, validity,  sufficiency,  accuracy, genuineness or legal effect
of any document  issued 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; (ii)
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,  which  may prove to be
invalid or ineffective  for any reason;  (iii) for failure of the beneficiary of
any Letter of Credit to comply fully with conditions required in order to demand
payment under such Letter of Credit;  provided  that, in the case of any payment
by Agent  under any Letter of Credit or  guaranty  thereof,  Agent has not acted
with gross negligence or willful misconduct (as finally determined by a court of
competent  jurisdiction)  in determining  that the demand for payment under such
Letter of Credit or guaranty  thereof  complies on its face with any  applicable
requirements  for a demand for  payment  under such Letter of Credit or guaranty
thereof; (iv) 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;  (v) for errors in  interpretation of technical terms;
(vi) for any loss or delay in the  transmission  or  otherwise  of any  document
required  in order to make a  payment  under any  Letter  of Credit or  guaranty
thereof or of the proceeds thereof;  (vii) for the credit of the proceeds of any
drawing  under any  Letter of Credit or  guaranty  thereof;  and  (viii) for any
consequences arising from causes beyond the control of Agent or any Lender. None
of the above shall affect,  impair,  or prevent the vesting of any of Agent's or
any Lender's rights or powers hereunder.

                                        4

<PAGE>



                                     ANNEX C
                                       TO
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                             CASH MANAGEMENT SYSTEMS

         The Borrower shall,  and shall cause its Subsidiaries to, establish and
maintain the Cash Management Systems described below:

                  Prior to the  Closing  Date and for so long as any Loan or any
other  Obligation  is  outstanding,  Borrower  shall deposit and shall cause its
Subsidiaries to deposit or cause to be deposited  promptly,  and in any event no
later than the first Business Day after the date of receipt  thereof,  all cash,
checks,  drafts or other  similar items of payment  relating to or  constituting
payments  made in  respect  of any and all  Collateral  into  bank  accounts  in
Borrower's  name  or  such  Subsidiary's  name   (collectively,   the  "Borrower
Accounts")  at banks set forth on  Schedule  3.22.  Prior to the  Closing  Date,
Borrower shall have established a concentration  account in Borrower's name (the
"Concentration  Account") at LaSalle National Bank, which shall be designated as
the  Concentration  Account bank on Schedule 3.22, in accordance  with a blocked
account  agreement  in form and  substance  satisfactory  to Agent,  in its sole
discretion.

                  Prior  to  the  Closing  Date,   LaSalle   National  Bank,  as
Concentration Account bank, and all of the banks set forth on Schedule 3.22 with
which Borrower or any Subsidiary  thereof has any relationship other than as the
holder of a deposit  account,  including by way of example any mortgage or other
lending relationship (each such bank a "Relationship  Bank"), shall have entered
into triparty  blocked account  agreements with Agent, for the benefit of itself
and Lenders,  and Borrower and/or each such Subsidiary,  as applicable,  in form
and substance  acceptable to Agent,  which shall become  operative  prior to the
Closing  Date at LaSalle  National  Bank,  as the bank  where the  Concentration
Account is maintained, and all Relationship Banks at which Borrower Accounts are
maintained.  Borrower shall clearly  designate each bank which is a Relationship
Bank as such on  Schedule  3.22.  Each  such  blocked  account  agreement  shall
provide, among other things, that:

                  (i) all items of payment  deposited in such  Borrower  Account
         and proceeds thereof deposited in such  Concentration  Account are held
         by such bank as agent or bailee-in- possession for Agent;

                  (ii) the bank executing such agreement has no rights of setoff
         or  recoupment  or any other claim  against  such  Borrower  Account or
         Concentration  Account,  as the case may be,  other than for payment of
         its  service   fees  and  other   charges   directly   related  to  the
         administration  of such account and for returned  checks or other items
         of payment; and

                  (iii) prior to the Closing  Date (A) with respect to each bank
         at which a Borrower  Account is  located,  such bank  agrees to forward
         immediately  all  amounts  in  Borrower  Account  to the  Concentration
         Account and to commence the process of daily sweeps from such  Borrower
         Account into the Concentration Account and (B) with respect to the bank
         at which the  Concentration  Account is  located,  such bank  agrees to
         forward immediately all

                                        1

<PAGE>



         amounts received in the Concentration Account to the Collection Account
         through  daily  sweeps  from  such   Concentration   Account  into  the
         Collection Account.

                  Prior to the Closing Date, Borrower shall cause each and every
bank at which any Borrower Account is located,  including each Relationship Bank
and each of the other banks at which any  Borrower  Account is  located,  to (i)
forward  immediately,  and in no event less  frequently  than once each Business
Day, all amounts in Borrower Accounts at such bank to the Concentration  Account
and (ii)  commence,  and continue each Business Day, the process of daily sweeps
from each such Borrower  Account into the  Concentration  Account.  Prior to the
Closing Date,  Borrower shall cause LaSalle National Bank, as the bank where the
Concentration Account is located, to forward immediately all amounts received in
the  Concentration  Account to the Collection  Account through daily sweeps from
such Concentration Account into the Collection Account.

                  So long as no Default or Event of Default has  occurred and is
continuing,  Borrower  may amend  Schedule  3.22 to add or  replace  a  Borrower
Account or replace the Concentration Account; provided,  however, that (i) Agent
shall have consented in writing to the opening of such account with the relevant
bank, and (ii) prior to the time of the opening of such account, Borrower and/or
the Subsidiaries  thereof, as applicable,  and such bank shall have executed and
delivered to Agent a triparty blocked account  agreement,  in form and substance
satisfactory to Agent.

