Document:

RHEOMETRIC SCIENTIFIC, INC.

                             2000 STOCK OPTION PLAN

SECTION 1. Purpose

           The purpose of the Rheometric Scientific, Inc. 2000 Stock Option Plan
(the "Plan) is to attract and retain key employees and  consultants,  to provide
an incentive  for them to assist the Company to achieve  long-range  performance
goals and to enable them to participate in the long-term growth of the Company,

SECTION 2. Definitions

           "Affiliate"  means any  business  entity in which  the  company  owns
directly or indirectly 50% or more of the total  combined  voting power or has a
significant financial interest as determined by the Board or the Committee.

           "Award" means any Option awarded under the Plan.

           "Board" means the Board of Directors of the Company.

           "Change  in  Control"   means  (i)  the   acquisition,   directly  or
indirectly,  by any person or group  (within the meaning of Section  13(d)(3) of
the  Securities  Exchange Act of 1934, as amended (the  "Exchange  Act")) of the
beneficial  ownership  of more  than  fifty  percent  (50%)  of the  outstanding
securities of the Company;  (ii) a merger or  consolidation in which the Company
is not the surviving  entity,  except for a  transaction  in which the principal
purpose is to change the state in which the Company is  incorporated;  (iii) the
sale, transfer or other disposition of all or substantially all of the assets of
the Company;  (iv) a complete liquidation or dissolution of the Company; (v) any
reverse  merger  in which  the  Company  is the  surviving  entity  but in which
securities possessing more than fifty percent (50%) of the total combined voting
power of the Company's  outstanding  securities  are  transferred to a person or
persons different from the persons holding those securities immediately prior to
such  merger;  or (vi) a change in control of a nature that would be required to
be  reported  in  response  to  Item  6(a) of  Schedule  14A of  Regulation  14A
promulgated under the Exchange Act, or any successor provision thereto,  whether
or not the Company is then subject to such reporting requirements.

           "Company" means Rheometric Scientific, Inc.

           "Code" means Internal  Revenue Code of 1986, as amended from, time to
time.

           "Committee" means the Committee  appointed by the Board in accordance
with Section 3 of the Plan.  If the Board does not appoint or ceases to maintain
a Committee, the term "Committee" shall refer to the Board.

<PAGE>

           "Common Stock" or "Stock" means the Common Stock of the Company.

           "Consultant"  means any  independent  contractor  retained to perform
services for the Company.

           "Continuous  Employment"  means the  absence of any  interruption  or
termination of service as an Employee,  Director or Consultant by the Company or
any Subsidiary. Continuous Employment shall not be considered interrupted during
any period of (i) any leave of absence approved by the Company or (ii) transfers
between  locations  of the  Company  or  between  the  Company  and any  Parent,
Subsidiary  or  successor  of the  Company.  A leave of absence  approved by the
Company shall include sick leave,  military  leave or any other  personal  leave
approved  by an  authorized  representative  of the  Company.  For  purposes  of
Incentive  Stock  Options,  no such leave may exceed  ninety  (90) days,  unless
re-employment  upon  expiration  of such  leave  is  guaranteed  by  statute  or
contract.

           "Covered Employee" means any individual whose compensation is subject
to the limitations on tax  deductibility  provided by Section 162(m) of the Code
and any Treasury  Regulations  promulgated  thereunder in effect at the close of
the  taxable  year of the  Company in which an Option  has been  granted to such
individual.

           "Director" means a director of the Company.

           "Designated  Beneficiary"  means  the  beneficiary  designated  by  a
Participant  in a manner  determined by the Board or the  Committee,  to receive
amounts  due  or  exercise  rights  of  the  Participant  in  the  event  of the
Participant's   death.  In  the  absence  of  an  effective   designation  by  a
Participant, Designated Beneficiary shall mean the Participant's estate.

           "Effective  Date"  means  the  date on which  the  Plan is  initially
approved by the stockholders in accordance with Section 8(c) of the Plan.

           "Employee" means any person,  including officers (whether or not they
are directors), employed by the Company or any Subsidiary.

           "Exchange Act" means the Securities Exchange Act of 1934, as amended.

           "Fair  Market  Value"  means (i) the closing  price of a Share on the
principal exchange on which the Shares are traded, or (ii) if the Shares are not
traded  on an  exchange  but are  quoted  on the  Nasdaq  National  Market  or a
successor  quotation system,  the closing price of the Nasdaq National Market or
such  successor  quotation  system,  (iii) the closing  price of a Share as most
recently  reported on an inter-dealer  quotation system through which shares are
traded (which in the case of the grant of an Option,  shall be the closing price
determined  under clause (i), (ii) or (iii) on the last trading day prior to the
Grant Date),  or (iv) if the Shares are not traded as described in (i),  (ii) or
(iii),  the fair market value of a Share as determined by the Company's Board of
Directors  in good  faith,  based  upon  such  factors  as they  deem  relevant.
Notwithstanding the preceding, for federal, state and local income tax reporting
purposes,  fair market value shall be  determined by the Committee in accordance
with uniform and  nondiscriminatory  standards  adopted by it from time to time.
Such determination shall be conclusive and binding on all persons.

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<PAGE>

           "Grant  Date"  means,  with  respect to an Option,  the date that the
Option is granted by the Committee.

           "Incentive Stock Option" means an option to purchase shares of Common
Stock  awarded to a  Participant  under  Section 6 that is  intended to meet the
requirements of Section 422 of the Code or any successor provision.

           "Non-Employee Director" means a Director of the Company who qualifies
as a Non-Employee Director as such term is defined in Section 240.16b-3(b)(3) of
the  General  Rules and  Regulations  promulgated  under the  Exchange  Act (the
"General Rules and Regulations").

           "Non-qualified  Stock Option"  means an option to purchase  shares of
Common  Stock  under  Section 6 that is not  intended to be an  Incentive  Stock
Option.

           "Option"  means an Incentive  Stock Option or a  Non-qualified  Stock
Option.

           "Optionee" means an Employee or Consultant who receives an Option.

           "Option  Agreement" means a written agreement between the Company and
the Optionee,  or a written certificate of the Company containing and confirming
the terms of an Award.

           "Outside  Director"  means a Director of the Company who qualifies as
an  Outside  Director  as such  term is used in  Section  162(m) of the Code and
defined in any applicable Treasury Regulations promulgated thereunder.

           "Parent"  means a  "parent  corporation",  whether  now or  hereafter
existing, as defined in Section 424(e) of the Code.

           "Participant"  means a person  selected by the Board or the Committee
to receive an Award under the Plan.

           "Reporting  Person"  means a  person  subject  to  Section  16 of the
Securities Exchange Act of 1934 or any successor provision.

                  "Section 16(b)" means Section 16(b) of the Securities Exchange
Act of 1934, or any successor.

                  "Section  162(m)  Effective  Date"  means the first date as of
which the limitations on the tax deductibility of certain compensation  provided
by  Section  162(m)  of  the  Code  and  any  Treasury  Regulations  promulgated
thereunder are applicable to Options granted under the Plan.

           "Share"  means a share of the Common Stock  subject to an Option,  as
adjusted in accordance with Section 13 of the Plan.

           "Subsidiary"  means  a  "subsidiary  corporation",   whether  now  or
hereafter existing, as defined in Section 424(f) of the Code.

                                     - 3 -

<PAGE>

           "Termination  of  Service"  means (a) in the case of an  Employee,  a
cessation  of the  employee-employer  relationship  between an employee  and the
Company or an Affiliate for any reason, including, but not by way of limitation,
a termination by resignation, discharge, death, disability or the disaffiliation
of  an  Affiliate,   but  excluding  any  such  termination  where  there  is  a
simultaneous  re-employment by the Company or an Affiliate;  and (b) in the case
of a Consultant,  a cessation of the service  relationship  between a Consultant
and the Company or an  Affiliate  for any reason,  including,  but not by way of
limitation,  a termination by resignation,  discharge,  death, disability or the
disaffiliation  of an Affiliate,  but excluding any such termination where there
is a  simultaneous  re-engagement  of  the  Consultant  by  the  Company  or  an
Affiliate.

SECTION 3. Administration

     (a) The Plan shall be administered by the Board or the Committee. The Board
or  the  Committee  shall  have  authority  to  adopt,  alter  and  repeal  such
administrative  rules,  guidelines and practices  governing the operation of the
Plan as it shall from time to time  consider  advisable,  and to  interpret  the
provisions of the Plan. The Board's or the Committee's  decisions shall be final
and  binding.  To the  extent  permitted  by  applicable  law,  the Board or the
Committee  may  delegate  to one or more  executive  officers of the Company the
power to make  Awards to  Participants  who are not  Reporting  Persons  and all
determinations  under the Plan with respect thereto,  provided that the Board or
the  Committee  shall fix the maximum  amount of such Awards for the group and a
maximum for any one Participant.

     (b) Members of the Board or Committee  who are either  eligible for Options
or  have  been  granted   Options  may  vote  on  any  matters   affecting   the
administration  of the Plan or the grant of Options pursuant to the Plan, except
that no such member shall act upon the granting of an Option to him/herself, but
any such member may be counted in  determining  the existence of a quorum at any
meeting of the Board or the Committee  during which action is taken with respect
to the grant of an Option to him or her.

           The  Committee  shall  meet at such  times and  places  and upon such
notice  as  the  chairperson  determines.  A  majority  of the  Committee  shall
constitute a quorum.  Any acts by the  Committee  may be taken at any meeting at
which a quorum  is  present  and  shall  be by  majority  vote of those  members
entitled  to vote.  Additionally,  any acts  reduced to writing or  approved  in
writing  by all of the  members  of the  Committee  shall be  valid  acts of the
Committee.

     (c) The Plan shall be administered  either by (i) the full Board; or (ii) a
Committee of two (2) or more Directors, each of whom is a Non-Employee Director.
The Board shall take all action  necessary  to  administer  the Plan so that all
transactions  involving  Options and Shares issued pursuant to the Plan shall be
exempt  from  Section  16(b) of the  Exchange  Act in  accordance  with the then
effective  provisions  of Section  240-16b-3  et. seq. of the General  Rules and
Regulations;  provided that any  amendment to the Plan  required for  compliance
with such provision shall be made consistent with the provisions of Section 8(d)
of the Plan and the General Rules and Regulations.

                                     - 4 -

<PAGE>

     (d) Notwithstanding  subsection (b) and (c) above, after the Section 162(m)
Effective  Date,  the Plan and all  Option  grants  shall  be  administered  and
approved by a Committee comprised solely of two or more Outside Directors.

SECTION 4. Eligibility

           All employees,  and in the case of Awards other than Incentive  Stock
Options,  Consultants  of the Company or any Affiliate  capable of  contributing
significantly  to the  successful  performance  of the  Company,  other than any
person who has  irrevocably  elected  not to be  eligible,  are  eligible  to be
Participants in the Plan.

SECTION 5. Stock Available for Awards

     (a) Subject to adjustment  under  subsection  (b), Awards may be made under
the Plan for up to 1,000,000  shares of Common Stock. If any Award in respect to
shares of Common Stock expires or is terminated  unexercised or is forfeited for
any reason,  the shares subject to such Award, to the extent of such expiration,
termination  or  forfeiture,  shall again be available for award under the Plan,
subject,  however,  in the case of Incentive  Stock  Options,  to any limitation
required under the Code. Shares issued under the Plan may consist in whole or in
part of authorized but unissued shares or treasury shares.

     (b) In the event that the Board or the Committee  determines that any stock
dividend, extraordinary cash dividend, creation of a class of equity securities,
recapitalization,  reorganization,  merger,  consolidation,  split-up, spin-off,
combination,  exchange of shares, warrants or rights offering to purchase Common
Stock at a price  substantially below market value, or other similar transaction
affects  the  Common  Stock  such that an  adjustment  is  required  in order to
preserve the benefits or potential  benefits intended to be made available under
the Plan,  then the Board or the  Committee,  subject,  in the case of Incentive
Stock Options, to any limitation required under the Code, shall equitably adjust
any or all of (i) the number  and kind of shares in respect of which  Awards may
be made  under  the  Plan,  (ii)  the  number  and  kind of  shares  subject  to
outstanding  Awards,  and (iii) the  exercise  price with  respect to any of the
foregoing,  and if considered  appropriate,  the Board or the Committee may make
provision for a cash payment with respect to an outstanding Award, provided that
the number of shares subject to any Award shall always be a whole number.

     (c) The maximum  number of Shares of Common  Stock  subject to Options that
may be granted to any  Participant  in the  aggregate  in any fiscal year of the
Company shall not exceed 100,000, subject to adjustment under subsection (b).

                                     - 5 -

<PAGE>

SECTION 6. Stock Options

     (a) Subject to the  provision of the Plan,  the Board or the  Committee may
award Incentive Stock Options and Non-qualified  Stock Options and determine the
number of Shares to be covered by each Option, the option price therefor and the
conditions and limitations  applicable to the exercise of the Option.  The terms
and  conditions  of Incentive  Stock Options shall be subject to and comply with
Section  422 of the  Code,  or any  successor  provision,  and  any  regulations
thereunder.

     (b) Any Option  granted  hereunder  shall be  exercisable at such times and
under such conditions as determined by the Committee and as shall be permissible
under the terms of the Plan,  which shall be specified  in the Option  Agreement
evidencing the Option. Unless the Committee specifically determines otherwise at
the  time of the  grant  of the  Option,  each  Option  shall  vest  and  become
exercisable,  cumulatively, as to one-quarter of the Option Shares at the end of
each  calendar  year after the Grant Date until all of the Optioned  Shares have
vested,  subject to the Optionee's Continuous  Employment.  An Option may not be
exercised for fractional shares or for less than one hundred (100) Shares unless
that is all the shares covered by the Option.

     (c) The Board or the Committee shall establish the option price at the time
each  Option is  awarded,  which  price  shall be not less than 100% of the Fair
Market  Value of the  Common  Stock on the Grant  Date in the case of  Incentive
Stock Options and not less than 85% of the Fair Market Value of the Common Stock
on the Grant Date in the case of Non-qualified Stock Options.

     (d) After the Section  162(m)  Effective  Date,  the exercise  price of any
Option granted to a Covered  Employee shall be at least equal to the Fair Market
Value of the Shares on the Grant Date.

     (e) Each  Option  shall be  exercisable  at such times and  subject to such
terms and conditions as the Board or the Committee may specify in the applicable
Award or thereafter.  The Board or the Committee may impose such conditions with
respect to the exercise of Options,  including conditions relating to applicable
federal or state securities laws, as it considers necessary or advisable.

     (f) Unless the  Committee  determines  otherwise,  the term of each  Option
granted under the Plan shall be ten (10) years from the Grant Date.  The term of
the  Option  shall be set forth in the  Option  Agreement.  No  Option  shall be
exercisable after the expiration of ten (10) years from the Grant Date, provided
that no  Incentive  Stock  Option  granted to an Employee  who, at the date such
Option is granted owns  (within the meaning of Section  424(d) of the Code) more
than ten percent (10%) of the total combined  voting power of all classes of the
stock of the Company or any Parent or Subsidiary shall be exercisable  after the
expiration of five (5) years from the Grant Date.

                                     - 6 -

<PAGE>

     (g) No shares  shall be  delivered  pursuant  to any  exercise of an Option
until  payment in full of the option price  therefor is received by the Company.
Such payment may be in whole or part in cash or, to the extent  permitted by the
Board or the  Committee  at or after the award of an Option,  as provided in the
relevant Option Agreement,  upon the delivery of Shares of Common Stock owned by
the Optionee,  or such other lawful  consideration as the Board or the Committee
may determine.

     (h) The  consideration  to be paid for the Optioned Shares shall be payment
in cash or by personal check, cashier's check, certified check or wire transfer,
unless payment in some other manner shall be approved by the Board of Directors,
including by promissory note, other shares of the Company's Common stock or such
other consideration and method of payment for the issuance of Optioned Shares as
may be permitted by law. Any cash or other property received by the Company from
the sale of Shares  pursuant  to the Plan shall  constitute  part of the general
assets of the Company.

     (i) If an Optionee is permitted to exercise an Option by delivering  Shares
of the Company's  Common Stock,  the Option  Agreement  covering such Option may
include provisions  authorizing the Optionee to exercise the Option, in whole or
in part, by (i) delivering whole shares of the Company's Common Stock previously
owned by such Optionee  (whether or not acquired  through the prior  exercise of
stock  options)  having a Fair Market Value equal to the Option  price;  or (ii)
directing the Company to withhold from the Shares that would otherwise be issued
upon  exercise of the Option that  number of whole  Shares  having a Fair Market
Value  equal to the  Option  price.  Shares  of the  Company's  Common  Stock so
delivered  or withheld  shall be valued at the Fair Market Value at the close of
the last business day immediately  preceding the date of exercise of the Option,
as determined by the Committee. Any balance of the Option price shall be paid in
cash. Any Shares  delivered or withheld in accordance  with this provision shall
again become  available  for  purposes of the Plan and for Options  subsequently
granted  thereunder.  Any  exercise  of an Option by a Section  16 Person  shall
comply  with the  relevant  requirements  of Section  240.16b-1  et seq.  of the
General Rules and Regulations.

     (j) The Board or the Committee  may provide for the  automatic  award of an
Option upon the delivery of Shares to the Company in payment of an Option for up
to the number of shares so delivered.

     (k) If an Optionee  shall cease to be an  Employee  or  Consultant  for any
reason other than  permanent and total  disability or death,  he or she may, but
only within  ninety (90) days (or such other period of time as is  determined by
the  Committee  and  set  forth  in the  Option  Agreement)  after  the  date of
Termination of Service,  exercise his or her Option to the extent that he or she
was entitled to exercise it at the date of  Termination  of Service,  subject to
the  condition  that no Option shall be exercised  after the  expiration  of the
Option period.

     (l) If an  Optionee  shall cease to be an  Employee  or  Consultant  due to
permanent  disability,  and such  Optionee was in  Continuous  Employment  as an
Employee  or  Consultant  from the Grant Date until the Date of  Termination  of
Service,  the Option may be  exercised  at any time  within  twelve  (12) months
following the date of Termination of Service (or such other period of time as is
determined by the Committee and set forth in the Option Agreement),  but

                                     - 7 -

<PAGE>

only to the extent of the accrued  right to exercise at the time of  Termination
of Service  subject to the condition that no Option shall be exercised after the
expiration of the Option period.

     (m) In the event of the death  during the Option  period of an Optionee who
is at the time of his or her  death an  Employee  or  Consultant  and who was in
Continuous  Employment as such from the Grant Date until the date of death,  the
Option may be exercised at any time within twelve (12) months following the date
of death (or such other period of time as is determined by the Committee and set
forth in the  Option  Agreement)  by the  Optionee's  estate or by a person  who
acquired the right to exercise the Option by bequest,  inheritance  or otherwise
as a result of the Optionee's death, but only to the extent of the accrued right
to exercise at the time of death,  subject to the condition that no Option shall
be exercised after the expiration of the Option period.

SECTION 7. General Provisions Applicable to Awards

     (a) Reporting Person  Limitations.  Notwithstanding  any other provision of
the Plan, to the extent  required to qualify for the exemption  provided by Rule
l6b-3  under  Section  16(b),  any Option  issued  under the Plan to a Reporting
Person shall not be  transferable  other than by will or the laws of descent and
distribution and shall be exercisable during the Participant's  lifetime only by
the Participant or the Participant's guardian or legal representative.

     (b)  Documentation.  Each  Award  under the Plan shall be  evidenced  by an
Option Agreement specifying the terms and conditions thereof and containing such
other terms and conditions not  inconsistent  with the provisions of the Plan as
the Board or the  Committee  considers  necessary  or  advisable  to achieve the
purposes  of the Plan or comply  with  applicable  tax and  regulatory  laws and
accounting principles.

     (c) Board or Committee Discretion.  Each type of Award may be made alone or
in addition to or in relation to any other type of Award. The terms of each type
of Award need not be identical,  and the Board or the  Committee  need not treat
Participants uniformly, except as otherwise provided by the Plan or a particular
Award.  Any  determination  with respect to an Award may be made by the Board or
the Committee at the time of Award or at any time thereafter.

     (d)  Conditions  upon  Issuance of Shares.  Shares shall not be issued with
respect to an Option  granted  under the Plan unless the exercise of such Option
and the issuance and delivery of such Shares pursuant  thereto shall comply with
all relevant  provisions of law, including,  without limitation,  the Securities
Act, the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements  of any stock  exchange  upon  which the Shares may then be listed,
and,  if  required by the Board or  Committee,  shall be further  subject to the
approval  of counsel  for the  Company  with  respect to such  compliance.  As a
condition  to the  exercise  of an Option,  the  Company  may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being  purchased only for investment and without any present
intention  to sell or  distribute  such Shares if, in the opinion of counsel for
the  Company,  such a  representation  is required by any of the  aforementioned
relevant provisions of law.

                                     - 8 -

<PAGE>

     (e) Reservation of Shares. During the term of this Plan the Company will at
all  times  reserve  and  keep  available  such  number  of  Shares  as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to  obtain  authority  from  any  regulatory  body  having  jurisdiction,  which
authority  is deemed by the  Company's  counsel  to be  necessary  to the lawful
issuance  and sale of any Shares  hereunder,  shall  relieve  the Company of any
liability in respect to the non-issuance or sale of such Shares as to which such
requisite authority shall not have been obtained.

     (f) Change in Control.  In order to preserve a Participant's right under an
Award in the  event of a Change  in  Control  of the  Company,  the Board or the
Committee  in its  discretion  may,  at the time an Award is made or at any time
thereafter,  take one or more of the  following  actions:  (i)  provide  for the
acceleration  of any time period  relating to the exercise or realization of the
Award, (ii) provide for the purchase of the Award upon the Participant's request
for an amount of cash or other  property  that would have been received upon the
exercise or realization  of the Award had the Award been  currently  exercisable
and  available  for  sale,  (iii)  adjust  the  terms  of the  Award in a manner
determined by the Board or the Committee to reflect the Change in Control,  (iv)
cause the Award to be assumed,  or new rights substituted  therefor,  by another
entity,  or (v) make such  other  provision  as the Board or the  Committee  may
consider equitable and in the best interests of the Company.

     (g)  Withholding.  The  Participant  shall  pay to  the  Company,  or  make
provision  satisfactory  to the Board or the Committee for payment of, any taxes
required by law to be withheld in respect of Awards under the Plan no later than
the  date  of the  event  creating  the tax  liability.  In the  Board's  or the
Committee's discretion,  such tax obligations may be paid in whole or in part in
shares of Common Stock,  including  Shares  retained from the Award creating the
tax obligation,  valued at their Fair Market Value on the date of delivery.  The
Company and its Affiliates may, to the extent  permitted by law, deduct any such
tax obligations from any payment of any kind otherwise due to the participant.

     (h) Amendment of Award.  The Board or the  Committee  may amend,  modify or
terminate any outstanding Award,  including  substituting therefor another Award
of the same or a different type, changing the date of exercise,  accelerating or
waiving the vesting  schedule  and  converting  an  Incentive  Stock Option to a
Non-qualified  Stock  Option,  provided that the  Participant's  consent to such
action shall be required  unless the Board or the Committee  determines that the
action,  taking into  account  any  related  action,  would not  materially  and
adversely affect the Participant.

                                     - 9 -

<PAGE>

SECTION 8. Miscellaneous

     (a) No Right To Employment.  No persons shall have any claim or right to be
granted an Award,  and the grant of an Award shall not be  construed as giving a
Participant the right to continued  employment or engagement by the Company. The
Company  expressly  reserves the right at any time to dismiss a Participant free
from any liability or claim under the Plan, except as expressly  provided in the
applicable Award.

     (b) No Rights As  Stockholder.  Subject to the provisions of the applicable
Award,  no  Participant  or  Designated  Beneficiary  shall have any rights as a
Stockholder  with  respect to any shares of Common  Stock to be  distributed  or
acquired under the Plan until he or she becomes the holder thereof.

     (c)  Effective  Date.  Subject to the approval of the  Stockholders  of the
Company,  the Plan shall be effective on the date the Plan is approved by a vote
of the Stockholders.  Awards may be made before,  but expressly subject to, such
approval.

     (d) Amendment of Plan.  The Board may amend,  suspend or terminate the Plan
or any portion  thereof at any time,  provided  that no amendment  shall be made
without  Stockholder  approval if such  approval is necessary to comply with any
applicable  tax  or  regulatory  requirement,   including  any  requirement  for
exemptive relief under Section 16(b).

     (e)  Governing  Law.  The  provisions  of the Plan  shall be  governed  and
interpreted in accordance with the laws of the State of Delaware.

                                     - 10 -REVOLVING CREDIT, TERM LOAN

                                       AND

                               SECURITY AGREEMENT

                         PNC BANK, NATIONAL ASSOCIATION
                            (AS LENDER AND AS AGENT)

                                      WITH

                          RHEOMETRIC SCIENTIFIC, INC.,
                         RHEOMETRIC SCIENTIFIC LIMITED,
                       RHEOMETRIC SCIENTIFIC FRANCE SARL,
                         RHEOMETRIC SCIENTIFIC GMBH, AND
                         RHEOMETRIC SCIENTIFIC F.E. LTD.
                                   (BORROWERS)

                                  March 6, 2000

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<S>        <C>                                                                                        <C>

                                TABLE OF CONTENTS
                                                                                                      PAGE
                                                                                                      ----

I.         DEFINITIONS...................................................................................1
           1.1.   Accounting Terms.......................................................................1
           1.2.   General Terms..........................................................................1
           1.3.   Uniform Commercial Code Terms.........................................................11
           1.4.   Certain Matters of Construction.......................................................11

II.        ADVANCES, PAYMENTS...........................................................................12
           2.1.   (a)    Revolving Advances.............................................................12
                  (b)    Discretionary Rights...........................................................12
           2.2.   Procedure for Borrowing Advances......................................................12
           2.3.   Disbursement of Advance Proceeds......................................................14
           2.4.   Term Loan.............................................................................14
           2.5.   Maximum Advances......................................................................14
           2.6.   Repayment of Advances.................................................................15
           2.7.   Repayment of Excess Advances..........................................................15
           2.8.   Statement of Account..................................................................15
           2.9.   Additional Payments...................................................................15
           2.10.  Manner of Borrowing and Payment.......................................................15
           2.11.  Mandatory Prepayments.................................................................17
           2.12.  Use of Proceeds.......................................................................17
           2.13.  Defaulting Lender.....................................................................17
           2.14.  Letters of Credit.....................................................................18
           2.15.  Issuance of Letters of Credit.........................................................18
           2.16   Requirements For Issuance of Letters of Credit........................................18

III.       INTEREST AND FEES............................................................................19
           3.1.   Interest..............................................................................19
           3.2.   Other Fees............................................................................20
                  (a)    Closing Fee....................................................................20
                  (b)    Facility Fee...................................................................20
                  (c)    EXIM Bank Fee..................................................................20
                  (d)    Term Loan Fee..................................................................20
                  (e)    Letter of Credit Fee...........................................................20
           3.3.   (a)    Collateral Evaluation Fee......................................................21
                  (b)    Collateral Monitoring..........................................................21
           3.4.   Computation of Interest and Fees......................................................21
           3.5.   Maximum Charges.......................................................................21
           3.6.   Increased Costs.......................................................................21
           3.7.   Basis For Determining Interest Rate Inadequate or Unfair..............................22
           3.8.   Capital Adequacy......................................................................22

IV.        COLLATERAL:  GENERAL TERMS...................................................................22
           4.1.   Security Interest in the Collateral...................................................22
           4.2.   Perfection of Security Interest.......................................................23

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           4.3.   Disposition of Collateral.............................................................23
           4.4.   Preservation of Collateral............................................................23
           4.5.   Ownership of Collateral...............................................................23
           4.6.   Defense of Agent's and Lenders'Interests..............................................23
           4.7.   Books and Records.....................................................................24
           4.8.   Financial Disclosure..................................................................24
           4.9.   Compliance with Laws..................................................................24
           4.10.  Inspection of Premises................................................................24
           4.11.  Insurance.............................................................................25
           4.12.  Failure to Pay Insurance..............................................................25
           4.13.  Payment of Taxes......................................................................25
           4.14.  Payment of Leasehold Obligations......................................................25
           4.15.  Receivables...........................................................................26
                  (a)    Nature of Receivables..........................................................26
                  (b)    Solvency of Customers..........................................................26
                  (c)    Locations of Borrower..........................................................26
                  (d)    Collection of Receivables......................................................26
                  (e)    Notification of Assignment of Receivables......................................26
                  (f)    Power of Agent to Act on Borrowers'Behalf......................................26
                  (g)    No Liability...................................................................27
                  (h)    Establishment of a Lockbox Account, Dominion Account...........................27
                  (i)    Adjustments....................................................................27
           4.16.  Inventory.............................................................................27
           4.17.  Maintenance of Equipment..............................................................27
           4.18.  Exculpation of Liability..............................................................27
           4.19.  Environmental Matters.................................................................28
           4.20.  Financing Statements..................................................................29

V.         REPRESENTATIONS AND WARRANTIES...............................................................29
           5.1.   Authority.............................................................................29
           5.2.   Formation and Qualification...........................................................29
           5.3.   Survival of Representations and Warranties............................................30
           5.4.   Tax Returns...........................................................................30
           5.5.   Financial Statements..................................................................30
           5.6.   Corporate Name........................................................................30
           5.7.   O.S.H.A. and Environmental Compliance.................................................30
           5.8.   Solvency; No Litigation, Violation, Indebtedness or Default...........................31
           5.9.   Patents, Trademarks, Copyrights and Licenses..........................................32
           5.10.  Licenses and Permits..................................................................32
           5.11.  Default of Indebtedness...............................................................32
           5.12.  No Default............................................................................32
           5.13.  No Burdensome Restrictions............................................................32
           5.14.  No Labor Disputes.....................................................................32
           5.15.  Margin Regulations....................................................................32
           5.16.  Investment Company Act................................................................33
           5.17.  Disclosure............................................................................33
           5.18.  Swaps  ...............................................................................33
           5.19.  Conflicting Agreements................................................................33
           5.20.  Application of Certain Laws and Regulations...........................................33

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           5.21.  Business and Property of Borrowers....................................................33
           5.22.  Year 2000.............................................................................33
           5.23.  Section 20 Subsidiaries...............................................................33

VI.        AFFIRMATIVE COVENANTS........................................................................33
           6.1.   Payment of Fees.......................................................................33
           6.2.   Conduct of Business and Maintenance of Existence and Assets...........................34
           6.3.   Violations............................................................................34
           6.4.   Government Receivables................................................................34
           6.5.   Fixed Charge Coverage Ratio...........................................................34
           6.6.   Execution of Supplemental Instruments.................................................34
           6.7.   Payment of Indebtedness...............................................................34
           6.8.   Standards of Financial Statements.....................................................34

VII.       NEGATIVE COVENANTS...........................................................................34
           7.1.   Merger, Consolidation, Acquisition and Sale of Assets.................................34
           7.2.   Creation of Liens.....................................................................35
           7.3.   Guarantees............................................................................35
           7.4.   Investments...........................................................................35
           7.5.   Loans  ...............................................................................35
           7.6.   Capital Expenditures..................................................................35
           7.7.   Dividends.............................................................................35
           7.8.   Indebtedness..........................................................................35
           7.9.   Nature of Business....................................................................35
           7.10.  Transactions with Affiliates..........................................................35
           7.11.  Leases ...............................................................................36
           7.12.  Subsidiaries..........................................................................36
           7.13.  Fiscal Year and Accounting Changes....................................................36
           7.14.  Pledge of Credit......................................................................36
           7.15.  Amendment of Articles of Incorporation, Bylaws........................................36
           7.16.  Compliance with ERISA.................................................................36
           7.17.  Prepayment of Indebtedness............................................................36
           7.18.  Subordinated Note.....................................................................36

VIII.      CONDITIONS PRECEDENT.........................................................................36
           8.1.   Conditions to Initial Advances........................................................36
                  (a)    Note...........................................................................37
                  (b)    Filings, Registrations and Recordings..........................................37
                  (c)    Corporate Proceedings of Borrowers.............................................37
                  (d)    Incumbency Certificates of Borrowers...........................................37
                  (e)    Certificates...................................................................37
                  (f)    Good Standing Certificates.....................................................37
                  (g)    Legal Opinion..................................................................37
                  (h)    No Litigation..................................................................37
                  (i)    Financial Condition Certificates...............................................38
                  (j)    Collateral Examination.........................................................38
                  (k)    Fees...........................................................................38

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                  (l)    Pro Forma Financial Statements.................................................38
                  (m)    Subordinate Documents..........................................................38
                  (n)    Subordination Agreements.......................................................38
                  (o)    Insurance......................................................................38
                  (p)    Environmental Reports..........................................................38
                  (q)    Payment Instructions...........................................................38
                  (r)    Blocked Accounts...............................................................38
                  (s)    Consents.......................................................................38
                  (t)    No Adverse Material Change.....................................................38
                  (u)    Leasehold Agreements...........................................................38
                  (v)    Contract Review................................................................39
                  (w)    Closing Certificate............................................................39
                  (x)    Borrowing Base.................................................................39
                  (y)    Undrawn Availability...........................................................39
                  (z)    Recapitalization...............................................................39
                  (aa)   Other..........................................................................39
           8.2.   Conditions to Each Advance............................................................39
                  (a)    Representations and Warranties.................................................39
                  (b)    No Default.....................................................................39
                  (c)    Maximum Advances...............................................................39
           8.3.   Conditions to Eurodollar Rate Loans...................................................39

