Document:

sec document

                                                                    Exhibit 4.37

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                                CREDIT AGREEMENT

                                  BY AND AMONG

                               BAIRNCO CORPORATION

                                    AS PARENT

             CERTAIN OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO

                                  AS BORROWERS,

                     THE LENDERS THAT ARE SIGNATORIES HERETO

                                 AS THE LENDERS,

                                       AND

                               ABLECO FINANCE LLC

                             AS ADMINISTRATIVE AGENT

                            DATED AS OF JULY 17, 2007

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                                                                                               PAGE

1.    DEFINITIONS AND CONSTRUCTION..............................................................1
      1.1      DEFINITIONS......................................................................1
      1.2      ACCOUNTING TERMS.................................................................1
      1.3      CODE.............................................................................1
      1.4      CONSTRUCTION.....................................................................1
      1.5      PROVINCE OF QUEBEC...............................................................2
      1.6      SCHEDULES AND EXHIBITS...........................................................2
2.    LOAN AND TERMS OF PAYMENT.................................................................2
      2.1      TERM LOAN........................................................................2
      2.2      BORROWING PROCEDURES AND SETTLEMENTS.............................................2
      2.3      PAYMENTS.........................................................................3
      2.4      INTEREST RATES:  RATES, PAYMENTS, AND CALCULATIONS...............................6
      2.5      CASH MANAGEMENT..................................................................7
      2.6      CREDITING PAYMENTS...............................................................8
      2.7      DESIGNATED ACCOUNT...............................................................8
      2.8      MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS...........................8
      2.9      FEES.............................................................................9
      2.10     LIBOR OPTION.....................................................................9
      2.11     CAPITAL REQUIREMENTS............................................................10
      2.12     JOINT AND SEVERAL LIABILITY OF BORROWERS........................................11
      2.13     SECURITIZATION..................................................................13
3.    CONDITIONS; TERM OF AGREEMENT............................................................14
      3.1      CONDITIONS PRECEDENT TO THE TERM LOAN...........................................14
      3.2      TERM............................................................................14
      3.3      EFFECT OF TERMINATION...........................................................14
      3.4      EARLY TERMINATION BY BORROWERS..................................................14
4.    REPRESENTATIONS AND WARRANTIES...........................................................14
      4.1      NO ENCUMBRANCES.................................................................15
      4.2      [INTENTIONALLY OMITTED].........................................................15
      4.3      [INTENTIONALLY OMITTED.]........................................................15
      4.4      EQUIPMENT.......................................................................15
      4.5      LOCATION OF COLLATERAL..........................................................15
      4.6      INVENTORY RECORDS...............................................................15
      4.7      JURISDICTION OF ORGANIZATION; LOCATION OF CHIEF EXECUTIVE OFFICE;
               ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS....................15

      4.8      DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES................................15
      4.9      DUE AUTHORIZATION; NO CONFLICT..................................................16
      4.10     LITIGATION......................................................................17
      4.11     NO MATERIAL ADVERSE CHANGE......................................................17
      4.12     FRAUDULENT TRANSFER.............................................................18
      4.13     EMPLOYEE BENEFITS...............................................................18
      4.14     ENVIRONMENTAL CONDITION.........................................................19
      4.15     INTELLECTUAL PROPERTY...........................................................19
      4.16     LEASES; ETC.....................................................................19
      4.17     DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS........................................19
      4.18     COMPLETE DISCLOSURE.............................................................20
      4.19     INDEBTEDNESS....................................................................20
      4.20     MATERIAL CONTRACTS..............................................................20
      4.21     PERMITS, LICENSES, ETC..........................................................20
      4.22     SUPPLIERS.......................................................................20
      4.23     MARGIN STOCK....................................................................21
      4.24     INSURANCE.......................................................................21
      4.25     INVESTMENT COMPANY ACT, ETC.....................................................21
      4.26     TAXES, ETC......................................................................21
      4.27     NATURE OF BUSINESS..............................................................21
      4.28     RELATED TRANSACTION DOCUMENTS...................................................21
      4.29     NO IMMUNITY.....................................................................21
      4.30     NO TAXES........................................................................21
5.    AFFIRMATIVE COVENANTS....................................................................22
      5.1      ACCOUNTING SYSTEM...............................................................22
      5.2      COLLATERAL REPORTING............................................................22
      5.3      FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.....................................22
      5.4      GUARANTOR REPORTS...............................................................22
      5.5      INSPECTION......................................................................22
      5.6      MAINTENANCE OF PROPERTIES.......................................................22
      5.7      TAXES...........................................................................22
      5.8      INSURANCE.......................................................................23
      5.9      LOCATION OF COLLATERAL..........................................................23
      5.10     COMPLIANCE WITH LAWS............................................................23
      5.11     LEASES..........................................................................24
      5.12     EXISTENCE.......................................................................24

      5.13     ENVIRONMENTAL...................................................................24
      5.14     DISCLOSURE UPDATES..............................................................24
      5.15     CONTROL AGREEMENTS..............................................................24
      5.16     FORMATION OF SUBSIDIARIES.......................................................24
      5.17     FURTHER ASSURANCES..............................................................25
      5.18     MATERIAL CONTRACTS..............................................................25
      5.19     SUBORDINATION...................................................................25
      5.20     AFTER ACQUIRED REAL PROPERTY....................................................25
6.    NEGATIVE COVENANTS.......................................................................26
      6.1      INDEBTEDNESS....................................................................26
      6.2      LIENS...........................................................................27
      6.3      RESTRICTIONS ON FUNDAMENTAL CHANGES.............................................27
      6.4      DISPOSAL OF ASSETS..............................................................27
      6.5      CHANGE NAME.....................................................................27
      6.6      NATURE OF BUSINESS..............................................................27
      6.7      PREPAYMENTS AND AMENDMENTS......................................................27
      6.8      CHANGE OF CONTROL...............................................................28
      6.9      CONSIGNMENTS....................................................................28
      6.10     DISTRIBUTIONS...................................................................28
      6.11     ACCOUNTING METHODS..............................................................28
      6.12     INVESTMENTS.....................................................................28
      6.13     TRANSACTIONS WITH AFFILIATES....................................................29
      6.14     USE OF PROCEEDS.................................................................29
      6.15     INVENTORY AND EQUIPMENT WITH BAILEES............................................29
      6.16     FINANCIAL COVENANTS.............................................................29
      6.17     PARENT AS HOLDING COMPANY.......................................................31
      6.18     EMPLOYEE BENEFITS...............................................................31
      6.19     LIMITATIONS ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
               SUBSIDIARIES....................................................................31
      6.20     LEASE OBLIGATIONS...............................................................32
      6.21     FEDERAL RESERVE REGULATIONS.....................................................32
      6.22     INVESTMENT COMPANY ACT OF 1940..................................................32
7.    EVENTS OF DEFAULT........................................................................32
8.    THE LENDER GROUP'S RIGHTS AND REMEDIES...................................................34
      8.1      RIGHTS AND REMEDIES.............................................................34
      8.2      REMEDIES CUMULATIVE.............................................................35

9.    TAXES AND EXPENSES.......................................................................35
10.   WAIVERS; INDEMNIFICATION.................................................................35
      10.1     DEMAND; PROTEST; ETC............................................................35
      10.2     THE LENDER GROUP'S LIABILITY FOR COLLATERAL.....................................35
      10.3     INDEMNIFICATION.................................................................35
11.   NOTICES..................................................................................36
12.   CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER...............................................37
13.   ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS...............................................38
      13.1     ASSIGNMENTS AND PARTICIPATIONS..................................................38
      13.2     SUCCESSORS......................................................................40
14.   AMENDMENTS; WAIVERS......................................................................40
      14.1     AMENDMENTS AND WAIVERS..........................................................40
      14.2     REPLACEMENT OF HOLDOUT LENDER...................................................41
      14.3     NO WAIVERS; CUMULATIVE REMEDIES.................................................41
15.   AGENT; THE LENDER GROUP..................................................................42
      15.1     APPOINTMENT AND AUTHORIZATION OF AGENT..........................................42
      15.2     DELEGATION OF DUTIES............................................................42
      15.3     LIABILITY OF AGENT..............................................................42
      15.4     RELIANCE BY AGENT...............................................................43
      15.5     NOTICE OF DEFAULT OR EVENT OF DEFAULT...........................................43
      15.6     CREDIT DECISION.................................................................43
      15.7     COSTS AND EXPENSES; INDEMNIFICATION.............................................44
      15.8     AGENT IN INDIVIDUAL CAPACITY....................................................44
      15.9     SUCCESSOR AGENT.................................................................44
      15.10    LENDER IN INDIVIDUAL CAPACITY...................................................45
      15.11    COLLATERAL MATTERS..............................................................45
      15.12    RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.........................46
      15.13    AGENCY FOR PERFECTION...........................................................46
      15.14    PAYMENTS BY AGENT TO THE LENDERS................................................46
      15.15    CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS............................46
      15.16    FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS
               BY LENDERS; OTHER REPORTS AND INFORMATION.......................................46
      15.17    SEVERAL OBLIGATIONS; NO LIABILITY...............................................47
      15.18    QUEBEC SECURITY DOCUMENTS.......................................................48
16.   WITHHOLDING TAXES........................................................................48
17.   GENERAL PROVISIONS.......................................................................50

      17.1     EFFECTIVENESS...................................................................50
      17.2     SECTION HEADINGS................................................................50
      17.3     INTERPRETATION..................................................................50
      17.4     SEVERABILITY OF PROVISIONS......................................................50
      17.5     DEBTORCREDITOR RELATIONSHIP.....................................................50
      17.6     COUNTERPARTS; ELECTRONIC EXECUTION..............................................50
      17.7     REVIVAL AND REINSTATEMENT OF OBLIGATIONS........................................51
      17.8     CONFIDENTIALITY.................................................................51
      17.9     LENDER GROUP EXPENSES...........................................................51
      17.10    USA PATRIOT ACT.................................................................51
      17.11    INTEGRATION.....................................................................51
      17.12    PARENT AS AGENT FOR BORROWERS...................................................52
      17.13    INTERCREDITOR AGREEMENT.........................................................52
      17.14    JUDGMENT CURRENCY...............................................................52
      17.15    IMMUNITY........................................................................53

                             EXHIBITS AND SCHEDULES

Exhibit A1                          Form of Assignment and Acceptance
Exhibit C1                          Form of Compliance Certificate
Exhibit L1                          Form of LIBOR Notice

Schedule A1                         Agent's Account
Schedule A2                         Authorized Persons
Schedule A3                         Approved AddBack Expenses
Schedule C1                         Commitments
Schedule D1                         Designated Account
Schedule K1                         Kasco Nonrecurring Expenses
Schedule P2                         Permitted Liens
Schedule P3                         Survey Exceptions
Schedule R1                         Real Property Collateral
Schedule 1.1                        Definitions
Schedule 2.5(a)                     Cash Management Banks
Schedule 3.1                        Conditions Precedent
Schedule 3.1(x)                     Mortgage Policy
Schedule 4.5                        Locations of Collateral
Schedule 4.7(a)                     States of Organization
Schedule 4.7(b)                     Chief Executive Offices
Schedule 4.7(c)                     Organizational Identification Numbers
Schedule 4.7(d)                     Commercial Tort Claims
Schedule 4.8(b)                     Capitalization of Borrowers
Schedule 4.8(c)                     Capitalization of Borrowers' Subsidiaries
Schedule 4.10                       Litigation
Schedule 4.13                       Labor and Employee Matters
Schedule 4.14                       Environmental Matters
Schedule 4.15                       Intellectual Property
Schedule 4.16                       Properties
Schedule 4.17                       Deposit Accounts and Securities Accounts
Schedule 4.19                       Permitted Indebtedness
Schedule 4.20                       Material Contracts
Schedule 4.24                       Insurance
Schedule 5.2                        Collateral Reporting
Schedule 5.3                        Financial Statements, Reports, Certificates
Schedule 6.6                        Description of Business
Schedule 6.17                       Holding Company Operations

                                CREDIT AGREEMENT

                   THIS CREDIT AGREEMENT (this "AGREEMENT"),  is entered into as
of July 17, 2007, by and among the lenders  identified  on the  signature  pages
hereof (such lenders,  together with their  respective  successors and permitted
assigns,  are  referred  to  hereinafter  each  individually  as a "Lender"  and
collectively as the "LENDERS"), ABLECO FINANCE LLC, a Delaware limited liability
company,  as  administrative  agent for the Lenders (in such capacity,  together
with its successors and assigns in such capacity, "AGENT"), BAIRNCO CORPORATION,
a Delaware corporation ("PARENT"),  and each of Parent's Subsidiaries identified
on the signature pages hereof as a Borrower (such  Subsidiaries  are referred to
hereinafter   each   individually  as  a  "BORROWER",   and   individually   and
collectively, jointly and severally, as the "BORROWERS").

                   The parties agree as follows:

1.        DEFINITIONS AND CONSTRUCTION.

          1.1      DEFINITIONS.  Capitalized  terms used in this Agreement shall
have the meanings specified therefor on SCHEDULE 1.1.

          1.2      ACCOUNTING  TERMS.  All  accounting  terms  not  specifically
defined herein shall be construed in accordance with GAAP. When used herein, the
term  "financial  statements"  shall  include the notes and  schedules  thereto.
Whenever  the term  "Borrowers"  or the term  "Parent"  is used in  respect of a
financial  covenant  or a related  definition,  it shall be  understood  to mean
Parent and its Subsidiaries on a consolidated  basis, unless the context clearly
requires otherwise.

          1.3      CODE.  Any terms used in this  Agreement  that are defined in
the  Code  shall be  construed  and  defined  as set  forth  in the Code  unless
otherwise defined herein; PROVIDED, HOWEVER, that to the extent that the Code is
used to define any term herein and such term is defined differently in different
Articles of the Code,  the definition of such term contained in Article 9 of the
Code shall govern.

          1.4      CONSTRUCTION.  Unless the  context of this  Agreement  or any
other Loan Document clearly requires otherwise, references to the plural include
the  singular,  references  to  the  singular  include  the  plural,  the  terms
"includes" and "including" are not limiting, and the term "or" has, except where
otherwise  indicated,  the inclusive meaning represented by the phrase "and/or."
The words "hereof," "herein,"  "hereby,"  "hereunder," and similar terms in this
Agreement or any other Loan Document  refer to this Agreement or such other Loan
Document,  as the case may be, as a whole and not to any particular provision of
this  Agreement  or such  other  Loan  Document,  as the case  may be.  Section,
subsection,  clause,  schedule,  and  exhibit  references  herein  are  to  this
Agreement unless otherwise specified.  Any reference in this Agreement or in any
other Loan Document to any agreement,  instrument, or document shall include all
alterations,   amendments,   changes,   extensions,   modifications,   renewals,
replacements,  substitutions, joinders, and supplements, thereto and thereof, as
applicable  (subject  to  any  restrictions  on  such  alterations,  amendments,
changes,  extensions,  modifications,  renewals,  replacements,   substitutions,
joinders,  and  supplements  set  forth  herein).   References  to  statutes  or
regulations  are to be construed  as  including  all  statutory  and  regulatory
provisions consolidating,  amending,  supplementing,  interpreting, or replacing
the  statute or  regulation  referred  to,  and,  to the  extent the  context so
requires,  any  equivalent,  similar or comparable  statute or regulation in any
applicable  jurisdiction.  Any reference herein or in any other Loan Document to
the  satisfaction  or  repayment  in  full of the  Obligations  shall  mean  the
repayment in full in cash of all Obligations  other than  unasserted  contingent
indemnification  Obligations.  Any  reference  herein  to any  Person  shall  be
construed to include such Person's successors and assigns.  Any requirement of a
writing contained herein or in any other Loan Document shall be satisfied by the
transmission  of a Record and any Record  transmitted  shall be treated and have
the same effect as if such Record was furnished in writing. An Event of Default,
if one occurs, shall "exist",  "continue" or "be continuing" until such Event of
Default has been waived in writing in accordance with SECTION 14.1.

          1.5      PROVINCE OF QUEBEC. With respect to real or tangible personal
property  located in the  Province  of Quebec,  (a) the terms  "real  property",
"personal property" and "real and personal property" and words of similar import
shall be deemed to also refer to "immovable  property",  "movable  property" and
"immovable and movable  property".  The terms  "tangible" and  "intangible"  and
words of  similar  import  shall be  deemed  to also  refer to  "corporeal"  and
"incorporeal".

          1.6      SCHEDULES  AND  EXHIBITS.  All of the  schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.

2.        LOAN AND TERMS OF PAYMENT.

          2.1      TERM LOAN.

                   (a) Subject to the terms and conditions of this Agreement, on
the  Closing  Date each  Lender  agrees  (severally,  not jointly or jointly and
severally) to make term loans (collectively, the "TERM LOAN") to Borrowers in an
amount equal to such  Lender's  Pro Rata Share of the Term Loan Amount  provided
that the Term Loan shall be funded in full for the benefit of the Borrowers. The
outstanding  unpaid principal balance and all accrued and unpaid interest on the
Term Loan shall be due and  payable on the  earliest of (i) the  Maturity  Date,
(ii) the date of the  acceleration of the Term Loan in accordance with the terms
hereof,  and (iii) the date of termination of this Agreement pursuant to SECTION
8.1(B).  All principal of,  interest on, and other amounts payable in respect of
the Term Loan shall constitute Obligations.

                   (b) Any  principal  amount  of the  Term  Loan  that has been
repaid or prepaid may not be reborrowed.

          2.2      BORROWING PROCEDURES AND SETTLEMENTS.

                   (a)  PROCEDURE FOR  BORROWING.  The  Administrative  Borrower
shall give the Agent prior written notice (a "Notice of Borrowing")),  not later
than 12:00 noon (New York City time) on the date which is five (5) Business Days
prior to the date of the proposed Term Loan (or such shorter period as the Agent
is willing to  accommodate,  but in no event later than (x) one (1) Business Day
prior to the date of the  proposed  Term  Loan if the  Term  Loan is to  consist
exclusively  of Base Rate Loans,  and (y) three (3)  Business  Days prior to the
date of the proposed Term Loan, if any portion of the Term Loan is to consist of
a LIBOR Rate Loan.  Such Notice of  Borrowing  shall  specify (i) the  principal
amount of the  proposed  Term  Loan,  (ii)  whether  the  proposed  Term Loan is
requested  to consist of  Reference  Rate Loans or LIBOR Rate Loans and,  in the
case of LIBOR Rate Loans,  the initial  Interest  Periods with respect  thereto,
(iii) the use of the proceeds of such proposed Term Loan,  and (iv) the proposed
borrowing date, which must be (A) a Business Day and (B) the Closing Date.

                   (b) MAKING OF LOANS.  Promptly after receipt of a request for
the Term Loan pursuant to SECTION  2.2(A),  Agent shall notify the Lenders,  not
later than 1:00 p.m. (New York time) on the Business Day  immediately  preceding
the Closing Date, by telecopy, telephone, or other similar form of transmission,
of the requested  Term Loan.  Each Lender shall make the amount of such Lender's
Pro Rata Share of the  requested  Term Loan  available  to Agent in  immediately
available funds, to Agent's  Account,  not later than 10:00 a.m. (New York time)
on the Closing  Date.  After  Agent's  receipt of the proceeds of the Term Loan,
Agent shall make the proceeds thereof  available to  Administrative  Borrower on
the  Closing  Date by  transferring  immediately  available  funds equal to such
proceeds  received by Agent in  accordance  with written  instructions  from the
Administrative  Borrower;  PROVIDED,  HOWEVER,  that Agent shall not request any
Lender to make,  and no Lender shall have the  obligation to make, the Term Loan
if  Agent  shall  have  actual  knowledge  that  one or more  of the  applicable
conditions  precedent  set  forth  in  SECTION  3 will not be  satisfied  on the
requested Closing Date.

                                       2

                   (c) PROTECTIVE ADVANCES.

                       (i)  Agent  hereby is  authorized  by  Borrowers  and the
Lenders, from time to time in Agent's sole discretion,  (A) after the occurrence
and during the  continuance  of a Default or an Event of Default,  or (B) at any
time that Agent, in its Permitted  Discretion  deems necessary or desirable,  to
make  extensions  of credit to (or on behalf of)  Borrowers  (1) to  preserve or
protect the Collateral, or any portion thereof, (2) to enhance the likelihood of
repayment  of the  Obligations,  or (3) to pay any other  amount  chargeable  to
Borrowers  pursuant  to the  terms of this  Agreement,  including  Lender  Group
Expenses and the costs,  fees,  and expenses  described in SECTION 9 (any of the
advances described in this SECTION 2.2(C)(I) shall be referred to as "PROTECTIVE
ADVANCES").

                       (ii) All  payments on the  Protective  Advances  shall be
payable to Agent solely for its own account.  The  Protective  Advances shall be
repayable  on  demand,  secured by the  Agent's  Liens,  constitute  Obligations
hereunder,  and bear interest at the rate  applicable  from time to time to Base
Rate Loans. The provisions of this SECTION 2.2(C) are for the exclusive  benefit
of Agent and the Lenders  and are not  intended to benefit any Loan Party in any
way.

                   (d) NOTATION.  Agent shall record on its books the  principal
amount of the  portion  of the Term Loan  owing to each  Lender  and  Protective
Advances owing to Agent, and the interests therein of each Lender,  from time to
time and such records shall, absent manifest error,  conclusively be presumed to
be correct and accurate.

                   (e) LENDERS' FAILURE TO PERFORM.  The Term Loan shall be made
by the Lenders  contemporaneously  and in accordance with their Pro Rata Shares.
It is understood  that (i) no Lender shall be responsible for any failure by any
other Lender to perform its  obligation to make its portion of the Term Loan (or
other extension of credit) hereunder,  nor shall any Commitment of any Lender be
increased or decreased as a result of any failure by any other Lender to perform
its  obligations  hereunder,  and (ii) no failure  by any Lender to perform  its
obligations  hereunder  shall  excuse  any  other  Lender  from its  obligations
hereunder.

          2.3      PAYMENTS.

                   (a) PAYMENTS  BY  BORROWERS.  Except as  otherwise  expressly
provided  herein,  all payments by (or on behalf of) Borrowers  shall be made to
Agent's  Account  for the  account  of the  Lender  Group  and  shall be made in
immediately available funds, no later than 4:00 p.m. (New York time) on the date
specified  herein.  Any payment received by Agent later than 4:00 p.m. (New York
time),  shall be deemed to have been received on the following  Business Day and
any  applicable  interest or fee shall  continue to accrue until such  following
Business Day.

                   (b) APPORTIONMENT AND APPLICATION.

                       (i) So long as no Event of Default  has  occurred  and is
continuing,  all principal and interest  payments shall be  apportioned  ratably
among the Lenders  (according to the unpaid principal balance of the Obligations
to which such payments  relate held by each Lender) and all payments of fees and
expenses  (other than fees or expenses  that are for Agent's  separate  account)
shall be  apportioned  ratably among the Lenders  having a Pro Rata Share of the
type of Commitment or Obligation to which a particular  fee or expense  relates.
All payments to be made  hereunder  by Borrowers  shall be remitted to Agent and
all (subject to Section  2.3(b)(iv)  hereof) such payments,  and all proceeds of
Collateral  received by Agent, shall be applied,  so long as no Event of Default
has  occurred  and is  continuing,  to  reduce  the  balance  of the  Term  Loan
outstanding  and,  thereafter,  to  Borrowers  (to be  wired  to the  Designated
Account) or such other Person entitled thereto under applicable law.

                                       3

                       (ii)  Subject to Section  2.3(e)(i),  at any time that an
Event of Default has occurred and is continuing (and subject to the terms of the
Intercreditor  Agreement)  all  payments  remitted to Agent and all  proceeds of
Collateral received by Agent shall be applied as follows:

                             (A)  FIRST,   to  pay  any  Lender  Group  Expenses
(including  cost or expense  reimbursements)  or  indemnities  then due to Agent
under the Loan Documents, until paid in full,

                             (B) SECOND, to pay any fees or premiums then due to
Agent under the Loan Documents until paid in full,

                             (C) THIRD,  to pay  interest  due in respect of all
Protective Advances until paid in full,

                             (D) FOURTH,  to pay the principal of all Protective
Advances until paid in full,

                             (E) FIFTH, ratably to pay any Lender Group Expenses
(including cost or expense reimbursements) or indemnities then due to any of the
Lenders under the Loan Documents, until paid in full,

                             (F) SIXTH, ratably to pay any fees or premiums then
due to any of the Lenders under the Loan Documents until paid in full,

                             (G) SEVENTH, ratably to pay interest due in respect
of the Term Loan until paid in full,

                             (H)  EIGHTH,  to  pay  the  outstanding   principal
balance of the Term Loan until the Term Loan is paid in full,

                             (I) NINTH, to pay any other Obligations, and

                             (J)  TENTH,  to  Borrowers  (to  be  wired  to  the
Designated Account) or such other Person entitled thereto under applicable law.

                       (iii) Agent  promptly  shall  distribute  to each Lender,
pursuant  to the  applicable  wire  instructions  received  from each  Lender in
writing, such funds as it may be entitled to receive.

                       (iv) In each instance, so long as no Event of Default has
occurred and is  continuing,  SECTION  2.3(B)(I)  shall not apply to any payment
made by Borrowers  to Agent and  specified by Borrowers to be for the payment of
specific Obligations then due and payable (or prepayable) under any provision of
this Agreement.

                       (v) For  purposes of SECTION  2.3(B)(II),  "paid in full"
means  payment of all amounts  owing under the Loan  Documents  according to the
terms thereof,  including loan fees, service fees,  professional fees,  interest
(and  specifically  including  interest  accrued after the  commencement  of any
Insolvency  Proceeding),  default  interest,  interest on interest,  and expense
reimbursements,  whether or not any of the  foregoing  would be or is allowed or
disallowed in whole or in part in any Insolvency Proceeding.

                       (vi)  In the  event  of a  direct  conflict  between  the
priority provisions of this SECTION 2.3 and any other provision contained in any
other  Loan  Document,  it is the  intention  of the  parties  hereto  that such
provisions be read together and construed, to the fullest extent possible, to be
in concert with each other. In the event of any actual,  irreconcilable conflict
that cannot be resolved as aforesaid,  the terms and  provisions of this SECTION
2.3 shall control and govern.

                                       4

                   (c) OPTIONAL  PREPAYMENTS.  Borrowers may voluntarily prepay,
without  penalty  or  premium,  the Term Loan in full or in part at any time and
from time to time upon at least three (3) Business Days prior written  notice to
Agent so long as any such  payment is (i) in an amount  equal to or greater than
$100,000 and an integral multiple of $100,000, and (ii) not prohibited under the
Working Capital Credit Agreement. Any prepayments of the Term Loan made pursuant
to this  SECTION  2.3(C)  shall  be  accompanied  by all  accrued  interest  and
applicable fees on the principal amount being prepaid to the date of prepayment;
PROVIDED,  HOWEVER, if an Event of Default then exists, such prepayment shall be
applied to the Obligations pursuant to SECTION 2.3(B)(II).

                   (d) MANDATORY PREPAYMENTS.

                       (i) Immediately  upon the receipt by Parent or any of its
Subsidiaries of the proceeds of any Permitted Kasco Sale Transaction,  Borrowers
shall prepay the outstanding  principal amount of the  Obligations,  the Working
Capital Indebtedness and the Subordinated  Indebtedness,  as the case may be, in
accordance  with SECTION  2.3(E)(I) in an aggregate  amount equal to 100% of the
Net Cash Proceeds received by Parent or its Subsidiaries in connection with such
sale.  Nothing contained in this SECTION 2.3(D)(I) shall permit Parent or any of
its  Subsidiaries  to sell or otherwise  dispose of any property or assets other
than in accordance the  requirements  of the definition of Permitted  Kasco Sale
Transaction or as otherwise permitted hereunder.

                       (ii) Immediately upon the receipt by Parent or any of its
Subsidiaries of the proceeds of any voluntary or involuntary sale or disposition
by Parent or any of its Subsidiaries of property or assets  (including  casualty
losses or  condemnations  but excluding sales or  dispositions  which qualify as
Permitted  Dispositions under clauses (a), (b), (c), or (d) of the definition of
Permitted Dispositions or any Permitted Kasco Sale Transaction), Borrowers shall
prepay the  outstanding  principal  amount of the Obligations in accordance with
SECTION  2.3(E)(II)  in an  amount  equal  to  100%  of the  Net  Cash  Proceeds
(including  condemnation awards and payments in lieu thereof) received by Parent
or its  Subsidiaries  in connection  with such sales or  dispositions;  PROVIDED
that,  so long as (A) no Default or Event of Default  shall have occurred and is
continuing,  (B)  Administrative  Borrower  shall have given Agent prior written
notice of Borrowers'  intention to apply such monies to the costs of replacement
of the  properties  or assets that are the subject of such sale or  disposition,
casualty loss or condemnation,  or the cost of purchase or construction of other
assets useful in the business of Borrowers or their Subsidiaries, (C) the monies
are held in a cash collateral account in which Agent (or, so long as the Working
Capital Credit  Agreement is in effect,  Working Capital Agent,  acting as agent
for  the  Agent)  has a  perfected  first-priority  security  interest,  and (D)
Borrowers or their  Subsidiaries,  as  applicable,  complete  such  replacement,
purchase,  or  construction  within 180 days after the  initial  receipt of such
monies,  Borrowers  and their  Subsidiaries  shall have the option to apply such
monies to the  costs of  replacement  of the  property  or  assets  that are the
subject of such sale or disposition or the costs of purchase or  construction of
other assets useful in the business of Borrowers and their  Subsidiaries  unless
and to the extent that such  applicable  period shall have expired  without such
replacement,  purchase or construction  being made or completed,  in which case,
any amounts remaining in the cash collateral  account shall be paid to Agent and
applied in accordance with SECTION 2.3(E)(II). Nothing contained in this SECTION
2.3(D)(II)  shall permit Parent or any of its  Subsidiaries to sell or otherwise
dispose of any property or assets other than in accordance with SECTION 6.4.

                       (iii)  Immediately  upon the  receipt by Parent or any of
its  Subsidiaries  of any  Extraordinary  Receipts,  Borrowers  shall prepay the
outstanding  principal  amount of the  Obligations  in  accordance  with SECTION
2.3(E)(II) in an amount equal to 100% of such Extraordinary Receipts, net of any
reasonable expenses incurred in collecting such Extraordinary Receipts.

                       (iv)  Immediately  upon the  issuance  or  incurrence  by
Parent or any of its Subsidiaries of any Indebtedness  (other than  Indebtedness
permitted under SECTION 6.1(A), (B), (C), (D), or (E)) or the issuance by Parent
or any of its Subsidiaries of any shares of Parent's or its Subsidiaries'  Stock
(other  than  (A) the  issuance  of Stock  under an  employee  stock  option  or
incentive plan of any Loan Party to the extent permitted hereunder or (B) in the
event that Parent or any  Subsidiary  of Parent forms a Subsidiary in accordance

                                       5

with the terms  hereof,  the issuance by such  Subsidiary  of Stock to Parent or
such  Subsidiary,  as  applicable),   Borrowers  shall  prepay  the  outstanding
principal amount of the Obligations in accordance with SECTION  2.3(E)(II) in an
amount  equal  to  100% of the Net  Cash  Proceeds  received  by  Parent  or its
Subsidiaries in connection  with such issuance or incurrence.  The provisions of
this SECTION  2.3(D)(IV)  shall not be deemed to be implied  consent to any such
issuance or incurrence  otherwise prohibited by the terms and conditions of this
Agreement.

                   (e) APPLICATION OF PAYMENTS.

                       (i) Each prepayment  pursuant to SECTION  2.3(D)(I) above
shall (A) so long as no Application Event shall have occurred and be continuing,
be applied,  FIRST, to the outstanding  principal  amount of the Working Capital
Advances,  or to cash  collateralize the Working Capital Letters of Credit in an
amount equal to 105% of the then extant Working  Capital Letter of Credit Usage,
in an amount equal to the book value of Eligible Accounts,  Eligible  Inventory,
Eligible  Canadian  Inventory,  Eligible  Foreign  Inventory and Eligible  Kasco
Inventory (in each case,  as defined in the Working  Capital  Credit  Agreement)
sold in a Permitted  Kasco Sale  Transaction  multiplied by the advance rate for
such item of  Collateral  as  contained  in the  definition  of Working  Capital
Borrowing  Base;  SECOND,  to the  outstanding  principal  amount of the Working
Capital Term Loan in an amount up to  $15,000,000,  less any principal  payments
made with  respect  to the Term Loan prior to such  date;  THIRD,  to prepay any
Working Capital Advances,  or to cash  collateralize the Working Capital Letters
of Credit in an amount equal to 105% of the then extant  Working  Capital Letter
of Credit Usage,  such that after giving effect to such  prepayment  the Working
Capital  Availability is not less than  $5,000,000;  FOURTH,  to prepay the Term
Loan such that,  following such prepayment,  the pro forma Senior Leverage Ratio
(but excluding any  outstanding  letters of credit) is less than 4.4 to 1.00 for
the four fiscal  quarters then ended  (measured as if the  Permitted  Kasco Sale
Transaction  and such  prepayment  had  occurred  on the  first day of such four
fiscal quarter  period);  FIFTH, to prepay the  Subordinated  Indebtedness in an
amount up to $4,000,000;  and SIXTH, the balance of such Net Cash Proceeds shall
used to prepay the Term Loan and the  Subordinated  Indebtedness in the ratio of
1:2,  respectively,  and (B) if an Application  Event shall have occurred and be
continuing, be applied in the manner set forth in SECTION 2.3(B)(II).

                       (ii) Each  prepayment  pursuant  to  SECTION  2.3(D)(II),
2.3(D)(III),  or 2.3(D)(IV) above shall (A) so long as no Event of Default shall
have occurred and be continuing, be applied, FIRST, to the outstanding principal
amount of the  Working  Capital  Term Loan  until paid in full,  SECOND,  to the
outstanding   principal   amount  of  the  Working  Capital   Advances  (with  a
corresponding  permanent  reduction  in the  Working  Capital  Maximum  Revolver
Amount,  until paid in full, and THIRD, to the outstanding  principal  amount of
the Term Loan until paid in full, and fourth, to cash  collateralize the Working
Capital  Letters of Credit in an amount equal to 105% of the then extant Working
Capital Letter of Credit Usage (with a corresponding  permanent reduction in the
Working Capital Maximum  Revolver  Amount,  and (B) if an Event of Default shall
have occurred and be continuing, the amounts payable to Agent pursuant to clause
"third"  may  be  applied  in  the  manner  set  forth  in  SECTION  2.3(B)(II).
Notwithstanding  the foregoing or anything to the contrary herein,  any required
prepayment resulting from tax refunds related to the tax year ended December 31,
2006 and the stub  period  ended  April 13,  2007  received by the Parent or any
Subsidiary up to $2,000,000  shall be applied first to repay any Working Capital
Advances.

          2.4      INTEREST RATES:  RATES, PAYMENTS, AND CALCULATIONS.

                   (a) INTEREST RATES. Except as provided in SECTION 2.4(B), all
Obligations  whether or not  charged to the Loan  Account  pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows:

                       (i) if the relevant Obligation is a LIBOR Rate Loan, at a
per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and

                                       6

                       (ii)  otherwise,  at a per annum  rate  equal to the Base
Rate plus the Base Rate Margin.

                   (b) DEFAULT  RATE.   Upon  the   occurrence  and  during  the
continuation  of an  Event  of  Default  (and at the  election  of  Agent or the
Required  Lenders),  all Obligations  whether or not charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily Balance thereof at
a per annum  rate  equal to 2.0  percentage  points  above  the per  annum  rate
otherwise applicable hereunder.

                   (c) PAYMENT.  Except as provided  to the  contrary in SECTION
2.9,  interest payable  hereunder shall be due and payable,  in arrears,  on the
first  day of each  month at any time  that  Obligations  are  outstanding.  Any
interest  not paid when due shall be  compounded  by being  charged  to the Loan
Account and shall thereafter  constitute  Obligations hereunder and shall accrue
interest at the rate then applicable to Base Rate Loans.

                   (d) COMPUTATION.  All  interest  chargeable  under  the  Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days  elapsed.  In the  event  the Base  Rate is  changed  from  time to time
hereafter,   the  rates  of  interest   hereunder   based  upon  the  Base  Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.

                   (e) INTENT TO LIMIT  CHARGES TO MAXIMUM  LAWFUL  RATE.  In no
event shall the interest rate or rates payable  under this  Agreement,  plus any
other amounts paid in connection  herewith,  exceed the highest rate permissible
under  any  law  that a  court  of  competent  jurisdiction  shall,  in a  final
determination, deem applicable. Borrowers and the Lender Group, in executing and
delivering  this  Agreement,  intend  legally to agree upon the rate or rates of
interest  and  manner of payment  stated  within it;  PROVIDED,  HOWEVER,  that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum  allowable under applicable
law, then, IPSO FACTO, as of the date of this Agreement, Borrowers are and shall
be liable  only for the payment of such  maximum as allowed by law,  and payment
received  from  Borrowers in excess of such legal  maximum,  whenever  received,
shall be applied  to reduce the  principal  balance  of the  Obligations  to the
extent of such excess.

          2.5      CASH MANAGEMENT.

                   (a) Parent and Borrowers  shall and shall cause each of their
Subsidiaries  to (i) establish and maintain cash  management  services of a type
and on terms  satisfactory  to Agent at one or more of the  banks  set  forth on
SCHEDULE 2.5(A) (each a "CASH  MANAGEMENT  BANK"),  and shall request in writing
and otherwise take such  reasonable  steps to ensure that all of their and their
Subsidiaries'  Account  Debtors  forward  payment  of the  amounts  owed by them
directly to such Cash Management Bank, and (ii) deposit or cause to be deposited
promptly,  and in any  event no later  than the  first  Business  Day (or,  with
respect to  Collections  not to exceed  $100,000  in the  aggregate,  the second
Business  Day)  after  the date of  receipt  thereof,  all of their  Collections
(including those sent directly by their Account Debtors to Parent,  Borrowers or
their  respective  Subsidiaries)  into a bank  account  in  Agent's  name (or in
Working  Capital Agent's name, as applicable) (a "CASH  MANAGEMENT  ACCOUNT") at
one of the Cash Management Banks.

                   (b) Each Cash  Management  Bank shall  establish and maintain
Cash Management  Agreements with Agent,  Working Capital Agent and Loan Parties.
Each such Cash Management Agreement shall provide,  among other things, that (i)
the Cash Management Bank will comply with any  instructions  originated by Agent
or Working  Capital Agent  directing the  disposition  of the funds in such Cash
Management   Account   without   further   consent  by  Loan  Parties  or  their
Subsidiaries,  as  applicable,  (ii) the Cash  Management  Bank has no rights of
setoff or recoupment or any other claim against the applicable  Cash  Management
Account,  other than for payment of its service fees and other charges  directly
related to the  administration of such Cash Management  Account and for returned
checks or other items of  payment,  and (iii) upon the  instruction  of Agent or
Working  Capital Agent (an "ACTIVATION  INSTRUCTION"),  it will forward by daily
sweep all  amounts in the  applicable  Cash  Management  Account to the  account

                                       7

designated  in  the  Activation  Instruction.  Agent  agrees  not  to  issue  an
Activation  Instruction  with respect to the Cash Management  Accounts unless an
Event of Default has  occurred  and is  continuing  at the time such  Activation
Instruction is issued.  Agent agrees to use commercially  reasonable  efforts to
rescind  an  Activation  Instruction  (the  "RESCISSION")  if:  (x) the Event of
Default  upon which such  Activation  Instruction  was issued has been waived in
writing  in  accordance  with the  terms of this  Agreement,  (y) no  additional
Default or Event of Default has occurred and is continuing  prior to the date of
the Rescission or is reasonably  expected to occur on or  immediately  after the
date of the Rescission.

                   (c) So long as no Default or Event of  Default  has  occurred
and is continuing,  Administrative  Borrower may amend SCHEDULE 2.5(A) to add or
replace a Cash Management Bank or Cash Management  Account;  PROVIDED,  HOWEVER,
that (i) such prospective Cash Management Bank shall be reasonably  satisfactory
to Agent,  and (ii)  prior to the time of the  opening  of such Cash  Management
Account,  a Loan Party (or its Subsidiary,  as applicable) and such  prospective
Cash  Management  Bank  shall  have  executed  and  delivered  to  Agent  a Cash
Management Agreement. Loan Parties (or their Subsidiaries,  as applicable) shall
close any of their Cash  Management  Accounts (and  establish  replacement  cash
management  accounts in accordance with the foregoing  sentence) promptly and in
any event within 30 days of notice from Agent that the  creditworthiness  of any
Cash Management Bank is no longer acceptable in Agent's reasonable judgment,  or
as promptly as practicable  and in any event within 60 days of notice from Agent
that the operating  performance,  funds transfer, or availability  procedures or
performance of the Cash Management Bank with respect to Cash Management Accounts
or  Agent's  liability  under  any Cash  Management  Agreement  with  such  Cash
Management Bank is no longer acceptable in Agent's reasonable judgment.

                   (d) Each Cash  Management  Account shall be a cash collateral
account subject to a Control Agreement.

          2.6      CREDITING PAYMENTS.  The receipt of any payment item by Agent
(whether from  transfers to Agent by the Cash  Management  Banks pursuant to the
Cash  Management  Agreements or otherwise)  shall not be considered a payment on
account  unless such payment item is a wire  transfer of  immediately  available
federal funds made to the Agent's  Account or unless and until such payment item
is honored when  presented  for payment.  Should any payment item not be honored
when presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated  accordingly.  Anything to the contrary
contained herein  notwithstanding,  any payment item shall be deemed received by
Agent only if it is received  into the Agent's  Account on a Business  Day on or
before  12:00 p.m.  (New York time).  If any payment  item is received  into the
Agent's  Account on a non-Business  Day or after 12:00 p.m. (New York time) on a
Business  Day,  it shall be  deemed  to have  been  received  by Agent as of the
opening of business on the immediately following Business Day.

          2.7      DESIGNATED ACCOUNT. Agent is authorized to make the Term Loan
under this Agreement based upon instructions  received from anyone purporting to
be an  Authorized  Person.  Administrative  Borrower  agrees  to  establish  and
maintain the Designated Account with the Designated Account Bank.

          2.8      MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent
shall  maintain  an  account  on its books in the name of  Borrowers  (the "LOAN
ACCOUNT") on which  Borrowers will be charged with the Term Loan, all Protective
Advances  made by Agent or the Lenders to Borrowers or for  Borrowers'  account,
and with all  other  payment  Obligations  hereunder  or under  the  other  Loan
Documents,  including,  accrued  interest,  fees and expenses,  and Lender Group
Expenses. In accordance with SECTION 2.6, the Loan Account will be credited with
all  payments  received  by Agent  from  Borrowers  or for  Borrowers'  account,
including all amounts  received in the Agent's  Account from any Cash Management
Bank. Agent shall render statements regarding the Loan Account to Administrative
Borrower,  including principal,  interest, fees, and including an itemization of
all charges and expenses  constituting  Lender Group  Expenses  owing,  and such
statements,  absent manifest error, shall be conclusively presumed to be correct
and accurate and constitute an account  stated between  Borrowers and the Lender
Group unless,  within 30 days after receipt thereof by Administrative  Borrower,

                                       8

Administrative  Borrower  shall  deliver  to  Agent  written  objection  thereto
describing the error or errors contained in any such statements.

          2.9 FEES.  On or prior to the  Closing  Date,  Borrowers  shall pay to
Agent for the account of the Lenders,  in accordance with their Pro Rata Shares,
a non-refundable closing fee (the "CLOSING FEE") equal to $960,000,  which shall
be deemed fully earned when paid.

          2.10     LIBOR OPTION.

                   (a) INTEREST.  In lieu of having interest charged at the rate
based upon the Base Rate,  Borrowers  shall have the option (the "LIBOR OPTION")
to have interest on all or a portion of the Term Loan be charged (whether at the
time when made (unless otherwise  provided herein),  upon conversion from a Base
Rate Loan to a LIBOR Rate Loan, or upon  continuation  of a LIBOR Rate Loan as a
LIBOR Rate Loan) at a rate of interest  based upon the LIBOR  Rate.  On the last
day of each applicable Interest Period, unless Administrative  Borrower properly
has  exercised  the  LIBOR  Option  with  respect  thereto,  the  interest  rate
applicable  to such LIBOR Rate Loan  automatically  shall convert to the rate of
interest then applicable to Base Rate Loans of the same type  hereunder.  At any
time that an Event of Default  has  occurred  and is  continuing,  Borrowers  no
longer  shall have the option to request  that the Term Loan bear  interest at a
rate based upon the LIBOR Rate,  and Agent  shall have the right,  at the end of
the applicable Interest Period for each LIBOR Rate Loan, to convert the interest
rate on such  LIBOR  Rate Loan to the rate then  applicable  to Base Rate  Loans
hereunder.

                   (b) LIBOR ELECTION.

                       (i)  Administrative  Borrower  may,  at any time and from
time to time,  so long as no Event of Default has  occurred  and is  continuing,
elect to exercise the LIBOR Option by notifying  Agent prior to 11:00 a.m.  (New
York time) at least 3 Business  Days prior to the  commencement  of the proposed
Interest  Period (the "LIBOR  DEADLINE").  Notice of  Administrative  Borrower's
election  of the LIBOR  Option for a  permitted  portion of the Term Loan and an
Interest Period pursuant to this Section shall be made by delivery to Agent of a
LIBOR  Notice  received by Agent  before the LIBOR  Deadline,  or by  telephonic
notice  received by Agent before the LIBOR Deadline (to be confirmed by delivery
to Agent of a LIBOR Notice  received by Agent prior to 5:00 p.m. (New York time)
on the same day).  Promptly  upon its receipt of each such LIBOR  Notice,  Agent
shall provide a copy thereof to each of the affected Lenders.

                       (ii) Each LIBOR Notice shall be  irrevocable  and binding
on Borrowers.  In  connection  with each LIBOR Rate Loan,  each  Borrower  shall
indemnify,  defend,  and hold Agent and the Lenders  harmless  against any loss,
cost, or expense  incurred by Agent or any Lender as a result of (A) the payment
of any  principal  of any  LIBOR  Rate  Loan  other  than on the  last day of an
Interest  Period  applicable  thereto  (including  as a  result  of an  Event of
Default),  (B) the  conversion of any LIBOR Rate Loan other than on the last day
of the  Interest  Period  applicable  thereto,  or (C) the  failure  to  borrow,
convert,  continue  or prepay any LIBOR Rate Loan on the date  specified  in any
LIBOR  Notice  delivered  pursuant  hereto  (such  losses,  costs,  or expenses,
"FUNDING LOSSES"). Funding Losses shall, with respect to Agent or any Lender, be
deemed to equal the amount  determined by Agent or such Lender to be the excess,
if any, of (1) the amount of interest  that would have accrued on the  principal
amount of such LIBOR Rate Loan had such  event not  occurred,  at the LIBOR Rate
that would have been  applicable  thereto,  for the period from the date of such
event to the last day of the then current  Interest  Period therefor (or, in the
case of a failure to borrow,  convert,  or  continue,  for the period that would
have been the Interest Period  therefor),  MINUS (2) the amount of interest that
would accrue on such principal amount for such period at the interest rate which
Agent or such Lender would be offered were it to be offered, at the commencement
of such period,  Dollar deposits of a comparable amount and period in the London
interbank market. A certificate of Agent or a Lender delivered to Administrative
Borrower  setting  forth any  amount or  amounts  that  Agent or such  Lender is
entitled to receive  pursuant to this  SECTION 2.10 shall be  conclusive  absent
manifest error.

                                       9

                       (iii) Borrowers shall have not more than three LIBOR Rate
Loans in effect at any given time.  Borrowers only may exercise the LIBOR Option
for LIBOR Rate Loans of at least $1,000,000.

                   (c) CONVERSION.  Borrowers  may  convert  LIBOR Rate Loans to
Base Rate  Loans at any time;  PROVIDED,  HOWEVER,  that in the event that LIBOR
Rate Loans are  converted or prepaid on any date that is not the last day of the
Interest  Period  applicable  thereto,  including  as a result of any  automatic
prepayment  through  the  required  application  by  Agent of  proceeds  of Loan
Parties' and their  Subsidiaries'  Collections in accordance with SECTION 2.3(B)
or for  any  other  reason,  including  early  termination  of the  term of this
Agreement or acceleration  of all or any portion of the Obligations  pursuant to
the terms hereof, each Borrower shall indemnify,  defend, and hold Agent and the
Lenders and their  Participants  harmless  against any and all Funding Losses in
accordance with SECTION 2.10 (B)(II) above.

                   (d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.

                       (i)   The  LIBOR  Rate  may be  adjusted  by  Agent  with
respect to any Lender on a prospective basis to take into account any additional
or increased  costs to such Lender of  maintaining  or obtaining any  eurodollar
deposits or increased  costs,  in each case,  due to changes in  applicable  law
occurring subsequent to the commencement of the then applicable Interest Period,
including  changes  in tax laws  (except  changes of  general  applicability  in
corporate  income tax laws) and changes in the reserve  requirements  imposed by
the  Board of  Governors  of the  Federal  Reserve  System  (or any  successor),
excluding the Reserve  Percentage,  which  additional  or increased  costs would
increase the cost of funding or maintaining  loans bearing interest at the LIBOR
Rate. In any such event, the affected Lender shall give Administrative  Borrower
and Agent notice of such a determination and adjustment and Agent promptly shall
transmit  the notice to each other  Lender  and,  upon its receipt of the notice
from the  affected  Lender,  Administrative  Borrower  may,  by  notice  to such
affected Lender (y) require such Lender to furnish to Administrative  Borrower a
statement  setting forth the basis for adjusting  such LIBOR Rate and the method
for determining the amount of such adjustment, or (z) repay the LIBOR Rate Loans
with respect to which such  adjustment  is made  (together  with any amounts due
under SECTION 2.10(B)(II)).

                       (ii)  In the event that any  change in market  conditions
or any law,  regulation,  treaty, or directive,  or any change therein or in the
interpretation of application thereof,  shall at any time after the date hereof,
in the reasonable  opinion of any Lender,  make it unlawful or  impractical  for
such Lender to fund or maintain  LIBOR Rate Loans or to continue such funding or
maintaining,  or to determine or charge  interest rates at the LIBOR Rate,  such
Lender   shall  give  notice  of  such  changed   circumstances   to  Agent  and
Administrative  Borrower and Agent  promptly  shall  transmit the notice to each
other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are
outstanding,  the date  specified in such Lender's  notice shall be deemed to be
the last day of the Interest Period of such LIBOR Rate Loans,  and interest upon
the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate
then  applicable to Base Rate Loans,  and (z) Borrowers shall not be entitled to
elect the LIBOR Option until such Lender  determines  that it would no longer be
unlawful or impractical to do so.

                   (e) NO  REQUIREMENT  OF  MATCHED  FUNDING.  Anything  to  the
contrary  contained herein  notwithstanding,  neither Agent, nor any Lender, nor
any of their  Participants,  is required actually to acquire eurodollar deposits
to fund or otherwise  match fund any Obligation as to which interest  accrues at
the LIBOR Rate.  The provisions of this Section shall apply as if each Lender or
its  Participants  had match  funded  any  Obligation  as to which  interest  is
accruing at the LIBOR Rate by acquiring  eurodollar  deposits for each  Interest
Period in the amount of the LIBOR Rate Loans.

          2.11     CAPITAL  REQUIREMENTS.  If, after the date hereof, any Lender
determines  that (i) the adoption of or change in any law,  rule,  regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the  interpretation  or  application  thereof by any  Governmental
Authority charged with the  administration  thereof,  or (ii) compliance by such
Lender or its  parent  bank  holding  company  with any  guideline,  request  or
directive of any such entity regarding  capital adequacy  (whether or not having

                                       10

the force of law),  has the effect of  reducing  the return on such  Lender's or
such holding  company's  capital as a consequence  of such Lender's  Commitments
hereunder to a level below that which such Lender or such holding  company could
have  achieved  but for  such  adoption,  change,  or  compliance  (taking  into
consideration  such Lender's or such holding  company's  then existing  policies
with  respect to capital  adequacy and  assuming  the full  utilization  of such
entity's capital) by any amount deemed by such Lender to be material,  then such
Lender may notify Administrative  Borrower and Agent thereof.  Following receipt
of such notice,  Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after  presentation  by such Lender of a statement  in the amount
and setting forth in reasonable detail such Lender's calculation thereof and the
assumptions  upon which such  calculation  was based (which  statement  shall be
deemed true and correct absent manifest error). In determining such amount, such
Lender may use any reasonable averaging and attribution methods.

          2.12     JOINT AND SEVERAL LIABILITY OF BORROWERS.

                   (a) Each  Borrower is accepting  joint and several  liability
hereunder and under the other Loan Documents in  consideration  of the financial
accommodations to be provided by the Lender Group under this Agreement,  for the
mutual benefit,  directly and indirectly,  of each Borrower and in consideration
of the undertakings of the other Borrowers to accept joint and several liability
for  the   Obligations.   Each   Borrower   hereby   further   irrevocably   and
unconditionally  guaranties as and for its own debt, until final payment in full
thereof has been made, (a) the payment of the Obligations,  when and as the same
shall  become due and  payable,  whether at  maturity,  pursuant  to a mandatory
prepayment  requirement,  by acceleration,  or otherwise; it being the intent of
each  Borrower that the guaranty set forth herein shall be a guaranty of payment
and not a guaranty of collection; and (b) the punctual and faithful performance,
keeping,  observance, and fulfillment by each Borrower of all of the agreements,
conditions,  covenants,  and  obligations  of such  Borrower  contained  in this
Agreement and under each of the other Loan Documents.

                   (b) Each Borrower, jointly and severally,  hereby irrevocably
and  unconditionally  accepts,  not merely as a surety but also as a  co-debtor,
joint and  several  liability  with the other  Borrowers,  with  respect  to the
payment and  performance of all of the  Obligations  (including any  Obligations
arising under this SECTION  2.12),  it being the intention of the parties hereto
that all the  Obligations  shall be the joint and  several  obligations  of each
Borrower without preferences or distinction among them.

                   (c) If and to the extent that any Borrower shall fail to make
any payment with respect to any of the Obligations as and when due or to perform
any of the Obligations in accordance  with the terms thereof,  then in each such
event the other  Borrowers  will make such  payment with respect to, or perform,
such Obligation.