                  The Borrower Accounts and the  Concentration  Account shall be
cash  collateral  accounts,  with all cash,  checks and other  similar  items of
payment  in such  accounts  securing  payment  of all  Loans,  Letter  of Credit
Obligations  and other  Obligations,  and in which  Borrower or such  Subsidiary
shall have granted a Lien to Agent, on behalf of itself and Lenders, pursuant to
the Security Agreement.

                  All  amounts  deposited  in the  Collection  Account  shall be
deemed  received by Agent in  accordance  with Section 1.14 of the Agreement and
shall be applied (and allocated) by Agent in accordance with Section 1.15 of the
Agreement.  In no event  shall any  amount be so  applied  unless and until such
amount shall have been credited in immediately available funds to the Collection
Account.

                  The  Borrower  may  maintain,  in its name,  an  account  (the
"Disbursement  Account") at a bank acceptable to Agent into which,  Agent shall,
from time to time,  deposit  proceeds of Revolving Credit Advances made pursuant
to Section 1.1 of the Agreement and Swing Line Advances made pursuant to Section
1.4 of the Agreement, in each case for use by Borrower solely in accordance with
the provisions of Section 1.8 of the Agreement.  The Disbursement  Account shall
be a cash collateral  account,  with all cash, checks and other similar items of
payment  in such  account  securing  payment  of all  Loans,  Letter  of  Credit
Obligations  and other  Obligations,  and in which Borrower shall have granted a
Lien to Agent,  for the benefit of itself and Lenders,  pursuant to the Security
Agreement.  The  Disbursement  Account  shall be subject  to a triparty  blocked
account agreement identical to the agreement governing Borrower Accounts and the
Concentration Account; provided,  however, that, according to the terms thereof,
such  agreement  shall become  effective  upon the occurrence of a default or an
Event of Default.

                                        2

<PAGE>




                  The  Borrower  shall and shall cause its  Subsidiaries  to (i)
hold in trust for Agent, for the benefit of itself and Lenders, all checks, cash
and other items of payment received by Borrower or any such Subsidiary, and (ii)
within one (1) Business Day after receipt by Borrower or any such  Subsidiary of
any checks,  cash or other  items or  payment,  deposit the same into a Borrower
Account. The Borrower and its Subsidiaries  acknowledge and agree that all cash,
checks or items of payment constituting  proceeds of Collateral are the property
of Lenders.  All proceeds of the sale or other  disposition  of any  Collateral,
other than sales of Inventory  by Borrower in the  ordinary  course of business,
shall be deposited directly into the Concentration Account.

                  (i) Notwithstanding  the foregoing,  Borrower shall deliver to
Agent as soon as possible and in any event within 45 days after the Closing Date
a fully executed  blocked account  agreement,  in accordance with the foregoing,
with respect to Borrower's bank account, number 1350016640,  maintained at Union
Planters Bank, Hialeah, Florida.


                                        3

<PAGE>



                                    ANNEX D
                                       TO
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                             SCHEDULE OF DOCUMENTS

In addition to, and not in limitation  of, the  conditions  described in Section
2.1 of the Agreement, pursuant to Section 2.1(b) of the Agreement, the following
items must be received by Agent in form and substance  satisfactory  to Agent on
or prior to the  Closing  Date  (each  capitalized  term used but not  otherwise
defined  herein  shall  have  the  meaning  ascribed  thereto  in Annex A to the
Agreement):

                  Exhibits,  Schedules and Annexes. All Exhibits,  Schedules and
Annexes to the Agreement, in form and substance satisfactory to Agent.

                  Revolving  Credit Notes.  For each Revolving  Lender,  one (1)
duly executed original Revolving Credit Note, dated the Closing Date.

                  Swing  Line  Note.  For the Swing  Line  Lender,  one (1) duly
executed original Swing Line Note, dated the Closing Date.

                  Term  Loan A  Notes.  For  each  Lender  with  a  Term  Loan A
Commitment,  one (1) duly executed  original Term Loan A Note, dated the Closing
Date.

                  Term  Loan B  Notes.  For  each  Lender  with  a  Term  Loan B
Commitment,  one (1) duly executed  original Term Loan B Note, dated the Closing
Date.

                  Term  Loan C  Notes.  For  each  Lender  with  a  Term  Loan C
Commitment,  one (1) duly executed  original Term Loan C Note, dated the Closing
Date.

                  Capital Expenditure Loan Notes. For each Lender with a Capital
Expenditure Loan Commitment,  one (1) duly executed original Capital Expenditure
Loan Note, dated the Closing Date.

                  Security  Agreement  . A  duly  executed  Security  Agreement,
amended and restated as of the Closing  Date,  including a power of attorney and
all other instruments,  documents and agreements executed pursuant thereto,  all
in form and substance satisfactory to Agent.

                  Copyrights,  Patents and Trademarks. Duly executed supplements
to Borrower's  Copyright  Assignment and Patent and Trademark  Assignment,  with
respect to any  applicable  Collateral  not secured  pursuant  thereto as of the
Closing Date.

                  Pledge Agreement . A duly executed Pledge  Agreement,  amended
and restated as of the Closing Date,  including all  instruments,  documents and
agreements executed pursuant thereto, all in form and substance  satisfactory to
Agent.