IX.        INFORMATION AS TO BORROWERS..................................................................40
           9.1.   Disclosure of Material Matters........................................................40
           9.2.   Schedules.............................................................................40
           9.3.   Environmental Reports.................................................................40
           9.4.   Litigation............................................................................40
           9.5.   Material Occurrences..................................................................40
           9.6.   Government Receivables................................................................40
           9.7.   Annual Financial Statements...........................................................41
           9.8.   Quarterly Financial Statements........................................................41
           9.9.   Monthly Financial Statements..........................................................41
           9.10.  Other Reports.........................................................................41
           9.11.  Additional Information................................................................41
           9.12.  Projected Operating Budget............................................................42
           9.13.  Notice of Suits, Adverse Events.......................................................42
           9.14.  ERISA Notices and Requests............................................................42
           9.15.  Additional Documents..................................................................42

X.         EVENTS OF DEFAULT............................................................................42

XI.        LENDERS'RIGHTS AND REMEDIES AFTER DEFAULT....................................................44
           11.1.  Rights and Remedies...................................................................44
           11.2.  Agent's Discretion....................................................................45
           11.3.  Setoff ...............................................................................45
           11.4   Rights and Remedies not Exclusive.....................................................45

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XII.       WAIVERS AND JUDICIAL PROCEEDINGS.............................................................45
           12.1.  Waiver of Notice......................................................................45
           12.2.  Delay  ...............................................................................45
           12.3.  Jury Waiver...........................................................................45

XIII.      EFFECTIVE DATE AND TERMINATION...............................................................46
           13.1.  Term   ...............................................................................46
           13.2.  Termination...........................................................................46

XIV.       REGARDING AGENT..............................................................................46
           14.1.  Appointment...........................................................................46
           14.2.  Nature of Duties......................................................................47
           14.3.  Lack of Reliance on Agent and Resignation.............................................47
           14.4.  Certain Rights of Agent...............................................................47
           14.5.  Reliance..............................................................................47
           14.6.  Notice of Default.....................................................................48
           14.7.  Indemnification.......................................................................48
           14.8.  Agent in its Individual Capacity......................................................48
           14.9.  Delivery of Documents.................................................................48
           14.10. Borrowers'Undertaking to Agent........................................................48

XV.        BORROWING AGENCY.............................................................................48
           15.1.  Borrowing Agency Provisions...........................................................48
           15.2.  Waiver of Subrogation.................................................................49

XVI.       MISCELLANEOUS................................................................................49
           16.1.  Governing Law.........................................................................49
           16.2.  Entire Understanding..................................................................49
           16.3.  Successors and Assigns; Participations; New Lenders...................................51
           16.4.  Application of Payments...............................................................52
           16.5.  Indemnity.............................................................................52
           16.6.  Notice ...............................................................................52
           16.7.  Survival..............................................................................53
           16.8.  Severability..........................................................................53
           16.9.  Expenses..............................................................................53
           16.10. Injunctive Relief.....................................................................53
           16.11. Consequential Damages.................................................................53
           16.12. Captions..............................................................................53
           16.13. Counterparts; Telecopied Signatures...................................................53
           16.14. Construction..........................................................................54
           16.15. Confidentiality; Sharing Information..................................................54
           16.16. Publicity.............................................................................54
           16.17  Conflicting Terms.....................................................................54
           16.18  Assignment to Export-Import Bank......................................................54

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                         List of Exhibits and Schedules

Exhibits

Exhibit 2.1(a)          Revolving Credit Notes

Exhibit 2.4(a)          Term Note

Exhibit 5.5(b)          Financial Projections

Exhibit 8.1(k)          Financial Condition Certificate

Exhibit 16.3            Commitment Transfer Supplement

Exhibit A               Borrowing Base Certificate

Schedules

Schedule 1.1            Original Owners

Schedule 1.2            Permitted Encumbrances

Schedule 4.5            Equipment and Inventory Locations

Schedule 4.15(c)        Location of Executive Offices

Schedule 4.19           Real Property

Schedule 5.2(a)         States of Qualification and Good Standing

Schedule 5.2(b)         Subsidiaries

Schedule 5.4            Federal Tax Identification Number

Schedule 5.6            Prior Names

Schedule 5.7            Environmental

Schedule 5.8(b)         Litigation

Schedule 5.8(d)         Plans

Schedule 5.9            Intellectual Property, Source Code Escrow Agreements

Schedule 5.10           Licenses and Permits

Schedule 5.14           Labor Disputes

Schedule 7.3            Guarantees

Schedule 7.8            Existing Debt

<PAGE>

                           REVOLVING CREDIT, TERM LOAN
                             AND SECURITY AGREEMENT

         Revolving Credit,  Term Loan and Security Agreement dated March 6, 2000
by and among RHEOMETRIC SCIENTIFIC, INC., a corporation organized under the laws
of the State of New Jersey ("RSI"),  RHEOMETRIC  SCIENTIFIC  LIMITED,  a company
organized  under the laws of England and Wales  ("RSL"),  RHEOMETRIC  SCIENTIFIC
FRANCE  SARL, a limited  liability  company  organized  under the laws of France
("RSF"),  RHEOMETRIC  SCIENTIFIC GmbH, a corporation organized under the laws of
Germany ("RSG"),  and RHEOMETRIC  SCIENTIFIC F.E. LTD., a corporation  organized
under  the  laws  of  Japan  ("RSLFE")  (each  a  "Borrower"  and   collectively
"Borrowers"), the financial institutions which are now or which hereafter become
a party hereto (collectively, the "Lenders" and individually a "Lender") and PNC
BANK, NATIONAL ASSOCIATION ("PNC"), as agent for Lenders (PNC, in such capacity,
the "Agent").

         IN  CONSIDERATION  of the  mutual  covenants  and  undertakings  herein
contained, Borrowers, Lenders and Agent hereby agree as follows:

I.       DEFINITIONS.

         1.1.  Accounting  Terms.  As used in this  Agreement,  the Note, or any
certificate,  report  or  other  document  made or  delivered  pursuant  to this
Agreement,  accounting  terms not  defined in Section 1.2 or  elsewhere  in this
Agreement and  accounting  terms partly defined in Section 1.2 to the extent not
defined,  shall have the respective meanings given to them under GAAP; provided,
however, whenever such accounting terms are used for the purposes of determining
compliance  with financial  covenants in this Agreement,  such accounting  terms
shall be  defined in  accordance  with GAAP as  applied  in  preparation  of the
audited financial statements of Borrowers for the fiscal year ended December 31,
2000.

         1.2.  General Terms. For purposes of this Agreement the following terms
shall have the following meanings:

               "Accountants"  shall have the  meaning  set forth in Section  9.7
hereof.

               "Advances" shall mean and include the Revolving  Advances as well
as the Term Loan.

               "Advance  Rates"  shall mean the Domestic  Advance  Rates and the
EXIM Advance Rates.

               "Affiliate"  of any  Person  shall  mean  (a) any  Person  which,
directly or  indirectly,  is in control of, is controlled by, or is under common
control with such Person,  or (b) any Person who is a director or officer (i) of
such  Person,  (ii) of any  Subsidiary  of such  Person  or (iii) of any  Person
described  in clause (a) above.  For purposes of this  definition,  control of a
Person shall mean the power,  direct or indirect,  (x) to vote 5% or more of the
securities  having  ordinary  voting power for the election of directors of such
Person,  or (y) to direct or cause the direction of the  management and policies
of such Person whether by contract or otherwise.

               "Agent"  shall have the meaning set forth in the preamble to this
Agreement and shall include its successors and assigns.

               "Authority" shall have the meaning set forth in Section 4.19(d).

               "Base Rate" shall mean the base commercial lending rate of PNC as
publicly  announced to be in effect from time to time,  such rate to be adjusted
automatically, without notice, on the effective date of any change in such rate.
This  rate of  interest  is  determined  from  time to time by PNC as a means of
pricing some loans to its  customers and is neither tied to any external rate of
interest  or index nor does it  necessarily  reflect the lowest rate of interest
actually charged by PNC to any particular class or category of customers of PNC.

               "Blocked  Accounts"  shall have the  meaning set forth in Section
4.15(h).

               "Borrower" or "Borrowers" shall have the meaning set forth in the
preamble to this  Agreement  and shall extend to all  permitted  successors  and
assigns of such Persons.

               "Borrowing  Base  Certificate"  shall  mean  a  certificate  duly
executed  by an  officer  of  Borrowing  Agent  appropriately  completed  and in
substantially the form of Exhibit A hereto.

               "Borrowers on a consolidated  basis" shall mean the Borrowers and
those  other  entities,  if any,  that

<PAGE>

would be included in the  consolidated  financial  statements  of the  Borrowers
prepared in accordance with GAAP.

               "Borrowers'  Account" shall have the meaning set forth in Section
2.8.

               "Borrowing Agent" shall mean RSI.

               "Business  Day" shall mean any day other than  Saturday or Sunday
or a legal holiday on which  commercial  banks are authorized or required by law
to be closed for business in East  Brunswick,  New Jersey and, if the applicable
Business Day relates to any Eurodollar  Rate Loans,  such day must also be a day
on which dealings are carried on in the London interbank market.

               "CERCLA"  shall mean the  Comprehensive  Environmental  Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss.ss.9601 et seq.

               "Change of Control"  shall mean (a) the  occurrence  of any event
(whether in one or more  transactions)  which results in Andlinger  Capital XXVI
LLC, its  affiliates or its permitted  transferees  not continuing to own in the
aggregate equal to or greater than fifty percent (50%) of the Initial  Threshold
Amount (as defined in the  Securities  Purchase  Agreement)  which  results in a
transfer of control of any Borrower,  or (b) any merger or  consolidation  of or
with any Borrower or sale of all or substantially  all of the property or assets
of any  Borrower,  except as expressly  permitted  herein.  For purposes of this
definition,  "control of Borrower"  shall mean the power,  direct or indirect by
contract or otherwise, to elect a majority of the directors of any Borrower.

               "Charges" shall mean all taxes, charges, fees, imposts, levies or
other assessments,  including, without limitation, all net income, gross income,
gross  receipts,  sales,  use, ad valorem,  value  added,  transfer,  franchise,
profits, inventory,  capital stock, license,  withholding,  payroll, employment,
social security, unemployment, excise, severance, stamp, occupation and property
taxes, custom duties, fees,  assessments,  liens, claims and charges of any kind
whatsoever,  together with any interest and any  penalties,  additions to tax or
additional  amounts,  imposed  by any  taxing or other  authority,  domestic  or
foreign (including, without limitation, the Pension Benefit Guaranty Corporation
or any environmental agency or superfund),  upon the Collateral, any Borrower or
any of its Affiliates.

               "Closing Date" shall mean the date hereof.

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

               "Collateral" shall mean and include:

                   (a) all Receivables;

                   (b) all Equipment;

                   (c) all General Intangibles;

                   (d) all Inventory;

                   (e) all Investment Property;

                   (f) all of each Borrower's  right,  title and interest in and
to (i) its respective  goods and other property  including,  but not limited to,
all merchandise  returned or rejected by Customers,  relating to or securing any
of the  Receivables;  (ii)  all of each  Borrower's  rights  as a  consignor,  a
consignee,  an unpaid  vendor,  mechanic,  artisan,  or other lienor,  including
stoppage in transit,  setoff,  detinue,  replevin,  reclamation  and repurchase;
(iii) all additional  amounts due to any Borrower from any Customer  relating to
the Receivables; (iv) other property, including warranty claims, relating to any
goods  securing this  Agreement;  (v) all of each  Borrower's  contract  rights,
rights of payment  which have been earned under a contract  right,  instruments,
documents,  chattel paper, warehouse receipts,  deposit accounts and money; (vi)
if and when  obtained by any Borrower,  all real and personal  property of third
parties in which such  Borrower has been granted a lien or security  interest as
security  for the payment or  enforcement  of  Receivables;  and (vii) any other
goods,  personal  property or real  property now owned or hereafter  acquired in
which any  Borrower  has  expressly  granted a security  interest  or may in the
future  grant a security  interest to Agent  hereunder,  or in any  amendment or
supplement hereto or thereto, or under any other agreement between Agent and any
Borrower;

                   (g) all of  each  Borrower's  ledger  sheets,  ledger  cards,
files,  correspondence,  records, books of account,  business papers, computers,
computer software (owned by any Borrower or in which it

                                       2
<PAGE>

has an interest), computer programs, tapes, disks and documents relating to (a),
(b), (c), (d), (e), or (f), of this Paragraph; and

                    (h) all proceeds and products of (a),  (b),  (c),  (d), (e),
(f), and (g), in whatever  form,  including,  but not limited to: cash,  deposit
accounts (whether or not comprised solely of proceeds), certificates of deposit,
insurance proceeds  (including hazard,  flood and credit insurance),  negotiable
instruments  and other  instruments  for the  payment of money,  chattel  paper,
security agreements,  documents, eminent domain proceeds,  condemnation proceeds
and tort claim proceeds.

               "Commitment  Percentage"  of any Lender shall mean the percentage
set forth below such Lender's  name on the signature  page hereof as same may be
adjusted upon any assignment by a Lender pursuant to Section 16.3 hereof.

               "Commitment  Transfer  Supplement"  shall mean a document  in the
form of Exhibit  16.3  hereto,  properly  completed  and  otherwise  in form and
substance  satisfactory  to Agent by which the Purchasing  Lender  purchases and
assumes a portion  of the  obligation  of Lenders  to make  Advances  under this
Agreement.

               "Consents"  shall mean all  filings  and all  licenses,  permits,
consents, approvals,  authorizations,  qualifications and orders of governmental
authorities and other third parties, domestic or foreign,  necessary to carry on
any Borrower's business,  including,  without limitation,  any Consents required
under all applicable federal, state or other applicable law.

               "Contract  Rate"  shall have the meaning set forth in Section 3.1
hereof.

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

               "Customer" shall mean and include the account debtor with respect
to any Receivable  and/or the prospective  purchaser of goods,  services or both
with respect to any contract or contract right, and/or any party who enters into
or proposes to enter into any contract or other  arrangement  with any Borrower,
pursuant to which such  Borrower is to deliver any personal  property or perform
any services.

               "Default" shall mean an event which, with the giving of notice or
passage of time or both, would constitute an Event of Default.

               "Default  Rate"  shall have the  meaning set forth in Section 3.1
hereof.

               "Defaulting  Lender"  shall have the meaning set forth in Section
2.13 hereof.

               "Depository Accounts" shall have the meaning set forth in Section
4.15(h) hereof.

               "Documents"  shall have the meaning  set forth in Section  8.1(c)
hereof.

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

               "Domestic  Advance  Rates"  shall have the  meaning  set forth in
Section 2.1(a) hereof.

               "Domestic  Eligible  Inventory" shall mean and include  Inventory
excluding work in process,  with respect to each Borrower valued at the lower of
cost or market value, determined on a first-in-first-out basis, which is not, in
Agent's reasonable  opinion,  obsolete,  slow moving or unmerchantable and which
Agent, in its sole discretion,  exercised reasonably,  shall not deem ineligible
Inventory,  based on such  considerations  as Agent  may from  time to time deem
appropriate including, without limitation, whether the Inventory is subject to a
perfected,  first priority  security  interest in favor of Agent and whether the
Inventory conforms to all standards imposed by any governmental agency, division
or department thereof which has regulatory  authority over such goods or the use
or sale  thereof.  Domestic  Eligible  Inventory  shall  include  all  Inventory
in-transit  for which  title has passed to a  Borrower,  which is insured to the
full value  thereof  and for which Agent  shall have in its  possession  (a) all
negotiable bills of lading properly endorsed and (b) all non-negotiable bills of
lading issued in Agent's name.

               "Domestic  Eligible  Receivables"  shall  mean and  include  with
respect  to each  Borrower,  each  Receivable  of such  Borrower  arising in the
ordinary course of such Borrower's  business and which Agent, in its sole credit
judgment, exercised reasonably, shall deem to be a Domestic Eligible Receivable,
based on such considerations as Agent may from time to time deem appropriate.  A
Receivable  shall not be  deemed a  Domestic  Eligible  Receivable  unless  such
Receivable is subject to Agent's first priority  perfected security interest and
no other

                                       3
<PAGE>

Lien (other than Permitted  Encumbrances),  and is evidenced by an invoice, bill
of lading, or other documentary  evidence  reasonably  satisfactory to Agent. In
addition, no Receivable shall be an Domestic Eligible Receivable if:

                   (a) it  arises  out  of a sale  made  by any  Borrower  to an
Affiliate  of any  Borrower or to a Person  controlled  by an  Affiliate  of any
Borrower;

                   (b) it is due or unpaid  more than ninety (90) days after the
original invoice date;

                   (c) fifty percent (50%) or more of the Receivables  from such
Customer are not deemed Eligible Receivables hereunder.  Such percentage may, in
Agent's reasonable discretion, be increased or decreased from time to time;

                   (d) any  covenant,  representation  or warranty  contained in
this Agreement with respect to such Receivable has been breached;

                   (e) the Customer shall (i) apply for,  suffer,  or consent to
the  appointment  of, or the taking of  possession  by, a  receiver,  custodian,
trustee or liquidator of itself or of all or a substantial  part of its property
or call a meeting of its creditors,  (ii) admit in writing its inability,  or be
generally unable, to pay its debts as they become due or cease operations of its
present business,  (iii) make a general assignment for the benefit of creditors,
(iv) commence a voluntary  case under any state or federal  bankruptcy  laws (as
now or hereafter in effect),  (v) be  adjudicated a bankrupt or insolvent,  (vi)
file a petition  seeking to take  advantage of any other law  providing  for the
relief of debtors,  (vii) acquiesce to, or fail to have dismissed,  any petition
which is filed against it in any involuntary case under such bankruptcy laws, or
(viii) take any action for the purpose of effecting any of the foregoing;

                   (f) the sale is to a Customer outside the continental  United
States  of  America,  unless  the  sale is on  letter  of  credit,  guaranty  or
acceptance terms, in each case acceptable to Agent in its reasonable discretion;

                   (g)  the  sale  to  the  Customer  is  on  a   bill-and-hold,
guaranteed  sale,  sale-and-return,  sale on approval,  consignment or any other
repurchase or return basis or is evidenced by chattel paper;

                   (h)  Agent  believes,   in  its  reasonable  judgment,   that
collection  of such  Receivable is insecure or that such  Receivable  may not be
paid by reason of the Customer's financial inability to pay;

                   (i) the Customer is the United  States of America,  any state
or  any  department,  agency  or  instrumentality  of any of  them,  unless  the
applicable  Borrower  assigns its right to payment of such  Receivable  to Agent
pursuant  to the  Assignment  of  Claims  Act of 1940,  as  amended  (31  U.S.C.
Sub-Section 3727 et seq. and 41 U.S.C.  Sub-Section 15 et seq.) or has otherwise
complied with other applicable statutes or ordinances;

                   (j) the goods  giving rise to such  Receivable  have not been
shipped to the Customer or the services  giving rise to such Receivable have not
been performed by the applicable  Borrower or the Receivable  otherwise does not
represent a final sale;

                   (k) the  Receivables  of the  Customer  exceed a credit limit
determined by Agent, in its sole discretion, exercised reasonably, to the extent
such Receivable exceeds such limit;

                   (l) the  Receivable  is  subject  to any  offset,  deduction,
defense,   dispute,   or  counterclaim,   other  than  customary  discounts  and
allowances,  the  Customer is also a creditor  or supplier of a Borrower  unless
such  creditor  or supplier  has  executed a no-off set letter  satisfactory  to
Agent, or the Receivable is contingent in any respect or for any reason;

                   (m) the  applicable  Borrower has made any agreement with any
Customer for any deduction therefrom, except for discounts or allowances made in
the ordinary  course of business for prompt  payment,  all of which discounts or
allowances are reflected in the calculation of the face value of each respective
invoice related thereto;

                   (n) any return,  rejection or repossession of the merchandise
has occurred or the rendition of services has been disputed;

                   (o) such Receivable is not payable to a Borrower; or

                   (p) such Receivable is not otherwise satisfactory to Agent as
determined  in good  faith by  Agent  in the  exercise  of its  discretion  in a
reasonable manner.

               "Domestic  Formula  Amount"  shall have the  meaning set forth in
Section 2.1(a).

                                       4
<PAGE>

               "Domestic  Inventory  Advance  Rate"  shall have the  meaning set
forth in Section 2.1(a)(i)(y)(B) hereof.

               "Domestic  Rate Loan" shall mean any Advance that bears  interest
based upon the Base Rate.

               "Domestic  Receivables  Advance  Rate" shall have the meaning set
forth in Section 2.1(a)(i)(y)(A) hereof.

               "Domestic  Revolving  Advances"  shall  mean  the  Advances  made
pursuant to Section 2.1(a)(i).

               "Domestic  Revolving Facility" shall mean Advances in the form of
Domestic Revolving Advances.

               "Early  Termination  Date"  shall have the  meaning  set forth in
Section 13.1 hereof.

               "Earnings  Before  Interest  and Taxes" shall mean for any period
the sum of (i) net income (or loss) of  Borrowers  on a  consolidated  basis for
such period (excluding  extraordinary gains but including  extraordinary losses,
plus (ii) all interest  expense of Borrowers  on a  consolidated  basis for such
period,  plus (iii) all charges  against  income of Borrowers on a  consolidated
basis for such period for federal, state and local taxes actually paid.

               "EBITDA" shall mean for any period the sum of (i) Earnings Before
Interest  and Taxes for such period  plus (ii)  depreciation  expenses  for such
period, plus (iii) amortization expenses for such period.

               "Eligible  Inventory" shall mean Domestic Eligible  Inventory and
EXIM Eligible Inventory.

               "Eligible  Receivables" shall mean Domestic Eligible  Receivables
and EXIM Eligible Receivables.

               "Environmental  Complaint"  shall have the  meaning  set forth in
Section 4.19(d) hereof.

               "Environmental  Laws"  shall  mean all  federal,  state and local
environmental,  health,  chemical use,  safety and  sanitation  laws,  statutes,
ordinances  and codes  relating  to the  protection  of the  environment  and/or
governing the use, storage, treatment, generation,  transportation,  processing,
handling,  production  or  disposal  of  Hazardous  Substances  and  the  rules,
regulations,  orders and  directives  of federal,  state and local  governmental
agencies and authorities with respect thereto.

               "Equipment"  shall mean and  include as to each  Borrower  all of
such  Borrower's  goods  (other than  Inventory)  whether now owned or hereafter
acquired and wherever  located  including,  without  limitation,  all equipment,
machinery,   apparatus,  motor  vehicles,  fittings,   furniture,   furnishings,
fixtures,  parts, accessories and all replacements and substitutions therefor or
accessions thereto.

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

               "Eurodollar Rate" shall mean for any Eurodollar Rate Loan for the
then  current  Interest  Period  relating  thereto the  interest  rate per annum
determined  by PNC by dividing  (the  resulting  quotient  rounded  upwards,  if
necessary,  to the  nearest  1/100th of 1% per  annum) (i) the rate of  interest
determined by PNC in accordance with its usual procedures  (which  determination
shall be  conclusive  absent  manifest  error) to be the  average  of the London
interbank  offered  rates  for  U.S.  Dollars  quoted  by the  British  Bankers'
Association  as set  forth  on Dow  Jones  Markets  Service  (formerly  known as
Telrate) (or appropriate  successor or, if British  Banker's  Association or its
successor ceases to provide such quotes, a comparable  replacement determined by
PNC)  display  page 3750 (or such other  display  page on the Dow Jones  Markets
Service system as may replace  display page 3750) two (2) Business Days prior to
the  first  day of  such  Interest  Period  for an  amount  comparable  to  such
Eurodollar  Rate Loan and having a borrowing  date and a maturity  comparable to
such  Interest  Period  by  (ii) a  number  equal  to  1.00  minus  the  Reserve
Percentage. The Eurodollar Rate may also be expressed by the following formula:

             Average of London interbank offered rates quoted by BBA as shown on
          Eurodollar Rate =Dow Jones Markets Service display page 3750 or
          appropriate successor
                           1.00 - Reserve Percentage]

               "Eurodollar  Rate  Loan"  shall  mean an Advance at any time that
bears interest based on the Eurodollar Rate.

               "Event of Default" shall mean the occurrence of any of the events
set forth in Article X hereof.

                                       5
<PAGE>

               "Excess  Cash Flow" for any fiscal  period  shall mean  EBITDA of
Borrowers on a  consolidated  basis for such fiscal  period  minus  non-financed
capital  expenditures  made by  Borrowers  on a  consolidated  basis during such
fiscal  period minus taxes  actually paid by Borrowers on a  consolidated  basis
during such fiscal period minus  increases in working  capital of Borrowers on a
consolidated  basis  during such fiscal  period  minus  principal  and  interest
payments on Indebtedness.

               "EXIM Advance  Rates" shall have the meaning set forth in Section
2.1(a) hereof.

               "EXIM  Borrower  Agreement"  shall  mean the  Borrower  Agreement
entered into between the Borrowers and the Export-Import Bank dated on even date
herewith  together with: (i) a certain waiver letter dated January 14, 2000 from
the Export-Import Bank to the Agent, and (ii) the Master Guarantee  Agreement to
the extent applicable, the Delegated Authority Letter Agreement, all as referred
to in the Borrower Agreement.

               "EXIM  Borrower  Documents"  shall  mean  any and  all  documents
executed by  Borrowers in  connection  with the  execution of the EXIM  Borrower
Agreement.

               "EXIM Eligible  Inventory" shall mean and include Inventory which
meets the criteria set forth in the definition of Domestic  Eligible  Inventory,
and which also  qualifies as Eligible  Export-Related  Inventory  under the EXIM
Borrower Agreement.

               "EXIM Eligible  Receivables"  shall mean and include with respect
to each  Borrower,  each  Receivable  of such  Borrower  arising in the ordinary
course of such Borrower's business and which Agent, in its sole credit judgment,
exercised  reasonably,  shall deem to be an EXIM Eligible  Receivable,  based on
such  considerations  as  Agent  may  from  time to  time  deem  appropriate.  A
Receivable  shall  not  be  deemed  an  EXIM  Eligible  Receivable  unless  such
Receivable is subject to Agent's first priority  perfected security interest and
no other Lien  (other  than  Permitted  Encumbrances),  and is  evidenced  by an
invoice,  bill of lading, or other documentary evidence reasonably  satisfactory
to Agent. In addition,  no Receivable shall be an EXIM Eligible Receivable if it
meets  any of the  criteria  set forth in  subsections  (a)  through  (e) or (g)
through (p) of the definition of Domestic  Eligible  Receivables,  and unless it
also qualifies as an Eligible  Export-Related Accounts Receivable under the EXIM
Borrower  Agreement.  In  addition,  no  Receivable  shall  be an EXIM  Eligible
Receivable  if it is due or unpaid more than sixty (60) days after the  original
due date,  but not to exceed one hundred  twenty  (120) days after the  original
invoice date.

               "EXIM Formula Amount" shall have the meaning set forth in Section
2.1(a).

               "EXIM Inventory Advance Rate" shall have the meaning set forth in
Section 2.1(a)(ii)(y)(B) hereof.

               "EXIM  Receivable  Advance Rate" shall have the meaning set forth
in Section 2.1(a)(ii)(y)(A) hereof.

               "EXIM  Revolving  Advances" shall mean the Advances made pursuant
to Section 2.1(a)(i).

               "EXIM Revolving Facility" shall mean Advances in the form of EXIM
Revolving Advances.

               "Export-Import  Bank"  shall mean the  Export-Import  Bank of the
United States.

               "Federal  Funds  Rate"  shall  mean,  for any day,  the  weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers,  as published for such
day (or if such day is not a Business Day, for the next preceding  Business Day)
by the Federal Reserve Bank of New York, or if such rate is not so published for
any day which is a Business Day, the average of quotations  for such day on such
transactions  received by PNC from three  Federal  funds  brokers of  recognized
standing selected by PNC.

               "Fixed  Charge  Coverage  Ratio"  shall  mean and  include,  with
respect to any quarterly  period  tested on a rolling  four-quarter  basis,  the
ratio of (a) EBITDA minus unfinanced  capitalized  expenditures made during such
period less cash  payments  made towards  taxes to (b) all Senior Debt  Payments
plus all Subordinated Debt Payments during such period.

               "Formula  Amount" shall mean the Domestic Formula Amount plus the
EXIM Formula Amount.

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

               "General  Intangibles" shall mean and include as to each Borrower
all of such Borrower's general

                                       6

<PAGE>

intangibles,   whether  now  owned  or  hereafter  acquired  including,  without
limitation,  all choses in action, causes of action, corporate or other business
records,   inventions,   designs,   patents,   patent  applications,   equipment
formulations,  manufacturing procedures, quality control procedures, trademarks,
service   marks,   trade   secrets,   goodwill,   copyrights,   design   rights,
registrations,  licenses,  franchises,  customer lists, tax refunds,  tax refund
claims,  computer programs,  all claims under guaranties,  security interests or
other  security held by or granted to such Borrower to secure  payment of any of
the  Receivables by a Customer and all rights of  indemnification  and all other
intangible   property  of  every  kind  and  nature  (other  than  Receivables).
"Governmental  Body"  shall  mean any nation or  government,  any state or other
political   subdivision  thereof  or  any  entity  exercising  the  legislative,
judicial,   regulatory  or  administrative  functions  of  or  pertaining  to  a
government.

               "Guarantor"  shall mean any Person  who may  hereafter  guarantee
payment  or  performance  of the  whole  or any  part  of  the  Obligations  and
"Guarantors" means collectively all such Persons.

               "Guarantor  Security Agreement" shall mean any Security Agreement
executed  by any  Guarantor  in favor of Agent  securing  the  Guaranty  of such
Guarantor.

               "Guaranty"   shall  mean  any  guaranty  of  the  obligations  of
Borrowers  executed by a Guarantor in favor of Agent for its benefit and for the
ratable benefit of Lenders.

               "Hazardous Discharge" shall have the meaning set forth in Section
4.19(d) hereof.

               "Hazardous Substance" shall mean any flammable explosives, radon,
radioactive   materials,    asbestos,   urea   formaldehyde   foam   insulation,
polychlorinated biphenyls,  petroleum and petroleum products, methane, hazardous
materials,  Hazardous Wastes, hazardous or Toxic Substances or related materials
as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49
U.S.C. Sections 1801, et seq.), RCRA, the New Jersey Environmental Site Recovery
Act (ISRA),  or any other  applicable  Environmental  Law and in the regulations
adopted pursuant thereto.

               "Hazardous  Wastes"  shall  mean all waste  materials  subject to
regulation under CERCLA,  RCRA or applicable state law, and any other applicable
Federal and state laws now in force or hereafter  enacted  relating to hazardous
waste disposal.

               "Indebtedness"  of a Person at a  particular  date shall mean all
obligations  of such Person which in  accordance  with GAAP would be  classified
upon a balance sheet as liabilities  (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration,  shall
include all  indebtedness,  debt and other similar monetary  obligations of such
Person  whether  direct or  guaranteed,  and all  premiums,  if any,  due at the
required prepayment dates of such indebtedness,  and all indebtedness secured by
a Lien on assets owned by such Person, whether or not such indebtedness actually
shall have been created, assumed or incurred by such Person. Any indebtedness of
such Person  resulting from the acquisition by such Person of any assets subject
to any Lien shall be deemed,  for the purposes  hereof,  to be the equivalent of
the creation,  assumption  and incurring of the  indebtedness  secured  thereby,
whether or not actually so created, assumed or incurred.

               "Ineligible  Security"  shall mean any security  which may not be
underwritten  or dealt in by member  banks of the Federal  Reserve  System under
Section  16 of the  Banking  Act of 1933 (12 U.S.C.  Section  24,  Seventh),  as
amended.

               "Intercreditor  and  Subordination   Agreement"  shall  mean  the
Intercreditor and Subordination  Agreement dated of even date herewith among the
Agent, RSI and Axess Corporation.

               "Interest   Period"  shall  mean  the  period  provided  for  any
Eurodollar Rate Loan pursuant to Section 2.2(b).

               "Inventory"  shall mean and  include as to each  Borrower  all of
such  Borrower's now owned or hereafter  acquired  goods,  merchandise and other
personal  property,  wherever  located,  to be  furnished  under any contract of
service or held for sale or lease, all raw materials,  work in process, finished
goods and materials and supplies of any kind, nature or description which are or
might be used or  consumed  in such  Borrower's  business  or used in selling or
furnishing  such  goods,  merchandise  and  other  personal  property,  and  all
documents of title or other documents representing them.

               "Investment Property" shall mean and include as to each Borrower,
all of such Borrower's now

                                       7

<PAGE>

owned or hereafter acquired securities (whether certificated or uncertificated),
securities   entitlements,   securities  accounts,   commodities  contracts  and
commodities accounts.

               "Lender" and  "Lenders"  shall have the meaning  ascribed to such
term in the  preamble to this  Agreement  and shall  include  each Person  which
becomes a transferee, successor or assign of any Lender.

               "Letter  of Credit  Fees"  shall  have the  meaning  set forth in
Section 3.2(e) hereof.