                   (d) The  Obligations of each Borrower under the provisions of
this SECTION 2.12  constitute  the absolute  and  unconditional,  full  recourse
Obligations  of each  Borrower  enforceable  against  each  Borrower to the full
extent of its properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.

                   (e) Except as otherwise expressly provided in this Agreement,
each  Borrower  hereby  waives  notice of  acceptance  of its joint and  several
liability,  notice of the Term Loan or any other  advance or extension of credit
made  under or  pursuant  to this  Agreement,  notice of the  occurrence  of any
Default,  Event  of  Default,  or of any  demand  for  any  payment  under  this
Agreement, notice of any action at any time taken or omitted by Agent or Lenders
under or in respect of any of the  Obligations,  any requirement of diligence or
to mitigate damages and,  generally,  to the extent permitted by applicable law,
all demands, notices and other formalities of every kind in connection with this
Agreement (except as otherwise provided in this Agreement). Each Borrower hereby
assents to, and waives notice of, any extension or  postponement of the time for
the payment of any of the  Obligations,  the acceptance of any payment of any of
the  Obligations,  the acceptance of any partial  payment  thereon,  any waiver,
consent or other action or acquiescence by Agent or Lenders at any time or times
in respect of any default by any Borrower in the  performance or satisfaction of
any term, covenant,  condition or provision of this Agreement, any and all other

                                       11

indulgences whatsoever by Agent or Lenders in respect of any of the Obligations,
and the taking,  addition,  substitution or release, in whole or in part, at any
time or times,  of any  security  for any of the  Obligations  or the  addition,
substitution or release, in whole or in part, of any Borrower.  Without limiting
the  generality of the foregoing,  each Borrower  assents to any other action or
delay in  acting  or  failure  to act on the part of any  Agent or  Lender  with
respect to the  failure by any  Borrower  to comply  with any of its  respective
Obligations,  including,  without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply  fully with  applicable
laws or  regulations  thereunder,  which might,  but for the  provisions of this
SECTION  2.12 afford  grounds for  terminating,  discharging  or  relieving  any
Borrower,  in whole or in part, from any of its  Obligations  under this SECTION
2.12,  it being  the  intention  of each  Borrower  that,  so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of each Borrower under
this SECTION 2.12 shall not be discharged except by performance and then only to
the extent of such  performance.  The  Obligations  of each Borrower  under this
SECTION  2.12  shall  not  be  diminished  or  rendered   unenforceable  by  any
unenforceability  of this  Agreement or any other Loan  Document  against one or
more of the other  Borrowers  or any  winding up,  reorganization,  arrangement,
liquidation,  reconstruction or similar  proceeding with respect to any Borrower
or any Agent or Lender.

                   (f) Each  Borrower  represents  and  warrants  to  Agent  and
Lenders that such Borrower is currently  informed of the financial  condition of
Borrowers and of all other  circumstances  which a diligent inquiry would reveal
and which bear upon the risk of  nonpayment  of the  Obligations.  Each Borrower
further represents and warrants to Agent and Lenders that such Borrower has read
and understands  the terms and conditions of the Loan  Documents.  Each Borrower
hereby covenants that such Borrower will continue to keep informed of Borrowers'
financial condition, the financial condition of other guarantors, if any, and of
all other circumstances which bear upon the risk of nonpayment or nonperformance
of the Obligations.

                   (g) Each Borrower waives all rights and defenses  arising out
of an election of remedies by Agent or any Lender,  even though that election of
remedies,  such as a  nonjudicial  foreclosure  with  respect to security  for a
guaranteed  obligation,  has  destroyed  Agent's  or  such  Lender's  rights  of
subrogation and reimbursement  against such Borrower by the operation of Section
580(d) of the California Code of Civil Procedure or otherwise:

                   (h) Each  Borrower  waives all rights and defenses  that such
Borrower may have because the  Obligations  are secured by Real  Property.  This
means, among other things:

                       (i) Agent and  Lenders  may  collect  from such  Borrower
without first foreclosing on any Real or Personal Property Collateral pledged by
Borrowers.

                       (ii)  If  Agent  or any  Lender  forecloses  on any  Real
Property Collateral pledged by Borrowers:

                             (A) The  amount of the  Obligations  may be reduced
only by the price for which that  collateral  is sold at the  foreclosure  sale,
even if the collateral is worth more than the sale price.

                             (B)  Agent  and  Lenders  may  collect   from  such
Borrower  even  if  Agent  or  Lenders,  by  foreclosing  on the  Real  Property
Collateral,  has  destroyed any right such Borrower may have to collect from the
other Borrowers.

This is an unconditional and irrevocable  waiver of any rights and defenses such
Borrower may have because the  Obligations  are secured by Real Property.  These
rights and  defenses  include,  but are not  limited  to, any rights or defenses
based upon  Section  580a,  580b,  580d or 726 of the  California  Code of Civil
Procedure.

                   (i) The  provisions  of this  SECTION  2.12  are made for the
benefit of Agent,  Lenders and their respective  successors and assigns, and may
be enforced  by it or them from time to time  against  any or all  Borrowers  as

                                       12

often as  occasion  therefor  may arise and without  requirement  on the part of
Agent,  Lender,  successor or assign first to marshal any of its or their claims
or to exercise any of its or their rights against any Borrower or to exhaust any
remedies  available to it or them against any Borrower or to resort to any other
source or means of obtaining  payment of any of the Obligations  hereunder or to
elect any other  remedy.  The  provisions  of this  SECTION 2.12 shall remain in
effect  until all of the  Obligations  shall have been paid in full or otherwise
fully  satisfied.  If at any time,  any payment,  or any part  thereof,  made in
respect of any of the Obligations, is rescinded or must otherwise be restored or
returned  by  Agent  or  any  Lender   upon  the   insolvency,   bankruptcy   or
reorganization  of any Borrower,  or otherwise,  the  provisions of this SECTION
2.12 will forthwith be reinstated in effect, as though such payment had not been
made.

                   (j)  Until  the  Obligations  have  been  paid in full,  each
Borrower  hereby  agrees  that  it  will  not  enforce  any  of  its  rights  of
contribution  or  subrogation  against any other  Borrower  with  respect to any
liability incurred by it hereunder or under any of the other Loan Documents, any
payments  made by it to Agent or Lenders with respect to any of the  Obligations
or any  collateral  security  therefor.  Any claim which any  Borrower  may have
against any other  Borrower  with respect to any payments to any Agent or Lender
hereunder  or  under  any  other  Loan  Documents  are  hereby   expressly  made
subordinate  and junior in right of payment to the prior payment in full in cash
of  the  Obligations   and,  in  the  event  of  any   insolvency,   bankruptcy,
receivership,  liquidation, reorganization or other similar proceeding under the
laws of any  jurisdiction  relating  to any  Borrower,  its debts or its assets,
whether voluntary or involuntary,  all such Obligations shall be paid in full in
cash  before any  payment or  distribution  of any  character,  whether in cash,
securities or other property, shall be made to any other Borrower therefor.

                   (k) Each Borrower  hereby agrees that,  after the  occurrence
and during the  continuance  of any Default or Event of Default,  the payment of
any amounts due with  respect to the  indebtedness  owing by any Borrower to any
other  Borrower is hereby  subordinated  to the prior payment in full in cash of
the  Obligations.  Each  Borrower  hereby agrees that after the  occurrence  and
during the  continuance  of any Default or Event of Default,  such Borrower will
not demand,  sue for or  otherwise  attempt to collect any  indebtedness  of any
other Borrower owing to such Borrower until the Obligations shall have been paid
in full in cash. If, notwithstanding the foregoing sentence, such Borrower shall
collect,  enforce or receive any amounts in respect of such  indebtedness,  such
amounts  shall be  collected,  enforced and received by such Borrower as trustee
for  Agent,  and such  Borrower  shall  deliver  any such  amounts  to Agent for
application to the Obligations in accordance with SECTION 2.3(B).

          2.13     SECURITIZATION.  Parent  and  each  Borrower  (on  behalf  of
themselves  and their  respective  Subsidiaries)  hereby  acknowledge  that each
Lender and each of its  Affiliates  and Related Funds may sell or securitize its
portion of the Term Loan (a "SECURITIZATION")  through the pledge of its portion
of the  Term  Loan as  collateral  security  for  loans  to such  Lender  or its
Affiliates  or Related Funds or through the sale of its portion of the Term Loan
or the issuance of direct or indirect interests in its portion of the Term Loan,
which  loans to such  Lender or its  Affiliates  or  Related  Funds or direct or
indirect  interests  will be rated by Moody's,  S&P or one or more other  rating
agencies  (the  "RATING  AGENCIES").  Parent  and each  Borrower  (on  behalf of
themselves  and their  Subsidiaries)  agree to  cooperate  with such Lenders and
their  Affiliates  and Related  Funds to effect the  Securitization,  including,
without limitation,  by (a) executing such additional  documents,  as reasonably
requested by such Lenders in connection with the  Securitization,  provided that
(i) any such  additional  documentation  does  not  impose  additional  costs on
Borrowers  (other  than  costs  of a de  minimis  nature),  and  (ii)  any  such
additional  documentation  does not adversely affect the rights, or increase the
obligations  (other than increases of a de minimis  nature),  of Borrowers under
the Loan  Documents  or change or affect in a manner  adverse to  Borrowers  the
financial  terms of the Term Loan, and (b) providing such  information as may be
reasonably  requested by such Lenders in connection  with the rating of the Term
Loan or the Securitization.

                                       13

3.        CONDITIONS; TERM OF AGREEMENT.

          3.1      CONDITIONS PRECEDENT TO THE TERM LOAN. The obligation of each
Lender  to make  the  Term  Loan  provided  for  hereunder,  is  subject  to the
fulfillment,  to the  satisfaction  of Agent and each  Lender of (a) each of the
conditions precedent set forth on SCHEDULE 3.1 (the making of the Term Loan by a
Lender  being  conclusively  deemed  to be its  satisfaction  or  waiver of such
conditions precedent), and (b) each of the following conditions precedent:

                       (i)  the  representations  and  warranties  of  the  Loan
Parties and their Subsidiaries  contained in this Agreement or in the other Loan
Documents shall be true and correct in all material  respects  (except that such
materiality  qualifier  shall  not  be  applicable  to any  representations  and
warranties  that already are  qualified or modified by  materiality  in the text
thereof) on and as of the date of such  extension  of credit,  as though made on
and as of  such  date  (except  to the  extent  that  such  representations  and
warranties relate solely to an earlier date);

                       (ii) no Default or Event of Default  shall have  occurred
and be  continuing  on the date of such  extension  of credit,  nor shall either
result from the making thereof;

                       (iii) no injunction,  writ,  restraining  order, or other
order, or any law, rule or regulation, of any nature restricting or prohibiting,
directly or indirectly,  the extending of such credit shall have been issued and
remain in force by any Governmental  Authority against any Loan Party, Agent, or
any Lender; and

                       (iv) no Material Adverse Change shall have occurred since
December 31, 2006, provided that the transactions contemplated by this Agreement
and the  transactions  made in connection  with the  Permitted  Merger shall not
constitute a Material Adverse Change.

          3.2      TERM.  This Agreement shall continue in full force and effect
for a term  ending  on July  17,  2012  (the  "MATURITY  DATE").  The  foregoing
notwithstanding,  the Lender Group,  upon the election of the Required  Lenders,
shall  have  the  right  to  terminate  its  obligations  under  this  Agreement
immediately  and without notice upon the occurrence and during the  continuation
of an Event of Default.

          3.3      EFFECT OF  TERMINATION.  On the date of  termination  of this
Agreement,  all  Obligations  immediately  shall become due and payable  without
notice or demand.  No termination of this Agreement,  however,  shall relieve or
discharge Loan Parties or their  Subsidiaries of their duties,  Obligations,  or
covenants  hereunder or under any other Loan  Document and the Agent's  Liens in
the Collateral  shall remain in effect until all  Obligations  have been paid in
full. When this Agreement has been  terminated and all of the  Obligations  have
been paid in full,  Agent will, at Borrowers' sole expense,  execute and deliver
any termination statements, lien releases, mortgage releases,  re-assignments of
trademarks,  discharges of security  interests,  and other similar  discharge or
release  documents  (and, if applicable,  in recordable  form) as are reasonably
necessary  to  release,  as of  record,  the  Agent's  Liens and all  notices of
security  interests  and liens  previously  filed by Agent  with  respect to the
Obligations.

          3.4      EARLY TERMINATION BY BORROWERS. Borrowers have the option, at
any  time  upon 30 days  prior  written  notice  to  Agent,  to  terminate  this
Agreement,  without  penalty  or  premium,  by  paying to  Agent,  in cash,  the
Obligations, in full. If Borrowers have sent a notice of termination pursuant to
the provisions of this Section,  then Borrowers  shall be obligated to repay the
Obligations,  in full, on the date set forth as the date of  termination of this
Agreement in such notice.

4.        REPRESENTATIONS AND WARRANTIES.

                   In order to  induce  the  Lender  Group  to enter  into  this
Agreement,  Parent and each  Borrower  make the  following  representations  and

                                       14

warranties to the Lender Group which shall be true, correct,  and complete as of
the Closing Date (except to the extent that such  representations and warranties
relate  solely to an earlier  date or any  Schedule  or  Projection  referred to
herein  has  been  updated  or  amended  in   accordance   herewith)   and  such
representations  and warranties shall survive the execution and delivery of this
Agreement:

          4.1      NO  ENCUMBRANCES.  Each Loan Party and its  Subsidiaries  has
good and indefeasible title to, or a valid leasehold interest in, their personal
property assets and good and marketable title to, or a valid leasehold  interest
in,  their  Real  Property,  in each  case,  free and clear of Liens  except for
Permitted Liens.

          4.2      [INTENTIONALLY OMITTED].

          4.3      [INTENTIONALLY OMITTED.].

          4.4      EQUIPMENT.  Each  material  item of Equipment of Loan Parties
and their  Subsidiaries is used or held for use in their business and is in good
working order, ordinary wear and tear and damage by casualty excepted.

          4.5      LOCATION OF COLLATERAL.  The Collateral (other than vehicles,
Inventory  maintained  on vehicles and Equipment out for repair) of Loan Parties
and their  Subsidiaries  is not stored with a bailee,  warehouseman,  or similar
party (except with respect to Inventory in the ordinary course of business), and
is located only at, or in-transit between,  the locations identified on SCHEDULE
4.5 (as such Schedule may be updated pursuant to SECTION 5.9).

          4.6      INVENTORY RECORDS. Each Loan Party keeps correct and accurate
records in all material respects itemizing and describing the type, quality, and
quantity of its and its Subsidiaries' Inventory and the book value thereof.

          4.7      JURISDICTION  OF  ORGANIZATION;  LOCATION OF CHIEF  EXECUTIVE
OFFICE; ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS.

                   (a) The name of (within the  meaning of Section  9-503 of the
Code)  and  jurisdiction  of  organization  of each  Loan  Party and each of its
Subsidiaries  is set forth on SCHEDULE  4.7(A) (as such  Schedule may be updated
from time to time to reflect changes permitted to be made under SECTION 6.5).

                   (b) The chief executive  office of each Loan Party is located
at the address  indicated  on SCHEDULE  4.7(B) (as such  Schedule may be updated
from time to time to reflect changes permitted to be made under SECTION 5.9).

                   (c) Each  Loan   Party's  tax   identification   numbers  and
organizational identification numbers, if any, are identified on SCHEDULE 4.7(C)
(as such Schedule may be updated from time to time to reflect changes  permitted
to be made under SECTION 6.5).

                   (d) As of the  Closing  Date,  the  Loan  Parties  and  their
Subsidiaries  do not hold any  commercial  tort  claims,  except as set forth on
SCHEDULE 4.7(D).

          4.8      DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.

                   (a) Each Loan Party (i) is duly organized and existing and in
good  standing  (or the  non-U.S.  equivalent  thereof)  under  the  laws of the
jurisdiction  of  its   organization  and  qualified  to  do  business  in  each
jurisdiction  where the failure to be so qualified  reasonably could be expected
to result in a Material  Adverse  Change,  and (ii) has all requisite  power and
authority   to  conduct  its  business  as  now   conducted   and  as  currently
contemplated,  to make the borrowings hereunder (in the case of Borrowers),  and
to  execute  and  deliver  each  Loan  Document  to which it is a party,  and to
consummate the transactions contemplated thereby.

                                       15

                   (b) Set forth on  SCHEDULE  4.8(B) (as such  Schedule  may be
updated from time to time to reflect changes  permitted to be made under SECTION
5.16), is a complete and accurate description of the authorized capital Stock of
each Loan Party,  by class,  and, as of the Closing Date, a  description  of the
number of shares of each such class that are issued and outstanding.  Other than
as described on SCHEDULE 4.8(B), there are no subscriptions,  options, warrants,
or calls relating to any shares (or other equity  interest) of each Loan Party's
capital  Stock,  including  any  right  of  conversion  or  exchange  under  any
outstanding  security  or other  instrument.  No Loan  Party is  subject  to any
obligation  (contingent  or otherwise)  to  repurchase  or otherwise  acquire or
retire any  shares of its  capital  Stock or any  security  convertible  into or
exchangeable for any of its capital Stock.

                   (c) Set forth on  SCHEDULE  4.8(C) (as such  Schedule  may be
updated from time to time to reflect changes  permitted to be made under SECTION
5.16),  is a complete and accurate list of each Loan Party's direct and indirect
Subsidiaries,  showing:  (i) the  jurisdiction of their  organization,  (ii) the
number of shares of each class of common and preferred Stock authorized for each
of such Subsidiaries, and (iii) the number and the percentage of the outstanding
shares of each such class owned  directly or indirectly by the  applicable  Loan
Party.  All of the  outstanding  capital Stock of each such  Subsidiary has been
validly issued and is fully paid and non-assessable.

                   (d) Except  as set  forth on  SCHEDULE  4.8(C),  there are no
subscriptions,  options,  warrants,  or calls relating to any shares of any Loan
Party's  Subsidiaries'  capital  Stock,  including  any right of  conversion  or
exchange under any outstanding  security or other  instrument.  No Loan Party or
any of its respective  Subsidiaries is subject to any obligation  (contingent or
otherwise) to  repurchase or otherwise  acquire or retire any shares of any Loan
Party's  Subsidiaries'  capital  Stock  or  any  security  convertible  into  or
exchangeable for any such capital Stock.

          4.9      DUE AUTHORIZATION; NO CONFLICT.

                   (a) As  to  each  Borrower,  the  execution,   delivery,  and
performance  by such Borrower of this  Agreement and the Loan Documents to which
it is a party have been duly  authorized by all necessary  action on the part of
such Borrower.

                   (b) As  to  each  Borrower,  the  execution,   delivery,  and
performance  by such Borrower of this  Agreement and the other Loan Documents to
which it is a party do not and will not (i)  violate any  provision  of federal,
state,  or local law or regulation  applicable to such  Borrower,  the Governing
Documents of such Borrower,  or any order,  judgment,  or decree of any court or
other  Governmental  Authority  binding on such  Borrower,  (ii) conflict  with,
result in a breach of, or constitute  (with due notice or lapse of time or both)
a default  under any  Material  Contract of such  Borrower,  (iii)  result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of such Borrower,  other than Permitted Liens,  (iv) do not
and will not  result  in any  default,  noncompliance,  suspension,  revocation,
impairment,  forfeiture or nonrenewal of any permit,  license,  authorization or
approval  applicable to its operations or any of its properties,  or (v) require
any approval of such  Borrower's  interestholders  or any approval or consent of
any Person under any Material Contract of such Borrower,  other than consents or
approvals that have been obtained and that are still in force and effect.

                   (c) Other  than  the  filing  of  financing  statements,  the
recordation of the Mortgages,  and other filings or actions necessary to perfect
Liens  granted  to  Agent  in  the  Collateral,  the  execution,  delivery,  and
performance  by each Borrower of this  Agreement and the other Loan Documents to
which such  Borrower  is a party do not and will not  require  any  registration
with,  consent,  or approval  of, or notice to, or other  action with or by, any
Governmental Authority, other than consents or approvals that have been obtained
and that are still in force and effect.

                   (d) As to each  Borrower,  this  Agreement and the other Loan
Documents  to  which  such  Borrower  is  a  party,   and  all  other  documents

                                       16

contemplated  hereby and thereby,  when  executed and delivered by such Borrower
will be the legally valid and binding obligations of such Borrower,  enforceable
against such  Borrower in  accordance  with their  respective  terms,  except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization,  moratorium,  or similar laws relating to or limiting creditors'
rights generally.

                   (e) The Agent's Liens are validly  created,  perfected (other
than  (i) in  respect  of motor  vehicles  and (ii)  any  Deposit  Accounts  and
Securities  Accounts not subject to a Control  Agreement as permitted by SECTION
6.12, and subject only to the filing of financing statements and the recordation
of the Mortgages,  and (ii) to the extent such Liens are not validly  created or
perfected  solely as a result  of the  gross  negligence  of  Agent),  and first
priority Liens (subject only to Permitted Priority Liens).

                   (f) The  execution,   delivery,   and   performance  by  each
Guarantor of the Loan Documents to which it is a party have been duly authorized
by all necessary action on the part of such Guarantor.

                   (g) The  execution,   delivery,   and   performance  by  each
Guarantor  of the Loan  Documents to which it is a party do not and will not (i)
violate any provision of federal,  state, or local law or regulation  applicable
to such  Guarantor,  the Governing  Documents of such  Guarantor,  or any order,
judgment, or decree of any court or other Governmental Authority binding on such
Guarantor,  (ii) conflict with,  result in a breach of, or constitute  (with due
notice or lapse of time or both) a default  under any Material  Contract of such
Guarantor,  (iii) result in or require the creation or imposition of any Lien of
any nature  whatsoever  upon any properties or assets of such  Guarantor,  other
than  Permitted  Liens,  (iv)  do not  and  will  not  result  in  any  default,
noncompliance,  suspension,  revocation, impairment, forfeiture or nonrenewal of
any permit,  license,  authorization or approval applicable to its operations or
any  of  its  properties,  or (v)  require  any  approval  of  such  Guarantor's
interestholders  or any  approval  or consent of any Person  under any  Material
Contract of such  Guarantor,  other than  consents or  approvals  that have been
obtained and that are still in force and effect.

                   (h) Other than the  filing of  financing  statements  and the
recordation of the Mortgages,  and other filings or actions necessary to perfect
Liens  granted  to  Agent  in  the  Collateral,  the  execution,  delivery,  and
performance by each Guarantor of the Loan Documents to which such Guarantor is a
party do not and will not require any registration  with,  consent,  or approval
of, or notice to, or other action with or by, any Governmental Authority,  other
than  consents or approvals  that have been obtained and that are still in force
and effect.

                   (i) The Loan  Documents  to which each  Guarantor is a party,
and all other  documents  contemplated  hereby and  thereby,  when  executed and
delivered by such Guarantor will be the legally valid and binding obligations of
such  Guarantor,  enforceable  against such  Guarantor in accordance  with their
respective terms,  except as enforcement may be limited by equitable  principles
or by  bankruptcy,  insolvency,  reorganization,  moratorium,  or  similar  laws
relating to or limiting creditors' rights generally.

          4.10     LITIGATION.  Other than those  matters  disclosed on SCHEDULE
4.10 and other than matters arising after the Closing Date that reasonably could
not be expected to result in a Material  Adverse  Change,  there are no actions,
suits, or proceedings  pending or, to the knowledge of Parent and each Borrower,
threatened against any Loan Party or any of its Subsidiaries.  As of the Closing
Date,  none of the Loan Parties holds any  commercial  tort claims in respect of
which a claim  has  been  filed  in a court  of law or a  written  notice  by an
attorney has been given to a potential defendant

          4.11     NO MATERIAL ADVERSE CHANGE. All financial statements relating
to Parent and its Subsidiaries that have been delivered by any Loan Party to the
Lender Group have been prepared in accordance with GAAP (except,  in the case of
unaudited financial  statements,  for the lack of footnotes and being subject to
year-end  audit  adjustments)  and  present  fairly  in all  material  respects,
Parent's and its  Subsidiaries'  financial  condition as of the date thereof and
results of operations  for the period then ended.  There has not been a Material
Adverse  Change with respect to Parent and its  Subsidiaries  since December 31,
2006.  Notwithstanding  anything to the  contrary  herein,  for purposes of this

                                       17

Agreement,  no Material  Adverse  Change shall be deemed to have occurred on the
Closing Date as a direct  result (i) of the making of the Term Loan or (ii) from
transactions  completed  prior  to the  Closing  Date  directly  related  to the
consummation of the Permitted Merger.

          4.12     FRAUDULENT TRANSFER.

                   (a) Each Loan  Party and each  Subsidiary  of a Loan Party is
Solvent.

                   (b) No  transfer  of property is being made by any Loan Party
or any  Subsidiary of a Loan Party and no  obligation  is being  incurred by any
Loan Party or any Subsidiary of a Loan Party in connection with the transactions
contemplated  by this  Agreement or the other Loan  Documents with the intent to
hinder, delay, or defraud either present or future creditors of the Loan Parties
or their Subsidiaries.

          4.13     EMPLOYEE BENEFITS.

                   (a) Except as set forth on Schedule  4.13,  (i) each Employee
Plan is in  substantial  compliance  with ERISA and the IRC, (ii) no Termination
Event has  occurred  nor is  reasonably  expected  to occur with  respect to any
Employee  Plan,  (iii) the most recent  annual  report  (Form 5500  Series) with
respect to each  Employee  Plan,  including  any required  Schedule B (Actuarial
Information) thereto,  copies of which have been filed with the Internal Revenue
Service and  delivered to Agent,  is to the  knowledge of Borrower  complete and
correct,  and since the date of such report  there has been no Material  Adverse
Change in such funding status,  (iv) copies of each agreement  entered into with
the PBGC,  the U.S.  Department  of Labor or the Internal  Revenue  Service with
respect to any Employee Plan have been delivered to Agent,  (v) no Employee Plan
had an  accumulated  or waived  funding  deficiency or permitted  decrease which
would create a deficiency in its funding  standard account or has applied for an
extension of any  amortization  period  within the meaning of Section 412 of the
IRC at any time during the previous 60 months,  and (vi) no Lien  imposed  under
the IRC or ERISA  exists or is likely to arise on account of any  Employee  Plan
within the  meaning of Section  412 of the IRC.  Except as set forth on Schedule
4.13, no Loan Party or any of its ERISA  Affiliates  has incurred any withdrawal
liability under ERISA with respect to any Multiemployer Plan, or is aware of any
facts  indicating  that  it or any of its  ERISA  Affiliates  may in the  future
reasonably  be expected to incur any such  withdrawal  liability.  Except as set
forth on Schedule  4.13,  no Loan Party or any of its ERISA  Affiliates  nor any
fiduciary  of any  Employee  Plan  has (A)  engaged  in a  nonexempt  prohibited
transaction  described  in  Sections  406 of ERISA or 4975 of the IRC that could
reasonably be expected to result in a Material Adverse Change, (B) failed to pay
any required  installment or other payment required under Section 412 of the IRC
on or before  the due date for such  required  installment  or  payment  if such
failure is not cured within 3 Business Days, (C) engaged in a transaction within
the meaning of Section 4069 of ERISA or (D)  incurred any  liability to the PBGC
which remains  outstanding other than the payment of premiums,  and there are no
premium  payments  which have become due which are unpaid.  There are no pending
or, to the knowledge of any Loan Party, threatened claims, actions,  proceedings
or lawsuits  (other than claims for benefits in the normal  course)  asserted or
instituted  against (1) any Employee Plan or its assets,  (2) any fiduciary with
respect  to any  Employee  Plan,  or (3)  any  Loan  Party  or any of its  ERISA
Affiliates  with  respect to any  Employee  Plan.  Except as required by Section
4980B of the IRC,  no Loan  Party or any of its ERISA  Affiliates  maintains  an
employee  welfare  benefit  plan (as  defined  in Section  3(1) of ERISA)  which
provides  health or welfare  benefits  (through  the  purchase of  insurance  or
otherwise)  for any  retired or former  employee of any Loan Party or any of its
ERISA Affiliates or coverage after a participant's termination of employment.

                   (b) Except as set  forth on  SCHEDULE  4.13,  there is (a) no
unfair labor  practice  complaint  pending or, to Parent's  and each  Borrower's
knowledge,  threatened against any Loan Party before any Governmental  Authority
and no grievance or  arbitration  proceeding  pending or threatened  against any
Loan Party which arises out of or under any collective bargaining agreement, (b)
no strike,  labor  dispute,  slowdown,  stoppage or similar  action or grievance
pending  or, to the best  knowledge  of  Parent  and each  Borrower,  threatened
against any Loan Party and (c) no union  representation  question  existing with
respect  to the  employees  of any Loan Party and no union  organizing  activity

                                       18

taking place with respect to any of the employees of any of them. No Loan Party,
nor any  ERISA  Affiliate  of any Loan  Party  has  incurred  any  liability  or
obligation  under the  Worker  Adjustment  and  Retraining  Notification  Act or
similar state law,  which remains  unpaid or  unsatisfied.  The hours worked and
payments  made to  employees  of Loan  Parties have not been in violation of the
Fair  Labor  Standards  Act or any  other  applicable  legal  requirements.  All
material  payments  due from any Loan Party on account of workers  compensation,
wages and employee  health and welfare  insurance  and other  benefits have been
paid or accrued as a liability on the books of such Loan Party.

          4.14     ENVIRONMENTAL  CONDITION.  Except  as set  forth on  SCHEDULE
4.14, (a) to Parent's and each Borrower's  knowledge,  none of the Loan Parties'
or their  Subsidiaries'  properties  or  assets  has ever  been used by the Loan
Parties or their  Subsidiaries,  or, to their  knowledge,  by previous owners or
operators in the disposal of, or to produce,  store, handle,  treat, release, or
transport,  any  Hazardous  Materials,  where  such  use,  production,  storage,
handling,  treatment,  release or transport  was in  violation,  in any material
respect, of any applicable material  Environmental Law, (b) to Parent's and each
Borrower's  knowledge,  none  of  the  Loan  Parties'  nor  their  Subsidiaries'
properties  or assets  has ever been  designated  or  identified  in any  manner
pursuant  to any  environmental  protection  statute  as a  Hazardous  Materials
disposal site, (c) none of the Loan Parties nor any of their  Subsidiaries  have
received  written  notice that a Lien arising  under any  Environmental  Law has
attached to any revenues or to any Real  Property  owned or operated by the Loan
Parties or their Subsidiaries, and (d) none of the Loan Parties nor any of their
Subsidiaries  have received a summons,  citation,  written notice,  or directive
from the United States  Environmental  Protection Agency or any other federal or
state governmental agency concerning any material action or omission by any Loan
Party or any Subsidiary of a Loan Party  resulting in the releasing or disposing
of Hazardous Materials into the environment.

          4.15     INTELLECTUAL PROPERTY. Each Loan Party and each Subsidiary of
a  Loan  Party  owns,  or  holds  licenses  in,  all  trademarks,  trade  names,
copyrights,  patents,  patent  rights,  and licenses  that are  necessary to the
conduct of its business as currently conducted,  and attached hereto as SCHEDULE
4.15 (as updated from time to time) is a true, correct,  and complete listing of
all material patents, patent applications,  trademarks,  trademark applications,
copyrights,  and copyright  registrations  as to which each Loan Party or one of
its Subsidiaries is the owner or is an exclusive  licensee;  PROVIDED,  HOWEVER,
that Administrative  Borrower may amend SCHEDULE 4.15 to add additional property
so long as such  amendment  occurs by  written  notice to Agent not less than 10
days  before  the date on which a Loan Party or any  Subsidiary  of a Loan Party
acquires any such property after the Closing Date.

          4.16     LEASES; ETC..

                   (a) Loan Parties and their  Subsidiaries  enjoy  peaceful and
undisturbed  possession in all material  respects,  under all leases material to
their  business and to which they are parties or under which they are  operating
and all of such material leases are valid and subsisting and no material default
by Loan Parties or their Subsidiaries exists under any of them.

                   (b) Schedule 4.16 sets forth a complete and accurate list, as
of the Closing Date, of the location,  by street  address,  of all real property
owned or leased by each Loan Party.  No consent or  approval of any  landlord or
other third party in  connection  with any such lease is necessary  for any Loan
Party  to enter  into and  execute  the Loan  Documents  to which it is a party,
except as set forth on Schedule  4.16. To the best  knowledge of any Loan Party,
no other  party to any such lease is in default of its  obligations  thereunder,
and no Loan  Party  (or any  other  party  to any  such  lease)  has at any time
delivered or received any notice of default which remains uncured under any such
lease and, as of the Closing Date, no event has occurred which,  with the giving
of notice or the passage of time or both,  would  constitute a material  default
under any such lease.

          4.17     DEPOSIT  ACCOUNTS  AND  SECURITIES  ACCOUNTS.  Set  forth  on
SCHEDULE 4.17 is a listing of all of the Loan  Parties' and their  Subsidiaries'
Deposit Accounts and Securities Accounts,  including,  with respect to each bank

                                       19

or securities  intermediary (a) the name and address of such Person, and (b) the
account numbers of the Deposit Accounts or Securities  Accounts  maintained with
such Person.

          4.18     COMPLETE  DISCLOSURE.  All  factual  information  (taken as a
whole)  furnished by or on behalf of the Loan Parties or their  Subsidiaries  in
writing to Agent or any  Lender  (including  all  information  contained  in the
Schedules  hereto  or  in  the  other  Loan  Documents)  for  purposes  of or in
connection  with this Agreement,  the other Loan  Documents,  or any transaction
contemplated  herein  or  therein  is,  and will be,  true and  accurate  in all
material respects on the date as of which such information is dated or certified
and not  incomplete  by  omitting  to state  any  fact  necessary  to make  such
information  (taken as a whole) not  misleading in any material  respect at such
time in light of the circumstances under which such information was provided. On
the Closing Date, the Closing Date Projections represent,  and as of the date on
which any other Projections are delivered to Agent, such additional  Projections
represent  Parent's and each  Borrower's  good faith estimate of their and their
Subsidiaries'  future  performance  for the periods  covered  thereby based upon
assumptions believed by Parent and each of the Borrowers to be reasonable at the
time of the delivery thereof to Agent (it being understood that such projections
and forecasts are subject to uncertainties and contingencies,  many of which are
beyond the control of the Loan Parties and their  Subsidiaries and no assurances
can be given that such projections or forecasts will be realized).

          4.19     INDEBTEDNESS.  Set  forth  on  SCHEDULE  4.19  is a true  and
complete list of all  Indebtedness  of each Loan Party and each  Subsidiary of a
Loan Party  outstanding  immediately prior to the Closing Date that is to remain
outstanding  after the Closing Date and such Schedule  accurately sets forth the
aggregate principal amount of such Indebtedness and the principal terms thereof.

          4.20     MATERIAL   CONTRACTS.   Set  forth  on  SCHEDULE  4.20  is  a
description of all Material  Contracts of Parent and its  Subsidiaries,  showing
the  parties  and  principal   subject   matter   thereof  and   amendments  and
modifications thereto; PROVIDED, HOWEVER, that Administrative Borrower may amend
SCHEDULE 4.20 to add  additional  Material  Contracts so long as such  amendment
occurs by  written  notice to Agent not less than 5 days after the date on which
Parent or its  Subsidiary  enters into such Material  Contract after the Closing
Date. Except for matters which, either  individually or in the aggregate,  could
not reasonably be expected to result in a Material Adverse Change, each Material
Contract  (other than those that have expired at the end of their normal  terms)
(a) is in full  force and effect and is  binding  upon and  enforceable  against
Parent  or its  Subsidiary  and,  to the best of  Parent's  and each  Borrower's
knowledge,  each other  Person that is a party  thereto in  accordance  with its
terms, (b) has not been otherwise  amended or modified (other than amendments or
modifications permitted by SECTION 6.7(C)), and (c) is not in default due to the
action or inaction of Parent or any of its Subsidiaries.

          4.21     PERMITS,  LICENSES,  ETC. Parent and its  Subsidiaries are in
compliance   in  all  respects   with  all   governmental   permits,   licenses,
authorizations, approvals, entitlements and accreditations required and material
for such Person lawfully to own, lease, manage or operate,  or to acquire,  each
business currently owned, leased,  managed or operated,  or previously acquired,
by such Person. No condition exists or event has occurred which could reasonably
be expected to result in the suspension,  revocation,  impairment, forfeiture or
non-renewal of any such permit, license, authorization, approval, entitlement or
accreditation,  and there is no outstanding claim by any Governmental  Authority
that  any  such  permit,  license,   authorization,   approval,  entitlement  or
accreditation is not in full force and effect.

          4.22     SUPPLIERS.  There exists no actual or, to the best  knowledge
of Parent and each Borrower, threatened termination,  cancellation or limitation
of, or  modification to or change in, the business  relationship  between Parent
and any  Subsidiary  of  Parent,  on the one  hand,  and any  material  supplier
thereof,  on the other hand which  could  reasonably  be expected to result in a
Material Adverse Change; and, to the best knowledge of Parent and each Borrower,
there exists no present state of facts or circumstances  that could give rise to
or result in any such  termination,  cancellation,  limitation,  modification or
change.

                                       20

          4.23     MARGIN STOCK. None of Loan Parties or any of their respective
Subsidiaries is nor will be engaged in the business of extending  credit for the
purpose  of  purchasing  or  carrying   margin  stock  (within  the  meaning  of
Regulations T, U or X of the Board of Governors of the Federal Reserve  System),
and no  proceeds  of the Term Loan will be used to  purchase or carry any margin
stock or to extend  credit to others for the purpose of  purchasing  or carrying
any margin stock.

          4.24     INSURANCE.  Parent  and each of its  Subsidiaries  keeps  its
property  adequately  insured and  maintains  (a)  insurance  to such extent and
against such risks,  including  fire, as is customary with companies in the same
or  similar  businesses,  (b)  workers'  compensation  insurance  in the  amount
required  by  applicable  law,  (c)  public  liability  insurance  in the amount
customary  with  companies in the same or similar  business  against  claims for
personal injury or death on properties owned,  occupied or controlled by it, and
(d) such  other  insurance  as may be  required  by law or as may be  reasonably
required by Agent (including,  without limitation, against larceny, embezzlement
or other  criminal  misappropriation).  SCHEDULE  4.24 sets  forth a list of all
insurance maintained by Parent and its Subsidiaries on the Closing Date.

          4.25     INVESTMENT  COMPANY  ACT,  ETC..  No  Loan  Party  is  (a) an
"investment  company" or an "affiliated  person" or "promoter" of, or "principal
underwriter"  of or for, an "investment  company",  as such terms are defined in
the  Investment  Company Act of 1940,  as amended,  or (b) subject to regulation
under any federal, state, provincial,  territorial,  local or foreign statute or
regulation  which may  limit  its  ability  to incur  Indebtedness  or which may
otherwise render all or any portion of the Obligations unenforceable.

          4.26     TAXES,  ETC. All  federal,  state,  provincial,  territorial,
supranational,  local and  foreign tax  returns  and other  reports  required by
applicable law to be filed by any Loan Party have been filed, or extensions have
been obtained, and all taxes, assessments and other governmental charges imposed
upon any Loan Party or any  property of any Loan Party and which have become due
and payable on or prior to the date hereof have been paid,  except as  otherwise
permitted under SECTION 5.7.

          4.27     NATURE OF BUSINESS.  No Loan Party is engaged in any business
other than (a) designing,  manufacturing,  and selling engineered  materials and
components  for  the  electronic,   industrial  and  commercial   markets,   (b)
manufacturing and distributing  meat-room products and maintenance  services for
the meat and deli departments of supermarkets;  restaurants;  meat,  poultry and
fish processing plants; and (c) distributing electrical saws and food processing
equipment.

          4.28     RELATED  TRANSACTION  DOCUMENTS.  The Parent has delivered to
Agent  a  complete  and  correct  copy  of each  Related  Transaction  Document,
including all schedules and exhibits thereto. The Related Transaction  Documents
set forth the entire agreement and understanding of the parties thereto relating
to the subject matter thereof,  and there are no other agreements,  arrangements
or understandings, written or oral, relating to the matters covered thereby. The
execution,  delivery and performance of the Related  Transaction  Documents have
been duly authorized by all necessary action (including, without limitation, the
obtaining  of any  consent of  stockholders  or other  holders of Capital  Stock
required  by  law  or  by  any  applicable  corporate  or  other  organizational
documents)  on the part of each such  Person.  No  authorization  or approval or
other action by, and no notice to filing with or license from, any  Governmental
Authority is required for such sale other than such as have been  obtained on or
prior to the Closing  Date.  The Related  Transaction  Documents  are the legal,
valid and binding  obligation of the parties thereto,  enforceable  against such
parties in accordance with their terms.

          4.29     NO  IMMUNITY.  No Loan Party nor any  Subsidiary  of any Loan
Party or any of their respective  property has any immunity from jurisdiction of
any  court or from  any  legal  process  (whether  through  service  or  notice,
attachment  prior to  judgment,  attachment  in aid of  execution,  execution or
otherwise)  under  the  laws  of  the  United  States  or  its  jurisdiction  of
organization.

          4.30     NO TAXES.  Except for any withholding tax imposed on interest
payable by any Loan Party hereunder,  there is no tax, levy, impost,  duty, fee,
assessment  or other  governmental  charge,  or any  deduction  or  withholding,

                                       21

imposed  by  any  Governmental  Authority  either  (i)  on or by  virtue  of the
execution or delivery of the Loan Documents or (ii) on any payment to be made by
any Loan Party pursuant to the Loan Documents.

5.        AFFIRMATIVE COVENANTS.

                   Parent and each Borrower covenants and agrees that, until the
payment in full of the  Obligations,  Parent and each of the Borrowers shall and
shall cause each of their respective Subsidiaries to do all of the following:

          5.1      ACCOUNTING  SYSTEM.  Maintain  a system  of  accounting  that
enables Loan Parties to produce financial statements in accordance with GAAP and
maintain records  pertaining to the Collateral that contain  information as from
time to time reasonably may be requested by Agent.  Loan Parties also shall keep
a  reporting  system  that shows all  additions,  sales,  claims,  returns,  and
allowances  with respect to their and their  Subsidiaries'  sales.  Loan Parties
shall also maintain their billing  systems/practices  as approved by Agent prior
to the Closing  Date and shall only make  material  modifications  thereto  with
notice to, and consent of, Agent.

          5.2      COLLATERAL  REPORTING.  Provide Agent (and if so requested by
Agent,  with  copies  for each  Lender)  with each of the  reports  set forth on
SCHEDULE 5.2 at the times specified therein.  In addition,  each Borrower agrees
to cooperate fully with Agent to facilitate and implement a system of electronic
collateral  reporting  in order to provide  electronic  reporting of each of the
items set forth above.

          5.3      FINANCIAL  STATEMENTS,  REPORTS,  CERTIFICATES.   Deliver  to
Agent, with copies to each Lender, each of the financial statements, reports, or
other  items  set  forth on  SCHEDULE  5.3 at the times  specified  therein.  In
addition,  Parent  agrees that no  Subsidiary  of Parent will have a fiscal year
different from that of Parent.

          5.4      GUARANTOR REPORTS. Cause each Guarantor to deliver its annual
financial  statements  at the time when Parent  provides  its audited  financial
statements  to  Agent,  but  only  to  the  extent  such  Guarantor's  financial
statements are not consolidated with Parent's financial statements.

          5.5      INSPECTION. Permit Agent, each Lender, and each of their duly
authorized  representatives or agents to visit any of its properties and inspect
any of its assets or books and records,  to examine and make copies of its books
and records, and to discuss its affairs,  finances, and accounts with, and to be
advised as to the same by, its officers and employees at such  reasonable  times
and  intervals  as Agent or any such  Lender may  designate  and,  so long as no
Default  or  Event  of  Default  exists,   with   reasonable   prior  notice  to
Administrative Borrower. In furtherance of the foregoing, during the continuance
of an  Event  of  Default,  Parent  and  each  Borrower  hereby  authorizes  its
independent  accountants,  and  the  independent  accountants  of  each  of  its
Subsidiaries,  to discuss  the  affairs,  finances  and  accounts of such Person
(independently or together with  representatives of such Person) with the agents
and representatives of Agent in accordance with this Section 5.5.

          5.6      MAINTENANCE OF PROPERTIES. Maintain and preserve all of their
properties which are necessary or useful in the proper conduct of their business
in good working order and condition,  ordinary wear, tear, and casualty excepted
(and  except  where the  failure to do so could not be  expected  to result in a
Material  Adverse  Change),  and comply at all times with the  provisions of all
material leases to which it is a party as lessee,  so as to prevent any material
loss or forfeiture thereof or thereunder.

          5.7      TAXES.  Cause  all  assessments  and  taxes,   whether  real,
personal,  or  otherwise,  due or payable  by, or imposed,  levied,  or assessed
against Loan Parties,  their Subsidiaries,  or any of their respective assets to
be paid in full,  before  delinquency  or before the expiration of any extension
period,  except to the extent that the validity of such  assessment or tax shall
be the subject of a Permitted  Protest and except for  assessments and taxes not
exceeding  $100,000 in the  aggregate.  Loan  Parties  will and will cause their
Subsidiaries  to  make  timely  payment  or  deposit  of all  tax  payments  and
withholding  taxes  required of them by applicable  laws,  including  those laws

                                       22

concerning F.I.C.A.,  F.U.T.A., state disability,  and local, state, and federal
income taxes, and will, upon request,  furnish Agent with proof  satisfactory to
Agent  indicating  that the applicable  Loan Party or Subsidiary of a Loan Party
has made such payments or deposits.

          5.8      INSURANCE.

                   (a) At Parent's or  Borrowers'  expense,  maintain  insurance
(with responsible and reputable insurance companies)  respecting their and their
Subsidiaries'  assets wherever located,  covering loss or damage by fire, theft,
explosion,  and all other hazards and risks as ordinarily are insured against by
other  Persons  engaged in the same or similar  businesses.  Parent or Borrowers
also  shall  maintain  business  interruption,  public  liability,  and  product
liability  insurance,  as well as insurance against larceny,  embezzlement,  and
criminal  misappropriation.  All such  policies  of  insurance  shall be in such
amounts and with such  insurance  companies as are  reasonably  satisfactory  to
Agent.  Administrative  Borrower  shall  deliver  copies of all such policies to
Agent with an  endorsement  naming Agent as the loss payee (under a satisfactory
lender's loss payable  endorsement) or additional insured, as appropriate.  Each
policy of insurance or endorsement  shall contain a clause requiring the insurer
to give not less  than 30 days  prior  written  notice  to Agent in the event of
cancellation of the policy for any reason whatsoever.

                   (b) Administrative Borrower shall give Agent prompt notice of
any loss exceeding  $250,000  covered by such insurance.  So long as no Event of
Default has occurred and is continuing, Borrowers shall have the exclusive right
to adjust any losses  payable under any such  insurance  policies which are less
than $500,000.  Following the occurrence and during the continuation of an Event
of Default,  or in the case of any losses payable under such insurance exceeding
$500,000,  Agent  shall have the  exclusive  right to adjust any losses  payable
under any such  insurance  policies,  without any  liability  to Loan Parties or
their Subsidiaries whatsoever in respect of such adjustments; PROVIDED, HOWEVER,
that  if no  Event  of  Default  exists,  the  Borrowers  and  Agent  shall  use
commercially  reasonable  efforts  to  adjust  any  losses by  agreement  of the
parties.

          5.9      LOCATION  OF  COLLATERAL.  Keep  each  Loan  Party's  and its
Subsidiaries' Inventory and Equipment (other than vehicles, Inventory maintained
on vehicles and Equipment  out for repair) only at the  locations  identified on
SCHEDULE 4.5 and their chief executive offices only at the locations  identified
on SCHEDULE 4.7(B);  PROVIDED,  however, that Administrative  Borrower may amend
SCHEDULE 4.5 or SCHEDULE 4.7 so long as such amendment  occurs by written notice
to Agent  not less  than 30 days  after  the date on  which  such  Inventory  or
Equipment  is moved to such new  location  or such  chief  executive  office  is
relocated,  so long as such new location is within the continental United States
or Canada,  and so long as, at the time of such written  notification,  the Loan
Party provides Agent a Collateral Access Agreement with respect thereto.

          5.10     COMPLIANCE  WITH LAWS.  Comply with the  requirements  of all
applicable laws, rules,  regulations,  and orders of any Governmental Authority,
other than laws, rules,  regulations,  and orders the non-compliance with which,
individually or in the aggregate,  could not reasonably be expected to result in
a Material Adverse Change, such compliance to include,  without limitation,  (a)
paying before the same become delinquent all taxes, assessments and governmental
charges or levies  imposed  upon it or upon its income or profits or upon any of
its properties, (b) paying all lawful claims which if unpaid might become a Lien
or charge upon any of its  properties,  except to the extent  contested  in good
faith by proper  proceedings  which stay the imposition of any penalty,  fine or
Lien resulting from the  non-payment  thereof and with respect to which adequate
reserves have been set aside for the payment  thereof in  accordance  with GAAP,
(c) withholding from each payment made to any of its past or present  employees,
officers  or  directors,  and to any non  resident of the country in which it is
resident,  the amount of all Taxes and other deductions  required to be withheld
therefrom  and paying the same to the  proper  tax or other  receiving  officers
within the time required  under any  applicable  laws,  and (d) collect from all
Persons the amount of all Taxes required to be collected from them and remit the
same to the  proper tax or other  receiving  officers  within the time  required
under any applicable laws.

                                       23

          5.11     LEASES.  Pay when due all  rents and  other  amounts  payable
under any material  leases to which any Loan Party or any  Subsidiary  of a Loan
Party is a party  or by  which  any  Loan  Party's  or any of its  Subsidiaries'
properties  and assets are bound,  unless  such  payments  are the  subject of a
Permitted Protest.

          5.12     EXISTENCE.  At all times  preserve and keep in full force and
effect each Loan Party's and each of its  Subsidiaries',  valid existence,  good
standing in its jurisdiction of organization and  qualifications  to do business
as a  foreign  entity  in each  jurisdiction  in which it is  required  to be so
qualified  and,  except  as could  not  reasonably  be  expected  to result in a
Material   Adverse   Change,   any  rights,   franchises,   permits,   licenses,
accreditations, authorizations, or other approvals material to their businesses.

          5.13     ENVIRONMENTAL.

                   (a) Keep any  property  either  owned or operated by any Loan
Party or any Subsidiary of a Loan Party free of any Environmental  Liens or post
bonds or other  financial  assurances  sufficient to satisfy the  obligations or
liability evidenced by such Environmental Liens,

                   (b) comply, in all material respects, with Environmental Laws
and provide to Agent  documentation  of such compliance  which Agent  reasonably
requests,

                   (c) promptly  notify  Agent  of any  release  of a  Hazardous
Material in any  reportable  quantity from or onto property owned or operated by
any Loan Party or any  Subsidiary of a Loan Party and take any Remedial  Actions
required  to abate  said  release  or  otherwise  to come into  compliance  with
applicable Environmental Law, and

                   (d) promptly,  but in any event  within 5 days of its receipt
thereof,  provide Agent with written notice of any of the following:  (i) actual
knowledge or written  notice that an  Environmental  Lien has been filed against
any of the real or personal  property of any Loan Party or any  Subsidiary  of a
Loan Party,  (ii) actual  knowledge or written notice of the commencement of any
Environmental  Action or written  notice  that an  Environmental  Action will be
filed  against  any Loan  Party or any  Subsidiary  of a Loan  Party,  and (iii)
written notice of a violation,  citation,  or other  administrative  order which
reasonably could be expected to result in a Material Adverse Change.

          5.14     DISCLOSURE  UPDATES.  Promptly  and in no event  later than 5
Business Days after  obtaining  knowledge  thereof,  notify Agent if any written
information,  exhibit, or report furnished to the Lender Group contained, at the
time it was  furnished,  any untrue  statement of a material  fact or omitted to
state any material fact necessary to make the statements  contained  therein not
misleading  in light of the  circumstances  in which made.  The foregoing to the
contrary  notwithstanding,  any notification pursuant to the foregoing provision
will not cure or remedy the effect of the prior  untrue  statement of a material
fact or omission of any material fact nor shall any such  notification  have the
effect of amending or modifying this Agreement or any of the Schedules hereto.

          5.15     CONTROL  AGREEMENTS.  Take all reasonable  steps in order for
Agent to obtain control in accordance with Sections 8-106,  9-104, 9-105, 9-106,
and 9-107 of the Code with  respect to  (subject  to the  proviso  contained  in
SECTION  6.12) all of its  Securities  Accounts,  Deposit  Accounts,  electronic
chattel paper, investment property, and letter-of-credit rights.

          5.16     FORMATION  OF  SUBSIDIARIES.  At the time that any Loan Party
forms any direct or  indirect  Subsidiary  or  acquires  any direct or  indirect
Subsidiary  after the  Closing  Date,  such Loan Party  shall (a) cause such new
Subsidiary  to  provide  to Agent a joinder  to the  Guaranty  and the  Security
Agreement, together with such other security documents (including Mortgages with
respect to any Real  Property of such new  Subsidiary),  as well as  appropriate
financing  statements  (and with respect to all property  subject to a Mortgage,
fixture  filings),  all in form and substance  satisfactory to Agent  (including
being  sufficient  to grant Agent a first  priority  Lien  (subject to Permitted
Priority  Liens)  in and  to  the  assets  of  such  newly  formed  or  acquired

                                       24

Subsidiary),   (b)  provide  to  Agent  a  pledge   agreement  and   appropriate
certificates and powers or financing statements, hypothecating all of the direct
or beneficial  ownership interest in such new Subsidiary,  in form and substance
satisfactory  to  Agent,  and (c)  provide  to Agent  all  other  documentation,
including one or more opinions of counsel  satisfactory  to Agent,  which in its
opinion  is  appropriate  with  respect to the  execution  and  delivery  of the
applicable   documentation  referred  to  above  (including  policies  of  title
insurance  or other  documentation  with  respect to all  property  subject to a
Mortgage). Any document, agreement, or instrument executed or issued pursuant to
this SECTION 5.16 shall be a Loan Document.