                                        1

<PAGE>



                  Warrant.  A  duly  executed  replacement  Warrant,  dated  the
Closing Date,  including all  instruments,  documents  and  agreements  executed
pursuant thereto, all in form and substance satisfactory to Agent.

                  Other Loan Documents.  Evidence satisfactory to Agent that all
other Loan Documents are in full force and effect as of the Closing Date.

                  Security  Interests  and Code  Filings.  Except as received by
Agent pursuant to the Prior Credit  Agreement,  evidence  satisfactory  to Agent
that Agent (for the  benefit of itself and  Lenders)  has a valid and  perfected
first priority (other than to the extent otherwise  permitted in accordance with
Section 6.7 of the Agreement) security interest in the Collateral.

                  Cash Management System; Blocked Account Agreements.  Except as
received by Agent pursuant to the Prior Credit Agreement,  evidence satisfactory
to Agent that,  prior to the Closing Date,  cash management  systems,  including
Blocked Account Agreements (amended as Agent may deem necessary)  complying with
Annex C to the  Agreement  are  currently  maintained in the manner set forth in
such Annex C.

                  Mortgage Amendments. Amendments to the Mortgages, covering all
of the Real Estate  (each,  a  "Mortgaged  Property"),  dated the Closing  Date,
satisfactory  in form and  substance to Agent for recording in all places to the
extent necessary to maintain valid and enforceable  first priority lien (subject
to Permitted Encumbrances) on each Mortgaged Property.

                  Insurance.  Except as recently  received by Agent  pursuant to
the Prior Credit Agreement,  updated  certificates of insurance  relating to the
insurance  policies  required  by Section  5.5 of the  Agreement,  showing  loss
payable and/or additional insured clauses or endorsements, in favor of Agent, on
behalf of Lenders.

                  Waivers.  Except as  received  by Agent  pursuant to the Prior
Credit  Agreement,  landlord waivers and consents,  bailee letters and mortgagee
agreements in form and substance  satisfactory to Agent and amended as Agent may
deem  necessary,  in each  case as  required  pursuant  to  Section  5.11 of the
Agreement.

                  Fee  Letter.  A duly  executed  original of the GE Capital Fee
Letter.

                  Initial Borrowing Base Certificate.  A duly executed Borrowing
Base  Certificate most recently  required to be delivered  pursuant to the Prior
Credit Agreement.

                  Initial Notice of Revolving  Credit  Advance.  A duly executed
Notice of Revolving Credit Advance,  dated on or prior to the Closing Date, with
respect to the initial  Revolving  Credit  Advance,  if any, to be  requested by
Borrower on the Closing Date.

                  Financial  Statements  and Collateral  Reports.  All Financial
Statements  and  Collateral  Reports  most  recently  required  to be  delivered
pursuant to the Prior Credit Agreement.

                                        2

<PAGE>




                  Officer's   Certificate.   A  duly  executed   original  of  a
certificate  of the  chief  executive  officer  or chief  financial  officer  of
Borrower,  dated the Closing Date,  stating that since December 31, 1996,  there
has been: (i) no Material Adverse Effect on the business, operations,  financial
condition,  prospects or  projections  of Borrower,  the  industries in which it
operates,  the Collateral,  or any of its  Subsidiaries;  (ii) no litigation has
commenced  which, if successful,  could have any such Material Adverse Effect or
could challenge any of the  transactions  contemplated by this Agreement and the
other Loan Documents; (iii) except as expressly permitted in accordance with the
Prior  Credit  Agreement,   no  dividends,   distributions,   payments,   loans,
contributions,  fees or other transfers of cash, property or other assets to any
stockholders  or  Affiliate  of  Borrower,  including  ARTRA  or its  employees,
directors, officers or Affiliates; and (iv) no material increase in liabilities,
liquidated or contingent,  and no material decrease in assets of Borrower or any
of its Subsidiaries.

                  Charter and Good  Standing.  For Parent,  Borrower and each of
its Subsidiaries, such Person's (a) certificate or articles of incorporation and
all amendments thereto, (b) good standing certificates  (including  verification
of tax status) in its state of incorporation and (c) good standing  certificates
(including  verification  of tax status) and  certificates of  qualification  to
conduct business in each  jurisdiction  where its ownership or lease of property
or  the  conduct  of its  business  requires  such  qualification,  each  of the
foregoing  dated a recent date prior to the Closing  Date and  certified  by the
applicable Secretary of State or other authorized governmental entity.

                  Bylaws and Resolutions.  For Parent,  Borrower and each of its
Subsidiaries (a) such Person's bylaws, together with all amendments thereto, and
(b)   resolutions  of  such  Person's  Board  of  Directors  and,  as  required,
stockholders,  approving and authorizing the execution, delivery and performance
of the Loan Documents to which such Person is a party and the transactions to be
consummated in connection  therewith,  each of the foregoing certified as of the
Closing Date by such Person's corporate  secretary or an assistant  secretary as
being in full force and effect without any modification or amendment.

                  Incumbency Certificates.  For Parent, Borrower and each of its
Subsidiaries, signature and incumbency certificates of the officers of each such
Person executing any of the Loan Documents,  certified as of the Closing Date by
such  Person's  corporate  secretary  or an  assistant  secretary as being true,
accurate, correct and complete.

                  Opinions of Counsel.  Duly executed originals of an opinion of
Kwiatt,  Silverman and Ruben, Ltd., General Counsel for Parent, Borrower and its
Subsidiaries, in form and substance satisfactory to Agent and its counsel, dated
the Closing Date,  and  accompanied  by a letter  addressed to such counsel from
Parent, Borrower and its Subsidiaries, authorizing and directing such counsel to
address  its  opinion  to Agent,  on behalf of  Lenders,  and to include in such
opinion an express statement to the effect that Agent and Lenders are authorized
to rely on such opinion.