               "Letters  of Credit"  shall have the meaning set forth in Section
2.14 hereof.

               "Lien"  shall  mean  any   mortgage,   deed  of  trust,   pledge,
hypothecation,   assignment,  security  interest,  lien  (whether  statutory  or
otherwise),  Charge,  claim or  encumbrance,  or  preference,  priority or other
security  agreement or preferential  arrangement  held or asserted in respect of
any asset of any kind or nature whatsoever  including,  without limitation,  any
conditional  sale  or  other  title  retention   agreement,   any  lease  having
substantially  the same economic effect as any of the foregoing,  and the filing
of, or agreement to give, any financing  statement under the Uniform  Commercial
Code or comparable law of any jurisdiction.

               "Material Adverse Effect" shall mean a material adverse effect on
(a) the condition,  operations,  assets or business of the applicable  Person or
Persons,  (b) any Borrower's  ability to pay the  Obligations in accordance with
the terms  thereof,  (c) the value of the  Collateral,  or Agent's  Liens on the
Collateral or the priority of any such Lien or (d) the practical  realization of
the  benefits  of  Agent's  and each  Lender's  rights and  remedies  under this
Agreement and the Other Documents.

               "Maximum   Domestic   Revolving   Advance   Amount"   shall  mean
$6,500,000.00.

               "Maximum EXIM Revolving Advance Amount" shall mean $6,500,000.00.

               "Maximum Loan Amount" shall mean  $14,500,000.00  less repayments
of the Term Loan.

               "Maximum Revolving Advance Amount" shall mean $13,000,000.00.

               "Monthly  Advances"  shall have the  meaning set forth in Section
3.1 hereof.

               "Multiemployer Plan" shall mean a "multiemployer plan" as defined
in Sections 3(37) and 4001(a)(3) of ERISA.

               "Note" shall mean  collectively  the Term Note, and the Revolving
Credit Notes.

               "Obligations" shall mean and include any and all loans, advances,
debts,  liabilities,  obligations,  covenants  and duties  owing by Borrowers to
Lenders or Agent or to any other direct or indirect  subsidiary  or affiliate of
Agent or any Lender of any kind or nature, present or future (including, without
limitation, any interest accruing thereon after maturity, or after the filing of
any  petition  in   bankruptcy,   or  the   commencement   of  any   insolvency,
reorganization  or like  proceeding  relating to any Borrower,  whether or not a
claim for post-filing or post-petition  interest is allowed in such proceeding),
whether or not  evidenced  by any note,  guaranty or other  instrument,  whether
arising  under  any  agreement,  instrument  or  document,  (including,  without
limitation,  this  Agreement  and the Other  Documents)  whether  or not for the
payment of money,  whether arising by reason of an extension of credit,  opening
of a letter of credit, loan, equipment lease or guarantee, under any interest or
currency  swap,  future,  option  or other  similar  agreement,  or in any other
manner,  whether  arising  out of  overdrafts  or deposit or other  accounts  or
electronic  funds  transfers  (whether  through  automated  clearing  houses  or
otherwise) or out of the Agent's or any Lenders  non-receipt  of or inability to
collect funds or otherwise not being made whole in  connection  with  depository
transfer  check  or other  similar  arrangements,  whether  direct  or  indirect
(including  those  acquired  by  assignment  or   participation),   absolute  or
contingent,  joint or several,  due or to become due,  now existing or hereafter
arising, contractual or tortious, liquidated or unliquidated,  regardless of how
such  indebtedness or liabilities  arise or by what agreement or instrument they
may be evidenced or whether evidenced by any agreement or instrument, including,
but  not  limited  to,  any  and  all  of  any  Borrower's  Indebtedness  and/or
liabilities  under  this  Agreement,  the  Other  Documents  or under  any other
agreement  between  Agent  or  Lenders  and any  Borrower  and  any  amendments,
extensions,  renewals or  increases  and all costs and expenses of Agent and any
Lender incurred in the documentation,  negotiation,  modification,  enforcement,
collection or otherwise in connection  with any of the foregoing,  including but
not limited to reasonable  attorneys'  fees and expenses and all  obligations of
any Borrower

                                       8
<PAGE>

to Agent or Lenders to perform acts or refrain from taking any action.

               "Other  Documents"  shall mean the Note, the  Questionnaire,  any
Guaranty,  any Guarantor  Security  Agreement and any and all other  agreements,
instruments and documents,  including, without limitation,  guaranties, pledges,
powers  of  attorney,  consents,  and  all  other  writings  heretofore,  now or
hereafter executed by any Borrower or any Guarantor and/or delivered to Agent or
any Lender in respect of the transactions contemplated by this Agreement.

               "Original Owners" shall mean those entities set forth on Schedule
1.1 attached hereto

               "Parent" of any Person shall mean a  corporation  or other entity
owning,  directly  or  indirectly  at least 50% of the  shares of stock or other
ownership  interests  having  ordinary  voting  power to elect a majority of the
directors of the Person, or other Persons  performing  similar functions for any
such Person.

               "Participant"  shall mean each  Person  who shall be granted  the
right by any Lender to  participate  in any of the  Advances  and who shall have
entered into a  participation  agreement in form and substance  satisfactory  to
such Lender.

               "Payment Office" shall mean initially Two Tower Center Boulevard,
East  Brunswick,  New Jersey 08816;  thereafter,  such other office of Agent, if
any,  which it may designate by notice to Borrowing  Agent and to each Lender to
be the Payment Office.

               "PBGC" shall mean the Pension Benefit Guaranty Corporation.

               "Permitted  Encumbrances"  shall mean (a) Liens in favor of Agent
for the benefit of Agent and Lenders; (b) Liens for taxes,  assessments or other
governmental  charges not  delinquent  or being  contested  in good faith and by
appropriate  proceedings  and with  respect to which proper  reserves  have been
taken by  Borrowers;  provided,  that,  the Lien  shall  have no  effect  on the
priority  of the  Liens in favor of Agent or the  value of the  assets  in which
Agent has such a Lien and a stay of  enforcement  of any such  Lien  shall be in
effect; (c) Liens disclosed in the financial  statements  referred to in Section
5.5, the existence of which Agent has  consented to in writing;  (d) deposits or
pledges to secure  obligations under worker's  compensation,  social security or
similar laws, or under unemployment insurance; (e) deposits or pledges to secure
bids,  tenders,  contracts  (other  than  contracts  for the  payment of money),
leases, statutory obligations,  surety and appeal bonds and other obligations of
like nature  arising in the  ordinary  course of any  Borrower's  business;  (f)
judgment  Liens  that have  been  stayed or  bonded  and  mechanics',  workers',
materialmen's  or  other  like  Liens  arising  in the  ordinary  course  of any
Borrower's  business with respect to obligations  which are not due or which are
being contested in good faith by the applicable Borrower;  (g) Liens placed upon
fixed  assets  hereafter  acquired  to secure a portion  of the  purchase  price
thereof,  provided that (x) any such lien shall not encumber any other  property
of the Borrowers and (y) the aggregate  amount of  Indebtedness  secured by such
Liens  incurred as a result of such  purchases  during any fiscal year shall not
exceed the  amount  provided  for in Section  7.6;  and (h) Liens  disclosed  on
Schedule 1.2.

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

               "Plan" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA,  maintained  for  employees of Borrowers or any member of
the Controlled Group or any such Plan to which any Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.

               "Process  Control  Rheometer  Business"  shall  mean  a  business
division of RSI currently  operating  under the name Process  Control  Rheometer
Business (including any successor business unit, division or entity).

               "Pro Forma  Balance  Sheet"  shall have the  meaning set forth in
Section 5.5(a) hereof.

               "Pro Forma Financial Statements" shall have the meaning set forth
in Section 5.5(b) hereof.

               "Projections"  shall have the meaning set forth in Section 5.5(b)
hereof.

               "Purchasing  Lender"  shall have the meaning set forth in Section
16.3 hereof.

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

                                       9

<PAGE>

               "Real Property" shall mean all of each  Borrower's  right,  title
and interest in and to the leased premises identified on Schedule 4.19 hereto.

               "Receivables" shall mean and include, as to each Borrower, all of
such  Borrower's  accounts,   contract  rights,   instruments  (including  those
evidencing  indebtedness  owed to  Borrowers  by their  Affiliates),  documents,
chattel paper, general intangibles relating to accounts, drafts and acceptances,
and all other forms of obligations  owing to such Borrower  arising out of or in
connection with the sale or lease of Inventory or the rendition of services, all
guarantees  and other  security  therefor,  whether  secured or  unsecured,  now
existing or hereafter created,  and whether or not specifically sold or assigned
to Agent hereunder.

               "Release"  shall have the meaning set forth in Section  5.7(c)(i)
hereof.

               "Reportable  Event"  shall mean a reportable  event  described in
Section 4043(b) of ERISA or the regulations promulgated thereunder.

               "Required  Lenders" shall mean Lenders holding at least sixty-six
and  two-thirds  percent  (66-2/3%)  of the  Advances  and, if no  Advances  are
outstanding,  shall  mean  Lenders  holding  sixty-six  and  two-thirds  percent
(66-2/3%) of the Commitment Percentages.

               "Reserve  Percentage" shall mean the maximum effective percentage
in effect on any day as  prescribed  by the Board of  Governors  of the  Federal
Reserve  System (or any  successor)  for  determining  the reserve  requirements
(including,  without  limitation,  supplemental,  marginal and emergency reserve
requirements) with respect to eurocurrency funding.

               "Revolving Advances" shall mean Advances made other than the Term
Loan.

               "Revolving  Credit  Notes"  shall have the  meaning  set forth in
Section 2.1(a) hereof.

               "Revolving  Interest  Rate" shall mean an interest rate per annum
equal to (a) the Base Rate percent with respect to Domestic  Rate Loans,  (b) to
the extent that Eurodollar  Loans are available to the Borrower  pursuant to the
terms  hereof,  the sum of the  Eurodollar  Rate  plus two and  one-half  (2.5%)
percent with respect to Eurodollar Rate Loans.

               "Section 20  Subsidiary"  shall mean the  Subsidiary  of the bank
holding company  controlling PNC, which Subsidiary has been granted authority by
the  Federal  Reserve  Board  to  underwrite  and  deal  in  certain  Ineligible
Securities.

               "Securities   Purchase   Agreement"  shall  mean  the  Securities
Purchase Agreement between Andlinger Capital XXVI LLC and RSI dated February 17,
2000.

               "Senior Debt  Payments"  shall mean and include all cash actually
expended by Borrowers to make (a) interest  payments on any Advances  hereunder,
plus, (b) scheduled  principal  payments on the Term Loan, plus (c) payments for
all fees,  commissions  and  charges  set forth  herein and with  respect to any
Advances, plus (d) capitalized lease payments, plus (e) payments with respect to
any other Indebtedness for borrowed money.

               "Settlement  Date"  shall mean the  Closing  Date and  thereafter
Wednesday  of each week unless  such day is not a Business  Day in which case it
shall be the next succeeding Business Day.

               "Subordinated  Debt  Payments"  shall mean and  include  all cash
actually expended to make payments of principal and interest on the Subordinated
Note.

               "Subordinated   Loan"  shall  mean  the  loan  evidenced  by  the
Subordinated Note.

               "Subordinated  Note" shall mean the Subordinated  Promissory Note
issued by RSI in favor of Axess Corporation dated March 6, 2000 in the principal
sum of $1,000,000.

               "Subordinate  Documentation"  shall mean the documents reflecting
the Subordinated Loan.

               "Subsidiary"  shall mean a  corporation  or other entity of whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership  interests having such power only by reason of the
happening  of a  contingency)  to  elect a  majority  of the  directors  of such
corporation,  or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.

               "Tangible  Net Worth" shall mean, at a particular  date,  (a) the
aggregate amount of all assets of

                                       10

<PAGE>

Borrowers  on a  consolidated  basis as may be  properly  classified  as such in
accordance  with GAAP  consistently  applied  excluding such other assets as are
properly  classified  as  intangible  assets under GAAP,  less (b) the aggregate
amount of all liabilities of the Borrowers on a consolidated basis.

               "Term" shall have the meaning set forth in Section 13.1 hereof.

               "Term Loan" shall mean the Advances  made pursuant to Section 2.4
hereof.

               "Term Loan Rate" shall mean an  interest  rate per annum equal to
the sum of the  Base  Rate  plus  (a) for so long as the  outstanding  principal
balance under the Term Loan exceeds  $680,000,  one and one-half (1.5%) percent,
and (b) for so long as the  outstanding  principal  balance  under the Term Loan
equals or is less than $680,000, one-half of one (0.5%) percent.

               "Term Note" shall mean the  promissory  note described in Section
2.4 hereof.

               "Termination  Event"  shall  mean  (i) a  Reportable  Event  with
respect to any Plan or  Multiemployer  Plan; (ii) the withdrawal of any Borrower
or any member of the Controlled Group from a Plan or Multiemployer Plan during a
plan year in which  such  entity  was a  "substantial  employer"  as  defined in
Section  4001(a)(2)  of  ERISA;  (iii)  the  providing  of  notice  of intent to
terminate  a Plan in a distress  termination  described  in  Section  4041(c) of
ERISA;  (iv) the  institution  by the PBGC of proceedings to terminate a Plan or
Multiemployer  Plan;  (v) any  event or  condition  (a) which  might  constitute
grounds under Section 4042 of ERISA for the  termination  of, or the appointment
of a trustee to  administer,  any Plan or  Multiemployer  Plan,  or (b) that may
result in  termination  of a  Multiemployer  Plan  pursuant to Section  4041A of
ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections
4203 and 4205 of ERISA,  of any Borrower or any member of the  Controlled  Group
from a Multiemployer Plan.

               "Toxic  Substance" shall mean and include any material present on
the Real Property  which has been shown to have  significant  adverse  effect on
human  health or which is  subject  to  regulation  under  the Toxic  Substances
Control Act (TSCA), 15 U.S.C. ss.ss. 2601 et seq.,  applicable state law, or any
other  applicable  Federal  or state  laws now in  force  or  hereafter  enacted
relating to toxic substances.  "Toxic Substance"  includes but is not limited to
asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.

               "Transactions"  shall have the  meaning  set forth in Section 5.5
hereof.

               "Transferee"  shall have the meaning set forth in Section 16.3(b)
hereof.

               "Undrawn  Availability" at a particular date shall mean an amount
equal to (a) the  lesser  of (i) the  Formula  Amount or (ii) the  Maximum  Loan
Amount,  minus (b) the sum of (i) the outstanding amount of Advances (other than
the Term Loan) plus (ii) all amounts due and owing to Borrowers' trade creditors
which are  outstanding  beyond normal trade terms,  plus (iii) fees and expenses
for which  Borrowers  are  liable  but which  have not been paid or  charged  to
Borrowers' Account.

               "Week" shall mean the time period  commencing with the opening of
business on a Wednesday and ending on the end of business the following Tuesday.

               "Working Capital" at a particular date, shall mean the excess, if
any, of Current Assets over Current Liabilities at such date.

         1.3.  Uniform  Commercial Code Terms. All terms used herein and defined
in the Uniform  Commercial Code as adopted in the State of New Jersey shall have
the meaning given therein unless otherwise defined herein.

         1.4. Certain Matters of Construction.  The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular  section,  paragraph or subdivision.  Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used  herein in the  singular  also  include  the  plural  and vice  versa.  All
references to statutes and related  regulations  shall include any amendments of
same and any successor statutes and regulations.  Unless otherwise provided, all
references  to  any  instruments  or  agreements  to  which  Agent  is a  party,
including,  without limitation,  references to any of the Other Documents, shall
include  any  and  all  modifications  or  amendments  thereto  and  any and all
extensions or renewals thereof.

II.      ADVANCES, PAYMENTS.

         2.1. (a) Revolving  Advances.  Subject to the terms and  conditions set
forth in this Agreement

                                       11

<PAGE>

including, without limitation,  Section 2.1(b), and further subject to the terms
and  conditions  set  forth  in the  EXIM  Borrower  Agreement  (the  terms  and
conditions of which shall be and hereby are  incorporated  herein by reference),
each Lender, severally and not jointly, will make

         (i) Domestic  Revolving  Advances to  Borrowers  in  aggregate  amounts
     outstanding at any time equal to such Lender's Commitment Percentage of the
     lesser  of (x) the  Maximum  Domestic  Revolving  Advance  Amount or (y) an
     amount equal to the sum of:

         (A)  up to 85%,  subject to the  provisions  of Section  2.1(b)  hereof
              ("Domestic   Receivables  Advance  Rate"),  of  Domestic  Eligible
              Receivables, plus

         (B)  up to the lesser of (1) 60%,  subject to the provisions of Section
              2.1(b) hereof ("Domestic Inventory Advance Rate"), of the value of
              the Domestic Eligible Inventory (the Domestic  Receivables Advance
              Rate and the Domestic  Inventory Advance Rate shall be referred to
              collectively,  as the "Domestic  Advance Rates") or (2) $6,000,000
              less the amount  advanced  under Section  2.1(a)(ii)(y)(B)  in the
              aggregate at any one time, minus

         (C)  such  reserves as Agent may  reasonably  deem proper and necessary
              from time to time.

              The amount  derived  from (x) the sum of Sections  2.1(a)(i)(y)(A)
         and (B) minus (y) Section 2.1 (a)(i)(y)(C) at any time and from time to
         time shall be referred to as the "Domestic Formula Amount".

         (ii)  EXIM  Revolving   Advances  to  Borrowers  in  aggregate  amounts
     outstanding at any time equal to such Lender's Commitment Percentage of the
     lesser of (x) the Maximum EXIM  Revolving  Advance  Amount or (y) an amount
     equal to the sum of:

         (A)  up to 90%,  subject to the provisions of Section 2.1(b) hereof and
              of the EXIM Borrower Agreement ("EXIM Receivables  Advance Rate"),
              of EXIM Eligible Receivables, plus

         (B)  up to the lesser of (1) 75%,  subject to the provisions of Section
              2.1(b) hereof and of the EXIM Borrowers Agreement ("EXIM Inventory
              Advance Rate"),  of the value of the EXIM Eligible  Inventory,  or
              (2) 60% of the total of all  outstanding  EXIM Revolving  Advances
              (the EXIM Receivables  Advance Rate and the EXIM Inventory Advance
              Rate  shall be  referred  to  collectively,  as the "EXIM  Advance
              Rates"),  or (3) $6,000,000 less the amount advanced under Section
              2.1(a)(i)(y)(B) in the aggregate at any one time, minus

         (C)  such  reserves as Agent may  reasonably  deem proper and necessary
              from time to time.

              The amount  derived from the sum of (x) Sections  2.1(a)(ii)(y)(A)
         and (B) minus (y) Section 2.1  (a)(ii)(y)(C)  at any time and from time
         to time shall be referred to as the "EXIM Formula Amount".

The  Revolving  Advances  shall be evidenced  by one or more secured  promissory
notes  including,  but not limited to, a  $6,500,000  note  evidencing  the EXIM
Revolving  Facility  and a $6,500,000  note  evidencing  the Domestic  Revolving
Facility (collectively,  the "Revolving Credit Notes") substantially in the form
attached hereto as Exhibit 2.1(a).

              (b)  Discretionary  Rights.  The Advance Rates may be increased or
decreased  by Agent at any time and from  time to time  upon two (2) days  prior
written  notice to the Borrower  (however,  no notice shall be required  after a
Default or an Event of Default has occurred and is  continuing)  in the exercise
of its reasonable  discretion.  Each Borrower  consents to any such increases or
decreases and  acknowledges  that decreasing the Advance Rates or increasing the
reserves may limit or restrict Advances requested by Borrowing Agent.

         2.2. Procedure for Borrowing Advances.

              (a)  Borrowing  Agent on behalf of any  Borrower  may notify Agent
prior to 11:00 a.m. on a Business Day of a Borrower's  request to incur, on that
day, a Revolving  Advance  hereunder.  Should any amount  required to be paid as
interest  hereunder,  or as fees or other  charges  under this  Agreement or any
other agreement with Agent or Lenders,  or with respect to any other Obligation,
become due,  same shall be deemed a request  for a  Revolving  Advance as of the
date such payment is due, in the amount  required to pay in full such  interest,
fee, charge or Obligation under this Agreement or any other agreement with Agent
or Lenders, and such request shall be irrevocable.

              (b)  Notwithstanding the provisions of (a) above, in the event any
Borrower desires to obtain

                                       12
<PAGE>

a Eurodollar Rate Loan and has become entitled to request a Eurodollar Rate Loan
pursuant to Section 8.3 hereof,  Borrowing Agent shall give Agent at least three
(3) Business Days' prior written notice, specifying (i) the date of the proposed
borrowing  (which shall be a Business  Day),  (ii) the type of borrowing and the
amount on the date of such  Advance to be  borrowed,  which amount shall be in a
minimum amount of $500,000 and in integral multiples of $250,000 thereafter, and
(iii) the duration of the first Interest Period  therefor.  Interest Periods for
Eurodollar  Rate Loans shall be for one, two, or three months;  provided,  if an
Interest  Period would end on a day that is not a Business  Day, it shall end on
the next  succeeding  Business Day unless such day falls in the next  succeeding
calendar month in which case the Interest Period shall end on the next preceding
Business Day. No Eurodollar Rate Loan shall be made available to Borrower during
the continuance of a Default or an Event of Default.

              (c) Each Interest  Period of a Eurodollar Rate Loan shall commence
on the date  such  Eurodollar  Rate  Loan is made and  shall end on such date as
Borrowing  Agent may elect as set forth in subsection  (b)(iii)  above  provided
that the exact length of each Interest  Period shall be determined in accordance
with the practice of the interbank  market for offshore  Dollar  deposits and no
Interest Period shall end after the last day of the Term.

         Borrowing Agent shall elect the initial Interest Period applicable to a
Eurodollar  Rate Loan by its  notice of  borrowing  given to Agent  pursuant  to
Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section
2.2(d),  as the case may be.  Borrowing  Agent shall elect the  duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not less than three (3) Business Days prior to the last day of the then
current  Interest Period  applicable to such Eurodollar Rate Loan. If Agent does
not receive  timely notice of the Interest  Period  elected by Borrowing  Agent,
Borrowers  shall be deemed to have  elected to  convert to a Domestic  Rate Loan
subject to Section 2.2(d) hereinbelow.

              (d) Provided  that no Event of Default  shall have occurred and be
continuing,  any  Borrower  may, on the last  Business  Day of the then  current
Interest Period  applicable to any  outstanding  Eurodollar Rate Loan, or on any
Business Day with respect to Domestic  Rate Loans,  convert any such loan into a
loan of another type in the same aggregate  principal  amount  provided that any
conversion of a Eurodollar Rate Loan shall be made only on the last Business Day
of the then current Interest Period  applicable to such Eurodollar Rate Loan. If
a Borrower desires to convert a loan,  Borrowing Agent shall give Agent not less
than three (3) Business  Days' prior  written  notice to convert from a Domestic
Rate Loan to a  Eurodollar  Rate Loan or one (1)  Business  Day's prior  written
notice  to  convert  from a  Eurodollar  Rate  Loan  to a  Domestic  Rate  Loan,
specifying  the date of such  conversion,  the loans to be converted  and if the
conversion is from a Domestic Rate Loan to any other type of loan,  the duration
of the first Interest Period therefor.

              (e) At its option and upon three (3) Business  Days' prior written
notice,  any Borrower may prepay the Eurodollar  Rate Loans in whole at any time
or in part from time to time,  without  premium  or  penalty,  but with  accrued
interest on the  principal  being  prepaid to the date of such  repayment.  Such
Borrower  shall specify the date of prepayment of Advances  which are Eurodollar
Rate Loans and the amount of such  prepayment.  In the event that any prepayment
of a Eurodollar Rate Loan is required or permitted on a date other than the last
Business Day of the then current  Interest  Period with  respect  thereto,  such
Borrower shall indemnify  Agent and Lenders  therefor in accordance with Section
2.2(f) hereof.

              (f) Each Borrower shall indemnify Agent and Lenders and hold Agent
and Lenders  harmless from and against any and all losses or expenses that Agent
and Lenders may sustain or incur as a consequence of any prepayment,  conversion
of or any default by any Borrower in the payment of the principal of or interest
on any  Eurodollar  Rate Loan or failure by any Borrower to complete a borrowing
of, a prepayment of or  conversion of or to a Eurodollar  Rate Loan after notice
thereof has been given,  including,  but not limited to, any interest payable by
Agent or Lenders to lenders of funds obtained by it in order to make or maintain
its Eurodollar Rate Loans hereunder.  A certificate as to any additional amounts
payable pursuant to the foregoing  sentence  submitted by Agent or any Lender to
Borrowing Agent shall be conclusive absent manifest error.

              (g)  Notwithstanding any other provision hereof, if any applicable
law,  treaty,  regulation  or  directive,  or  any  change  therein  or  in  the
interpretation  or  application  thereof,  shall make it unlawful for any Lender
(for purposes of this subsection (g), the term "Lender" shall include any Lender
and the office or branch where any Lender or any corporation or bank controlling
such Lender makes or maintains  any  Eurodollar  Rate Loans) to make or maintain
its Eurodollar  Rate Loans,  the obligation of Lenders to make  Eurodollar  Rate
Loans  hereunder  shall  forthwith  be cancelled  and  Borrowers  shall,  if any
affected Eurodollar Rate Loans are then outstanding,  promptly upon request from
Agent,  either pay all such  affected  Eurodollar  Rate  Loans or  convert  such
affected Eurodollar

                                       13

<PAGE>

Rate Loans into loans of another  type. If any such payment or conversion of any
Eurodollar  Rate Loan is made on a day that is not the last day of the  Interest
Period applicable to such Eurodollar Rate Loan,  Borrowers shall pay Agent, upon
Agent's  request,  such  amount or amounts  as may be  necessary  to  compensate
Lenders for any loss or expense  sustained  or incurred by Lenders in respect of
such Eurodollar  Rate Loan as a result of such payment or conversion,  including
(but not limited to) any interest or other amounts payable by Lenders to lenders
of funds obtained by Lenders in order to make or maintain such  Eurodollar  Rate
Loan.  A  certificate  as to any  additional  amounts  payable  pursuant  to the
foregoing  sentence  submitted by Lenders to Borrowing Agent shall be conclusive
absent manifest error.

         2.3. Disbursement of Advance Proceeds.  All Advances shall be disbursed
from whichever  office or other place Agent may designate from time to time and,
together  with any and all other  Obligations  of Borrowers to Agent or Lenders,
shall be  charged to  Borrowers'  Account  on  Agent's  books.  During the Term,
Borrowers   may  use  the  Revolving   Advances  by  borrowing,   prepaying  and
reborrowing,  all in  accordance  with the  terms  and  conditions  hereof.  The
proceeds of each Revolving Advance requested by Borrowers or deemed to have been
requested  by Borrowers  under  Section  2.2(a)  hereof  shall,  with respect to
requested Revolving Advances to the extent Lenders make such Revolving Advances,
be made available to the  applicable  Borrower on the day so requested by way of
credit to such  Borrower's  operating  account  at PNC,  or such  other  bank as
Borrowing  Agent may designate  following  notification to Agent, in immediately
available federal funds or other immediately available funds or, with respect to
Revolving  Advances deemed to have been requested by any Borrower,  be disbursed
to Agent to be applied to the outstanding Obligations giving rise to such deemed
request.

         2.4. Term Loan.  Subject to the terms and conditions of this Agreement,
each Lender,  severally  and not jointly,  will make a Term Loan to Borrowers in
the sum equal to such Lender's Commitment Percentage of $1,500,000.00.  The Term
Loan  shall be  advanced  on the  Closing  Date and shall be,  with  respect  to
principal,  payable pursuant to the following schedule,  subject to acceleration
upon the occurrence and during the continuance of an Event of Default under this
Agreement or termination of this Agreement:

             ----------------------------------- -------------------------------
                        Payment Date                          Amount
             ----------------------------------- -------------------------------
             ----------------------------------- -------------------------------
             June 6, 2001                        $75,000
             ----------------------------------- -------------------------------
             ----------------------------------- -------------------------------
             September 6, 2001                   $75,000
             ----------------------------------- -------------------------------
             ----------------------------------- -------------------------------
             December 6, 2001                    $75,000
             ----------------------------------- -------------------------------
             ----------------------------------- -------------------------------
             March 6, 2001                       $75,000
             ----------------------------------- -------------------------------
             ----------------------------------- -------------------------------
             April 6, 2001 through February 6,   $25,000 each month
             2003
             ----------------------------------- -------------------------------
             ----------------------------------- -------------------------------
             March 6, 2003                       $625,000
             ----------------------------------- -------------------------------

and shall be evidenced by one or more secured  promissory  notes  (collectively,
the "Term Note") in substantially the form attached hereto as Exhibit 2.4.

         2.5.  Maximum  Advances.  The aggregate  balance of Revolving  Advances
outstanding  at any time shall not exceed  the lesser of (a)  Maximum  Revolving
Advance Amount or (b) the Formula Amount.

         2.6. Repayment of Advances.

              (a) The Revolving Advances shall be due and payable in full on the
last day of the Term subject to earlier prepayment as herein provided.  The Term
Loan shall be due and  payable as provided in Section 2.4 hereof and in the Term
Note.

              (b) Each Borrower recognizes that the amounts evidenced by checks,
notes,  drafts or any other  items of payment  relating  to and/or  proceeds  of
Collateral  may  not  be   collectible  by  Agent  on  the  date  received.   In
consideration of Agent's agreement to conditionally credit Borrowers' Account as
of the  Business  Day on which  Agent  receives  those  items of  payment,  each
Borrower agrees that, in computing the charges under this  Agreement,  all items
of payment shall be deemed  applied by Agent on account of the  Obligations  one
(1) Business

                                       14
<PAGE>

Day after the Business Day Agent  receives  such  payments via wire  transfer or
electronic  depository  check.  Agent  is  not,  however,   required  to  credit
Borrowers'  Account  for the amount of any item of payment  which is  reasonably
unsatisfactory to Agent and Agent may charge  Borrowers'  Account for the amount
of any item of payment which is returned to Agent unpaid.

              (c) All payments of principal,  interest and other amounts payable
hereunder,  or under  any of the Other  Documents  shall be made to Agent at the
Payment Office not later than 1:00 P.M. (New York Time) on the due date therefor
in lawful money of the United  States of America in federal funds or other funds
immediately available to Agent. Agent shall have the right to effectuate payment
on any and all  Obligations  due and  owing  hereunder  by  charging  Borrowers'
Account or by making Advances as provided in Section 2.2 hereof.

              (d) Borrowers shall pay principal, interest, and all other amounts
payable  hereunder,  or under any of the Other Documents,  without any deduction
whatsoever,  including,  but not  limited  to, any  deduction  for any setoff or
counterclaim.

         2.7.  Repayment of Excess Advances.  The aggregate  balance of Advances
outstanding  at any time in excess of the maximum  amount of Advances  permitted
hereunder (an  "Overadvance")  shall be immediately  due and payable without the
necessity  of any  demand,  at the Payment  Office,  whether or not a Default or
Event of Default has occurred. Provided, however, that if an Overadvance results
from a decrease in the Advance  Rates  resulting  from  Agent's  exercise of its
discretionary rights pursuant to Section 2.1(b) of this Agreement,  the Borrower
shall repay such Overadvance within five (5) days after the occurrence  thereof,
unless such  Overadvance  increases  during such period,  in which case the full
amount of such Overadvance shall be immediately due and payable.

         2.8. Statement of Account. Agent shall maintain, in accordance with its
customary  procedures,  a loan  account  ("Borrowers'  Account")  in the name of
Borrowers in which shall be recorded the date and amount of each Advance made by
Agent and the date and  amount of each  payment in  respect  thereof;  provided,
however, the failure by Agent to record the date and amount of any Advance shall
not  adversely  affect  Agent or any  Lender.  Each  month,  Agent shall send to
Borrowing  Agent a  statement  showing the  accounting  for the  Advances  made,
payments made or credited in respect  thereof,  and other  transactions  between
Agent and Borrowers,  during such month. The monthly  statements shall be deemed
correct and binding upon  Borrowers  in the absence of manifest  error and shall
constitute an account stated between Lenders and Borrowers unless Agent receives
a written statement of Borrowers' specific exceptions thereto within thirty (30)
days after such statement is received by Borrowing  Agent.  The records of Agent
with  respect to the loan  account  shall be  rebuttable,  presumptive  evidence
absent  manifest error of the amounts of Advances and other charges  thereto and
of payments applicable thereto.

         2.9. Additional Payments.  Any sums expended by Agent or any Lender due
to any Borrower's  failure to perform or comply with its obligations  under this
Agreement or any Other Document including,  without  limitation,  any Borrower's
obligations  under Sections 4.2, 4.4, 4.12,  4.13,  4.14 and 6.1 hereof,  may be
charged  to  Borrowers'  Account  as  a  Revolving  Advance  and  added  to  the
Obligations.

         2.10. Manner of Borrowing and Payment.

              (a)  Each  borrowing  of  Revolving  Advances  shall  be  advanced
according to the applicable  Commitment  Percentages  of Lenders.  The Term Loan
shall be advanced according to the Commitment Percentages of Lenders.