          5.17     FURTHER  ASSURANCES.  At any time upon the  request of Agent,
the Loan  Parties  shall  execute  or deliver to Agent,  and shall  cause  their
Subsidiaries to execute or deliver to Agent,  any and all financing  statements,
fixture filings,  security  agreements,  pledges,  assignments,  endorsements of
certificates of title,  mortgages,  deeds of trust, opinions of counsel, and all
other  documents  (collectively,  the  "ADDITIONAL  DOCUMENTS")  that  Agent may
request  in form and  substance  reasonably  satisfactory  to Agent,  to create,
perfect, and continue perfected or to better perfect the Agent's Liens in all of
the  properties and assets of the Loan Parties and their  Subsidiaries  (whether
now owned or hereafter  arising or  acquired,  tangible or  intangible,  real or
personal),  to create and perfect  Liens in favor of Agent in any Real  Property
acquired by the Loan Parties or their  Subsidiaries  after the Closing Date, and
in order to fully  consummate all of the  transactions  contemplated  hereby and
under the other Loan  Documents.  To the maximum extent  permitted by applicable
law,  Parent and each Borrower  authorize  Agent to execute any such  Additional
Documents in the Loan Party's or their Subsidiaries'  names, as applicable,  and
authorizes Agent to file such executed  Additional  Documents in any appropriate
filing office.

          5.18     MATERIAL  CONTRACTS.  Contemporaneously  with the delivery of
each Compliance  Certificate  pursuant hereto,  provide Agent with copies of (a)
each  Material  Contract  entered  into  since  the  delivery  of  the  previous
Compliance  Certificate,  and (b) each amendment or modification of any Material
Contract entered into since the delivery of the previous Compliance Certificate.

          5.19     SUBORDINATION.  Cause all Indebtedness and other  obligations
now or hereafter  owed by it to any of its  Affiliates,  to be  subordinated  in
right of payment and security to the Indebtedness and other Obligations owing to
the Agent and the Lenders in accordance with a  subordination  agreement in form
and substance satisfactory to the Agent.

          5.20     AFTER ACQUIRED REAL PROPERTY.  Upon the  acquisition by it or
any of its  Subsidiaries  after the date hereof of any interest  (whether fee or
leasehold) in any Real Property  (wherever located) (each such interest being an
"AFTER ACQUIRED PROPERTY") (x) with a Current Value (as defined below) in excess
of  $150,000  in the case of a fee  interest,  or (y)  requiring  the payment of
annual  rent  exceeding  in the  aggregate  $250,000  in the  case of  leasehold
interest,  immediately  so  notify  Agent,  setting  forth  with  specificity  a
description of the interest  acquired,  the location of the real  property,  any
structures or improvements  thereon and either an appraisal or such Loan Party's
good-faith  estimate of the current value of such real property (for purposes of
this  Section,  the  "CURRENT  VALUE").  Agent  shall  notify such Loan Party in
writing  whether  it  intends  to  require a  Mortgage  and the other  documents
referred  to  below or in the  case of  leasehold,  a  leasehold  Mortgage  or a
Collateral Access Agreement.  Upon receipt of such notice requesting a Mortgage,
the Person which has acquired  such After  Acquired  Property  shall  furnish to
Agent  within a  reasonable  time  thereafter  the  following,  each in form and
substance reasonably satisfactory to Agent: (a) in the case of a fee interest, a
Mortgage  with respect to such real property and related  assets  located at the
After  Acquired  Property,  each duly  executed by such Person and in recordable
form;  (b) in the  case of a fee  interest,  evidence  of the  recording  of the
Mortgage  referred  to in clause  (a) above in such  office or offices as may be
necessary  or, in the  reasonable  opinion  of Agent,  desirable  to create  and
perfect a valid and enforceable first priority lien on the property purported to
be covered  thereby or to otherwise  protect the rights of Agent and the Lenders
thereunder,  (c) in  the  case  of a fee  interest,  a  title  insurance  policy
satisfactory to Agent, (d) in the case of a fee interest,  a survey of such real
property,  certified  to Agent and to the issuer of the title  insurance  policy
referred to in clause (c) above by a licensed  professional  surveyor reasonably
satisfactory to Agent, (v) in the case of a fee interest,  Phase I environmental
site  assessments  with respect to such real  property,  certified to Agent by a
company reasonably  satisfactory to Agent, or such other evidence or description
of the environmental status of the property reasonably  acceptable to Agent, (e)

                                       25

in the case of a leasehold  interest,  a certified copy of the lease between the
landlord and such Person with respect to such Real Property in which such Person
has a leasehold interest, and the certificate of occupancy, if any, with respect
thereto,  and (f) such other  documents or  instruments  (including  opinions of
counsel) as Agent may reasonably  require.  In the case of a leasehold interest,
the Person which has acquired such After Acquired  property shall request of the
landlord an attornment and  nondisturbance  agreement  between the landlord (and
any fee mortgagee) with respect to such real property and Agent. Borrowers shall
pay all reasonable fees and expenses,  including reasonable  attorneys' fees and
expenses,  and all title insurance charges and premiums, in connection with each
Loan Party's obligations under this SECTION 5.21.

6.        NEGATIVE COVENANTS.

                   Parent and each Borrower  covenants and agrees that until the
payment in full of the  Obligations,  Parent and each of the Borrowers  will not
and  will  not  permit  any of their  respective  Subsidiaries  to do any of the
following:

          6.1      INDEBTEDNESS.   Create,   incur,  assume,  suffer  to  exist,
guarantee,  or otherwise become or remain,  directly or indirectly,  liable with
respect to any Indebtedness, except:

                   (a) Indebtedness  evidenced by this  Agreement  and the other
Loan Documents,

                   (b) Indebtedness   set  forth  on   SCHEDULE   4.19  and  any
Refinancing Indebtedness in respect of such Indebtedness,

                   (c) Permitted Purchase Money Indebtedness and any Refinancing
Indebtedness in respect of such Indebtedness,

                   (d) endorsement  of  instruments  or other  payment items for
deposit,

                   (e) Indebtedness composing Permitted Investments,

                   (f) (a)   Indebtedness   under  the  Working  Capital  Credit
Agreement  in an  aggregate  principal  amount  not to exceed (A) in the case of
Working Capital  Indebtedness in respect of Working Capital Advances,  letter of
credit reimbursement obligations and bank product obligations, the lesser of (I)
$35,000,000 and (II) 110% of Working Capital Borrowing Base (after giving effect
to all reserves then in effect),  plus (B) the aggregate principal amount of the
Working  Capital Term Loan  outstanding on the date hereof,  minus the aggregate
amount of all principal  payments  received by the Working  Capital Lenders with
respect  thereto;  provided  that,  (i) the Working  Capital  Agent and the Loan
Parties shall have executed and delivered to Agent the Intercreditor  Agreement,
and (ii) the Working Capital Credit Agreement is not amended to increase Working
Capital  Availability  thereunder,  including  any  amendment,  waiver  or other
modification   with  respect  to  the  Working   Capital   Borrowing  Base,  the
requirements to impose permanent  reserves against Working Capital  Availability
and/or the Working  Capital  Borrowing  Base and to reduce the  Working  Capital
Commitments  upon the occurrence of certain  events,  and (b) the refinancing of
the Indebtedness under the Working Capital Credit Agreement;  provided, that (i)
the  aggregate  outstanding  principal  amount  of the  loans,  letter of credit
accommodations  made,  issued or incurred  pursuant to such new working  capital
credit facility shall not exceed the amounts set forth in clause (a) above, (ii)
the  lender or lenders  under such new  working  capital  facility  and the Loan
Parties  shall  have  executed  and  delivered  to the  Agent  an  intercreditor
agreement,  substantially in the form of the Intercreditor  Agreement, and (iii)
the Working  Capital Credit  Agreement is replaced with another  working capital
agreement,  the terms and  conditions of which are no less favorable to the Loan
Parties and the Lenders than the Working Capital Credit  Agreement  entered into
on the Closing Date  (including  with respect to the Working  Capital  Borrowing
Base, the imposition of permanent reserves against Working Capital  Availability
and/or the Working Capital Borrowing Base);

                                       26

                   (g) the Subordinated  Indebtedness and the obligations  under
the WHX Guaranty  Documents,  subject to the execution and delivery of a joinder
to the terms of the  Subordination  Agreement,  any Refinancing  Indebtedness of
such Indebtedness,

                   (h) Indebtedness   incurred  by  the  Parent's   Subsidiaries
organized  outside of the United  States and  Canada  (other  than  Indebtedness
described on SCHEDULE 4.19), provided that (i) the aggregate principal amount of
such Indebtedness  shall not exceed $3,000,000  outstanding at any time and (ii)
such  Indebtedness  is supported by one or more issued and  outstanding  Working
Capital  Letters of Credit (for the avoidance of doubt,  Indebtedness  shall not
include any contingent  obligations arising under undrawn letters of credit that
provide credit support for Indebtedness permitted under this clause (h)); and

                   (i) Other Subordinated Indebtedness.

          6.2      LIENS. Create, incur, assume, or suffer to exist, directly or
indirectly,  any Lien on or with  respect  to any of its  assets,  of any  kind,
whether now owned or  hereafter  acquired,  or any income or profits  therefrom,
except for Permitted Liens.

          6.3      RESTRICTIONS ON FUNDAMENTAL CHANGES.

                   (a) Enter  into  any  merger,  consolidation,   amalgamation,
reorganization, or recapitalization, or reclassify its Stock except that so long
as no  Default  or Event of  Default  exists or would  result  therefrom,  (i) a
Borrower or any Domestic Subsidiary thereof may merge with a Borrower,  provided
such Borrower is the continuing or surviving  Person,  (ii) the Loan Parties may
consummate a merger or similar  transaction in connection with a Permitted Kasco
Sale  Transaction and (iii) Loan Parties may effectuate a restructuring  for tax
purposes with the prior written consent of Agent,  such consent to be granted or
withheld by Agent in its sole and absolute discretion  (provided that so long as
such tax  restructuring  is not adverse to the interests of the Lender Group, as
determined  by  Agent in its  sole  discretion,  Agent's  consent  shall  not be
unreasonably withheld).

                   (b) Liquidate,  wind up, or  dissolve  itself  (or suffer any
liquidation or dissolution),

                   (c) Suspend  or go out  of a  substantial  portion  of its or
their business.

          6.4      DISPOSAL OF ASSETS.  Other than Permitted  Dispositions  or a
Permitted  Kasco  Sale  Transaction,   convey,  sell,  lease,  license,  assign,
transfer,  or otherwise dispose of (or enter into an agreement to convey,  sell,
lease, license,  assign, transfer, or otherwise dispose of) any of the assets of
any Loan Party or any Subsidiary of a Loan Party.

          6.5      CHANGE   NAME.   Change  any  Loan  Party's  or  any  of  its
Subsidiaries' name, organizational  identification number, state of organization
or organizational identity; PROVIDED, HOWEVER, that a Loan Party or a Subsidiary
of a Loan Party may change its name upon at least 30 days prior  written  notice
by  Administrative  Borrower to Agent of such change and so long as, at the time
of such written  notification,  such Loan Party or such Subsidiary  provides any
financing  statements  necessary to perfect and continue  perfected  the Agent's
Liens.

          6.6      NATURE OF  BUSINESS.  Make any  change in the nature of their
business as described in SCHEDULE 6.6 or acquire any  properties  or assets that
are not reasonably related to the conduct of such business activities.

          6.7      PREPAYMENTS  AND   AMENDMENTS.   Except  in  connection  with
Refinancing Indebtedness permitted by SECTION 6.1,

                                       27

                   (a) optionally  prepay,   redeem,   defease,   purchase,   or
otherwise acquire any Indebtedness of any Loan Party or any Subsidiary of a Loan
Party,  other than (i) the Obligations in accordance  with this  Agreement,  and
(ii) the Working  Capital  Indebtedness  in accordance  with the Working Capital
Credit Agreement,

                   (b) make any payment on account of Indebtedness that has been
contractually  subordinated in right of payment if such payment is not permitted
at such time under the subordination terms and conditions, or

                   (c) directly or indirectly,  amend, modify, alter,  increase,
or  change  any of the  terms or  conditions  of (i) the  Working  Capital  Loan
Documents  (except as specifically  permitted by the  Intercreditor  Agreement),
(ii) any other  agreement,  instrument,  document,  indenture,  or other writing
evidencing or concerning  Indebtedness permitted under SECTION 6.1, (iii) except
to the extent that such amendment, modification, alteration, increase, or change
could not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Change, any other Material Contract,  or (iv) its certificate
of  incorporation  or  bylaws  (or  other  similar  organizational   documents),
including,  without limitation, by the filing or modification of any certificate
of designation, or any agreement or arrangement entered into by it, with respect
to any of its Stock (including any shareholders'  agreement),  or enter into any
new  agreement  with  respect to any of its  Stock,  without  the prior  written
consent of Agent,  except any such  amendments,  modifications or changes or any
such new  agreements or  arrangements  pursuant to this clause (iv) that are not
adverse to the interests of any member of the Lender Group, or

                   (d) amend, modify or otherwise change its name,  jurisdiction
of organization,  organizational identification number or FEIN, without at least
twenty (20) days prior written notice to Agent.

          6.8      CHANGE OF  CONTROL.  Cause,  permit,  or suffer,  directly or
indirectly, any Change of Control.

          6.9      CONSIGNMENTS.  Consign any of their  Inventory or sell any of
their  Inventory on bill and hold,  sale or return,  sale on approval,  or other
conditional  terms of  sale,  in an  aggregate  amount  at any time  outstanding
exceeding $1,000,000.

          6.10     DISTRIBUTIONS.  Make any  distribution  or declare or pay any
dividends (in cash or other property, other than common Stock of the Parent) on,
or purchase,  acquire,  redeem,  or retire any of Parent's  Stock, of any class,
whether now or hereafter outstanding.

          6.11     ACCOUNTING  METHODS.  Modify or  change  their  fiscal  year,
method of  accounting  (other  than as may be  required  to  conform to GAAP) or
auditors,  or enter into, modify, or terminate any agreement currently existing,
or at any time hereafter  entered into, with any third party  accounting firm or
service  bureau  for the  preparation  or  storage  of Loan  Parties'  or  their
Subsidiaries'  accounting records without said accounting firm or service bureau
agreeing  to  provide  Agent  information  regarding  Loan  Parties'  and  their
Subsidiaries' financial condition.

          6.12     INVESTMENTS.  Except for Permitted  Investments,  directly or
indirectly,  make or acquire any Investment or incur any liabilities  (including
contingent  obligations)  for or in connection  with any  Investment;  PROVIDED,
HOWEVER,  that the Loan Parties shall not have Permitted Investments (other than
in the Cash Management  Accounts) in Deposit Accounts or Securities  Accounts in
an aggregate  amount in excess of $100,000 at any one time unless the applicable
Loan Party and the applicable securities  intermediary or bank have entered into
Control Agreements governing such Permitted Investments in order to perfect (and
further  establish) the Agent's Liens in such Permitted  Investments;  provided,
however,  the applicable  Loan Party shall transfer any Investment  with account
balance in excess of $25,000 to a Deposit Account or Securities  Account that is
subject to a Control  Agreement  within  one (1)  Business  Day of such  account
balance exceeding $25,000.  Subject to the foregoing proviso, Loan Parties shall

                                       28

not and shall not permit their  Domestic  Subsidiaries  to establish or maintain
any Deposit  Account or  Securities  Account  unless Agent shall have received a
Control Agreement in respect of such Deposit Account or Securities Account.

          6.13     TRANSACTIONS  WITH  AFFILIATES.  Directly or indirectly enter
into or permit to exist any transaction  with any Affiliate (which is not a Loan
Party) of any Loan Party or any Subsidiary (which is not a Loan Party) of a Loan
Party except for:

                   (a) transactions    (other   the   payment   of   management,
consulting,  monitoring,  or advisory  fees)  between the Loan  Parties or their
Subsidiaries,  on the one hand,  and any  Affiliate of the Loan Parties or their
Subsidiaries,  on the other hand,  so long as such  transactions  (i) are in the
ordinary  course of business  and  desirable  for the prudent  operation  of its
business,  upon fair and reasonable  terms, (ii) are fully disclosed to Agent if
they involve one or more  payments by any Loan Party or any of  Subsidiary  of a
Loan  Party in  excess  of  $250,000  for any  single  transaction  or series of
transactions,  and  (iii)  are no  less  favorable  to  Loan  Parties  or  their
Subsidiaries,  as  applicable,  than  would  be  obtained  in  an  arm's  length
transaction with a non-Affiliate; and

                   (b) the payment of reasonable fees, compensation, or employee
benefit  arrangements to, and any indemnity provided for the benefit of, outside
directors  of Parent in the  ordinary  course of business  and  consistent  with
industry practice.

          6.14     USE OF  PROCEEDS.  Use the  proceeds of the Term Loan for any
purpose  other  than to  repay,  in full,  the  outstanding  principal,  accrued
interest,  and  accrued  fees and  expenses  owing to Existing  Lender,  (ii) to
partially  repay the  outstanding  obligations  under the Bridge  Facility in an
amount equal to $56,659,776.38,  and (iii) to pay transactional fees, costs, and
expenses  incurred in connection with this Agreement,  the other Loan Documents,
and the transactions  contemplated  hereby and thereby,  and (b) consistent with
the terms and conditions hereof, for other lawful and permitted purposes.

          6.15     INVENTORY AND EQUIPMENT WITH BAILEES.  Except in the ordinary
course of  business,  store any  Inventory or Equipment of Loan Parties or their
Subsidiaries  at any time  now or  hereafter  with a  bailee,  warehouseman,  or
similar party.

          6.16     FINANCIAL COVENANTS.

                   (a) MINIMUM TTM EBITDA. Permit TTM EBITDA to be less than the
required amount set forth in the following  table for the applicable  period set
forth opposite thereto:

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

          Applicable Amount                     Applicable Period
-------------------------------------------------------------------------------

             $17,250,000                    For the 12- month period
                                            ending September 30, 2007
-------------------------------------------------------------------------------

             $17,250,000                    For the 12- month period
                                            ending December 31, 2007
-------------------------------------------------------------------------------

             $18,500,000                    For the 12- month period
                                              ending March 31, 2008
-------------------------------------------------------------------------------

             $19,500,000                    For the 12- month period
                                              ending June 30, 2008
-------------------------------------------------------------------------------

             $20,250,000                    For the 12- month period
                                            ending September 30, 2008
-------------------------------------------------------------------------------

             $20,750,000       For the 12- month period ending December 31, 2008
                                   and ending each fiscal quarter thereafter
-------------------------------------------------------------------------------

                                       29

                   (b) FIXED CHARGE COVERAGE RATIO. Have a Fixed Charge Coverage
Ratio, measured on a quarterly basis, less than the required amount set forth in
the following table for the applicable period set forth opposite thereto:

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

          Applicable Ratio                      Applicable Period
-------------------------------------------------------------------------------

              0.81:1.0                       For the 12- month period
                                            ending September 30, 2007
-------------------------------------------------------------------------------

              0.83:1.0                       For the 12- month period
                                             ending December 31, 2007
-------------------------------------------------------------------------------

              0.90:1.0                       For the 12- month period
                                              ending March 31, 2008
-------------------------------------------------------------------------------

              1.02:1.0                       For the 12- month period
                                               ending June 30, 2008
-------------------------------------------------------------------------------

              1.10:1.0                       For the 12- month period
                                            ending September 30, 2008
-------------------------------------------------------------------------------

              1.15:1.0             For the 12- month period ending December 31, 2008
                                       and ending each fiscal quarter thereafter
-------------------------------------------------------------------------------

                   (c)  LEVERAGE  RATIO.  Have a Leverage  Ratio,  measured on a
quarterly basis, more than the applicable ratio set forth in the following table
for the applicable date set forth opposite thereto:

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

          Applicable Ratio                       Applicable Date
-------------------------------------------------------------------------------

              5.22:1.0                          September 30, 2007
-------------------------------------------------------------------------------

              5.00:1.0                           December 31, 2007
-------------------------------------------------------------------------------

              4.90:1.0                            March 31, 2008
-------------------------------------------------------------------------------

              4.54:1.0                             June 30, 2008
-------------------------------------------------------------------------------

              4.12:1.0                          September 30, 2008
-------------------------------------------------------------------------------

              4.00:1.0                December 31, 2008 and the last day of each
                                            fiscal quarter thereafter
-------------------------------------------------------------------------------

                                       30

                   (d) CAPITAL  EXPENDITURES.  Make Capital  Expenditures in any
fiscal  year in excess of the  amount set forth in the  following  table for the
applicable period:

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

Fiscal Year 2007  Fiscal Year 2008   Fiscal Year 2009   Fiscal Year 2010  Fiscal Year 2011   Fiscal Year 2011
-------------------------------------------------------------------------------------------------------------

   $9,000,000        $9,000,000         $9,000,000         $9,000,000        $9,000,000         $9,000,000
-------------------------------------------------------------------------------------------------------------

;  PROVIDED,  HOWEVER,  that if during  any  fiscal  year the  amount of Capital
Expenditures  permitted  for  that  fiscal  year  is not  utilized,  50% of such
unutilized  amount  (exclusive of any amounts carried over from the prior fiscal
year) may be utilized in the immediately succeeding fiscal year.

          6.17     PARENT  AS  HOLDING  COMPANY.  Permit  Parent  to  incur  any
liabilities  (other than  liabilities  arising  under the Loan  Documents or the
Working Capital Loan Documents,  the Subordinated Debt Loan Documents or the WHX
Guaranty  Documents),  own or acquire  any assets  (other  than the Stock of its
Subsidiaries) or engage itself in any operations or business except as set forth
on SCHEDULE 6.17.

          6.18     EMPLOYEE BENEFITS.  (i) Engage, or permit any ERISA Affiliate
to engage,  in any transaction  described in Section 4069 of ERISA; (ii) engage,
or permit any ERISA Affiliate to engage, in any prohibited transaction described
in  Section  406 of  ERISA  or 4975 of the IRC for  which a  statutory  or class
exemption  is not  available  or a private  exemption  has not  previously  been
obtained  from the U.S.  Department  of Labor;  (iii)  adopt or permit any ERISA
Affiliate  to adopt any  employee  welfare  benefit  plan  within the meaning of
Section 3(1) of ERISA which provides  benefits to employees after termination of
employment  other than as required by Section  601 of ERISA or  applicable  law;
(iv) fail to make any contribution or payment to any Multiemployer Plan which it
or any ERISA  Affiliate may be required to make under any agreement  relating to
such Multiemployer Plan, or any law pertaining thereto;  (v) fail, or permit any
ERISA  Affiliate to fail, to pay any required  installment  or any other payment
required  under  Section  412 of the IRC on or  before  the due  date  for  such
installment  or other  payment;  or (vi)  merge  or  otherwise  consolidate  any
Employee  Plan of any Loan Party with any other  Employee Plan without the prior
written  consent of Agent,  such  consent to be granted or  withheld by Agent in
sole  and  absolute  discretion  (provided  that  so  long  as  such  merger  or
consolidation is not adverse to the interests of the Lender Group, as determined
by Agent in its sole  discretion,  Agent's  consent  shall  not be  unreasonably
withheld).

          6.19     LIMITATIONS  ON  DIVIDENDS  AND  OTHER  PAYMENT  RESTRICTIONS
AFFECTING  SUBSIDIARIES.  Create or otherwise cause,  incur,  assume,  suffer or
permit to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any Subsidiary of any Loan Party (i) to pay dividends
or to make any other  distribution  on any  shares  of Stock of such  Subsidiary
owned by any Loan Party or any of its Subsidiaries,  (ii) to pay or prepay or to
subordinate any Indebtedness  owed to any Loan Party or any of its Subsidiaries,
(iii) to make loans or advances to any Loan Party or any of its  Subsidiaries or
(iv) to transfer  any of its  property or assets to any Loan Party or any of its
Subsidiaries,  or permit  any of its  Subsidiaries  to do any of the  foregoing;
PROVIDED,  HOWEVER,  that  nothing in any of clauses  (i)  through  (iv) of this
SECTION 6.19 shall prohibit or restrict compliance with:

                   (a) this Agreement, the other Loan Documents, and the Working
                   Capital Loan Documents;

                   (b)  any  applicable  law,  rule  or  regulation   (including
                   applicable   currency   control  laws  and  applicable  state
                   corporate  statutes  restricting  the payment of dividends in
                   certain circumstances);

                                       31

                   (c) in the case of clause (iv),  any agreement  setting forth
                   customary  restrictions  on  the  subletting,  assignment  or
                   transfer of any property or asset that is leased or licensed;
                   or

                   (d) in the case of clause (iv), any agreement,  instrument or
                   other document evidencing a Permitted Lien that restricts, on
                   customary  terms,  the  transfer  of any  property  or assets
                   subject thereto.

          6.20     LEASE  OBLIGATIONS.  Create,  incur or suffer  to  exist,  or
permit  any of its  Subsidiaries  to  create,  incur or  suffer  to  exist,  any
obligations  as  lessee  (i) for the  payment  of rent for any real or  personal
property in connection with any sale and leaseback transaction,  or (ii) for the
payment of rent for any real or personal  property under leases or agreements to
lease  other  than (A)  Capital  Lease  Obligations  which  would  not cause the
aggregate amount of all obligations  under Capital Leases entered into after the
Closing Date owing by all Loan Parties and their Subsidiaries in any fiscal year
to exceed the amounts SECTION 6.16(D), and (B) Operating Lease Obligations which
would not cause the aggregate amount of all Operating Lease Obligations owing by
all Loan Parties and their Subsidiaries in any fiscal year to exceed $5,000,000.

          6.21     FEDERAL  RESERVE  REGULATIONS.  Permit the Term Loan,  or the
proceeds  thereof,  to be used for any purpose that would cause the Term Loan to
be a margin loan under the  provisions  of  Regulation T, U or X of the Board of
Governors of the Federal Reserve System.

          6.22     INVESTMENT COMPANY ACT OF 1940. Engage in any business, enter
into any transaction,  use any securities or take any other action or permit any
of its  Subsidiaries  to do any of the foregoing,  that would cause it or any of
its  Subsidiaries  to become  subject to the  registration  requirements  of the
Investment  Company Act of 1940, as amended,  by virtue of being an  "investment
company" or a company "controlled" by an "investment company" not entitled to an
exemption within the meaning of such Act.

7.        EVENTS OF DEFAULT.

                   Any one or more of the following  events shall  constitute an
event of default (each, an "EVENT OF DEFAULT") under this Agreement:

          7.1      If any Loan Party fail to pay when due and  payable,  or when
declared due and payable,  (a) all or any portion of the Obligations  consisting
of interest,  fees,  or charges due the Lender  Group,  reimbursement  of Lender
Group Expenses,  or other amounts (other than any portion  thereof  constituting
principal) constituting  Obligations (including any portion thereof that accrues
after the  commencement  of an  Insolvency  Proceeding,  regardless  of  whether
allowed  or  allowable  in whole  or in part as a claim  in any such  Insolvency
Proceeding),  and such failure continues for a period of 3 Business Days, or (b)
all or any portion of the principal of the Obligations;

          7.2      If any Loan Party or any Subsidiary of any Loan Party;

                   (a)  fails  to  perform  or  observe  any  covenant  or other
agreement contained in any of SECTIONS 2.5, 5.2, 5.3, 5.4, 5.5, 5.8, 5.12, 5.14,
5.16,  5.17 and 6.1 through 6.22 of this  Agreement or Section 6 of the Security
Agreement;  provided,  that no more than two (2) times during any fiscal year of
Parent,  any Loan  Party  may fail to  deliver  in a  timely  manner a  delivery
required  under  SECTIONS 5.2, 5.3 or 5.4, if such delivery shall occur no later
than two (2) Business Days following notice by Agent;

                   (b)  fails  to  perform  or  observe  any  covenant  or other
agreement  contained in any of SECTIONS 5.6, 5.7,  5.9,  5.10,  5.11 and 5.15 of
this  Agreement  and such  failure  continues  for a period of 10 days after the
earlier of (i) the date on which such  failure  shall first  become known to any
officer  of any  Loan  Party,  or  (ii)  written  notice  thereof  is  given  to
Administrative Borrower by Agent;

                                       32

                   (c)  fails  to  perform  or  observe  any  covenant  or other
agreement contained in this Agreement, or in any of the other Loan Documents, in
each case,  other than any such  covenant  or  agreement  that is the subject of
another provision of this SECTION 7 (in which event such other provision of this
SECTION 7 shall  govern),  and such  failure  continues  for a period of 20 days
after the earlier of (i) the date on which such failure shall first become known
to any officer of any Loan Party,  or (ii)  written  notice  thereof is given to
Administrative Borrower by Agent.

          7.3      If any  material  portion  of any Loan  Party's or any of its
Subsidiaries'  assets  is  attached,  seized,  subjected  to a writ or  distress
warrant, or is levied upon, or comes into the possession of any third Person and
the same is not discharged before the earlier of 30 days after the date it first
arises or 5 days prior to the date on which such property or asset is subject to
forfeiture by such Loan Party or the applicable Subsidiary;

          7.4      If an Insolvency Proceeding is commenced by any Loan Party or
any Subsidiary of a Loan Party;

          7.5      If an  Insolvency  Proceeding  is commenced  against any Loan
Party or any Subsidiary of a Loan Party,  and any of the following events occur:
(a) the applicable Loan Party or Subsidiary  consents to the institution of such
Insolvency  Proceeding  against it, (b) the petition  commencing  the Insolvency
Proceeding  is  not  timely  controverted,   (c)  the  petition  commencing  the
Insolvency  Proceeding is not  dismissed  within 60 calendar days of the date of
the filing  thereof,  (d) an interim  trustee is appointed to take possession of
all or any substantial portion of the properties or assets of, or to operate all
or any substantial  portion of the business of, any Loan Party or any Subsidiary
of a Loan  Party,  or (e) an order for relief  shall have been issued or entered
therein;

          7.6      If any  Loan  Party  or any  Subsidiary  of a Loan  Party  is
enjoined,  restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs;

          7.7      If one or more  judgments,  orders,  or awards  involving  an
aggregate  amount of $250,000,  or more  (except to the extent fully  covered by
insurance  pursuant  to which the  insurer has  accepted  liability  therefor in
writing)  shall be entered or filed against any Loan Party or any  Subsidiary of
any Loan Party or with respect to any of their respective  assets,  and the same
is not released, discharged, bonded against, or stayed pending appeal before the
earlier of 30 days after the date it first arises or 5 days prior to the date on
which such asset is subject to being  forfeited by the applicable  Loan Party or
the applicable Subsidiary;

          7.8      If there is a default in one or more  agreements to which any
Loan Party or any  Subsidiary  of a Loan Party is a party with one or more third
Persons relative to Indebtedness of any Loan Party or any Subsidiary of any Loan
Party involving an aggregate  amount of $250,000,  or more, and such default (i)
occurs at the final maturity of the obligations thereunder, or (ii) results in a
right by such third Person(s),  irrespective of whether exercised, to accelerate
the  maturity  of  the  applicable  Loan  Party's  or  Subsidiary's  obligations
thereunder;

          7.9      If any warranty, representation,  material written statement,
or material  Record made herein or in any other Loan  Document or  delivered  to
Agent or any Lender in connection with this Agreement or any other Loan Document
proves  to be untrue  in any  material  respect  (except  that such  materiality
qualifier  shall not be applicable to any  representations  and warranties  that
already are qualified or modified by  materiality in the text thereof) as of the
date of issuance or making or deemed making thereof;

          7.10     If the  obligation  of any  Guarantor  under the  Guaranty is
limited or  terminated  by  operation of law or by such  Guarantor,  or any such
Guarantor becomes the subject of an Insolvency Proceeding;

          7.11     If the Security  Agreement,  the Canadian Security Agreement,
any Mortgage or any other Loan Document  that purports to create a Lien,  shall,
for any reason, fail or cease to create a valid and perfected and, except to the

                                       33

extent permitted by the terms hereof or thereof, first priority Lien (subject to
Permitted  Priority  Liens) on or security  interest in the  Collateral  covered
hereby or thereby,  except (a) as a result of a  disposition  of the  applicable
Collateral in a transaction  permitted  under this  Agreement or (b) solely as a
result of the gross negligence of Agent;

          7.12     Any provision of any Loan Document  shall at any time for any
reason be declared to be null and void  (except  solely as a result of the gross
negligence  of  Agent),  or the  validity  or  enforceability  thereof  shall be
contested by any Loan Party or any  Subsidiary of a Loan Party,  or a proceeding
shall be commenced by any Loan Party or any  Subsidiary  of a Loan Party,  or by
any  Governmental  Authority  having  jurisdiction  over any  Loan  Party or any
Subsidiary   of  a  Loan  Party,   seeking  to  establish   the   invalidity  or
unenforceability  thereof,  or any Loan Party or any  Subsidiary of a Loan Party
shall deny that it has any liability or obligation purported to be created under
any Loan Document;

          7.13     Any material damage to, or loss, theft or destruction of, any
Collateral,  whether or not  insured,  or any strike,  lockout,  labor  dispute,
embargo,  condemnation,  act of God or public  enemy,  or other  casualty  which
causes,  for more than thirty (30)  consecutive days and which is not reasonably
capable of remedy within such period,  the cessation or substantial  curtailment
of revenue  producing  activities at any facility of any Loan Party, if any such
event or circumstance  could  reasonably be expected to have a Material  Adverse
Effect; or

          7.14     Any  cessation of a  substantial  part of the business of the
Parent  or any  of its  Subsidiaries,  taken  as a  whole,  for a  period  which
materially and adversely affects the ability of such business to be continued on
a profitable basis.

          7.15     Any Loan Party or any of its ERISA Affiliates shall have made
a complete or partial withdrawal from a Multiemployer  Plan, and, as a result of
such  complete  or  partial  withdrawal,  any  Loan  Party  or any of its  ERISA
Affiliates incurs a withdrawal liability in an annual amount exceeding $250,000;
or a  Multiemployer  Plan enters  reorganization  status  under  Section 4241 of
ERISA, and, as a result thereof any Loan Party's or any of its ERISA Affiliates'
annual  contribution  requirements  with  respect  to  such  Multiemployer  Plan
increases in an annual amount exceeding $250,000; or

          7.16     Any Termination Event with respect to any Employee Plan shall
have  occurred,  and, 30 days after notice  thereof shall have been given to any
Loan Party by any Agent, (i) such Termination  Event (if correctable)  shall not
have been  corrected,  and (ii) the then current value of such  Employee  Plan's
vested  benefits  exceeds the then  current  value of assets  allocable  to such
benefits  in such  Employee  Plan by more than  $250,000  (or,  in the case of a
Termination Event involving  liability under Section 409, 502(i),  502(l),  515,
4062,  4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 of the IRC,
which  liabilities  will not be  aggregated,  the liability is in excess of such
amount).

8.        THE LENDER GROUP'S RIGHTS AND REMEDIES.

          8.1      RIGHTS  AND  REMEDIES.  Upon the  occurrence,  and during the
continuation,  of an Event of Default,  the Required  Lenders (at their election
but without  notice of their  election  and without  demand) may  authorize  and
instruct  Agent to do any one or more of the  following  on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender  Group),  all of which are authorized by Parent
and each of the Borrowers:

                   (a)  Declare all or any portion of the  Obligations,  whether
evidenced by this Agreement,  by any of the other Loan Documents,  or otherwise,
immediately due and payable;

                   (b)  Terminate  this  Agreement  and  any of the  other  Loan
Documents as to any future  liability or  obligation  of the Lender  Group,  but
without  affecting  any of the  Agent's  Liens  in the  Collateral  and  without
affecting the Obligations; and

                                       34

                   (c)  The  Lender  Group  shall  have  all  other  rights  and
remedies available at law or in equity or pursuant to any other Loan Document.

The foregoing to the contrary notwithstanding,  upon the occurrence of any Event
of Default  described in SECTION 7.4 or SECTION 7.5, in addition to the remedies
set forth  above,  without any notice to Loan Parties or any other Person or any
act by the Lender Group and the Obligations then outstanding,  together with all
accrued and unpaid interest thereon and all fees and all other amounts due under
this Agreement and the other Loan Documents, shall automatically and immediately
become due and payable,  without presentment,  demand, protest, or notice of any
kind, all of which are expressly waived by Parent and each of the Borrowers.

          8.2      REMEDIES  CUMULATIVE.  The rights and  remedies of the Lender
Group under this Agreement,  the other Loan Documents,  and all other agreements
shall be  cumulative.  The Lender Group shall have all other rights and remedies
not inconsistent  herewith as provided under the Code, by law, or in equity.  No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the  Lender  Group of any  Event of  Default  shall be deemed a
continuing  waiver.  No delay by the Lender  Group  shall  constitute  a waiver,
election, or acquiescence by it.

9.        TAXES AND EXPENSES.

                   If any Loan Party or its Subsidiaries  fail to pay any monies
(whether  taxes,  assessments,  insurance  premiums,  or,  in the case of leased
properties or assets,  rents or other amounts  payable under such leases) due to
third  Persons,  or fails to make any deposits or furnish any required  proof of
payment or deposit,  all as required  under the terms of this  Agreement,  then,
Agent, in its sole discretion and without prior notice to any Loan Party, may do
any or all of the  following:  (a) make payment of the same or any part thereof,
or (b) in the case of the failure to comply with SECTION 5.8 hereof,  obtain and
maintain  insurance  policies of the type  described in SECTION 5.8 and take any
action with respect to such  policies as Agent deems  prudent.  Any such amounts
paid by Agent shall constitute Lender Group Expenses and any such payments shall
not constitute an agreement by the Lender Group to make similar  payments in the
future  or a waiver  by the  Lender  Group of any Event of  Default  under  this
Agreement.  Agent need not inquire as to, or contest the  validity  of, any such
expense,  tax,  or Lien and the  receipt  of the usual  official  notice for the
payment  thereof shall be conclusive  evidence that the same was validly due and
owing.

10.       WAIVERS; INDEMNIFICATION.

          10.1     DEMAND; PROTEST; ETC. Except to the extent expressly provided
herein,  Parent and each  Borrower  waives (on  behalf of  themselves  and their
respective  Subsidiaries) demand,  protest, notice of protest, notice of default
or dishonor, notice of payment and nonpayment,  nonpayment at maturity, release,
compromise, settlement, extension, or renewal of documents, instruments, chattel
paper, and guarantees at any time held by the Lender Group on which Parent, such
Borrower or any Subsidiary may in any way be liable.

          10.2     THE LENDER GROUP'S LIABILITY FOR COLLATERAL.  Parent and each
Borrower   hereby  agrees  (on  behalf  of  themselves   and  their   respective
Subsidiaries) that: (a) so long as Agent complies with its obligations,  if any,
under the Code,  the  Lender  Group  shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral,  (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause,  (iii) any
diminution  in the value  thereof,  or (iv) any act or default  of any  carrier,
warehouseman,  bailee,  forwarding  agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Loan Parties.

          10.3     INDEMNIFICATION.   Parent  and  each  Borrower,  jointly  and
severally, shall pay, indemnify, defend, and hold the Agent-Related Persons, the
Lender-Related  Persons,  and each Participant  (each, an "INDEMNIFIED  PERSON")
harmless (to the fullest  extent  permitted by law) from and against any and all
claims,  demands,  suits,  actions,  investigations,  proceedings,  liabilities,
fines, costs, penalties,  and damages, and all reasonable fees and disbursements
of attorneys,  experts, or consultants and all other costs and expenses actually

                                       35

incurred in connection  therewith or in connection  with the enforcement of this
indemnification  (as and when they are incurred and irrespective of whether suit
is brought),  at any time asserted against,  imposed upon, or incurred by any of
them (a) in  connection  with or as a result  of or  related  to the  execution,
delivery,   enforcement,   performance,   or   administration   (including   any
restructuring  or workout with  respect  hereto) of this  Agreement,  any of the
other Loan Documents, or the transactions  contemplated hereby or thereby or the
monitoring  of the Loan  Parties' and their  Subsidiaries'  compliance  with the
terms of the Loan Documents, (b) with respect to any investigation,  litigation,
or proceeding related to this Agreement,  any other Loan Document, or the use of
the  proceeds  of the credit  provided  hereunder  (irrespective  of whether any
Indemnified  Person  is a  party  thereto),  or any  act,  omission,  event,  or
circumstance  in any  manner  related  thereto,  and (c) in  connection  with or
arising out of any presence or release of Hazardous  Materials at, on, under, to
or from any assets or properties  owned,  leased or operated by Parent or any of
its Subsidiaries or any  Environmental  Actions,  Environmental  Liabilities and
Costs or Remedial Actions related in any way to any such assets or properties of
Parent  or  any  of its  Subsidiaries  (each  and  all  of  the  foregoing,  the
"INDEMNIFIED  LIABILITIES").  The  foregoing  to the  contrary  notwithstanding,
Parent and the  Borrowers  shall have no obligation  to any  Indemnified  Person
under this SECTION 10.3 with respect to any  Indemnified  Liability that a court
of competent  jurisdiction  finally  determines  to have resulted from the gross
negligence  or  willful  misconduct  of such  Indemnified  Person  or from  such
Indemnified   Person's  breach  of  its  material  obligations  under  the  Loan
Documents.  This provision  shall survive the  termination of this Agreement and
the repayment of the Obligations. If any Indemnified Person makes any payment to
any other  Indemnified  Person with  respect to an  Indemnified  Liability as to
which Parent or the Borrowers were required to indemnify the Indemnified  Person
receiving such payment,  the Indemnified  Person making such payment is entitled
to be  indemnified  and  reimbursed  by Parent and the  Borrowers  with  respect
thereto.  WITHOUT  LIMITATION,  THE  FOREGOING  INDEMNITY  SHALL  APPLY  TO EACH
INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED  LIABILITIES WHICH IN WHOLE OR IN
PART ARE  CAUSED  BY OR  ARISE  OUT OF ANY  NEGLIGENT  ACT OR  OMISSION  OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

11.       NOTICES.

                   Unless otherwise  provided in this Agreement,  all notices or
demands by Parent, Borrowers or Agent to the other relating to this Agreement or
any other Loan Document shall be in writing and (except for financial statements
and other informational documents which may be sent by first-class mail, postage
prepaid)  shall be personally  delivered or sent by registered or certified mail
(postage prepaid, return receipt requested),  overnight courier, electronic mail
(at such email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance  herewith),  or telefacsimile to Borrowers
in care of  Administrative  Borrower  or to  Agent,  as the case may be,  at its
address set forth below:

                   If to Administrative     BAIRNCO CORPORATION
                   Borrower:                300 Primera Blvd.
                                            Suite 432
                                            Lake Mary, Florida  32746
                                            Attn:  Chief Executive Officer
                                            Fax No.:  407-875-3398

                   With copies to:          OLSHAN GRUNDMAN FROME ROSENZWEIG &
                                            WOLOSKY LLP
                                            65 East 55th Street
                                            New York , New York 10022-1106
                                            Attn:     Steve Wolosky, Esq.
                                            Fax No.: 212-451-2222

                                       36

                   If to Agent:             ABLECO FINANCE LLC
                                            299 Park Avenue
                                            22nd Floor
                                            New York, New York  10171
                                            Attn:     Daniel E. Wolf
                                            Fax No.: 212-891-1549

                   With copies to:          SCHULTE ROTH & ZABEL LLP
                                            919 Third Avenue
                                            New York, New York  10022
                                            Attn:     Eliot Relles, Esq.
                                            Fax No.: 212-593-5955

                   Agent and Parent and the  Borrowers may change the address at
which  they are to  receive  notices  hereunder,  by  notice in  writing  in the
foregoing  manner  given to the other  party.  All  notices or  demands  sent in
accordance  with this SECTION 11, other than notices by Agent in connection with
enforcement  rights  against the  Collateral  under the  provisions of the Code,
shall be deemed  received  on the  earlier  of the date of actual  receipt  or 3
Business  Days after the deposit  thereof in the mail.  Parent and each Borrower
acknowledges  and agrees (on behalf of themselves and their  Subsidiaries)  that
notices sent by the Lender Group in connection  with the exercise of enforcement
rights against  Collateral under the provisions of the Code shall be deemed sent
when deposited in the mail or personally delivered,  or, where permitted by law,
transmitted by telefacsimile or any other method set forth above.

12.       CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

                   (a)  THE  VALIDITY  OF THIS  AGREEMENT  AND  THE  OTHER  LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN  DOCUMENT),  THE  CONSTRUCTION,  INTERPRETATION,  AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

                   (b)  THE  PARTIES  AGREE  THAT  ALL  ACTIONS  OR  PROCEEDINGS
ARISING IN CONNECTION  WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
TRIED AND LITIGATED ONLY IN THE STATE AND TO THE EXTENT  PERMITTED BY APPLICABLE
LAW,  FEDERAL  COURTS  LOCATED  IN THE  COUNTY OF NEW  YORK,  STATE OF NEW YORK;
PROVIDED,  HOWEVER,  THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER  PROPERTY  MAY  BE  BROUGHT,  AT  AGENT'S  OPTION,  IN THE  COURTS  OF ANY
JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR
OTHER  PROPERTY MAY BE FOUND.  EACH OF THE PARTIES  HERETO WAIVE,  TO THE EXTENT
PERMITTED  UNDER  APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON  CONVENIENS  OR TO OBJECT TO VENUE TO THE EXTENT ANY  PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 12(B).

                   (c)  EACH OF THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE  TRANSACTIONS  CONTEMPLATED  THEREIN,
INCLUDING  CONTRACT CLAIMS,  TORT CLAIMS,  BREACH OF DUTY CLAIMS,  AND ALL OTHER
COMMON LAW OR STATUTORY  CLAIMS.  EACH OF THE PARTIES HERETO REPRESENT THAT EACH
HAS REVIEWED  THIS WAIVER AND EACH  KNOWINGLY  AND  VOLUNTARILY  WAIVES ITS JURY

                                       37

TRIAL  RIGHTS  FOLLOWING  CONSULTATION  WITH  LEGAL  COUNSEL.  IN THE  EVENT  OF
LITIGATION,  A COPY OF THIS  AGREEMENT  MAY BE FILED AS A WRITTEN  CONSENT  TO A
TRIAL BY THE COURT.

13.       ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

          13.1     ASSIGNMENTS AND PARTICIPATIONS.

                   (a)  Each  Lender  may with the  written  consent  of  Agent,
assign to one or more other  lenders or other  entities  all or a portion of its
rights and obligations  under this Agreement with respect to all or a portion of
its Term Loan Commitment and any Term Loan made by it; PROVIDED,  HOWEVER,  that
(i) such  assignment is in an amount which is at least  $1,000,000 or a multiple
of $100,000 in excess  thereof (or the  remainder of such  Lender's  Commitment)
(except such minimum  amount shall not apply to an assignment by a Lender to (x)
a Lender,  an Affiliate of such Lender or a Related Fund of such Lender or (y) a
group of new Lenders, each of whom is an Affiliate or Related Fund of each other
to the extent the aggregate  amount to be assigned to all such new Lenders is at
least $1,000,000 or a multiple of $100,000 in excess thereof),  (ii) the parties
to each  such  assignment  shall  execute  and  deliver  to the  Agent,  for its
acceptance,  an Assignment and  Acceptance,  together with any  promissory  note
subject to such assignment and such parties shall deliver to the Agent,  for the
benefit of the Agent,  a processing  and  recordation  fee of $3,500 (except the
payment of such fee shall not be required in connection  with an assignment by a
Lender to a  Lender,  an  Affiliate  of such  Lender  or a Related  Fund of such
Lender)  and (iii) no written  consent of the Agent  shall be  required  if such
assignment is in connection with any merger,  consolidation,  sale, transfer, or
other  disposition  of all or any  substantial  portion of the  business or loan
portfolio of such Lender. Upon such execution, delivery and acceptance, from and
after the effective date  specified in each  Assignment  and  Acceptance,  which
effective  date shall be at least 3 Business Days after the delivery  thereof to
the  Agent  (or such  shorter  period as shall be agreed to by the Agent and the
parties to such assignment), (A) the assignee thereunder shall become a "Lender"
hereunder  and, in addition to the rights and  obligations  hereunder held by it
immediately  prior to such  effective  date,  have the  rights  and  obligations
hereunder  that  have  been  assigned  to it  pursuant  to such  Assignment  and
Acceptance and (B) the assigning  Lender  thereunder  shall,  to the extent that
rights and  obligations  hereunder  have been  assigned  by it  pursuant to such
Assignment  and  Acceptance,  relinquish  its  rights and be  released  from its
obligations  under  this  Agreement  (and,  in the  case  of an  Assignment  and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and  obligations  under this  Agreement,  such Lender  shall cease to be a party
hereto).

                   (b)  By  executing   and   delivering   an   Assignment   and
Acceptance,  the  assigning  Lender and the assignee  thereunder  confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such  Assignment  and  Acceptance,  the  assigning  Lender  makes no
representation  or warranty  and assumes no  responsibility  with respect to any
statements,  warranties or  representations  made in or in connection  with this
Agreement  or any other Loan  Document  or the  execution,  legality,  validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document  furnished  pursuant  hereto;  (ii) the assigning  Lender makes no
representation  or warranty  and assumes no  responsibility  with respect to the
financial  condition  of any  Loan  Party  or any  of  its  Subsidiaries  or the
performance or observance by any Loan Party of any of its obligations under this
Agreement  or any other Loan  Document  furnished  pursuant  hereto;  (iii) such
assignee  confirms  that it has received a copy of this  Agreement and the other
Loan Documents, together with such other documents and information it has deemed
appropriate  to make its own credit  analysis  and  decision  to enter into such
Assignment and Acceptance;  (iv) such assignee will,  independently  and without
reliance  upon the assigning  Lender,  any Agent or any Lender and based on such
documents and information as it shall deem appropriate at the time,  continue to
make its own  credit  decisions  in  taking  or not  taking  action  under  this
Agreement  and  the  other  Loan  Documents;  (v)  such  assignee  appoints  and
authorizes  the Agent to take such action as agent on its behalf and to exercise
such powers under this  Agreement and the other Loan  Documents as are delegated
to the Agent by the terms hereof and thereof,  together  with such powers as are
reasonably  incidental hereto and thereto; and (vi) such assignee agrees that it

                                       38

will perform in accordance with their terms all of the obligations  which by the
terms  of this  Agreement  and the  other  Loan  Documents  are  required  to be
performed by it as a Lender.

                   (c)  The Agent  shall,  acting  solely for this  purpose as a
non-fiduciary agent of the Borrowers, maintain, or cause to be maintained at the
Payment  Office,  a copy of each  Assignment  and  Acceptance  delivered  to and
accepted by it and a register (the  "REGISTER") for the recordation of the names
and addresses of the Lenders and the Commitments of, and the principal amount of
the Term Loan (and stated interest  thereon) (the  "REGISTERED  LOANS") owing to
each Lender from time to time.  The entries in the Register  shall be conclusive
and binding for all purposes,  absent  manifest  error,  and the Borrowers,  the
Agent and the  Lenders  may treat  each  Person  whose name is  recorded  in the
Register as a Lender hereunder for all purposes of this Agreement.  The Register
shall be available for inspection by the Administrative  Borrower and any Lender
at any reasonable time and from time to time upon reasonable prior notice. Agent
shall use commercially reasonable efforts to notify the Administrative Borrower,
within five (5) days prior to the  effectiveness of an Assignment and Acceptance
(except in connection  with an assignment by a Lender to a Lender,  an Affiliate
of such Lender or a Related Fund of such Lender in which case no notice shall be
given), of the identity of such assignee and the Term Loan amount being assigned
(it being understood and agreed that the failure by Agent to give such notice to
Administrative  Borrower shall not affect Agent's and Lenders' rights  hereunder
or Borrowers' obligations hereunder).

                   (d)  Upon receipt by the Agent of a completed  Assignment and
Acceptance and the processing  and  recordation  fee, and subject to any consent
required from the Agent,  the Agent shall accept such  assignment and record the
information contained therein in the Register.

                   (e)  A  Registered  Loan (and the  registered  note,  if any,
evidencing  the  same)  may be  assigned  or sold in  whole  or in part  only by
registration  of such  assignment or sale on the Register  (and each  registered
note shall expressly so provide).  Any assignment or sale of all or part of such
Registered  Loan (and the registered  note, if any,  evidencing the same) may be
effected  only by  registration  of  such  assignment  or sale on the  Register,
together with the surrender of the registered note, if any,  evidencing the same
duly endorsed by (or  accompanied by a written  instrument of assignment or sale
duly executed by) the holder of such registered note, whereupon,  at the request
of the designated assignee(s) or transferee(s), one or more new registered notes
in the same  aggregate  principal  amount  shall  be  issued  to the  designated
assignee(s) or transferee(s). Prior to the registration of assignment or sale of
any Registered Loan (and the registered note, if any,  evidencing the same), the
Agent  shall  treat the  Person  in whose  name  such  Registered  Loan (and the
registered  note, if any,  evidencing the same) is registered on the Register as
the  owner  thereof  for  the  purpose  of  receiving   all  payments   thereon,
notwithstanding notice to the contrary.

                   (f)  In the event that any Lender sells  participations  in a
Registered  Loan, such Lender shall,  acting for this purpose as a non-fiduciary
agent of the  Borrowers,  maintain a register on which it enters the name of all
participants  in the Registered  Loans held by it and the principal  amount (and
stated  interest  thereon)  of the  portion of the  Registered  Loan that is the
subject of the  participation  (the "PARTICIPANT  REGISTER").  A Registered Loan
(and the registered  note, if any,  evidencing the same) may be  participated in
whole or in part only by registration of such  participation  on the Participant
Register  (and  each   registered   note  shall   expressly  so  provide).   Any
participation  of  such  Registered  Loan  (and  the  registered  note,  if any,
evidencing  the  same)  may  be  effected  only  by  the  registration  of  such
participation  on the Participant  Register.  The Participant  Register shall be
available for  inspection by the  Administrative  Borrower and any Lender at any
reasonable time and from time to time upon reasonable prior notice.

                   (g)  Any  Non-U.S.  Lender who  purchases  or is  assigned or
participates  in any portion of such  Registered  Loan shall comply with SECTION
16.