                  Other  Documents.  Such  other  certificates,   documents  and
agreements respecting Borrower or any of its Subsidiaries,  as Agent may request
in its sole discretion, including the GE Capital Fee Letter.


                                        3

<PAGE>



                                     ANNEX E
                                       to
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                             RESPONSIBLE INDIVIDUAL

                                                                Telephone #
         Name and Title               Notice Address            Telecopy #

         James Hogan /                General Electric          203-316-7500
         Bagcraft Account Manager     Capital Corporation       203-316-7893
                                      Commercial Finance, Inc.
                                      201 High Ridge Road
                                      Stamford, CT 06927-5100







                                        1

<PAGE>



                                     ANNEX F
                                       TO
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                                ELIGIBLE ACCOUNTS

                  In  determining  whether an account  constitutes  an  Eligible
Account, Agent shall not include any Account:

                  (a)  which  does  not  arise  from  the  sale of  goods or the
performance of services by Borrower in the ordinary course of its business;

                  (b) upon which (i) Borrower's  right to receive payment is not
absolute or is contingent  upon the  fulfillment of any condition  whatsoever or
(ii)  Borrower  is not able to bring  suit or  otherwise  enforce  its  remedies
against the Account Debtor through judicial process;

                  (c)  against  which is  asserted  any  defense,  counterclaim,
setoff or dispute,  but only to the full extent of such  defense,  counterclaim,
setoff or dispute;

                  (d) that is not a true and  correct  statement  of a bona fide
indebtedness  incurred  in the amount of the Account  for  merchandise  sold and
accepted by the Account Debtor obligated upon such Account;

                  (e) with respect to which an invoice,  acceptable  to Agent in
form and substance, has not been sent;

                  (f) that (i) is not owned by  Borrower  or (ii) is  subject to
any right, claim, security interest or other interest of any other Person, other
than the Lien in favor of Agent, on behalf of itself and Lenders;

                  (g) that arises from a sale to any  director,  officer,  other
employee or Affiliate of Borrower or any  Subsidiary  thereof,  or to any entity
which has any  common  officer  or  director  with  Borrower  or any  Subsidiary
thereof;

                  (h) that is the  obligation  of an Account  Debtor that is the
United States government or a political  subdivision  thereof,  unless Agent, in
its sole  discretion,  has agreed to the  contrary in writing and  Borrower,  if
necessary or desirable as  determined  by Agent,  has complied  with the Federal
Assignment of Claims Act of 1940,  and any amendments  thereto,  with respect to
such obligation;

                  (i) that is the  obligation of an Account  Debtor located in a
foreign  country,  other than (i) Canada,  provided,  that,  such  obligation is
denominated  entirely in United States  dollars and is fully payable  within the
United States or (ii) a foreign  country,  provided,  that,  such  obligation is
backed by a letter of credit or other credit  enhancement  in form and substance
acceptable to Agent in its sole  discretion  and the same has been  delivered to
Agent and, provided, further, that, if any

                                        1

<PAGE>



Default or Event of Default  shall have  occurred  and be  continuing,  Borrower
shall  notify the issuer of such  letter of credit or other  credit  enhancement
that the same has been  assigned to Agent,  on behalf of Agent and  Lenders,  in
accordance with Section 5-116(2)(b) of the Code;

                  (j)  that  is the  obligation  of an  Account  Debtor  to whom
Borrower or any Subsidiary thereof is liable for goods sold or services rendered
by the Account  Debtor to Borrower or any  Subsidiary  thereof,  but only to the
full  extent of all such  liabilities  in the  aggregate  with  respect  to such
Account Debtor;

                  (k) that arises with respect to goods which are delivered on a
cash-on-delivery basis or placed on consignment,  guaranteed sale or other terms
by reason of which the payment by the Account Debtor is or may be conditional;

                  (l)  that is in  default;  provided,  further,  that,  without
limiting the generality of the foregoing,  an Account shall be deemed in default
upon the occurrence of any of the following:

                  (i)  the Account is not paid within the earlier of: sixty (60)
          days past its due date or ninety (90) days past  its original  invoice
          date;

                  (ii)  if  any  Account  Debtor  obligated  upon  such  Account
         suspends  business,  makes a  general  assignment  for the  benefit  of
         creditors or fails to pay its debts generally as they come due; or

                  (iii)  if any  petition  is filed by or  against  any  Account
         Debtor  obligated  upon such Account  under any  bankruptcy  law or any
         other   federal,   state  or   foreign   (including   any   provincial)
         receivership,  insolvency relief or other law or laws for the relief of
         debtors;

                  (m) which is the  obligation  of an  Account  Debtor  that has
failed to make a payment  within sixty (60) days past the applicable due date on
fifty  percent  (50%) or more of the dollar  amount of Accounts  upon which such
Account  Debtor  is  obligated  (Borrower  shall be  entitled  to  notify  Agent
regarding the circumstances of such payment failure, and, thereafter,  Agent, in
its sole and  absolute  discretion,  may choose to include all or a portion,  if
any, of such account as an Eligible Account);

                  (n) which is due more than  ninety  (90) days from the date of
determination of eligibility thereof;