              (b) Each  payment  (including  each  prepayment)  by  Borrowers on
account of the  principal of and interest on the  Revolving  Advances,  shall be
applied  to  the  Revolving  Advances  pro  rata  according  to  the  applicable
Commitment  Percentages of Lenders.  Each payment (including each prepayment) by
Borrowers on account of the principal of and interest on the Term Note, shall be
made from or to, or applied to that  portion of the Term Loan  evidenced  by the
Term Note pro rata according to the Commitment Percentages of Lenders. Except as
expressly  provided herein, all payments  (including  prepayments) to be made by
any  Borrower on account of  principal,  interest and fees shall be made without
set off or  counterclaim  and shall be made to Agent on behalf of the Lenders to
the Payment  Office,  in each case on or prior to 1:00 P.M.,  New York time,  in
Dollars and in immediately available funds.

              (c) (i)  Notwithstanding  anything to the  contrary  contained  in
Sections  2.10(a)  and (b)  hereof,  commencing  with  the  first  Business  Day
following  the Closing  Date,  each  borrowing  of Revolving  Advances  shall be
advanced  by Agent and each  payment by any  Borrower  on  account of  Revolving
Advances shall be applied first to those Revolving  Advances  advanced by Agent.
On or before 1:00 P.M., New York time, on each

                                       15

<PAGE>
Settlement Date commencing with the first  Settlement Date following the Closing
Date,  Agent and Lenders  shall make  certain  payments  as follows:  (I) if the
aggregate  amount of new  Revolving  Advances made by Agent during the preceding
Week (if any) exceeds the aggregate amount of repayments  applied to outstanding
Revolving  Advances  during such preceding  Week, then each Lender shall provide
Agent with funds in an amount equal to its applicable  Commitment  Percentage of
the difference  between (w) such Revolving  Advances and (x) such repayments and
(II) if the aggregate  amount of  repayments  applied to  outstanding  Revolving
Advances during such Week exceeds the aggregate amount of new Revolving Advances
made during such Week,  then Agent  shall  provide  each Lender with funds in an
amount equal to its applicable  Commitment  Percentage of the difference between
(y) such repayments and (z) such Revolving Advances.

                   (ii) Each Lender  shall be  entitled to earn  interest at the
applicable Contract Rate on outstanding Advances which it has funded.

                   (iii) Promptly  following each Settlement  Date,  Agent shall
submit to each  Lender a  certificate  with  respect to  payments  received  and
Advances made during the Week  immediately  preceding such Settlement Date. Such
certificate of Agent shall be conclusive in the absence of manifest error.

              (d) If any Lender or Participant  (a "benefited  Lender") shall at
any  time  receive  any  payment  of all or part of its  Advances,  or  interest
thereon,  or receive any Collateral in respect thereof  (whether  voluntarily or
involuntarily  or by set-off) in a greater  proportion  than any such payment to
and  Collateral  received by any other Lender,  if any, in respect of such other
Lender's Advances,  or interest thereon, and such greater  proportionate payment
or receipt of Collateral is not expressly  permitted  hereunder,  such benefited
Lender shall  purchase for cash from the other Lenders a  participation  in such
portion of each such other Lender's Advances, or shall provide such other Lender
with the benefits of any such Collateral,  or the proceeds thereof,  as shall be
necessary to cause such benefited Lender to share the excess payment or benefits
of such Collateral or proceeds ratably with each of the other Lenders; provided,
however,  that if all or any  portion  of such  excess  payment or  benefits  is
thereafter  recovered  from  such  benefited  Lender,  such  purchase  shall  be
rescinded,  and the purchase price and benefits returned,  to the extent of such
recovery,  but without interest.  Each Lender so purchasing a portion of another
Lender's  Advances  may  exercise  all  rights of  payment  (including,  without
limitation,  rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.

              (e) Unless Agent shall have been notified by telephone,  confirmed
in writing,  by any Lender that such Lender will not make the amount which would
constitute its  applicable  Commitment  Percentage of the Advances  available to
Agent,  Agent may (but shall not be obligated  to) assume that such Lender shall
make such amount available to Agent on the next Settlement Date and, in reliance
upon such assumption,  make available to Borrowers a corresponding amount. Agent
will promptly notify  Borrowers of its receipt of any such notice from a Lender.
If such amount is made  available to Agent on a date after such next  Settlement
Date, such Lender shall pay to Agent on demand an amount equal to the product of
(i) the daily average Federal Funds Rate (computed on the basis of a year of 360
days) during such period as quoted by Agent, times (ii) such amount, times (iii)
the number of days from and including such  Settlement Date to the date on which
such amount  becomes  immediately  available to Agent.  A  certificate  of Agent
submitted to any Lender with respect to any amounts  owing under this  paragraph
(e) shall be conclusive, in the absence of manifest error. If such amount is not
in fact made  available to Agent by such Lender  within three (3) Business  Days
after such Settlement  Date,  Agent shall be entitled to recover such an amount,
with interest  thereon at the rate per annum then  applicable to such  Revolving
Advances hereunder,  on demand from Borrowers;  provided,  however, that Agent's
right to such  recovery  shall  not  prejudice  or  otherwise  adversely  affect
Borrowers' rights (if any) against such Lender.

         2.11. Mandatory Prepayments.

              (a)  Except  as set  forth in  Section  2.11(c)  hereof,  when any
Borrower  sells  or  otherwise  disposes  of any  Collateral  in  excess  in the
aggregate of $50,000 at any time,  other than  Inventory and  Receivables in the
ordinary course of business, or equipment that in Borrower's reasonable judgment
is no longer  necessary  or useful in such  business as permitted by Section 4.3
hereof, or any other equipment to the extent that the proceeds received from the
sale of such equipment is used to purchase new equipment,  Borrowers shall repay
the Advances in an amount  equal to the net  proceeds of such sale (i.e.,  gross
proceeds less the reasonable  costs of such sales or other  dispositions),  such
repayments to be made promptly but in no event more than three (3) Business Days
following  receipt of such net  proceeds,  and until the date of  payment,  such
proceeds shall be held in trust for Agent.  The foregoing shall not be deemed to
be  implied  consent  to any such  sale  otherwise  prohibited  by the terms and
conditions  hereof.  Such repayments  shall be applied first, to the outstanding
principal installments of the Term Loan

                                       16

<PAGE>

in the inverse  order of the  maturities  thereof and second,  to the  remaining
Advances in such order as Agent may determine,  subject to Borrower's ability to
reborrow Revolving Advances in accordance with the terms hereof.

              (b) Borrowers shall prepay the outstanding  amount of the Advances
in an amount equal to 50% of Excess Cash Flow,  for each fiscal year  commencing
on or after January 1, 2000,  payable upon delivery of the financial  statements
to Agent  referred to in and required by Section 9.7 for such fiscal year but in
any event not later  than  ninety  (90) days  after the end of each such  fiscal
year, which amount shall be applied to the outstanding principal installments of
the Term Loan in the inverse order of the maturities  thereof. In the event that
the  financial  statement is not so  delivered,  then a  calculation  based upon
estimated amounts shall be made by Agent upon which calculation  Borrowers shall
make the prepayment required by this Section 2.9(b),  subject to adjustment when
the  financial   statement  is  delivered  to  Agent  as  required  hereby.  The
calculation  made by Agent  shall not be deemed a waiver of any rights  Agent or
Lenders  may have as a result  of the  failure  by  Borrowers  to  deliver  such
financial statement.

              (c)  Upon  the  sale of the  Process  Control  Rheometer  Business
pursuant to Section 4.3 hereof,  the  proceeds  derived  from such sale shall be
disbursed as follows:  (x) first,  to a reduction in the  outstanding  principal
balance of the Term Note to $680,000, (y) second, to pay in full the outstanding
amount of the Subordinated  Note, and (z) third, any remainder to a reduction in
the  principal  amount  outstanding  under the Term Note in the inverse order of
maturity.

         2.12. Use of Proceeds.  Borrowers  shall apply the proceeds of Advances
to (i) repay existing  indebtedness owed to Fleet Capital Corporation,  (ii) pay
fees and expenses relating to this transaction, (iii) pay indebtedness under the
Subordinated  Note,  (iv) pay  indebtedness  to Mettler  Toledo GmbH, and (v) to
provide for their working capital needs.

         2.13. Defaulting Lender.

              (a) Notwithstanding  anything to the contrary contained herein, in
the event any Lender (x) has refused (which refusal constitutes a breach by such
Lender of its obligations under this Agreement) to make available its portion of
any Advance or (y) notifies  either  Agent or  Borrowing  Agent that it does not
intend to make available its portion of any Advance (if the actual refusal would
constitute  a breach by such  Lender of its  obligations  under this  Agreement)
(each, a "Lender Default"),  all rights and obligations hereunder of such Lender
(a  "Defaulting  Lender")  as to which a Lender  Default is in effect and of the
other parties  hereto shall be modified to the extent of the express  provisions
of this Section 2.13 while such Lender Default remains in effect.

              (b)  Advances  shall  be  incurred  pro  rata  from  Lenders  (the
"Non-Defaulting  Lenders")  which  are not  Defaulting  Lenders  based  on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any  Advances  required to be advanced by any Lender shall
be increased as a result of such Lender Default.  Amounts received in respect of
principal  of any type of  Advances  shall be applied  to reduce the  applicable
Advances  of each  Lender pro rata  based on the  aggregate  of the  outstanding
Advances of that type of all Lenders at the time of such application;  provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that,  the aggregate  amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.

              (c) A Defaulting Lender shall not be entitled to give instructions
to Agent or to approve,  disapprove,  consent to or vote on any matters relating
to this Agreement and the Other  Documents.  All  amendments,  waivers and other
modifications  of this  Agreement  and the Other  Documents  may be made without
regard to a Defaulting  Lender and, for purposes of the  definition of "Required
Lenders", a Defaulting Lender shall be deemed not to be a Lender and not to have
Advances outstanding.

              (d) Other than as expressly  set forth in this Section  2.11,  the
rights and  obligations  of a Defaulting  Lender  (including  the  obligation to
indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in
this  Section  2.11 shall be deemed to release  any  Defaulting  Lender from its
obligations  under this  Agreement  and the Other  Documents,  shall  alter such
obligations,  shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender
may have  against  any  Defaulting  Lender  as a result of any  default  by such
Defaulting Lender hereunder.

              (e) In the event a Defaulting  Lender  retroactively  cures to the
satisfaction  of Agent the breach  which  caused a Lender to become a Defaulting
Lender,  such Defaulting Lender shall no longer be a

                                       17

<PAGE>

Defaulting Lender and shall be treated as a Lender under this Agreement.

         2.14  Letters of Credit.  Subject to the terms and  conditions  hereof,
Agent  shall  issue or cause the  issuance  of  Letters of Credit  ("Letters  of
Credit") on behalf of any Borrower;  provided,  however,  that Agent will not be
required to issue or cause to be issued any Letters of Credit to the extent that
the face  amount of such  Letters of Credit  would then cause the sum of (i) the
outstanding Revolving Advances plus (ii) outstanding Letters of Credit to exceed
the  lesser of (x) the  Maximum  Revolving  Advance  Amount  or (y) the  Formula
Amount.  All  disbursements  or payments  related to Letters of Credit  shall be
deemed to be Domestic Rate Loans consisting of Revolving Advances and shall bear
interest at the Revolving  Interest  Rate;  Letters of Credit that have not been
drawn upon shall not bear interest.

         2.15. Issuance of Letters of Credit.

              (a) Borrowing Agent, on behalf of Borrowers,  may request Agent to
issue or cause the issuance of a Letter of Credit by  delivering to Agent at the
Payment  Office,  Agent's form of Letter of Credit  Application  (the "Letter of
Credit  Application")  completed to the  satisfaction of Agent;  and, such other
certificates, documents and other papers and information as Agent may reasonably
request.  Borrowing  Agent,  on behalf of Borrowers,  also has the right to give
instructions and make agreements with respect to any application, any applicable
letter  of  credit  and  security  agreement,  any  applicable  letter of credit
reimbursement  agreement  and/or any other applicable  agreement,  any letter of
credit and the  disposition of documents,  disposition of any unutilized  funds,
and to agree with Agent upon any  amendment,  extension or renewal of any Letter
of Credit.

              (b) Each Letter of Credit shall,  among other things,  (i) provide
for the payment of sight drafts or  acceptances  of usance drafts when presented
for honor  thereunder in accordance with the terms thereof and when  accompanied
by the documents  described  therein and (ii) have an expiry date not later than
six (6) months  after such Letter of Credit's  date of issuance  and in no event
later than the last day of the Term.  Each Letter of Credit  shall be subject to
the Uniform  Customs and  Practice  for  Documentary  Credits  (1993  Revision),
International  Chamber of Commerce  Publication  No. 500, and any  amendments or
revision  thereof  adhered to by the Issuer and, to the extent not  inconsistent
therewith, the laws of the State of New Jersey.

              (c) Agent shall use its  reasonable  efforts to notify  Lenders of
the request by Borrowing Agent for a Letter of Credit hereunder.

         2.16. Requirements For Issuance of Letters of Credit.

              (a) In  connection  with the  issuance  of any  Letter  of  Credit
Borrowers  shall  indemnify,  save and hold  Agent,  each Lender and each Issuer
harmless  from  any  loss,  cost,  expense  or  liability,   including,  without
limitation,  payments  made by Agent,  any Lender or any Issuer and expenses and
reasonable  attorneys' fees incurred by Agent,  any Lender or Issuer arising out
of, or in connection  with, any Letter of Credit to be issued or created for any
Borrower.  Borrowers  shall be bound by Agent's or any Issuer's  regulations and
good  faith  interpretations  of any  Letter of Credit  issued  or  created  for
Borrowers' Account,  although this interpretation may be different from its own;
and,  neither  Agent,  nor  any  Lender,   nor  any  Issuer  nor  any  of  their
correspondents shall be liable for any error, negligence,  or mistakes,  whether
of omission or  commission,  in following  Borrowing  Agent's or any  Borrower's
instructions or those contained in any Letter of Credit or of any modifications,
amendments or  supplements  thereto or in issuing or paying any Letter of Credit
except for Agent's, any Lender's,  any Issuer's or such correspondents'  willful
misconduct.

              (b) Borrowing  Agent shall authorize and direct any Issuer to name
the applicable  Borrower as the "Applicant" or "Account Party" of each Letter of
Credit.  If Agent is not the  Issuer of any Letter of  Credit,  Borrowing  Agent
shall  authorize  and direct  the  Issuer to  deliver to Agent all  instruments,
documents,  and other writings and property  received by the Issuer  pursuant to
the  Letter of Credit  and to accept  and rely  upon  Agent's  instructions  and
agreements  with respect to all matters arising in connection with the Letter of
Credit, the application therefor or any acceptance therefor.

              (c) In  connection  with all Letters of Credit issued or caused to
be issued by Agent under this

                                       18
<PAGE>

Agreement,  each  Borrower  hereby  appoints  Agent,  or  its  designee,  as its
attorney,  with  full  power  and  authority  (i) to sign  and/or  endorse  such
Borrower's  name  upon  any  warehouse  or  other  receipts,  letter  of  credit
applications  and  acceptances;  (ii) to sign such  Borrower's  name on bills of
lading;  (iii) to clear  Inventory  through the United States of America Customs
Department  ("Customs")  in the  name of  such  Borrower  or  Agent  or  Agent's
designee, and to sign and deliver to Customs officials powers of attorney in the
name of such Borrower for such purpose;  and (iv) to complete in such Borrower's
name or  Agent's,  or in the  name  of  Agent's  designee,  any  order,  sale or
transaction, obtain the necessary documents in connection therewith, and collect
the proceeds  thereof.  Neither Agent nor its  attorneys  will be liable for any
acts or  omissions  nor for any error of  judgment  or  mistakes of fact or law,
except for Agent's or its  attorney's  willful  misconduct.  This  power,  being
coupled with an interest, is irrevocable as long as any Letters of Credit remain
outstanding.

              (d) Each Lender shall to the extent of the percentage amount equal
to the product of such Lender's Commitment Percentage times the aggregate amount
of all unreimbursed reimbursement obligations arising from disbursements made or
obligations  incurred  with  respect to the  Letters of Credit be deemed to have
irrevocably  purchased  an  undivided  participation  in each such  unreimbursed
reimbursement  obligation.  In the event that at the time a disbursement is made
the unpaid  balance of  Revolving  Advances  exceeds or would  exceed,  with the
making of such disbursement,  the lesser of the Maximum Revolving Advance Amount
or the Formula  Amount,  and such  disbursement  is not  reimbursed by Borrowers
within two (2) Business Days,  Agent shall promptly  notify each Lender and upon
Agent's demand each Lender shall pay to Agent such Lender's  proportionate share
of such  unreimbursed  disbursement  together with such  Lender's  proportionate
share of Agent's  unreimbursed  costs and expenses relating to such unreimbursed
disbursement.  Upon  receipt by Agent of a  repayment  from any  Borrower of any
amount  disbursed  by Agent  for which  Agent had  already  been  reimbursed  by
Lenders, Agent shall deliver to each Lender that Lender's pro rata share of such
repayment.  Each Lender's participation commitment shall continue until the last
to occur of any of the  following  events:  (A) Agent  ceases to be obligated to
issue or cause to be issued Letters of Credit hereunder; (B) no Letter of Credit
issued hereunder  remains  outstanding and uncancelled or (C) all Persons (other
than the applicable  Borrower) have been fully  reimbursed for all payments made
under or relating to Letters of Credit.

III.     INTEREST AND FEES.

         3.1. Interest.  Interest on Advances shall be payable in arrears on the
first day of each month with respect to Domestic Rate Loans and, with respect to
Eurodollar  Rate Loans,  at the end of each Interest  Period or, for  Eurodollar
Rate Loans with an Interest Period in excess of three months,  at the earlier of
(a) each  three  months  on the  anniversary  date of the  commencement  of such
Eurodollar  Rate Loan or (b) the end of the Interest  Period.  Interest  charges
shall be computed on the actual principal amount of Advances  outstanding during
the month (the "Monthly Advances") at a rate per annum equal to (i) with respect
to Revolving  Advances,  the  applicable  Revolving  Interest Rate and (ii) with
respect  to the Term  Loan,  the Term Loan Rate (as  applicable,  the  "Contract
Rate").  Whenever,  subsequent to the date of this  Agreement,  the Base Rate is
increased or  decreased,  the  applicable  Contract Rate for Domestic Rate Loans
shall be  similarly  changed  without  notice or demand of any kind by an amount
equal to the amount of such  change in the  Alternate  Base Rate during the time
such change or changes remain in effect.  The Eurodollar  Rate shall be adjusted
with respect to Eurodollar  Rate Loans  without  notice or demand of any kind on
the effective date of any change in the Reserve  Percentage as of such effective
date.  Upon and after the  occurrence  of an Event of  Default,  and  during the
continuation thereof, (i) the Obligations other than Eurodollar Rate Loans shall
bear  interest  at the  applicable  Contract  Rate for  Domestic  Loans plus two
percent (2%) per annum and (ii) Eurodollar Rate Loans shall bear interest at the
Revolving  Interest  Rate for  Eurodollar  Rate Loans plus two percent  (2%) per
annum (as applicable, the "Default Rate").

         3.2. Other Fees. (a) Closing Fee. Upon the execution of this Agreement,
Borrowers shall pay to Agent for the ratable benefit of Lenders a closing fee of
$177,500.00  less that  portion  of the  commitment  fee of  $75,000.00  and the
deposit fee of $15,000.00  heretofore paid by Borrowers to Agent remaining after
application of such fee to out of pocket expenses.

              (b) Facility  Fee. If, for any month during the Term,  the average
daily unpaid  balance of the Revolving  Advances for each day of such month does
not equal the Maximum  Revolving  Advance  Amount,  then Borrowers  shall pay to
Agent for the ratable benefit of Lenders a fee at a rate equal to  three-eighths
of one  percent  (3/8%) per annum on the amount by which the  Maximum  Revolving
Advance  Amount  exceeds such average  daily unpaid  balance.  Such fee shall be
payable to Agent in arrears on the last day of each month.

                                       19
<PAGE>

              (c) EXIM Bank Fee. Upon the first anniversary of the Closing date,
and annually  thereafter in advance until the payment in full of all obligations
due hereunder,  the Borrowers shall pay an EXIM Bank Fee equal to $97,500.00 per
annum.

              (d) Term Loan Fee.  In the event  that the  outstanding  principal
balance under the Term Loan is not reduced to  $680,000.00  or less by the first
anniversary of the Closing Date, then the Borrowers shall pay a Term Loan Fee of
$50,000.00.

              (e) Letter of Credit  Fees.(e)  Borrowers  shall pay (x) to Agent,
for the benefit of  Lenders,  fees for each Letter of Credit for the period from
and  excluding  the  date  of  issuance  of same to and  including  the  date of
expiration  or  termination,  equal to the  average  daily  face  amount of each
outstanding  Letter of Credit  multiplied by such fees as are  chargeable by the
Lenders  calculated on the basis of a 360-day year for the actual number of days
elapsed and to be payable  monthly in arrears on the first day of each month and
on the last day of the Term and (y) to the Issuer, any and all fees and expenses
as agreed  upon by the Issuer and the  Borrowing  Agent in  connection  with any
Letter of Credit, including, without limitation, in connection with the opening,
amendment  or renewal of any such Letter of Credit and any  acceptances  created
thereunder and shall reimburse Agent for any and all fees and expenses,  if any,
paid by Agent to the Issuer (all of the  foregoing  fees,  the "Letter of Credit
Fees").  All such  charges  shall be deemed  earned in full on the date when the
same are due and  payable  hereunder  and  shall  not be  subject  to  rebate or
proration upon the termination of this Agreement for any reason. Any such charge
in effect at the time of a particular  transaction  shall be the charge for that
transaction,  notwithstanding  any subsequent change in the Issuer's  prevailing
charges  for that  type of  transaction.  All  Letter  of  Credit  Fees  payable
hereunder  shall be deemed  earned in full on the date when the same are due and
payable  hereunder  and shall not be  subject  to rebate or  proration  upon the
termination of this Agreement for any reason.

         On demand,  Borrowers will cause cash to be deposited and maintained in
an account with Agent, as cash collateral, in an amount equal to one hundred and
five percent  (105%) of the  outstanding  Letters of Credit,  and each  Borrower
hereby  irrevocably  authorizes  Agent,  in its  discretion,  on such Borrower's
behalf and in such  Borrower's  name,  to open such an  account  and to make and
maintain  deposits  therein,  or in an account opened by such  Borrower,  in the
amounts required to be made by such Borrower, out of the proceeds of Receivables
or other  Collateral or out of any other funds of such Borrower  coming into any
Lender's  possession at any time.  Agent will invest such cash collateral  (less
applicable reserves) in such short-term money-market items as to which Agent and
such Borrower  mutually  agree and the net return on such  investments  shall be
credited to such account and constitute additional cash collateral.  No Borrower
may  withdraw  amounts  credited to any such  account  except  upon  payment and
performance in full of all Obligations and termination of this Agreement.

         3.3.  (a)  Collateral  Evaluation  Fee.  Borrowers  shall  pay  Agent a
collateral  evaluation fee equal to $1,500.00 per month  commencing on the first
day of the month  following  the Closing Date and on the first day of each month
thereafter during the Term. The collateral evaluation fee shall be deemed earned
in full on the date  when  same is due and  payable  hereunder  and shall not be
subject  to rebate or  proration  upon  termination  of this  Agreement  for any
reason.

              (b)  Collateral  Monitoring . Borrowers  shall pay to Agent on the
first  day of each  month  following  any  month in  which  Agent  performs  any
collateral  monitoring - namely any field  examination,  collateral  analysis or
other business analysis,  the need for which is to be determined by Agent in its
reasonable discretion and which monitoring is undertaken by Agent or for Agent's
benefit - a  collateral  monitoring  fee in an amount  equal to $750 per day for
each person (other than Agent's management  personnel)  employed to perform such
monitoring, plus all reasonable costs and disbursements incurred by Agent in the
performance of such examination or analysis.

         3.4.  Computation  of Interest and Fees.  Interest  and fees  hereunder
shall be computed  on the basis of a year of 360 days and for the actual  number
of days elapsed.  If any payment to be made hereunder becomes due and payable on
a day other than a Business  Day, the due date thereof  shall be extended to the
next  succeeding  Business  Day and  interest  thereon  shall be  payable at the
applicable Contract Rate for Domestic Rate Loans during such extension.

         3.5. Maximum  Charges.  In no event whatsoever shall interest and other
charges charged  hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed  hereunder would  otherwise  exceed
the highest rate permitted  under law, such excess amount shall be first applied
to any unpaid

                                       20

<PAGE>

principal balance owed by Borrowers,  and if the then remaining excess amount is
greater than the previously  unpaid  principal  balance,  Lenders shall promptly
refund such excess amount to Borrowers and the provisions hereof shall be deemed
amended to provide for such permissible rate.

         3.6.  Increased  Costs. In the event that any applicable law, treaty or
governmental  regulation  first made  effective  after the date  hereof,  or any
change therein or in the  interpretation  or application of any applicable  law,
treaty or governmental  regulation  after the date hereof,  or compliance by any
Lender (for purposes of this Section 3.6, the term "Lender"  shall include Agent
or any Lender and any corporation or bank  controlling  Agent or any Lender) and
the  office  or  branch  where  Agent or any  Lender  (as so  defined)  makes or
maintains any  Eurodollar  Rate Loans with any request or directive  (whether or
not having the force of law) first made after the date  hereof  from any central
bank or other financial, monetary or other authority, shall:

              (a) subject Agent or any Lender to any tax of any kind  whatsoever
with  respect to this  Agreement  or any Other  Document  or change the basis of
taxation of payments to Agent or any Lender of principal,  fees, interest or any
other amount payable  hereunder or under any Other Documents (except for changes
in the rate of tax on the  overall  net  income  of Agent or any  Lender  by the
jurisdiction in which it maintains its principal office);

              (b)  impose,  modify  or  hold  applicable  any  reserve,  special
deposit,  assessment or similar  requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by, any
office  of Agent or any  Lender,  including  (without  limitation)  pursuant  to
Regulation D of the Board of Governors of the Federal Reserve System; or

              (c)  impose  on  Agent  or  any  Lender  or the  London  interbank
Eurodollar  market any other  condition  with  respect to this  Agreement or any
Other Document;

and the result of any of the  foregoing  is to increase the cost to Agent or any
Lender of making,  renewing or maintaining  its Advances  hereunder by an amount
that Agent or such  Lender  deems to be  material or to reduce the amount of any
payment  (whether of principal,  interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be material,  then,  in
any case  Borrowers  shall  promptly  pay Agent or such  Lender  within five (5)
Business  Days  following  written  demand,   such  additional  amount  as  will
compensate  Agent or such Lender for such additional cost or such reduction,  as
the case may be,  provided that the foregoing shall not apply to increased costs
which are reflected in the Eurodollar  Rate.  Agent or such Lender shall certify
the amount of such  additional  cost or reduced  amount to  Borrowers,  and such
certification shall be conclusive absent manifest error.

         3.7. Basis For Determining  Interest Rate Inadequate or Unfair.  In the
event that Agent or any Lender shall have determined that:

              (a) reasonable  means do not exist for ascertaining the Eurodollar
Rate for any Interest Period; or

              (b) Dollar  deposits in the  relevant  amount and for the relevant
maturity  are not  available in the London  interbank  Eurodollar  market,  with
respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan,
or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan,

then Agent shall give Borrowing Agent prompt written,  telephonic or telegraphic
notice of such  determination.  If such notice is given,  (i) any such requested
Eurodollar  Rate Loan shall be made as a Domestic  Rate Loan,  unless  Borrowing
Agent shall notify  Agent no later than 10:00 a.m.  (New York City time) two (2)
Business Days prior to the date of such proposed borrowing, that its request for
such  borrowing  shall be cancelled or made as an unaffected  type of Eurodollar
Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have
been converted to an affected type of Eurodollar Rate Loan shall be continued as
or converted  into a Domestic  Rate Loan,  or, if  Borrowing  Agent shall notify
Agent, no later than 10:00 a.m. (New York City time) two (2) Business Days prior
to the  proposed  conversion,  shall  be  maintained  as an  unaffected  type of
Eurodollar Rate Loan, and (iii) any outstanding  affected  Eurodollar Rate Loans
shall be  converted  into a Domestic  Rate Loan,  or, if  Borrowing  Agent shall
notify  Agent,  no later than 10:00 a.m.  (New York City time) two (2)  Business
Days  prior  to the  last  Business  Day of the  then  current  Interest  Period
applicable to such affected  Eurodollar  Rate Loan,  shall be converted  into an
unaffected  type of  Eurodollar  Rate Loan, on the last Business Day of the then
current  Interest  Period for such affected  Eurodollar  Rate Loans . Until such
notice has been withdrawn,  Lenders shall have no obligation to make an affected
type of Eurodollar Rate Loan or maintain  outstanding  affected  Eurodollar Rate
Loans and no Borrower shall have the right to convert a Domestic Rate Loan or an
unaffected type of Eurodollar

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<PAGE>

Rate Loan into an affected type of Eurodollar Rate Loan.

         3.8. Capital Adequacy.

              (a) In the event that Agent or any  Lender  shall have  determined
that any  applicable  law,  rule,  regulation or guideline  first made effective
after the date hereof regarding capital adequacy,  or any change therein, or any
change after the date hereof in the interpretation or administration  thereof by
any governmental  authority,  central bank or comparable agency charged with the
interpretation or administration  thereof,  or compliance by Agent or any Lender
(for purposes of this Section 3.8, the term "Lender"  shall include Agent or any
Lender and any  corporation  or bank  controlling  Agent or any  Lender) and the
office or branch  where Agent or any Lender (as so defined)  makes or  maintains
any  Eurodollar  Rate Loans with any request or directive  first made  effective
after the date  hereof  regarding  capital  adequacy  (whether or not having the
force of law) of any such authority,  central bank or comparable  agency, has or
would have the effect of  reducing  the rate of return on Agent or any  Lender's
capital as a  consequence  of its  obligations  hereunder  to a level below that
which Agent or such Lender could have achieved but for such adoption,  change or
compliance  (taking into  consideration  Agent's and each Lender's policies with
respect to capital  adequacy)  by an amount  deemed by Agent or any Lender to be
material,  then, from time to time, Borrowers shall pay within five (5) Business
Days of written  demand  from Agent or such  Lender  such  additional  amount or
amounts  as will  compensate  Agent  or  such  Lender  for  such  reduction.  In
determining such amount or amounts,  Agent or such Lender may use any reasonable
averaging or  attribution  methods.  The protection of this Section 3.8 shall be
available  to Agent and each Lender  regardless  of any possible  contention  of
invalidity or inapplicability  with respect to the applicable law, regulation or
condition.

              (b) A  certificate  of Agent or such  Lender  setting  forth  such
amount or amounts as shall be necessary to compensate  Agent or such Lender with
respect to Section 3.8(a) hereof when delivered to Borrowers shall be conclusive
absent manifest error.  Such certificate  shall set forth in reasonable detail a
calculation  of the amount due and the Agent's or Lender's  reasons for invoking
the provisions of Section 3.8 hereof.

IV.      COLLATERAL:  GENERAL TERMS

         4.1. Security Interest in the Collateral.  To secure the prompt payment
and  performance  to Agent and each  Lender of the  Obligations,  each  Borrower
hereby assigns,  pledges and grants to Agent for its benefit and for the ratable
benefit  of each  Lender a  continuing  security  interest  in and to all of its
Collateral,  whether now owned or existing or hereafter  acquired or arising and
wheresoever  located.  Each Borrower  shall mark its books and records as may be
necessary or  appropriate  to  evidence,  protect and perfect  Agent's  security
interest  and shall cause its  financial  statements  to reflect  such  security
interest.

         4.2.  Perfection of Security  Interest.  Each  Borrower  shall take all
action that may be necessary or desirable,  or that Agent may request,  so as at
all times to maintain the validity,  perfection,  enforceability and priority of
Agent's  security  interest  in the  Collateral  or to enable  Agent to protect,
exercise or enforce its rights hereunder and in the Collateral,  including,  but
not  limited  to,  (i)  promptly  discharging  all Liens  other  than  Permitted
Encumbrances,  (ii)  obtaining  landlords' or  mortgagees'  lien waivers,  (iii)
delivering to Agent,  endorsed or accompanied by such  instruments of assignment
as Agent may  specify,  and  stamping  or  marking,  in such manner as Agent may
specify, any and all chattel paper, instruments,  letters of credits and advices
thereof  and  documents  evidencing  or forming a part of the  Collateral,  (iv)
entering into warehousing,  lockbox and other custodial arrangements  reasonably
satisfactory to Agent,  and (v) executing and delivering  financing  statements,
instruments of pledge, mortgages,  notices and assignments, in each case in form
and  substance  reasonably  satisfactory  to Agent,  relating  to the  creation,
validity,  perfection,  maintenance or continuation of Agent's security interest
under the  Uniform  Commercial  Code or other  applicable  law.  Agent is hereby
authorized to file financing  statements  signed by Agent instead of Borrower in
accordance  with Section  9-402(2) of Uniform  Commercial Code as adopted in the
State of New Jersey. All charges, expenses and fees Agent may incur in doing any
of the  foregoing,  and any local taxes  relating  thereto,  shall be charged to
Borrowers'  Account as a Revolving  Advance of a Domestic Rate Loan and added to
the Obligations,  or, at Agent's option,  shall be paid to Agent for the ratable
benefit of Lenders immediately upon demand.