                   (h)  Each Lender may sell participations to one or more banks
or other entities in or to all or a portion of its rights and obligations  under
this Agreement and the other Loan Documents (including,  without limitation, all
or a portion of its  Commitments  and the  portion of the Term Loan made by it);
PROVIDED,  that (i) such Lender's  obligations  under this Agreement  (including

                                       39

without  limitation,  its  Commitments  hereunder)  and the other Loan Documents
shall remain unchanged;  (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, and the Borrowers,
the Agent and the other Lenders shall  continue to deal solely and directly with
such Lender in connection with such Lender's  rights and obligations  under this
Agreement and the other Loan  Documents;  and (iii) a  participant  shall not be
entitled  to require  such  Lender to take or omit to take any action  hereunder
except (A) action  directly  effecting an  extension  of the  maturity  dates or
decrease in the principal amount of the Term Loan, (B) action directly effecting
an extension  of the due dates or a decrease in the rate of interest  payable on
the Term Loan or the fees payable under this Agreement,  or (C) actions directly
effecting a release of all or a  substantial  portion of the  Collateral  or any
Loan  Party  (except  as set  forth  in of  this  Agreement  or any  other  Loan
Document). The Loan Parties agree that each participant shall be entitled to the
benefits of SECTION 2.11 and SECTION 15.11 of this Agreement with respect to its
participation in any portion of the Commitments and the Term Loan as if it was a
Lender.

          13.2     SUCCESSORS.  This  Agreement  shall  bind  and  inure  to the
benefit  of the  respective  successors  and  assigns  of each  of the  parties;
PROVIDED,  HOWEVER,  that no Loan Party may assign  this  Agreement  or any Loan
Document or any rights or duties  hereunder or  thereunder  without the Lenders'
prior written consent and any prohibited  assignment shall be absolutely void AB
INITIO.  No consent to  assignment  by the Lenders  shall release any Loan Party
from its  Obligations.  A Lender may assign  this  Agreement  and the other Loan
Documents and its rights and duties hereunder and thereunder pursuant to SECTION
13.1  hereof  and no  consent  or  approval  by any Loan  Party is  required  in
connection with any such assignment.

14.       AMENDMENTS; WAIVERS.

          14.1     AMENDMENTS  AND  WAIVERS.  No  amendment  or  waiver  of  any
provision  of this  Agreement  or any other Loan  Document,  and no consent with
respect to any departure by any Loan Party therefrom,  shall be effective unless
the same shall be in writing and signed by the Required  Lenders (or by Agent at
the written  request of the Required  Lenders) and  Administrative  Borrower (on
behalf  of all  Loan  Parties)  and then any such  waiver  or  consent  shall be
effective,  but only in the specific  instance and for the specific  purpose for
which given; PROVIDED, HOWEVER, that no such waiver, amendment, or consent shall
do any of the following:

                   (a)  increase the amount or extend the expiration date of any
Commitment  of any Lender  without the written  consent of each Lender  directly
affected thereby,

                   (b)  postpone  or delay any date fixed by this  Agreement  or
any other Loan Document for any payment of principal,  interest,  fees, or other
amounts  due  hereunder  or under any other Loan  Document  without  the written
consent of each Lender directly affected thereby,

                   (c)  forgive the principal of, or reduce the rate of interest
on, any loan or other extension of credit hereunder, or reduce any fees or other
amounts payable  hereunder or under any other Loan Document  without the written
consent of each Lender directly affected thereby,

                   (d)  amend or modify the Pro Rata Share that is  required  to
take any action hereunder without the written consent of each Lender,

                   (e)  amend or modify this  Section or any  provision  of this
Agreement  providing  for  consent or other  action by all  Lenders  without the
written consent of each Lender,

                   (f)  other  than  as  permitted  by  SECTION  15.11,  release
Agent's Lien in and to any of the Collateral without the written consent of each
Lender,

                   (g)  amend or modify the definition of "Required  Lenders" or
"Pro Rata Share" without the written consent of each Lender,

                                       40

                   (h)  contractually  subordinate  any  of  the  Agent's  Liens
without the written consent of each Lender,

                   (i)  other  than in  connection  with a merger,  liquidation,
dissolution  or sale of such Person  expressly  permitted by the terms hereof or
the other Loan Documents, release (A) a Borrower or (B) all or substantially all
of the  Guarantors  from any  obligation for the payment of money under the Loan
Documents, in each case without the written consent of each Lender,

                   (j)  amend any of the provisions of SECTION 2.3(B)(I) OR (II)
without the written consent of each Lender,

                   (k)  amend or modify the definitions of Term Loan Amount,  or
amend or modify SECTION 2.1 without the written consent of each Lender, or

                   (l)  amend,  modify,  or waive any  provision  of  SECTION 15
pertaining to Agent, or any other rights or duties of Agent under this Agreement
or the other Loan Documents, without the written consent of Agent.

and,  PROVIDED  FURTHER,  HOWEVER,  that no amendment,  waiver or consent shall,
unless in  writing  and  signed by Agent,  affect  the rights or duties of Agent
under this Agreement or any other Loan Document. The foregoing  notwithstanding,
any amendment,  modification,  waiver, consent,  termination,  or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves,  and that
does not affect the rights or obligations of the Loan Parties, shall not require
consent by or the agreement of Parent or any Borrower.

          14.2     REPLACEMENT OF HOLDOUT LENDER.

                   (a)  If any action to be taken by the  Lender  Group or Agent
hereunder  requires the unanimous  consent,  authorization,  or agreement of all
Lenders,   and  a  Lender   ("HOLDOUT   LENDER")  fails  to  give  its  consent,
authorization,  or  agreement,  then Agent,  upon at least 5 Business Days prior
irrevocable  notice to the Holdout Lender,  may permanently  replace the Holdout
Lender with one or more substitute Lenders (each, a "REPLACEMENT  LENDER"),  and
the Holdout Lender shall have no right to refuse to be replaced hereunder.  Such
notice to replace the Holdout  Lender shall  specify an effective  date for such
replacement,  which date shall not be later than 15 Business Days after the date
such notice is given.

                   (b)  Prior to the  effective  date of such  replacement,  the
Holdout  Lender  and each  Replacement  Lender  shall  execute  and  deliver  an
Assignment and  Acceptance,  subject only to the Holdout Lender being repaid its
share of the outstanding  Obligations without any premium or penalty of any kind
whatsoever.  If the Holdout  Lender  shall refuse or fail to execute and deliver
any  such  Assignment  and  Acceptance  prior  to the  effective  date  of  such
replacement,  the Holdout  Lender shall be deemed to have executed and delivered
such Assignment and  Acceptance.  The replacement of any Holdout Lender shall be
made in accordance with the terms of SECTION 13.1.

          14.3     NO WAIVERS;  CUMULATIVE REMEDIES.  No failure by Agent or any
Lender to exercise  any right,  remedy,  or option  under this  Agreement or any
other Loan  Document,  or delay by Agent or any Lender in  exercising  the same,
will  operate  as a waiver  thereof.  No waiver by Agent or any  Lender  will be
effective  unless it is in  writing,  and then only to the  extent  specifically
stated.  No  waiver  by Agent or any  Lender  on any  occasion  shall  affect or
diminish  Agent's  and  each  Lender's  rights   thereafter  to  require  strict
performance  by  Parent  and  each of the  Borrowers  of any  provision  of this
Agreement.  Agent's and each Lender's  rights under this Agreement and the other
Loan Documents will be cumulative and not exclusive of any other right or remedy
that Agent or any Lender may have.

                                       41

15.       AGENT; THE LENDER GROUP.

          15.1     APPOINTMENT AND  AUTHORIZATION  OF AGENT.  Each Lender hereby
designates and appoints  Ableco as its  representative  under this Agreement and
the other Loan Documents and each Lender hereby irrevocably  authorizes Agent to
execute and deliver  each of the other Loan  Documents on its behalf and to take
such other action on its behalf under the  provisions of this Agreement and each
other Loan  Document and to exercise  such powers and perform such duties as are
expressly  delegated  to Agent by the terms of this  Agreement or any other Loan
Document,  together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express  conditions  contained  in this SECTION 15.
The  provisions  of this  SECTION 15 are solely for the benefit of Agent and the
Lenders,  and Parent and each of the Borrowers and their Subsidiaries shall have
no  rights  as a third  party  beneficiary  of any of the  provisions  contained
herein. Any provision to the contrary  contained  elsewhere in this Agreement or
in any other Loan Document  notwithstanding,  Agent shall not have any duties or
responsibilities,  except those expressly set forth herein, nor shall Agent have
or be deemed to have any fiduciary  relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this  Agreement  or any other  Loan  Document  or  otherwise  exist
against Agent; it being expressly understood and agreed that the use of the word
"Agent" is for convenience only, that Ableco is merely the representative of the
Lenders,  and only has the  contractual  duties  set  forth  herein.  Except  as
expressly otherwise provided in this Agreement, Agent shall have and may use its
sole  discretion  with respect to exercising or refraining  from  exercising any
discretionary  rights or taking or refraining from taking any actions that Agent
expressly is entitled to take or assert under or pursuant to this  Agreement and
the other Loan Documents.  Without limiting the generality of the foregoing,  or
of any other  provision of the Loan Documents that provides  rights or powers to
Agent,  Lenders  agree that Agent shall have the right to exercise the following
powers as long as this Agreement remains in effect: (a) maintain,  in accordance
with its customary business practices, ledgers and records reflecting the status
of the  Obligations,  the  Collateral,  the  Collections of the Loan Parties and
their  Subsidiaries,  and  related  matters,  (b)  execute  or file  any and all
financing or similar statements or notices, amendments,  renewals,  supplements,
documents,  instruments,  proofs of claim,  notices and other written agreements
with  respect to the Loan  Documents,  (c) make the Term Loan,  for itself or on
behalf of Lenders as provided in the Loan Documents,  (d)  exclusively  receive,
apply, and distribute the Collections of the Loan Parties and their Subsidiaries
as provided in the Loan Documents,  (e) open and maintain such bank accounts and
cash  management  arrangements  as Agent  deems  necessary  and  appropriate  in
accordance  with the Loan  Documents for the foregoing  purposes with respect to
the Collateral and the  Collections of the Loan Parties and their  Subsidiaries,
(f) perform,  exercise, and enforce any and all other rights and remedies of the
Lender  Group  with  respect  to the Loan  Parties  or their  Subsidiaries,  the
Obligations,  the  Collateral,  the  Collections  of the Loan  Parties and their
Subsidiaries,  or  otherwise  related  to any of same as  provided  in the  Loan
Documents,  and (g) incur and pay such Lender  Group  Expenses as Agent may deem
necessary or appropriate  for the  performance  and fulfillment of its functions
and powers pursuant to the Loan Documents.

          15.2     DELEGATION  OF DUTIES.  Agent may  execute  any of its duties
under this Agreement or any other Loan Document by or through agents,  employees
or attorneys in fact and shall be entitled to advice of counsel  concerning  all
matters  pertaining  to such  duties.  Agent  shall not be  responsible  for the
negligence  or  misconduct  of any agent or  attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.

          15.3     LIABILITY OF AGENT.  None of the Agent Related  Persons shall
(a) be liable for any  action  taken or omitted to be taken by any of them under
or in  connection  with  this  Agreement  or  any  other  Loan  Document  or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct),  or (b) be  responsible in any manner to any of the Lenders for any
recital, statement,  representation or warranty made by any Loan Party or any of
its Subsidiaries or Affiliates, or any officer or director thereof, contained in
this Agreement or in any other Loan  Document,  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 other Loan Document,  or the
validity,  effectiveness,  genuineness,  enforceability  or  sufficiency of this
Agreement  or any other Loan  Document,  or for any failure of any Loan Party or
its  Subsidiaries  or any  other  party  to any Loan  Document  to  perform  its

                                       42

obligations hereunder or thereunder.  No Agent-Related Person shall be under any
obligation  to any Lender to  ascertain  or to inquire as to the  observance  or
performance  of any of the  agreements  contained  in, or  conditions  of,  this
Agreement  or any other Loan  Document,  or to inspect  the books and records or
properties of any of the Loan Parties or their Subsidiaries.

          15.4     RELIANCE BY AGENT. Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing,  resolution,  notice,  consent,
certificate,  affidavit,  letter,  telegram,  telefacsimile  or other electronic
method of transmission,  telex or telephone message, statement or other document
or  conversation  believed  by it to be  genuine  and  correct  and to have been
signed,  sent,  or made by the proper  Person or  Persons,  and upon  advice and
statements of legal counsel (including counsel to the Loan Parties or counsel to
any Lender),  independent accountants and other experts selected by Agent. Agent
shall be fully  justified  in failing or refusing to take any action  under this
Agreement  or any other Loan  Document  unless  Agent shall first  receive  such
advice or  concurrence  of the  Lenders as it deems  appropriate  and until such
instructions are received,  Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction  by the Lenders  against any and all liability and expense that may
be incurred  by it by reason of taking or  continuing  to take any such  action.
Agent shall in all cases be fully  protected in acting,  or in  refraining  from
acting,  under this  Agreement or any other Loan Document in  accordance  with a
request or consent of the  requisite  Lenders  and such  request  and any action
taken or  failure  to act  pursuant  thereto  shall be  binding  upon all of the
Lenders.

          15.5     NOTICE OF DEFAULT  OR EVENT OF  DEFAULT.  Agent  shall not be
deemed to have  knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal,  interest,
fees,  and expenses  required to be paid to Agent for the account of the Lenders
and,  except  with  respect  to  Events of  Default  of which  Agent has  actual
knowledge,  unless  Agent shall have  received  written  notice from a Lender or
Administrative Borrower referring to this Agreement,  describing such Default or
Event of Default,  and stating that such notice is a "notice of default."  Agent
promptly  will  notify the  Lenders of its  receipt of any such notice or of any
Event of Default  of which  Agent has actual  knowledge.  If any Lender  obtains
actual knowledge of any Event of Default,  such Lender promptly shall notify the
other  Lenders and Agent of such Event of Default.  Each Lender  shall be solely
responsible  for giving  any  notices to its  participants,  if any.  Subject to
SECTION 15.4, Agent shall take such action with respect to such Default or Event
of Default as may be  requested  by the  Required  Lenders  in  accordance  with
SECTION 8; PROVIDED,  HOWEVER, that unless and until Agent has received any such
request,  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.

          15.6     CREDIT DECISION.  Each Lender  acknowledges  that none of the
Agent Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken,  including any review of the affairs of the Loan
Parties and their Subsidiaries or Affiliates,  shall be deemed to constitute any
representation  or warranty  by any  Agent-Related  Person to any  Lender.  Each
Lender represents to Agent that it has,  independently and without reliance upon
any  Agent-Related  Person and based on such documents and information as it has
deemed  appropriate,  made  its own  appraisal  of and  investigation  into  the
business,  prospects,  operations,  property,  financial and other condition and
creditworthiness  of the  Loan  Parties  or any  other  Person  party  to a Loan
Document,  and all applicable bank regulatory laws relating to the  transactions
contemplated  hereby, and made its own decision to enter into this Agreement and
to  extend  credit to  Borrowers.  Each  Lender  also  represents  that it will,
independently  and without reliance upon any  Agent-Related  Person and based on
such  documents  and  information  as it shall  deem  appropriate  at the  time,
continue to make its own credit analysis,  appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such  investigations  as it deems necessary to inform itself as to the business,
prospects,   operations,   property,   financial   and   other   condition   and
creditworthiness  of the  Loan  Parties  or any  other  Person  party  to a Loan
Document.  Except for notices,  reports,  and other documents  expressly  herein
required to be furnished to the Lenders by Agent,  Agent shall not have any duty
or  responsibility  to provide any Lender  with any credit or other  information
concerning the business,  prospects,  operations,  property, financial and other

                                       43

condition or creditworthiness of the Loan Parties or any other Person party to a
Loan  Document  that may come into the  possession  of any of the Agent  Related
Persons.

          15.7     COSTS AND EXPENSES; INDEMNIFICATION.  Agent may incur and pay
Lender  Group  Expenses  to the  extent  Agent  reasonably  deems  necessary  or
appropriate for the performance  and fulfillment of its functions,  powers,  and
obligations  pursuant to the Loan Documents,  including  court costs,  attorneys
fees and  expenses,  fees  and  expenses  of  financial  accountants,  advisors,
consultants, and appraisers, costs of collection by outside collection agencies,
auctioneer fees and expenses, and costs of security guards or insurance premiums
paid to maintain the  Collateral,  whether or not any Loan Party is obligated to
reimburse  Agent or Lenders  for such  expenses  pursuant to this  Agreement  or
otherwise.  Agent is  authorized  and  directed to deduct and retain  sufficient
amounts from the Collections of the Loan Parties and their Subsidiaries received
by Agent to reimburse Agent for such  out-of-pocket  costs and expenses prior to
the distribution of any amounts to Lenders. In the event Agent is not reimbursed
for such costs and  expenses  by the Loan  Parties or their  Subsidiaries,  each
Lender  hereby  agrees  that it is and shall be  obligated  to pay to Agent such
Lender's Pro Rata Share thereof.  Whether or not the  transactions  contemplated
hereby  are   consummated,   the  Lenders  shall   indemnify   upon  demand  the
Agent-Related  Persons (to the extent not reimbursed by or on behalf of the Loan
Parties and  without  limiting  the  obligation  of the Loan  Parties to do so),
according  to their Pro Rata  Shares,  from and against any and all  Indemnified
Liabilities;  PROVIDED,  HOWEVER, that no Lender shall be liable for the payment
to any  Agent-Related  Person of any  portion  of such  Indemnified  Liabilities
resulting solely from such Person's gross  negligence or willful  misconduct nor
shall any Lender be liable for the  obligations of any Lender in failing to make
its portion of the Term Loan or any other extension of credit hereunder. Without
limitation of the foregoing,  each Lender shall  reimburse Agent upon demand for
such Lender's Pro Rata Share of any costs or out of pocket  expenses  (including
attorneys, accountants, advisors, and consultants fees and expenses) incurred by
Agent in connection with the preparation,  execution, delivery,  administration,
modification,  amendment,  or enforcement (whether through  negotiations,  legal
proceedings  or  otherwise)  of,  or  legal  advice  in  respect  of  rights  or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated  by or  referred  to  herein,  to  the  extent  that  Agent  is not
reimbursed  for  such  expenses  by  or on  behalf  of  the  Loan  Parties.  The
undertaking  in this  Section  shall  survive  the  payment  of all  Obligations
hereunder and the resignation or replacement of Agent.

          15.8     AGENT IN INDIVIDUAL  CAPACITY.  Ableco and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial  advisory,  underwriting,  or other business with the Loan Parties and
their  Subsidiaries  and  Affiliates  and any  other  Person  party  to any Loan
Documents as though Ableco were not Agent hereunder,  and, in each case, without
notice to or consent of the other members of the Lender Group. The other members
of the Lender Group acknowledge that, pursuant to such activities, Ableco or its
Affiliates  may  receive  information   regarding  the  Loan  Parties  or  their
Affiliates  or any other Person party to any Loan  Documents  that is subject to
confidentiality  obligations  in favor of the Loan  Parties or such other Person
and that prohibit the  disclosure of such  information  to the Lenders,  and the
Lenders  acknowledge that, in such circumstances (and in the absence of a waiver
of such confidentiality obligations,  which waiver Agent will use its reasonable
best efforts to obtain), Agent shall not be under any obligation to provide such
information  to them.  The terms  "Lender" and "Lenders"  include  Ableco in its
individual capacity.

          15.9     SUCCESSOR  AGENT.  Agent  may  resign  as Agent  upon 45 days
notice to the Lenders (unless such notice is waived by the Required Lenders). If
Agent  resigns  under this  Agreement,  the  Required  Lenders  shall  appoint a
successor Agent for the Lenders. If no successor Agent is appointed prior to the
effective date of the resignation of Agent, Agent may appoint,  after consulting
with the Lenders, a successor Agent. If Agent has materially  breached or failed
to perform any material  provision of this  Agreement or of applicable  law, the
Required  Lenders  may agree in  writing  to remove  and  replace  Agent  with a
successor Agent from among the Lenders.  In any such event,  upon the acceptance
of its  appointment as successor  Agent  hereunder,  such successor  Agent shall
succeed to all the rights, powers, and duties of the retiring Agent and the term
"Agent" shall mean such successor  Agent and the retiring  Agent's  appointment,
powers,  and duties as Agent shall be  terminated.  After any  retiring  Agent's
resignation hereunder as Agent, the provisions of this SECTION 15 shall inure to

                                       44

its  benefit as to any  actions  taken or omitted to be taken by it while it was
Agent under this Agreement.  If no successor  Agent has accepted  appointment as
Agent by the date  which is 45 days  following  a  retiring  Agent's  notice  of
resignation,  the retiring  Agent's  resignation  shall  nevertheless  thereupon
become  effective  and the  Lenders  shall  perform  all of the  duties of Agent
hereunder  until such time, if any, as the Lenders  appoint a successor Agent as
provided for above.

          15.10    LENDER IN INDIVIDUAL CAPACITY.  Any Lender and its respective
Affiliates  and Related Funds may make loans to, issue letters of credit for the
account of, accept  deposits  from,  acquire  equity  interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting, or other
business with the Loan Parties and their  Subsidiaries  and  Affiliates  and any
other Person party to any Loan Documents as though such Lender were not a Lender
hereunder without notice to or consent of the other members of the Lender Group.
The other  members  of the  Lender  Group  acknowledge  that,  pursuant  to such
activities,  such Lender and its  respective  Affiliates  and Related  Funds may
receive information  regarding the Loan Parties or their Affiliates or any other
Person  party  to  any  Loan  Documents  that  is  subject  to   confidentiality
obligations  in favor of the Loan Parties or such other Person and that prohibit
the disclosure of such information to the Lenders,  and the Lenders  acknowledge
that,  in  such   circumstances  (and  in  the  absence  of  a  waiver  of  such
confidentiality  obligations,  which waiver such Lender will use its  reasonable
best  efforts to  obtain),  such  Lender  shall not be under any  obligation  to
provide such information to them.

          15.11    COLLATERAL MATTERS.

                   (a)  The Lenders hereby  irrevocably  authorize Agent, at its
option and in its sole  discretion,  to release any Lien on any  Collateral  (i)
upon payment and satisfaction in full by Loan Parties of all  Obligations,  (ii)
constituting  property  being sold or  disposed  of if a release is  required or
desirable in connection  therewith and if Administrative  Borrower  certifies to
Agent  that the sale or  disposition  is  permitted  under  SECTION  6.4 of this
Agreement or the other Loan  Documents (and Agent may rely  conclusively  on any
such certificate, without further inquiry), (iii) constituting property in which
no Loan Party or its  Subsidiaries  owned any  interest  at the time the Agent's
Lien was  granted  nor at any time  thereafter,  or (iv)  constituting  property
leased to a Loan Party or its Subsidiaries  under a lease that has expired or is
terminated in a transaction  permitted under this Agreement.  Except as provided
above,  Agent  will  not  execute  and  deliver  a  release  of any  Lien on any
Collateral  without the prior written  authorization of (y) if the release is of
all or  substantially  all  of  the  Collateral,  all  of  the  Lenders,  or (z)
otherwise,  the  Required  Lenders.  Upon  request  by Agent  or  Administrative
Borrower at any time, the Lenders will confirm in writing  Agent's  authority to
release any such Liens on particular  types or items of  Collateral  pursuant to
this SECTION 15.11;  PROVIDED,  HOWEVER, that (1) Agent shall not be required to
execute any  document  necessary  to  evidence  such  release on terms that,  in
Agent's  opinion,  would expose Agent to liability or create any  obligation  or
entail any  consequence  other than the release of such Lien  without  recourse,
representation,  or  warranty,  and (2) such  release  shall  not in any  manner
discharge,  affect,  or impair the  Obligations  or any Liens  (other than those
expressly  being  released) upon (or  obligations of Loan Parties in respect of)
all interests retained by Loan Parties, including, the proceeds of any sale, all
of which shall continue to constitute part of the Collateral.

                   (b)  Agent shall have no obligation  whatsoever to any of the
Lenders  to assure  that the  Collateral  exists or is owned by Loan  Parties or
their  Subsidiaries  or  is  cared  for,  protected,  or  insured  or  has  been
encumbered,  or that the Agent's  Liens have been  properly or  sufficiently  or
lawfully  created,  perfected,  protected,  or enforced  or are  entitled to any
particular priority,  or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising,  any of the
rights,  authorities and powers granted or available to Agent pursuant to any of
the Loan  Documents,  it being  understood  and  agreed  that in  respect of the
Collateral, or any act, omission, or event related thereto, subject to the terms
and  conditions  contained  herein,  Agent  may act in any  manner  it may  deem
appropriate, in its sole discretion given Agent's own interest in the Collateral
in its capacity as one of the Lenders and that Agent shall have no other duty or
liability  whatsoever  to any  Lender  as to any of  the  foregoing,  except  as
otherwise provided herein.

                                       45

          15.12    RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.

                   (a)  Each of the Lenders  agrees  that it shall not,  without
the express  written  consent of Agent,  and that it shall,  to the extent it is
lawfully  entitled to do so, upon the written request of Agent,  set off against
the  Obligations,  any  amounts  owing by such  Lender to any Loan  Party or its
Subsidiaries or any deposit  accounts of any Loan Party or its  Subsidiaries now
or hereafter  maintained  with such Lender.  Each of the Lenders  further agrees
that it shall not, unless  specifically  requested to do so in writing by Agent,
take or cause to be taken any action,  including,  the commencement of any legal
or equitable  proceedings to enforce any Loan Document  against the Loan Parties
or  Guarantors  or to foreclose  any Lien on, or otherwise  enforce any security
interest in, any of the Collateral.

                   (b)  If, at any time or times any Lender shall receive (i) by
payment,  foreclosure,  setoff, or otherwise,  any proceeds of Collateral or any
payments  with  respect  to the  Obligations,  except for any such  proceeds  or
payments  received  by such  Lender  from  Agent  pursuant  to the terms of this
Agreement, or (ii) payments from Agent in excess of such Lender's Pro Rata Share
of all such distributions by Agent, such Lender promptly shall (A) turn the same
over to  Agent,  in kind,  and with  such  endorsements  as may be  required  to
negotiate the same to Agent, or in immediately  available  funds, as applicable,
for the account of all of the Lenders and for  application to the Obligations in
accordance with the applicable  provisions of this  Agreement,  or (B) purchase,
without  recourse or warranty,  an undivided  interest and  participation in the
Obligations owed to the other Lenders so that such excess payment received shall
be  applied  ratably  as among the  Lenders  in  accordance  with their Pro Rata
Shares; provided,  however, that to the extent that such excess payment received
by the  purchasing  party is thereafter  recovered  from it, those  purchases of
participations  shall be rescinded in whole or in part, as  applicable,  and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection  with the recovery of the excess
payment.

          15.13    AGENCY  FOR  PERFECTION.  Agent  hereby  appoints  each other
Lender as its agent (and each Lender hereby  accepts such  appointment)  for the
purpose of  perfecting  the Agent's Liens in assets  which,  in accordance  with
Article 8 or  Article 9, as  applicable,  of the Code can be  perfected  only by
possession  or control.  Should any Lender  obtain  possession or control of any
such  Collateral,  such Lender shall notify Agent  thereof,  and,  promptly upon
Agent's request therefor shall deliver  possession or control of such Collateral
to Agent or in accordance with Agent's instructions.

          15.14    PAYMENTS BY AGENT TO THE LENDERS.  All payments to be made by
Agent  to the  Lenders  shall  be made  by bank  wire  transfer  of  immediately
available  funds pursuant to such wire transfer  instructions  as each party may
designate  for itself by written  notice to Agent.  Concurrently  with each such
payment,  Agent shall  identify  whether such  payment (or any portion  thereof)
represents principal, premium, fees, or interest of the Obligations.

          15.15    CONCERNING THE COLLATERAL  AND RELATED LOAN  DOCUMENTS.  Each
member of the  Lender  Group  authorizes  and  directs  Agent to enter into this
Agreement and the other Loan  Documents.  Each member of the Lender Group agrees
that any action taken by Agent in accordance with the terms of this Agreement or
the other Loan Documents relating to the Collateral and the exercise by Agent of
its powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.

          15.16    FIELD  AUDITS  AND  EXAMINATION   REPORTS;   CONFIDENTIALITY;
DISCLAIMERS BY LENDERS;  OTHER REPORTS AND  INFORMATION.  By becoming a party to
this Agreement, each Lender:

                   (a)  is deemed to have  requested  that  Agent  furnish  such
Lender,  promptly  after it becomes  available,  a copy of each  field  audit or
examination  report  respecting  Loan  Parties  or  their  Subsidiaries  (each a
"REPORT" and  collectively,  "REPORTS")  prepared by or at the request of Agent,
and Agent shall so furnish each Lender with such Reports,

                                       46

                   (b)  expressly  agrees and  acknowledges  that Agent does not
(i) make any  representation  or warranty as to the accuracy of any Report,  and
(ii) shall not be liable for any information contained in any Report,

                   (c)  expressly agrees and  acknowledges  that the Reports are
not comprehensive  audits or examinations,  that Agent or other party performing
any audit or examination will inspect only specific  information  regarding Loan
Parties or their Subsidiaries and will rely significantly upon the Loan Parties'
and their  Subsidiaries' books and records, as well as on representations of the
Loan Parties' personnel,

                   (d)  agrees  to  keep  all   Reports   and  other   material,
non-public  information  regarding Loan Parties and their Subsidiaries and their
operations,   assets,  and  existing  and  contemplated   business  plans  in  a
confidential manner in accordance with SECTION 17.8, and

                   (e)  without   limiting   the   generality   of   any   other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any such  other  Lender  preparing  a Report  harmless  from any  action the
indemnifying  Lender may take or fail to take or any conclusion the indemnifying
Lender may reach or draw from any Report in  connection  with any loans or other
credit  accommodations that the indemnifying Lender has made or may make to Loan
Parties,  or the  indemnifying  Lender's  participation  in, or the indemnifying
Lender's  purchase  of,  a loan or loans  of Loan  Parties;  and (ii) to pay and
protect,  and  indemnify,  defend  and hold  Agent,  and any such  other  Lender
preparing a Report harmless from and against, the claims, actions,  proceedings,
damages,  costs,  expenses,  and other amounts  (including,  attorneys  fees and
costs)  incurred  by Agent and any such other  Lender  preparing a Report as the
direct or indirect  result of any third  parties who might obtain all or part of
any Report through the indemnifying Lender.

In addition to the  foregoing:  (x) any Lender may from time to time  request of
Agent in  writing  that  Agent  provide  to such  Lender a copy of any report or
document  provided by Loan Parties or their  Subsidiaries  to Agent that has not
been  contemporaneously  provided by Loan Parties or their  Subsidiaries to such
Lender,  and, upon receipt of such request,  Agent promptly shall provide a copy
of same to such  Lender,  (y) to the extent  that Agent is  entitled,  under any
provision of the Loan Documents,  to request  additional  reports or information
from Loan  Parties or their  Subsidiaries,  any Lender  may,  from time to time,
reasonably  request  Agent to exercise  such right as specified in such Lender's
notice to Agent,  whereupon  Agent  promptly  shall  request  of  Administrative
Borrower the  additional  reports or  information  reasonably  specified by such
Lender, and, upon receipt thereof from Administrative  Borrower,  Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to Administrative  Borrower a statement regarding the Loan Account,  Agent shall
send a copy of such statement to each Lender.

          15.17    SEVERAL  OBLIGATIONS;  NO  LIABILITY.   Notwithstanding  that
certain of the Loan Documents now or hereafter may have been or will be executed
only by or in favor of Agent in its capacity as such,  and not by or in favor of
the Lenders,  any and all  obligations on the part of Agent (if any) to make any
credit  available  hereunder  shall  constitute  the  several  (and  not  joint)
obligations  of the respective  Lenders on a ratable  basis,  according to their
respective  Commitments,  to make an amount of such  credit  not to  exceed,  in
principal amount,  at any one time  outstanding,  the amount of their respective
Commitments.  Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability  for, or in respect of, the business,
assets,  profits,  losses, or liabilities of any other Lender. Each Lender shall
be solely  responsible for notifying its participants of any matters relating to
the Loan Documents to the extent any such notice may be required,  and no Lender
shall have any  obligation,  duty, or liability to any  participant of any other
Lender.  Except as provided in SECTION 15.7, no member of the Lender Group shall
have any  liability  for the acts of any other  member of the Lender  Group.  No
Lender  shall be  responsible  to any Loan  Party or any  other  Person  for any
failure by any other Lender to fulfill its obligations to make credit  available
hereunder,  nor to  advance  for it or on its  behalf  in  connection  with  its
Commitment,  nor to  take  any  other  action  on  its  behalf  hereunder  or in
connection with the financing contemplated herein.

                                       47

          15.18    QUEBEC SECURITY DOCUMENTS.

          For greater  certainty,  and without  limiting the powers of Agent, or
any other Person  acting as an agent or mandatary  for Agent  hereunder or under
any other Loan Documents, each Loan Party hereby acknowledges that, for purposes
of holding  any  hypothecs  and  security  granted  by a Loan Party on  property
pursuant to the laws of the Province of Quebec to secure  obligations  of a Loan
Party under any  debenture  or bond  issued by a Loan Party,  Agent shall be the
holder of an  irrevocable  power of  attorney  (FONDE DE  POUVOIR)  (within  the
meaning of the CIVIL CODE OF QUEBEC) for the Lender Group (which  includes  each
Lender and Agent), including without limitation,  all present and future Lenders
and any  Affiliate  of a Lender,  and in  particular  for all present and future
holders of any such debenture or bond. The Lender Group hereby:  (i) irrevocably
constitute, to the extent necessary, Agent as the holder of an irrevocable power
of attorney (FONDE DE POUVOIR)  (within the meaning of Article 2692 of the CIVIL
CODE OF QUEBEC) in order to hold hypothecs and security  granted by a Loan Party
on  property  pursuant  to the laws of the  Province  of Quebec  to  secure  the
obligations  of a Loan Party under any debenture or bond issued by a Loan Party;
and (ii) appoint and agree that Agent may act as the  bondholder  and  mandatary
(i.e.  agent) with respect to any debenture or bond that may be issued by a Loan
Party and  pledged  in its favour  from time to time.  The  execution  by Agent,
acting as FONDE DE POUVOIR and mandatary,  prior to this Agreement, of any deeds
of hypothec or other security documents is hereby ratified and confirmed.

Notwithstanding  the  provisions of Section 32 of AN ACT  RESPECTING THE SPECIAL
POWERS OF LEGAL  PERSONS  (Quebec),  Agent may  acquire and be the holder of any
debenture or bond issued by a Loan Party (i.e.  the FONDE DE POUVOIR may acquire
and hold the first debenture or bond issued under any deed of hypothec by a Loan
Party).  Each  Loan  Party  hereby  acknowledges  that  such  debenture  or bond
constitutes a title of indebtedness, as such term is used in Article 2692 of the
CIVIL CODE OF QUEBEC.

The  constitution  of Agent as FONDE DE POUVOIR and as bondholder  and mandatary
with  respect  to any bond that may be issued and  pledged  from time to time to
Agent for the benefit of the Lender Group, shall be deemed to have been ratified
and confirmed by each Person  accepting an assignment of, a participation  in or
an  arrangement  in respect of, all or any portion of an  assignor's  rights and
obligations  under this  Agreement by the execution of an assignment  agreement,
including an Assignment and Acceptance or other  agreement  pursuant to which it
becomes  such  assignee  or  participant,  and by each  successor  Agent  by the
execution  of an  Assignment  and  Acceptance  or  other  agreement,  or by  the
compliance  with other  formalities,  as the case may be,  pursuant  to which it
becomes a successor Agent under this Agreement.

Agent,  acting as FONDE DE  POUVOIR,  shall  have the same  rights,  powers  and
immunities as Agent as stipulated herein, including under this Section 15, which
shall apply MUTATIS MUTANDIS.  Without limitation,  the provisions of Section 15
shall apply MUTATIS  MUTANDIS to the  resignation and appointment of a successor
Agent acting as FONDE DE POUVOIR.

Agent, acting as bondholder,  shall have the same rights,  powers and immunities
as Agent as  stipulated  herein,  including  under this  Section 15, which shall
apply MUTATIS MUTANDIS.  Without limitation,  the provisions of Section 15 shall
apply MUTATIS  MUTANDIS to the  resignation and appointment of a successor Agent
acting as bondholder and mandatary.

16.       WITHHOLDING TAXES.

                   (a)  Any and all  payments  by any Loan  Party  hereunder  or
under  any other  Loan  Document  shall be made  free and  clear of and  without
deduction for any and all present or future taxes, levies, imposts,  deductions,
charges or withholdings,  and all liabilities  with respect  thereto,  EXCLUDING
taxes  imposed on the net income of Agent or any  Lender (or any  transferee  or
assignee  thereof,   including  a  participation  holder  (any  such  entity,  a
"TRANSFEREE"))  by the jurisdiction in which such Person is organized or has its
principal  lending  office  (all  such  nonexcluded  taxes,   levies,   imposts,
deductions, charges withholdings and liabilities,  collectively or individually,
"TAXES").  If any Loan Party  shall be  required  to deduct any Taxes from or in

                                       48

respect of any sum payable hereunder to Agent or any Lender (or any Transferee),
(i) the sum payable  shall be increased by the amount (an  "ADDITIONAL  AMOUNT")
necessary  so that after making all required  deductions  (including  deductions
applicable  to  additional  sums  payable  under this  SECTION 16) Agent or such
Lender (or such  Transferee)  shall  receive an amount equal to the sum it would
have received had no such  deductions been made, (ii) such Loan Party shall make
such  deductions and (iii) such Loan Party shall pay the full amount deducted to
the relevant Governmental Authority in accordance with applicable law.

                   (b)  In  addition,  each  Loan  Party  agrees  to  pay to the
relevant Governmental Authority in accordance with applicable law any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar  levies  that  arise  from any  payment  made  hereunder  or from the
execution,  delivery or  registration  of, or  otherwise  with  respect to, this
Agreement  or any other Loan  Document  ("OTHER  TAXES").  Each Loan Party shall
deliver to Agent and each  Lender  official  receipts in respect of any Taxes or
Other Taxes  payable  hereunder  promptly  after  payment of such Taxes or Other
Taxes.

                   (c)  The Loan Parties hereby jointly and severally  indemnify
and agree to hold Agent and each  Lender  harmless  from and  against  Taxes and
Other Taxes (including, without limitation, Taxes and Other Taxes imposed on any
amounts payable under this SECTION 16) paid by such Person,  whether or not such
Taxes or Other Taxes were correctly or legally  asserted.  Such  indemnification
shall be paid  within  10 days  from the date on  which  any such  Person  makes
written demand therefore  specifying in reasonable  detail the nature and amount
of such Taxes or Other Taxes.

                   (d)  Each Lender (or Transferee)  that is organized under the
laws of a jurisdiction  outside the United States (a "NON-U.S.  LENDER")  agrees
that it shall, no later than the Closing Date (or, in the case of a Lender which
becomes a party hereto pursuant to hereof after the Closing Date, promptly after
the date upon which such  Lender  becomes a party  hereto)  deliver to Agent one
properly  completed  and duly  executed  copy of either  U.S.  Internal  Revenue
Service  Form W-8BEN,  W-8ECI or W-8IMY or any  subsequent  versions  thereof or
successors  thereto,  in each case claiming complete  exemption from, or reduced
rate of, U.S.  Federal  withholding tax and payments of interest  hereunder.  In
addition, in the case of a Non-U.S.  Lender claiming exemption from U.S. Federal
withholding  tax under  Section  871(h) or 881(c) of the Internal  Revenue Code,
such  Non-U.S.  Lender hereby  represents  to Agent and the Borrowers  that such
Non-U.S.  Lender is not a bank for  purposes of Section  881(c) of the  Internal
Revenue  Code,  is not a 10-percent  shareholder  (within the meaning of Section
871(h)(3)(B) of the Internal Revenue Code) of the Parent and is not a controlled
foreign  corporation  related  to the  Parent  (within  the  meaning  of Section
864(d)(4) of the Internal Revenue Code), and such Non-U.S. Lender agrees that it
shall promptly  notify Agent in the event any such  representation  is no longer
accurate. Such forms shall be delivered by each Non-U.S. Lender on or before the
date it becomes a party to this Agreement (or, in the case of a Transferee  that
is a  participation  holder,  on or before  the date such  participation  holder
becomes a Transferee hereunder) and on or before the date, if any, such Non-U.S.
Lender changes its applicable  lending office by designating a different lending
office (a "NEW LENDING OFFICE"). In addition, such Non-U.S. Lender shall deliver
such forms within 20 days after receipt of a written request therefor from Agent
or the Lender granting a participation, as applicable. Notwithstanding any other
provision of this , a Non-U.S.  Lender shall not be required to deliver any form
pursuant to this that such Non-U.S. Lender is not legally able to deliver.

                   (e)  The Loan Parties  shall not be required to indemnify any
Non-U.S.  Lender,  or pay any  additional  amounts to any  Non-U.S.  Lender,  in
respect of United States Federal  withholding tax pursuant to this SECTION 16 to
the extent that (i) the  obligation  to withhold  amounts with respect to United
States Federal withholding tax existed on the date such Non-U.S. Lender became a
party to this Agreement (or, in the case of a Transferee that is a participation
holder, on the date such participation holder became a Transferee hereunder) or,
with respect to payments to a New Lending Office, the date such Non-U.S.  Lender
designated  such New Lending Office with respect to a Loan;  PROVIDED,  HOWEVER,
that this  clause  (i) shall not apply to the extent  the  indemnity  payment or
additional  amounts  any  Transferee,  or Lender (or  Transferee)  through a New
Lending Office, would be entitled to receive (without regard to this clause (i))
do not exceed the indemnity payment or additional amounts that the Person making
the  assignment,  participation  or transfer to such  Transferee,  or Lender (or

                                       49

Transferee)  making the designation of such New Lending Office,  would have been
entitled to receive in the absence of such assignment,  participation,  transfer
or designation,  or (ii) the obligation to pay such additional amounts would not
have  arisen  but for a failure  by such  Non-U.S.  Lender  to  comply  with the
provisions of clause (d) above.

                   (f)  Agent  or  any  Lender  (or  Transferee)   claiming  any
indemnity payment or additional payment amounts payable pursuant to this SECTION
16  shall  use  reasonable   efforts   (consistent  with  legal  and  regulatory
restrictions)  to file any  certificate  or  document  reasonably  requested  in
writing by the  Administrative  Borrower  or to change the  jurisdiction  of its
applicable  lending  office if the making of such a filing or change would avoid
the need for or reduce the amount of any such  indemnity  payment or  additional
amount that may  thereafter  accrue,  would not require Agent or such Lender (or
Transferee)  to disclose any  information  Agent or such Lender (or  Transferee)
deems  confidential  and would not, in the sole  determination  of Agent or such
Lender, be otherwise disadvantageous to Agent or such Lender (or Transferee).

                   (g)  The  obligations  of the Loan Parties under this SECTION
16 shall survive the  termination  of this Agreement and the payment of the Term
Loan and all other amounts payable hereunder.

17.       GENERAL PROVISIONS.

          17.1     EFFECTIVENESS.  This  Agreement  shall be binding  and deemed
effective  when  executed by Parent,  Borrowers,  Agent,  and each Lender  whose
signature is provided for on the signature pages hereof.

          17.2     SECTION  HEADINGS.  Headings  and numbers have been set forth
herein for  convenience  only.  Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.

          17.3     INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity  herein  shall be  construed  against  the Lender  Group,  Parent,  or
Borrowers, whether under any rule of construction or otherwise. On the contrary,
this  Agreement  has been  reviewed by all parties  and shall be  construed  and
interpreted  according  to the  ordinary  meaning  of the  words  used  so as to
accomplish fairly the purposes and intentions of all parties hereto.

          17.4     SEVERABILITY OF PROVISIONS.  Each provision of this Agreement
shall be severable from every other  provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.

          17.5     DEBTOR-CREDITOR  RELATIONSHIP.  The relationship  between the
Lenders and Agent, on the one hand, and Parent and Borrowers, on the other hand,
is solely that of creditor  and  debtor.  No member of the Lender  Group has (or
shall be  deemed  to have)  any  fiduciary  relationship  or duty to  Parent  or
Borrowers  arising out of or in connection with, and there is no agency or joint
venture  relationship  between the members of the Lender Group, on the one hand,
and Parent and  Borrowers,  on the other hand, by virtue of any Loan Document or
any transaction contemplated therein.

          17.6     COUNTERPARTS;  ELECTRONIC  EXECUTION.  This  Agreement may be
executed  in any number of  counterparts  and by  different  parties on separate
counterparts,  each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same  Agreement.  Delivery of an executed  counterpart  of this Agreement by
telefacsimile  or other  electronic  method of transmission  shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party  delivering an executed  counterpart of this Agreement by telefacsimile or
other electronic  method of transmission also shall deliver an original executed
counterpart  of this  Agreement but the failure to deliver an original  executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.  The foregoing  shall apply to each other Loan Document  MUTATIS
MUTANDIS.

                                       50

          17.7     REVIVAL AND  REINSTATEMENT OF OBLIGATIONS.  If the incurrence
or payment of the  Obligations  by any Borrower or any Guarantor or the transfer
to the  Lender  Group of any  property  should for any  reason  subsequently  be
declared  to be void or  voidable  under any state or federal  law  relating  to
creditors'  rights,  including  provisions  of the  Bankruptcy  Code relating to
fraudulent conveyances,  preferences,  or other voidable or recoverable payments
of money or  transfers of property  (each,  a "VOIDABLE  TRANSFER"),  and if the
Lender  Group is  required to repay or  restore,  in whole or in part,  any such
Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
then, as to any such Voidable  Transfer,  or the amount  thereof that the Lender
Group is required or elects to repay or restore, and as to all reasonable costs,
expenses,  and attorneys fees of the Lender Group related thereto, the liability
of Loan Parties  automatically  shall be revived,  reinstated,  and restored and
shall exist as though such Voidable Transfer had never been made.

          17.8     CONFIDENTIALITY.

                   (a)  Agent and Lenders each  individually (and not jointly or
jointly and severally)  agree that material,  non-public  information  regarding
Loan Parties and their Subsidiaries,  their operations, assets, and existing and
contemplated  business  plans  shall be  treated  by Agent and the  Lenders in a
confidential  manner,  and shall not be  disclosed  by Agent and the  Lenders to
Persons who are not parties to this Agreement,  except: (i) to attorneys for and
other  advisors,  accountants,  auditors,  and  consultants to any member of the
Lender Group,  (ii) to  Subsidiaries  and Affiliates of any member of the Lender
Group,  provided  that any such  Subsidiary  or  Affiliate  shall have agreed to
receive such  information  hereunder  subject to the terms of this SECTION 17.8,
(iii) as may be  required by statute,  decision,  or judicial or  administrative
order,   rule,  or  regulation,   (iv)  as  may  be  agreed  to  in  advance  by
Administrative  Borrower or its  Subsidiaries or as requested or required by any
Governmental  Authority pursuant to any subpoena or other legal process,  (v) as
to any such  information  that is or becomes  generally  available to the public
(other than as a result of prohibited disclosure by Agent or the Lenders),  (vi)
in  connection  with any  assignment,  participation  or pledge of any  Lender's
interest under this Agreement, provided that any such assignee,  participant, or
pledgee  shall have  agreed in writing to  receive  such  information  hereunder
subject  to the  terms  of this  Section,  and  (vii)  in  connection  with  any
litigation or other  adversary  proceeding  involving  parties hereto which such
litigation  or adversary  proceeding  involves  claims  related to the rights or
duties  of such  parties  under  this  Agreement  or the other  Loan  Documents,
provided  that Agent or  applicable  Lender,  as the case may be, shall give the
Loan  Parties  five (5)  Business  Days  notice  of the  production  of any such
information  in such  litigation  or other  adversary  proceeding  to the extent
practicable  under the  circumstances.  The  provisions of this SECTION  17.8(A)
shall survive for 2 years after the payment in full of the Obligations.

                   (b)  Anything   in   this    Agreement    to   the   contrary
notwithstanding,   Agent  may  provide  information  concerning  the  terms  and
conditions of this  Agreement and the other Loan  Documents to loan  syndication
and pricing reporting services.

          17.9     LENDER  GROUP  EXPENSES.  Parent and  Borrowers,  jointly and
severally,  agree to pay any and all Lender Group Expenses promptly after demand
therefor by Agent and agrees that their  obligations  contained  in this SECTION
17.9 shall survive payment or satisfaction in full of all other Obligations.

          17.10    USA  PATRIOT  ACT.   Each  Lender  that  is  subject  to  the
requirements  of the USA Patriot Act (Title 111 of Pub. L. 107-56  (signed  into
law October 26, 2001)) (the "ACT")  hereby  notifies  Parent and Borrowers  that
pursuant to the  requirements  of the Act, it is required to obtain,  verify and
record  information  that  identifies  Parent and Borrowers,  which  information
includes  the name and  address  of Parent and each of the  Borrowers  and other
information  that will  allow  such  Lender to  identify  Parent and each of the
Borrowers in accordance with the Act.

          17.11    INTEGRATION.  This  Agreement,  together  with the other Loan
Documents,  reflects the entire understanding of the parties with respect to the
transactions  contemplated  hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

                                       51

          17.12    PARENT  AS  AGENT  FOR   BORROWERS.   Each  Borrower   hereby
irrevocably  appoints Parent as the borrowing agent and attorney-in-fact for all
Borrowers (the "ADMINISTRATIVE BORROWER") which appointment shall remain in full
force and effect unless and until Agent shall have received prior written notice
signed by each Borrower that such  appointment has been revoked and that another
Borrower  has been  appointed  Administrative  Borrower.  Each  Borrower  hereby
irrevocably  appoints and authorizes the Administrative  Borrower (i) to provide
Agent with all notices with respect to the Term Loan obtained for the benefit of
any Borrower and all other  notices and  instructions  under this  Agreement and
(ii) to take such action as the Administrative Borrower deems appropriate on its
behalf to the Term Loan and to  exercise  such  other  powers as are  reasonably
incidental thereto to carry out the purposes of this Agreement. It is understood
that the handling of the Loan Account and  Collateral of Borrowers in a combined
fashion,  as more fully set forth herein,  is done solely as an accommodation to
Borrowers in order to utilize the  collective  borrowing  powers of Borrowers in
the most efficient and economical  manner and at their request,  and that Lender
Group  shall  not incur  liability  to any  Borrower  as a result  hereof.  Each
Borrower expects to derive benefit, directly or indirectly, from the handling of
the Loan Account and the  Collateral in a combined  fashion since the successful
operation of each Borrower is dependent on the continued successful  performance
of  the  integrated  group.  To  induce  the  Lender  Group  to do  so,  and  in
consideration  thereof,  each Borrower  hereby  jointly and severally  agrees to
indemnify  each  member of the Lender  Group and hold each  member of the Lender
Group harmless against any and all liability,  expense,  loss or claim of damage
or injury,  made  against the Lender Group by any Borrower or by any third party
whosoever,  arising  from or incurred by reason of (a) the  handling of the Loan
Account and Collateral of Borrowers as herein  provided,  (b) the Lender Group's
relying on any  instructions of the  Administrative  Borrower,  or (c) any other
action  taken by the Lender Group  hereunder or under the other Loan  Documents,
except that  Borrowers  will have no  liability  to the  relevant  Agent-Related
Person or  Lender-Related  Person under this  SECTION  17.12 with respect to any
liability that has been finally determined by a court of competent  jurisdiction
to have resulted solely from the gross negligence or willful  misconduct of such
Agent-Related  Person or  Lender-Related  Person, or from such members breach of
its material obligations under the Loan Documents, as the case may be.

          17.13    INTERCREDITOR  AGREEMENT.  Notwithstanding anything herein to
the contrary,  the liens and security interests granted to the Agent pursuant to
the Loan  Documents in the Collateral and the exercise of any right or remedy by
the Agent  with  respect  to the  Collateral  hereunder  or under any other Loan
Document are subject to the provisions of the  Intercreditor  Agreement.  In the
event of any conflict between the terms of the Intercreditor  Agreement and this
Agreement  with  respect to (a) the  priority  of liens and  security  interests
granted to the Agent in the Collateral pursuant to the Loan Documents or (b) the
rights  of the  Agent or any  Lender  under  this  Agreement,  the  terms of the
Intercreditor  Agreement  shall  govern and control as between the Agent and the
Lenders,  on the one hand, and the Working Capital Agent and the Working Capital
Lenders, on the other hand.

          17.14    JUDGMENT CURRENCY.

                   (a)  This is an international  financial transaction in which
the  specification of a currency and payment in New York City is of the essence.
Dollars shall be the currency of account in the case of all payments pursuant to
or arising under this Agreement or under any other Loan  Document,  and all such
payments shall be made to the Agent's Account in immediately available funds. To
the fullest  extent  permitted by applicable  law, the  Obligations of each Loan
Party to the Agent and the Lenders under this Agreement and under the other Loan
Documents shall not be discharged by any amount paid in any other currency or in
any other  manner than to the  Agent's  Account to the extent that the amount so
paid after  conversion  under this Agreement and transfer to the Agent's Account
does not yield the amount of  Dollars in New York City due under this  Agreement
and under the other Loan Documents.

                   (b)  If, for the purposes of obtaining or enforcing  judgment
against the Loan Parties in any court in any  jurisdiction  in  connection  with
this Agreement or any other Loan Document,  it becomes necessary to convert into
any other  currency  (such other  currency  being  referred to as the  "JUDGMENT
CURRENCY")  an amount due under this  Agreement or any Loan  Document in Dollars

                                       52

other  than  Judgment  Currency,  the  conversion  shall  be made at the rate of
exchange  prevailing on the Business Day  immediately  preceding (a) the date of
actual payment of the amount due, in the case of any proceeding in the courts of
any  jurisdiction  that would give effect to such conversion  being made on such
date,  or (b) the  date on  which  the  judgment  is  given,  in the case of any
proceeding in the courts of any other  jurisdiction  (the  applicable date as of
which such  conversion is made pursuant to this SECTION 17.14 being  hereinafter
referred to as the "JUDGMENT CONVERSION DATE").