                  (o) which arises from any bill-and-hold or other sale of goods
which remain in  Borrower's  or any  Subsidiary  thereof's  possession  or under
Borrower's or any such Subsidiary's  control,  but only to the fullest extent of
that  portion  of such  goods not  actually  billed  and  shipped at the time of
Agent's determination thereof;

                  (p) as to which  Agent's  interest,  on behalf  of itself  and
Lenders, therein is not a first priority perfected security interest;


                                        2

<PAGE>



                  (q)  as to  which  any of the  representations  or  warranties
pertaining  to  Accounts  set forth in the  Agreement  or any of the other  Loan
Documents is untrue;

                  (r) to the  extent  such  Account  exceeds  any  credit  limit
established by Agent, in its reasonable discretion;

                  (s) to the extent such Account is evidenced by any note; or

                  (t)  which  is  otherwise  unacceptable  to  Agent in its sole
discretion.












                                        3

<PAGE>



                                     ANNEX G
                                       TO
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                               ELIGIBLE INVENTORY

         In determining whether Inventory constitutes Eligible Inventory,  Agent
shall not include Inventory which:

                  (a) is not owned by  Borrower  free and clear of all Liens and
rights of any other  Person,  except  the Liens in favor of Agent,  on behalf of
itself  and  Lenders,  and  encumbrances  set forth in clause (v) or (vi) of the
definition of Permitted Encumbrances;

                  (b) except as set forth in clause  (c) below  with  respect to
goods which are "in  transit,"  is not located on  premises  owned,  operated or
leased by Borrower;

                  (c)  consists of goods which are "in  transit",  except to the
extent  shipped (i) F.O.B.  point of shipment  and/or (ii) on vehicles  owned by
Borrower  or common  carriers  employed  by, or  subject  to the  direction  of,
Borrower;  provided,  that,  Borrower  maintains  (A)  appropriate  and adequate
casualty  insurance  with respect to goods shipped on such common  carriers,  in
form  and  with  insurers  recognized  as  adequate  by  Agent,   together  with
appropriate  evidence  showing loss payable  clauses or endorsements in favor of
Agent, on behalf of Lenders, in form and substance satisfactory to Agent and (B)
adequate  reserves on its books,  in accordance  with GAAP,  with respect to all
amounts charged by, and all other fees and expenses associated with, such common
carriers;

                  (d) is covered by a negotiable  document of title, unless such
document and evidence of acceptable  insurance  covering such Inventory has been
delivered to Agent;

                  (e) in  Agent's  reasonable  credit  judgement,  is  obsolete,
unsalable, shopworn, damaged or unfit for sale;

                  (f) consists of display items or shipping materials;

                  (g) consists of packing materials, but only to the full extent
that the same are (i) customized or specialized  for or on behalf of Borrower or
(ii) not maintained in "full  pallets" or are otherwise  maintained in broken or
incomplete packages or sets;

                  (h) consists of goods which have been returned by the buyer;

                  (i) consists of discontinued or slow-moving  items or finished
goods of substandard quality;

                  (j) is placed by Borrower on consignment;

                  (k) is not of a type held for sale in the  ordinary  course of
Borrower's business;

                                        1

<PAGE>




                  (l) as to which  Agent's  interest,  on behalf  of itself  and
Lenders, therein is not a first priority perfected security interest;

                  (m)  as to  which  any of the  representations  or  warranties
pertaining  to  Inventory  set forth in the  Agreement  or any of the other Loan
Documents is untrue;

                  (n)  is  located  at a  public  warehouse,  unless  Agent  has
received  therefrom  a copy  of a duly  executed  bailee  letter,  in  form  and
substance acceptable to Agent in its sole discretion;

                  (o) consists of supplies or work-in-process;

                  (p) is otherwise unacceptable to Agent in its sole discretion.

                  In addition,  Inventory located at an owned or leased location
shall be subject  to the  provisions  set forth in Section  5.11 and 5.12 of the
Agreement.


                                        2

<PAGE>



                                     ANNEX H
                                       to
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                               Insurance Standards

                  1. Borrower  shall,  and shall cause each of its  Subsidiaries
to, at its sole cost and expense,  maintain "All Risk" physical damage insurance
on all real and personal property,  including fire and extended coverage, boiler
and machinery coverage, flood, earthquake,  liquids, theft, explosion,  collapse
and all other hazards and risks ordinarily insured against by owners or users of
such  properties  in similar  businesses.  All  policies  of  insurance  on such
property shall contain an  endorsement,  in form and substance  satisfactory  to
Agent, showing loss payable to Agent as its interests appear.

                  2.  Borrower  shall,  at its sole cost and  expense,  maintain
commercial  general  liability  insurance on an "occurrence  basis" (unless such
insurance  cannot be reasonably  obtained at commercially  reasonable  rates, in
which case such insurance  shall be on a "claims made" basis) against claims for
personal  injury,  bodily  injury and  property  damage with a minimum  limit of
$1,000,000 per  occurrence and $2,000,000 in the aggregate.  Such coverage shall
include,  but not be limited  to,  premises/operations,  broad form  contractual
liability, underground,  explosion and collapse hazard, independent contractors,
broad form  property  coverage,  products and  completed  operations  liability.
Borrower shall,  at its sole cost and expense,  maintain  workers'  compensation
insurance  including  employer's  liability  in the amount of $500,000  for each
accident, $500,000 disease-policy limit, and $500,000 disease-each employee.