         4.3.  Disposition  of  Collateral.  Each  Borrower  will  safeguard and
protect all  Collateral  for  Agent's  general  account and make no  disposition
thereof whether by sale, lease or otherwise except: (a) the sale of Inventory in
the ordinary course of business; (b) the disposition or transfer of obsolete and
worn out  equipment  in the  ordinary  course of  business;  (c) the sale of the
Process  Control  Rheometer  Business  provided  the  proceeds  of such sale are
disbursed in conformity with Section 2.11(c) hereof;  and (d) the abandonment of
intellectual property rights in the

                                       22
<PAGE>

ordinary course of business.

         4.4.  Preservation  of Collateral.  Following the occurrence and during
the  continuance of a Default or an Event of Default,  in addition to the rights
and remedies set forth in Section 11.1 hereof,  Agent:  (a) may at any time take
such steps as Agent deems  reasonably  necessary to protect Agent's  interest in
and to preserve the Collateral,  including the hiring of such security guards or
the placing of other security protection measures as Agent may deem appropriate;
(b) may employ and maintain at any of any  Borrower's  premises a custodian  who
shall have full authority to do all acts necessary to protect Agent's  interests
in the Collateral;  (c) may lease  warehouse  facilities to which Agent may move
all or part of the Collateral; (d) may use any Borrower's owned or leased lifts,
hoists,  trucks and other  facilities  or equipment for handling or removing the
Collateral;  and (e) shall have, and is hereby  granted,  a right of ingress and
egress to the places where the  Collateral is located,  and may proceed over and
through  any of  Borrower's  owned  or  leased  property.  Each  Borrower  shall
cooperate  fully with all of Agent's efforts to preserve the Collateral and will
take such actions to preserve the Collateral as Agent may reasonably direct. All
of Agent's  reasonable  expenses of  preserving  the  Collateral,  including any
expenses relating to the bonding of a custodian,  shall be charged to Borrowers'
Account  as a  Revolving  Advance  of a  Domestic  Rate  Loan  and  added to the
Obligations.

         4.5.  Ownership of Collateral.  With respect to the Collateral,  at the
time the  Collateral  becomes  subject to Agent's  security  interest:  (a) each
Borrower  shall be the  sole  owner of and  fully  authorized  and able to sell,
transfer,  pledge and/or grant a first  priority  security  interest in each and
every item of the its respective  Collateral to Agent; and, except for Permitted
Encumbrances,  the  Collateral  shall  be  free  and  clear  of  all  Liens  and
encumbrances  whatsoever;  (b) each  document  and  agreement  executed  by each
Borrower or delivered to Agent or any Lender in connection  with this  Agreement
shall be true and correct in all respects;  (c) all signatures and  endorsements
of each Borrower that appear on such documents and  agreements  shall be genuine
and each  Borrower  shall  have full  capacity  to  execute  same;  and (d) each
Borrower's Equipment and Inventory shall be located as set forth on Schedule 4.5
and shall not be removed from such location(s) without the prior written consent
of Agent, which shall not be unreasonably  withheld,  except with respect to the
sale of Inventory in the ordinary course of business and as otherwise  permitted
by Section 4.3 hereof.

         4.6. Defense of Agent's and Lenders'  Interests.  Until (a) payment and
performance  in  full of all of the  Obligations  and  (b)  termination  of this
Agreement,  Agent's interests in the Collateral shall continue in full force and
effect.  During such period no Borrower  shall,  without  Agent's  prior written
consent,  pledge,  sell (except  Inventory in the ordinary  course of business),
assign, transfer,  create or suffer to exist a Lien upon or encumber or allow or
suffer to be encumbered in any way except for Permitted  Encumbrances,  any part
of the Collateral except as permitted by Section 4.3 hereof. Each Borrower shall
defend  Agent's  interests  in  the  Collateral  against  any  and  all  Persons
whatsoever. At any time following the occurrence and during the continuance of a
Default  or an  Event  of  Default  and  demand  by  Agent  for  payment  of all
Obligations, Agent shall have the right to take possession of the indicia of the
Collateral and the  Collateral in whatever  physical form  contained,  including
without limitation: labels, stationery,  documents,  instruments and advertising
materials.  If Agent  exercises this right to take possession of the Collateral,
Borrowers shall,  upon demand,  assemble it in the best manner possible and make
it available to Agent at a place  reasonably  convenient to Agent.  In addition,
with respect to all  Collateral,  Agent and Lenders  shall be entitled to all of
the rights and  remedies  set forth  herein and further  provided by the Uniform
Commercial  Code or other  applicable  law. At any time following the occurrence
and during the  continuance  of a Default or Event of Default  and demand by the
Agent for payment of all Obligations, each Borrower shall, and Agent may, at its
option,  instruct all  suppliers,  carriers,  forwarders,  warehousers or others
receiving or holding cash, checks, Inventory,  documents or instruments in which
Agent  holds a security  interest  to deliver  same to Agent  and/or  subject to
Agent's order and if they shall come into any Borrower's  possession,  they, and
each of them,  shall be held by such Borrower in trust as Agent's  trustee,  and
such  Borrower  will  immediately  deliver them to Agent in their  original form
together with any necessary endorsement.

         4.7.  Books and Records.  Each Borrower  shall (a) keep proper books of
record and account in which full,  true and correct  entries will be made of all
dealings or transactions of or in relation to its business and affairs;  (b) set
up on its books accruals with respect to all taxes, assessments, charges, levies
and claims;  and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables,  advances and investments and
all  other  proper  accruals   (including   without   limitation  by  reason  of
enumeration,  accruals  for  premiums,  if any,  due on  required  payments  and
accruals for depreciation,  obsolescence, or amortization of properties),  which
should be set aside from such  earnings in  connection  with its  business.  All
determinations  pursuant to this subsection shall be made in accordance with, or
as required  by, GAAP  consistently  applied in the

                                       23
<PAGE>

opinion of such independent public accountant as shall then be regularly engaged
by Borrowers.

         4.8. Financial Disclosure.  Each Borrower hereby irrevocably authorizes
and directs all accountants  and auditors  employed by such Borrower at any time
during the Term to exhibit and deliver to Agent and each Lender copies of any of
any Borrower's financial statements,  trial balances or other accounting records
of any sort in the  accountant's  or  auditor's  possession,  and to disclose to
Agent and each Lender any information  such accountants may have concerning such
Borrower's  financial  status and  business  operations.  Each  Borrower  hereby
authorizes all federal,  state and municipal authorities to furnish to Agent and
each Lender copies of reports or examinations relating to such Borrower, whether
made by such Borrower or otherwise;  however, Agent and each Lender will attempt
to obtain such  information  or materials  directly from such Borrower  prior to
obtaining  such   information  or  materials  from  such   accountants  or  such
authorities.

         4.9.  Compliance  with Laws.  Each Borrower shall comply with all acts,
rules,  regulations and orders of any  legislative,  administrative  or judicial
body or official applicable to its respective  Collateral or any part thereof or
to the operation of such Borrower's business the non-compliance with which could
reasonably be expected to have a Material  Adverse Effect on such Borrower.  The
assets of  Borrowers at all times shall be  maintained  in  accordance  with the
requirements of all insurance  carriers which provide  insurance with respect to
the assets of  Borrowers so that such  insurance  shall remain in full force and
effect.

         4.10.  Inspection of Premises.  At all reasonable  times Agent and each
Lender shall have full access to and the right to audit, check, inspect and make
abstracts and copies from each Borrower's books, records, audits, correspondence
and all other  papers  relating  to the  Collateral  and the  operation  of each
Borrower's  business.  Agent,  any Lender and their agents may enter upon any of
each  Borrower's  premises  at any time during  business  hours and at any other
reasonable  time,  and from time to time,  for the  purpose  of  inspecting  the
Collateral and any and all records  pertaining thereto and the operation of such
Borrower's business.

         4.11. Insurance.  Each Borrower shall bear the full risk of any loss of
any nature  whatsoever  with respect to the  Collateral.  At each Borrower's own
cost and expense in amounts and with  carriers  reasonably  acceptable to Agent,
each Borrower  shall (a) keep all its  insurable  properties  and  properties in
which each Borrower has an interest insured against the hazards of fire,  flood,
sprinkler leakage, those hazards covered by extended coverage insurance and such
other  hazards,  and for such amounts,  as is customary in the case of companies
engaged in businesses similar to such Borrower's including,  without limitation,
business  interruption  insurance;  (b)  maintain  a bond in such  amounts as is
customary  in the  case of  companies  engaged  in  businesses  similar  to such
Borrower   insuring   against   larceny,    embezzlement   or   other   criminal
misappropriation  of insured's  officers and  employees who may either singly or
jointly  with  others  at any time have  access  to the  assets or funds of such
Borrower  either  directly  or through  authority  to draw upon such funds or to
direct generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others;  (d)  maintain  all such  worker's  compensation  or similar
insurance  as may be  required  under the laws of any state or  jurisdiction  in
which such Borrower is engaged in business; (e) furnish Agent with (i) copies of
all  policies and evidence of the  maintenance  of such  policies by the renewal
thereof  at  least  thirty  (30)  days  before  any  expiration  date,  and (ii)
appropriate  loss payable  endorsements  in form and substance  satisfactory  to
Agent,  naming Agent as a co-insured  and loss payee as its interests may appear
with respect to all insurance coverage referred to in clauses (a) and (c) above,
and providing (A) that all proceeds thereunder shall be payable to Agent, (B) no
such  insurance  shall be affected by any act or neglect of the insured or owner
of the  property  described  in such  policy,  and (C) that such policy and loss
payable  clauses may not be  cancelled,  amended or  terminated  unless at least
thirty (30) days' prior  written  notice is given to Agent.  In the event of any
loss thereunder, the carriers named therein hereby are directed by Agent and the
applicable  Borrower  to make  payment  for such  loss to Agent  and not to such
Borrower and Agent jointly.  If any insurance losses are paid by check, draft or
other  instrument  payable to any Borrower and Agent jointly,  Agent may endorse
such  Borrower's  name  thereon  and do such  other  things  as  Agent  may deem
advisable to reduce the same to cash.  Agent is hereby  authorized to adjust and
compromise  claims under insurance  coverage  referred to in clauses (a) and (b)
above.  All loss  recoveries  received by Agent upon any such  insurance  may be
applied to the Obligations,  in such order as Agent in its sole discretion shall
determine.  Any surplus shall be paid by Agent to Borrowers or applied as may be
otherwise  required by law. Any deficiency thereon shall be paid by Borrowers to
Agent, on demand.

         4.12.  Failure  to Pay  Insurance.  If any  Borrower  fails  to  obtain
insurance as hereinabove provided, or to keep the same in force, Agent, if Agent
so elects,  may obtain such insurance and pay the premium  therefor on behalf of
such Borrower,  and charge Borrowers' Account therefor as a Revolving Advance of
a Domestic Rate Loan and

                                       24
<PAGE>

such expenses so paid shall be part of the Obligations.

         4.13.  Payment of Taxes.  Each  Borrower will pay, when due, all taxes,
assessments and other Charges  lawfully levied or assessed upon such Borrower or
any of the Collateral including,  without limitation, real and personal property
taxes,  assessments and charges and all franchise,  income,  employment,  social
security benefits,  withholding, and sales taxes. If any tax by any governmental
authority is or may be imposed on or as a result of any transaction  between any
Borrower  and Agent or any Lender  which  Agent or any Lender may be required to
withhold or pay or if any taxes,  assessments,  or other  Charges  remain unpaid
after the date fixed for their payment,  or if any claim shall be made which, in
Agent's  or any  Lender's  opinion,  may  possibly  create  a valid  Lien on the
Collateral,  Agent may without notice to Borrowers pay the taxes, assessments or
other  Charges and each  Borrower  hereby  indemnifies  and holds Agent and each
Lender  harmless  in respect  thereof.  The amount of any payment by Agent under
this Section 4.13 shall be charged to Borrowers'  Account as a Revolving Advance
of a Domestic Rate Loan and added to the Obligations  and, until Borrowers shall
furnish  Agent  with an  indemnity  therefor  (or  supply  Agent  with  evidence
satisfactory to Agent that due provision for the payment thereof has been made),
Agent may hold without  interest any balance  standing to Borrowers'  credit and
Agent  shall  retain its  security  interest in any and all  Collateral  held by
Agent.

         4.14.  Payment of Leasehold  Obligations.  Each  Borrower  shall at all
times pay, when and as due, its rental  obligations under all leases under which
it is a tenant, and shall otherwise comply, in all material  respects,  with all
other  terms of such  leases  and keep them in full  force and  effect  and,  at
Agent's request will provide evidence of having done so.

         4.15. Receivables.

              (a) Nature of Receivables. Each of the Receivables shall be a bona
fide and valid account  representing  a bona fide  indebtedness  incurred by the
Customer  therein  named,  for a fixed sum as set forth in the invoice  relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery of
goods upon stated terms of a Borrower,  or work,  labor or services  theretofore
rendered by a Borrower as of the date each Receivable is created.  Same shall be
due and owing in accordance  with the  applicable  Borrower's  standard terms of
sale  without  dispute,  setoff or  counterclaim  except as may be stated on the
accounts receivable schedules delivered by Borrowers to Agent.

              (b)  Solvency of  Customers.  Each  Customer,  to the best of each
Borrower's knowledge,  as of the date each Receivable is created, is and will be
solvent and able to pay all  Receivables  on which the  Customer is obligated in
full when due or with  respect to such  Customers  of any  Borrower  who are not
solvent such Borrower has set up on its books and in its  financial  records bad
debt reserves adequate to cover such Receivables.

              (c) Locations of Borrower.  Each Borrower's chief executive office
is located at the addresses set forth on Schedule 4.15(c) hereto.  Until written
notice is given to Agent by  Borrowing  Agent of any  other  office at which any
Borrower keeps its records pertaining to Receivables,  all such records shall be
kept at such executive office.

              (d) Collection of Receivables.  Until any Borrower's  authority to
do so is terminated by Agent (which notice Agent may give at any time  following
the occurrence and during the  continuance of an Event of Default or a Default),
each Borrower  will, at such  Borrower's  sole cost and expense,  but on Agent's
behalf and for Agent's  account,  collect as Agent's  property  and in trust for
Agent  all  amounts  received  on  Receivables,  and shall  not  commingle  such
collections with any Borrower's funds or use the same except to pay Obligations.
Each Borrower shall,  upon request,  deliver to Agent, or deposit in the Blocked
Account,  in original  form and within one (1) Business Day of receipt  thereof,
all checks, drafts, notes, money orders,  acceptances,  cash and other evidences
of Indebtedness.

              (e)  Notification  of  Assignment  of  Receivables.  At  any  time
following  the  occurrence  and during the  continuance  of an Event of Default,
Agent  shall have the right to send  notice of the  assignment  of, and  Agent's
security  interest  in, the  Receivables  to any and all  Customers or any third
party  holding or otherwise  concerned  with any of the  Collateral.  Thereafter
following the occurrence and during the continuance of an Event of Default Agent
shall have the sole right to collect the  Receivables,  take  possession  of the
Collateral,  or both.  Agent's actual collection  expenses,  including,  but not
limited to,  stationery and postage,  telephone and telegraph,  secretarial  and
clerical  expenses  and  the  salaries  of any  collection  personnel  used  for
collection, may be charged to Borrowers' Account and added to the Obligations.

                                       25
<PAGE>

              (f) Power of Agent to Act on Borrowers'  Behalf.  Agent shall have
the right to receive, endorse, assign and/or deliver in the name of Agent or any
Borrower  any and all checks,  drafts and other  instruments  for the payment of
money  relating to the  Receivables,  and each Borrower  hereby waives notice of
presentment,  protest  and  non-payment  of any  instrument  so  endorsed.  Each
Borrower  hereby  constitutes  Agent  or  Agent's  designee  as such  Borrower's
attorney  with  power  (i) to  endorse  such  Borrower's  name  upon any  notes,
acceptances,  checks,  drafts,  money  orders or other  evidences  of payment or
Collateral;  (ii) to sign such  Borrower's name on any invoice or bill of lading
relating to any of the Receivables,  drafts against  Customers,  assignments and
verifications of Receivables;  (iii) to send verifications of Receivables to any
Customer;  (iv) to sign such Borrower's name on all financing  statements or any
other  documents or  instruments  deemed  necessary or  appropriate  by Agent to
preserve,  protect,  or perfect  Agent's  interest in the Collateral and to file
same; (v) to demand payment of the  Receivables;  (vi) to enforce payment of the
Receivables  by  legal  proceedings  or  otherwise;  (vii)  to  exercise  all of
Borrowers' rights and remedies with respect to the collection of the Receivables
and any other Collateral;  (viii) to settle, adjust, compromise, extend or renew
the  Receivables;  (ix) to settle,  adjust or compromise  any legal  proceedings
brought to collect  Receivables;  (x) to prepare,  file and sign such Borrower's
name on a proof of claim in bankruptcy or similar document against any Customer;
(xi) to  prepare,  file and sign  such  Borrower's  name on any  notice of Lien,
assignment or  satisfaction  of Lien or similar  document in connection with the
Receivables;  and (xii) to do all other acts and things  necessary  to carry out
this  Agreement.  All acts of said attorney or designee are hereby  ratified and
approved,  and said  attorney  or  designee  shall not be liable for any acts of
omission  or  commission  nor for any error of judgment or mistake of fact or of
law,  unless done  maliciously or with gross (not mere)  negligence;  this power
being  coupled  with an interest  is  irrevocable  while any of the  Obligations
remain unpaid.  Agent shall have the right at any time to change the address for
delivery  of mail  addressed  to any  Borrower  to such  address  as  Agent  may
designate  and to  receive,  open  and  dispose  of all  mail  addressed  to any
Borrower.

              (g) No Liability.  Neither  Agent nor any Lender shall,  under any
circumstances  or in any event  whatsoever,  have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument  received in payment thereof, or for
any damage resulting  therefrom.  Agent may, following the occurrence and during
the  continuance  of an Event of  Default,  without  notice or consent  from any
Borrower,  sue  upon or  otherwise  collect,  extend  the  time of  payment  of,
compromise or settle for cash,  credit or upon any terms any of the  Receivables
or any other  securities,  instruments  or insurance  applicable  thereto and/or
release any obligor  thereof.  Agent is authorized  following the occurrence and
during the continuance of an Event of Default and empowered to accept the return
of the goods represented by any of the Receivables, without notice to or consent
by any Borrower,  all without discharging or in any way affecting any Borrower's
liability hereunder.

              (h)  Establishment of a Lockbox  Account,  Dominion  Account.  All
proceeds of  Collateral  shall,  at the  direction  of Agent,  be  deposited  by
Borrowers  into  lockbox  accounts,  dominion  accounts  or such other  "blocked
accounts"  ("Blocked  Accounts") as Agent may require pursuant to an arrangement
with such banks as may be selected by Borrowers and be reasonably  acceptable to
Agent.  Borrowers  shall  issue to any  such  bank,  an  irrevocable  letter  of
instruction  directing  said bank to transfer  such funds so deposited to Agent,
either to any account  maintained  by Agent at said bank or by wire  transfer to
appropriate  account(s) of Agent.  All funds  deposited in such Blocked  Account
shall  immediately  become the property of Agent and Borrowers  shall obtain the
agreement  by such  bank to  waive  any  offset  rights  against  the  funds  so
deposited.  Neither  Agent nor any Lender  assumes any  responsibility  for such
blocked account arrangement,  including without limitation,  any claim of accord
and  satisfaction  or release  with  respect to  deposits  accepted  by any bank
thereunder.  Alternatively, Agent may establish depository accounts ("Depository
Accounts") in the name of Agent at a bank or banks for the deposit of such funds
and  Borrowers  shall  deposit all  proceeds of  Collateral  or cause same to be
deposited,  in kind, in such Depository  Accounts of Agent in lieu of depositing
same to the Blocked Accounts.

              (i)  Adjustments.  No  Borrower  will,  without  Agent's  consent,
compromise or adjust any Receivables (or extend the time for payment thereof) or
accept any returns of merchandise or grant any additional discounts,  allowances
or  credits  thereon  except  for  those  compromises,   adjustments,   returns,
discounts,  credits and  allowances  as have been  heretofore  customary  in the
business of such Borrower.

         4.16.  Inventory.  To the extent  Inventory  held for sale or lease has
been produced by any Borrower, it has been and will be produced by such Borrower
in accordance,  in all material respects,  with the Federal Fair Labor Standards
Act of 1938, as amended, and all rules, regulations and orders thereunder.

         4.17.  Maintenance of Equipment.  The Equipment  shall be maintained in
good operating condition and

                                       26

<PAGE>

repair (reasonable wear and tear excepted) and all necessary replacements of and
repairs thereto shall be made so that the value and operating  efficiency of the
Equipment  shall be maintained and  preserved.  No Borrower shall use or operate
the  Equipment  in  violation  of any law,  statute,  ordinance,  code,  rule or
regulation,  except to the extent any such  violation  could not  reasonably  be
expected to have a Material  Adverse  Effect.  Borrower  shall have the right to
sell equipment to the extent set forth in Section 4.3 hereof.

         4.18.  Exculpation of Liability.  Except as expressly  provided herein,
nothing herein contained shall be construed to constitute Agent or any Lender as
any Borrower's agent for any purpose  whatsoever,  nor shall Agent or any Lender
be  responsible  or  liable  for  any  shortage,  discrepancy,  damage,  loss or
destruction of any part of the  Collateral  wherever the same may be located and
regardless  of the cause  thereof.  Neither  Agent nor any  Lender,  whether  by
anything herein or in any assignment or otherwise,  assume any of any Borrower's
obligations  under any contract or  agreement  assigned to Agent or such Lender,
and  neither  Agent  nor any  Lender  shall  be  responsible  in any way for the
performance by any Borrower of any of the terms and conditions thereof.

         4.19.  Environmental Matters. Except where such failure to comply could
not reasonably be expected to have a Material Adverse Effect:

              (a)  Borrowers  shall  ensure  that the Real  Property  remains in
compliance with all Environmental  Laws and they shall not place or permit to be
placed any  Hazardous  Substances  on any Real  Property  except as permitted by
applicable law or appropriate governmental authorities.

              (b) Borrowers  shall (i) employ in connection  with the use of the
Real Property  appropriate  technology necessary to maintain compliance with any
applicable  Environmental  Laws and (ii) dispose of any and all Hazardous  Waste
generated  at the  Real  Property  only at  facilities  and with  carriers  that
maintain valid permits under RCRA and any other applicable  Environmental  Laws.
Borrowers shall use their best efforts to obtain certificates of disposal,  such
as hazardous waste manifest receipts, from all treatment,  transport, storage or
disposal  facilities or operators  employed by Borrowers in connection  with the
transport or disposal of any Hazardous Waste generated at the Real Property.

              (c) In the event any Borrower obtains, gives or receives notice of
any  Release or threat of  Release of a  reportable  quantity  of any  Hazardous
Substances at the Real Property (any such event being hereinafter referred to as
a  "Hazardous  Discharge")  or  receives  any notice of  violation,  request for
information or notification that it is potentially responsible for investigation
or cleanup of  environmental  conditions at the Real Property,  demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of Environmental  Laws affecting the Real Property or any
Borrower's  interest  therein (any of the  foregoing is referred to herein as an
"Environmental   Complaint")  from  any  Person,   including  any  state  agency
responsible in whole or in part for environmental  matters in the state in which
the Real  Property  is  located or the United  States  Environmental  Protection
Agency (any such person or entity  hereinafter  the  "Authority") in either case
which is reasonably  likely to cause a Material  Adverse Effect,  then Borrowing
Agent shall, within five (5) Business Days, give written notice of same to Agent
detailing facts and  circumstances of which any Borrower is aware giving rise to
the Hazardous  Discharge or Environmental  Complaint.  Such information is to be
provided to allow Agent to protect its  security  interest in the Real  Property
and the  Collateral  and is not  intended  to create  nor  shall it  create  any
obligation upon Agent or any Lender with respect thereto.

              (d)  Borrowers  shall  promptly  forward  to Agent  copies  of any
request for information,  notification of potential liability,  or demand letter
relating  to  potential  responsibility  with  respect to the  investigation  or
cleanup of Hazardous Substances at any other site owned, operated or used by any
Borrower to dispose of Hazardous Substances and shall continue to forward copies
of material correspondence between any Borrower and the Authority regarding such
claims to Agent until the claim is settled.  Borrowers shall promptly forward to
Agent copies of all  documents and reports  concerning a Hazardous  Discharge at
the Real Property that any Borrower is required to file under any  Environmental
Laws.  Such  information  is to be  provided  solely to allow  Agent to  protect
Agent's security interest in the Real Property and the Collateral.

              (e) Borrowers shall respond promptly to any Hazardous Discharge or
Environmental   Complaint  and  take  all  necessary   action   required   under
environmental  laws in order to safeguard  the health of any Person and to avoid
subjecting  the  Collateral or Real Property to any Lien. If any Borrower  shall
fail to respond promptly to any Hazardous  Discharge or Environmental  Complaint
as required by environmental  laws or any Borrower shall fail to comply with any
of the requirements of any  Environmental  Laws, Agent on behalf of Lenders

                                       27
<PAGE>

may, but without the  obligation  to do so, for the sole  purpose of  protecting
Agent's interest in Collateral: (A) give such notices or (B) enter onto the Real
Property (or authorize  third parties to enter onto the Real  Property) and take
such  actions  as Agent (or such  third  parties  as  directed  by  Agent)  deem
reasonably  necessary or advisable,  to clean up, remove,  mitigate or otherwise
deal  with  any  such  Hazardous  Discharge  or  Environmental   Complaint.  All
reasonable  costs and  expenses  incurred  by Agent and  Lenders  (or such third
parties)  in the  exercise  of any  such  rights,  including  any  sums  paid in
connection  with any judicial or  administrative  investigation  or proceedings,
fines and  penalties,  together with interest  thereon from the date expended at
the Default Rate for Revolving  Advances shall be paid upon demand by Borrowers,
and until paid shall be added to and become a part of the Obligations secured by
the Liens created by the terms of this Agreement or any other agreement  between
Agent, any Lender and any Borrower.

              (f) Upon the occurrence and during the  continuance of an Event of
Default, promptly upon the written request of Agent from time to time, Borrowers
shall  provide  Agent,  at  Borrowers'  expense,   with  an  environmental  site
assessment  or   environmental   audit  report  prepared  by  an   environmental
engineering firm acceptable in the reasonable opinion of Agent, to assess with a
reasonable  degree of certainty the  existence of a Hazardous  Discharge and the
potential  costs in  connection  with  abatement,  cleanup  and  removal  of any
Hazardous Substances found on, under, at or within the Real Property. Any report
or  investigation  of such  Hazardous  Discharge  proposed and  acceptable to an
appropriate  Authority that is charged to oversee the clean-up of such Hazardous
Discharge shall be acceptable to Agent.

              (g)  Borrowers  shall defend and  indemnify  Agent and Lenders and
hold Agent,  Lenders  and their  respective  employees,  agents,  directors  and
officers  harmless  from and against all loss,  liability,  damage and  expense,
claims,  costs,  fines and penalties,  including  attorney's  fees,  suffered or
incurred  by Agent or Lenders  under or on account  of any  Environmental  Laws,
including,  without  limitation,  the  assertion  of any Lien  thereunder,  with
respect to any Hazardous  Discharge,  the presence of any  Hazardous  Substances
affecting the Real Property,  whether or not the same originates or emerges from
the Real Property or any contiguous real estate,  including any loss of value of
the Real Property as a result of the  foregoing  except to the extent such loss,
liability,  damage  and  expense  is  attributable  to any  Hazardous  Discharge
resulting  from  actions  on  the  part  of  Agent  or  any  Lender.  Borrowers'
obligations  under this  Section  4.19 shall  arise  upon the  discovery  of the
presence of any Hazardous  Substances at the Real  Property,  whether or not any
federal, state, or local environmental agency has taken or threatened any action
in  connection  with  the  presence  of  any  Hazardous  Substances.  Borrowers'
obligation and the indemnifications under this Section 4.19(h) shall survive the
termination of this Agreement.

              (h) For purposes of Section 4.19 and 5.7, all  references  to Real
Property shall be deemed to include all of Borrowers' right,  title and interest
in and to its owned and leased premises.

         4.20. Financing Statements. Except as respects the financing statements
filed by Agent and the  financing  statements  described  on  Schedule  1.2,  no
financing statement covering any of the Collateral or any proceeds thereof is on
file in any public office.

V.       REPRESENTATIONS AND WARRANTIES.

         Each Borrower represents and warrants as follows:

         5.1. Authority. Each Borrower has full power, authority and legal right
to enter into this  Agreement  and the Other  Documents  and to perform  all its
respective  Obligations  hereunder and thereunder.  This Agreement and the Other
Documents  constitute the legal,  valid and binding  obligation of such Borrower
enforceable in accordance with their terms, except as such enforceability may be
limited by any  applicable  bankruptcy,  insolvency,  moratorium or similar laws
affecting creditors' rights generally.  The execution,  delivery and performance
of this  Agreement  and of the Other  Documents  (a) are within such  Borrower's
corporate powers, have been duly authorized,  are not in contravention of law or
the terms of such  Borrower's  by-laws,  certificate of  incorporation  or other
applicable  documents relating to such Borrower's formation or to the conduct of
such  Borrower's  business or of any material  agreement or undertaking to which
such  Borrower is a party or by which such  Borrower is bound,  and (b) will not
conflict with nor result in any breach in any of the provisions of or constitute
a  default  under  or  result  in the  creation  of any  Lien  except  Permitted
Encumbrances  upon any  asset  of such  Borrower  under  the  provisions  of any
agreement,  charter document,  instrument,  by-law, or other instrument to which
such Borrower is a party or by which it or its property may be bound.

         5.2.   Formation   and   Qualification.   (a)  Each  Borrower  is  duly
incorporated  and in  good  standing  under  the  laws  of its  jurisdiction  of
incorporation  listed on Schedule  5.2(a) and is qualified to do business and is
in good

                                       28
<PAGE>

standing in the states or other  jurisdictions  listed on Schedule  5.2(a) which
constitute  all  jurisdictions  in which  qualification  and good  standing  are
necessary  for such  Borrower to conduct its  business  and own its property and
where the failure to so qualify could  reasonably be expected to have a Material
Adverse Effect on such  Borrower.  Each Borrower has delivered to Agent true and
complete copies of its certificate of incorporation and bylaws and will promptly
notify Agent of any amendment or changes thereto.

              (b) The only  Subsidiaries of each Borrower are listed on Schedule
5.2(b).

         5.3. Survival of Representations  and Warranties.  All  representations
and  warranties  of such  Borrower  contained  in this  Agreement  and the Other
Documents  shall  be true  at the  time of  such  Borrower's  execution  of this
Agreement and the Other Documents, and shall survive the execution, delivery and
acceptance  thereof by the parties  thereto and the closing of the  transactions
described therein or related thereto.

         5.4. Tax Returns.  Each Borrower's federal tax identification number is
set forth on Schedule 5.4. Each Borrower has filed all federal,  state and local
tax returns and other  reports  each is required by law to file and has paid all
taxes,  assessments,  fees  and  other  governmental  charges  that  are due and
payable.  Federal, state and local income tax returns of each Borrower have been
examined  and reported  upon by the  appropriate  taxing  authority or closed by
applicable statute and satisfied for all fiscal years prior to and including the
fiscal year ending  December 31, 1999.  The  provision for taxes on the books of
each Borrower are adequate for all years not closed by applicable statutes,  and
for its current fiscal year, and no Borrower has any knowledge of any deficiency
or additional assessment in connection therewith not provided for on its books.

         5.5. Financial Statements.

              (a) The pro forma balance sheet of Borrowers on a consolidated and
consolidating  basis (the "Pro Forma Balance  Sheet")  furnished to Agent on the
Closing Date reflects the  consummation of the transactions  contemplated  under
this Agreement (the  "Transactions")  and is accurate,  complete and correct and
fairly  reflects the  financial  condition of  Borrowers on a  consolidated  and
consolidating  basis  as  of  the  Closing  Date  after  giving  effect  to  the
Transactions,  and has been  prepared  in  accordance  with  GAAP,  consistently
applied, except as may be disclosed in such balance sheet. The Pro Forma Balance
Sheet has been  certified  as  accurate,  complete  and correct in all  material
respects by the President and Chief Financial Officer of RSI.

              (b) The  twelve-month  cash flow projections of the Borrowers on a
consolidated  basis and their  projected  balance sheets as of the Closing Date,
copies of which are annexed  hereto as Exhibit 5.5(b) (the  "Projections")  were
prepared  by the  Chief  Financial  Officer  of RSI,  are  based  on  underlying
assumptions  which  provide a  reasonable  basis for the  projections  contained
therein and reflect  Borrowers'  judgment based on present  circumstances of the
most likely set of conditions and course of action for the projected  period, it
being  recognized that such  projections do not constitute a  representation  or
warranty as to the future  performance  of Borrowers and that actual results may
differ from forecasted results.  The cash flow Projections together with the Pro
Forma Balance Sheet, are referred to as the "Pro Forma Financial Statements".