                   (c)  If,  in the case of any  proceeding  in the court of any
jurisdiction  referred to in subsection (a) above, there is a change in the rate
of exchange  prevailing  between the  Judgment  Conversion  Date and the date of
actual  receipt for value of the amount  due,  the Loan  Parties  shall pay such
additional  amount  (if any,  and in any  event not a lesser  amount)  as may be
necessary to ensure that the amount actually received in the Judgment  Currency,
when converted at the rate of exchange  prevailing on the date of payment,  will
produce the amount of Dollars which could have been purchased with the amount of
the Judgment  Currency  stipulated in the judgment or judicial order at the rate
of  exchange  prevailing  on the  Judgment  Conversion  Date.  The term "rate of
exchange"  in this  Section  means the Spot  Rate at which  the  Agent  would be
prepared to sell Dollars against the Judgment Currency.

                   (d)  Any amount due from the Loan Parties  under this SECTION
17.14 shall not be affected by judgment being obtained for any other amounts due
under or in respect of this Agreement or any other Loan Document.

          17.15    IMMUNITY.  To the  extent  that any Loan  Party or any of its
Subsidiaries has or hereafter may acquire any immunity  (sovereign or otherwise)
from  jurisdiction  of any  court or from  set-off  or from any  legal  process,
action, suit or proceeding (whether through service or notice,  attachment prior
to judgment, attachment in aid of execution, execution of judgment or otherwise)
with  respect to itself or any of its  property,  the  Parent and each  Borrower
hereby  irrevocably waives (on behalf of itself and its Subsidiaries) and agrees
not to plead or claim such immunity in respect of its Obligations  hereunder and
under the other Loan Documents to which it is a party to the extent permitted by
applicable law and,  without  limiting the  generality of the foregoing,  agrees
that the waivers set forth in this SECTION 17.15 shall be to the fullest  extent
permitted  under the  Foreign  Sovereign  Immunities  Act of 1976 of the  United
States and are intended to be irrevocable for purposes of such Act.

                          [Signature pages to follow.]

                                       53

                   IN WITNESS  WHEREOF,  the  parties  hereto  have  caused this
Agreement to be executed and delivered as of the date first above written.

BORROWERS:                               ARLON, INC.,
                                         a Delaware corporation

                                         By: ___________________________________
                                         Title:_________________________________

                                         ARLON VISCOR LTD.,
                                         a Texas limited partnership

                                         By: Arlon Partners, Inc.,
                                             Its General Partner

                                         By: ___________________________________
                                         Title:_________________________________

                                         ARLON SIGNTECH, LTD.,
                                         a Texas limited partnership

                                         By: Arlon Partners, Inc.,
                                             Its General Partner

                                         By: ___________________________________
                                         Title:_________________________________

                                         KASCO CORPORATION,
                                         a Delaware corporation

                                         By: ___________________________________
                                         Title:_________________________________

                                         SOUTHERN SAW ACQUISITION CORPORATION,
                                         a Delaware corporation

                                         By: ___________________________________
                                         Title:_________________________________

PARENT:                                  BAIRNCO CORPORATION,
                                         a Delaware corporation

                                         By: ___________________________________
                                         Title:_________________________________

                                       54

AGENT AND LENDERS:                       ABLECO FINANCE LLC,
                                         a Delaware limited liability company, as Agent and as a
                                         Lender

                                         By: ___________________________________
                                         Title:_________________________________

                                       55

                                  SCHEDULE 1.1

As  used  in the  Agreement,  the  following  terms  shall  have  the  following
definitions:

                   "ABLECO"  means  Ableco  Finance  LLC,  a  Delaware   limited
liability company.

                   "ACCOUNT"  means an  account  (as that term is defined in the
Code).

                   "ACCOUNT  DEBTOR"  means any  Person who is  obligated  on an
Account, chattel paper, or a general intangible.

                   "ACT" has the meaning specified therefor in SECTION 17.10.

                   "ACTIVATION  INSTRUCTION" has the meaning specified  therefor
in SECTION 2.5(B).

                   "ADDITIONAL  DOCUMENTS" has the meaning specified therefor in
SECTION 5.17.

                   "ADMINISTRATIVE  BORROWER" has the meaning specified therefor
in SECTION 17.12.

                   "AFFILIATE" means, as applied to any Person, any other Person
who controls, is controlled by, or is under common control with, such Person and
in the case of any Loan Party, the immediate family members,  spouses and lineal
descendants of individuals  that are Affiliates of such Loan Party. For purposes
of this  definition,  "control"  means the  possession,  directly or  indirectly
through one or more  intermediaries,  of the power to direct the  management and
policies of a Person,  whether through the ownership of Stock,  by contract,  or
otherwise;  PROVIDED,  HOWEVER,  that,  for  purposes  of  SECTION  6.13  of the
Agreement:  (a) any Person which owns directly or indirectly  10% or more of the
Stock  having  ordinary  voting  power for the  election of  directors  or other
members of the governing  body of a Person or 10% or more of the  partnership or
other  ownership  interests of a Person (other than as a limited partner of such
Person)  shall be deemed an  Affiliate  of such  Person,  (b) each  director (or
comparable  manager)  of a Person  shall be  deemed to be an  Affiliate  of such
Person, and (c) each partnership in which a Person is a general partner shall be
deemed an  Affiliate  of such  Person.  Notwithstanding  anything  herein to the
contrary, in no event shall the Agent or any Lender be considered an "Affiliate"
of any Loan Party.

                   "AGENT" has the meaning specified therefor in the preamble to
the Agreement.

                   "AGENT-RELATED   PERSONS"  means  Agent,  together  with  its
Affiliates, officers, directors, employees, attorneys, and agents.

                   "AGENT'S   ACCOUNT"  means  the  Deposit   Account  of  Agent
identified on SCHEDULE A-1.

                   "AGENT'S  LIENS" means the Liens granted by any Loan Party to
Agent under the Loan Documents.

                   "AGREEMENT" means the Credit Agreement to which this SCHEDULE
1.1 is attached.

                   "APPLICATION  EVENT" means the occurrence of (a) a failure by
Borrowers to repay all of the  Obligations on the Maturity Date, or (b) an Event
of Default  and the  election  by the  Required  Lenders  to declare  all or any
portion of the Obligations to be due and payable or to exercise remedies against
the Collateral.

                   "APPROVED ADDBACK EXPENSES" means, with respect to any period
specified on SCHEDULE A-3, the lesser of (a) the actual  amount  expended by the
Parent and its  Subsidiaries  in respect of the items  specified on SCHEDULE A-3
during such  period,  and (b) the amount  specified  on SCHEDULE A-3 during such
period.

                   "ASSIGNMENT   AND   ACCEPTANCE"   means  an  Assignment   and
Acceptance Agreement substantially in the form of EXHIBIT A-1 or such other form
acceptable to Agent.

                   "AUTHORIZED   PERSON"  means  any  one  of  the   individuals
identified on SCHEDULE A-2.

                   "BANKRUPTCY  CODE"  means (i) title 11 of the  United  States
Code,  and (ii) any similar  legislation in any relevant  jurisdiction,  in each
case, as in effect from time to time.

                   "BASE  LIBOR RATE"  means the rate per annum,  determined  by
Agent in accordance with its customary procedures, and utilizing such electronic
or other quotation sources as it considers appropriate,  to be the rate at which
Dollar deposits (for delivery on the first day of the requested Interest Period)
are offered to major banks in the London  interbank market 2 Business Days prior
to the  commencement  of the  requested  Interest  Period,  for a term and in an
amount  comparable to the Interest  Period and the amount of the LIBOR Rate Loan
requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR
Rate  Loan or as a  conversion  of a Base  Rate  Loan to a LIBOR  Rate  Loan) by
Administrative  Borrower in accordance with the Agreement,  which  determination
shall be conclusive in the absence of manifest error.

                   "BASE RATE" means the rate of interest publicly  announced by
the  Reference  Bank in New York,  New York  from time to time as its  reference
rate,  base rate or prime rate. The reference  rate,  base rate or prime rate is
determined  from time to time by the  Reference  Bank as a means of pricing some
loans to its  borrowers  and neither is tied to any external rate of interest or
index nor necessarily  reflects the lowest rate of interest  actually charged by
the Reference Bank to any particular class or category of customers. Each change
in the Base Rate shall be effective  from and  including the date such change is
publicly announced as being effective.

                   "BASE  RATE LOAN"  means  each  portion of the Term Loan that
bears interest at a rate determined by reference to the Base Rate.

                   "BASE RATE MARGIN" means 3.50 percentage points.

                   "BOARD  OF  DIRECTORS"  means  the  board  of  directors  (or
comparable  managers) of WHX or any committee  thereof duly authorized to act on
behalf of the board of directors (or comparable managers).

                   "BORROWER"  and  "BORROWERS"  have  the  respective  meanings
specified therefor in the preamble to the Agreement.

                   "BRIDGE  FACILITY" means the facility under that certain Loan
and  Security  Agreement  in  the  aggregate  principal  amount  not  to  exceed
$90,000,000, dated as of April 17, 2007, by and between Steel Partners II, L.P.,
Parent and BZ Acquisition Corp., as amended and restated on the date hereof.

                   "BUSINESS DAY" means any day that is not a Saturday,  Sunday,
or other day on which banks are  authorized or required to close in the state of
New York,  except that, if a  determination  of a Business Day shall relate to a
LIBOR Rate Loan,  the term  "Business  Day" also shall  exclude any day on which
banks are closed for dealings in Dollar deposits in the London interbank market.

                   "CANADIAN  GUARANTY" means a Guaranty  executed and delivered
by the Canadian Obligor in favor of Agent, in form and substance satisfactory to
Agent.

                   "CANADIAN  OBLIGOR" means Atlantic Service Company,  Limited,
an Ontario corporation.

                   "CANADIAN  SECURITY  AGREEMENT"  means a  Security  Agreement
executed and  delivered by the Canadian  Obligor in favor of Agent,  in form and
substance satisfactory to Agent.

                   "CANADIAN  SECURITY  DOCUMENTS"  means the Canadian  Security
Agreement,   the  Quebec  Security   Documents,   and  such  other  instruments,
agreements,  and  documents  governed  by the laws of  Canada  or any  political
subdivision  thereof, as Agent may require in order to secure the obligations of
the Canadian Obligor under the Canadian Guaranty.

                   "CAPITAL  EXPENDITURES" means, with respect to any Person for
any  period,   the  aggregate  of  all  expenditures  by  such  Person  and  its
Subsidiaries  during such period that are capital  expenditures as determined in
accordance with GAAP, whether such expenditures are paid in cash or financed.

                   "CAPITAL  LEASE   OBLIGATION"   means  that  portion  of  the
obligations  under  a  Capital  Lease  that is  required  to be  capitalized  in
accordance with GAAP.

                   "CAPITAL  LEASE"  means  a  lease  that  is  required  to  be
capitalized for financial reporting purposes in accordance with GAAP.

                   "CASH  EQUIVALENTS"  means (a) marketable direct  obligations
issued by, or unconditionally  guaranteed by, the United States or issued by any
agency thereof and backed by the full faith and credit of the United States,  in
each case  maturing  within 1 year  from the date of  acquisition  thereof,  (b)
marketable  direct  obligations  issued by any state of the United States or any
political  subdivision of any such state or any public  instrumentality  thereof
maturing within 1 year from the date of acquisition  thereof and, at the time of
acquisition,  having  one of the two  highest  ratings  obtainable  from  either
Standard  & Poor's  Rating  Group  ("S&P") or Moody's  Investors  Service,  Inc.
("Moody's"),  (c) commercial  paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least  P-1 from  Moody's,  (d)  certificates  of  deposit  or
bankers' acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank  organized  under the laws of the United  States or any state
thereof having at the date of acquisition  thereof  combined capital and surplus
of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank
that  satisfies  the criteria  described in clause (d) above,  or (ii) any other
bank organized  under the laws of the United States or any state thereof so long
as the  amount  maintained  with any such  other  bank is less  than or equal to
$100,000  and is insured  by the  Federal  Deposit  Insurance  Corporation,  (f)
Investments in money market funds substantially all of whose assets are invested
in the types of assets described in clauses (a) through (e) above.

                   "CASH MANAGEMENT  ACCOUNT" has the meaning specified therefor
in SECTION 2.5(A).

                   "CASH  MANAGEMENT   AGREEMENTS"   means  those  certain  cash
management  agreements,  in form and substance  satisfactory  to Agent,  each of
which is among Parent or one of its Subsidiaries,  Agent,  Working Capital Agent
and one of the Cash Management Banks.

                   "CASH MANAGEMENT BANK" has the meaning specified  therefor in
SECTION 2.5(A).

                   "CFC" means a controlled foreign corporation (as that term is
defined in the IRC).

                   "CHANGE OF CONTROL" means that (a) Permitted  Holders fail to
beneficially  own,  directly or indirectly,  at least 25% of the Stock of WHX or
(b) a majority  of the  members of WHX's Board of  Directors  do not  constitute
Continuing  Directors  or  (c)  WHX  fails  to  own  and  control,  directly  or
indirectly, 100% of the Stock of Parent.

                   "CLOSING  DATE" means the date of the making of the Term Loan
hereunder.

                   "CLOSING  DATE  TRANSACTIONS"  means,  collectively,  (a) the
funding of (i) the Term Loan,  (ii) the  Working  Capital  Term Loan,  (iii) the
Working  Capital  Advances  to be made on the  Closing  Date,  (iv)  the  Equity
Contribution,  and (v) the  Subordinated  Indebtedness,  (b) the issuance of the
Working  Capital  Letters of Credit to be issued on the  Closing  Date,  (c) the
repayment of the Indebtedness  owing to the Existing Lender and the Indebtedness
outstanding  under  the  Bridge  Facility  and the  termination  of such  credit
facilities,  and (d) the payment of all fees and expenses in connection with the
foregoing.

                   "CODE"  means the New York  Uniform  Commercial  Code,  as in
effect from time to time.

                   "COLLATERAL"  means all  assets and  interests  in assets and
proceeds  thereof now owned or hereafter  acquired by Parent or its Subsidiaries
in or upon which a Lien is granted under any of the Loan Documents.

                   "COLLATERAL ACCESS AGREEMENT" means a landlord waiver, bailee
letter, or  acknowledgement  agreement of any lessor,  warehouseman,  processor,
consignee,  or other  Person in  possession  of,  having a Lien upon,  or having
rights  or  interests  in  Parent's  or its  Subsidiaries'  books  and  records,
Equipment,  or Inventory,  in each case, in form and substance  satisfactory  to
Agent.

                   "COLLECTIONS" means ALL cash, checks, notes, instruments, and
other items of payment (including  insurance  proceeds,  proceeds of cash sales,
rental proceeds, and tax refunds).

                   "COMMITMENT"   means,  with  respect  to  each  Lender,   its
Commitment, and, with respect to all Lenders, their Commitments, in each case as
such Dollar amounts are set forth beside such Lender's name under the applicable
heading on SCHEDULE C-1 or in the Assignment  and  Acceptance  pursuant to which
such  Lender  became a Lender  hereunder,  as such  amounts  may be  reduced  or
increased from time to time pursuant to assignments  made in accordance with the
provisions of SECTION 13.1.

                   "COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of EXHIBIT C-1  delivered by the chief  financial  officer of Parent to
Agent.

                   "CONTINUING  DIRECTOR"  means (a) any  member of the Board of
Directors who was a director (or comparable manager) of WHX on the Closing Date,
(b) any  individual  who  becomes a member of the Board of  Directors  after the
Closing Date if such  individual  was appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors,  but excluding any
such individual  originally  proposed for election in opposition to the Board of
Directors  in office at the  Closing  Date in an actual or  threatened  election
contest  relating to the election of the directors (or  comparable  managers) of
WHX and whose  initial  assumption  of office  resulted from such contest or the
settlement  thereof or (c) any  individual  who becomes a member of the Board of
Directors  after the Closing Date if such  individual was appointed or nominated
by Permitted Holder for or Permitted Holder voted in favor of such  individual's
election to the Board of Directors.

                   "CONTRIBUTION  AGREEMENT" means the  Contribution  Agreement,
dated as of the Closing  Date,  among the Loan  Parties,  for the benefit of the
Agent and the Lenders.

                   "CONTROL  AGREEMENT" means a control  agreement,  in form and
substance  satisfactory to Agent, executed and delivered by Parent or one of its
Subsidiaries,  Agent,  Working  Capital  Agent  and  the  applicable  securities
intermediary  (with respect to a Securities  Account) or bank (with respect to a
Deposit Account).

                   "COPYRIGHT  SECURITY  AGREEMENT"  has the  meaning  specified
therefor in the Security Agreement.

                   "DAILY BALANCE" means,  as of any date of  determination  and
with respect to any Obligation, the amount of such Obligation owed at the end of
such day.

                   "DEFAULT"  means an event,  condition,  or default that, with
the  giving  of  notice,  the  passage  of time,  or both,  would be an Event of
Default.

                   "DEPOSIT  ACCOUNT" means any deposit account (as that term is
defined in the Code).

                   "DESIGNATED   ACCOUNT"   means   the   Deposit   Account   of
Administrative Borrower identified on SCHEDULE D-1.

                   "DESIGNATED  ACCOUNT BANK" has the meaning specified therefor
in SCHEDULE D-1.

                   "DOLLARS" or "$" means United States dollars.

                   "DOMESTIC  SUBSIDIARY" means a Subsidiary organized under the
laws of the United States or any jurisdiction thereof.

                   "EBITDA" means,  with respect to any fiscal period,  Parent's
and its Subsidiaries'  consolidated net earnings (or loss), MINUS  extraordinary
gains,  interest income,  PLUS interest expense,  income taxes, and depreciation
and  amortization  for such period,  PLUS or MINUS, as the case may be, deferred
financing costs that are written off so long as such costs arise from financings
effectuated  prior to the  Closing  Date,  non  cash  amortization  of  deferred
financing costs related to the Term Loan and the Working  Capital  Indebtedness,
non cash gains or losses arising from the sale of capital assets, non cash gains
or losses  arising from the write up or write down of assets  (including the non
cash write down associated with the JD Edwards system),  non-cash period pension
costs  or  credit  related  to any  existing  Employee  Plan,  and any non  cash
extraordinary  gains  or  losses  (in  each  case,  to the  extent  included  in
determining  net  income)  for  such  period,  in  each  case,  determined  on a
consolidated basis in accordance with GAAP; PROVIDED,  that for the calculations
contemplated  in SECTION 6.16 of the  Agreement,  EBITDA shall be determined (A)
before any Approved Addback Expenses,  (B) before Kasco  Non-recurring  Expenses
and  (C)  before  actual  costs  and  expenses   related  to  the   transactions
contemplated by this Agreement in an aggregate amount not to exceed $500,000, in
each case to the extent such items impact net income.

                   "EMPLOYEE PLAN" means an employee  benefit plan (other than a
Multiemployer  Plan)  covered by Title IV of ERISA and  maintained  (or that was
maintained at any time during the six (6) calendar  years  preceding the date of
any  borrowing  hereunder)  for  employees of any Loan Party or any of its ERISA
Affiliates.

                   "ENVIRONMENTAL   ACTIONS"  means  any   complaint,   summons,
citation,  written notice, directive,  order, claim, litigation,  investigation,
judicial or administrative proceeding,  judgment, letter, or other communication
from any  Governmental  Authority,  or any third party  involving  violations of
Environmental  Laws or  releases  of  Hazardous  Materials  from (a) any assets,
properties,  or businesses of any Loan Party, any Subsidiary of a Loan Party, or
any of  their  predecessors  in  interest,  (b)  from  adjoining  properties  or
businesses,  or (c)  from  or  onto  any  facilities  which  received  Hazardous
Materials generated by any Loan Party, any Subsidiary of a Loan Party, or any of
their predecessors in interest.

                   "ENVIRONMENTAL  LAW"  means any  applicable  federal,  state,
provincial,  foreign or local statute, law, rule, regulation,  ordinance,  code,
binding and enforceable  guideline,  binding and enforceable  written policy, or
rule of common law now or  hereafter  in effect and in each case as amended,  or
any judicial or administrative interpretation thereof, including any judicial or
administrative  order,  consent decree or judgment,  in each case, to the extent
binding on any Loan Party or any  Subsidiary  of a Loan  Party,  relating to the
environment,  the effect of the  environment  on employee  health,  or Hazardous
Materials, in each case as amended from time to time.

                   "ENVIRONMENTAL  LIABILITIES" means all liabilities,  monetary
obligations,  losses, damages,  punitive damages,  consequential damages, treble
damages,  costs and expenses  (including all reasonable fees,  disbursements and
expenses of counsel,  experts,  or consultants,  and costs of investigation  and
feasibility studies),  fines, penalties,  sanctions,  and interest incurred as a
result of any claim or demand, or Remedial Action required,  by any Governmental
Authority or any third party, and which relate to any Environmental Action.

                   "ENVIRONMENTAL   LIEN"   means  any  Lien  in  favor  of  any
Governmental Authority for Environmental Liabilities.

                   "EQUIPMENT"  means  equipment (as that term is defined in the
Code).

                   "EQUITY  CONTRIBUTION" means a cash equity contribution in an
aggregate  amount not less than  $15,000,000  made by WHX to the Parent prior to
the Closing Date.

                   "ERISA" means the Employee  Retirement Income Security Act of
1974, as amended,  and any successor statute thereto or the non-U.S.  equivalent
thereof.

                   "ERISA AFFILIATE" means (a) any Person subject to ERISA whose
employees  are treated as employed by the same  employer as the  employees  of a
Loan Party or a  Subsidiary  of a Loan Party under IRC Section  414(b),  (b) any
trade or business  subject to ERISA whose  employees  are treated as employed by
the same  employer as the  employees of a Loan Party or a  Subsidiary  of a Loan
Party under IRC Section 414(c),  (c) solely for purposes of Section 302 of ERISA
and Section 412 of the IRC, any  organization  subject to ERISA that is a member
of an  affiliated  service group of which a Loan Party or a Subsidiary of a Loan
Party is a member  under IRC  Section  414(m),  or (d)  solely for  purposes  of
Section  302 of ERISA and Section  412 of the IRC,  any Person  subject to ERISA
that is a party to an  arrangement  with a Loan Party or a Subsidiary  of a Loan
Party and whose employees are aggregated with the employees of a Loan Party or a
Subsidiary of a Loan Party under IRC Section 414(o).

                   "EVENT OF  DEFAULT"  has the  meaning  specified  therefor in
SECTION 7.

                   "EXCESS CASH FLOW" means,  with respect to any fiscal  period
and with respect to Parent determined on a consolidated basis in accordance with
GAAP (a) TTM  EBITDA,  MINUS  (b) the sum of (i) the cash  portion  of  Interest
Expense  paid during such fiscal  period,  (ii) the cash portion of income taxes
paid during such period,  (iii) all scheduled principal payments made in respect
of the Term Loan during such period, (iv) any required cash contributions to any
Employee  Plan to the extent not included in the  calculation  of TTM EBITDA for
such  period and (v) the cash  portion of Capital  Expenditures  (net of (y) any
proceeds  reinvested in accordance with the proviso to SECTION 2.3(D)(II) of the
Agreement,  and (z) any  proceeds  of related  financings  with  respect to such
expenditures) made during such period.

                   "EXCHANGE ACT" means the Securities  Exchange Act of 1934, as
in effect from time to time.

                   "EXISTING LENDER" means Bank of America, N.A. and each of the
lenders party to the credit facilities agented by Bank of America.

                   "EXTRAORDINARY RECEIPTS" means any Net Cash Proceeds received
by Parent or any of its  Subsidiaries  not in the  ordinary  course of business,
including as a result of, without duplication, (a) foreign, United States, state
or local tax refunds  (other than  amounts  automatically  applied to future tax
payments or  representing  overpayments  of  estimated  taxes for the current or
immediately  preceding tax year), (b) pension plan  reversions,  (c) proceeds of
insurance (including key man life insurance and business interruption insurance,
but excluding any casualty insurance), (d) judgments, proceeds of settlements or
other  consideration  of any kind in  connection  with any cause of action,  (e)
indemnity payments, and (f) any purchase price adjustment received in connection
with any purchase agreement.

                   "FIXED CHARGE COVERAGE  RATIO" means,  with respect to Parent
for  any  period,  the  ratio  of (i)  EBITDA  for  such  period  MINUS  Capital
Expenditures  made (to the extent not  already  incurred  in a prior  period) or
incurred during such period, to (ii) Fixed Charges for such period.

                   "FIXED CHARGES" means,  with respect to any fiscal period and
with respect to Parent and its Subsidiaries  determined on a consolidated  basis
in accordance with GAAP, the sum, without  duplication,  of (a) Interest Expense
(other than payment-in-kind and non-cash financing expenses) accrued during such
period,  (b) principal  payments in respect of Indebtedness that are required to
be paid during such period,  and (c) all federal,  state, and local income taxes
accrued during such period;  PROVIDED, that for each fiscal quarter ending after
the Closing Date, through and including the fiscal quarter ending June 30, 2008,
Fixed  Charges  shall be deemed to be an amount  calculated by adding the sum of
all such Interest Expense,  principal payments and accrued taxes made or accrued
during the period  from the  Closing  Date  through  the date of  determination,
multiplying  such sum by 365,  and  dividing  the  product by the number of days
elapsed since the Closing Date.

                   "FUNDED INDEBTEDNESS" means, as of any date of determination,
all  Indebtedness for borrowed money or letters of credit (other than letters of
credit that provide collateral support for other outstanding Funded Indebtedness
at the time of such determination) of Parent, determined on a consolidated basis
in accordance  with GAAP, that by its terms matures more than one year after the
date of  calculation,  and any such  Indebtedness  maturing within one year from
such  date  that is  renewable  or  extendable  at the  option  of Parent or its
Subsidiaries,  as  applicable,  to a date more  than one year  from  such  date,
including, in any event, but without duplication, with respect to Parent and its
Subsidiaries,  the Term Loan, the Working Capital Indebtedness, any Indebtedness
under credit  facilities for non-U.S.  Subsidiaries of the Parent and the amount
of their Capital Lease Obligations,  but excluding the Subordinated Indebtedness
and Other Subordinated Indebtedness.

                   "FUNDING  LOSSES"  has  the  meaning  specified  therefor  in
SECTION 2.10(B)(II).

                   "FUNDS FLOW AGREEMENT" means a funds flow agreement,  in form
and substance reasonably  satisfactory to Agent,  executed and delivered by Loan
Parties, Agent, and Working Capital Agent.

                   "GAAP" means generally accepted  accounting  principles as in
effect from time to time in the United States, consistently applied.

                   "GOVERNING  DOCUMENTS" means, with respect to any Person, the
certificate  or  articles of  incorporation,  by-laws,  or other  organizational
documents of such Person.

                   "GOVERNMENTAL  AUTHORITY"  means any federal,  state,  local,
supra-national or other  governmental or administrative  body,  instrumentality,
board,  department,  or agency or any court,  tribunal,  administrative  hearing
body, arbitration panel, commission, or other similar dispute-resolving panel or
body.

                   "GUARANTORS"  means (a) Parent,  and (b) each  Subsidiary  of
Parent (other than Borrowers,  or any other Subsidiary that is a CFC and that is
not  required  to  guaranty  the  Obligations  pursuant  to Section  5.16),  and
"GUARANTOR" means any one of them.

                   "GUARANTY"  means that certain  general  continuing  guaranty
executed and delivered by each  Guarantor in favor of Agent,  for the benefit of
the Lender Group, in form and substance satisfactory to Agent.

                   "HAZARDOUS  MATERIALS"  means (a) substances that are defined
or listed  in, or  otherwise  classified  pursuant  to, any  applicable  laws or
regulations  as  "hazardous   substances,"   "hazardous  materials,"  "hazardous
wastes," "toxic substances," or any other formulation  intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity,   reactivity,   carcinogenicity,   reproductive  toxicity,  or  "EP
toxicity",  (b) oil, petroleum,  or petroleum derived  substances,  natural gas,
natural gas liquids,  synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,

natural gas, or geothermal resources, (c) any flammable substances or explosives
or any  radioactive  materials,  and (d)  asbestos  in any  form  or  electrical
equipment  that  contains  any oil or  dielectric  fluid  containing  levels  of
polychlorinated biphenyls in excess of 50 parts per million.

                   "HEDGE AGREEMENT" means any and all agreements,  or documents
now existing or hereafter entered into by Parent or any of its Subsidiaries that
provide for an interest  rate,  credit,  commodity or equity swap,  cap,  floor,
collar, forward foreign exchange transaction, currency swap, cross currency rate
swap,  currency option,  or any combination of, or option with respect to, these
or similar  transactions,  for the  purpose of  hedging  Parent's  or any of its
Subsidiaries'  exposure to  fluctuations  in interest or exchange  rates,  loan,
credit exchange, security, or currency valuations or commodity prices.

                   "HOLDOUT  LENDER"  has  the  meaning  specified  therefor  in
SECTION 14.2(A).

                   "INDEBTEDNESS"  means (a) all obligations for borrowed money,
(b) all  obligations  evidenced by bonds,  debentures,  notes,  or other similar
instruments and all  reimbursement or other obligations in respect of letters of
credit,  bankers acceptances,  interest rate swaps, or other financial products,
(c) all  obligations as a lessee under Capital  Leases,  (d) all  obligations or
liabilities  of  others  secured  by a Lien  on any  asset  of a  Person  or its
Subsidiaries,  irrespective  of whether such obligation or liability is assumed,
(e) all  obligations  to pay the deferred  purchase  price of assets (other than
trade  payables  incurred  in the  ordinary  course of  business,  repayable  in
accordance with customary  trade  practices),  (f) all  obligations  owing under
Hedge Agreements,  and (g) any obligation  guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed,  endorsed,  co-made,  discounted, or
sold  with  recourse)  any  obligation  of any  other  Person  that  constitutes
Indebtedness under any of clauses (a) through (f) above.

                   "INDEMNIFIED  LIABILITIES" has the meaning specified therefor
in SECTION 10.3.

                   "INDEMNIFIED  PERSON" has the meaning  specified  therefor in
SECTION 10.3.

                   "INSOLVENCY  PROCEEDING" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
state or federal  bankruptcy or insolvency  law,  assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization,  arrangement, or other similar
relief.

                   "INTERCOMPANY  SUBORDINATION AGREEMENT" means a subordination
agreement executed and delivered by each Loan Party, each Subsidiary of any Loan
Party, and Agent, the form and substance of which is satisfactory to Agent.

                   "INTERCREDITOR  AGREEMENT" means an  intercreditor  agreement
executed and delivered by Agent and Working Capital Agent,  and acknowledged and
consented to by each  Borrower  and each  Guarantor,  as amended,  supplemented,
restated or otherwise modified from time to time.

                   "INTEREST  EXPENSE" means,  for any period,  the aggregate of
the interest expense of Parent and its Subsidiaries for such period,  determined
on a consolidated basis in accordance with GAAP.

                   "INTEREST  PERIOD"  means,  with  respect  to each LIBOR Rate
Loan, a period  commencing on the date of the making of such LIBOR Rate Loan (or
the continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR  Rate  Loan) and  ending,  as  selected  by  Borrowers,  1, 2, or 3 months
thereafter;  PROVIDED,  HOWEVER,  that (a) if any Interest Period would end on a
day that is not a Business Day, such Interest Period shall be extended  (subject
to clauses  (c)-(e)  below) to the next  succeeding  Business  Day, (b) interest
shall accrue at the applicable rate based upon the LIBOR Rate from and including
the first day of each Interest  Period to, but  excluding,  the day on which any
Interest Period expires, (c) any Interest Period that would end on a day that is
not a Business Day shall be extended to the next succeeding  Business Day unless

such Business Day falls in another  calendar  month, in which case such Interest
Period  shall end on the next  preceding  Business  Day,  (d) with respect to an
Interest  Period that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically  corresponding day in the calendar month
at the end of such Interest  Period),  the Interest Period shall end on the last
Business Day of the  calendar  month that is 1, 2, or 3 months after the date on
which  the  Interest  Period  began,  as  applicable,   and  (e)  Borrowers  (or
Administrative  Borrower on behalf  thereof)  may not elect an  Interest  Period
which will end after the Maturity Date.

                   "INVENTORY"  means  inventory (as that term is defined in the
Code).

                   "INVESTMENT"   means,   with  respect  to  any  Person,   any
investment by such Person in any other Person (including Affiliates) in the form
of loans, guarantees, advances, capital contributions (excluding (a) commission,
travel,  and similar  advances to officers and  employees of such Person made in
the  ordinary  course of  business,  and (b) BONA FIDE  Accounts  arising in the
ordinary course of business  consistent with past practice),  or acquisitions of
Indebtedness,  Stock,  or all or  substantially  all of the assets of such other
Person (or of any division or business line of such other Person), and any other
items that are or would be classified as investments on a balance sheet prepared
in accordance with GAAP.

                   "IRC" means the Internal  Revenue Code of 1986,  as in effect
from time to time.

                   "JUDGMENT CONVERSION DATE" has the meaning specified therefor
in SECTION 17.14.

                   "JUDGMENT  CURRENCY"  has the meaning  specified  therefor in
SECTION 17.14.

                   "KASCO" means Kasco Corporation, a Delaware corporation.

                   "KASCO  NON-RECURRING  EXPENSES"  means,  with respect to any
period  specified on SCHEDULE K-1, the lesser of (a) the actual amount  expended
by the Parent and its Subsidiaries in respect of the items specified on SCHEDULE
K-1 during such period, and (b) the amount specified on SCHEDULE K-1 during such
period.

                   "LENDER" and "LENDERS" have the respective meanings set forth
in the  preamble to the  Agreement,  and shall  include any other  Person made a
party to the Agreement in accordance with the provisions of SECTION 13.1.

                   "LENDER GROUP" means, individually and collectively,  each of
the Lenders and Agent.

                   "LENDER  GROUP  EXPENSES"  means  all (a)  costs or  expenses
(including taxes, and insurance premiums) required to be paid by a Loan Party or
its  Subsidiaries  under any of the Loan Documents that are paid,  advanced,  or
incurred  by any one or more  members of the Lender  Group,  (b) fees or charges
paid or incurred by Agent in  connection  with the Lender  Group's  transactions
with  Loan  Parties  or  their  Subsidiaries,  including,  fees or  charges  for
photocopying, notarization, couriers and messengers,  telecommunication,  public
record searches (including tax lien, judgment lien, litigation, and UCC searches
and  including  searches  with the patent and  trademark  office,  the copyright
office, or the department of motor vehicles),  filing,  recording,  publication,
appraisal  (including periodic  collateral  appraisals or business valuations to
the  extent of the fees and  charges  (and up to the  amount of any  limitation)
contained in the Agreement), real estate surveys, real estate title policies and
endorsements, and environmental audits, (c) costs and expenses incurred by Agent
or other  members of the  Lender  Group in the  disbursement  of funds to (or on
behalf of)  Borrowers  (by wire  transfer or  otherwise),  (d)  charges  paid or
incurred by Agent  resulting from the dishonor of checks,  (e) reasonable  costs
and  expenses  paid or  incurred  by the Lender  Group to correct any default or
enforce  any  provision  of the Loan  Documents,  or in gaining  possession  of,
maintaining,  handling,  preserving,  storing, shipping,  selling, preparing for
sale,  or  advertising  to  sell  the  Collateral,   or  any  portion   thereof,
irrespective  of  whether a sale is  consummated,  (f) audit  fees and  expenses
(including  travel,  meals,  and lodging) of Agent related to any inspections or
audits  to the  extent  of the fees and  charges  (and up to the  amount  of any

limitation)  contained in the Agreement,  (g)  reasonable  costs and expenses of
third party claims or any other suit paid or incurred by any one or more members
of the  Lender  Group  in  enforcing  or  defending  the  Loan  Documents  or in
connection  with the  transactions  contemplated  by the Loan  Documents  or the
Lender  Group's  relationship  with any Loan Party or any  Subsidiary  of a Loan
Party, (h) Agent's and each Lender's  reasonable  costs and expenses  (including
attorneys  fees)  incurred  in  advising,   structuring,   drafting,  reviewing,
administering  (including travel,  meals, and lodging),  syndicating  (including
rating the Term Loan), or amending the Loan Documents,  and (i) Agent's and each
Lender's  reasonable  costs  and  expenses  (including  attorneys,  accountants,
consultants,  and other  advisors  fees and expenses)  incurred in  terminating,
enforcing (including  attorneys,  accountants,  consultants,  and other advisors
fees and expenses incurred in connection with a "workout," a "restructuring," or
an Insolvency  Proceeding  concerning any Loan Party or any Subsidiary of a Loan
Party  or in  exercising  rights  or  remedies  under  the Loan  Documents),  or
defending the Loan  Documents,  irrespective  of whether suit is brought,  or in
taking any Remedial Action concerning the Collateral.

                   "LENDER-RELATED  PERSON"  means,  with respect to any Lender,
such Lender,  together with such Lender's Affiliates,  Related Funds,  officers,
directors, employees, attorneys, and agents.

                   "LEVERAGE RATIO" means, as of any date of  determination  (a)
the amount of  Parent's  Funded  Indebtedness  as of such  date,  DIVIDED BY (b)
Parent's EBITDA for the 12 month period ended as of such date.

                   "LIBOR  DEADLINE"  has  the  meaning  specified  therefor  in
SECTION 2.10(B)(I).

                   "LIBOR  NOTICE" means a written notice in the form of EXHIBIT
L-1.

                   "LIBOR OPTION" has the meaning specified  therefor in SECTION
2.10(A).

                   "LIBOR RATE" means,  for each Interest  Period for each LIBOR
Rate Loan, the rate per annum determined by Agent by DIVIDING (a) the Base LIBOR
Rate for such Interest  Period,  by (b) 100% MINUS the Reserve  Percentage.  The
LIBOR Rate shall be adjusted on and as of the effective day of any change in the
Reserve Percentage.

                   "LIBOR  RATE LOAN"  means each  portion of the Term Loan that
bears interest at a rate determined by reference to the LIBOR Rate.

                   "LIBOR RATE MARGIN" means 6.00 percentage points.

                   "LIEN"   means  any   mortgage,   deed  of   trust,   pledge,
hypothecation,  assignment, charge, deposit arrangement,  encumbrance, easement,
lien (statutory or other),  security interest, or other security arrangement and
any other  preference,  priority,  or  preferential  arrangement  of any kind or
nature  whatsoever,  including  any  conditional  sale  contract  or other title
retention  agreement,  the  interest of a lessor  under a Capital  Lease and any
synthetic or other financing lease having substantially the same economic effect
as any of the foregoing.

                   "LOAN ACCOUNT" has the meaning specified  therefor in SECTION
2.8.

                   "LOAN DOCUMENTS" means the Agreement,  the Canadian Guaranty,
the Canadian Security Documents, the Cash Management Agreements,  the Collateral
Access Agreements, the Control Agreements, the Copyright Security Agreement, the
Guaranty, the Intercompany Subordination Agreement, the Intercreditor Agreement,
the  Mortgages,  the Patent  Security  Agreement,  the Security  Agreement,  the
Subordination  Agreement,  the Trademark  Security  Agreement,  the Post-Closing
Letter,  any  note or  notes  executed  by a  Borrower  in  connection  with the
Agreement and payable to a member of the Lender Group,  and any other  agreement
entered  into,  now or in  the  future,  by  any  Loan  Party  or  any of  their
Subsidiaries, and the Lender Group in connection with the Agreement.

                   "LOAN PARTY" means any Borrower or any Guarantor.

                   "MATERIAL ADVERSE CHANGE" means (a) a material adverse change
in  the  business,  prospects,   operations,   results  of  operations,  assets,
liabilities  or  condition  (financial  or  otherwise)  of  Borrowers  and their
Subsidiaries, taken as a whole, (b) a material impairment of a Borrower's or any
of its Subsidiaries' ability to perform its obligations under the Loan Documents
to  which  it is a  party  or of the  Lender  Group's  ability  to  enforce  the
Obligations or realize upon the Collateral,  or (c) a material impairment of the
enforceability  or priority of the Agent's Liens with respect to the  Collateral
as a result  of an  action  or  failure  to act on the part of a  Borrower  or a
Subsidiary of a Borrower.

                   "MATERIAL  CONTRACT" means,  with respect to any Person,  (i)
each contract or agreement to which such Person or any of its  Subsidiaries is a
party  involving  aggregate  consideration  payable to or by such Person or such
Subsidiary  of  $250,000 or more (other  than  purchase  orders in the  ordinary
course  of the  business  of such  Person  or such  Subsidiary  and  other  than
contracts  that by their terms may be terminated by such Person or Subsidiary in
the  ordinary  course of its  business  upon less  than 60 days  notice  without
penalty or premium), (ii) the Related Transaction Documents, and (iii) all other
contracts  or  agreements  material  to  the  business,  operations,   condition
(financial or otherwise), performance, prospects or properties of such Person or
such Subsidiary.

                   "MATURITY DATE" has the meaning specified therefor in SECTION
3.2.

                   "MOODY'S"   has  the  meaning   specified   therefor  in  the
definition of Cash Equivalents.

                   "MORTGAGE  POLICY"  has the  meaning  specified  therefor  in
SCHEDULE 3.1(X).

                   "MORTGAGES" means, individually and collectively, one or more
mortgages,  deeds of trust, or deeds to secure debt, executed and delivered by a
Loan  Party or a  Subsidiary  of a Loan  Party in  favor of  Agent,  in form and
substance satisfactory to Agent, that encumber the Real Property Collateral.

                   "MULTIEMPLOYER  PLAN" means a "multiemployer plan" as defined
in  Section  4001(a)(3)  of ERISA to which  any Loan  Party or any of its  ERISA
Affiliates has contributed to, or has been obligated to contribute,  at any time
during the preceding six (6) years.

                   "NET CASH PROCEEDS" means:

                            (a) with  respect  to any sale or  disposition  by a
Loan Party or a Subsidiary of a Loan Party of property or assets,  the amount of
cash proceeds  received  (directly or indirectly)  from time to time (whether as
initial consideration or through the payment of deferred consideration) by or on
behalf of a Loan Party or a Subsidiary of a Loan Party, in connection  therewith
after deducting therefrom only (i) the amount of any Indebtedness secured by any
Permitted Lien on any asset (other than (A)  Indebtedness  owing to Agent or any
Lender under the  Agreement  or the other Loan  Documents  and (B)  Indebtedness
assumed by the  purchaser of such asset) which is required to be, and is, repaid
in connection with such sale or disposition,  (ii) reasonable fees, commissions,
and  expenses  related  thereto and  required to be paid by a Loan Party or such
Subsidiary of a Loan Party in connection with such sale or disposition and (iii)
taxes  paid  or  payable  to any  taxing  authorities  by a Loan  Party  or such
Subsidiary of a Loan Party in connection with such sale or disposition,  in each
case to the extent, but only to the extent, that the amounts so deducted are, at
the time of receipt of such cash,  actually  paid or payable to a Person that is
not an  Affiliate  of a Loan  Party or a  Subsidiary  of a Loan  Party,  and are
properly attributable to such transaction; and

                            (b) with  respect to the issuance or  incurrence  of
any  Indebtedness  by a Loan  Party  or a  Subsidiary  of a Loan  Party,  or the
issuance  by a Loan Party or a  Subsidiary  of a Loan Party of any shares of its
Stock, the aggregate amount of cash received  (directly or indirectly) from time
to time (whether as initial  consideration or through the payment or disposition
of deferred consideration) by or on behalf of a Loan Party or such Subsidiary in

connection with such issuance or incurrence,  after deducting therefrom only (i)
reasonable  fees,  commissions,  and expenses related thereto and required to be
paid by a Loan Party or such  Subsidiary  in  connection  with such  issuance or
incurrence, (ii) taxes paid or payable to any taxing authorities by a Loan Party
or such Subsidiary in connection with such issuance or incurrence,  in each case
to the extent, but only to the extent,  that the amounts so deducted are, at the
time of receipt of such cash,  actually  paid or payable to a Person that is not
an Affiliate  of a Loan Party or  Subsidiary  of a Loan Party,  and are properly
attributable to such transaction.

                   "NEW LENDING  OFFICE" has the meaning  specified  therefor in
SECTION 16(D).

                   "NON-US LENDER" has the meaning specified therefor in SECTION
16(D).

                   "OBLIGATIONS"  means all  loans  (including  the Term  Loan),
debts,  principal,  interest  (including  any interest  that  accrues  after the
commencement  of an  Insolvency  Proceeding  regardless  of  whether  allowed or
allowable  in whole or in part as a claim  in any such  Insolvency  Proceeding),
premiums,  liabilities (including all amounts charged to Borrowers' Loan Account
pursuant to the Agreement), obligations (including indemnification obligations),
fees, charges, costs, Lender Group Expenses (including any fees or expenses that
accrue after the commencement of an Insolvency Proceeding, regardless of whether
allowed  or  allowable  in whole  or in part as a claim  in any such  Insolvency
Proceeding), guaranties, covenants, and duties of any kind and description owing
by Loan  Parties  to the  Lender  Group  pursuant  to or  evidenced  by the Loan
Documents and  irrespective of whether for the payment of money,  whether direct
or  indirect,  absolute or  contingent,  due or to become due,  now  existing or
hereafter  arising,  and  including all interest not paid when due and all other
expenses or other  amounts that Loan Parties are required to pay or reimburse by
the Loan Documents or by law or otherwise in connection with the Loan Documents.
Any reference in the Agreement or in the Loan Documents to the Obligations shall
include all or any portion thereof and any extensions, modifications,  renewals,
or alterations thereof, both prior and subsequent to any Insolvency Proceeding.

                   "OPERATING LEASE  OBLIGATIONS"  means all obligations for the
payment of rent for any real or personal  property under leases or agreements to
lease, other than Capital Lease Obligations.

                   "OTHER SUBORDINATED  INDEBTEDNESS" means any Indebtedness (i)
which  is  expressly  subordinated  in  right  of  payment  to all  Indebtedness
evidenced  by  this  Agreement,  the  Working  Capital  Indebtedness,   and  the
Subordinated Indebtedness,  (ii) which does not mature prior to the date that is
six-months  following  the  stated  maturity  date  for  each  of the  foregoing
Indebtedness,  whichever is latest, (iii) which does not contain a cash interest
payment requirement and (iv) which has terms and conditions, and is subject to a
subordination agreement, reasonably acceptable to Agent.

                   "OTHER TAXES" has the meaning  specified  therefor in SECTION
16(B).

                   "PARENT" has the meaning  specified  therefor in the preamble
to the Agreement.

                   "PARTICIPANT  REGISTER" has the meaning specified therefor in
SECTION 13.1(F).

                   "PATENT  SECURITY   AGREEMENT"  has  the  meaning   specified
therefor in the Security Agreement.

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

                   "PERMITTED  DISCRETION"  means  a  determination  made in the
exercise of  reasonable  (from the  perspective  of a secured  lender)  business
judgment.

                   "PERMITTED   DISPOSITIONS"   means   (a)   sales   or   other
dispositions of Equipment that is substantially  worn,  damaged,  or obsolete in
the ordinary  course of business;  PROVIDED that the Net Cash Proceeds from such
sales or other  dispositions do not exceed $100,000 in the aggregate  during any
fiscal  year,  and such  Equipment is sold (or  otherwise  disposed of) for fair

market  value,  (b)  sales of  Inventory  to buyers  in the  ordinary  course of
business,  (c) the use or transfer of money or Cash Equivalents in a manner that
is not prohibited by the terms of the Agreement or the other Loan Documents, and
(d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights,
and other intellectual property rights in the ordinary course of business.

                   "PERMITTED  HOLDER"  means Steel  Partners  II, L.P.  and its
Affiliates.

                   "PERMITTED  INVESTMENTS"  means (a)  Investments  in cash and
Cash Equivalents,  (b) Investments in negotiable instruments for collection, (c)
advances made in connection  with purchases of goods or services in the ordinary
course of business, and (d) Investments received in settlement of amounts due to
a Loan Party or any Subsidiary of a Loan Party  effected in the ordinary  course
of  business  or owing to a Loan  Party or any  Subsidiary  of a Loan Party as a
result  of  Insolvency  Proceedings  involving  an  Account  Debtor  or upon the
foreclosure  or  enforcement  of  any  Lien  in  favor  of a Loan  Party  or any
Subsidiary of a Loan Party.

                   "PERMITTED KASCO SALE  TRANSACTION"  means the sale of all of
the Stock or  substantially  all of the  assets  of Kasco  and its  Subsidiaries
subject to  satisfaction of the conditions set forth in the Permitted Kasco Sale
Letter.

                   "PERMITTED  KASCO SALE LETTER" means that certain side letter
among  Parent,   Agent  and  Working   Capital  Agent,  in  form  and  substance
satisfactory  to  Agent,  pertaining  to  the  sale  of  all  of  the  Stock  or
substantially all of the assets of Kasco and its Subsidiaries.

                   "PERMITTED LIENS" means (a) Liens held by Agent to secure the
Obligations,  (b) Liens for unpaid  taxes,  assessments,  or other  governmental
charges or levies  that either (i) are not yet  delinquent,  or (ii) do not have
priority  over the  Agent's  Liens and the  underlying  taxes,  assessments,  or
charges or levies are the subject of Permitted Protests, (c) judgment Liens that
do not  constitute an Event of Default under SECTION 7.7 of the  Agreement,  (d)
Liens set forth on SCHEDULE  P-2,  provided  that any such Lien only secures the
Indebtedness   that  it  secures  on  the  Closing  Date  and  any   Refinancing
Indebtedness  in respect  thereof,  (e) the interests of lessors under operating
leases,  (f)  purchase  money Liens or the  interests of lessors  under  Capital
Leases to the extent  that such Liens or  interests  secure  Permitted  Purchase
Money  Indebtedness  and so long as (i) such  Lien  attaches  only to the  asset
purchased or acquired and the proceeds thereof,  and (ii) such Lien only secures
the Indebtedness that was incurred to acquire the asset purchased or acquired or
any Refinancing  Indebtedness in respect thereof, (g) Liens arising by operation
of law in favor of warehousemen,  landlords,  carriers, mechanics,  materialmen,
laborers,  or suppliers,  incurred in the ordinary course of business and not in
connection with the borrowing of money,  and which Liens either (i) are for sums
not yet delinquent,  or (ii) are the subject of Permitted Protests, (h) Liens on
amounts  deposited in connection with obtaining  worker's  compensation or other
unemployment  insurance,  (i) Liens on amounts  deposited in connection with the
making or entering into of bids,  tenders,  or leases in the ordinary  course of
business and not in connection with the borrowing of money, (j) Liens on amounts
deposited as security for surety or appeal bonds in  connection  with  obtaining
such bonds in the ordinary course of business,  (k) (i) with respect to any Real
Property Collateral,  any encumbrance or restriction  contained in Schedule B of
the title insurance  policies for such Real Property which have been approved by
Lenders,  shown on the surveys  listed on SCHEDULE P-3 with respect to such Real
Property, or such other encumbrances,  restrictions,  easements,  rights of way,
and zoning restrictions that do not materially  interfere with or impair the use
or  operation  thereof,  and (ii)  with  respect  to all  other  Real  Property,
encumbrances,  restrictions,  easements,  rights of way, and zoning restrictions
that do not materially  interfere  with or impair the use or operation  thereof,
(l)  Liens  held  by  Working  Capital  Agent  to  secure  the  Working  Capital
Indebtedness,  so  long as such  Liens  are  subject  to the  provisions  of the
Intercreditor  Agreement,  (m) Liens held by Subordinated  Debt Lender to secure
the  Subordinated  Indebtedness,  so long  as  such  Liens  are  subject  to the
provisions of the Subordination  Agreement, and (n) Liens held by Steel Partners
II, L.P. to secure the obligations under the WHX Guaranty, so long as such Liens
are subject to the provisions of the Subordination  Agreement. For the avoidance
of doubt and notwithstanding anything to the contrary contained herein, under no
circumstances  shall  Permitted Liens include any Liens imposed under the IRC or
ERISA,  or otherwise,  that secures any liability or obligation  with respect to
any Employee Plan.

                   "PERMITTED  MERGER"  means the merger,  effective as of April
24, 2007, of BZ Acquisition  Corp., a Delaware  corporation  and an affiliate of
Steel Partners II, L.P. ("BZ"), with and into Bairnco with Bairnco continuing as
the  surviving  entity,  pursuant to that certain  Agreement and Plan of Merger,
dated as of February 23,  2007,  by and among Steel  Partners  II, L.P.,  BZ and
Baimco (the "BZ MERGER  AGREEMENT"),  and as assigned by Steel Partners II, L.P.
to WHX pursuant to the Stock Purchase Agreement,  dated as of April 12, 2007, by
and between Steel Partners II, L.P. and WHX.

                   "PERMITTED  PRIORITY LIENS" means any Permitted Lien that has
(and is  permitted  to  have)  priority  over the  Liens  in favor of the  Agent
pursuant to any applicable law or agreement.

                   "PERMITTED  PROTEST"  means the right of Parent or any of its
Subsidiaries  to  protest  any  Lien  (other  than  any Lien  that  secures  the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
United States federal tax lien), or rental payment,  provided that (a) a reserve
with  respect  to such  obligation  is  established  on  Parent's  or any of its
Subsidiaries'  books and records in such amount as is required  under GAAP,  (b)
any such protest is instituted  promptly and prosecuted  diligently by Parent or
any of its  Subsidiaries,  as  applicable,  in  good  faith,  and (c)  Agent  is
satisfied that,  while any such protest is pending,  there will be no impairment
of the enforceability, validity, or priority of any of the Agent's Liens.

                   "PERMITTED PURCHASE MONEY INDEBTEDNESS" means, as of any date
of determination, Purchase Money Indebtedness incurred after the Closing Date in
an  aggregate  principal  amount  outstanding  at any one time not in  excess of
$1,000,000.

                   "PERSON"  means  natural   persons,   corporations,   limited
liability  companies,  limited  partnerships,   general  partnerships,   limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other  organizations,  irrespective  of  whether  they are legal  entities,  and
governments and agencies and political subdivisions thereof.

                   "POST-CLOSING LETTER" means that certain Post-Closing Letter,
dated of as of the date hereof,  between Parent and Agent, in form and substance
satisfactory to Agent.

                   "PROJECTIONS"  means Parent's  forecasted (a) balance sheets,
(b) profit and loss statements,  and (c) cash flow statements, all prepared on a
basis consistent with Parent's historical  financial  statements,  together with
appropriate supporting details and a statement of underlying assumptions.

                   "PRO RATA SHARE" means, as of any date of  determination  (a)
prior to the making of the Term Loan,  the  percentage  obtained by dividing (i)
such  Lender's  Commitment,  by  (ii)  the  aggregate  amount  of  all  Lenders'
Commitments,  and (b) from and after the making of the Term Loan, the percentage
obtained by dividing (i) the principal  amount of such  Lender's  portion of the
Term Loan by (ii) the principal amount of the Term Loan.