                  3.  Borrower  shall,  at its sole cost and  expense,  maintain
automobile  liability  insurance for all owned,  non-owned or hired  automobiles
against  claims for personal  injury,  bodily injury and property  damage with a
minimum combined single limit of $1,000,000 per occurrence.

                  4.  Borrower  shall,  at its sole cost and  expense,  maintain
umbrella  policies of insurance in form and substance  substantially  similar to
each of the umbrella  policies which it maintains on the Closing Date,  with, in
any event, a minimum combined limit of $25,000,000 in the aggregate.

                  5. All policies of insurance  required to be maintained  under
this Agreement shall (i) include Agent as an additional insured,  (ii) contain a
30-day advance notice of alteration or  cancellation,  (iii) provide that no act
or default by  Borrower,  any  Subsidiary  or any other  Person shall affect the
right of Agent to recover  under such policy or policies of insurance in case of
loss or damage, (iv) be in form substantially  similar to those in effect on the
Closing Date and be with  insurers  rated at least A by A.M.  Best and (v) be in
not less than the amounts set forth herein.

                                        1

<PAGE>



                                     ANNEX I
                                       TO
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                      FINANCIAL STATEMENTS AND PROJECTIONS

                  Borrowers  shall  deliver or cause to be delivered to Agent or
to Agent and Lenders, as indicated, the following:

                  (a) To Agent and  Lenders,  within  thirty (30) days after the
end of each Fiscal Month,  consolidated  and  consolidating  financial and other
information  regarding  Borrower  and its  Subsidiaries,  certified by the chief
financial officer of Borrower,  including (i) unaudited balance sheets as of the
close of such Fiscal  Month and the related  statements  of income and cash flow
for that  portion of the Fiscal Year ending as of the close of such Fiscal Month
and (ii) unaudited statements of income and cash flows for such Fiscal Month, in
each case setting forth in  comparative  form the figures for the  corresponding
period in the prior year and the figures  contained in the budget,  all prepared
in accordance with GAAP (subject to normal year-end adjustments), except for the
absence of footnotes  and except as otherwise  disclosed  therein in  reasonable
detail,  and  accompanied  by (A) a statement in reasonable  detail  showing the
calculations  used in determining  compliance  with the financial  covenants set
forth on Annex K and (B) the  certification  of the chief  executive  officer or
chief  financial  officer  of  Borrower  that all of such  financial  and  other
information is true, complete and correct and presents fairly in accordance with
GAAP  (subject  to normal  year-end  adjustments),  except  for the  absence  of
footnotes and except as otherwise  disclosed therein in reasonable  detail,  the
financial  position,  results  of  operations  and  statements  of cash flows of
Borrower and its Subsidiaries,  on both a consolidated and consolidating  basis,
as at the end of such Fiscal Month and for the period then ended, and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of Default shall have occurred and be continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default.

                  In  addition,  Borrower  shall  deliver to Agent and  Lenders,
within  thirty  (30)  days  after the end of each  Fiscal  Month,  a  management
discussion  and analysis  which  includes a comparison to budget for that Fiscal
Month and a comparison of performance for that Fiscal Month to the corresponding
period in the prior year;

                  (b) To Agent and Lenders, within sixty (60) days after the end
of each Fiscal Year,  an operating  plan,  approved by the Board of Directors of
Borrower,  for such  applicable  Fiscal  Year,  which  will  include a  complete
statement of the  assumptions on which such plan is based,  will include monthly
balance  sheets and a monthly  budget for such  applicable  Fiscal Year and will
integrate sales, gross profits, operating expenses,  operating profit, cash flow
projections  and  borrowing  availability  projections  all prepared on the same
basis as that on which operating results are reported,  and plans for personnel,
capital  expenditures  (with a separate  description  for  Capital  Expenditures
constituting  the acquisition  cost of Equipment to be financed with proceeds of
Capital  Expenditure  Advances) and facilities;  all of which shall be in detail
acceptable to Agent in its sole discretion;

                                        1

<PAGE>




                  (c) To  Agent  and  Lenders,  contemporaneously  with  ARTRA's
filing thereof with the Securities and Exchange  Commission,  audited  financial
statements,  for  Borrower  and  its  Subsidiaries,  on  a  consolidated  basis,
consisting of balance sheets and statements of income and retained  earnings and
cash flows,  setting forth in comparative  form in each case the figures for the
previous  Fiscal Year and the figures  contained in the budget,  which financial
statements  shall be  prepared in  accordance  with GAAP,  certified  (only with
respect to the consolidated financial statements) without  qualification,  by an
independent  certified public  accounting firm of national standing or otherwise
acceptable to Agent,  and accompanied by (i) a statement  prepared in reasonable
detail showing the calculations used in determining  compliance with each of the
financial  covenants  set forth on Annex K, (ii) a report  from such  accounting
firm to the effect that, in connection with their audit examination, nothing has
come to their  attention  to cause  them to  believe  that a Default or Event of
Default has occurred (or  specifying  those  Defaults and Events of Default that
they became aware of),  (iii) a letter  addressed to Agent,  on behalf of itself
and Lenders, in form and substance  reasonably  satisfactory to Agent, signed by
such accounting firm  acknowledging  that Agent and Lenders are entitled to rely
upon such accounting firm's certification of such audited financial  statements,
(iv) the annual  letters to such  accountants  in  connection  with their  audit
examination detailing contingent liabilities and material litigation matters and
(v) the  certification of the chief executive officer or chief financial officer
of Borrower that all such financial  statements  are true,  complete and correct
and present fairly in accordance  with GAAP the financial  position,  results of
operations and statements of cash flows of Borrower and its  Subsidiaries,  on a
consolidated  basis,  as at the end of such year and for the period  then ended,
and that there was no Default or Event of Default in  existence  as of such time
or, if a Default or Event of  Default  shall have  occurred  and be  continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default;