              (c) The  consolidated  and  consolidating  balance  sheets  of the
Borrowers,  and such other Persons described therein  (including the accounts of
all  Subsidiaries   for  the  respective   periods  during  which  a  subsidiary
relationship  existed) as of September 30, 1999,  and the related  statements of
income, changes in stockholder's equity, and changes in cash flow for the period
ended on such date,  all  accompanied  by reports  thereon  containing  opinions
without  qualification by independent  certified public  accountants,  copies of
which have been delivered to Agent,  have been prepared in accordance with GAAP,
consistently   applied   (except  for  changes  in  application  in  which  such
accountants  concur,  and present fairly the financial position of the Borrowers
at such  date  and the  results  of their  operations  for  such  period.  Since
September  30,  1999 and as of the date  hereof  there has been no change in the
condition,  financial or  otherwise,  of Borrowers as shown on the  consolidated
balance sheet as of such date and no change in the aggregate value of machinery,
equipment and Real Property  owned by Borrowers,  except changes in the ordinary
course of business,  none of which  individually  or in the  aggregate  has been
materially adverse.

         5.6.  Corporate Name. No Borrower has been known by any other corporate
name in the past five years or sells  Inventory  under any other name  except as
set forth on Schedule 5.6, nor has any Borrower  been the surviving  corporation
of a merger or consolidation or acquired all or substantially  all of the assets
of any Person during the preceding five (5) years.

         5.7. O.S.H.A. and Environmental Compliance.

                                       29

<PAGE>

              Except as  disclosed  on Schedule  5.7 or would not be  reasonably
expected to cause a Material Adverse Effect:

              (a) Each  Borrower has duly  complied  with,  and its  facilities,
business,  assets,  property,  leaseholds and Equipment are in compliance in all
material  respects with, the provisions of the Federal  Occupational  Safety and
Health Act, the Environmental  Protection Act, RCRA and all other  Environmental
Laws;  there  have  been  no  outstanding   citations,   notices  or  orders  of
non-compliance  issued to any  Borrower  or relating  to its  business,  assets,
property, leaseholds or Equipment under any such laws, rules or regulations.

              (b) Each Borrower has been issued all required federal,  state and
local licenses, certificates or permits relating to all applicable Environmental
Laws.

              (c)  (i)  There  are  no  visible   signs  of  releases,   spills,
discharges,  leaks or  disposal  (collectively  referred  to as  "Releases")  of
Hazardous Substances at, upon, under or within any Real Property; (ii) there are
no underground  storage tanks or polychlorinated  biphenyls on the Real Property
in violation of Environmental  Laws; (iii) the Real Property has never been used
as a treatment,  storage or disposal  facility of Hazardous  Waste;  and (iv) no
Hazardous  Substances are present on the Real Property or any premises leased by
any Borrower,  excepting such  quantities as are handled in accordance  with all
applicable Environmental Laws.

         5.8. Solvency; No Litigation, Violation, Indebtedness or Default.

              (a) Borrowers are solvent, able to pay their debts as they mature,
have capital  sufficient to carry on their  business and all businesses in which
they are about to  engage,  and (i) as of the  Closing  Date,  the fair  present
saleable  value  of  their  assets  (including  without  limitation   goodwill),
calculated  on a going  concern  basis,  is in  excess  of the  amount  of their
liabilities and (ii) subsequent to the Closing Date,  after giving effect to the
transactions  contemplated  herein,  the fair  saleable  value  of their  assets
(calculated  on a going concern  basis) will be in excess of the amount of their
liabilities.

              (b) Except as  disclosed in Schedule  5.8(b),  no Borrower has (i)
any pending or, to its knowledge, threatened litigation, arbitration, actions or
proceedings which could reasonably be expected to have a Material Adverse Effect
on such Borrower,  and (ii) any liabilities nor  indebtedness for borrowed money
other than the Obligations and the Subordinated Debt Payments.

              (c)  No  Borrower  is in  violation  of  any  applicable  statute,
regulation  or ordinance in any respect  which could  reasonably  be expected to
have a  Material  Adverse  Effect  on  such  Borrower,  nor is any  Borrower  in
violation of any order of any court, governmental authority or arbitration board
or tribunal.

              (d) As of the date  hereof,  no  Borrower  nor any  member  of the
Controlled Group maintains or contributes to any Plan other than those listed on
Schedule 5.8(d) hereto.  Except as set forth in Schedule 5.8(d), (i) no Plan has
incurred any "accumulated  funding  deficiency," as defined in Section 302(a)(2)
of ERISA and  Section  412(a)  of the  Code,  whether  or not  waived,  and each
Borrower and each member of the Controlled Group has met all applicable  minimum
funding  requirements  under Section 302 of ERISA in respect of each Plan,  (ii)
each Plan which is intended to be a qualified  plan under Section  401(a) of the
Code as currently in effect has been determined by the Internal  Revenue Service
to be qualified  under Section 401(a) of the Code and the trust related  thereto
is exempt from federal  income tax under  Section  501(a) of the Code,  (iii) no
Borrower nor any member of the  Controlled  Group has incurred any  liability to
the PBGC  other  than for the  payment  of  premiums,  and there are no  premium
payments  which  have  become  due  which  are  unpaid,  (iv) no Plan  has  been
terminated by the plan  administrator  thereof nor by the PBGC,  and there is no
occurrence which would cause the PBGC to institute proceedings under Title IV of
ERISA to terminate any Plan,  (v) at this time,  the current value of the assets
of each  Plan  exceeds  the  present  value of the  accrued  benefits  and other
liabilities of such Plan and no Borrower nor any member of the Controlled  Group
knows of any facts or circumstances  which would materially  change the value of
such assets and accrued benefits and other liabilities, (vi) no Borrower nor any
member  of the  Controlled  Group  has  breached  any  of the  responsibilities,
obligations or duties imposed on it by ERISA with respect to any Plan,  (vii) no
Borrower nor any member of a Controlled Group has incurred any liability for any
excise tax arising under  Section 4972 or 4980B of the Code,  and no fact exists
which could give rise to any such  liability,  (viii) no Borrower nor any member
of the Controlled  Group nor any fiduciary of, nor any trustee to, any Plan, has
engaged in a "prohibited  transaction"  described in Section 406 of the ERISA or
Section 4975 of the Code nor taken any action which would  constitute  or result
in a Termination  Event with respect to any such Plan which is subject to ERISA,
(ix)  each  Borrower  and  each  member  of the  Controlled  Group  has made all
contributions  due and payable  with  respect to each Plan,  (x) there exists no
event  described  in  Section  4043(b) of ERISA,  for which the thirty  (30) day
notice period

                                       30

<PAGE>

contained  in 29 CFR  ss.2615.3  has not been  waived,  (xi) no Borrower nor any
member of the Controlled Group has any fiduciary  responsibility for investments
with  respect  to any plan  existing  for the  benefit  of  persons  other  than
employees or former  employees of any Borrower and any member of the  Controlled
Group,  and  (xii) no  Borrower  nor any  member  of the  Controlled  Group  has
withdrawn,  completely or partially,  from any Multiemployer Plan so as to incur
liability under the Multiemployer Pension Plan Amendments Act of 1980.

         5.9. Patents, Trademarks,  Copyrights and Licenses. All patents, patent
applications,  trademark  registrations,  trademark  applications,  service mark
registrations,  service mark applications,  copyright  registrations,  copyright
applications,  design  rights,  trade names,  assumed  names,  trade secrets and
licenses  owned or utilized by any Borrower are set forth on Schedule  5.9, have
been duly  registered or filed with the relevant  governmental  authorities  and
constitute all of the  intellectual  property rights which are necessary for the
operation of its business;  there is no objection to or pending challenge to the
validity of any patent,  trademark,  copyright,  design right, trade name, trade
secret or license  owned or utilized by any Borrower and no Borrower is aware of
any grounds for any challenge,  except as set forth in Schedule 5.9 hereto. Each
patent, patent application,  patent license,  trademark,  trademark application,
trademark license, service mark, service mark application, service mark license,
design right,  copyright,  copyright  application and copyright license owned or
held by any  Borrower  and all trade  secrets  used by any  Borrower  consist of
original  material  or  property  developed  by such  Borrower  or was  lawfully
acquired by such Borrower from the proper and lawful owner thereof. Each of such
items has been  maintained  so as to preserve the value thereof from the date of
creation  or  acquisition  thereof.  With  respect to all  software  used by any
Borrower,  such Borrower is in possession of all source and object codes related
to each  piece  of  software  or is the  beneficiary  of a  source  code  escrow
agreement,  each such source code escrow  agreement being listed on Schedule 5.9
hereto.

         5.10. Licenses and Permits.  Except as set forth in Schedule 5.10, each
Borrower (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any applicable federal,  state,
provincial or local law or regulation  for the operation of its business in each
jurisdiction  wherein it is now  conducting or proposes to conduct  business and
where the  failure to comply  with and procure  such  licenses or permits  could
reasonably be expected to have a Material Adverse Effect on such Borrower.

         5.11. Default of Indebtedness. No Borrower is in default in the payment
of the principal of or interest on any Indebtedness in excess of $200,000 in the
aggregate or under any  instrument  or  agreement  under or subject to which any
Indebtedness has been issued and, to the best of Borrowers' knowledge,  no event
has occurred under the provisions of any such instrument or agreement which with
or without the lapse of time or the giving of notice,  or both,  constitutes  or
would constitute an event of default thereunder.

         5.12.  No  Default.  As of the date hereof no Borrower is in default in
the payment or performance of any of its material contractual obligations and no
Default has occurred.

         5.13. No Burdensome Restrictions.  As of the date hereof no Borrower is
party to any contract or agreement the performance of which could  reasonably be
expected to have a Material  Adverse  Effect on such  Borrower.  No Borrower has
agreed or consented  to cause or permit in the future  (upon the  happening of a
contingency  or otherwise)  any of its property,  whether now owned or hereafter
acquired, to be subject to a Lien which is not a Permitted Encumbrance.

         5.14. No Labor Disputes.  As of the date hereof no Borrower is involved
in any labor dispute;  there are no strikes or walkouts or union organization of
any Borrower's  employees in existence or, to the best of Borrower's  knowledge,
threatened,  and no labor  contract is scheduled to expire during the Term other
than as set forth on Schedule 5.14 hereto.

         5.15. Margin Regulations.  No Borrower 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 stock" within
the  respective  meanings  of each of the quoted  terms  under  Regulation  U or
Regulation G of the Board of Governors of the Federal  Reserve System as now and
from time to time  hereafter  in effect.  No part of the proceeds of any Advance
will be used for  "purchasing"  or  "carrying"  "margin  stock"  as  defined  in
Regulation U of such Board of Governors.

         5.16.  Investment  Company Act. No Borrower is an "investment  company"
registered  or required to be  registered  under the  Investment  Company Act of
1940, as amended, nor is it controlled by such a company.

         5.17. Disclosure. No representation or warranty made by any Borrower in
this Agreement or in any financial statement,  report,  certificate or any other
document furnished in connection herewith contains any untrue

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statement of fact or omits to state any fact  necessary  to make the  statements
herein or therein not materially misleading. There is no fact known to Borrowers
or which  reasonably  should  be known to  Borrowers  which  Borrowers  have not
disclosed to Agent in writing with respect to the  transactions  contemplated by
this  Agreement  which could  reasonably be expected to have a Material  Adverse
Effect on any Borrower.

         5.18.  Swaps. No Borrower is a party to, nor will it be a party to, any
swap  agreement  whereby such Borrower has agreed or will agree to swap interest
rates or currencies unless same provides that damages upon termination following
an event of default  thereunder  are  payable on an  unlimited  "two-way  basis"
without regard to fault on the part of either party.

         5.19. Conflicting Agreements. No provision of any mortgage,  indenture,
contract,  agreement,  judgment,  decree or order  binding  on any  Borrower  or
affecting the Collateral  conflicts  with, or requires any Consent which has not
already been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other Documents  except where
such failure to obtain such consent  could not  reasonably be expected to have a
Material Adverse Effect.

         5.20. Application of Certain Laws and Regulations.  No Borrower nor any
Affiliate of any Borrower is subject to any statute,  rule or  regulation  which
regulates the  incurrence of any  Indebtedness,  including  without  limitation,
statutes or regulations relative to common or interstate carriers or to the sale
of electricity, gas, steam, water, telephone,  telegraph or other public utility
services.

         5.21.  Business and Property of  Borrowers.  Upon and after the Closing
Date,  Borrowers do not propose to engage in any business other than the design,
production,  and sales of rheometers  and other  scientific  testing and related
equipment,  and activities  necessary to conduct the  foregoing.  On the Closing
Date,  each Borrower will own all the property and possess all of the rights and
Consents necessary for the conduct of the business of such Borrower.

         5.22.  Year 2000.  Borrowers  and their  respective  Subsidiaries  have
reviewed the areas within their business and operations which could be adversely
affected  by, and have  developed  or are  developing  a program to address on a
timely basis, the risk that certain computer  applications  used by Borrowers or
their respective  Subsidiaries (or any of their respective  material  suppliers,
customers  or  vendors)  may  be  unable  to  recognize  and  perform   properly
date-sensitive  functions  involving  dates prior to and after December 31, 1999
(the  "Year  2000  Problem").  The Year 2000  Problem  will not have a  Material
Adverse Effect on Borrowers.

         5.23. Section 20 Subsidiaries. Borrowers do not intend to use and shall
not use any portion of the proceeds of the Advances,  directly or indirectly, to
purchase during the underwriting  period, or for 30 days thereafter,  Ineligible
Securities being underwritten by a Section 20 Subsidiary.

VI.      AFFIRMATIVE COVENANTS.

         Each  Borrower  shall,  until  payment in full of the  Obligations  and
termination of this Agreement:

         6.1.  Payment of Fees.  Pay to Agent on demand all usual and  customary
fees and expenses  which Agent incurs in connection  with (a) the  forwarding of
Advance  proceeds  and (b) the  establishment  and  maintenance  of any  Blocked
Accounts or Depository  Accounts as provided for in Section 4.15(h).  Agent may,
without making demand, charge Borrowers' Account for all such fees and expenses.

         6.2.  Conduct of Business and Maintenance of Existence and Assets.  (a)
Conduct  continuously and operate actively its business  according to reasonable
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition  (reasonable wear and tear excepted
and  except  as  may be  disposed  of in  accordance  with  the  terms  of  this
Agreement),  including,  without limitation, all licenses, patents,  copyrights,
design  rights,  trade names,  trade secrets and trademarks and take all actions
reasonably  necessary  to enforce and protect the  validity of any  intellectual
property right or other right included in the Collateral; (b) keep in full force
and effect its existence  and comply in all material  respects with the laws and
regulations  governing  the conduct of its  business  where the failure to do so
could reasonably be expected to have a Material Adverse Effect on such Borrower;
and (c) make all such  reports  and pay all such  franchise  and other taxes and
license  fees and do all such other acts and things as may be lawfully  required
to maintain its rights,  licenses,  leases, powers and franchises under the laws
of the United States or any political subdivision thereof.

         6.3.  Violations.  Promptly notify Agent in writing of any violation of
any law,  statute,  regulation or ordinance of any Governmental  Body, or of any
agency thereof, applicable to any Borrower which could reasonably

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<PAGE>

be expected to have a Material Adverse Effect on any Borrower.

         6.4.  Government  Receivables.  Take all  steps  necessary  to  protect
Agent's interest in the Collateral under the Federal Assignment of Claims Act or
other  applicable  state or local  statutes or  ordinances  and deliver to Agent
appropriately  endorsed,  any  instrument  or chattel paper  connected  with any
Receivable  arising out of contracts between any Borrower and the United States,
any state or any department, agency or instrumentality of any of them.

         6.5.  Fixed Charge  Coverage  Ratio.  Maintain a Fixed Charge  Coverage
Ratio of not less than: .7 to 1 for the three-month period ending June 30, 2000;
1.1 to 1 for the six-month  period ending  September 30, 2000;  1.1 to 1 for the
nine-month period ending December 31, 2000; 1.1 to 1 for the twelve-month period
ending March 31, 2001; and maintain,  thereafter,  on a quarterly  basis at each
quarter end on a rolling  four-quarter  basis, a Fixed Charge  Coverage Ratio of
not less than 1.1 to 1.

         6.6.  Execution  of  Supplemental  Instruments.  Execute and deliver to
Agent from time to time, upon demand, such supplemental agreements,  statements,
assignments  and  transfers,  or  instructions  or  documents  relating  to  the
Collateral, and such other instruments as Agent may reasonably request, in order
that the full intent of this Agreement may be carried into effect.

         6.7. Payment of Indebtedness. Pay, discharge or otherwise satisfy at or
before maturity (subject,  where applicable,  to specified grace periods and, in
the case of the trade payables, to normal payment practices) all its obligations
and  liabilities  (other than  Subordinated  Debt Payments) of whatever  nature,
except  when the  failure to do so could not  reasonably  be  expected to have a
Material  Adverse  Effect or when the amount or  validity  thereof is  currently
being contested in good faith by appropriate proceedings and each Borrower shall
have  provided  for such  reserves  as Agent  may  reasonably  deem  proper  and
necessary,  subject at all times to any applicable subordination  arrangement in
favor of Lenders.

         6.8. Standards of Financial Statements.  Cause all financial statements
referred to in Sections 9.7, 9.8, 9.9,  9.10,  9.11,  9.12, and 9.13 as to which
GAAP is applicable to be complete and correct in all material respects (subject,
in  the  case  of  interim  financial  statements,   to  normal  year-end  audit
adjustments) and to be prepared in reasonable detail and in accordance with GAAP
applied  consistently  throughout  the  periods  reflected  therein  (except  as
concurred in by such reporting  accountants or officer,  as the case may be, and
disclosed therein).

VII.     NEGATIVE COVENANTS.

         No Borrower  shall,  until  satisfaction in full of the Obligations and
termination of this Agreement:

         7.1. Merger, Consolidation, Acquisition and Sale of Assets.

              (a) Enter into any merger,  consolidation or other  reorganization
with or into any other  Person or acquire  all or a  substantial  portion of the
assets or stock of any Person or permit any other Person to consolidate  with or
merge with it.

              (b) Sell,  lease,  transfer  or  otherwise  dispose  of any of its
properties or assets,  except: (i) in the ordinary course of its business;  (ii)
as provided in Section  4.3;  and (iii) the  subleasing  of portions of the Real
Property.

         7.2. Creation of Liens.  Create or suffer to exist any Lien or transfer
upon or against any of its property or assets now owned or  hereafter  acquired,
except Permitted Encumbrances.

         7.3.  Guarantees.  Become liable upon the  obligations of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders)
except as  disclosed on Schedule  7.3 and (b) the  endorsement  of checks in the
ordinary course of business.

         7.4.  Investments.  Purchase or acquire obligations or stock of, or any
other interest in, any Person,  except (a)  obligations  issued or guaranteed by
the United States of America or any agency  thereof,  (b) commercial  paper with
maturities of not more than 270 days and a published rating of not less than A-1
or P-1 (or the equivalent  rating),  (c) demand  deposits,  certificates of time
deposit and bankers' acceptances having maturities of not more than 270 days and
repurchase  agreements  backed  by  United  States  government  securities  of a
commercial bank if (i) such bank has a combined  capital and surplus of at least
$500,000,000,  or (ii) its debt  obligations,  or those of a holding  company of
which it is a Subsidiary,  are rated not less than A (or the equivalent  rating)
by a nationally recognized investment rating agency, (d) U.S. money market funds
that invest solely in obligations issued or

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<PAGE>

guaranteed  by the  United  States  of  America  or an agency  thereof,  and (e)
Subsidiaries permitted hereunder.

         7.5. Loans. Make advances, loans or extensions of credit to any Person,
including without  limitation,  any Parent,  Subsidiary or Affiliate except with
respect to (a) the extension of commercial  trade credit in connection  with the
sale of  Inventory  in the  ordinary  course of its  business,  (b) loans to its
employees in the ordinary course of business not to exceed the aggregate  amount
of $100,000 at any time  outstanding,  and (c) investments  permitted by Section
7.4.

         7.6.  Capital   Expenditures.   Contract  for,  purchase  or  make  any
expenditure or commitments  for fixed or capital assets  (including  capitalized
leases) in any fiscal year in an aggregate amount for all Borrowers in excess of
$400,000.

         7.7.  Dividends.  Except for dividends payable to RSI, declare,  pay or
make any dividend or distribution on any shares of the common stock or preferred
stock of any  Borrower  (other than  dividends or  distributions  payable in its
stock,  or  split-ups  or  reclassifications  of its  stock) or apply any of its
funds, property or assets to the purchase, redemption or other retirement of any
common or  preferred  stock,  or of any  options to purchase or acquire any such
shares of common or preferred stock of any Borrower .

         7.8.  Indebtedness.  Create,  incur,  assume  or  suffer  to exist  any
Indebtedness  (exclusive of trade debt) except in respect of (i) Indebtedness to
Lenders;  (ii) Indebtedness  incurred for capital  expenditures  permitted under
Section  7.6  hereof;  provided,  however,  that the  maximum  aggregate  amount
outstanding at any time of such Indebtedness shall not exceed $1,200,000;  (iii)
Subordinated  Debt Payment;  and (iv) existing debt as set forth on Schedule 7.8
hereof.

         7.9.  Nature  of  Business.  Substantially  change  the  nature  of the
business in which it is presently engaged, nor except as specifically  permitted
hereby  purchase or invest,  directly or  indirectly,  in any assets or property
other than in the ordinary  course of business for assets or property  which are
useful  in,  necessary  for  and are to be used  in its  business  as  presently
conducted.

         7.10.  Transactions  with  Affiliates.  Except as  otherwise  permitted
herein,  or as expressly  contemplated  by the  Securities  Purchase  Agreement,
directly or indirectly,  purchase,  acquire or lease any property from, or sell,
transfer or lease any property to, or otherwise deal with, any Affiliate, except
transactions  in the ordinary course of business,  on an  arm's-length  basis on
terms no less  favorable  than terms  which  would have been  obtainable  from a
Person other than an Affiliate.

         7.11.  Leases.  Enter as lessee into any lease  arrangement for real or
personal property (unless capitalized and permitted under Section 7.6 hereof) if
after giving effect  thereto,  aggregate  annual rental  payments for all leased
property would exceed $1,200,000 in any one fiscal year in the aggregate for all
Borrowers.

         7.12. Subsidiaries.

              (a) Form, after the date hereof, any Subsidiary.

              (b)  Enter  into  any   partnership,   joint  venture  or  similar
arrangement  without  the  written  consent  of the  Agent  which  shall  not be
unreasonably withheld.

         7.13. Fiscal Year and Accounting  Changes.  Change its fiscal year from
December  31 or make  any  change  (i) in  accounting  treatment  and  reporting
practices  except as required by GAAP or (ii) in tax reporting  treatment except
as required by law.

         7.14. Pledge of Credit. Now or hereafter pledge Agent's or any Lender's
credit on any purchases or for any purpose  whatsoever or use any portion of any
Advance in or for any business other than such Borrower's  business as conducted
on the date of this Agreement.

         7.15. Amendment of Articles of Incorporation,  Bylaws. Amend, modify or
waive any term or material  provision of its Articles of Incorporation or Bylaws
unless  required by law,  except as  expressly  contemplated  by the  Securities
Purchase Agreement.

         7.16.  Compliance with ERISA. (i) (x) Maintain, or permit any member of
the Controlled  Group to maintain,  or (y) become  obligated to  contribute,  or
permit any member of the Controlled Group to become obligated to contribute,  to
any Plan, other than those Plans disclosed on Schedule 5.8(d),  (ii) engage,  or
permit  any  member  of the  Controlled  Group  to  engage,  in  any  non-exempt
"prohibited  transaction",  as that term is defined in Section  406 of ERISA and
Section 4975 of the Code,  (iii) incur,  or permit any member of the  Controlled
Group to incur, any

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<PAGE>

"accumulated  funding  deficiency",  as that term is defined  in Section  302 of
ERISA or Section 412 of the Code,  (iv)  terminate,  or permit any member of the
Controlled  Group to  terminate,  any Plan where such event could  result in any
liability  of  any  Borrower  or  any  member  of the  Controlled  Group  or the
imposition  of a lien on the  property  of any  Borrower  or any  member  of the
Controlled  Group pursuant to Section 4068 of ERISA,  (v) assume,  or permit any
member of the  Controlled  Group to assume,  any obligation to contribute to any
Multiemployer  Plan not disclosed on Schedule 5.8(d),  (vi) incur, or permit any
member  of the  Controlled  Group to  incur,  any  withdrawal  liability  to any
Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of any
Termination  Event,  (viii) fail to comply, or permit a member of the Controlled
Group to fail to  comply,  with the  requirements  of ERISA or the Code or other
applicable  laws in respect of any Plan, (ix) fail to meet, or permit any member
of the Controlled Group to fail to meet, all minimum funding  requirements under
ERISA or the Code or  postpone  or delay or allow any  member of the  Controlled
Group to postpone or delay any funding requirement with respect of any Plan.

         7.17.  Prepayment  of  Indebtedness.  Except as otherwise  permitted by
Sections 2.11(c) or 7.18 hereof, at any time, directly or indirectly, prepay any
Indebtedness (other than to Lenders), or repurchase, redeem, retire or otherwise
acquire any Indebtedness of any Borrower.

         7.18.  Subordinated  Note. At any time,  directly or  indirectly,  pay,
prepay, repurchase,  redeem, retire or otherwise acquire, or make any payment on
account of any principal of,  interest on or premium  payable in connection with
the  repayment  or  redemption  of the  Subordinated  Note,  except as expressly
permitted in the Intercreditor and Subordination Agreement.

VIII.    CONDITIONS PRECEDENT.

         8.1.  Conditions to Initial Advances.  The agreement of Lenders to make
the initial Advances  requested to be made on the Closing Date is subject to the
satisfaction,  or waiver by Lenders,  immediately  prior to or concurrently with
the making of such Advances, of the following conditions precedent:

              (a)  Note.  Agent  shall  have  received  the Note  and the  Other
Documents duly executed and delivered by an authorized officer of each Borrower;

              (b) Filings,  Registrations and Recordings.  Except with regard to
filings within the United Kingdom, each document (including, without limitation,
any Uniform Commercial Code financing statement) required by this Agreement, any
related agreement or under law or reasonably requested by the Agent to be filed,
registered  or  recorded  in order to  create,  in favor of Agent,  a  perfected
security interest in or lien upon the Collateral shall have been properly filed,
registered or recorded in each jurisdiction in which the filing, registration or
recordation  thereof is so required or requested,  and Agent shall have received
an  acknowledgment  copy,  or other  evidence  satisfactory  to it, of each such
filing,  registration or recordation and satisfactory evidence of the payment of
any necessary fee, tax or expense relating thereto;

              (c) Corporate Proceedings of Borrowers.  Agent shall have received
a copy of the  resolutions  in form and  substance  reasonably  satisfactory  to
Agent, of the Board of Directors of each Borrower authorizing (i) the execution,
delivery and  performance of this Agreement,  the Note, any related  agreements,
(collectively  the  "Documents")  and (ii) the granting by each  Borrower of the
security  interests in and liens upon the  Collateral in each case  certified by
the Secretary or an Assistant Secretary of each Borrower as of the Closing Date;
and, such certificate  shall state that the resolutions  thereby  certified have
not  been  amended,  modified,  revoked  or  rescinded  as of the  date  of such
certificate;

              (d)  Incumbency  Certificates  of  Borrowers.   Agent  shall  have
received a  certificate  of the  Secretary  or an  Assistant  Secretary  of each
Borrower,  dated the Closing  Date,  as to the  incumbency  and signature of the
officers of each Borrower  executing this  Agreement,  any  certificate or other
documents to be delivered by it pursuant  hereto,  together with evidence of the
incumbency of such Secretary or Assistant Secretary;

              (e) Certificates. Agent shall have received a copy of the Articles
or Certificate of  Incorporation of each Borrower,  and all amendments  thereto,
certified  by the  Secretary  of  State  or other  appropriate  official  of its
jurisdiction  of  incorporation  together  with  copies  of the  Bylaws  of each
Borrower  and  all  agreements  of each  Borrower's  shareholders  certified  as
accurate and complete by the Secretary of each Borrower;

              (f) Good  Standing  Certificates.  Agent shall have  received good
standing certificates for each Borrower dated not more than 30 days prior to the
Closing Date, issued by the Secretary of State or other

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<PAGE>

appropriate  official of each Borrower's  jurisdiction of incorporation and each
jurisdiction  where the conduct of each  Borrower's  business  activities or the
ownership of its properties necessitates qualification;

              (g) Legal  Opinion.  Agent shall have received the executed  legal
opinion of Borrowers'  New Jersey,  French,  German,  Japanese,  United  Kingdom
counsel in form and  substance  satisfactory  to Agent  which  shall  cover such
matters incident to the transactions  contemplated by this Agreement,  the Note,
and related  agreements as Agent may reasonably require and each Borrower hereby
authorizes  and  directs  such  counsel to deliver  such  opinions  to Agent and
Lenders;

              (h) No Litigation. (i) No litigation,  investigation or proceeding
before  or by any  arbitrator  or  Governmental  Body  shall  be  continuing  or
threatened  against any  Borrower or against the  officers or  directors  of any
Borrower (A) in connection with the Other  Documents or any of the  transactions
contemplated  thereby and which,  in the reasonable  opinion of Agent, is deemed
material or (B) which could, in the reasonable opinion of Agent, have a Material
Adverse Effect; and (ii) no injunction,  writ,  restraining order or other order
of any nature materially  adverse to any Borrower or the conduct of its business
or inconsistent  with the due consummation of the  Transactions  shall have been
issued by any Governmental Body;

              (i) Financial Condition Certificates. Agent shall have received an
executed Financial Condition Certificate in the form of Exhibit 8.1(i).

              (j) Collateral Examination.  Agent shall have completed Collateral
examinations and received appraisals, the results of which shall be satisfactory
in form  and  substance  to  Lenders,  of the  Receivables,  Inventory,  General
Intangibles,  Real  Property,  and  Equipment of each Borrower and all books and
records in connection therewith;

              (k) Fees.  Agent shall have received all fees payable to Agent and
Lenders on or prior to the Closing Date pursuant to Article III hereof;

              (l) Pro Forma  Financial  Statements.  Agent shall have received a
copy of the Pro Forma  Financial  Statements  which shall be satisfactory in all
respects to Lenders;

              (m)  Subordinate  Documents.   Agent  shall  have  received  final
executed copies of the Subordinate  Documentation,  and all related  agreements,
documents and instruments as in effect on the Closing Date and the  transactions
contemplated by such  documentation  shall be consummated prior to the making of
the initial Advance including,  without limitation,  the receipt by Borrowers of
the purchase price for the 10,606,000 shares of common stock issued to Andlinger
Capital  XXVI LLC under  the  Securities  Purchase  agreement  in the  amount of
$1,825,000.

              (n)  Subordination  Agreements.  Agent shall have  entered  into a
Subordination  Agreement  with Borrowers and Axess  Corporation  which shall set
forth the basis upon which Axess  Corporation  may receive,  and  Borrowers  may
make, payments under the Subordinated Note, which basis shall be satisfactory in
form and substance to Agent in its sole discretion;

              (o)  Insurance.  Agent shall have  received in form and  substance
satisfactory  to  Agent,  certified  copies  of  Borrowers'  casualty  insurance
policies,  together with loss payable  endorsements on Agent's  standard form of
loss payee  endorsement  naming  Agent as loss payee,  and  certified  copies of
Borrowers' liability insurance policies, together with endorsements naming Agent
as a co-insured;

              (p)   Environmental   Reports.   Agent  shall  have  received  all
environmental studies and reports in the possession of the Borrowers prepared by
independent  environmental  engineering  firms with respect to all Real Property
owned or leased by Borrowers;

              (q)  Payment  Instructions.  Agent  shall  have  received  written
instructions from Borrowers directing the application of proceeds of the initial
Advances made pursuant to this Agreement;

              (r) Blocked  Accounts.  Agent shall have  received  duly  executed
agreements  establishing  the  Blocked  Accounts  or  Depository  Accounts  with
financial  institutions  acceptable to Agent for the  collection or servicing of
the Receivables and proceeds of the Collateral;

              (s)  Consents.  Agent  shall have  received  any and all  Consents
necessary to permit the  effectuation of the  transactions  contemplated by this
Agreement and the Other Documents;  and, Agent shall have received such Consents
and waivers of such third  parties as might  assert  claims with  respect to the
Collateral, as

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<PAGE>

Agent and its counsel shall reasonably deem necessary;

              (t) No Adverse Material Change.  (i) Since February 1, 2000, there
shall not have  occurred  any event,  condition  or state of facts  which  could
reasonably  be  expected  to  have  a  Material   Adverse  Effect  and  (ii)  no
representations  made or information supplied to Agent shall have been proven to
be inaccurate or misleading in any material respect;

              (u)  Leasehold  Agreements.  Agent shall have  received  landlord,
mortgagee or warehouseman  agreements  satisfactory to Agent with respect to all
premises leased by Borrowers at which Inventory is located;

              (v)  Contract  Review.  Agent  shall have  reviewed  all  material
contracts of Borrowers including,  without limitation,  leases, union contracts,
labor contracts, vendor supply contracts, license agreements and distributorship
agreements  and such  contracts  and  agreements  shall be  satisfactory  in all
respects to Agent;

              (w)  Closing  Certificate.  Agent  shall  have  received a closing
certificate  signed by the Chief  Finacial  Officer of each Borrower dated as of
the Closing Date, stating that (i) all  representations and warranties set forth
in this Agreement and the Other  Documents are true and correct on and as of the
Closing Date,  (ii) Borrowers are on the Closing Date in compliance with all the
terms and  provisions  set forth in this  Agreement and the Other  Documents and
(iii) on the  Closing  Date no Default or Event of Default  has  occurred  or is
continuing;

              (x)  Borrowing  Base.  Agent  shall have  received  evidence  from
Borrowers  that the  aggregate  amount  of  Eligible  Receivables  and  Eligible
Inventory is  sufficient  in value and amount to support  Advances in the amount
requested by Borrowers on the Closing Date;

              (y)  Undrawn  Availability.  After  giving  effect to the  initial
Advances and Closing Date charges  hereunder,  as well as after  subtracting all
trade payables that are more then sixty (60) days past due, Borrowers shall have
Undrawn Availability of at least $1,000,000.00;

              (z)  Recapitalization.  Agent  shall  have  received a copy of the
final  recapitalization plan for the Borrower,  which shall include a maximum of
$3,500,000.00  in cash  payable  on or before the  Closing  Date by RSI to Axess
Corporation,  which  shall  include a cash  equity  investment  of not less than
$1,750,000.00 by Andlinger  Capital XXVI LLC, and which shall be satisfactory in
all other respects to Lenders; and

              (aa)  Other.  All  corporate  and  other   proceedings,   and  all
documents,   instruments   and  other  legal  matters  in  connection  with  the
Transactions shall be reasonably satisfactory in form and substance to Agent and
its counsel.