                   "PROTECTIVE  ADVANCES" has the meaning specified  therefor in
SECTION 2.2(C)(I).

                   "PURCHASE MONEY  INDEBTEDNESS" means Indebtedness (other than
the Obligations, but including Capital Lease Obligations),  incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.

                   "QUALIFIED CASH" means, as of any date of determination,  the
amount  of  unrestricted  cash and  Cash  Equivalents  of  Borrowers  and  their
Subsidiaries  that is in Deposit  Accounts  or in  Securities  Accounts,  or any
combination thereof, and which such Deposit Account or Securities Account is the
subject of a Control  Agreement and is maintained by a branch office of the bank
or securities intermediary located within the United States.

                   "QUEBEC SECURITY  DOCUMENTS" means (i) a Deed of Hypothec and
Issue of Bonds in favour of Agent, as fonde de pouvoir under Article 2692 of the
Civil Code of Quebec,  to be executed before a notary of the Province of Quebec,
(ii) a bond issued by a Canadian  Obligor  pursuant to such Deed of Hypothec and
Issue of Bonds, and (iii) a pledge agreement to be granted by a Canadian Obligor
in respect of any bond issued under such Deed of Hypothec and Issue of Bonds.

                   "RATING  AGENCIES"  has the  meaning  specified  therefor  in
SECTION 2.14.

                   "REAL  PROPERTY"  means  any  estates  or  interests  in real
property  now owned or hereafter  acquired by any Loan Party or a Subsidiary  of
any Loan Party and the improvements thereto.

                   "REAL PROPERTY COLLATERAL" means the Real Property identified
on SCHEDULE R-1 and any Real Property  hereafter acquired by a Loan Party or any
Subsidiary of a Loan Party.

                   "RECORD"  means  information  that is inscribed on a tangible
medium or that is stored in an electronic or other medium and is  retrievable in
perceivable form.

                   "REFERENCE BANK" means JPMorgan Chase Bank, its successors or
any other commercial bank designated by the Agent to the Administrative Borrower
from time to time.

                   "REFINANCING  INDEBTEDNESS" means refinancings,  renewals, or
extensions  of  Indebtedness  so long as: (a) such  refinancings,  renewals,  or
extensions  do  not  result  in an  increase  in  the  principal  amount  of the
Indebtedness  so  refinanced,  renewed,  or  extended,  (b)  such  refinancings,
renewals,  or  extensions do not result in an increase in the cash interest rate
with respect to the Indebtedness so refinanced,  renewed, or extended,  (c) such
refinancings,  renewals,  or  extensions  do not result in a  shortening  of the
average  weighted  maturity  of the  Indebtedness  so  refinanced,  renewed,  or
extended,  nor are they on  terms  or  conditions  that,  taken as a whole,  are
materially  more  burdensome  or  restrictive  to  Loan  Parties,   (d)  if  the
Indebtedness that is refinanced,  renewed, or extended was subordinated in right
of payment to the Obligations, then the terms and conditions of the refinancing,
renewal,  or extension must include  subordination terms and conditions that are
at least as favorable to the Lender Group as those that were  applicable  to the
refinanced,  renewed, or extended Indebtedness, and (e) the Indebtedness that is
refinanced, renewed, or extended is not recourse to any Person that is liable on
account of the  Obligations  other than those Persons which were  obligated with
respect to the Indebtedness that was refinanced, renewed, or extended.

                   "REGISTER"  has the  meaning  specified  therefor  in SECTION
13.1(C).

                   "REGISTERED LOAN" has the meaning specified  therefor SECTION
13.1(C).

                   "RELATED FUND" means a fund, money market account, investment
account or other  account  managed by a Lender or an Affiliate of such Lender or
its investment manager.

                   "RELATED  TRANSACTION  DOCUMENTS"  means,  collectively,  the
Working Capital Documents and the Subordinated Debt Documents.

                   "REMEDIAL  ACTION"  means all actions  taken to (a) clean up,
remove,  remediate,  contain,  treat, monitor,  assess,  evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened  release of Hazardous  Materials so they do not
migrate or endanger or  threaten  to  endanger  public  health or welfare or the
indoor or outdoor  environment,  (c) restore or reclaim natural resources or the
environment,   (d)  perform  any  pre-remedial   studies,   investigations,   or
post-remedial  operation and  maintenance  activities,  or (e) conduct any other
actions with respect to Hazardous Materials authorized by Environmental Laws.

                   "REPLACEMENT  LENDER" has the meaning  specified  therefor in
SECTION 14.2(A).

                   "REPORT" has the meaning specified therefor in SECTION 15.16.

                   "REPORTABLE  EVENT"  means an event in Section  4043 of ERISA
(other than an event not subject to the  provision for 30-day notice to the PBGC
under the regulations promulgated under such Section).

                   "REQUIRED   LENDERS"  means,  at  any  time,   Lenders  whose
aggregate Pro Rata Shares exceed 50%.

                   "RESERVE  PERCENTAGE"  means, on any day, for any Lender, the
maximum  percentage  prescribed by the Board of Governors of the Federal Reserve
System (or any successor  Governmental  Authority) for  determining  the reserve
requirements  (including  any  basic,   supplemental,   marginal,  or  emergency
reserves) that are in effect on such date with respect to  eurocurrency  funding
(currently  referred to as "eurocurrency  liabilities")  of that Lender,  but so
long as such Lender is not required or directed under applicable  regulations to
maintain such reserves, the Reserve Percentage shall be zero.

                   "SEC"  means  the  United  States   Securities  and  Exchange
Commission and any successor thereto.

                   "SECURITIES ACCOUNT" means a securities account (as that term
is defined in the Code).

                   "SECURITIZATION"   has  the  meaning  specified  therefor  in
SECTION 2.14.

                   "SECURITY AGREEMENT" means a security agreement,  in form and
substance  satisfactory  to Agent,  executed  and  delivered  by  Borrowers  and
Guarantors to Agent.

                   "SENIOR   LEVERAGE   RATIO"   means,   as  of  any   date  of
determination  (a) the outstanding  principal  amount of the Obligations and the
Working  Capital  Indebtedness,  divided by (b) Parent's EBITDA for the 12 month
period ended as of such date.

                   "SOLVENT"  means,  with respect to any Person on a particular
date, that, at fair valuations,  the sum of such Person's assets is greater than
all of such Person's debts.

                   "SPOT RATE" means the prevailing spot rate of exchange of the
Reference Bank (or, if such rate is not available from the Reference  Bank, such
other bank as the Agent may reasonably  select) for the purpose of conversion of
one currency to another,  at or around 11:00 a.m.  (New York City time),  on the
date  on  which  any  such  conversion  of  currency  is to be made  under  this
Agreement.

                   "S&P" has the meaning specified therefor in the definition of
Cash Equivalents.

                   "STOCK"  means  all  shares,  options,  warrants,  interests,
participations,  or other equivalents  (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other  "equity  security"  (as such term is  defined  in Rule  3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).

                   "SUBORDINATED  DEBT  CREDIT  AGREEMENT"  means  that  certain
Amended and Restated Credit  Agreement,  dated as of even date herewith,  by and
among  Parent,  Borrowers  and  Subordinated  Debt  Lender,  as such is amended,
modified,  supplemented,  restated,  replaced or refinanced from time to time in
accordance  with  the  terms  thereof,  the  terms  of this  Agreement,  and the
Subordination Agreement.

                   "SUBORDINATED  DEBT DOCUMENTS"  means the "Loan Documents" as
such  term  is  defined  in the  Subordinated  Debt  Credit  Agreement  and  any
documents,  instruments  and  agreements  entered  into in  connection  with any
amendment,  supplement,  restatement,  replacement  or refinancing  thereof,  as
amended, modified, supplemented or restated from time to time in accordance with
the terms thereof, the terms of the Agreement, and the Subordination Agreement.

                   "SUBORDINATED  INDEBTEDNESS" means the Indebtedness  incurred
by Parent under the Subordinated Debt Documents in an aggregate principal amount
of not less than  $28,500,000,  plus the amount of interest accrued thereon that
is paid-in-kind, minus the aggregate amount of all repayments and prepayments of
the principal of the obligations  under the  Subordinated  Debt Credit Agreement
(other  than  repayments  or  prepayments  of  such  term  loan  obligations  in
connection with a Refinancing thereof).

                   "SUBORDINATED  DEBT  LENDER"  means  "Lender" as such term is
defined in the Subordinated  Credit Agreement and any Person acting in a similar
capacity  under  any   amendment,   restatement,   supplement,   replacement  or
refinancing thereof.

                   "SUBORDINATION   AGREEMENT"   means   a   subordination   and
intercreditor  agreement executed and delivered by Agent, Working Capital Agent,
and Subordinated Debt Lender, and acknowledged and consented to by each Borrower
and each Guarantor,  as amended,  supplemented,  restated or otherwise  modified
from time to time.

                   "SUBSIDIARY"  of a Person means a  corporation,  partnership,
limited  liability  company,  or other  entity in which that Person  directly or
indirectly  owns or controls the shares of Stock having ordinary voting power to
elect a  majority  of the  board  of  directors  (or  appoint  other  comparable
managers) of such corporation,  partnership, limited liability company, or other
entity.

                   "TAX PARTY" has the meaning  specified  therefore  in SECTION
4.28.

                   "TAXES" has the meaning specified therefor in SECTION 16(A).

                   "TERMINATION EVENT" means (i) a Reportable Event with respect
to any Employee Plan,  with respect to which the reporting  requirement  has not
been  waived,  (ii) any event  that  causes  any Loan  Party or any of its ERISA
Affiliates  directly to incur liability under Section 409, 502(i),  502(l), 515,
4062,  4063,  4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of
the IRC,  (iii) the filing of a notice of intent to terminate  an Employee  Plan
(other than in connection  with a standard  termination)  or the treatment of an
Employee Plan amendment as a termination  under Section 4041 of ERISA,  (iv) the
institution of proceedings by the PBGC to terminate an Employee Plan, or (v) any
other event or condition which might reasonably constitute grounds under Section
4042 of ERISA  for the  termination  of,  or the  appointment  of a  trustee  to
administer, any Employee Plan.

                   "TERM  LOAN" has the  meaning  specified  therefor in SECTION
2.1.

                   "TERM LOAN AMOUNT" means $48,000,000.

                   "TRADEMARK  SECURITY  AGREEMENT"  has the  meaning  specified
therefor in the Security Agreement.

                   "TRANSFEREE"  has the meaning  specified  therefor in SECTION
16(A).

                   "TTM EBITDA" means, as of any date of  determination,  EBITDA
of Parent determined on a consolidated basis in accordance with GAAP, for the 12
month period most recently ended.

                   "UNITED STATES" means the United States of America.

                   "VOIDABLE  TRANSFER"  has the meaning  specified  therefor in
SECTION 17.7.

                   "WHX" means WHX Corporation, a Delaware Corporation.

                   "WHX  GUARANTY"  means  that  certain  Guarantee,  Pledge and
Security Agreement,  dated as of April 17, 2007, by and among Parent and certain
of Parent's  Subsidiaries  party  thereto,  as obligors,  and Steel Partners II,
L.P., as secured party, as amended, modified, supplemented or restated from time
to time in accordance  with the terms thereof,  the terms of the Agreement,  and
the Subordination Agreement.

                   "WHX  GUARANTY  DOCUMENTS"  the WHX  Guaranty  and any  other
documents,  instruments and agreements  entered into in connection  therewith or
with any amendment, supplement, restatement, replacement or refinancing thereof,
each  as  amended,  modified,  supplemented  or  restated  from  time to time in
accordance  with  the  terms  thereof,  the  terms  of the  Agreement,  and  the
Subordination Agreement.

                   "WORKING  CAPITAL  ADVANCES" means "Advances" as such term is
defined in the Working Capital Credit Agreement.

                   "WORKING  CAPITAL AGENT" means Wells Fargo Foothill,  Inc., a
California corporation, in its capacity as agent for the Working Capital Lenders
under the Working Capital Credit Agreement.

                   "WORKING CAPITAL  AVAILABILITY" means  "Availability" as such
term in defined in the Working Capital Credit Agreement.

                   "WORKING  CAPITAL  BORROWING BASE" means  "Borrowing Base" as
such term is defined in the Working Capital Credit Agreement.

                   "WORKING CAPITAL BORROWING BASE CERTIFICATE" means "Borrowing
Base  Certificate"  as such  term  is  defined  in the  Working  Capital  Credit
Agreement.

                   "WORKING CAPITAL CREDIT  AGREEMENT" means that certain Credit
Agreement  dated as of even date  herewith  by and among the Loan  Parties,  the
Working  Capital  Lenders,  and the  Working  Capital  Agent as such is amended,
modified,  supplemented,  restated, refinanced, renewed or replaced from time to
time in accordance  with the terms  thereof and the terms of this  Agreement and
the Intercreditor Agreement.

                   "WORKING CAPITAL  DOCUMENTS" means the Working Capital Credit
Agreement and each other agreement, instrument or document executed or delivered
pursuant to or in connection with the Working Capital Credit Agreement,  as such
documents are amended, modified,  supplemented, or restated from time to time in
accordance with the terms of this Agreement and the Intercreditor Agreement.

                   "WORKING   CAPITAL   INDEBTEDNESS"   means  the  Indebtedness
incurred by the Loan Parties under the Working Capital Credit Agreement.

                   "WORKING CAPITAL LENDERS" means the lenders from time to time
party to the Working Capital Credit Agreement.

                   "WORKING  CAPITAL  LETTER OF CREDIT" means "Letter of Credit"
as such term is defined in the Working Capital Credit Agreement.

                   "WORKING  CAPITAL  LETTER OF CREDIT  USAGE" means  "Letter of
Credit Usage" as such term is defined in the Working Capital Credit Agreement.

                   "WORKING  CAPITAL  MAXIMUM  REVOLVER  AMOUNT" means  "Maximum
Revolver  Amount"  as  such  term  is  defined  in the  Working  Capital  Credit
Agreement.

                   "WORKING  CAPITAL  REVOLVER   COMMITMENTS"   means  "Revolver
Commitments" as such term is defined in the Working Capital Credit Agreement.

                   "WORKING  CAPITAL  TERM LOAN"  means the "Term  Loan" as such
term is defined in the Working Capital Credit Agreement.

                                  SCHEDULE 3.1

          The  obligation of each Lender to make its portion of the Term Loan is
subject to the  fulfillment,  to the  satisfaction of Agent and each Lender (the
making of the Term Loan  being  conclusively  deemed to be its  satisfaction  or
waiver of the following), of each of the following conditions precedent:

                   (a)      the  Closing  Date shall  occur on or before July 17,
2007;

                   (b)      Agent shall have  received a letter duly  executed by
each Borrower and each Guarantor authorizing Agent to file appropriate financing
statements  in such office or offices as may be necessary  or, in the opinion of
Agent,  desirable  to perfect the  security  interests to be created by the Loan
Documents;

                   (c)      Agent shall have received  evidence that  appropriate
financing  statements  have been duly filed in such  office or offices as may be
necessary or, in the opinion of Agent, desirable to perfect the Agent's Liens in
and to the  Collateral,  and Agent shall have received  searches  reflecting the
filing of all such financing statements;

                   (d)      Agent  shall  have  received  each  of the  following
documents,  in form and substance satisfactory to Agent, duly executed, and each
such document shall be in full force and effect:

                            (i)      the Cash Management Agreements,

                            (ii)     the Control Agreements,

                            (iii)    the Copyright Security Agreement,

                            (iv)     a   disbursement    letter   executed   and
delivered  by  Borrowers  to Agent  and  Working  Capital  Agent  regarding  the
extensions of credit to be made on the Closing  Date,  the form and substance of
which is satisfactory to Agent,

                            (v)      the Guaranty,

                            (vi)     the Intercompany Subordination Agreement,

                            (vii)    the Mortgages,

                            (viii)   the Patent Security Agreement,

                            (ix)     the Canadian Security Agreement,

                            (x)      the Canadian Guaranty,

                            (xi)     the Hypothec,

                            (xii)    a   letter,    in   form   and    substance
satisfactory to Agent, from Bank of America,  N.A.  ("EXISTING LENDER") to Agent
respecting the amount  necessary to repay in full all of the obligations of Loan
Parties and their  Subsidiaries owing to Existing Lender and obtain a release of
all of the Liens  existing in favor of  Existing  Lender in and to the assets of
Loan Parties and their  Subsidiaries,  together with termination  statements and
other  documentation  evidencing the termination by Existing Lender of its Liens
in and to the properties and assets of Loan Parties and their Subsidiaries,

                            (xiii)   the  Security   Agreement,   together  with
copies of all certificates  representing the shares of Stock  intercompany notes
pledged thereunder that are delivered to Working Capital Agent, as well as Stock
powers and allonges with respect thereto endorsed in blank,

                            (xiv)    the Trademark Security Agreement,

                            (xv)     the Intercreditor Agreement,

                            (xvi)    the Subordination Agreement,

                            (xvii)   the Collateral  Assignment of each Approved
Policy with respect to Eligible Foreign Accounts (as each term is defined in the
Working Capital Credit Agreement);

                            (xviii)  the Permitted Kasco Sale Letter; and

                            (xix)    the Post-Closing Letter.

                   (e)      Agent  shall have  received a  certificate  from the
Secretary of each Borrower (i) attesting to the  resolutions of such  Borrower's
Board of Directors authorizing its execution,  delivery, and performance of this
Agreement and the other Loan  Documents to which such Borrower is a party,  (ii)
authorizing  specific  officers of such Borrower to execute the same,  and (iii)
attesting to the  incumbency  and  signatures of such specific  officers of such
Borrower;

                   (f)      Agent shall have received  copies of each Borrower's
Governing Documents, as amended,  modified, or supplemented to the Closing Date,
certified by the Secretary of such Borrower;

                   (g)      Agent shall have  received a  certificate  of status
with respect to each  Borrower,  dated within 10 days of the Closing Date,  such
certificate  to be issued by the  appropriate  officer  of the  jurisdiction  of
organization  of such  Borrower,  which  certificate  shall  indicate  that such
Borrower is in good standing in such jurisdiction;

                   (h)      Agent  shall have  received  certificates  of status
with respect to each  Borrower,  each dated within 30 days of the Closing  Date,
such  certificates to be issued by the appropriate  officer of the jurisdictions
(other than the  jurisdiction of organization of such Borrower) in which (i) its
failure to be duly  qualified or licensed  would  constitute a Material  Adverse
Change, which certificates shall indicate that such Borrower is in good standing
in such jurisdictions, and (ii) it maintains any Collateral;

                   (i)      Agent  shall have  received a  certificate  from the
Secretary of each Guarantor (i) attesting to the resolutions of such Guarantor's
Board of Directors authorizing its execution,  delivery,  and performance of the
Loan Documents to which such  Guarantor is a party,  (ii)  authorizing  specific
officers  of such  Guarantor  to  execute  the same and (iii)  attesting  to the
incumbency and signatures of such specific officers of Guarantor;

                   (j)      Agent shall have received copies of each Guarantor's
Governing Documents, as amended,  modified, or supplemented to the Closing Date,
certified by the Secretary of such Guarantor;

                   (k)      Agent shall have  received a  certificate  of status
with respect to each  Guarantor,  dated within 10 days of the Closing Date, such
certificate  to be issued by the  appropriate  officer  of the  jurisdiction  of
organization  of such  Guarantor,  which  certificate  shall  indicate that such
Guarantor is in good standing in such jurisdiction;

                                      -2-

                   (l)      Agent  shall have  received  certificates  of status
with respect to each  Guarantor,  each dated within 30 days of the Closing Date,
such  certificates to be issued by the appropriate  officer of the jurisdictions
(other than the jurisdiction of organization of such Guarantor) in which (i) its
failure to be duly  qualified or licensed  would  constitute a Material  Adverse
Change, which certificates shall indicate that such Borrower is in good standing
in such jurisdictions, and (ii) it maintains any Collateral;

                   (m)      Agent   shall  have   received  a   certificate   of
insurance,  together with the endorsements  thereto,  as are required by SECTION
5.8, the form and substance of which shall be satisfactory to Agent;

                   (n)      Agent   shall  have   received   Collateral   Access
Agreements with respect to the following locations:  Lake Mary, Florida; Dallas,
Texas (2 locations); San Antonio, Texas (2 locations); Montreal, Canada;

                   (o)      Agent   shall  have   received   Collateral   Access
Agreement with respect to 21800 South Cicero, Matteson, Illinois;

                   (p)      Agent  shall  have   received  an  opinion  of  Loan
Parties' counsel under New York, Delaware,  Texas and Canadian laws, in form and
substance satisfactory to Agent;

                   (q)      After   giving    effect   to   the   Closing   Date
Transactions, (i) Working Capital Availability shall not be less than $6,500,000
and (ii) all  liabilities  of the Loan Parties shall be (A) current and (B) at a
level and in a condition  satisfactory to the Agent in its sole discretion.  The
Administrative  Borrower  shall deliver to the Agent a certificate  of the chief
financial officer of the  Administrative  Borrower  certifying as to the matters
set forth in clauses (i) and (ii)(A) above and  containing  the  calculation  of
Working Capital Availability.

                   (r)      Agent shall have completed its business,  legal, and
collateral  due diligence,  including (i) a collateral  audit and review of Loan
Parties'  and their  Subsidiaries'  books and records and  verification  of Loan
Parties'  representations  and  warranties to the Lender  Group,  the results of
which shall be satisfactory to Agent,  (ii) such books and records of the Parent
and its  Subsidiaries  as the  Agent  may  request,  (iii)  an  analysis  of the
financial  statements  of the Parent and its  Subsidiaries  for the period  from
April 1, 2006 through  March 31,  2007,  (iv) review of Loan  Parties'  material
contracts,  and (v) an inspection  of each of the locations  where Loan Parties'
and their  Subsidiaries'  Inventory is located,  and, in each case,  the results
thereof shall be acceptable to the Agent, in its sole and absolute discretion;

                   (s)      Agent shall have received evidence that the Canadian
Obligor  has  appointed  an agent in New York City for the purpose of service of
process and such agent agrees in writing to give Agent notice of any resignation
of such service agent or other tsermination of agency;

                   (t)      Agent shall have received completed reference checks
with  respect  to Loan  Parties'  senior  management,  the  results of which are
satisfactory to Agent in its sole discretion;

                   (u)      Agent shall have  received  Loan  Parties'  business
plan,  the results of which are  satisfactory  to Agent in its sole  discretion,
certified  as true and correct by an  Authorized  Officer of the  Administrative
Borrower;

                   (v)      Agent shall have  received a set of  Projections  of
the Parent for the 3 year period  following  the Closing Date (on a year by year
basis, and for the 1 year period following the Closing Date, on a month by month
basis), in form and substance (including as to scope and underlying assumptions)
satisfactory to Agent, certified as true and correct by an Authorized Officer of
the Administrative Borrower;

                   (w)      Borrowers  shall have paid the  Closing  Fee and all
Lender Group Expenses incurred in connection with the transactions  evidenced by
this Agreement;

                                      -3-

                   (x)      Agent shall have received (i) appraisals of the Real
Property  Collateral  satisfactory to Agent,  and (ii) mortgagee title insurance
policies  (or  marked  commitments  to issue  the  same)  for the Real  Property
Collateral  issued by a title  insurance  company  satisfactory to Agent (each a
"MORTGAGE  POLICY"  and,  collectively,  the  "MORTGAGE  POLICIES")  in  amounts
satisfactory  to Agent  assuring  Agent that the Mortgages on such Real Property
Collateral are valid and enforceable  first priority  mortgage Liens (subject to
Permitted Priority Liens) on such Real Property Collateral free and clear of all
defects and  encumbrances  except  Permitted  Liens,  and the Mortgage  Policies
otherwise shall be in form and substance satisfactory to Agent;

                   (y)      Agent  shall have  received a phase-I  environmental
report and a real estate  survey with respect to each parcel  composing the Real
Property  Collateral;  the environmental  consultants and surveyors retained for
such  reports or surveys,  the scope of the reports or surveys,  and the results
thereof shall be acceptable to Agent;

                   (z)      Agent  shall  have  received  copies  of each of the
Working Capital Documents and the Subordinated  Debt Documents,  together with a
certificate  of the  Secretary  of the  Parent  certifying  that (i)  each  such
document is a true, correct, and complete copy thereof,  (ii) each such document
is in full force and effect,  and (iii) none of the Loan Parties has breached or
defaulted in any of its obligations thereunder;

                   (aa)     Loan  Parties and each of their  Subsidiaries  shall
have received all licenses,  approvals or evidence of other actions  required by
any Governmental Authority in connection with the execution and delivery by Loan
Parties or their  Subsidiaries of the Loan Documents or with the consummation of
the transactions contemplated thereby;

                   (bb)     Agent shall have  determined,  in its sole judgment,
that no event or development  shall have occurred since December 31, 2006, which
could  reasonably be expected to have a Material  Adverse Effect;  provided that
the  transactions  contemplated by this Agreement and the  transactions  made in
connection  with the Permitted  Merger shall not  constitute a Material  Adverse
Effect;

                   (cc)     All consents,  authorizations  and approvals of, and
filings  and  registrations  with,  and all other  actions  in  respect  of, any
Governmental Authority or other Person required in connection with the making of
the Term Loan, the consummation of any of the  transactions  contemplated by any
of the  Related  Transaction  Documents,  or the  conduct  of the Loan  Parties'
business shall have been obtained and shall be in full force and effect;

                   (dd)     Agent  shall  have  received a  certificate  from an
authorized officer of Parent and WHX certifying that none of the proceeds of the
Equity Contribution were returned to WHX prior to the Closing Date.

                   (ee)     Agent  shall have  received,  in form and  substance
satisfactory to the Agent,  evidence that (i) the Working Capital Documents have
been duly executed and delivered by and to the appropriate parties thereto, (ii)
no  provision  of any Working  Capital  Document  has been  amended or otherwise
modified or waived without the prior written consent of the Agent, and (iii) all
of the conditions  precedent to the making of the Working  Capital Term Loan and
the funding of the Working  Capital  Advances (other than the making of the Term
Loan hereunder) have been satisfied;

                   (ff)     Agent  shall have  received,  in form and  substance
satisfactory  to  the  Agent,  (A)  a  letter   agreement   between  Parent  and
Subordinated  Debt  Lender  relating  to  the  repayment  of a  portion  of  the
Subordinated  Indebtedness  on the Closing  Date and (B)  evidence  that (i) the
Subordinated  Debt Documents have been duly executed and delivered by and to the
appropriate parties thereto, (ii) the transactions  contemplated under the terms
of  the  Subordinated   Debt  Documents  have  been  consummated   prior  to  or
contemporaneous  with the execution of this  Agreement and (iii) the  guaranties
and liens  granted by  certain  foreign  Subsidiaries  of the Parent in favor of
Subordinated Debt Lender have been released and terminated;

                                      -4-

                   (gg)     Agent shall have  received (i) a Notice of Borrowing
pursuant  to and in  accordance  with the terms of SECTION 2.2 hereof and (ii) a
LIBOR Notice pursuant to SECTION 2.10 hereof, if applicable; and

                   (hh)     all other  documents and legal matters in connection
with the transactions  contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to Agent.

                                      -5-

                                  SCHEDULE 5.2

          Provide  Agent (and if so  requested  by Agent,  with  copies for each
Lender) with each of the  documents  set forth below at the  following  times in
form satisfactory to Agent:

================================================================================
Daily                    (a) an Account  roll-forward  with  supporting  details
                         supplied  from  sales  journals,  collection  journals,
                         credit registers and any other records,

                         (b) notice of all claims, offsets, or disputes asserted
                         by Account  Debtors with  respect to Loan  Parties' and
                         their Subsidiaries' Accounts, and

                         (c)  copies of  invoices  together  with  corresponding
                         shipping  and  delivery  documents,  and  credit  memos
                         together with corresponding  supporting  documentation,
                         with  respect to invoices and credit memos in excess of
                         an amount  determined in the sole  discretion of Agent,
                         from time to time.
--------------------------------------------------------------------------------
Weekly                   (d) Inventory  system/perpetual  reports specifying the
                         cost and the  wholesale  market value of Loan  Parties'
                         and their Subsidiaries'  Inventory,  by category (i.e.,
                         finished goods, work-in-process or raw materials), with
                         additional  detail  showing  additions to and deletions
                         therefrom  (delivered  electronically  in an acceptable
                         format,  if Loan  Parties have  implemented  electronic
                         reporting); and

                         (e) a detailed  reporting  of Loan  Parties'  and their
                         Subsidiaries intercompany activity.
--------------------------------------------------------------------------------
Monthly (no later than   (f) a Working Capital Borrowing Base Certificate,
the 15th day of each
month)                   (g) a detailed aging, by total, of Borrowers' Accounts,
                         together   with   a   reconciliation   and   supporting
                         documentation   for   any   reconciling   items   noted
                         (delivered  electronically in an acceptable  format, if
                         Borrowers have implemented electronic reporting),

                         (h) a detailed  calculation  of those Accounts that are
                         not eligible for the Working Capital Borrowing Base, if
                         Borrowers have not implemented electronic reporting,

                         (i)  a  detailed  Inventory   system/perpetual   report
                         together with a  reconciliation  to Borrowers'  general
                         ledger  accounts   (delivered   electronically   in  an
                         acceptable   format,   if  Borrowers  have  implemented
                         electronic reporting),

                         (j) a detailed calculation of Inventory categories that
                         are not  eligible  for the  Working  Capital  Borrowing
                         Base,  if  Borrowers  have not  implemented  electronic
                         reporting,

                         (k) a summary  aging,  by vendor,  of Loan Parties' and
                         their  Subsidiaries'  accounts  payable  and  any  book
                         overdrafts  (delivered  electronically in an acceptable
                         format,   if  Borrowers  have  implemented   electronic
                         reporting), an aging, by vendor, of any held checks and
                         detailed listing of all accrued expenses,

                         (l) a detailed report regarding Loan Parties' and their
                         Subsidiaries'  cash and Cash Equivalents,  including an
                         indication of which amounts constitute Qualified Cash,

                         (m)  a  monthly  Account  roll-forward,   in  a  format
                         acceptable  to  Agent  in its  discretion,  tied to the
                         beginning  and ending  account  receivable  balances of
                         Borrowers' general ledgers; and

                         (n) a detailed  report of all slow moving and  obsolete
                         Inventory.
================================================================================

                                      -1-

================================================================================
Monthly (no later        (o)  a  reconciliation  of  Accounts,   trade  accounts
than the 30th day        payable,  and Inventory of Loan Parties' general ledger
of each month)           accounts   to  their   monthly   financial   statements
                         including any book reserves related to each category;

                         (p)  a  report   regarding   Loan  Parties'  and  their
                         Subsidiaries'  accrued,  but unpaid,  taxes  including,
                         without limitation,  property taxes, real estate taxes,
                         ad  valorem  taxes,  income  taxes,  payroll  taxes and
                         withholding  taxes  (Canadian or  otherwise);  together
                         with proof of payment of such applicable taxes;

                         (q) a  detailed  report  by  customer  of all  deferred
                         revenue,   together  with  a  reconciliation   of  such
                         deferred  revenue to Parent's  general ledger  accounts
                         and monthly financial statements; and

                         (r) a detailed  reporting  of any deemed  dividend  tax
                         liability.
--------------------------------------------------------------------------------
Semi-Annual              (s) inventory appraisal, which shall be conducted by an
                         appraiser,  and in form and substance  satisfactory  to
                         Agent.

--------------------------------------------------------------------------------
Annually                 (t)  a   detailed   list  of   Borrowers'   and   their
                         Subsidiaries'  customers,   with  address  and  contact
                         information;

                         (u) machinery and equipment  appraisal,  which shall be
                         conducted by an  appraiser,  and in form and  substance
                         satisfactory to Agent; and

                         (v) real estate appraisals, which shall be conducted by
                         an appraiser, and in form and substance satisfactory to
                         Agent.
--------------------------------------------------------------------------------
Upon request by          (w)  copies  of  purchase   orders  and   invoices  for
                         Inventory and Equipment  acquired by Borrowers or their
                         Agent Subsidiaries, and

                         (x) such  other  reports  as to the  Collateral  or the
                         financial   condition   of  Loan   Parties   and  their
                         Subsidiaries, as Agent may reasonably request.
================================================================================

                                      -2-

                                  SCHEDULE 5.3

          Deliver to Agent,  with copies to each Lender,  each of the  financial
statements,  reports,  or other items set forth set forth below at the following
times in form satisfactory to Agent:

================================================================================
as soon as available, but in    (a) an unaudited  consolidated and consolidating
any event within 30 days        balance sheet,  income statement,  and statement
(45 days in the case of a       of  cash   flow   covering   Parent's   and  its
month that is the end of one    Subsidiaries' operations during such period, and
of Parent's fiscal quarters)
after the end of each month     (b) a Compliance Certificate.
during each of Parent's
fiscal years
--------------------------------------------------------------------------------
as soon as available,  but in   (c) audited consolidated financial statements of
any  event  within  120  days   WHX and its Subsidiaries (such audited financial
after  the  end  of  each  of   statements to include balance sheets, statements
WHX's fiscal years              of income and loss,  statements of cash flow and
                                statements   of   shareholders'    equity)   and
                                unaudited  consolidating financial statements of
                                WHX and its  Subsidiaries  (to  include  balance
                                sheets and  statements of income and loss),  and
                                the   accompanying   notes   thereto,   all   in
                                reasonable  detail,  fairly  presenting  in  all
                                material respects the financial position and the
                                results  of  the   operations  of  WHX  and  its
                                Subsidiaries  as of  the  end of  and  for  such
                                fiscal  year,   together  with  the  unqualified
                                opinion (for the avoidance of doubt, which shall
                                not  include  any  qualification  related to (A)
                                "going   concern"  or  like   qualification   or
                                exception,  (B) qualification or exception as to
                                the scope of such  audit,  or (C)  qualification
                                which relates to the treatment or classification
                                of any item and  which,  as a  condition  to the
                                removal of such qualification,  would require an
                                adjustment  to such  item,  the  effect of which
                                would be to  cause  any  noncompliance  with the
                                provisions  of Section 6.18) with respect to the
                                audited consolidated financial statements, which
                                accountants  shall be an independent  accounting
                                firm  selected by WHX and  acceptable  to Agent,
                                that   such   audited   consolidated   financial
                                statements have been prepared in accordance with
                                GAAP,   and  present   fairly  in  all  material
                                respects the results of operations and financial
                                condition of WHX and its  Subsidiaries as of the
                                end of and for the fiscal year then ended, and

                                (d) a Compliance Certificate.

--------------------------------------------------------------------------------
as soon as available,  but in   (e) copies of Parent's Projections,  in form and
any  event   within  30  days   substance  (including as to scope and underlying
after  the  start  of each of   assumptions)   satisfactory  to  Agent,  in  its
Parent's fiscal years,          Permitted  Discretion,  for  the  forthcoming  3
                                years,  year by  year,  and for the  forthcoming
                                fiscal  year,  month by month,  certified by the
                                chief financial  officer of Parent as being such
                                officer's  good faith  estimate of the financial
                                performance  of Parent during the period covered
                                thereby.
--------------------------------------------------------------------------------
if  and  when  filed  by  any   (f)  Form  10-Q  quarterly  reports,  Form  10-K
Loan Party,                     annual reports, and Form 8-K current reports,
--------------------------------------------------------------------------------

                                      -1-

--------------------------------------------------------------------------------
                                (g) any  other  filings  made by any Loan  Party
                                with the SEC, and

                                (h) any other  information  that is  provided by
                                Parent to its shareholders generally.
--------------------------------------------------------------------------------
promptly,  but in  any  event   (i)  notice  of such  event or  condition  and a
within   5   Business    Days   statement of the curative  action that Borrowers
after   a  Loan   Party   has   proposes to take with respect thereto.
knowledge  of  any  event  or
condition that  constitutes a
Default   or  an   Event   of
Default,
--------------------------------------------------------------------------------
promptly       after      the   (j) notice of all actions, suits, or proceedings
commencement         thereof,   brought  by or  against  any  Loan  Party or any
but in  any  event  within  5   Subsidiary   of  a   Loan   Party   before   any
Business   Days   after   the   Governmental Authority which reasonably could be
service   of   process   with   expected to result in a Material Adverse Change.
respect  thereto  on any Loan
Party or any  Subsidiary of a
Loan Party,
--------------------------------------------------------------------------------
as  soon as  possible  and in   (k) a statement of an Authorized  Officer of the
any event  within 5  Business   applicable  Loan Party setting forth the details
Days  after  any  Loan  Party   of such occurrence and the action, if any, which
or   any   ERISA    Affiliate   such Loan Party or such ERISA Affiliate proposes
thereof    knows    or    has   to take with respect thereto.
reason  to know  that (1) any
Reportable     Event     with   For purposes  hereof,  "Reportable  Event" shall
respect   to   any   Employee   mean an event described in Section 4043 of ERISA
Plan  has  occurred,  (2) any   (other   than  an  event  not   subject  to  the
other    Termination    Event   provision  for  30-day  notice to the PBGC under
with     respect    to    any   the regulations promulgated under such Section).
Employee       Plan       has
occurred,     or    (3)    an
accumulated           funding
deficiency      has      been
incurred  or  an  application
has   been    made   to   the
Secretary   of  the  Treasury
for a waiver or  modification
of   the   minimum    funding
standard           (including
installment  payments)  or an
extension        of       any
amortization   period   under
Section  412 of the IRC  with
respect   to   an    Employee
Plan,
--------------------------------------------------------------------------------

                                      -2-

--------------------------------------------------------------------------------
promptly  and  in  any  event   (l) copies of each  notice  received by any Loan
within   5   Business    Days   Party  or any  ERISA  Affiliate  thereof  of the
after receipt  thereof by any   PBGC's  intention  to  terminate  any Plan or to
Loan   Party  or  any   ERISA   have a trustee appointed to administer any Plan.
Affiliate  thereof  from  the
PBGC,
--------------------------------------------------------------------------------
promptly  and  in  any  event   (m)  copies  of  each   Schedule  B   (Actuarial
within   10   Business   Days   Information)  to the  annual  report  (Form 5500
after  the   filing   thereof   Series) with respect to each  Employee  Plan and
with  the  Internal   Revenue   Multiemployer Plan.
Service,
--------------------------------------------------------------------------------
promptly  and  in  any  event   (n)  notice  of such  event or  condition  and a
within   10   Business   Days   statement of the curative  action that Borrowers
after  any Loan  Party or any   proposes to take with respect thereto.
ERISA    Affiliate    thereof
knows   or  has   reason   to
know    that    a    required
installment     within    the
meaning  of  Section  412  of
the  IRC has  not  been  made
when due with  respect  to an
Employee Plan,
--------------------------------------------------------------------------------
promptly  and  in  any  event   (o) a copy of each  notice  received by any Loan
within   3   Business    Days   Party or any ERISA Affiliate thereof  concerning
after receipt  thereof by any   the imposition or amount of withdrawal liability
Loan   Party  or  any   ERISA   under Section 4202 of ERISA or  indicating  that
Affiliate   thereof   from  a   such Multiemployer Plan may enter reorganization
sponsor  of  a  Multiemployer   status under Section 4241 of ERISA.
Plan or from the PBGC,
--------------------------------------------------------------------------------
promptly  and  in  any  event   (p) copies of each such notice sent by such Loan
within   10   Business   Days   Party or such ERISA Affiliate thereof.
after  any Loan  Party or any
ERISA    Affiliate    thereof
sends   notice   of  a  plant
closing  or mass  layoff  (as
defined       in       Worker
Adjustment   and   Retraining
Notification      Act)     to
employees,
--------------------------------------------------------------------------------

                                      -3-

--------------------------------------------------------------------------------
promptly  and  in  any  event   (q) evidence, in form and substance satisfactory
within   5   Business    Days   to Agent,  that such payment or contribution has
after  the due  date  for any   been made.
scheduled      payment     or
contribution  which  was  not
paid,  but  required  of  any
Loan   Party  or  any   ERISA
Affiliate     thereof    with
respect   to   any   Employee
Plan,
--------------------------------------------------------------------------------
promptly  and  in  any  event   (r) strike, labor dispute, slowdown, stoppage or
within   5   Business    Days   similar action or grievance  against  against or
after  any  Loan   Party  has   involving  any  Loan  Party  if the  same  could
knowledge of any,               reasonably  be  expected  to result  in,  either
                                individually  or in the  aggregate,  a  Material
                                Adverse Change.
--------------------------------------------------------------------------------
promptly  and  in  any  event   (s)   amendment,   termination,    modification,
within   5   Business    Days   alteration,  increase, or change to any Material
after  any  Loan   Party  has   Contract  if  the  same  could   reasonably   be
knowledge of any,               expected to result in a Material Adverse Change.
--------------------------------------------------------------------------------
upon the request of Agent,      (t) any other information  reasonably  requested
                                relating to the financial condition of Borrowers
                                or their Subsidiaries.
================================================================================

                                      -4-sec document

                                                                    Exhibit 4.38

                                                                  EXECUTION COPY

================================================================================

                      AMENDED AND RESTATED CREDIT AGREEMENT

                                  BY AND AMONG

                               BAIRNCO CORPORATION

                                    AS PARENT

             CERTAIN OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO

                                  AS BORROWERS,

                                       AND

                            STEEL PARTNERS II, L.P.,

                                    AS LENDER

                            DATED AS OF JULY 17, 2007

================================================================================

Anything  herein  to  the  contrary   notwithstanding,   the  repayment  of  the
obligations  evidenced  by this  Agreement,  the  liens and  security  interests
securing the obligations evidenced by this Agreement,  the exercise of any right
or remedy with respect  thereto,  and certain of the rights of the holder hereof
are subject to the provisions of the Intercreditor  and Subordination  Agreement
dated as of July 17, 2007 (as  amended,  restated,  supplemented,  or  otherwise
modified from time to time, the "INTERCREDITOR AGREEMENT"), by and between Wells
Fargo  Foothill,  Inc.,  and Ableco  Finance  LLC, as Senior  Agents,  and Steel
Partners  II,  L.P.,  as  Subordinated  Creditor.  In the event of any  conflict
between the terms of the Intercreditor  Agreement and this Agreement,  the terms
of the Intercreditor Agreement shall govern and control.

1.    DEFINITIONS AND CONSTRUCTION...........................................1

      1.1   DEFINITIONS......................................................1

      1.2   ACCOUNTING TERMS.................................................1

      1.3   CODE.............................................................2

      1.4   CONSTRUCTION.....................................................2

      1.5   PROVINCE OF QUEBEC...............................................2

      1.6   SCHEDULES AND EXHIBITS...........................................2

2.    LOAN AND TERMS OF PAYMENT..............................................2

      2.1   TERM LOAN........................................................2

      2.2   PROTECTIVE ADVANCES AND NOTATION.................................3

      2.3   PAYMENTS.........................................................3

      2.4   INTEREST RATES AND FEES:  RATES, PAYMENTS, AND CALCULATIONS......6

      2.5   [INTENTIONALLY OMITTED]..........................................7

      2.6   CREDITING PAYMENTS...............................................7

      2.7   DESIGNATED ACCOUNT...............................................7

      2.8   MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS...........7

      2.9   CAPITAL REQUIREMENTS.............................................7

      2.10  JOINT AND SEVERAL LIABILITY OF BORROWERS.........................8

      2.11  SECURITIZATION..................................................10

3.    CONDITIONS; TERM OF AGREEMENT.........................................11

      3.1   CONDITIONS PRECEDENT TO THE TERM LOAN...........................11

      3.2   TERM............................................................11

      3.3   EFFECT OF TERMINATION...........................................11

      3.4   EARLY TERMINATION BY BORROWERS..................................11

4.    REPRESENTATIONS AND WARRANTIES........................................12

      4.1   NO ENCUMBRANCES.................................................12

      4.2   ORIGINAL LSA....................................................12

      4.3   [INTENTIONALLY OMITTED.]........................................12

      4.4   EQUIPMENT.......................................................12

      4.5   LOCATION OF COLLATERAL..........................................12

      4.6   INVENTORY RECORDS...............................................12

      4.7   JURISDICTION OF ORGANIZATION; LOCATION OF CHIEF EXECUTIVE
            OFFICE; ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL
            TORT CLAIMS.....................................................12

      4.8   DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES................13

      4.9   DUE AUTHORIZATION; NO CONFLICT..................................13

      4.10  LITIGATION......................................................15

      4.11  NO MATERIAL ADVERSE CHANGE......................................15

      4.12  FRAUDULENT TRANSFER.............................................15

      4.13  EMPLOYEE BENEFITS; LABOR MATTERS................................15

      4.14  ENVIRONMENTAL CONDITION.........................................16

      4.15  INTELLECTUAL PROPERTY...........................................17

      4.16  LEASES; ETC.....................................................17

      4.17  DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS........................17

      4.18  COMPLETE DISCLOSURE.............................................17

      4.19  INDEBTEDNESS....................................................17

      4.20  MATERIAL CONTRACTS..............................................17

      4.21  PERMITS, LICENSES, ETC..........................................18

      4.22  SUPPLIERS.......................................................18

      4.23  MARGIN STOCK....................................................18

      4.24  INSURANCE.......................................................18

      4.25  INVESTMENT COMPANY ACT, ETC.....................................18

      4.26  TAXES, ETC......................................................18

      4.27  NATURE OF BUSINESS..............................................19

      4.28  RELATED TRANSACTION DOCUMENTS...................................19

      4.29  NO IMMUNITY.....................................................19

      4.30  NO TAXES........................................................19

5.    AFFIRMATIVE COVENANTS.................................................19

      5.1   ACCOUNTING SYSTEM...............................................19

      5.2   COLLATERAL REPORTING............................................19

      5.3   FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.....................20

      5.4   GUARANTOR REPORTS...............................................20

      5.5   INSPECTION......................................................20

      5.6   MAINTENANCE OF PROPERTIES.......................................20

      5.7   TAXES...........................................................20

      5.8   INSURANCE.......................................................20

      5.9   LOCATION OF COLLATERAL..........................................21

      5.10  COMPLIANCE WITH LAWS............................................21

      5.11  LEASES..........................................................21

      5.12  EXISTENCE.......................................................21

      5.13  ENVIRONMENTAL...................................................21

      5.14  DISCLOSURE UPDATES..............................................22

      5.15  CONTROL AGREEMENTS..............................................22

      5.16  FORMATION OF SUBSIDIARIES.......................................22

      5.17  FURTHER ASSURANCES..............................................22

      5.18  MATERIAL CONTRACTS..............................................23

      5.19  SUBORDINATION...................................................23

      5.20  AFTER ACQUIRED REAL PROPERTY....................................23

6.    NEGATIVE COVENANTS....................................................24

      6.1   INDEBTEDNESS....................................................24

      6.2   LIENS...........................................................24

      6.3   RESTRICTIONS ON FUNDAMENTAL CHANGES.............................24

      6.4   DISPOSAL OF ASSETS..............................................24

      6.5   CHANGE NAME, ETC................................................24

      6.6   NATURE OF BUSINESS..............................................25

      6.7   PREPAYMENTS AND AMENDMENTS......................................25

      6.8   CHANGE OF CONTROL...............................................25

      6.9   CONSIGNMENTS....................................................25

      6.10  DISTRIBUTIONS...................................................25

      6.11  ACCOUNTING METHODS..............................................25

      6.12  INVESTMENTS.....................................................26

      6.13  INVENTORY AND EQUIPMENT WITH BAILEES............................26

      6.14  FINANCIAL COVENANTS.............................................26

      6.15  PARENT AS HOLDING COMPANY.......................................26

      6.16  EMPLOYEE BENEFITS...............................................26

      6.17  LIMITATIONS ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
            AFFECTING SUBSIDIARIES..........................................26

      6.18  LEASE OBLIGATIONS...............................................27

      6.19  FEDERAL RESERVE REGULATIONS.....................................27

      6.20  INVESTMENT COMPANY ACT OF 1940..................................27

7.    EVENTS OF DEFAULT.....................................................27

8.    THE LENDER'S RIGHTS AND REMEDIES......................................30
9.    TAXES AND EXPENSES....................................................30

10.   WAIVERS; INDEMNIFICATION..............................................31

      10.1  DEMAND; PROTEST; ETC............................................31

      10.2  LENDER'S LIABILITY FOR COLLATERAL...............................31

      10.3  INDEMNIFICATION.................................................31

11.   NOTICES...............................................................32

12.   CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER............................33

13.   [INTENTIONALLY OMITTED]...............................................33

14.   AMENDMENTS; WAIVERS...................................................33

      14.2  NO WAIVERS; CUMULATIVE REMEDIES.................................34

15.   [INTENTIONALLY OMITTED]...............................................34

16.   WITHHOLDING TAXES.....................................................34

17.   GENERAL PROVISIONS....................................................35

      17.1  EFFECTIVENESS...................................................35

      17.2  SECTION HEADINGS................................................35

      17.3  INTERPRETATION..................................................35

      17.4  SEVERABILITY OF PROVISIONS......................................35

      17.5  DEBTOR-CREDITOR RELATIONSHIP....................................35

      17.6  COUNTERPARTS; ELECTRONIC EXECUTION..............................35

      17.7  REVIVAL AND REINSTATEMENT OF OBLIGATIONS........................35

      17.8  CONFIDENTIALITY.................................................36

      17.9  LENDER EXPENSES.................................................36

      17.10 USA PATRIOT ACT.................................................36

      17.11 INTEGRATION; RESTATEMENT OF ORIGINAL LSA........................36

      17.12 PARENT AS AGENT FOR BORROWERS...................................36

      17.13 INTERCREDITOR AGREEMENT.........................................37

      17.14 JUDGMENT CURRENCY...............................................37

      17.15 IMMUNITY........................................................38

                             EXHIBITS AND SCHEDULES

Exhibit A-1             Form of Assignment and Acceptance
Exhibit C-1             Form of Compliance Certificate

Schedule A-1            Lender's Account
Schedule A-2            Authorized Persons
Schedule C-1            [omitted]
Schedule D-1            Designated Account
Schedule P-1            Permitted Holders
Schedule P-2            Permitted Liens
Schedule P-3            Survey Exceptions
Schedule R-1            Real Property Collateral
Schedule 1.1            Definitions
Schedule 3.1            Conditions Precedent
Schedule 4.5            Locations of Collateral
Schedule 4.7(a)         States of Organization
Schedule 4.7(b)         Chief Executive Offices
Schedule 4.7(c)         Organizational Identification Numbers
Schedule 4.7(d)         Commercial Tort Claims
Schedule 4.8(b)         Capitalization of Borrowers
Schedule 4.8(c)         Capitalization of Borrowers' Subsidiaries
Schedule 4.10           Litigation
Schedule 4.13           Labor and Employee Matters
Schedule 4.14           Environmental Matters
Schedule 4.15           Intellectual Property
Schedule 4.16           Properties
Schedule 4.17           Deposit Accounts and Securities Accounts
Schedule 4.19           Permitted Indebtedness
Schedule 4.20           Material Contracts
Schedule 4.24           Insurance
Schedule 5.2            Collateral Reporting
Schedule 5.3            Financial Statements, Reports, Certificates
Schedule 6.6            Description of Business
Schedule 6.17           Holding Company Operations

                                                                  EXECUTION COPY

            THIS AMENDED AND RESTATED CREDIT  AGREEMENT (this  "AGREEMENT"),  is
entered into as of July __,  2007,  by and among STEEL  PARTNERS  II, L.P.  (the
Lender"),  BAIRNCO CORPORATION,  a Delaware corporation ("PARENT"),  and each of
Parent's  Subsidiaries  identified on the  signature  pages hereof as a Borrower
(such   Subsidiaries  are  referred  to  hereinafter  each   individually  as  a
"BORROWER",  and individually and  collectively,  jointly and severally,  as the
"BORROWERS").

                                    RECITALS:

            WHEREAS,  Parent and BZ Acquisition Corp. ("BZ  Acquisition")(Parent
and BZ Acquisition  being  sometimes  collectively  referred to as the "Original
Borrowers") and Lender entered into a Loan and Security  Agreement,  dated as of
April 17, 2007 (the "Original LSA"), pursuant to which Lender agreed to lend the
sum of up to $90,000,000 to BZ Acquisition  for the purposes of the  acquisition
of  no  less  than  50%  of  the   outstanding   common  stock  of  Parent  (the
"Acquisition")  through  the  shareholders  of  Parent  tendering  their  Equity
Interests  in  Parent  to  BZ  Acquisition  and  the  subsequent  merger  of  BZ
Acquisition  with and into Parent with Parent  being the  surviving  corporation
(the "Merger"),  and to pay expenses incurred in connection with the Acquisition
and the Merger,  and the joinder of Parent as a Borrower  under the Original LSA
subsequent to the Merger,  on the terms and subject to the provisions  contained
in the Original LSA; and

      WHEREAS,  the Original  LSA  provides  that it may be amended by written
consent of the Original Borrowers and Lender; and

      WHEREAS,  the Original Borrowers and the other subsidiaries of Parent that
are named as Borrowers on the signature  pages of this Agreement  (collectively,
the  "Borrowers")  are  entering  into a Credit  Agreement  dated  of even  date
herewith (the "Working  Capital Credit  Agreement")  with Wells Fargo  Foothill,
Inc., a California  corporation,  as agent for itself and certain  other lenders
(the  "Working  Capital  Agent"),  and a Credit  Agreement  (the  "Term A Credit
Agreement") with ABLECO FINANCE LLC, a Delaware limited  liability  company,  as
administrative  agent  for the  Lenders  (in such  capacity,  together  with its
successors  and assigns in such  capacity,  the "Term Loan  AGENT") (the Working
Capital Credit Agreement and the Term A Credit Agreement, collectively sometimes
referred to herein as the "Senior Financing Agreements"); and

      WHEREAS, in connection with the Senior Financing Agreements,  the Original
Borrowers  and Lender wish to amend and restate the Original LSA in its entirety
so that this  Agreement  states the entire  agreement of the parties hereto with
respect to the  transactions  that are the subject of the  Original  LSA and the
matters set forth herein.