                  (d) To Agent and Lenders,  within five (5) Business Days after
receipt thereof by Borrower, copies of all management letters, exception reports
or similar letters or reports, if any, received by Borrower from its independent
certified public accountants;

                  (e) To Agent and Lenders,  as soon as practicable,  and in any
event  within  five  (5)  Business  Days  after  Borrower  becomes  aware of the
existence  of any  Default  or Event of  Default,  or any  development  or other
information which could have or result in a Material Adverse Effect,  telephonic
or telecopied  notice  specifying the nature of such Default or Event of Default
or development or information,  including the anticipated effect thereof,  which
notice, if given  telephonically,  shall be promptly confirmed in writing on the
next Business Day; and

                  (f) To Agent and Lenders,  as soon as  reasonably  practicable
after Agent's  request  therefor,  such other  financial  and other  information
respecting Borrower's or its Subsidiaries',  businesses,  financial condition or
prospects as Agent (or any Lender through Agent) shall request from time to time
with  reasonable  frequency  (unless a Default  or Event of  Default  shall have
occurred and be continuing, in which event Agent or Lenders may make requests at
any and all times).

                                        2

<PAGE>



                                     ANNEX J
                                       TO
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                               COLLATERAL REPORTS

                  Borrowers  shall  deliver or cause to be delivered to Agent or
to Agent and Lenders, as indicated, the following:

                  (a)  To  Agent,  upon  its  request,  and  in  no  event  less
frequently  than for each Fiscal Month  received  within fifteen (15) days after
the end of such Fiscal  Month  (together  with a copy of all or any part of such
delivery requested by any Lender in writing after the Closing Date), a Borrowing
Base  Certificate,  in each  case  accompanied  by such  supporting  detail  and
documentation as shall be requested by Agent in its sole discretion.

                  (b) To Agent, on a weekly basis, or daily as Agent may request
in its sole discretion (together with a copy of all or any part of such delivery
requested by any Lender in writing after the Closing Date),  collateral reports,
including  all  additions and  reductions  (cash and  non-cash)  with respect to
Accounts,  in each case accompanied by such supporting  detail and documentation
as shall be requested by Agent in its sole discretion;

                  (c)  To  Agent,  upon  its  request,  and  in  no  event  less
frequently than fifteen (15) days after the last day of each Fiscal Month,  and,
in the event,  if any, that  Borrowing  Availability  less the then  outstanding
balance of the Revolving Credit Loan falls below $1,000,000,  no less frequently
than  fifteen  (15) days after both the  fifteen  (15th) day and the last day of
each Fiscal Month, a summary of Inventory by location and type with a supporting
perpetual  Inventory  report, in each case accompanied by such supporting detail
and documentation as shall be requested by Agent in its sole discretion;

                  (d) To  Agent,  within  twenty  (20)  days  of the end of each
Fiscal Month, (i) a monthly trial balance showing Accounts outstanding aged from
invoice due date as follows: current, 1 to 30 days, 31 to 60 days, 61 to 90 days
and 91 days or more, and (ii) a complete Inventory report in detail satisfactory
to Agent; in each case accompanied by such supporting  detail and  documentation
as shall be requested by Agent in its sole discretion;

                  (e) To Agent,  at the time of  delivery of each of the monthly
financial  statements  delivered  pursuant to Annex I, a  reconciliation  of the
Accounts  trial balance and month-end  Inventory  reports to Borrower's  general
ledger and monthly financial  statements  delivered pursuant to such Annex I, in
each case  accompanied by such supporting  detail and  documentation as shall be
requested by Agent in its sole discretion; and

                  (f) Such other reports,  statements and  reconciliations  with
respect to the  Borrowing  Base or  Collateral  as Agent shall from time to time
request in its sole discretion.


                                        1

<PAGE>



                                     ANNEX K
                                       to
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                               FINANCIAL COVENANTS

                  Borrower  shall not  breach or fail to comply  with any of the
following financial  covenants,  each of which shall be calculated in accordance
with GAAP, consistently applied:

                  (a) EBITDA.  Borrower and its  Subsidiaries  on a consolidated
         basis shall have,  measured for the  trailing  twelve (12) Fiscal Month
         period ended on the last day of each Fiscal  Quarter ending during each
         calendar  month set forth  below,  EBITDA  equal to or greater than the
         amounts set forth opposite each of such periods:

                  Calendar Month                              Amount

                  March, 1998                                 $  8,500,000
                  June, 1998                                  $  8,500,000
                  September, 1998                             $  9,000,000
                  December, 1998                              $  9,000,000
                  March, 1999                                 $  9,500,000
                  June, 1999                                  $  9,500,000
                  September, 1999                             $ 10,000,000
                  December, 1999                              $ 10,000,000
                  March, 2000                                 $ 10,500,000
                  June, 2000                                  $ 10,500,000
                  September, 2000                             $ 11,000,000
                  December, 2000 and each calendar            $ 11,000,000
                  month thereafter

                  (b) EBITDA to Interest Expense.  Borrower and its Subsidiaries
         on a consolidated  basis shall have,  measured for the trailing  twelve
         (12) Fiscal Month  period ended on the last day of each Fiscal  Quarter
         ending  during each Fiscal Year set forth below,  a ratio of (i) EBITDA
         to (ii) Interest  Expense equal to or greater than the ratios set forth
         opposite each of such periods:

                  Fiscal Year                                       Ratio

                  1998                                           2.80 to 1:00
                  1999                                           3.00 to 1:00
                  2000 and each Fiscal Year thereafter           3.20 to 1:00

                  (c)  EBITDA  to  the  sum  of  Fixed   Charges   and   Capital
         Expenditures.  Borrower and its  Subsidiaries  on a consolidated  basis
         shall have,  measured for the trailing  twelve (12) Fiscal Month period
         ended on the last day of each Fiscal Quarter, a ratio of (i) EBITDA to



                                        1

<PAGE>



         (ii) the sum of (x) Fixed Charges and (y) Capital Expenditures equal to
         or greater 1:00 to 1:00:

                  (d)   Consolidated   Tangible   Net   Worth.   Borrower,   its
         Subsidiaries on a consolidated basis shall have, measured as of the end
         of the  trailing  twelve (12) Fiscal Month period ended on the last day
         of each Fiscal  Quarter  ending  during each  calendar  month set forth
         below,  Tangible  Net Worth  equal to or greater  than the  amounts set
         forth opposite each of such dates:

                  Calendar Month                              Amount

                  December, 1998                              ($13,000,000)
                  March, 1999                                 ($11,000,000)
                  June, 1999                                  ($11,000,000)
                  September, 1999                             ($ 9,000,000)
                  December, 1999                              ($ 9,000,000)
                  March, 2000                                 ($ 7,000,000)
                  June, 2000                                  ($ 7,000,000)
                  September, 2000                             ($ 7,000,000)
                  December, 2000 and each calendar            ($ 5,000,000)
                  month thereafter

                  (e)   Maximum   Capital   Expenditures.   Borrower   and   its
         Subsidiaries   on  a   consolidated   basis  shall  not  make   Capital
         Expenditures that exceed in the aggregate the amount set forth opposite
         each Fiscal Year set forth below:

                  Fiscal Year                                      Amount

                  1998                                          $4,500,000
                  1999 and each Fiscal Year thereafter          $3,000,000

                  (f) Notwithstanding anything contained in the Agreement or any
         other Loan  Document  to the  contrary,  for  purposes  of  calculating
         compliance  with (i) clauses  (a),  (b) and (c) above,  in  calculating
         EBITDA for any period of determination there shall be included therein,
         without duplication, non-cash ESOP, 401K and phantom stock expenses for
         such period,  as reflected on the books of Borrower in accordance  with
         GAAP,  (ii)  clauses  (c)  and  (e)  above,   in  calculating   Capital
         Expenditures  for any period of  determination  there shall be excluded
         therefrom  Capital  Expenditures  made during  such period  pursuant to
         Section 1.6(d) of the Agreement.


                                        2

<PAGE>



                                     ANNEX L
                                       to
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                                NOTICE ADDRESSES*

             (a)      If to Borrower:

                      Bagcraft Corporation of America
                      3900 West 43rd Street
                      Chicago, Illinois 60632
                      Attention:  Chief Financial Officer
                      Telecopy No.:  (773) 254-5216

                               With copies to:

                               Kwiatt, Silverman and Ruben, Ltd.
                               500 North Central Avenue
                               Northfield, Illinois  60093
                               Attention:  Philip E. Ruben
                               Telecopy No.:  (847) 441-7696

             (b)      If to Agent or GE Capital:

                      General Electric Capital Corporation
                      Commercial Finance, Inc.
                      201 High Ridge Road
                      Stamford, CT 06927-5100
                      Attention:  Vice President, Portfolio
                      Telecopy No.:  (203) 316-7893

                               With copies to:

                               General Electric Capital Corporation
                               201 High Ridge Road
                               Stamford, Connecticut 06927-5100
                               Attention: Corporate Counsel - Commercial Finance
                               Telecopy No.: (203) 316-7889

                               Winston & Strawn
                               35 West Wacker Drive
                               Chicago, Illinois 60601
                               Attention: Ronald H. Jacobson
                               Telecopy No.:  (312) 558-5700


                                        1

<PAGE>



                                     ANNEX M
                                       to
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                                WIRE INSTRUCTIONS

Lender                  Instructions

GE Capital              Bank:   Bankers Trust Company
                                         New York, New York
                                Acct.:   502 328 54
                                Ref.:    General Electric Capital Corporation,
                                         Commercial Finance Group
                                ABA:     021 001 033






                                        1

<PAGE>


                                     ANNEX N
                                       to
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                                   COMMITMENTS
<TABLE>
<CAPTION>

              Revolving Loan  Term Loan A    Capital Expenditure   Term Loan B    Term Loan C
Lender        Commitment 1/   Commitment     Loan Commitment 2/    Commitment     Commitment

<S>           <C>             <C>            <C>                   <C>            <C>
GE Capital    $18,000,000 3/  $20,000,000    $3,000,000            $5,000,000     $7,500,000
                   -

              -----------     -----------    ----------            ----------     ---------
Total:        $18,000,000     $20,000,000    $3,000,000            $5,000,000     $7,500,000
              ===========     ===========    ==========            ==========     ==========


-----------------------------------------------
<FN>

          1/ Incudes $3,000,000 Letter of Credit subfacility

          2/ Subfacility of Term Loan A

          3/ Includes $3,000,000 Swing Line Commitment
</FN>
</TABLE>



                                        1