         8.2.  Conditions to Each Advance.  The agreement of Lenders to make any
Advance  requested to be made on any date (including,  without  limitation,  the
initial  Advance),  is subject to the  satisfaction of the following  conditions
precedent as of the date such Advance is made:

              (a)  Representations  and Warranties.  Each of the representations
and  warranties  made by any Borrower in or pursuant to this  Agreement  and any
related agreements to which it is a party, and each of the  representations  and
warranties  contained  in  any  certificate,  document  or  financial  or  other
statement  furnished at any time under or in connection  with this  Agreement or
any related  agreement shall be true and correct in all material respects on and
as of such date as if made on and as of such date,  except such  warranties  and
representations  that relate to a specific  date which shall be true and correct
as of such specific date;

              (b) No Default. No Event of Default or Default shall have occurred
and be  continuing  on such date,  or would  exist  after  giving  effect to the
Advances requested to be made, on such date; provided,  however that Lenders, in
their  sole  discretion,  may  continue  to make  Advances  notwithstanding  the
existence  of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default; and

              (c) Maximum Advances.  In the case of any Advances requested to be
made, after giving effect thereto,  the aggregate  Advances shall not exceed the
maximum amount of Advances permitted under Section 2.1 hereof.

Each  request  for an Advance  by any  Borrower  hereunder  shall  constitute  a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.

         8.3. Conditions to Eurodollar Rate Loans.  Borrowers shall not have the
option of borrowing or receiving  Advances in the form of Eurodollar  Rate Loans
until Borrowers have, for two consecutive fiscal quarters,

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achieved a Fixed Charge  Coverage Ratio of 1.25;  after which,  Borrowers  shall
have the option of  borrowing or  receiving  Advances in the form of  Eurodollar
Rate Loans.

IX.      INFORMATION AS TO BORROWERS.

         Each Borrower shall,  until satisfaction in full of the Obligations and
the termination of this Agreement:

         9.1.  Disclosure of Material  Matters.  Promptly upon learning thereof,
report to Agent all matters  materially  affecting the value,  enforceability or
collectibility of any portion of the Collateral  including,  without limitation,
any Borrower's reclamation or repossession of, or the return to any Borrower of,
a material  amount of goods or claims or disputes  asserted  by any  Customer or
other obligor.

         9.2. Schedules.  Deliver to Agent on or before the fifteenth (15th) day
of each month as and for the prior month (a)  accounts  receivable  agings,  (b)
accounts  payable  schedules and (c) Inventory  reports and (d) a Borrowing Base
Certificate (which shall be calculated as of the last day of the prior month and
which shall not be binding  upon Agent or  restrictive  of Agent's  rights under
this  Agreement).  In  addition,  each  Borrower  will  deliver to Agent at such
intervals as Agent may require:  (i)  confirmatory  assignment  schedules,  (ii)
copies of Customer's invoices,  (iii) evidence of shipment or delivery, and (iv)
such further schedules, documents and/or information regarding the Collateral as
Agent  may  require  including,  without  limitation,  trial  balances  and test
verifications.  Agent shall have the right to confirm and verify all Receivables
by any manner and through any medium it considers  advisable  and do whatever it
may deem reasonably necessary to protect its interests  hereunder.  The items to
be provided  under this  Section are to be in form  reasonably  satisfactory  to
Agent and  executed by each  Borrower  and  delivered to Agent from time to time
solely for Agent's convenience in maintaining records of the Collateral, and any
Borrower's  failure to  deliver  any of such  items to Agent  shall not  affect,
terminate,   modify  or  otherwise  limit  Agent's  Lien  with  respect  to  the
Collateral.

         9.3.  Environmental  Reports.  Furnish  Agent,  concurrently  with  the
delivery of the financial statements referred to in Sections 9.7 and 9.8, with a
certificate signed by the President of each Borrower stating, to the best of his
knowledge, that each Borrower is in compliance in all material respects with all
federal,  state and local laws relating to environmental  protection and control
and  occupational  safety  and  health.  To the extent  any  Borrower  is not in
compliance  with the  foregoing  laws,  the  certificate  shall set  forth  with
reasonable  specificity all areas of non-compliance and the proposed action such
Borrower will implement in order to achieve full compliance.

         9.4.  Litigation.  Promptly  notify Agent in writing of any litigation,
suit or  administrative  proceeding  affecting any Borrower,  whether or not the
claim is covered by  insurance,  and of any suit or  administrative  proceeding,
which in any such case could  reasonably be expected to have a Material  Adverse
Effect on any Borrower.

         9.5.  Material  Occurrences.  Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; (b) any event, development or
circumstance  whereby any financial  statements  or other  reports  furnished to
Agent fail in any material  respect to present  fairly,  in accordance with GAAP
consistently  applied,  the  financial  condition  or  operating  results of any
Borrower as of the date of such statements;  (c) any accumulated retirement plan
funding  deficiency  which, if such deficiency  continued for two plan years and
was not  corrected  as provided in Section 4971 of the Code,  could  subject any
Borrower  to a tax  imposed  by  Section  4971 of the  Code;  (d) each and every
default by any Borrower which might result in the  acceleration  of the maturity
of any Indebtedness in excess of $100,000 in the aggregate,  including the names
and addresses of the holders of such Indebtedness with respect to which there is
a default  existing or with  respect to which the  maturity has been or could be
accelerated, and the amount of such Indebtedness;  and (e) any other development
in the business or affairs of any Borrower which could reasonably be expected to
have a Material  Adverse Effect;  in each case describing the nature thereof and
the action Borrowers propose to take with respect thereto.

         9.6.  Government  Receivables.  Notify  Agent  promptly  if  any of its
Receivables  arise out of contracts  between any Borrower and the United States,
any state, or any department, agency or instrumentality of any of them.

         9.7. Annual Financial Statements. Furnish Agent within ninety (90) days
after  the end of  each  fiscal  year  of  Borrowers,  financial  statements  of
Borrowers on a consolidating and consolidated  basis including,  but not limited
to,  statements  of  income  and  stockholders'  equity  and cash  flow from the
beginning  of the  current  fiscal  year to the end of such  fiscal year and the
balance sheet as at the end of such fiscal year, all prepared in accordance with
GAAP  applied on a basis  consistent  with prior  practices,  and in  reasonable
detail and reported upon, with respect to the consolidated  statements,  without
qualification by an independent certified public accounting firm selected by

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Borrowers and reasonably  satisfactory  to Agent (the  "Accountants"),  and with
respect to the consolidating  statements, by the Chief Financial Officer of RSI.
The  report  of the  Accountants  shall be  accompanied  by a  statement  of the
Accountants  certifying  that (i) they  have  caused  the Loan  Agreement  to be
reviewed, (ii) in making the examination upon which such report was based either
no information  came to their attention which to their knowledge  constituted an
Event of Default or a Default under this Agreement or any related  agreement or,
if such  information  came to their  attention,  specifying  any such Default or
Event of Default, its nature, when it occurred and whether it is continuing, and
such report shall contain or have appended thereto  calculations which set forth
Borrowers'  compliance with the requirements or restrictions imposed by Sections
6.9, 7.6 and 7.11 hereof.  In addition,  the reports shall be  accompanied  by a
certificate of RSI's Chief Financial Officer which shall state that, based on an
examination  sufficient to permit him to make an informed statement,  no Default
or Event of Default exists, or, if such is not the case, specifying such Default
or Event of Default, its nature, when it occurred,  whether it is continuing and
the steps  being taken by such  Borrower  with  respect to such event,  and such
certificate shall have appended thereto  calculations which set forth Borrowers'
compliance with the  requirements  or restrictions  imposed by Sections 6.9, 7.6
and 7.11 hereof.

         9.8. Quarterly  Financial  Statements.  Furnish Agent within forty-five
(45)days  after the end of each fiscal  quarter,  an unaudited  balance sheet of
Borrowers on a consolidated and consolidating basis and unaudited  statements of
income and stockholders' equity and cash flow of Borrowers on a consolidated and
consolidating  basis reflecting  results of operations from the beginning of the
fiscal year to the end of such quarter and for such quarter, prepared on a basis
consistent  with prior  practices  and  complete  and  correct  in all  material
respects, subject to normal and recurring year end adjustments that individually
and in the aggregate are not material to the business of Borrowers.  The reports
shall be accompanied by a certificate  signed by the Chief Financial  Officer of
RSI, which shall state that, based on an examination sufficient to permit him to
make an informed  statement,  no Default or Event of Default exists, or, if such
is not the case,  specifying such Default or Event of Default,  its nature, when
it  occurred,  whether it is  continuing  and the steps being taken by Borrowers
with respect to such default and, such  certificate  shall have appended thereto
calculations  which set forth  Borrowers'  compliance  with the  requirements or
restrictions imposed by Sections 6.9, 7.6 and 7.11 hereof.

         9.9.  Monthly  Financial  Statements.  Furnish Agent within thirty (30)
days after the end of each month,  an unaudited  balance sheet of Borrowers on a
consolidated  and  consolidating  basis and  unaudited  statements of income and
stockholders'   equity  and  cash  flow  of  Borrowers  on  a  consolidated  and
consolidating  basis reflecting  results of operations from the beginning of the
fiscal  year to the end of such month and for such  month,  prepared  on a basis
consistent  with prior  practices  and  complete  and  correct  in all  material
respects, subject to normal and recurring year end adjustments that individually
and in the aggregate are not material to the business of Borrowers.  The reports
shall be accompanied by a certificate of RSI's Chief  Financial  Officer,  which
shall state that,  based on an  examination  sufficient to permit him to make an
informed  statement,  no Default or Event of Default exists,  or, if such is not
the case,  specifying  such  Default or Event of Default,  its  nature,  when it
occurred,  whether it is continuing  and the steps being taken by Borrowers with
respect  to such  event  and,  such  certificate  shall  have  appended  thereto
calculations  which set forth  Borrowers'  compliance  with the  requirements or
restrictions imposed by Sections 6.9, 7.6 and 7.11 hereof.

         9.10.  Other  Reports.  Furnish Agent as soon as available,  but in any
event  within  ten (10) days after the  issuance  thereof,  with  copies of such
financial  statements,  reports and returns as each  Borrower  shall send to its
stockholders.

         9.11.  Additional  Information.  Furnish  Agent  with  such  additional
information  as Agent  shall  reasonably  request  in order to  enable  Agent to
determine  whether  the terms,  covenants,  provisions  and  conditions  of this
Agreement and the Note have been complied with by Borrowers  including,  without
limitation and without the necessity of any request by Agent,  (a) copies of all
environmental  audits and reviews,  (b) at least thirty (30) days prior thereto,
notice of any  Borrower's  opening of any new office or place of business or any
Borrower's closing of any existing office or place of business, and (c) promptly
upon any Borrower's  learning thereof,  notice of any labor dispute to which any
Borrower  may become a party,  any  strikes or  walkouts  relating to any of its
plants or other  facilities,  and the  expiration of any labor contract to which
any Borrower is a party or by which any Borrower is bound.

         9.12.  Projected Operating Budget.  Furnish Agent, no later than thirty
(30) days subsequent to the beginning of each Borrower's fiscal years commencing
with fiscal year 2001, a month by month projected operating budget and cash flow
of  Borrowers on a  consolidated  and  consolidating  basis for such fiscal year
(including an

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<PAGE>

income  statement  for each month and a balance  sheet as at the end of the last
month  in  each  fiscal  quarter),  such  projections  to  be  accompanied  by a
certificate signed by the Chief Financial Officer of RSI to the effect that such
projections have been prepared on the basis of sound financial planning practice
consistent with past budgets and financial  statements and that such officer has
no reason to question the  reasonableness  of any material  assumptions on which
such projections were prepared.

         9.13. Notice of Suits, Adverse Events. Furnish Agent with prompt notice
of (i) any lapse or other  termination  of any Consent issued to any Borrower by
any  Governmental  Body or any other Person that is material to the operation of
any Borrower's business,  (ii) any refusal by any Governmental Body or any other
Person to renew or extend any such Consent;  and (iii) copies of any periodic or
special reports filed by any Borrower with any Governmental  Body or Person,  if
such reports indicate any material change in the business,  operations,  affairs
or condition of any Borrower,  or if copies thereof are requested by Lender, and
(iv)  copies  of  any  material  notices  and  other   communications  from  any
Governmental Body or Person which specifically relate to any Borrower.

         9.14. ERISA Notices and Requests.  Furnish Agent with immediate written
notice in the event that (i) any Borrower or any member of the Controlled  Group
knows or has reason to know that a Termination Event has occurred, together with
a written  statement  describing such Termination  Event and the action, if any,
which such Borrower or any member of the Controlled  Group has taken, is taking,
or proposes to take with respect  thereto and,  when known,  any action taken or
threatened  by the Internal  Revenue  Service,  Department of Labor or PBGC with
respect  thereto,  (ii) any Borrower or any member of the Controlled Group knows
or has reason to know that a prohibited  transaction (as defined in Sections 406
of ERISA and 4975 of the Code) has occurred  together  with a written  statement
describing such  transaction and the action which such Borrower or any member of
the  Controlled  Group has taken,  is taking or  proposes  to take with  respect
thereto,  (iii) a funding waiver request has been filed with respect to any Plan
together with all  communications  received by any Borrower or any member of the
Controlled Group with respect to such request, (iv) any increase in the benefits
of any existing Plan or the establishment of any new Plan or the commencement of
contributions  to any Plan to which any Borrower or any member of the Controlled
Group was not  previously  contributing  shall  occur,  (v) any  Borrower or any
member of the Controlled Group shall receive from the PBGC a notice of intention
to  terminate  a Plan or to  have a  trustee  appointed  to  administer  a Plan,
together with copies of each such notice, (vi) any Borrower or any member of the
Controlled Group shall receive any favorable or unfavorable determination letter
from the Internal  Revenue Service  regarding the  qualification of a Plan under
Section 401(a) of the Code, together with copies of each such letter;  (vii) any
Borrower or any member of the Controlled  Group shall receive a notice regarding
the  imposition  of  withdrawal  liability,  together  with  copies of each such
notice;  (viii) any Borrower or any member of the Controlled Group shall fail to
make a required  installment or any other required  payment under Section 412 of
the Code on or before the due date for such  installment  or  payment;  (ix) any
Borrower or any member of the  Controlled  Group knows that (a) a  Multiemployer
Plan  has  been  terminated,   (b)  the  administrator  or  plan  sponsor  of  a
Multiemployer  Plan intends to terminate a  Multiemployer  Plan, or (c) the PBGC
has  instituted  or will  institute  proceedings  under Section 4042 of ERISA to
terminate a Multiemployer Plan.

         9.15. Additional Documents. Execute and deliver to Agent, upon request,
such  documents  and  agreements  as Agent  may,  from time to time,  reasonably
request to carry out the purposes, terms or conditions of this Agreement.

X.       EVENTS OF DEFAULT.

         The  occurrence  of any  one or  more  of the  following  events  shall
constitute an "Event of Default":

         10.1.  failure by any Borrower to pay any  principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration  pursuant
to the terms of this  Agreement  or by  notice of  intention  to  prepay,  or by
required  prepayment or failure to pay any other  liabilities  or make any other
payment,  fee or charge  provided for herein when due or in any Other  Document,
including, but not limited to violation of any Borrowing Base;

         10.2.  any  representation  or  warranty  made  or  deemed  made by any
Borrower in this  Agreement  or any  related  agreement  or in any  certificate,
document or financial  or other  statement  furnished at any time in  connection
herewith  or  therewith  shall  prove to have been  misleading  in any  material
respect on the date when made or deemed to have been made;

         10.3. failure by any Borrower to (i) furnish financial information when
due or when requested, or (ii) permit the inspection of its books or records, in
each case, in accordance with the terms of this Agreement;

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<PAGE>

         10.4.  issuance of a notice of Lien,  levy,  assessment,  injunction or
attachment against a material portion of any Borrower's property;

         10.5.  except as otherwise  provided for in Sections 10.1 and 10.3, and
subject  to any  applicable  grace  period,  if any,  failure  or neglect of any
Borrower to perform,  keep or observe any term, provision,  condition,  covenant
herein  contained,  or contained in any other agreement or  arrangement,  now or
hereafter entered into between any Borrower and Agent or any Lender except for a
failure  or neglect  of any  Borrower  to  perform,  keep or  observe  any term,
provision,  condition or covenant,  contained in Sections 4.6,  4.7, 4.9,  4.11,
4.13,  4.14,  4.16,  4.19,  6.1, 6.2, 6.3, 6.4, 9.4 or 9.6 hereof which is cured
within fifteen (15) days from the occurrence of such failure or neglect;

         10.6.  any final and  appealable  judgment or judgments are rendered or
judgment  liens filed against any Borrower for an aggregate  amount in excess of
$250,000.00  which  within  thirty (30) days of such  rendering or filing is not
either satisfied, stayed or discharged of record;

         10.7.  any  Borrower  shall (i) apply  for,  consent  to or suffer  the
appointment of, or the taking of possession by, a receiver,  custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property,  (ii) make a general  assignment  for the benefit of creditors,  (iii)
commence a voluntary case under any state or federal  bankruptcy laws (as now or
hereafter in effect),  (iv) be  adjudicated a bankrupt or insolvent,  (v) file a
petition  seeking to take advantage of any other law providing for the relief of
debtors,  (vi) acquiesce to, or fail to have dismissed,  within sixty (60) days,
any petition  filed  against it in any  involuntary  case under such  bankruptcy
laws,  or  (vii)  take  any  action  for the  purpose  of  effecting  any of the
foregoing;

         10.8.  any  Borrower  shall  admit  in  writing  its  inability,  or be
generally unable, to pay its debts as they become due or cease operations of its
present business;

         10.9.  any  Affiliate  or  any  Subsidiary  of  any  Borrower,  or  any
Guarantor,  shall (i) apply for, consent to or suffer the appointment of, or the
taking of possession by, a receiver,  custodian,  trustee, liquidator or similar
fiduciary of itself or of all or a substantial part of its property,  (ii) admit
in writing  its  inability,  or be  generally  unable,  to pay its debts as they
become due or cease  operations  of its present  business,  (iii) make a general
assignment  for the benefit of creditors,  (iv) commence a voluntary  case under
any state or federal  bankruptcy  laws (as now or hereafter  in effect),  (v) be
adjudicated  a  bankrupt  or  insolvent,  (vi) file a  petition  seeking to take
advantage of any other law providing for the relief of debtors,  (vii) acquiesce
to, or fail to have  dismissed,  within  thirty (30) days,  any  petition  filed
against it in any involuntary  case under such  bankruptcy  laws, or (viii) take
any action for the purpose of effecting any of the foregoing;

         10.10. any change in any Borrower's  condition or affairs (financial or
otherwise) which has a Material Adverse Effect;

         10.11.  any Lien in favor of the Lenders created  hereunder or provided
for hereby or under any related  agreement for any reason ceases to be or is not
a valid and perfected Lien having a first priority interest;

         10.12.  an event of default has  occurred and been  declared  under the
Subordinate  Documentation  which  default  shall not have been  cured or waived
within any applicable grace period and for which Axess  Corporation is permitted
to take action under the Subordination Agreement;

         10.13.  a default of the  obligations  of any Borrower  under any other
agreement to which it is a party shall occur which materially  adversely affects
its condition,  affairs or prospects  (financial or otherwise)  which default is
not cured within any applicable grace period;

         10.14.  termination  or breach of any  Guaranty  or  Guaranty  Security
Agreement or similar  agreement  executed and  delivered to Agent in  connection
with the Obligations of any Borrower, or if any Guarantor attempts to terminate,
challenges  the  validity  of, or its  liability  under,  any such  Guaranty  or
Guaranty Security Agreement or similar agreement;

         10.15. any Change of Ownership or Change of Control shall occur;

         10.16. any material  provision of this Agreement shall, for any reason,
cease to be valid and binding on any Borrower, or any Borrower shall so claim in
writing to Agent;

         10.17. (i) any Governmental Body shall (a) revoke,  terminate,  suspend
or  adversely  modify  any  license,  permit,  patent,  trademark  or trade name
material to the Borrowers' operations, or (b) commence proceedings to

                                       41

<PAGE>

suspend,  revoke,  terminate  or  adversely  modify  any such  license,  permit,
trademark,  trade name or patent and such proceedings  shall not be dismissed or
discharged  within sixty (60) days,  or (c) schedule or conduct a hearing on the
renewal of any license,  permit,  trademark,  trade name or patent necessary for
the continuation of any Borrower's  business and the staff of such  Governmental
Body issues a report  recommending  the termination,  revocation,  suspension or
material, adverse modification of such license, permit, trademark, trade name or
patent;  (ii) any  agreement  which is necessary or material to the operation of
any  Borrower's  business  shall be revoked or terminated  and not replaced by a
substitute  acceptable  to Agent within  thirty (30) days after the date of such
revocation   or   termination,   and  such   revocation   or   termination   and
non-replacement  would  reasonably be expected to have a Material Adverse Effect
on any Borrower;

         10.18.  any  substantial  portion of the Collateral  shall be seized or
taken by a  Governmental  Body,  or any  Borrower or the title and rights of any
Borrower or any Original Owner which is the owner of any material portion of the
Collateral  shall have become the subject matter of litigation  which might,  in
the reasonable opinion of Agent, upon final determination,  result in impairment
or loss of the security provided by this Agreement or the Other Documents;

         10.19.  the  operations of any  Borrower's  manufacturing  facility are
interrupted for any material period,  unless such Borrower shall (i) be entitled
to receive for such period of  interruption,  proceeds of business  interruption
insurance  sufficient  to assure that its per diem cash needs during such period
is at least equal to its average per diem cash needs for the  consecutive  three
month period  immediately  preceding the initial date of  interruption  and (ii)
receive such proceeds in the amount  described in clause (i) preceding not later
than  thirty (30) days  following  the  initial  date of any such  interruption;
provided,  however,  that notwithstanding the provisions of clauses (i) and (ii)
of this  section,  an Event of Default  shall be deemed to have occurred if such
Borrower shall be receiving the proceeds of business interruption  insurance for
a period of thirty (30) consecutive days;

         10.20.  a default shall occur under the EXIM Borrower  Agreement or any
EXIM Document; or

         10.21. an event or condition  specified in Sections 7.16 or 9.15 hereof
shall occur or exist with  respect to any Plan and, as a result of such event or
condition,  together with all other such events or  conditions,  any Borrower or
any member of the  Controlled  Group shall incur,  or in the opinion of Agent be
reasonably  likely to incur,  a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of Agent, would have a Material Adverse Effect on any
Borrower.

XI.      LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.

         11.1.  Rights  and  Remedies.  Upon the  occurrence  of (i) an Event of
Default  pursuant to Section 10.7 all  Obligations  shall be immediately due and
payable and this  Agreement and the obligation of Lenders to make Advances shall
be deemed  terminated;  and,  (ii) any of the other Events of Default and at any
time thereafter (such default not having  previously been cured),  at the option
of Required  Lenders all  Obligations  shall be immediately  due and payable and
Lenders  shall have the right to terminate  this  Agreement and to terminate the
obligation of Lenders to make Advances and (iii) a filing of a petition  against
Borrower in any involuntary case under any state or federal bankruptcy laws, the
obligation of Lenders to make Advances  hereunder shall be terminated other than
as may be  required  by an  appropriate  order of the  bankruptcy  court  having
jurisdiction  over any  Borrower.  Upon the  occurrence of any Event of Default,
Agent shall have the right to  exercise  any and all other  rights and  remedies
provided  for  herein,  under the Uniform  Commercial  Code and at law or equity
generally,  including,  without limitation,  the right to foreclose the security
interests  granted  herein and to realize upon any  Collateral  by any available
judicial  procedure  and/or  to take  possession  of and  sell any or all of the
Collateral  with  or  without  judicial  process.  Agent  may  enter  any of any
Borrower's  premises  or  other  premises  without  legal  process  and  without
incurring liability to any Borrower therefor, and Agent may thereupon, or at any
time thereafter, in its discretion without notice or demand, take the Collateral
and  remove  the same to such  place as Agent may deem  advisable  and Agent may
require  Borrowers  to make the  Collateral  available  to Agent at a convenient
place. With or without having the Collateral at the time or place of sale, Agent
may, upon the occurrence and during the continuance of an Event of Default, sell
the Collateral,  or any part thereof,  at public or private sale, at any time or
place,  in one or more  sales,  at such  price or prices,  and upon such  terms,
either for cash,  credit or future  delivery,  as Agent may elect.  Except as to
that part of the Collateral which is perishable or threatens to decline speedily
in value or is of a type  customarily sold on a recognized  market,  Agent shall
give Borrowers  reasonable  notification  of such sale or sales, it being agreed
that in all events  written  notice  mailed to  Borrowers at least five (5) days
prior to such sale or sales is reasonable notification. At any public sale Agent
or any Lender may bid for and become the purchaser, and Agent, any Lender or any
other  purchaser  at any such sale  thereafter  shall hold the  Collateral  sold
absolutely free from any

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claim or right of whatsoever  kind,  including any equity of redemption and such
right and equity are hereby expressly  waived and released by each Borrower.  In
connection  with the  exercise  of the  foregoing  remedies,  Agent  is  granted
permission to use all of each Borrower's trademarks,  trade styles, trade names,
patents, patent applications,  licenses, franchises and other proprietary rights
which are used in connection  with (a) Inventory for the purpose of disposing of
such Inventory and (b) Equipment for the purpose of completing  the  manufacture
of unfinished goods. The proceeds realized from the sale of any Collateral shall
be applied as follows:  first, to the reasonable costs,  expenses and attorneys'
fees  and  expenses  incurred  by  Agent  for  collection  and for  acquisition,
completion,  protection,  removal, storage, sale and delivery of the Collateral;
second,  to interest due upon any of the  Obligations and any fees payable under
this  Agreement;  and,  third,  to  the  principal  of the  Obligations.  If any
deficiency  shall  arise,  Borrowers  shall  remain  liable to Agent and Lenders
therefor.

         11.2.  Agent's  Discretion.  Agent  shall  have  the  right in its sole
discretion to determine  which  rights,  Liens,  security  interests or remedies
Agent may at any time pursue, relinquish,  subordinate, or modify or to take any
other action with  respect  thereto and such  determination  will not in any way
modify or affect any of Agent's or Lenders' rights hereunder.

         11.3. Setoff. In addition to any other rights which Agent or any Lender
may have  under  applicable  law,  upon the  occurrence  of an Event of  Default
hereunder,  Agent and such  Lender  shall  have a right to apply any  Borrower's
property held by Agent and such Lender to reduce the Obligations.

         11.4  Rights  and  Remedies  not  Exclusive.  The  enumeration  of  the
foregoing  rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy  shall not  preclude  the  exercise of any other right or
remedies provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.

XII.     WAIVERS AND JUDICIAL PROCEEDINGS.

         12.1.  Waiver  of  Notice.   Each  Borrower  hereby  waives  notice  of
non-payment of any of the Receivables,  demand, presentment,  protest and notice
thereof with respect to any and all  instruments,  notice of acceptance  hereof,
notice of loans or  advances  made,  credit  extended,  Collateral  received  or
delivered,  or any other action taken in reliance hereon,  and all other demands
and  notices of any  description,  except  such as are  expressly  provided  for
herein.

         12.2.  Delay.  No delay or omission on Agent's or any Lender's  part in
exercising any right,  remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.

         12.3. Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION (A)
ARISING  UNDER THIS  AGREEMENT  OR ANY OTHER  INSTRUMENT,  DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION  HEREWITH,  OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR  INCIDENTAL  TO THE DEALINGS OF THE PARTIES  HERETO OR ANY OF THEM
WITH RESPECT TO THIS  AGREEMENT OR ANY OTHER  INSTRUMENT,  DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER  ARISING,  AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE  AND EACH PARTY HEREBY  CONSENTS  THAT
ANY SUCH  CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION  SHALL BE  DECIDED BY COURT
TRIAL WITHOUT A JURY,  AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN  EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

XIII.    EFFECTIVE DATE AND TERMINATION.

         13.1.  Term.  This  Agreement,  which shall inure to the benefit of and
shall be binding upon the respective  successors  and permitted  assigns of each
Borrower,  Agent and each Lender,  shall become effective on the date hereof and
shall  continue  in full force and  effect  until the third  anniversary  of the
Closing Date (the "Term") unless sooner terminated as herein provided. Borrowers
may  terminate  this  Agreement at any time upon ninety (90) days' prior written
notice upon payment in full of the Obligations. In the event the Obligations are
prepaid in full  prior to the last day of the Term (the date of such  prepayment
hereinafter referred to as the "Early Termination Date"), Borrowers shall pay to
Agent for the benefit of Lenders an early  termination fee in an amount equal to
(x)  $290,000.00  if the Early  Termination  Date occurs on or after the Closing
Date to and including the date  immediately  preceding the first  anniversary of
the Closing Date, and (y) $145,000.00 if the Early Termination Date occurs on or

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<PAGE>

after  the first  anniversary  of the  Closing  Date to and  including  the date
immediately   preceding   the   second   anniversary   of  the   Closing   Date.
Notwithstanding  any other term or  provision  contained  in Section 13.1 to the
contrary,  the early  termination fee referred to herein shall not be payable in
the event  that PNC  ceases  to act as Agent  hereunder  due to PNC's  voluntary
resignation as Agent provided,  however,  that such voluntary resignation is not
caused by the merger,  consolidation,  sale,  transfer or other  combination  or
disposition of PNC or any division thereof with any other entity.

         13.2.  Termination.  The  termination of the Agreement shall not affect
any Borrower's, Agent's or any Lender's rights, or any of the Obligations having
their  inception  prior  to the  effective  date  of such  termination,  and the
provisions  hereof shall continue to be fully operative  until all  transactions
entered  into,  rights or  interests  created  or  Obligations  have been  fully
disposed of, concluded or liquidated.  The security interests,  Liens and rights
granted  to Agent and  Lenders  hereunder  and the  financing  statements  filed
hereunder  shall  continue  in  full  force  and  effect,   notwithstanding  the
termination of this Agreement or the fact that Borrowers'  Account may from time
to  time  be  temporarily  in a  zero  or  credit  position,  until  all  of the
Obligations  of each  Borrower  have been paid or  performed  in full  after the
termination of this  Agreement or each Borrower has furnished  Agent and Lenders
with an indemnification  satisfactory to Agent and Lenders with respect thereto.
Accordingly,  each  Borrower  waives any rights which it may have under  Section
9-404(1)  of the  Uniform  Commercial  Code to demand the filing of  termination
statements  with respect to the  Collateral,  and Agent shall not be required to
send such  termination  statements  to each  Borrower,  or to file them with any
filing  office,  unless and until this Agreement  shall have been  terminated in
accordance  with  its  terms  and all  Obligations  paid in full in  immediately
available  funds.  All  representations,   warranties,  covenants,  waivers  and
agreements   contained  herein  shall  survive   termination  hereof  until  all
Obligations are paid or performed in full.

XIV.     REGARDING AGENT.

         14.1.  Appointment.  Each Lender hereby  designates PNC to act as Agent
for such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably  authorizes  Agent to take  such  action  on its  behalf  under  the
provisions of this Agreement and the Other Documents and to exercise such powers
and to  perform  such  duties  hereunder  and  thereunder  as  are  specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest,  fees (except the fees set forth in Sections
3.3(a)  and  3.4),  charges  and  collections  (without  giving  effect  to  any
collection days) received pursuant to this Agreement, for the ratable benefit of
Lenders.  Agent may perform any of its duties hereunder by or through its agents
or  employees.  As to any matters not expressly  provided for by this  Agreement
(including  without  limitation,  collection  of the  Note)  Agent  shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain  from  acting  (and shall be fully  protected  in so acting or
refraining from acting) upon the instructions of the Required Lenders,  and such
instructions  shall be  binding;  provided,  however,  that  Agent  shall not be
required  to take  any  action  which  exposes  Agent to  liability  or which is
contrary to this Agreement or the Other Documents or applicable law unless Agent
is  furnished  with an  indemnification  reasonably  satisfactory  to Agent with
respect thereto.