      NOW, THEREFORE, the parties hereto agree as follows:

1.    DEFINITIONS AND CONSTRUCTION.

      1.1   DEFINITIONS. Capitalized terms used in this Agreement shall have the
meanings specified therefor on SCHEDULE 1.1.

      1.2   ACCOUNTING  TERMS.  All accounting  terms not  specifically  defined
herein shall be construed in accordance  with GAAP.  When used herein,  the term
"financial  statements" shall include the notes and schedules thereto.  Whenever
the term  "Borrowers"  or the term  "Parent"  is used in respect of a  financial
covenant or a related definition,  it shall be understood to mean Parent and its
Subsidiaries  on a  consolidated  basis,  unless the  context  clearly  requires
otherwise.

      1.3   CODE.  Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein;  PROVIDED,  HOWEVER,  that to the extent that the Code is used to define
any term herein and such term is defined  differently  in different  Articles of
the Code,  the  definition of such term contained in Article 9 of the Code shall
govern.

      1.4   CONSTRUCTION. Unless the context of this Agreement or any other Loan
Document  clearly  requires  otherwise,  references  to the plural  include  the
singular,  references to the singular  include the plural,  the terms "includes"
and "including" are not limiting,  and the term "or" has, except where otherwise
indicated,  the inclusive meaning  represented by the phrase "and/or." The words
"hereof," "herein,"  "hereby,"  "hereunder," and similar terms in this Agreement
or any other Loan Document  refer to this Agreement or such other Loan Document,
as the case  may be,  as a whole  and not to any  particular  provision  of this
Agreement or such other Loan Document, as the case may be. Section,  subsection,
clause,  schedule,  and exhibit  references  herein are to this Agreement unless
otherwise  specified.  Any  reference  in this  Agreement  or in any other  Loan
Document  to  any   agreement,   instrument,   or  document  shall  include  all
alterations,   amendments,   changes,   extensions,   modifications,   renewals,
replacements,  substitutions, joinders, and supplements, thereto and thereof, as
applicable  (subject  to  any  restrictions  on  such  alterations,  amendments,
changes,  extensions,  modifications,  renewals,  replacements,   substitutions,
joinders,  and  supplements  set  forth  herein).   References  to  statutes  or
regulations  are to be construed  as  including  all  statutory  and  regulatory
provisions consolidating,  amending,  supplementing,  interpreting, or replacing
the  statute or  regulation  referred  to,  and,  to the  extent the  context so
requires,  any  equivalent,  similar or comparable  statute or regulation in any
applicable  jurisdiction.  Any reference herein or in any other Loan Document to
the  satisfaction  or  repayment  in  full of the  Obligations  shall  mean  the
repayment in full in cash of all Obligations  other than  unasserted  contingent
indemnification  Obligations.  Any  reference  herein  to any  Person  shall  be
construed to include such Person's successors and assigns.  Any requirement of a
writing contained herein or in any other Loan Document shall be satisfied by the
transmission  of a Record and any Record  transmitted  shall be treated and have
the same effect as if such Record was furnished in writing. An Event of Default,
if one occurs, shall "exist",  "continue" or "be continuing" until such Event of
Default has been waived in writing in accordance with SECTION 14.1.

      1.5   PROVINCE  OF  QUEBEC.  With  respect  to real or  tangible  personal
property  located in the  Province  of Quebec,  (a) the terms  "real  property",
"personal property" and "real and personal property" and words of similar import
shall be deemed to also refer to "immovable  property",  "movable  property" and
"immovable and movable  property".  The terms  "tangible" and  "intangible"  and
words of  similar  import  shall be  deemed  to also  refer to  "corporeal"  and
"incorporeal".

      1.6   SCHEDULES AND EXHIBITS.  All of the schedules and exhibits  attached
to this Agreement shall be deemed incorporated herein by reference.

2.    LOAN AND TERMS OF PAYMENT.

      2.1   TERM LOAN.

            (a)   The  Lender  has  previously  made a  term  loan  to  Original
Borrowers  under the Original LSA pursuant to which the Original  Borrowers  are
currently  indebted to Lender for  principal  and accrued  interest  aggregating
$88,474,095.94 (the "Term Loan").  Concurrent with the execution and delivery of
this Agreement,  Parent is repaying an aggregate of  $56,659,776.38 in principal
and accrued  interest on the Term Loan from the proceeds of the Senior Financing
Agreements, leaving a principal balance of $31,814,319.56.

            (b)   as of the consummation of the Closing Date  Transactions  (the
"Term Loan Amount").  The outstanding  unpaid principal  balance and all accrued
and unpaid interest on the Term Loan shall be due and payable on the earliest of

                                       2

(i) the Maturity  Date,  (ii) the date of the  acceleration  of the Term Loan in
accordance  with the terms  hereof,  and (iii) the date of  termination  of this
Agreement  pursuant to SECTION 8.1(B).  All principal of, interest on, and other
amounts payable in respect of the Term Loan shall constitute Obligations.

            (c)   Any principal  amount of the Term Loan that has been repaid or
prepaid,  including  the  amounts  repaid  on  the  Closing  Date,  may  not  be
reborrowed.

      2.2   PROTECTIVE ADVANCES AND NOTATION.

            (a)   PROTECTIVE ADVANCES.

                  (i)   Lender hereby is  authorized by Borrowers,  from time to
time in  Lender's  sole  discretion,  (A) after the  occurrence  and  during the
continuance of a Default or an Event of Default, or (B) at any time that Lender,
in its Permitted Discretion deems necessary or desirable,  to make extensions of
credit to (or on behalf of) Borrowers (1) to preserve or protect the Collateral,
or any  portion  thereof,  (2) to enhance the  likelihood  of  repayment  of the
Obligations,  or (3) to pay any other amount chargeable to Borrowers pursuant to
the terms of this Agreement,  including Lender Expenses and the costs, fees, and
expenses  described in SECTION 9 (any of the advances  described in this SECTION
2.2(C)(I) shall be referred to as "PROTECTIVE ADVANCES").

                  (ii)  The  Protective  Advances  shall be repayable on demand,
secured by the Liens, constitute Obligations hereunder, and bear interest at the
Cash Interest  Rate. The provisions of this SECTION 2.2(A) are for the exclusive
benefit of the Lender and are not intended to benefit any Loan Party in any way.

            (b)   NOTATION.  Lender  shall  record on its  books  the  principal
amount of the Protective  Advances  owing to Lender,  from time to time and such
records shall, absent manifest error, conclusively be presumed to be correct and
accurate.

      2.3   PAYMENTS.

            (a)   PAYMENTS BY BORROWERS.  Except as otherwise expressly provided
herein,  all payments by (or on behalf of)  Borrowers  shall be made to Lender's
Account and shall be made in  immediately  available  funds,  no later than 4:00
p.m.  (New York time) on the date  specified  herein.  Any  payment  received by
Lender  later  than 4:00  p.m.  (New  York  time),  shall be deemed to have been
received on the following Business Day and any applicable  interest or fee shall
continue to accrue until such following Business Day.

            (b)   APPORTIONMENT AND APPLICATION.

                  (i)   All payments to be made hereunder by Borrowers  shall be
remitted  to Lender  and all (and  subject to Section  2.3(b)(iv)  hereof)  such
payments,  and all proceeds of Collateral received by Lender,  shall be applied,
so long as no Event of Default has occurred and is  continuing,  (subject to the
terms of the  Intercreditor  Agreement)  to reduce the  balance of the Term Loan
outstanding  and,  thereafter,  to  Borrowers  (to be  wired  to the  Designated
Account) or such other Person entitled thereto under applicable law.

                  (ii)  At any time that an Event of Default has occurred and is
continuing  (and  subject  to the  terms  of the  Intercreditor  Agreement)  all
payments  remitted to Lender and all proceeds of  Collateral  received by Lender
shall be applied as follows:

                                       3

                        (A) FIRST, to pay any Lender Expenses (including
cost or expense  reimbursements)  or indemnities  then due to Lender under the
Loan Documents, until paid in full,

                        (B) SECOND, to pay any fees or premiums then due to
Lender under the Loan Documents until paid in full,

                        (C) THIRD, to pay interest due in respect of all
Protective Advances until paid in full,

                        (D) FOURTH, to pay the principal of all Protective
Advances until paid in full,

                        (E) FIFTH, to pay interest due in respect of the
Term Loan until paid in full,

                        (F) SIXTH, to pay the outstanding principal balance
of the Term Loan until the Term Loan is paid in full,

                        (G) SEVENTH, to pay any other Obligations, and

                        (H) EIGHTH, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto under applicable law.

                  (iii) In each  instance,  so long as no Event of  Default  has
occurred and is  continuing,  SECTION  2.3(B)(I)  shall not apply to any payment
made by Borrowers to Lender and  specified by Borrowers to be for the payment of
specific Obligations then due and payable (or prepayable) under any provision of
this Agreement.

                  (iv)  For purposes of SECTION 2.3(B)(II), "paid in full" means
payment of all amounts  owing under the Loan  Documents  according  to the terms
thereof,  including loan fees, service fees,  professional  fees,  interest (and
specifically including interest accrued after the commencement of any Insolvency
Proceeding), default interest, interest on interest, and expense reimbursements,
whether or not any of the  foregoing  would be or is allowed  or  disallowed  in
whole or in part in any Insolvency Proceeding.

                  (v)   In the event of a direct  conflict  between the priority
provisions  of this SECTION 2.3 and any other  provision  contained in any other
Loan Document, it is the intention of the parties hereto that such provisions be
read together and construed,  to the fullest extent  possible,  to be in concert
with each other. In the event of any actual, irreconcilable conflict that cannot
be resolved as  aforesaid,  the terms and  provisions  of this SECTION 2.3 shall
control  and  govern;  except  in the  case of a  conflict  with the  terms  and
conditions  of  the  Intercreditor  Agreement,  in  which  case  the  applicable
provisions of the Intercreditor Agreement shall govern.

            (c)   OPTIONAL  PREPAYMENTS.  Borrowers may  voluntarily  prepay the
Term  Loan in full or in part at any time and  from  time to time  upon at least
three  (3)  Business  Days  prior  written  notice to Lender so long as any such
payment is (i) in an amount  equal to or greater  than  $100,000 and an integral
multiple  of  $100,000,  and (ii) not  prohibited  under  the  Senior  Financing
Agreements or the Intercreditor Agreement. Any prepayments of the Term Loan made
pursuant to this SECTION 2.3(C) shall be accompanied by payment in full of (i) a
prepayment fee in an amount equal to (x) during the period from the Closing Date
to the first  anniversary of the Closing Date,  three percent (3%) of the amount
of such  prepayment,  (y) during the period  from the first  anniversary  of the
Closing Date to the second  anniversary of the Closing Date, two percent (2%) of

                                       4

the  amount  of such  prepayment  and (z)  during  the  period  from the  second
anniversary  of the Closing Date to the third  anniversary  of the Closing Date,
one  percent  (1%) of the  amount  of such  prepayment,  plus  (ii) all  accrued
interest and applicable  fees on the principal  amount being prepaid to the date
of  prepayment;  PROVIDED,  HOWEVER,  if an Event of Default then  exists,  such
prepayment shall be applied to the Obligations  pursuant to SECTION  2.3(B)(II).
From and after the third  anniversary  of the  Closing  Date,  there shall be no
prepayment fee.

            (d)   MANDATORY PREPAYMENTS.

                  (i)   Immediately  upon the  receipt  by  Parent or any of its
Subsidiaries of the proceeds of any Permitted Kasco Sale Transaction,  Borrowers
shall prepay the outstanding  principal amount of the  Obligations,  the Working
Capital  Indebtedness  and the  Term A  Indebtedness,  as the  case  may be,  in
accordance  with  the  Intercreditor  Agreement  and  SECTION  2.3(E)(I)  in  an
aggregate  amount equal to 100% of the Net Cash  Proceeds  received by Parent or
its Subsidiaries in connection with such sale. Nothing contained in this SECTION
2.3(D)(I)  shall permit Parent or any of its  Subsidiaries  to sell or otherwise
dispose of any property or assets other than in accordance the  requirements  of
the definition of Permitted  Kasco Sale  Transaction  or as otherwise  permitted
hereunder.

                  (ii)  Immediately  upon the  receipt  by  Parent or any of its
Subsidiaries of the proceeds of any voluntary or involuntary sale or disposition
by Parent or any of its Subsidiaries of property or assets  (including  casualty
losses or  condemnations  but excluding sales or  dispositions  which qualify as
Permitted  Dispositions under clauses (a), (b), (c), or (d) of the definition of
Permitted Dispositions or any Permitted Kasco Sale Transaction), Borrowers shall
prepay the outstanding principal amount of the Obligations,  the Working Capital
Indebtedness  and the Term A Indebtedness in accordance  with the  Intercreditor
Agreement  and  SECTION  2.3(E)(II)  in an amount  equal to 100% of the Net Cash
Proceeds  (including  condemnation awards and payments in lieu thereof) received
by Parent or its  Subsidiaries  in connection  with such sales or  dispositions;
PROVIDED that, so long as (A) no Default or Event of Default shall have occurred
and is  continuing,  (B)  Administrative  Borrower  shall have given Agent prior
written  notice of  Borrowers'  intention  to apply such  monies to the costs of
replacement  of the  properties  or assets  that are the subject of such sale or
disposition,  casualty  loss  or  condemnation,  or  the  cost  of  purchase  or
construction  of other  assets  useful in the  business  of  Borrowers  or their
Subsidiaries,  (C) the  monies  are held in a cash  collateral  account in which
Lender (or, so long as the Working  Capital Credit  Agreement or the Term A Loan
Agreement is in effect,  Working  Capital Agent or Term A Agent,  as applicable,
acting  as  agent  for  the  Lender)  has a  perfected  first-priority  security
interest, and (D) Borrowers or their Subsidiaries, as applicable,  complete such
replacement, purchase, or construction within 180 days after the initial receipt
of such monies,  Borrowers and their Subsidiaries shall have the option to apply
such monies to the costs of  replacement  of the property or assets that are the
subject of such sale or disposition or the costs of purchase or  construction of
other assets useful in the business of Borrowers and their  Subsidiaries  unless
and to the extent that such  applicable  period shall have expired  without such
replacement,  purchase or construction  being made or completed,  in which case,
any amounts remaining in the cash collateral account shall be paid to Lender and
applied in accordance with SECTION 2.3(E)(II). Nothing contained in this SECTION
2.3(D)(II)  shall permit Parent or any of its  Subsidiaries to sell or otherwise
dispose of any property or assets other than in accordance with SECTION 6.4.

                  (iii) Immediately  upon the  receipt  by  Parent or any of its
Subsidiaries  of  any  Extraordinary   Receipts,   Borrowers  shall  prepay  the
outstanding   principal   amount  of  the   Obligations,   the  Working  Capital
Indebtedness  and the Term A Indebtedness in accordance with SECTION  2.3(e)(ii)
in an amount equal to 100% of such Extraordinary Receipts, net of any reasonable
expenses incurred in collecting such Extraordinary Receipts.

                                       5

                  (iv)  Immediately upon the issuance or incurrence by Parent or
any of its Subsidiaries of any Indebtedness  (other than Indebtedness  permitted
under SECTION 6.1(A), (B), (C), (D), or (E)) or the issuance by Parent or any of
its  Subsidiaries  of any shares of Parent's or its  Subsidiaries'  Stock (other
than (A) the issuance of Stock under an employee  stock option or incentive plan
of any Loan Party to the  extent  permitted  hereunder  or (B) in the event that
Parent or any  Subsidiary of Parent forms a Subsidiary  in  accordance  with the
terms  hereof,  the  issuance  by such  Subsidiary  of Stock to  Parent  or such
Subsidiary,  as applicable),  Borrowers  shall prepay the outstanding  principal
amount of the  Obligations,  the  Working  Capital  Indebtedness  and the Term A
Indebtedness in accordance with SECTION 2.3(E)(II) in an amount equal to 100% of
the Net Cash Proceeds  received by Parent or its Subsidiaries in connection with
such issuance or incurrence. The provisions of this SECTION 2.3(D)(IV) shall not
be deemed to be implied  consent to any such  issuance or  incurrence  otherwise
prohibited by the terms and conditions of this Agreement.

      2.4   INTEREST RATES AND FEES:  RATES, PAYMENTS, AND CALCULATIONS.

            (a)   INTEREST  RATE.  Except as  provided  in SECTION  2.4(B),  all
Obligations  whether or not  charged to the Loan  Account  pursuant to the terms
hereof  shall bear  interest  on the Daily  Balance  thereof at a per annum rate
equal to the Base Rate of Interest, plus the Base Rate Margin.

            (b)   DEFAULT RATE. Upon the occurrence and during the  continuation
of an Event of Default (and at the election of Lender),  all Obligations whether
or not  charged to the Loan  Account  pursuant  to the terms  hereof  shall bear
interest  on  the  Daily  Balance  thereof  at a per  annum  rate  equal  to 2.0
percentage points above the per annum rate otherwise applicable hereunder.

            (c)   PAYMENT.

                  (i)   Except  as  otherwise  permitted  by  the  Intercreditor
Agreement,  and pursuant to clause (ii) immediately below, interest and all fees
payable hereunder shall be due and payable,  in arrears,  on the date that is 15
days from the end of each fiscal quarter of Parent at any time that  Obligations
are  outstanding.  Without  limiting the  obligations  of the  Borrowers to make
payments in accordance with the terms hereof, Borrowers hereby authorize Lender,
from time to time,  without  prior  notice to Borrower or any other  Person,  to
charge all interest and fees (when due and payable), all Lender Expenses (as and
when due and  payable),  all fees and costs  provided for in SECTION 2.9 (as and
when due and payable),  and all other payments as and when due and payable under
any Loan Document to Borrowers' Loan Account.  All such amounts,  whether or not
charged to the Loan Account,  shall constitute  Obligations  hereunder and shall
accrue  interest at the rate then  applicable.  Any  interest  not paid when due
shall be compounded  by being  charged to the Loan Account and shall  thereafter
constitute   Obligations  hereunder  and  shall  accrue  interest  at  the  then
applicable Base Rate of Interest, plus the Base Rate Margin.

                  (ii)  From and  after  the date  that is  twelve  (12)  months
following the Closing Date,  interest shall be due and payable,  in arrears,  on
the date that is 15 days from the end of each fiscal  quarter of Parent with the
first such interest  payment being due and payable for the fiscal quarter of the
Parent ended on September  30, 2008;  PROVIDED  that (x) Leverage (as defined in
the Term A Credit  Agreement)  is less than 3.0 : 1 after  giving  effect to any
such payments;  and (y) Excess  Availability  (as defined in the Working Capital
Credit  Agreement) is greater than  $20,000,000  after giving effect to any such
payment.  To the extent that cash  interest  payments are not  permitted by this
SECTION  2.4(C)(II),  interest  shall  continue  to accrue  and shall be paid in
accordance with Section 2.4(c)(i),  above. If payment of a portion,  but not the
entire  amount,  of the interest then due and owing would satisfy the conditions
set forth in clauses (x) and (y), immediately above, then Borrowers shall make a
cash interest  payment in the largest  amount that would be in  compliance  with
such  conditions  and the balance of the payment then due and owing shall accrue
but remain unpaid.

                                       6

            (d)   COMPUTATION.  All interest and fees chargeable  under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed.

            (e)   INTENT TO LIMIT  CHARGES TO MAXIMUM  LAWFUL RATE.  In no event
shall the interest rate or rates payable  under this  Agreement,  plus any other
amounts paid in connection  herewith,  exceed the highest rate permissible under
any law that a court of competent  jurisdiction shall, in a final determination,
deem  applicable.  Borrowers and the Lender,  in executing and  delivering  this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; PROVIDED,  HOWEVER, that, anything contained herein
to the contrary notwithstanding,  if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, IPSO FACTO, as
of the date of this  Agreement,  Borrowers  are and shall be liable only for the
payment of such maximum as allowed by law, and payment  received from  Borrowers
in excess of such legal maximum,  whenever received,  shall be applied to reduce
the principal balance of the Obligations to the extent of such excess.

      2.5   [INTENTIONALLY OMITTED]

      2.6   CREDITING PAYMENTS.  The receipt of any payment item by Lender shall
not be  considered  a payment  on account  unless  such  payment  item is a wire
transfer of immediately  available federal funds made to the Lender's Account or
unless and until such payment item is honored when presented for payment. Should
any payment item not be honored when presented for payment, then Borrowers shall
be  deemed  not to have made  such  payment  and  interest  shall be  calculated
accordingly.  Anything to the contrary  contained  herein  notwithstanding,  any
payment item shall be deemed  received by Lender only if it is received into the
Lender's  Account on a Business Day on or before 2:00 p.m.  (New York time).  If
any payment item is received into the Agent's  Account on a non-Business  Day or
after 2:00 p.m.  (New York time) on a Business  Day,  it shall be deemed to have
been  received  by  Agent  as of the  opening  of  business  on the  immediately
following Business Day.

      2.7   DESIGNATED  ACCOUNT.  Lender  is  authorized  to take any  permitted
action  under  this  Agreement  based upon  instructions  received  from  anyone
purporting  to  be an  Authorized  Person.  Administrative  Borrower  agrees  to
establish and maintain the Designated Account with the Designated Account Bank.

      2.8   MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Lender shall
maintain an account on its books in the name of Borrowers  (the "LOAN  ACCOUNT")
on which  Borrowers will be charged with the Term Loan, all Protective  Advances
made by  Lender  to  Borrowers  or for  Borrowers'  account,  and with all other
payment  Obligations  hereunder  or under the other Loan  Documents,  including,
accrued  interest,  fees and expenses,  and Lender Expenses.  In accordance with
SECTION 2.6, the Loan  Account  will be credited  with all payments  received by
Lender from Borrowers or for Borrowers' account.  Lender shall render statements
regarding  the Loan Account to  Administrative  Borrower,  including  principal,
interest,  fees,  and  including  an  itemization  of all charges  and  expenses
constituting Lender Expenses owing, and such statements,  absent manifest error,
shall be  conclusively  presumed to be correct and  accurate and  constitute  an
account  stated between  Borrowers and the Lender  unless,  within 30 days after
receipt  thereof  by  Administrative  Borrower,  Administrative  Borrower  shall
deliver  to Lender  written  objection  thereto  describing  the error or errors
contained in any such statements.

      2.9   CAPITAL  REQUIREMENTS.  If, after the date hereof, Lender determines
that (i) the  adoption of or change in any law,  rule,  regulation  or guideline
applicable to Lender, or any change in the interpretation or application thereof
by any Governmental  Authority charged with the administration  thereof, or (ii)

                                       7

compliance by Lender with any guideline, request or directive of any such entity
regarding  capital  adequacy  (whether or not having the force of law),  has the
effect of reducing the return on Lender's  capital as a consequence  of Lender's
Commitments hereunder to a level below that which Lender could have achieved but
for such adoption,  change, or compliance  (taking into  consideration  Lender's
then existing  policies  with respect to capital  adequacy and assuming the full
utilization of Lender's  capital) by any amount deemed by Lender to be material,
then Lender may notify  Administrative  Borrower  thereof.  Following receipt of
such  notice,  Borrowers  agree to pay to Lender on  demand  the  amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after  presentation  by Lender of a  statement  in the amount and
setting  forth  in  reasonable  detail  Lender's  calculation  thereof  and  the
assumptions  upon which such  calculation  was based (which  statement  shall be
deemed true and correct absent  manifest  error).  In  determining  such amount,
Lender may use any reasonable averaging and attribution methods.

      2.10  JOINT AND SEVERAL LIABILITY OF BORROWERS.

            (a)   Each  Borrower  is  accepting  joint  and  several   liability
hereunder and under the other Loan Documents in  consideration  of the financial
accommodations to be provided by the Lender under this Agreement, for the mutual
benefit,  directly and indirectly,  of each Borrower and in consideration of the
undertakings  of the other  Borrowers to accept joint and several  liability for
the Obligations.  Each Borrower hereby further  irrevocably and  unconditionally
guaranties as and for its own debt, until final payment in full thereof has been
made, (a) the payment of the Obligations,  when and as the same shall become due
and  payable,   whether  at  maturity,   pursuant  to  a  mandatory   prepayment
requirement, by acceleration, or otherwise; it being the intent of each Borrower
that the  guaranty  set forth  herein  shall be a guaranty  of payment and not a
guaranty of collection; and (b) the punctual and faithful performance,  keeping,
observance,  and  fulfillment  by  each  Borrower  of  all  of  the  agreements,
conditions,  covenants,  and  obligations  of such  Borrower  contained  in this
Agreement and under each of the other Loan Documents.

            (b)   Each Borrower,  jointly and severally,  hereby irrevocably and
unconditionally  accepts, not merely as a surety but also as a co-debtor,  joint
and several liability with the other Borrowers,  with respect to the payment and
performance of all of the Obligations  (including any Obligations  arising under
this SECTION  2.10),  it being the intention of the parties  hereto that all the
Obligations shall be the joint and several  obligations of each Borrower without
preferences or distinction among them.

            (c)   If and to the extent that any Borrower  shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other  Borrowers  will make such payment  with respect to, or perform,  such
Obligation.

            (d)   The  Obligations of each Borrower under the provisions of this
SECTION  2.10   constitute  the  absolute  and   unconditional,   full  recourse
Obligations  of each  Borrower  enforceable  against  each  Borrower to the full
extent of its properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.

            (e)   Except as otherwise expressly provided in this Agreement, each
Borrower hereby waives notice of acceptance of its joint and several  liability,
notice  of the Term  Loan,  any  Protective  Advance  or any  other  advance  or
extension  of credit  made under or pursuant  to this  Agreement,  notice of the
occurrence  of any Default,  Event of Default,  or of any demand for any payment
under  this  Agreement,  notice of any  action at any time  taken or  omitted by
Lender  under  or in  respect  of any of the  Obligations,  any  requirement  of
diligence or to mitigate  damages  and,  generally,  to the extent  permitted by
applicable  law, all  demands,  notices and other  formalities  of every kind in
connection with this Agreement (except as otherwise provided in this Agreement).

                                       8

Each  Borrower  hereby  assents  to, and waives  notice  of,  any  extension  or
postponement  of the  time  for  the  payment  of any  of the  Obligations,  the
acceptance  of any  payment of any of the  Obligations,  the  acceptance  of any
partial payment thereon, any waiver,  consent or other action or acquiescence by
Lender at any time or times in respect of any  default  by any  Borrower  in the
performance or  satisfaction  of any term,  covenant,  condition or provision of
this Agreement, any and all other indulgences whatsoever by Lender in respect of
any of the Obligations,  and the taking,  addition,  substitution or release, in
whole  or in  part,  at any  time  or  times,  of any  security  for  any of the
Obligations or the addition,  substitution  or release,  in whole or in part, of
any Borrower.  Without  limiting the generality of the foregoing,  each Borrower
assents to any other  action or delay in acting or failure to act on the part of
Lender  with  respect to the  failure by any  Borrower to comply with any of its
respective Obligations,  including,  without limitation, any failure strictly or
diligently  to assert any right or to pursue any remedy or to comply  fully with
applicable laws or regulations  thereunder,  which might, but for the provisions
of this SECTION 2.10 afford  grounds for  terminating,  discharging or relieving
any  Borrower,  in whole or in part,  from  any of its  Obligations  under  this
SECTION 2.10,  it being the  intention of each Borrower  that, so long as any of
the Obligations  hereunder remain unsatisfied,  the Obligations of each Borrower
under this SECTION 2.10 shall not be discharged  except by performance  and then
only to the extent of such  performance.  The Obligations of each Borrower under
this  SECTION  2.10 shall not be  diminished  or rendered  unenforceable  by any
unenforceability  of this  Agreement or any other Loan  Document  against one or
more of the other  Borrowers  or any  winding up,  reorganization,  arrangement,
liquidation,  reconstruction or similar  proceeding with respect to any Borrower
or Lender.

            (f)   Each  Borrower  represents  and  warrants  to Lender that such
Borrower is currently  informed of the financial  condition of all Borrowers and
of all other  circumstances which a diligent inquiry would reveal and which bear
upon the risk of nonpayment of the Obligations. Each Borrower further represents
and warrants to Lender that such Borrower has read and understands the terms and
conditions of the Loan  Documents.  Each  Borrower  hereby  covenants  that such
Borrower will continue to keep informed of Borrowers' financial  condition,  the
financial condition of other guarantors,  if any, and of all other circumstances
which bear upon the risk of nonpayment or nonperformance of the Obligations.

            (g)   Each Borrower waives all rights and defenses arising out of an
election of remedies by Lender, even though that election of remedies, such as a
nonjudicial  foreclosure  with respect to security for a guaranteed  obligation,
has destroyed  Lender's  rights of subrogation  and  reimbursement  against such
Borrower by the  operation  of Section  580(d) of the  California  Code of Civil
Procedure or otherwise.

            (h)   Each  Borrower  waives  all  rights  and  defenses  that  such
Borrower may have because the  Obligations  are secured by Real  Property.  This
means, among other things:

                  (i)   Lender may  collect  from such  Borrower  without  first
foreclosing on any Real or Personal Property Collateral pledged by Borrowers.

                  (ii)  If Lender  forecloses  on any Real  Property  Collateral
pledged by Borrowers:

                        (A) The amount of the Obligations may be reduced
only by the price for which that  collateral  is sold at the  foreclosure  sale,
even if the collateral is worth more than the sale price.

                        (B) Lender may collect from such Borrower even if
Lender, by foreclosing on the Real Property Collateral,  has destroyed any right
such Borrower may have to collect from the other Borrowers.

                                       9

This is an unconditional and irrevocable  waiver of any rights and defenses such
Borrower may have because the  Obligations  are secured by Real Property.  These
rights and  defenses  include,  but are not  limited  to, any rights or defenses
based upon  Section  580a,  580b,  580d or 726 of the  California  Code of Civil
Procedure.

            (i) The  provisions of this SECTION 2.10 are made for the benefit of
Lender and its  successors  and assigns,  and may be enforced by it or them from
time to time  against any or all  Borrowers  as often as occasion  therefor  may
arise and without  requirement on the part of Lender,  successor or assign first
to marshal any of its or their  claims or to exercise any of its or their rights
against any Borrower or to exhaust any remedies  available to it or them against
any Borrower or to resort to any other  source or means of obtaining  payment of
any of the Obligations hereunder or to elect any other remedy. The provisions of
this SECTION 2.10 shall remain in effect until all of the Obligations shall have
been paid in full or otherwise fully satisfied.  If at any time, any payment, or
any part  thereof,  made in respect of any of the  Obligations,  is rescinded or
must otherwise be restored or returned by Lender upon the insolvency, bankruptcy
or reorganization of any Borrower, or otherwise,  the provisions of this SECTION
2.10 will forthwith be reinstated in effect, as though such payment had not been
made.

            (j)   Until the  Obligations  have been paid in full,  each Borrower
hereby  agrees  that it will not enforce  any of its rights of  contribution  or
subrogation against any other Borrower with respect to any liability incurred by
it hereunder or under any of the other Loan  Documents,  any payments made by it
to Lender with  respect to any of the  Obligations  or any  collateral  security
therefor.  Any claim which any Borrower may have against any other Borrower with
respect to any payments to Lender  hereunder  or under any other Loan  Documents
are  hereby  expressly  made  subordinate  and junior in right of payment to the
prior  payment  in full in cash of the  Obligations  and,  in the  event  of any
insolvency,  bankruptcy,  receivership,  liquidation,  reorganization  or  other
similar proceeding under the laws of any jurisdiction  relating to any Borrower,
its debts or its assets, whether voluntary or involuntary,  all such Obligations
shall  be paid  in  full in cash  before  any  payment  or  distribution  of any
character,  whether in cash, securities or other property,  shall be made to any
other Borrower therefor.

            (k)   Each Borrower  hereby agrees that,  after the  occurrence  and
during the  continuance  of any Default or Event of Default,  the payment of any
amounts due with respect to the indebtedness  owing by any Borrower to any other
Borrower  is hereby  subordinated  to the prior  payment  in full in cash of the
Obligations.  Each Borrower  hereby agrees that after the  occurrence and during
the  continuance  of any Default or Event of  Default,  such  Borrower  will not
demand,  sue for or otherwise  attempt to collect any  indebtedness of any other
Borrower  owing to such Borrower until the  Obligations  shall have been paid in
full in cash. If,  notwithstanding the foregoing  sentence,  such Borrower shall
collect,  enforce or receive any amounts in respect of such  indebtedness,  such
amounts  shall be  collected,  enforced and received by such Borrower as trustee
for  Lender,  and such  Borrower  shall  deliver  any such  amounts to Agent for
application to the Obligations in accordance with SECTION 2.3(B).

      2.11  SECURITIZATION.  Parent and each  Borrower (on behalf of  themselves
and their  respective  Subsidiaries)  hereby  acknowledge  that  Lender  and its
Affiliates and Related Funds may sell or securitize its portion of the Term Loan
(a  "SECURITIZATION")  through  the  pledge of its  portion  of the Term Loan as
collateral  security for loans to such Lender or its Affiliates or Related Funds
or through the sale of its portion of the Term Loan or the issuance of direct or
indirect interests in its portion of the Term Loan, which loans to Lender or its
Affiliates  or Related  Funds or direct or indirect  interests  will be rated by
Moody's,  S&P or one or more other  rating  agencies  (the  "RATING  AGENCIES").
Parent and each Borrower (on behalf of themselves and their  Subsidiaries) agree
to  cooperate  with Lender and its  Affiliates  and Related  Funds to effect the
Securitization,  including, without limitation, by (a) executing such additional
documents,   as  reasonably   requested  by  Lender  in   connection   with  the
Securitization,  provided that (i) any such  additional  documentation  does not
impose  additional costs on Borrowers (other than costs of a de minimis nature),

                                       10

and (ii) any such additional documentation does not adversely affect the rights,
or increase the obligations  (other than increases of a de minimis  nature),  of
Borrowers  under the Loan  Documents or change or affect in a manner  adverse to
Borrowers  the  financial  terms  of  the  Term  Loan  and  (b)  providing  such
information  as may be  reasonably  requested by Lender in  connection  with the
rating of the Term Loan or the Securitization.

3.    CONDITIONS; TERM OF AGREEMENT.

      3.1   CONDITIONS PRECEDENT TO THE TERM LOAN. The obligations of the Lender
hereunder,  including the  obligation to refinance the Term Loan, are subject to
the  fulfillment,  to the  satisfaction  of Lender of (a) each of the conditions
precedent set forth on SCHEDULE  3.1, and (b) each of the  following  conditions
precedent:

                  (i)   the  representations  and warranties of the Loan Parties
and their  Subsidiaries  contained in the Original LSA, this Agreement or in the
other Loan Documents shall be true and correct in all material  respects (except
that such materiality  qualifier shall not be applicable to any  representations
and warranties that already are qualified or modified by materiality in the text
thereof)  on and as of the  date  made and on the date  hereof,  (except  to the
extent that such  representations  and  warranties  relate  solely to an earlier
date);

                  (ii)  no Default or Event of Default  shall have  occurred and
be continuing under the Original LSA or hereunder on the date hereof,  nor shall
either  result  from the  execution  and  delivery  hereof  or the  transactions
contemplated hereby;

                  (iii) no injunction,  writ, restraining order, or other order,
or any law,  rule or  regulation,  of any  nature  restricting  or  prohibiting,
directly or  indirectly,  the extension of credit under the Original LSA or this
Agreement  shall  have  been  issued  and  remain  in force by any  Governmental
Authority against any Loan Party, or Lender; and

                  (iv)  no Material  Adverse  Change shall have  occurred  since
December 31, 2006, PROVIDED that the transactions contemplated by this Agreement
and the  transactions  made in connection  with the  Permitted  Merger shall not
constitute a Material Adverse Change.

      3.2   TERM.  This Agreement  shall continue in full force and effect for a
term  ending  on  January  17,  2013  (the  "MATURITY   DATE").   The  foregoing
notwithstanding,  the Lender shall have the right to terminate  its  obligations
under this  Agreement  immediately  and without  notice upon the  occurrence and
during the continuation of an Event of Default.

      3.3   EFFECT OF TERMINATION. On the date of termination of this Agreement,
all  Obligations  immediately  shall  become due and payable  without  notice or
demand.  No termination of this Agreement,  however,  shall relieve or discharge
Loan Parties or their  Subsidiaries of their duties,  Obligations,  or covenants
hereunder or under any other Loan Document and the Liens in the Collateral shall
remain  in  effect  until all  Obligations  have  been  paid in full.  When this
Agreement has been terminated and all of the Obligations have been paid in full,
Lender will, at Borrowers'  sole  expense,  execute and deliver any  termination
statements,  lien releases,  mortgage  releases,  re-assignments  of trademarks,
discharges  of  security  interests,  and other  similar  discharge  or  release
documents (and, if applicable,  in recordable form) as are reasonably  necessary
to release,  as of record,  the Liens and all notices of security  interests and
liens previously filed by Lender with respect to the Obligations.

      3.4   EARLY  TERMINATION BY BORROWERS.  Borrowers have the option,  at any
time following the payment in full of the Working Capital  Indebtedness  and the
Term A Indebtedness,  upon 30 days prior written notice to Lender,  to terminate

                                       11

this  Agreement,  by paying to Lender,  in cash,  the  Obligations,  in full. If
Borrowers have sent a notice of  termination  pursuant to the provisions of this
Section, then Borrowers shall be obligated to repay the Obligations, in full, on
the date set forth as the date of termination of this Agreement in such notice.

4.    REPRESENTATIONS AND WARRANTIES.

            In order to induce the Lender to enter into this  Agreement,  Parent
and each  Borrower  make the  following  representations  and  warranties to the
Lender which shall be true, correct, and complete as of the Closing Date (except
to the extent  that such  representations  and  warranties  relate  solely to an
earlier date or any Schedule or  Projection  referred to herein has been updated
or amended in accordance herewith) and such representations and warranties shall
survive the execution and delivery of this Agreement:

      4.1   NO  ENCUMBRANCES.  Each Loan Party and its Subsidiaries has good and
indefeasible title to, or a valid leasehold interest in, their personal property
assets and good and marketable title to, or a valid leasehold interest in, their
Real Property, in each case, free and clear of Liens except for Permitted Liens.

      4.2   ORIGINAL LSA. Each of the representations and warranties of the Loan
Parties contained in the Original LSA remains true,  accurate and complete as of
the Closing Date (except to the extent that such  representations and warranties
relate  solely to an earlier  date).  Each Loan Party has complied with each and
every  covenant  applicable to it under the Original LSA and since the execution
and delivery of the Original LSA,  there has been no Default or Event of Default
by any Loan Party under the Original LSA.

      4.3   [INTENTIONALLY OMITTED.].

      4.4   EQUIPMENT. Each material item of Equipment of Loan Parties and their
Subsidiaries  is used or held for use in their  business  and is in good working
order, ordinary wear and tear and damage by casualty excepted.

      4.5   LOCATION OF  COLLATERAL.  The  Collateral  (other  than  vehicles or
Equipment out for repair) of Loan Parties and their  Subsidiaries  is not stored
with a bailee, warehouseman,  or similar party (except with respect to Inventory
in the  ordinary  course of  business),  and is located  only at, or  in-transit
between,  the  locations  identified  on SCHEDULE  4.5 (as such  Schedule may be
updated pursuant to SECTION 5.9).

      4.6   INVENTORY  RECORDS.  Each Loan  Party  keeps  correct  and  accurate
records in all material respects itemizing and describing the type, quality, and
quantity of its and its Subsidiaries' Inventory and the book value thereof.

      4.7   JURISDICTION OF ORGANIZATION; LOCATION OF CHIEF EXECUTIVE OFFICE;
ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS.

            (a)   The name of (within the meaning of Section  9-503 of the Code)
and jurisdiction of organization of each Loan Party and each of its Subsidiaries
is set forth on SCHEDULE  4.7(A) (as such  Schedule  may be updated from time to
time to reflect changes permitted to be made under SECTION 6.5).

            (b)   The chief  executive  office of each Loan  Party is located at
the address  indicated on SCHEDULE  4.7(B) (as such Schedule may be updated from
time to time to reflect changes permitted to be made under SECTION 5.9).

                                       12

            (c)   Each   Loan   Party's   tax    identification    numbers   and
organizational identification numbers, if any, are identified on SCHEDULE 4.7(C)
(as such Schedule may be updated from time to time to reflect changes  permitted
to be made under SECTION 6.5).

            (d)   As  of  the  Closing   Date,   the  Loan   Parties  and  their
Subsidiaries  do not hold any  commercial  tort  claims,  except as set forth on
SCHEDULE 4.7(D).

      4.8   DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.

            (a)   Each Loan Party (i) is duly organized and existing and in good
standing (or the non-U.S. equivalent thereof) under the laws of the jurisdiction
of its organization and qualified to do business in each jurisdiction  where the
failure to be so qualified  reasonably could be expected to result in a Material
Adverse  Change,  and (ii) has all requisite  power and authority to conduct its
business  as  now  conducted  and  as  currently  contemplated,   to  incur  the
Obligations hereunder (in the case of the Borrowers), and to execute and deliver
each Loan Document to which it is a party,  and to consummate  the  transactions
contemplated thereby.

            (b)   Set forth on SCHEDULE  4.8(B) (as such Schedule may be updated
from time to time to reflect  changes  permitted to be made under SECTION 5.16),
is a complete and accurate  description of the authorized  capital Stock of each
Loan Party,  by class,  and, as of the Closing Date, a description of the number
of shares of each such  class that are  issued  and  outstanding.  Other than as
described on SCHEDULE 4.8(B), there are no subscriptions,  options, warrants, or
calls  relating to any shares (or other  equity  interest)  of each Loan Party's
capital  Stock,  including  any  right  of  conversion  or  exchange  under  any
outstanding  security  or other  instrument.  No Loan  Party is  subject  to any
obligation  (contingent  or otherwise)  to  repurchase  or otherwise  acquire or
retire any  shares of its  capital  Stock or any  security  convertible  into or
exchangeable for any of its capital Stock.

            (c)   Set forth on SCHEDULE  4.8(C) (as such Schedule may be updated
from time to time to reflect  changes  permitted to be made under SECTION 5.16),
is a  complete  and  accurate  list of each Loan  Party's  direct  and  indirect
Subsidiaries,  showing:  (i) the  jurisdiction of their  organization,  (ii) the
number of shares of each class of common and preferred Stock authorized for each
of such Subsidiaries, and (iii) the number and the percentage of the outstanding
shares of each such class owned  directly or indirectly by the  applicable  Loan
Party.  All of the  outstanding  capital Stock of each such  Subsidiary has been
validly issued and is fully paid and non-assessable.

            (d)   Except  as  set  forth  on  SCHEDULE  4.8(C),   there  are  no
subscriptions,  options,  warrants,  or calls relating to any shares of any Loan
Party's  Subsidiaries'  capital  Stock,  including  any right of  conversion  or
exchange under any outstanding  security or other  instrument.  No Loan Party or
any of its respective  Subsidiaries is subject to any obligation  (contingent or
otherwise) to  repurchase or otherwise  acquire or retire any shares of any Loan
Party's  Subsidiaries'  capital  Stock  or  any  security  convertible  into  or
exchangeable for any such capital Stock.

      4.9   DUE AUTHORIZATION; NO CONFLICT.

            (a)   As to each Borrower, the execution,  delivery, and performance
by such Borrower of this Agreement and the Loan Documents to which it is a party
have been duly authorized by all necessary action on the part of such Borrower.

            (b)   As to each Borrower, the execution,  delivery, and performance
by such Borrower of this Agreement and the other Loan Documents to which it is a
party do not and will not (i) violate any provision of federal,  state, or local
law or regulation  applicable to such Borrower,  the Governing Documents of such

                                       13

Borrower,  or any order,  judgment, or decree of any court or other Governmental
Authority  binding on such Borrower,  (ii) conflict with, result in a breach of,
or  constitute  (with due  notice or lapse of time or both) a default  under any
Material  Contract of such Borrower,  (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
such Borrower,  other than Permitted  Liens,  (iv) do not and will not result in
any default, noncompliance,  suspension,  revocation,  impairment, forfeiture or
nonrenewal of any permit,  license,  authorization or approval applicable to its
operations  or any of its  properties,  or (v)  require  any  approval  of  such
Borrower's  interestholders  or any  approval or consent of any Person under any
Material  Contract of such Borrower,  other than consents or approvals that have
been obtained and that are still in force and effect.

            (c)   Other than the filing of financing statements, the recordation
of the  Mortgages,  and other  filings or  actions  necessary  to perfect  Liens
granted to Lender in the Collateral, the execution, delivery, and performance by
each  Borrower  of this  Agreement  and the other Loan  Documents  to which such
Borrower is a party do not and will not require any registration with,  consent,
or  approval  of, or notice to, or other  action  with or by,  any  Governmental
Authority, other than consents or approvals that have been obtained and that are
still in force and effect.

            (d)   As to  each  Borrower,  this  Agreement  and  the  other  Loan
Documents  to  which  such  Borrower  is  a  party,   and  all  other  documents
contemplated  hereby and thereby,  when  executed and delivered by such Borrower
will be the legally valid and binding obligations of such Borrower,  enforceable
against such  Borrower in  accordance  with their  respective  terms,  except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization,  moratorium,  or similar laws relating to or limiting creditors'
rights generally.

            (e)   The Liens are validly  created,  perfected  (other than (i) in
respect of motor vehicles and (ii) any Deposit Accounts and Securities  Accounts
not subject to a Control  Agreement as permitted  by SECTION  6.12,  and subject
only to the filing of financing statements and the recordation of the Mortgages,
and (ii) to the extent such Liens are not validly created or perfected solely as
a result of the gross  negligence of Lender),  and first priority Liens (subject
only to Permitted Priority Liens).

            (f)   The execution,  delivery, and performance by each Guarantor of
the Loan  Documents  to which it is a party  have  been duly  authorized  by all
necessary action on the part of such Guarantor.

            (g)   The execution,  delivery, and performance by each Guarantor of
the Loan  Documents  to which it is a party do not and will not (i)  violate any
provision  of federal,  state,  or local law or  regulation  applicable  to such
Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or
decree of any court or other  Governmental  Authority binding on such Guarantor,
(ii) conflict  with,  result in a breach of, or  constitute  (with due notice or
lapse of time or both) a default under any Material  Contract of such Guarantor,
(iii) result in or require the creation or  imposition of any Lien of any nature
whatsoever upon any properties or assets of such Guarantor, other than Permitted
Liens,  (iv)  do  not  and  will  not  result  in  any  default,  noncompliance,
suspension,  revocation,  impairment,  forfeiture  or  nonrenewal of any permit,
license,  authorization  or approval  applicable to its operations or any of its
properties,  or (v) require any approval of such Guarantor's  interestholders or
any  approval  or consent  of any Person  under any  Material  Contract  of such
Guarantor, other than consents or approvals that have been obtained and that are
still in force and effect.

            (h)   Other  than  the  filing  of  financing   statements  and  the
recordation of the Mortgages,  and other filings or actions necessary to perfect
Liens  granted  to  Lender  in the  Collateral,  the  execution,  delivery,  and
performance by each Guarantor of the Loan Documents to which such Guarantor is a
party do not and will not require any registration  with,  consent,  or approval
of, or notice to, or other action with or by, any Governmental Authority,  other
than  consents or approvals  that have been obtained and that are still in force
and effect.

                                       14

            (i)   The Loan Documents to which each Guarantor is a party, and all
other documents  contemplated hereby and thereby, when executed and delivered by
such  Guarantor  will be the  legally  valid  and  binding  obligations  of such
Guarantor,   enforceable   against  such  Guarantor  in  accordance  with  their
respective terms,  except as enforcement may be limited by equitable  principles
or by  bankruptcy,  insolvency,  reorganization,  moratorium,  or  similar  laws
relating to or limiting creditors' rights generally.

      4.10  LITIGATION.  Other than those matters disclosed on SCHEDULE 4.10 and
other than matters arising after the Closing Date that  reasonably  could not be
expected to result in a Material Adverse Change, there are no actions, suits, or
proceedings pending or, to the knowledge of Parent and each Borrower, threatened
against any Loan Party or any of its Subsidiaries.  As of the Closing Date, none
of the Loan Parties holds any commercial tort claims in respect of which a claim
has been  filed in a court of law or a written  notice by an  attorney  has been
given to a potential defendant

      4.11  NO MATERIAL  ADVERSE CHANGE.  All financial  statements  relating to
Parent and its  Subsidiaries  that have been  delivered by any Loan Party to the
Lender  have been  prepared  in  accordance  with GAAP  (except,  in the case of
unaudited financial  statements,  for the lack of footnotes and being subject to
year-end  audit  adjustments)  and  present  fairly  in all  material  respects,
Parent's and its  Subsidiaries'  financial  condition as of the date thereof and
results of operations  for the period then ended.  There has not been a Material
Adverse  Change with respect to Parent and its  Subsidiaries  since December 31,
2006.  Notwithstanding  anything to the  contrary  herein,  for purposes of this
Agreement,  no Material  Adverse  Change  shall be deemed to have  occurred as a
result of the  transactions  contemplated  by this  Agreement and the other Loan
Documents  or from the  transactions  and  transfers  which  arose out of and in
connection with the Permitted Merger.

      4.12  FRAUDULENT TRANSFER.

            (a)   Each  Loan  Party  and  each  Subsidiary  of a Loan  Party  is
Solvent.

            (b)   No transfer of property is being made by any Loan Party or any
Subsidiary of a Loan Party and no obligation is being incurred by any Loan Party
or  any  Subsidiary  of  a  Loan  Party  in  connection  with  the  transactions
contemplated  by this  Agreement or the other Loan  Documents with the intent to
hinder, delay, or defraud either present or future creditors of the Loan Parties
or their Subsidiaries.

      4.13  EMPLOYEE  BENEFITS;  LABOR  MATTERS.  (a)  Except  as set  forth  on
Schedule 4.13, (i) each Employee Plan is in  substantial  compliance  with ERISA
and the IRC, (ii) no Termination  Event has occurred nor is reasonably  expected
to occur with respect to any Employee Plan,  (iii) the most recent annual report
(Form 5500 Series) with respect to each  Employee  Plan,  including any required
Schedule B (Actuarial Information) thereto, copies of which have been filed with
the Internal  Revenue  Service and  delivered to Agent,  is to the  knowledge of
Borrower complete and correct,  and since the date of such report there has been
no Material Adverse Change in such funding status, (iv) copies of each agreement
entered into with the PBGC, the U.S. Department of Labor or the Internal Revenue
Service with respect to any Employee Plan have been  delivered to Agent,  (v) no
Employee  Plan had an  accumulated  or waived  funding  deficiency  or permitted
decrease which would create a deficiency in its funding  standard account or has
applied  for an  extension  of any  amortization  period  within the  meaning of
Section  412 of the IRC at any time during the  previous 60 months,  and (vi) no
Lien  imposed  under the IRC or ERISA exists or is likely to arise on account of
any  Employee  Plan within the meaning of Section 412 of the IRC.  Except as set

                                       15

forth on  Schedule  4.13,  no Loan  Party  or any of its  ERISA  Affiliates  has
incurred any withdrawal  liability under ERISA with respect to any Multiemployer
Plan, or is aware of any facts indicating that it or any of its ERISA Affiliates
may in the future reasonably be expected to incur any such withdrawal liability.
Except  as set  forth  on  Schedule  4.13,  no Loan  Party  or any of its  ERISA
Affiliates nor any fiduciary of any Employee Plan has (A) engaged in a nonexempt
prohibited  transaction  described  in Sections  406 of ERISA or 4975 of the IRC
that could  reasonably be expected to result in a Material  Adverse Change,  (B)
failed to pay any required  installment or other payment  required under Section
412 of the IRC on or  before  the due  date  for such  required  installment  or
payment if such  failure is not cured within 3 Business  Days,  (C) engaged in a
transaction  within the  meaning of Section  4069 of ERISA or (D)  incurred  any
liability  to the PBGC  which  remains  outstanding  other  than the  payment of
premiums,  and there are no premium  payments  which  have  become due which are
unpaid. There are no pending or, to the knowledge of any Loan Party,  threatened
claims, actions,  proceedings or lawsuits (other than claims for benefits in the
normal  course)  asserted or  instituted  against (1) any  Employee  Plan or its
assets,  (2) any  fiduciary  with respect to any Employee  Plan, or (3) any Loan
Party or any of its ERISA  Affiliates with respect to any Employee Plan.  Except
as  required  by  Section  4980B of the IRC,  no Loan  Party or any of its ERISA
Affiliates  maintains  an employee  welfare  benefit plan (as defined in Section
3(1) of ERISA) which provides health or welfare  benefits  (through the purchase
of insurance or otherwise) for any retired or former  employee of any Loan Party
or any of its ERISA Affiliates or coverage after a participant's  termination of
employment.

            (b)   Except as set forth on SCHEDULE  4.13,  there is (a) no unfair
labor practice complaint pending or, to Parent's and each Borrower's  knowledge,
threatened  against  any Loan Party  before any  Governmental  Authority  and no
grievance or arbitration proceeding pending or threatened against any Loan Party
which arises out of or under any collective bargaining agreement, (b) no strike,
labor dispute, slowdown,  stoppage or similar action or grievance pending or, to
the best  knowledge  of Parent and each  Borrower,  threatened  against any Loan
Party and (c) no union  representation  question  existing  with  respect to the
employees of any Loan Party and no union  organizing  activity taking place with
respect to any of the  employees  of any of them.  No Loan Party,  nor any ERISA
Affiliate of any Loan Party has incurred any liability or  obligation  under the
Worker  Adjustment and Retraining  Notification  Act or similar state law, which
remains unpaid or  unsatisfied.  The hours worked and payments made to employees
of Loan Parties have not been in  violation of the Fair Labor  Standards  Act or
any other applicable legal requirements. All material payments due from any Loan
Party on account of workers compensation,  wages and employee health and welfare
insurance  and other  benefits  have been paid or accrued as a liability  on the
books of such Loan Party.