         14.2. Nature of Duties.  Agent shall have no duties or responsibilities
except those  expressly  set forth in this  Agreement  and the Other  Documents.
Neither Agent nor any of its officers,  directors,  employees or agents shall be
(i)  liable for any action  taken or  omitted  by them as such  hereunder  or in
connection  herewith,  unless  caused by their  gross (not mere)  negligence  or
willful  misconduct,  or  (ii)  responsible  in any  manner  for  any  recitals,
statements,  representations  or warranties  made by any Borrower or any officer
thereof contained in this Agreement,  or in any of the Other Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection  with,  this Agreement or any of the
Other  Documents or for the value,  validity,  effectiveness,  genuineness,  due
execution,  enforceability or sufficiency of this Agreement, or any of the Other
Documents  or for  any  failure  of any  Borrower  to  perform  its  obligations
hereunder. Agent shall not be under any obligation to any Lender to ascertain or
to  inquire  as to the  observance  or  performance  of  any  of the  agreements
contained in, or conditions of, this Agreement or any of the Other Documents, or
to inspect the properties, books or records of any Borrower. The duties of Agent
as respects the Advances to Borrowers shall be mechanical and  administrative in
nature;   Agent  shall  not  have  by  reason  of  this  Agreement  a  fiduciary
relationship in respect of any Lender; and nothing in this Agreement,  expressed
or implied,  is intended to or shall be so construed as to impose upon Agent any
obligations in respect of this Agreement except as expressly set forth herein.

         14.3.  Lack of Reliance  on Agent and  Resignation.  Independently  and
without reliance upon Agent or any other Lender,  each Lender has made and shall
continue to make (i) its own independent investigation of the

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<PAGE>

financial  condition and affairs of each Borrower in connection  with the making
and the  continuance  of the Advances  hereunder and the taking or not taking of
any  action  in  connection  herewith,   and  (ii)  its  own  appraisal  of  the
creditworthiness  of each Borrower.  Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any credit
or other  information with respect  thereto,  whether coming into its possession
before making of the Advances or at any time or times thereafter except as shall
be provided by any  Borrower  pursuant to the terms  hereof.  Agent shall not be
responsible   to  any  Lender  for  any   recitals,   statements,   information,
representations or warranties herein or in any agreement,  document, certificate
or a statement delivered in connection with or for the execution, effectiveness,
genuineness,  validity,  enforceability,  collectibility  or sufficiency of this
Agreement or any Other Document,  or of the financial condition of any Borrower,
or be  required  to make  any  inquiry  concerning  either  the  performance  or
observance of any of the terms, provisions or conditions of this Agreement,  the
Note,  the Other  Documents or the financial  condition of any Borrower,  or the
existence of any Event of Default or any Default.

         Agent may resign on sixty (60) days' written  notice to each of Lenders
and  Borrowing  Agent and upon  such  resignation,  the  Required  Lenders  will
promptly designate a successor Agent reasonably satisfactory to Borrowers.

         Any such successor Agent shall succeed to the rights, powers and duties
of Agent,  and the term "Agent" shall mean such successor  agent  effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be  terminated,  without  any other or  further  act or deed on the part of such
former Agent.  After any Agent's  resignation  as Agent,  the provisions of this
Article XIV shall inure to its benefit as to any actions  taken or omitted to be
taken by it while it was Agent under this Agreement.

         14.4. Certain Rights of Agent. If Agent shall request instructions from
Lenders  with  respect  to any  act or  action  (including  failure  to  act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain  from such act or taking such  action  unless and until Agent shall have
received  instructions  from the  Required  Lenders;  and Agent  shall not incur
liability  to any  Person by  reason  of so  refraining.  Without  limiting  the
foregoing,  Lenders shall not have any right of action whatsoever  against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.

         14.5.  Reliance.  Agent shall be  entitled to rely,  and shall be fully
protected in relying,  upon any note, writing,  resolution,  notice,  statement,
certificate,  telex, teletype or telecopier message,  cablegram,  order or other
document or  telephone  message  believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters  pertaining to this  Agreement and the Other  Documents and
its duties  hereunder,  upon advice of counsel  selected by it. Agent may employ
agents  and  attorneys-in-fact  and  shall  not be  liable  for the  default  or
misconduct  of any such  agents  or  attorneys-in-fact  selected  by Agent  with
reasonable care.

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

         14.7.  Indemnification.  To the  extent  Agent  is not  reimbursed  and
indemnified  by Borrowers,  each Lender will  reimburse  and indemnify  Agent in
proportion  to its  respective  portion of the Advances  (or, if no Advances are
outstanding,  according to its Commitment Percentage),  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  performing  its
duties hereunder,  or in any way relating to or arising out of this Agreement or
any Other Document;  provided that,  Lenders shall not be liable for any portion
of  such  liabilities,   obligations,   losses,  damages,  penalties,   actions,
judgments,  suits, costs, expenses or disbursements resulting from Agent's gross
(not mere) negligence or willful misconduct.

         14.8. Agent in its Individual Capacity.  With respect to the obligation
of Agent to lend under this  Agreement,  the Advances  made by it shall have the
same  rights  and  powers  hereunder  as any other  Lender and as if it were not
performing the duties as Agent  specified  herein;  and the term "Lender" or any
similar term shall, unless

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<PAGE>

the  context  clearly  otherwise  indicates,  include  Agent  in its  individual
capacity as a Lender.  Agent may engage in business  with any  Borrower as if it
were not performing the duties specified  herein,  and may accept fees and other
consideration  from any Borrower for services in connection  with this Agreement
or otherwise without having to account for the same to Lenders.

         14.9.  Delivery of Documents.  To the extent Agent  receives  financial
statements  required under Sections 9.7, 9.8, and 9.9 from any Borrower pursuant
to the terms of this Agreement,  Agent will promptly  furnish such documents and
information to Lenders.

         14.10.  Borrowers'  Undertaking  to Agent.  Without  prejudice to their
respective  obligations to Lenders under the other provisions of this Agreement,
each Borrower hereby  undertakes with Agent to pay to Agent from time to time on
demand all  amounts  from time to time due and  payable by it for the account of
Agent or Lenders or any of them  pursuant  to this  Agreement  to the extent not
already  paid.  Any payment  made  pursuant  to any such demand  shall pro tanto
satisfy the relevant Borrower's  obligations to make payments for the account of
Lenders or the relevant one or more of them pursuant to this Agreement.

XV.      BORROWING AGENCY.

         15.1. Borrowing Agency Provisions.

              (a) Each Borrower hereby irrevocably designates Borrowing Agent to
be its  attorney  and agent and in such  capacity  to borrow,  sign and  endorse
notes, and execute and deliver all instruments,  documents, writings and further
assurances now or hereafter  required  hereunder,  on behalf of such Borrower or
Borrowers,  and hereby  authorizes Agent to pay over or credit all loan proceeds
hereunder in accordance with the request of Borrowing Agent.

              (b)  The  handling  of  this  credit  facility  as a  co-borrowing
facility  with a borrowing  agent in the manner set forth in this  Agreement  is
solely as an accommodation to Borrowers and at their request.  Neither Agent nor
any Lender shall incur  liability to  Borrowers as a result  thereof.  To induce
Agent and Lenders to do so and in  consideration  thereof,  each Borrower hereby
indemnifies  Agent and each Lender and holds Agent and each Lender harmless from
and against any and all  liabilities,  expenses,  losses,  damages and claims of
damage or injury asserted against Agent or any Lender by any Person arising from
or incurred by reason of the handling of the financing arrangements of Borrowers
as  provided  herein,  reliance  by  Agent  or  any  Lender  on any  request  or
instruction  from  Borrowing  Agent or any  other  action  taken by Agent or any
Lender with  respect to this Section  15.1 except due to willful  misconduct  or
gross (not mere) negligence by the indemnified party.

              (c) All Obligations shall be joint and several,  and each Borrower
shall make payment  upon the  maturity of the  Obligations  by  acceleration  or
otherwise,  and such obligation and liability on the part of each Borrower shall
in no way be affected by any  extensions,  renewals and  forbearance  granted to
Agent or any Lender to any Borrower,  failure of Agent or any Lender to give any
Borrower  notice of borrowing or any other  notice,  any failure of Agent or any
Lender to pursue or preserve  its rights  against any  Borrower,  the release by
Agent or any  Lender  of any  Collateral  now or  thereafter  acquired  from any
Borrower,  and such  agreement  by each  Borrower to pay upon any notice  issued
pursuant thereto is  unconditional  and unaffected by prior recourse by Agent or
any  Lender  to the  other  Borrowers  or any  Collateral  for  such  Borrower's
Obligations or the lack thereof.

         15.2. Waiver of Subrogation. Each Borrower expressly waives any and all
rights of subrogation,  reimbursement,  indemnity, exoneration,  contribution of
any other claim which such Borrower may now or hereafter  have against the other
Borrowers or other Person  directly or  contingently  liable for the Obligations
hereunder,  or  against  or  with  respect  to  the  other  Borrowers'  property
(including,  without  limitation,  any  property  which  is  Collateral  for the
Obligations), arising from the existence or performance of this Agreement, until
termination of this Agreement and repayment in full of the Obligations.

XVI.     MISCELLANEOUS.

         16.1.  Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey. Any judicial  proceeding
brought by or against any Borrower with respect to any of the Obligations,  this
Agreement  or any  related  agreement  may be brought in any court of  competent
jurisdiction  in the State of New  Jersey,  United  States of  America,  and, by
execution and delivery of this Agreement,  each Borrower  accepts for itself and
in  connection  with  its  properties,   generally  and   unconditionally,   the
non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment  rendered  thereby  (subject to any rights of appeal other
than on jurisdictional grounds) in connection with this Agreement. Each Borrower
hereby waives

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<PAGE>

personal  service  of any and all  process  upon it and  consents  that all such
service of process may be made by  registered  mail (return  receipt  requested)
directed to Borrowing Agent at its address set forth in Section 16.6 and service
so made shall be deemed  completed  five (5) days after the same shall have been
so  deposited in the mails of the United  States of America,  or, at the Agent's
and/or any Lender's option,  by service upon Borrowing Agent which each Borrower
irrevocably  appoints  as such  Borrower's  Agent for the  purpose of  accepting
service within the State of New Jersey. Nothing herein shall affect the right to
serve  process in any manner  permitted by law or shall limit the right of Agent
or any Lender to bring  proceedings  against  any  Borrower in the courts of any
other jurisdiction. Each Borrower waives any objection to jurisdiction and venue
of any action  instituted  hereunder  and shall not assert any defense  based on
lack of jurisdiction  or venue or based upon forum non conveniens.  Any judicial
proceeding by any Borrower  against Agent or any Lender  involving,  directly or
indirectly,  any  matter  or  claim in any way  arising  out of,  related  to or
connected with this Agreement or any related agreement, shall be brought only in
a federal  or state  court  located  in the  County of  Middlesex,  State of New
Jersey.

         16.2.  Entire  Understanding.  (a)  This  Agreement  and the  documents
executed  concurrently  herewith contain the entire  understanding  between each
Borrower,  Agent  and each  Lender  and  supersedes  all  prior  agreements  and
understandings,  if any,  relating to the subject matter  hereof.  Any promises,
representations,  warranties or guarantees not herein  contained and hereinafter
made  shall  have  no  force  and  effect  unless  in  writing,  signed  by each
Borrower's,   Agent's  and  each  Lender's  respective  officers.  Neither  this
Agreement  nor any  portion  or  provisions  hereof  may be  changed,  modified,
amended, waived, supplemented,  discharged, cancelled or terminated orally or by
any course of dealing,  or in any manner  other than by an agreement in writing,
signed by the party to be charged.  Each Borrower  acknowledges that it has been
advised by counsel in connection  with the execution of this Agreement and Other
Documents   and  is  not  relying  upon  oral   representations   or  statements
inconsistent with the terms and provisions of this Agreement.

              (b) The Required Lenders, Agent with the consent in writing of the
Required  Lenders,  and Borrowers may, subject to the provisions of this Section
16.2 (b), from time to time enter into written  supplemental  agreements to this
Agreement  or the Other  Documents  executed  by  Borrowers,  for the purpose of
adding or deleting any provisions or otherwise  changing,  varying or waiving in
any  manner  the  rights  of  Lenders,  Agent  or  Borrowers  thereunder  or the
conditions,  provisions  or terms  thereof  of  waiving  any  Event  of  Default
thereunder,  but  only  to the  extent  specified  in such  written  agreements;
provided,  however,  that no such  supplemental  agreement  shall,  without  the
consent of all Lenders:

                   (i)  increase the  Commitment  Percentage  or maximum  dollar
commitment of any Lender.

                   (ii) extend the  maturity of any Note or the due date for any
amount  payable  hereunder,  or decrease  the rate of interest or reduce any fee
payable by Borrowers to Lenders pursuant to this Agreement.

                   (iii) alter the  definition of the term  Required  Lenders or
alter, amend or modify this Section 16.2(b).

                   (iv) release any  Collateral  during any calendar year (other
than in accordance  with the provisions of this  Agreement)  having an aggregate
value in excess of $50,000.

                   (v) change the rights and duties of Agent.

                   (vi) permit any Revolving  Advance other than EXIM  Revolving
Advances  to be made if after  giving  effect  thereto  the  total of  Revolving
Advances  outstanding  hereunder  would exceed the Formula  Amount for more than
sixty (60)  consecutive  Business  Days or exceed one  hundred  and ten  percent
(110%) of the Formula Amount.

                   (vii) permit any EXIM Revolving  Advance to be made if, after
giving  effect  thereto,  the  total  of  EXIM  Revolving  Advances  outstanding
hereunder would exceed the Formula Amount for more than ninety (90)  consecutive
Business Days or exceed  $325,000  above the Formula  Amount  provided that EXIM
Revolving Advances may never exceed the Maximum EXIM Revolving Advance Amount.

                   (viii)  increase the Advance Rates above the Advance Rates in
effect on the Closing Date.

Any such supplemental  agreement shall apply equally to each Lender and shall be
binding upon Borrowers, Lenders

                                       47

<PAGE>

and Agent and all future holders of the Obligations.  In the case of any waiver,
Borrowers,  Agent and Lenders  shall be restored to their former  positions  and
rights,  and any  Event of  Default  waived  shall be deemed to be cured and not
continuing,  but no waiver of a specific  Event of Default  shall  extend to any
subsequent  Event of Default  (whether or not the subsequent Event of Default is
the same as the  Event of  Default  which  was  waived),  or  impair  any  right
consequent thereon.

         In the event that Agent  requests  the consent of a Lender  pursuant to
this Section 16.2 and such Lender shall not respond or reply to Agent in writing
within ten (10) days of delivery of such request, such Lender shall be deemed to
have consented to matter that was the subject of the request.  In the event that
Agent  requests  the consent of a Lender  pursuant to this Section 16.2 and such
consent is denied,  then PNC may, at its option,  require  such Lender to assign
its interest in the Advances to PNC or to another  Lender or to any other Person
designated by the Agent (the "Designated Lender"), for a price equal to the then
outstanding  principal  amount thereof plus accrued and unpaid interest and fees
due such  Lender,  which  interest  and fees shall be paid when  collected  from
Borrowers.  In the event PNC elects to require any Lender to assign its interest
to PNC or to the  Designated  Lender,  PNC will so notify such Lender in writing
within forty five (45) days following such Lender's denial, and such Lender will
assign its interest to PNC or the Designated  Lender no later than five (5) days
following  receipt of such notice pursuant to a Commitment  Transfer  Supplement
executed by such Lender,  PNC or the  Designated  Lender,  as  appropriate,  and
Agent.

         Notwithstanding the foregoing,  Agent may at its discretion and without
the  consent  of  the  Required  Lenders,  voluntarily  permit  the  outstanding
Revolving Advances at any time to exceed the Formula Amount by up to one hundred
and ten percent (110%) of the Formula  Amount for up to thirty (30)  consecutive
Business Days. For purposes of the preceding sentence, the discretion granted to
Agent hereunder shall not preclude involuntary overadvances that may result from
time to time  due to the  fact  that  the  Formula  Amount  was  unintentionally
exceeded for any reason,  including,  but not limited to, Collateral  previously
deemed  to  be  either  "Eligible  Receivables"  or  "Eligible  Inventory",   as
applicable,  becomes  ineligible,  collections of Receivables  applied to reduce
outstanding Revolving Advances are thereafter returned for insufficient funds or
overadvances are made to protect or preserve the Collateral.  In the event Agent
involuntarily  permits the outstanding  Revolving Advances to exceed the Formula
Amount by more than ten percent  (10%),  Agent shall  decrease such excess in as
expeditious  a  manner  as  is  practicable  under  the  circumstances  and  not
inconsistent  with the reason for such  excess.  Revolving  Advances  made after
Agent has determined the existence of involuntary  overadvances  shall be deemed
to be  involuntary  overadvances  and shall be decreased in accordance  with the
preceding sentence.

         16.3. Successors and Assigns; Participations; New Lenders.

              (a) This Agreement  shall be binding upon and inure to the benefit
of Borrowers,  Agent,  each Lender,  all future holders of the  Obligations  and
their respective  successors and assigns,  except that no Borrower may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Agent and each Lender.

              (b) Each  Borrower  acknowledges  that in the  regular  course  of
commercial banking business one or more Lenders may at any time and from time to
time  sell   participating   interests  in  the  Advances  to  other   financial
institutions (each such transferee or purchaser of a participating  interest,  a
"Transferee").  Each  Transferee  may exercise all rights of payment  (including
without  limitation  rights of  set-off)  with  respect  to the  portion of such
Advances held by it or other  Obligations  payable hereunder as fully as if such
Transferee  were the direct holder thereof  provided that Borrowers shall not be
required to pay to any Transferee  more than the amount which it would have been
required to pay to Lender  which  granted an  interest in its  Advances or other
Obligations  payable  hereunder to such Transferee had such Lender retained such
interest in the Advances hereunder or other Obligations payable hereunder and in
no event shall  Borrowers  be required to pay any such amount  arising  from the
same  circumstances  and with respect to the same Advances or other  Obligations
payable hereunder to both such Lender and such Transferee.  Each Borrower hereby
grants to any Transferee a continuing security interest in any deposits,  moneys
or other property actually or constructively held by such Transferee as security
for the Transferee's interest in the Advances.

              (c) Any Lender may with the  consent of Agent  which  shall not be
unreasonably withheld or delayed sell, assign or transfer all or any part of its
rights under this  Agreement and the Other  Documents to one or more  additional
banks or financial  institutions  and one or more additional  banks or financial
institutions may commit to make Advances hereunder (each a "Purchasing Lender"),
in  minimum  amounts  of not less  than  $5,000,000,  pursuant  to a  Commitment
Transfer Supplement, executed by a Purchasing Lender, the transferor

                                       48

<PAGE>

Lender,  and Agent and delivered to Agent for  recording.  Upon such  execution,
delivery,  acceptance and recording,  from and after the transfer effective date
determined  pursuant to such  Commitment  Transfer  Supplement,  (i)  Purchasing
Lender  thereunder  shall be a party hereto and, to the extent  provided in such
Commitment  Transfer  Supplement,  have the rights and  obligations  of a Lender
thereunder  with a  Commitment  Percentage  as set forth  therein,  and (ii) the
transferor  Lender  thereunder  shall, to the extent provided in such Commitment
Transfer Supplement,  be released from its obligations under this Agreement, the
Commitment  Transfer  Supplement  creating a  novation  for that  purpose.  Such
Commitment  Transfer  Supplement  shall be deemed to amend this Agreement to the
extent,  and only to the  extent,  necessary  to reflect  the  addition  of such
Purchasing  Lender and the resulting  adjustment of the  Commitment  Percentages
arising from the purchase by such  Purchasing  Lender of all or a portion of the
rights and  obligations of such  transferor  Lender under this Agreement and the
Other  Documents.  Borrowers  hereby consent to the addition of such  Purchasing
Lender and the resulting  adjustment of the Commitment  Percentages arising from
the  purchase  by such  Purchasing  Lender of all or a portion of the rights and
obligations  of such  transferor  Lender  under  this  Agreement  and the  Other
Documents.  Borrowers  shall  execute and deliver such further  documents and do
such further acts and things in order to effectuate the foregoing.

              (d) Agent shall maintain at its address a copy of each  Commitment
Transfer  Supplement  delivered to it and a register  (the  "Register")  for the
recordation of the names and addresses of the Advances owing to each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest  error,  and  Borrowers,  Agent and Lenders may treat each Person whose
name is recorded in the  Register as the owner of the Advance  recorded  therein
for the  purposes  of this  Agreement.  The  Register  shall  be  available  for
inspection  by Borrowers or any Lender at any  reasonable  time and from time to
time upon  reasonable  prior notice.  Agent shall receive a fee in the amount of
$3,500  payable by the applicable  Purchasing  Lender upon the effective date of
each transfer or assignment to such Purchasing Lender.

              (e) Each  Borrower  authorizes  each  Lender  to  disclose  to any
Transferee or  Purchasing  Lender and any  prospective  Transferee or Purchasing
Lender any and all financial  information in such Lender's possession concerning
such  Borrower  which has been  delivered to such Lender by or on behalf of such
Borrower  pursuant to this Agreement or in connection  with such Lender's credit
evaluation of such Borrower.

         16.4.  Application  of Payments.  Agent shall have the  continuing  and
exclusive  right to apply or reverse  and  re-apply  any payment and any and all
proceeds of Collateral to any portion of the  Obligations in accordance with the
terms of this  Agreement.  To the extent  that any  Borrower  makes a payment or
Agent or any Lender  receives any payment or proceeds of the  Collateral for any
Borrower's  benefit,  which  are  subsequently   invalidated,   declared  to  be
fraudulent  or  preferential,  set aside or  required to be repaid to a trustee,
debtor  in  possession,  receiver,  custodian  or  any  other  party  under  any
bankruptcy  law,  common law or  equitable  cause,  then,  to such  extent,  the
Obligations  or part  thereof  intended  to be  satisfied  shall be revived  and
continue as if such payment or proceeds  had not been  received by Agent or such
Lender.

         16.5.  Indemnity.  Each Borrower shall indemnify Agent, each Lender and
each of their respective officers, directors,  Affiliates,  employees and agents
from  and  against  any  and  all  liabilities,  obligations,  losses,  damages,
penalties,  actions,  judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever  (including,  without limitation,  reasonable fees and
disbursements  of  counsel)  which may be imposed on,  incurred  by, or asserted
against  Agent or any  Lender in any  litigation,  proceeding  or  investigation
instituted or conducted by any  governmental  agency or  instrumentality  or any
other Person with respect to any aspect of, or any transaction  contemplated by,
or  referred  to in, or any  matter  related  to,  this  Agreement  or the Other
Documents,  whether or not Agent or any Lender is a party thereto, except to the
extent that any of the  foregoing  arises out of the willful  misconduct  of the
party being indemnified.

         16.6.  Notice.  Any  notice or  request  hereunder  may be given to any
Borrower or to Agent or any Lender at their respective addresses set forth below
or at such other address as may hereafter be specified in a notice designated as
a notice of  change  of  address  under  this  Section.  Any  notice or  request
hereunder  shall be  given by (a) hand  delivery,  (b)  overnight  courier,  (c)
registered or certified mail, return receipt  requested,  (d) telex or telegram,
subsequently  confirmed by registered or certified  mail, or (e) telecopy to the
number set out below (or such other  number as may  hereafter  be specified in a
notice designated as a notice of change of address) with electronic confirmation
of its receipt. Any notice or other communication required or permitted pursuant
to this  Agreement  shall be deemed given (a) when  personally  delivered to any
officer  of the  party to whom it is  addressed,  (b) on the  earlier  of actual
receipt  thereof or three (3) days  following  posting  thereof by  certified or
registered mail,  postage prepaid,  or (c) upon actual receipt thereof when sent
by a recognized overnight delivery service or (d) upon actual

                                       49
<PAGE>

receipt  thereof  when sent by  telecopier  to the number  set forth  below with
electronic  confirmation of its receipt, in each case addressed to each party at
its address set forth below or at such other  address as has been  furnished  in
writing by a party to the other by like notice:

         (A)  If to Agent or           PNC Bank, National Association
              PNC at:                  Two Tower Center Boulevard
                                       East Brunswick, New Jersey 08816
                                       Attention:      Michelle Stanley-Nurse,
                                                       Vice President
                                       Telephone:      732-220-4337
                                       Telecopier:     732-220-4393

              with a copy to:          Wilentz, Goldman & Spitzer, P.A.
                                       90 Woodbridge Center Drive
                                       P.O. Box 10
                                       Woodbridge, New Jersey 07095
                                       Attention:      Stuart A. Hoberman, Esq.
                                       Telephone:      (732) 855-6052
                                       Telecopier:     (732) 855-6117

         (B)  If to a Lender other than Agent, as specified on the signature
              pages hereof

         (C)  If to Borrowing Agent
              or any Borrower, at:       Rheometric Scientific, Inc.
                                         One Possumtown Road
                                         Piscataway, NJ  08854-2103
                                         Attention:      Chief Financial Officer
                                         Telephone:      732-560-8550
                                         Telecopier:     732-560-7451

               with a copy to:           Dechert, Price & Rhoads
                                         30 Rockefeller Plaza
                                         New York, NY  10112
                                         Attention:      Paul Gluck, Esquire
                                         Telephone:      212-698-3533
                                         Telecopier:     212-698-3599

         16.7.  Survival.  The obligations of Borrowers  under Sections  2.2(f),
3.6, 3.8, 4.19(h),  and 16.5 shall survive termination of this Agreement and the
Other Documents and payment in full of the Obligations.

         16.8.  Severability.  If any part of this  Agreement  is  contrary  to,
prohibited  by, or deemed invalid under  applicable  laws or  regulations,  such
provision  shall be  inapplicable  and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.

         16.9. Expenses.  All costs and expenses including,  without limitation,
reasonable  attorneys'  fees (including the allocated costs of in house counsel)
and disbursements  incurred by Agent, Agent on behalf of Lenders and Lenders (a)
in all efforts made to enforce payment of any Obligation or effect collection of
any  Collateral,  or (b) in  connection  with the entering  into,  modification,
amendment,  administration  and enforcement of this Agreement or any consents or
waivers hereunder and all related agreements,  documents and instruments, or (c)
in instituting,  maintaining,  preserving,  enforcing and foreclosing on Agent's
security interest in or Lien on any of the Collateral,  whether through judicial
proceedings  or  otherwise,  or (d) in defending or  prosecuting  any actions or
proceedings  arising out of or relating to Agent's or any Lender's  transactions
with any Borrower,  or (e) in  connection  with any advice given to Agent or any
Lender with respect to its rights and  obligations  under this Agreement and all
related  agreements,  may be charged to Borrowers'  Account and shall be part of
the Obligations.

         16.10.  Injunctive Relief.  Each Borrower recognizes that, in the event
any Borrower  fails to perform,  observe or discharge any of its  obligations or
liabilities under this Agreement, any remedy at law may prove to be

                                       50

<PAGE>

inadequate relief to Lenders;  therefore,  Agent, if Agent so requests, shall be
entitled to temporary and permanent  injunctive  relief in any such case without
the necessity of proving that actual damages are not an adequate remedy.

         16.11.  Consequential  Damages.  Neither Agent nor any Lender,  nor any
agent  or  attorney  for any of  them,  shall  be  liable  to any  Borrower  for
consequential  damages arising from any breach of contract,  tort or other wrong
relating to the establishment, administration or collection of the Obligations.

         16.12.  Captions.  The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.

         16.13.  Counterparts;  Telecopied  Signatures.  This  Agreement  may be
executed  in  any  number  of  and  by  different  parties  hereto  on  separate
counterparts,  all of which, when so executed,  shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.

         16.14.  Construction.  The parties  acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any  ambiguities  are to be resolved  against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.

         16.15. Confidentiality; Sharing Information. (a) Agent, each Lender and
each Transferee shall hold all non-public  information  obtained by Agent,  such
Lender or such  Transferee  pursuant to the  requirements  of this  Agreement in
accordance  with  Agent's,   such  Lender's  and  such  Transferee's   customary
procedures  for handling  confidential  information  of this  nature;  provided,
however,  Agent,  each Lender and each Transferee may disclose such confidential
information  (a) to its examiners,  affiliates,  outside  auditors,  counsel and
other  professional  advisors,  (b) to Agent,  any Lender or to any  prospective
Transferees  and  Purchasing  Lenders,  and (c) as required or  requested by any
Governmental  Body or  representative  thereof  or  pursuant  to legal  process;
provided,  further that (i) unless specifically  prohibited by applicable law or
court order,  Agent,  each Lender and each Transferee shall use its best efforts
prior to disclosure thereof, to notify the applicable Borrower of the applicable
request for disclosure of such non-public information (A) by a Governmental Body
or  representative  thereof  (other than any such request in connection  with an
examination  of the  financial  condition  of a Lender or a  Transferee  by such
Governmental  Body) or (B) pursuant to legal  process and (ii) in no event shall
Agent,  any  Lender or any  Transferee  be  obligated  to return  any  materials
furnished  by any  Borrower  other  than  those  documents  and  instruments  in
possession of Agent or any Lender in order to perfect its Lien on the Collateral
once  the  Obligations  have  been  paid in full  and  this  Agreement  has been
terminated.

              (b) Each Borrower  acknowledges  that from time to time  financial
advisory,  investment  banking and other  services may be offered or provided to
such  Borrower  or one or  more  of its  Affiliates  (in  connection  with  this
Agreement  or  otherwise)  by  any  Lender  or by one or  more  Subsidiaries  or
Affiliates of such Lender and each  Borrower  hereby  authorizes  each Lender to
share  any  information  delivered  to  such  Lender  by such  Borrower  and its
Subsidiaries  pursuant to this Agreement,  or in connection with the decision of
such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of
such Lender,  it being  understood  that any such Subsidiary or Affiliate of any
Lender  receiving  such  information  shall be bound by the provision of Section
16.15 as if it were a Lender  hereunder.  Such  authorization  shall survive the
repayment of the other Obligations and the termination of the Loan Agreement.

         16.16. Publicity. Each Borrower and each Lender hereby authorizes Agent
to make  appropriate  announcements  of the financial  arrangement  entered into
among Borrowers, Agent and Lenders, including, without limitation, announcements
which  are  commonly  known  as  tombstones,  in such  publications  and to such
selected  parties  as  Agent  shall in its sole  and  absolute  discretion  deem
appropriate and at no additional cost to Borrowers.

         16.17  Conflicting  Terms. In the event of a conflict between the terms
of this Agreement and the EXIM Borrower  Documents,  the more stringent terms as
contained in such documents with respect to the Borrower shall apply.

         16.18  Assignment  to  Export-Import  Bank.  The Lenders shall have the
right in their  sole  and  absolute  discretion  at any  time to  assign  to the
Export-Import  Bank this  Agreement,  the Other  Documents  and the  Obligations
evidenced  thereby.  The Lenders shall promptly notify the Borrowers of any such
assignment.

                                       51
<PAGE>

         Each of the parties has signed  this  Agreement  as of the day and year
first above written.

ATTEST:                                RHEOMETRIC SCIENTIFIC, INC.

BY:/s/ Richard J. Giacco               By:/s/ Joseph Musanti
   ------------------------               ---------------------------
   Name:  RICHARD J. GIACCO               Name:  JOSEPH MUSANTI
   Title:  Secretary                      Title: Vice President

ATTEST:                                RHEOMETRIC SCIENTIFIC LIMITED

BY:/s/ Richard J. Giacco               By:/s/ Joseph Musanti
   ------------------------               ---------------------------
   Name:  RICHARD J. GIACCO               Name:  JOSEPH MUSANTI
   Title:  Director                       Title: Director

                                       RHEOMETRIC SCIENTIFIC FRANCE SARL

                                       By:/s/ Joseph Musanti
                                          ---------------------------
                                          Name:  JOSEPH MUSANTI
                                          Title:  Manager

                                       RHEOMETRIC SCIENTIFIC GmbH

                                       By:/s/ Joseph Musanti
                                          ---------------------------
                                          Name:  JOSEPH MUSANTI
                                          Title:  Under Power of Attorney from
                                          Manfred Herzog, Managing Director

                                        RHEOMETRIC SCIENTIFIC F.E. LTD.

                  `                      By:/s/ Joseph Musanti
                                            -------------------------
                                            Name:  JOSEPH MUSANTI
                                            Title: Chairman and Representative
                                            Director

                                       52

<PAGE>

                                       PNC BANK, NATIONAL ASSOCIATION, as
                                       Lender and as Agent

                                       By: /s/ Peter J. Mardaga
                                          ---------------------------
                                             PETER J. MARDAGA
                                       Title:  Vice President
                                       Two Tower Center Boulevard
                                       East Brunswick, New Jersey 08816

                                       Commitment Percentage: 100%

                                       53

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