      4.14  ENVIRONMENTAL  CONDITION.  Except as set forth on SCHEDULE 4.14, (a)
to Parent's and each  Borrower's  knowledge,  none of the Loan Parties' or their
Subsidiaries'  properties  or assets  has ever been used by the Loan  Parties or
their Subsidiaries,  or, to their knowledge,  by previous owners or operators in
the disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such use, production,  storage, handling,  treatment,
release  or  transport  was  in  violation,  in  any  material  respect,  of any
applicable  material  Environmental  Law,  (b) to Parent's  and each  Borrower's
knowledge,  none of the Loan  Parties'  nor their  Subsidiaries'  properties  or
assets has ever been  designated  or  identified  in any manner  pursuant to any
environmental  protection  statute as a Hazardous  Materials  disposal site, (c)
none of the Loan Parties nor any of their  Subsidiaries  have  received  written
notice  that a Lien  arising  under any  Environmental  Law has  attached to any
revenues or to any Real Property  owned or operated by the Loan Parties or their
Subsidiaries,  and (d) none of the Loan  Parties  nor any of their  Subsidiaries
have received a summons,  citation, written notice, or directive from the United
States   Environmental   Protection   Agency  or  any  other  federal  or  state
governmental agency concerning any material action or omission by any Loan Party
or any  Subsidiary  of a Loan Party  resulting in the  releasing or disposing of
Hazardous Materials into the environment.

                                       16

      4.15  INTELLECTUAL PROPERTY. Each Loan Party and each Subsidiary of a Loan
Party owns,  or holds  licenses in, all  trademarks,  trade  names,  copyrights,
patents,  patent  rights,  and licenses that are necessary to the conduct of its
business as  currently  conducted,  and  attached  hereto as  SCHEDULE  4.15 (as
updated  from time to time) is a true,  correct,  and  complete  listing  of all
material  patents,  patent  applications,  trademarks,  trademark  applications,
copyrights,  and copyright  registrations  as to which each Loan Party or one of
its Subsidiaries is the owner or is an exclusive  licensee;  PROVIDED,  HOWEVER,
that Administrative  Borrower may amend SCHEDULE 4.15 to add additional property
so long as such  amendment  occurs by written  notice to Lender not less than 10
days  before  the date on which a Loan Party or any  Subsidiary  of a Loan Party
acquires any such property after the Closing Date.

      4.16  LEASES; ETC.. (a) Loan Parties and their Subsidiaries enjoy peaceful
and undisturbed  possession in all material respects,  under all leases material
to  their  business  and to which  they are  parties  or  under  which  they are
operating  and all of such  material  leases  are  valid and  subsisting  and no
material default by Loan Parties or their Subsidiaries exists under any of them.

            (b)   Schedule  4.16 sets forth a complete and accurate  list, as of
the Closing Date, of the location, by street address, of all real property owned
or leased by each Loan Party.  No consent or  approval of any  landlord or other
third party in connection with any such lease is necessary for any Loan Party to
enter into and execute the Loan Documents to which it is a party,  except as set
forth on Schedule 4.16. To the best knowledge of any Loan Party,  no other party
to any such lease is in default of its obligations thereunder, and no Loan Party
(or any other party to any such lease) has at any time delivered or received any
notice of default  which  remains  uncured  under any such lease and,  as of the
Closing  Date,  no event has  occurred  which,  with the giving of notice or the
passage of time or both,  would  constitute  a material  default  under any such
lease.

      4.17  DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Set forth on SCHEDULE 4.17
is a  listing  of all of the  Loan  Parties'  and  their  Subsidiaries'  Deposit
Accounts  and  Securities  Accounts,  including,  with  respect  to each bank or
securities  intermediary  (a) the name and address of such  Person,  and (b) the
account numbers of the Deposit Accounts or Securities  Accounts  maintained with
such Person.

      4.18  COMPLETE  DISCLOSURE.  All  factual  information  (taken as a whole)
furnished by or on behalf of the Loan Parties or their  Subsidiaries  in writing
to Lender (including all information contained in the Schedules hereto or in the
other Loan Documents) for purposes of or in connection with this Agreement,  the
other Loan Documents, or any transaction  contemplated herein or therein is, and
will be, true and accurate in all material respects on the date as of which such
information  is dated or certified  and not  incomplete by omitting to state any
fact necessary to make such information (taken as a whole) not misleading in any
material  respect at such time in light of the  circumstances  under  which such
information was provided.

      4.19  INDEBTEDNESS. Set forth on SCHEDULE 4.19 is a true and complete list
of all  Indebtedness  of each Loan  Party and each  Subsidiary  of a Loan  Party
outstanding  immediately prior to the Closing Date that is to remain outstanding
after the Closing Date and such  Schedule  accurately  sets forth the  aggregate
principal amount of such Indebtedness and the principal terms thereof.

      4.20  MATERIAL  CONTRACTS.  Set forth on SCHEDULE 4.20 is a description of
all Material  Contracts of Parent and its Subsidiaries,  showing the parties and
principal  subject  matter thereof and  amendments  and  modifications  thereto;
PROVIDED,  HOWEVER, that Administrative  Borrower may amend SCHEDULE 4.20 to add
additional Material Contracts so long as such amendment occurs by written notice
to Lender not less than 5 days after the date on which Parent or its  Subsidiary
enters into such Material  Contract  after the Closing Date.  Except for matters
which, either individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Change, each Material Contract (other than those

                                       17

that have  expired  at the end of their  normal  terms) (a) is in full force and
effect and is binding upon and enforceable against Parent or its Subsidiary and,
to the best of Parent's and each Borrower's knowledge, each other Person that is
a party thereto in accordance with its terms, (b) has not been otherwise amended
or  modified  (other  than  amendments  or  modifications  permitted  by SECTION
6.7(C)),  and (c) is not in default  due to the action or  inaction of Parent or
any of its Subsidiaries.

      4.21  PERMITS,   LICENSES,   ETC.  Parent  and  its  Subsidiaries  are  in
compliance   in  all  respects   with  all   governmental   permits,   licenses,
authorizations, approvals, entitlements and accreditations required and material
for such Person lawfully to own, lease, manage or operate,  or to acquire,  each
business currently owned, leased,  managed or operated,  or previously acquired,
by such Person. No condition exists or event has occurred which could reasonably
be expected to result in the suspension,  revocation,  impairment, forfeiture or
non-renewal of any such permit, license, authorization, approval, entitlement or
accreditation,  and there is no outstanding claim by any Governmental  Authority
that  any  such  permit,  license,   authorization,   approval,  entitlement  or
accreditation is not in full force and effect.

      4.22  SUPPLIERS.  There  exists no actual  or,  to the best  knowledge  of
Parent and each Borrower, threatened termination, cancellation or limitation of,
or  modification to or change in, the business  relationship  between Parent and
any Subsidiary of Parent, on the one hand, and any material supplier thereof, on
the other  hand  which  could  reasonably  be  expected  to result in a Material
Adverse  Change;  and, to the best knowledge of Parent and each Borrower,  there
exists no  present  state of facts or  circumstances  that could give rise to or
result  in any  such  termination,  cancellation,  limitation,  modification  or
change.

      4.23  MARGIN  STOCK.  None  of Loan  Parties  or any of  their  respective
Subsidiaries  is, nor will any thereof be,  engaged in the business of extending
credit for the  purpose of  purchasing  or  carrying  margin  stock  (within the
meaning  of  Regulations  T, U or X of the  Board of  Governors  of the  Federal
Reserve  System),  and no  proceeds of the Term Loan will be used to purchase or
carry  any  margin  stock or to  extend  credit to  others  for the  purpose  of
purchasing or carrying any margin stock.

      4.24  INSURANCE.  Parent and each of its  Subsidiaries  keeps its property
adequately  insured and  maintains (a) insurance to such extent and against such
risks,  including  fire, as is customary  with  companies in the same or similar
businesses,  (b)  workers'  compensation  insurance  in the amount  required  by
applicable  law, (c) public  liability  insurance in the amount  customary  with
companies in the same or similar  business against claims for personal injury or
death on  properties  owned,  occupied or  controlled  by it, and (d) such other
insurance as may be required by law or as may be  reasonably  required by Lender
(including,  without limitation, against larceny, embezzlement or other criminal
misappropriation).  SCHEDULE 4.24 sets forth a list of all insurance  maintained
by Parent and its Subsidiaries on the Closing Date.

      4.25  INVESTMENT  COMPANY ACT,  ETC.. No Loan Party is (a) an  "investment
company" or an "affiliated person" or "promoter" of, or "principal  underwriter"
of or for, an "investment  company", as such terms are defined in the Investment
Company Act of 1940, as amended, or (b) subject to regulation under any federal,
state, provincial, territorial, local or foreign statute or regulation which may
limit its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable.

      4.26  TAXES,   ETC.   All   federal,   state,   provincial,   territorial,
supranational,  local and  foreign tax  returns  and other  reports  required by
applicable law to be filed by any Loan Party have been filed, or extensions have
been obtained, and all taxes, assessments and other governmental charges imposed
upon any Loan Party or any  property of any Loan Party and which have become due
and payable on or prior to the date hereof have been paid,  except as  otherwise
permitted under SECTION 5.7.

                                       18

      4.27  NATURE OF BUSINESS.  No Loan Party is engaged in any business  other
than  (a)  designing,   manufacturing,  and  selling  engineered  materials  and
components for the electronic, industrial and commercial markets, (b) providing,
manufacturing and distributing  meat-room products and maintenance  services for
the meat and deli  departments of  supermarkets;  mass  merchants;  restaurants;
meat, poultry and fish processing plants; and (c) manufacturing and distributing
electrical saws and cutting food processing equipment

      4.28  RELATED TRANSACTION DOCUMENTS.  The Parent has delivered to Lender a
complete and correct copy of each Related  Transaction  Document,  including all
schedules and exhibits thereto. The Related Transaction  Documents set forth the
entire  agreement  and  understanding  of the  parties  thereto  relating to the
subject  matter  thereof,  and there are no other  agreements,  arrangements  or
understandings,  written or oral,  relating to the matters covered thereby.  The
execution,  delivery and performance of the Related  Transaction  Documents have
been duly authorized by all necessary action (including, without limitation, the
obtaining  of any  consent of  stockholders  or other  holders of Capital  Stock
required  by  law  or  by  any  applicable  corporate  or  other  organizational
documents)  on the part of each such  Person.  No  authorization  or approval or
other action by, and no notice to filing with or license from, any  Governmental
Authority is required for such sale other than such as have been  obtained on or
prior to the Closing  Date.  The Related  Transaction  Documents  are the legal,
valid and binding  obligation of the parties thereto,  enforceable  against such
parties in accordance with their terms.

      4.29  NO IMMUNITY.  No Loan Party nor any  Subsidiary of any Loan Party or
any of their respective property has any immunity from jurisdiction of any court
or from any legal process (whether  through service or notice,  attachment prior
to judgment,  attachment in aid of execution,  execution or otherwise) under the
laws of the United States or its jurisdiction of organization.

      4.30  NO TAXES. Except for any withholding tax imposed on interest payable
by any  Loan  Party  hereunder,  there  is no  tax,  levy,  impost,  duty,  fee,
assessment  or other  governmental  charge,  or any  deduction  or  withholding,
imposed  by  any  Governmental  Authority  either  (i)  on or by  virtue  of the
execution or delivery of the Loan Documents or (ii) on any payment to be made by
any Loan Party pursuant to the Loan Documents.

5.    AFFIRMATIVE COVENANTS.

            Parent  and each  Borrower  covenants  and  agrees  that,  until the
payment in full of the  Obligations,  Parent and each of the Borrowers shall and
shall cause each of their respective Subsidiaries to do all of the following:

      5.1   ACCOUNTING SYSTEM. Maintain a system of accounting that enables Loan
Parties to produce  financial  statements in  accordance  with GAAP and maintain
records  pertaining to the Collateral  that contain  information as from time to
time  reasonably  may be  requested  by Lender.  Loan  Parties also shall keep a
reporting  system  that  shows  all  additions,   sales,  claims,  returns,  and
allowances  with respect to their and their  Subsidiaries'  sales.  Loan Parties
shall also maintain their billing  systems/practices as approved by Lender prior
to the Closing  Date and shall only make  material  modifications  thereto  with
notice to, and consent of, Lender.

      5.2   COLLATERAL  REPORTING.  Provide  Lender with each of the reports set
forth on SCHEDULE 5.2 at the times specified therein. In addition, each Borrower
agrees to cooperate  fully with Lender to  facilitate  and implement a system of
electronic collateral reporting in order to provide electronic reporting of each
of the items set forth above.

                                       19

      5.3   FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.  Deliver to Lender each
of the financial  statements,  reports, or other items set forth on SCHEDULE 5.3
at the times specified therein. In addition, Parent agrees that no Subsidiary of
Parent will have a fiscal year different from that of Parent.

      5.4   GUARANTOR  REPORTS.  Cause  each  Guarantor  to  deliver  its annual
financial  statements  at the time when Parent  provides  its audited  financial
statements  to  Agent,  but  only  to  the  extent  such  Guarantor's  financial
statements are not consolidated with Parent's financial statements.

      5.5   INSPECTION. Permit Lender and its duly authorized representatives or
agents to visit any of its properties and inspect any of its assets or books and
records, to examine and make copies of its books and records, and to discuss its
affairs,  finances,  and accounts with, and to be advised as to the same by, its
officers and  employees  at such  reasonable  times and  intervals as Lender may
designate and, so long as no Default or Event of Default exists, with reasonable
prior notice to Administrative Borrower.

      5.6   MAINTENANCE  OF  PROPERTIES.  Maintain  and  preserve  all of  their
properties which are necessary or useful in the proper conduct of their business
in good working order and condition,  ordinary wear, tear, and casualty excepted
(and  except  where the  failure to do so could not be  expected  to result in a
Material  Adverse  Change),  and comply at all times with the  provisions of all
material leases to which it is a party as lessee,  so as to prevent any material
loss or forfeiture thereof or thereunder.

      5.7   TAXES. Cause all assessments and taxes, whether real,  personal,  or
otherwise,  due or payable by, or imposed,  levied,  or  assessed  against  Loan
Parties,  their  Subsidiaries,  or any of their respective  assets to be paid in
full,  before  delinquency  or before the  expiration of any  extension  period,
except to the extent that the  validity of such  assessment  or tax shall be the
subject  of a  Permitted  Protest  and  except  for  assessments  and  taxes not
exceeding  $100,000 in the  aggregate.  Loan  Parties  will and will cause their
Subsidiaries  to  make  timely  payment  or  deposit  of all  tax  payments  and
withholding  taxes  required of them by applicable  laws,  including  those laws
concerning F.I.C.A.,  F.U.T.A., state disability,  and local, state, and federal
income taxes, and will, upon request,  furnish Agent with proof  satisfactory to
Agent  indicating  that the applicable  Loan Party or Subsidiary of a Loan Party
has made such payments or deposits.

      5.8   INSURANCE.

            (a)   At Parent's or Borrowers'  expense,  maintain  insurance (with
responsible  and  reputable  insurance  companies)  respecting  their  and their
Subsidiaries'  assets wherever located,  covering loss or damage by fire, theft,
explosion,  and all other hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses. Parent or the Borrowers
also  shall  maintain  business  interruption,  public  liability,  and  product
liability  insurance,  as well as insurance against larceny,  embezzlement,  and
criminal  misappropriation.  All such  policies  of  insurance  shall be in such
amounts and with such  insurance  companies as are  reasonably  satisfactory  to
Agent.  Administrative  Borrower  shall  deliver  copies of all such policies to
Lender with an endorsement naming Lender as the loss payee (under a satisfactory
lender's loss payable  endorsement) or additional insured, as appropriate.  Each
policy of insurance or endorsement  shall contain a clause requiring the insurer
to give not less  than 30 days  prior  written  notice to Lender in the event of
cancellation of the policy for any reason whatsoever.

            (b)   Administrative Borrower shall give Lender prompt notice of any
loss  exceeding  $250,000  covered  by such  insurance.  So long as no  Event of
Default has occurred and is continuing, Borrowers shall have the exclusive right
to adjust any losses  payable under any such  insurance  policies which are less
than $500,000.  Following the occurrence and during the continuation of an Event
of Default,  or in the case of any losses payable under such insurance exceeding
$500,000,  Lender shall have the  exclusive  right to adjust any losses  payable
under any such  insurance  policies,  without any  liability  to Loan Parties or

                                       20

their Subsidiaries whatsoever in respect of such adjustments; PROVIDED, HOWEVER,
that if no  Event  of  Default  exists,  the  Borrowers  and  Lender  shall  use
commercially  reasonable  efforts  to  adjust  any  losses by  agreement  of the
parties.

      5.9   LOCATION OF COLLATERAL. Keep each Loan Party's and its Subsidiaries'
Inventory and Equipment (other than vehicles,  Inventory  maintained on vehicles
and Equipment  out for repair) only at the locations  identified on SCHEDULE 4.5
and their chief executive  offices only at the locations  identified on SCHEDULE
4.7(B);  PROVIDED,  HOWEVER, that Administrative Borrower may amend SCHEDULE 4.5
or SCHEDULE 4.7 so long as such amendment occurs by written notice to Lender not
less than 30 days after the date on which such  Inventory  or Equipment is moved
to such new location or such chief  executive  office is  relocated,  so long as
such new location is within the continental United States or Canada, and so long
as, at the time of such written  notification,  the Loan Party provides Lender a
Collateral Access Agreement with respect thereto.

      5.10  COMPLIANCE WITH LAWS. Comply with the requirements of all applicable
laws, rules, regulations,  and orders of any Governmental Authority,  other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the  aggregate,  could not  reasonably be expected to result in a Material
Adverse  Change,  such  compliance to include,  without  limitation,  (a) paying
before the same  become  delinquent  all  taxes,  assessments  and  governmental
charges or levies  imposed  upon it or upon its income or profits or upon any of
its properties, (b) paying all lawful claims which if unpaid might become a Lien
or charge upon any of its  properties,  except to the extent  contested  in good
faith by proper  proceedings  which stay the imposition of any penalty,  fine or
Lien resulting from the  non-payment  thereof and with respect to which adequate
reserves have been set aside for the payment  thereof in  accordance  with GAAP,
(c) withholding from each payment made to any of its past or present  employees,
officers  or  directors,  and to any non  resident of the country in which it is
resident,  the amount of all Taxes and other deductions  required to be withheld
therefrom  and paying the same to the  proper  tax or other  receiving  officers
within the time required  under any  applicable  laws,  and (d) collect from all
Persons the amount of all Taxes required to be collected from them and remit the
same to the  proper tax or other  receiving  officers  within the time  required
under any applicable laws.

      5.11  LEASES.  Pay when due all rents and other amounts  payable under any
material  leases to which any Loan Party or any  Subsidiary of a Loan Party is a
party or by which any Loan Party's or any of its  Subsidiaries'  properties  and
assets are bound, unless such payments are the subject of a Permitted Protest.

      5.12  EXISTENCE.  At all times  preserve and keep in full force and effect
each Loan Party's and each of its Subsidiaries',  valid existence, good standing
in its  jurisdiction  of  organization  and  qualifications  to do business as a
foreign entity in each  jurisdiction  in which it is required to be so qualified
and, except as could not reasonably be expected to result in a Material  Adverse
Change,   any   rights,   franchises,    permits,   licenses,    accreditations,
authorizations, or other approvals material to their businesses.

      5.13  ENVIRONMENTAL.

            (a)   Keep any  property  either owned or operated by any Loan Party
or any Subsidiary of a Loan Party free of any Environmental  Liens or post bonds
or other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens,

            (b)   comply, in all material respects,  with Environmental Laws and
provide  to  Agent  documentation  of such  compliance  which  Agent  reasonably
requests,

                                       21

            (c)   promptly  notify Agent of any release of a Hazardous  Material
in any  reportable  quantity from or onto property owned or operated by any Loan
Party or any Subsidiary of a Loan Party and take any Remedial  Actions  required
to abate said  release or  otherwise  to come into  compliance  with  applicable
Environmental Law, and

            (d)   promptly,  but in any  event  within  5  days  of its  receipt
thereof,  provide Agent with written notice of any of the following:  (i) actual
knowledge or written  notice that an  Environmental  Lien has been filed against
any of the real or personal  property of any Loan Party or any  Subsidiary  of a
Loan Party,  (ii) actual  knowledge or written notice of the commencement of any
Environmental  Action or written  notice  that an  Environmental  Action will be
filed  against  any Loan  Party or any  Subsidiary  of a Loan  Party,  and (iii)
written notice of a violation,  citation,  or other  administrative  order which
reasonably could be expected to result in a Material Adverse Change.

      5.14  DISCLOSURE  UPDATES.  Promptly and in no event later than 5 Business
Days  after  obtaining   knowledge   thereof,   notify  Lender  if  any  written
information,  exhibit,  or report furnished to Lender contained,  at the time it
was furnished,  any untrue  statement of a material fact or omitted to state any
material fact necessary to make the statements  contained therein not misleading
in light of the  circumstances  in which made.  The  foregoing  to the  contrary
notwithstanding,  any notification  pursuant to the foregoing provision will not
cure or remedy the effect of the prior untrue  statement  of a material  fact or
omission of any material fact nor shall any such notification have the effect of
amending or modifying this Agreement or any of the Schedules hereto.

      5.15  CONTROL AGREEMENTS. Take all reasonable steps in order for Lender to
obtain control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107
of the Code with respect to (subject to the proviso  contained in SECTION  6.12)
all of its Securities  Accounts,  Deposit  Accounts,  electronic  chattel paper,
investment property, and letter-of-credit rights.

      5.16  FORMATION OF SUBSIDIARIES. At the time that any Loan Party forms any
direct or  indirect  Subsidiary  or acquires  any direct or indirect  Subsidiary
after the Closing Date,  such Loan Party shall (a) cause such new  Subsidiary to
provide to Agent a joinder to the Guaranty and the Security Agreement,  together
with such other security documents (including Mortgages with respect to any Real
Property of such new Subsidiary),  as well as appropriate  financing  statements
(and with respect to all property subject to a Mortgage,  fixture filings),  all
in form and substance  satisfactory  to Lender  (including  being  sufficient to
grant Lender a first priority Lien (subject to Permitted  Priority Liens) in and
to the assets of such  newly  formed or  acquired  Subsidiary),  (b)  provide to
Lender a pledge  agreement and appropriate  certificates and powers or financing
statements,  hypothecating all of the direct or beneficial ownership interest in
such new  Subsidiary,  in form and  substance  satisfactory  to Lender,  and (c)
provide to Lender all other  documentation,  including  one or more  opinions of
counsel satisfactory to Lender, which in its opinion is appropriate with respect
to the execution and delivery of the applicable  documentation referred to above
(including  policies of title insurance or other  documentation  with respect to
all property  subject to a Mortgage).  Any  document,  agreement,  or instrument
executed or issued pursuant to this SECTION 5.16 shall be a Loan Document.

      5.17  FURTHER ASSURANCES. At any time upon the request of Lender, the Loan
Parties shall execute or deliver to Lender,  and shall cause their  Subsidiaries
to  execute or deliver to  Lender,  any and all  financing  statements,  fixture
filings, security agreements, pledges, assignments, endorsements of certificates
of  title,  mortgages,  deeds of  trust,  opinions  of  counsel,  and all  other
documents  (collectively,  the "ADDITIONAL DOCUMENTS") that Lener may request in
form and substance  reasonably  satisfactory to Lender, to create,  perfect, and
continue  perfected or to better  perfect the Liens in all of the properties and
assets  of the  Loan  Parties  and  their  Subsidiaries  (whether  now  owned or
hereafter  arising or acquired,  tangible or intangible,  real or personal),  to
create and perfect Liens in favor of Lender in any Real Property acquired by the

                                       22

Loan Parties or their Subsidiaries after the Closing Date, and in order to fully
consummate all of the transactions  contemplated hereby and under the other Loan
Documents.  To the maximum extent  permitted by applicable  law, Parent and each
Borrower  authorize Lender to execute any such Additional  Documents in the Loan
Party's or their  Subsidiaries'  names, as applicable,  and authorizes Lender to
file such executed Additional Documents in any appropriate filing office.

      5.18  MATERIAL  CONTRACTS.  Contemporaneously  with the  delivery  of each
Compliance  Certificate  pursuant hereto,  provide Agent with copies of (a) each
Material  Contract  entered into since the  delivery of the previous  Compliance
Certificate,  and (b) each amendment or  modification  of any Material  Contract
entered into since the delivery of the previous Compliance Certificate.

      5.19  SUBORDINATION.  Cause all Indebtedness and other  obligations now or
hereafter owed by it to any of its  Affiliates,  to be  subordinated in right of
payment and security to the Indebtedness and other  Obligations  owing to Lender
in accordance with a subordination  agreement in form and substance satisfactory
to Lender.

      5.20  AFTER ACQUIRED REAL PROPERTY.  Upon the  acquisition by it or any of
its  Subsidiaries  after  the  date  hereof  of  any  interest  (whether  fee or
leasehold) in any Real Property  (wherever located) (each such interest being an
"AFTER ACQUIRED PROPERTY") (x) with a Current Value (as defined below) in excess
of  $150,000  in the case of a fee  interest,  or (y)  requiring  the payment of
annual  rent  exceeding  in the  aggregate  $250,000  in the  case of  leasehold
interest,  immediately  so notify the Lender,  setting forth with  specificity a
description of the interest  acquired,  the location of the real  property,  any
structures or improvements  thereon and either an appraisal or such Loan Party's
good-faith  estimate of the current value of such real property (for purposes of
this  Section,  the  "CURRENT  VALUE").  Lender  shall notify such Loan Party in
writing  whether  it  intends  to  require a  Mortgage  and the other  documents
referred  to  below or in the  case of  leasehold,  a  leasehold  Mortgage  or a
Collateral Access Agreement.  Upon receipt of such notice requesting a Mortgage,
the Person which has acquired  such After  Acquired  Property  shall  furnish to
Lender,  within a reasonable time  thereafter,  the following,  each in form and
substance reasonably  satisfactory to Lender: (a) in the case of a fee interest,
a Mortgage with respect to such real property and related  assets located at the
After  Acquired  Property,  each duly  executed by such Person and in recordable
form;  (b) in the  case of a fee  interest,  evidence  of the  recording  of the
Mortgage  referred  to in clause  (a) above in such  office or offices as may be
necessary  or, in the  reasonable  opinion  of Lender,  desirable  to create and
perfect a valid and enforceable first priority lien on the property purported to
be covered thereby or to otherwise protect the rights of Lender thereunder,  (c)
in the case of a fee interest,  a title insurance policy satisfactory to Lender,
(d) in the case of a fee interest, a survey of such real property,  certified to
Lender and to the issuer of the title insurance policy referred to in clause (c)
above by a licensed professional surveyor reasonably satisfactory to Lender, (v)
in the case of a fee  interest,  Phase I  environmental  site  assessments  with
respect  to such real  property,  certified  to  Lender by a company  reasonably
satisfactory   to  Lender,   or  such  other  evidence  or  description  of  the
environmental status of the property reasonably acceptable to Lender, (e) in the
case of a leasehold interest, a certified copy of the lease between the landlord
and such  Person with  respect to such Real  Property in which such Person has a
leasehold  interest,  and the  certificate  of  occupancy,  if any, with respect
thereto and (f) such other  documents or instruments  (including  guarantees and
opinions of counsel) as Lender may reasonably  require.  The Borrowers shall pay
all fees and expenses,  including reasonable  attorneys' fees and expenses,  and
all title insurance  charges and premiums,  in connection with each Loan Party's
obligations under this SECTION 5.21.

                                       23

6.    NEGATIVE COVENANTS.

            Parent and each Borrower covenants and agrees that until the payment
in full of the  Obligations,  Parent and each of the Borrowers will not and will
not permit any of their respective Subsidiaries to do any of the following:

      6.1   INDEBTEDNESS.  Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain,  directly or indirectly,  liable with respect to any
Indebtedness, except:

            (a)   Indebtedness  evidenced by this  Agreement  and the other Loan
Documents,

            (b)   Indebtedness  set forth on SCHEDULE  4.19 and any  Refinancing
Indebtedness in respect of such Indebtedness,

            (c)   Permitted  Purchase  Money  Indebtedness  and any  Refinancing
Indebtedness in respect of such Indebtedness,

            (d)   endorsement of instruments or other payment items for deposit,

            (e)   Indebtedness composing Permitted Investments,

            (f)   Working Capital Indebtedness and any Refinancing  Indebtedness
of such Indebtedness,

            (g)   the Term A Indebtedness  and any  Refinancing  Indebtedness of
such Indebtedness, and

            (h)   Other Subordinated Indebtedness.

      6.2   LIENS.  Create,  incur,  assume,  or suffer to  exist,  directly  or
indirectly,  any Lien on or with  respect  to any of its  assets,  of any  kind,
whether now owned or  hereafter  acquired,  or any income or profits  therefrom,
except for Permitted Liens.

      6.3   RESTRICTIONS ON FUNDAMENTAL CHANGES.

            (a)   Enter   into   any   merger,   consolidation,    amalgamation,
reorganization, or recapitalization, or reclassify its Stock except that so long
as no  Default  or Event of  Default  exists or would  result  therefrom,  (i) a
Borrower  or any  Domestic  Subsidiary  thereof may merge with one or more other
Borrowers,  provided  the  continuing  or  surviving  Person of such Merger is a
Borrower,  (ii) the Loan Parties may consummate a merger or similar  transaction
in  connection  with a Permitted  Kasco Sale  Transaction  and Loan  Parties may
effectuate a  restructuring  for tax purposes with the prior written  consent of
Lender.

            (b)   Liquidate,   wind  up,  or  dissolve  itself  (or  suffer  any
liquidation or dissolution),

            (c)   Suspend  or go out of a  substantial  portion  of its or their
business.

      6.4   DISPOSAL OF ASSETS. Other than Permitted Dispositions or a Permitted
Kasco Sale Transaction,  convey,  sell, lease,  license,  assign,  transfer,  or
otherwise  dispose  of (or enter  into an  agreement  to  convey,  sell,  lease,
license,  assign,  transfer,  or otherwise  dispose of) any of the assets of any
Loan Party or any Subsidiary of a Loan Party.

      6.5   CHANGE  NAME,   ETC..   Change  any  Loan  Party's  or  any  of  its
Subsidiaries' name,  organizational  identification number, FEIN, state or other
jurisdiction of organization or organizational identity; PROVIDED, HOWEVER, that

                                       24

a Loan Party or a  Subsidiary  of a Loan Party may change its name upon at least
30 days prior written notice by Administrative Borrower to Lender of such change
and so long as, at the time of such  written  notification,  such Loan  Party or
such  Subsidiary  provides  any  financing  statements  necessary to perfect and
continue perfected the Liens.

      6.6   NATURE OF BUSINESS.  Make any change in the nature of their business
as described in SCHEDULE  6.6 or acquire any  properties  or assets that are not
reasonably related to the conduct of such business activities.

      6.7   PREPAYMENTS  AND AMENDMENTS.  Except in connection with  Refinancing
Indebtedness permitted by SECTION 6.1:

            (a)   optionally prepay,  redeem,  defease,  purchase,  or otherwise
acquire any  Indebtedness  of any Loan Party or any  Subsidiary of a Loan Party,
other than (i) the  Obligations  in  accordance  with this  Agreement,  (ii) the
Working  Capital  Indebtedness  in accordance  with the Working  Capital  Credit
Agreement and (iii) the Term A Indebtedness in accordance with the Term A Credit
Agreement;

            (b)   make any  payment  on account  of  Indebtedness  that has been
contractually  subordinated in right of payment if such payment is not permitted
at such time under the subordination terms and conditions; or

            (c)   directly or indirectly,  amend, modify,  alter,  increase,  or
change any of the terms or conditions of (i) the Working  Capital Loan Documents
or  the  Term  A  Debt  Documents  (except  as  specifically  permitted  by  the
Intercreditor  Agreement),  (ii)  any  other  agreement,  instrument,  document,
indenture,  or other writing  evidencing or  concerning  Indebtedness  permitted
under  SECTION  6.1  or  (iii)  except  to  the  extent  that  such   amendment,
modification,  alteration, increase, or change could not, individually or in the
aggregate,  reasonably be expected to result in a Material  Adverse Change,  any
other Material  Contract or (iv) its certificate of  incorporation or bylaws (or
other similar organizational documents),  including,  without limitation, by the
filing or modification  of any  certificate of designation,  or any agreement or
arrangement  entered into by it, with respect to any of its Stock (including any
shareholders' agreement), or enter into any new agreement with respect to any of
its  Stock,  without  the  prior  written  consent  of  Agent,  except  any such
amendments,  modifications or changes or any such new agreements or arrangements
pursuant  to this  clause  (iv) that are not  adverse  to the  interests  of the
Lender.

      6.8   CHANGE  OF  CONTROL.   Cause,  permit,  or  suffer,   directly  or
indirectly, any Change of Control.

      6.9   CONSIGNMENTS.  Consign any of their  Inventory  or sell any of their
Inventory  on  bill  and  hold,  sale or  return,  sale on  approval,  or  other
conditional  terms of  sale,  in an  aggregate  amount  at any time  outstanding
exceeding $1,000,000.

      6.10  DISTRIBUTIONS. Make any distribution or declare or pay any dividends
(in cash or other  property,  other  than  common  Stock of the  Parent)  on, or
purchase,  acquire,  redeem,  or retire  any of  Parent's  Stock,  of any class,
whether now or hereafter outstanding.

      6.11  ACCOUNTING  METHODS.  Modify or change their fiscal year,  method of
accounting  (other than as may be required to conform to GAAP) or  auditors,  or
enter into,  modify, or terminate any agreement  currently  existing,  or at any
time hereafter  entered into,  with any third party  accounting  firm or service
bureau for the  preparation  or storage of Loan Parties' or their  Subsidiaries'
accounting  records  without said  accounting firm or service bureau agreeing to
provide  Lender  information  regarding  Loan  Parties' and their  Subsidiaries'
financial condition.

                                       25

      6.12  INVESTMENTS.   Except  for   Permitted   Investments,   directly  or
indirectly,  make or acquire any Investment or incur any liabilities  (including
contingent  obligations)  for or in connection  with any  Investment;  PROVIDED,
HOWEVER,  that the Loan Parties shall not have Permitted Investments (other than
in the Cash Management  Accounts) in Deposit Accounts or Securities  Accounts in
an aggregate  amount in excess of $100,000 at any one time unless the applicable
Loan Party and the applicable securities  intermediary or bank have entered into
Control Agreements governing such Permitted Investments in order to perfect (and
further  establish)  the Liens in such  Permitted  Investments.  Subject  to the
foregoing  proviso,  Loan Parties shall not and shall not permit their  Domestic
Subsidiaries to establish or maintain any Deposit Account or Securities  Account
unless Lender shall have received a Control Agreement in respect of such Deposit
Account or Securities Account.

      6.13  INVENTORY AND EQUIPMENT WITH BAILEES.  Except in the ordinary course
of  business,  store  any  Inventory  or  Equipment  of Loan  Parties  or  their
Subsidiaries  at any time  now or  hereafter  with a  bailee,  warehouseman,  or
similar party.

      6.14  FINANCIAL COVENANTS.  [INTENTIONALLY DELETED].

      6.15  PARENT AS HOLDING COMPANY.  [INTENTIONALLY DELETED]

      6.16  EMPLOYEE  BENEFITS.  Employee  Benefits.  (i) Engage,  or permit any
ERISA  Affiliate  to engage,  in any  transaction  described  in Section 4069 of
ERISA;  (ii) engage,  or permit any ERISA Affiliate to engage, in any prohibited
transaction  described  in  Section  406 of ERISA or 4975 of the IRC for which a
statutory or class  exemption is not  available or a private  exemption  has not
previously  been  obtained  from the U.S.  Department  of Labor;  (iii) adopt or
permit any ERISA Affiliate to adopt any employee welfare benefit plan within the
meaning of Section  3(1) of ERISA which  provides  benefits to  employees  after
termination  of  employment  other than as  required  by Section 601 of ERISA or
applicable  law;  (iv)  fail  to  make  any   contribution  or  payment  to  any
Multiemployer Plan which it or any ERISA Affiliate may be required to make under
any  agreement  relating  to such  Multiemployer  Plan,  or any  law  pertaining
thereto;  (v) fail,  or permit any ERISA  Affiliate to fail, to pay any required
installment  or any other  payment  required  under Section 412 of the IRC on or
before  the due date for such  installment  or other  payment;  or (vi) merge or
otherwise  consolidate  any  Employee  Plan of any Loan  Party  with  any  other
Employee  Plan without the prior  written  consent of Agent,  such consent to be
granted or withheld by Agent in sole and absolute  discretion  (provided that so
long as such  merger or  consolidation  is not adverse to the  interests  of the
Lender Group,  as determined by Agent in its sole  discretion,  Agent's  consent
shall not be unreasonably withheld).

      6.17  LIMITATIONS  ON DIVIDENDS AND OTHER PAYMENT  RESTRICTIONS  AFFECTING
SUBSIDIARIES.  Create or otherwise  cause,  incur,  assume,  suffer or permit to
exist or become effective any consensual  encumbrance or restriction of any kind
on the ability of any  Subsidiary  of any Loan Party (i) to pay  dividends or to
make any other  distribution on any shares of Stock of such Subsidiary  owned by
any  Loan  Party  or any of  its  Subsidiaries,  (ii)  to  pay or  prepay  or to
subordinate any Indebtedness  owed to any Loan Party or any of its Subsidiaries,
(iii) to make loans or advances to any Loan Party or any of its  Subsidiaries or
(iv) to transfer  any of its  property or assets to any Loan Party or any of its
Subsidiaries,  or permit  any of its  Subsidiaries  to do any of the  foregoing;
PROVIDED,  HOWEVER,  that  nothing in any of clauses  (i)  through  (iv) of this
SECTION 6.19 shall prohibit or restrict compliance with:

            (a) this Agreement,  the other Loan  Documents,  the Working Capital
            Loan Documents and the Term A Debt Documents;

                                       26

            (b) any  applicable  law, rule or regulation  (including  applicable
            currency  control  laws  and  applicable  state  corporate  statutes
            restricting the payment of dividends in certain circumstances);

            (c)  in the  case  of  clause  (iv),  any  agreement  setting  forth
            customary restrictions on the subletting,  assignment or transfer of
            any property or asset that is leased or licensed; or

            (d) in the case of clause (iv), any  agreement,  instrument or other
            document  evidencing a Permitted Lien that  restricts,  on customary
            terms, the transfer of any property or assets subject thereto.

      6.18  LEASE OBLIGATIONS.  Create,  incur or suffer to exist, or permit any
of its  Subsidiaries  to create,  incur or suffer to exist,  any  obligations as
lessee  (i) for  the  payment  of rent  for any  real or  personal  property  in
connection with any sale and leaseback  transaction,  or (ii) for the payment of
rent for any real or personal property under leases or agreements to lease other
than (A) Capital Lease Obligations which would not cause the aggregate amount of
all  obligations  under Capital Leases entered into after the Closing Date owing
by all Loan  Parties  and their  Subsidiaries  in any fiscal  year to exceed the
amounts set forth in SECTION 6.15(D),  and (B) Operating Lease Obligations which
would not cause the aggregate amount of all Operating Lease Obligations owing by
all Loan Parties and their Subsidiaries in any fiscal year to exceed $5,000,000.

      6.19  FEDERAL RESERVE  REGULATIONS.  Permit the Term Loan, or the proceeds
thereof,  to be used for any  purpose  that  would  cause  the Term Loan to be a
margin  loan  under  the  provisions  of  Regulation  T, U or X of the  Board of
Governors of the Federal Reserve System.

      6.20  INVESTMENT  COMPANY ACT OF 1940. Engage in any business,  enter into
any  transaction,  use any  securities or take any other action or permit any of
its  Subsidiaries to do any of the foregoing,  that would cause it or any of its
Subsidiaries  to  become  subject  to  the  registration   requirements  of  the
Investment  Company Act of 1940, as amended,  by virtue of being an  "investment
company" or a company "controlled" by an "investment company" not entitled to an
exemption within the meaning of such Act.

7.    EVENTS OF DEFAULT.

            Any one or more of the following events shall constitute an event of
default (each, an "EVENT OF DEFAULT") under this Agreement:

      7.1   If any Loan Party fail to pay when due and payable, or when declared
due and  payable,  (a)  all or any  portion  of the  Obligations  consisting  of
interest, fees, or charges due the Lender,  reimbursement of Lender Expenses, or
other  amounts  (other  than  any  portion   thereof   constituting   principal)
constituting  Obligations  (including any portion thereof that accrues after the
commencement  of an  Insolvency  Proceeding,  regardless  of whether  allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding), and
such  failure  continues  for a period  of 3  Business  Days,  or (b) all or any
portion of the principal of the Obligations;

      7.2   If any Loan Party or any Subsidiary of any Loan Party:

            (a)   fails to perform or observe any  covenant  or other  agreement
contained in any of SECTIONS 2.5, 5.2, 5.3,  5.4, 5.5, 5.8,  5.12,  5.14,  5.16,
5.17  and 6.1  through  6.21 of this  Agreement  or  Section  6 of the  Security
Agreement;  provided,  that no more than two (2) times during any fiscal year of

                                       27

Parent,  any Loan  Party  may fail to  deliver  in a  timely  manner a  delivery
required  under  SECTIONS 5.2, 5.3 or 5.4, if such delivery shall occur no later
than two (2) Business Days following notice by Lender;

            (b)   fails to perform or observe any  covenant  or other  agreement
contained  in any of  SECTIONS  5.6,  5.7,  5.9,  5.10,  5.11  and  5.15 of this
Agreement  and such failure  continues for a period of 10 days after the earlier
of (i) the date on which such failure shall first become known to any officer of
any Loan  Party,  or (ii)  written  notice  thereof  is given to  Administrative
Borrower by Lender; or

            (c)   fails to perform or observe any  covenant  or other  agreement
contained  in this  Agreement,  or in any of the other Loan  Documents,  in each
case,  other than any such covenant or agreement  that is the subject of another
provision of this SECTION 7 (in which event such other provision of this SECTION
7 shall  govern),  and such failure  continues for a period of 20 days after the
earlier of (i) the date on which such  failure  shall first  become known to any
officer  of any  Loan  Party,  or  (ii)  written  notice  thereof  is  given  to
Administrative Borrower by Lender.

      7.3   If  any  material  portion  of  any  Loan  Party's  or  any  of  its
Subsidiaries'  assets  is  attached,  seized,  subjected  to a writ or  distress
warrant, or is levied upon, or comes into the possession of any third Person and
the same is not discharged before the earlier of 30 days after the date it first
arises or 5 days prior to the date on which such property or asset is subject to
forfeiture by such Loan Party or the applicable Subsidiary;

      7.4   4.    If an  Insolvency  Proceeding is commenced by any Loan Party
or any Subsidiary of a Loan Party;

      7.5   If an Insolvency  Proceeding is commenced  against any Loan Party or
any Subsidiary of a Loan Party,  and any of the following  events occur: (a) the
applicable  Loan  Party  or  Subsidiary  consents  to the  institution  of  such
Insolvency  Proceeding  against it, (b) the petition  commencing  the Insolvency
Proceeding  is  not  timely  controverted,   (c)  the  petition  commencing  the
Insolvency  Proceeding is not  dismissed  within 60 calendar days of the date of
the filing  thereof,  (d) an interim  trustee is appointed to take possession of
all or any substantial portion of the properties or assets of, or to operate all
or any substantial  portion of the business of, any Loan Party or any Subsidiary
of a Loan  Party,  or (e) an order for relief  shall have been issued or entered
therein;

      7.6   If any Loan Party or any  Subsidiary  of a Loan  Party is  enjoined,
restrained,  or in any way  prevented by court order from  continuing to conduct
all or any material part of its business affairs;

      7.7   If one or more judgments,  orders,  or awards involving an aggregate
amount of $250,000,  or more  (except to the extent  fully  covered by insurance
pursuant to which the insurer has accepted  liability therefor in writing) shall
be entered or filed  against any Loan Party or any  Subsidiary of any Loan Party
or with respect to any of their respective assets, and the same is not released,
discharged,  bonded  against,  or stayed pending appeal before the earlier of 30
days  after the date it first  arises or 5 days  prior to the date on which such
asset  is  subject  to  being  forfeited  by the  applicable  Loan  Party or the
applicable Subsidiary;

      7.8   If there is a default  in one or more  agreements  to which any Loan
Party  or any  Subsidiary  of a Loan  Party is a party  with  one or more  third
Persons relative to Indebtedness of any Loan Party or any Subsidiary of any Loan
Party involving an aggregate  amount of $250,000,  or more, and such default (i)
occurs at the final maturity of the obligations  thereunder,  or (ii) results in
such third Person(s) actual  acceleration of the maturity of the applicable Loan
Party's or Subsidiary's obligations thereunder;

                                       28

      7.9   If any warranty,  representation,  material  written  statement,  or
material Record made herein or in any other Loan Document or delivered to Lender
in connection with this Agreement or any other Loan Document proves to be untrue
in any material  respect  (except that such  materiality  qualifier shall not be
applicable to any  representations  and warranties that already are qualified or
modified  by  materiality  in the text  thereof)  as of the date of  issuance or
making or deemed making thereof;

      7.10  If the obligation of any Guarantor  under the Guaranty is limited or
terminated  by  operation  of law or by such  Guarantor,  or any such  Guarantor
becomes the subject of an Insolvency Proceeding;

      7.11  If the Security  Agreement,  the Canadian  Security  Agreement,  any
Mortgage or any other Loan Document that purports to create a Lien,  shall,  for
any reason,  fail or cease to create a valid and  perfected  and,  except to the
extent permitted by the terms hereof or thereof, first priority Lien (subject to
Permitted  Priority  Liens) on or security  interest in the  Collateral  covered
hereby or thereby,  except (a) as a result of a  disposition  of the  applicable
Collateral in a transaction  permitted  under this  Agreement or (b) solely as a
result of the gross negligence of Lender;

      7.12  Any provision of any Loan Document  shall at any time for any reason
be  declared  to be null and  void  (except  solely  as a  result  of the  gross
negligence  of Lender),  or the  validity  or  enforceability  thereof  shall be
contested by any Loan Party or any  Subsidiary of a Loan Party,  or a proceeding
shall be commenced by any Loan Party or any  Subsidiary  of a Loan Party,  or by
any  Governmental  Authority  having  jurisdiction  over any  Loan  Party or any
Subsidiary   of  a  Loan  Party,   seeking  to  establish   the   invalidity  or
unenforceability  thereof,  or any Loan Party or any  Subsidiary of a Loan Party
shall deny that it has any liability or obligation purported to be created under
any Loan Document;

      7.13  Any  material  damage  to, or loss,  theft or  destruction  of,  any
Collateral,  whether or not  insured,  or any strike,  lockout,  labor  dispute,
embargo,  condemnation,  act of God or public  enemy,  or other  casualty  which
causes,  for more than thirty (30)  consecutive  days or which is not reasonably
susceptible  of cure within such thirty (30) days,  the cessation or substantial
curtailment of revenue  producing  activities at any facility of any Loan Party,
if any  such  event or  circumstance  could  reasonably  be  expected  to have a
Material Adverse Effect; or

      7.14  Any cessation of a substantial part of the business of the Parent or
any of its Subsidiaries for a period which materially and adversely  affects the
ability of the Parent and its  Subsidiaries  (taken as a whole) to continue  its
business on a profitable basis.

      7.15  Any Loan  Party or any of its  ERISA  Affiliates  shall  have made a
complete or partial  withdrawal from a  Multiemployer  Plan, and, as a result of
such  complete  or  partial  withdrawal,  any  Loan  Party  or any of its  ERISA
Affiliates incurs a withdrawal liability in an annual amount exceeding $250,000;
or a  Multiemployer  Plan enters  reorganization  status  under  Section 4241 of
ERISA, and, as a result thereof any Loan Party's or any of its ERISA Affiliates'
annual  contribution  requirements  with  respect  to  such  Multiemployer  Plan
increases in an annual amount exceeding $250,000; or

      7.16  Any  Termination  Event with respect to any Employee Plan shall have
occurred,  and, 30 days after notice  thereof  shall have been given to any Loan
Party by any Agent, (i) such Termination  Event (if correctable)  shall not have
been  corrected,  and (ii) the then current value of such Employee Plan's vested
benefits  exceeds the then current value of assets allocable to such benefits in
such Employee Plan by more than $250,000 (or, in the case of a Termination Event
involving  liability under Section 409, 502(i),  502(l),  515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 4971 of the IRC, which  liabilities
will not be aggregated, the liability is in excess of such amount).

                                       29

      7.17  If at any time there  shall be an Event of Default  under  either of
the Senior Creditor Agreements.

8.    THE LENDER'S RIGHTS AND REMEDIES.

      8.1   RIGHTS  AND   REMEDIES.   Upon  the   occurrence,   and  during  the
continuation,  of  an  Event  of  Default,  but  subject  to  the  Intercreditor
Agreement,  Lender (at its  election  but  without  notice of its  election  and
without  demand)  may do any one or  more of the  following,  all of  which  are
authorized by Parent and each of the Borrowers:

            (a)   Declare  all  or  any  portion  of  the  Obligations,  whether
evidenced by this Agreement,  by any of the other Loan Documents,  or otherwise,
immediately due and payable;

            (b)   Terminate  this  Agreement and any of the other Loan Documents
as to any future liability or obligation of Lender, but without affecting any of
the Liens in the Collateral and without affecting the Obligations; and

            (c)   Lender shall have all other  rights and remedies  available at
law or in equity or pursuant to any other Loan Document.

The foregoing to the contrary notwithstanding,  upon the occurrence of any Event
of Default  described in SECTION 7.4 or SECTION 7.5, in addition to the remedies
set forth  above,  without any notice to Loan Parties or any other Person or any
act by Lender,  the Obligations then outstanding,  together with all accrued and
unpaid  interest  thereon  and all fees and all other  amounts  due  under  this
Agreement and the other Loan  Documents,  shall  automatically  and  immediately
become due and payable,  without presentment,  demand, protest, or notice of any
kind, all of which are expressly waived by Parent and each of the Borrowers.

      8.2   REMEDIES  CUMULATIVE.  The rights and  remedies of Lender under this
Agreement,  the  other  Loan  Documents,  and  all  other  agreements  shall  be
cumulative.  Lender shall have all other  rights and  remedies not  inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Lender
of one right or remedy shall be deemed an  election,  and no waiver by Lender of
any Event of Default  shall be deemed a  continuing  waiver.  No delay by Lender
shall constitute a waiver, election, or acquiescence by it.

9.    TAXES AND EXPENSES.

            If any  Loan  Party  or its  Subsidiaries  fail  to pay  any  monies
(whether  taxes,  assessments,  insurance  premiums,  or,  in the case of leased
properties or assets,  rents or other amounts  payable under such leases) due to
third  Persons,  or fails to make any deposits or furnish any required  proof of
payment or deposit,  all as required  under the terms of this  Agreement,  then,
Lender,  in its sole discretion and without prior notice to any Loan Party,  may
do any or all of the  following:  (a)  make  payment  of the  same  or any  part
thereof,  or (b) in the case of the failure to comply  with  SECTION 5.8 hereof,
obtain and maintain  insurance policies of the type described in SECTION 5.8 and
take any action with respect to such policies as Lender deems prudent.  Any such
amounts paid by Lender shall  constitute  Lender  Expenses and any such payments
shall not  constitute  an agreement  by Lender to make  similar  payments in the
future  or a waiver by Lender of any  Event of  Default  under  this  Agreement.
Lender  need not inquire as to, or contest the  validity  of, any such  expense,
tax,  or Lien and the  receipt  of the usual  official  notice  for the  payment
thereof shall be conclusive evidence that the same was validly due and owing.

                                       30

10.   WAIVERS; INDEMNIFICATION.

      10.1  DEMAND;  PROTEST;  ETC.  Except  to the  extent  expressly  provided
herein,  Parent  and each  Borrower  waive (on  behalf of  themselves  and their
respective  Subsidiaries) demand,  protest, notice of protest, notice of default
or dishonor, notice of payment and nonpayment,  nonpayment at maturity, release,
compromise, settlement, extension, or renewal of documents, instruments, chattel
paper, and guarantees at any time held by Lender on which Parent,  such Borrower
or any Subsidiary may in any way be liable.

      10.2  LENDER'S  LIABILITY FOR COLLATERAL.  Parent and each Borrower hereby
agree (on behalf of  themselves  and their  Subsidiaries)  that:  (a) so long as
Lender complies with its obligations,  if any, under the Code,  Lender shall not
in any way or manner be liable or  responsible  for: (i) the  safekeeping of the
Collateral,  (ii) any loss or damage thereto  occurring or arising in any manner
or fashion from any cause,  (iii) any diminution in the value  thereof,  or (iv)
any act or default of any carrier,  warehouseman,  bailee, forwarding agency, or
other Person, and (b) all risk of loss, damage, or destruction of the Collateral
shall be borne by Loan Parties.

      10.3  INDEMNIFICATION.  Parent and each  Borrower,  jointly and severally,
shall pay,  indemnify,  defend,  and hold the Lender-Related  Persons,  and each
Participant  (each,  an  "INDEMNIFIED  PERSON")  harmless (to the fullest extent
permitted by law) from and against any and all claims,  demands, suits, actions,
investigations,  proceedings, liabilities, fines, costs, penalties, and damages,
and all reasonable fees and disbursements of attorneys,  experts, or consultants
and all other costs and expenses actually incurred in connection therewith or in
connection  with the enforcement of this  indemnification  (as and when they are
incurred and  irrespective  of whether suit is  brought),  at any time  asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution,  delivery,  enforcement,  performance, or
administration  (including any  restructuring or workout with respect hereto) of
this  Agreement,   any  of  the  other  Loan  Documents,   or  the  transactions
contemplated  hereby or thereby or the monitoring of the Loan Parties' and their
Subsidiaries'  compliance with the terms of the Loan Documents, (b) with respect
to any investigation,  litigation,  or proceeding related to this Agreement, any
other Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission,  event,  or  circumstance  in any manner related  thereto,  and (c) in
connection with or arising out of any presence or release of Hazardous Materials
at, on, under, to or from any assets or properties owned,  leased or operated by
Parent or any of its Subsidiaries or any  Environmental  Actions,  Environmental
Liabilities and Costs or Remedial  Actions related in any way to any such assets
or  properties  of  Parent  or any  of its  Subsidiaries  (each  and  all of the
foregoing,  the  "INDEMNIFIED  LIABILITIES").  The  foregoing  to  the  contrary
notwithstanding,  Parent  and the  Borrowers  shall  have no  obligation  to any
Indemnified  Person  under this  SECTION  10.3 with  respect to any  Indemnified
Liability  that a court of competent  jurisdiction  finally  determines  to have
resulted  from the gross  negligence or willful  misconduct of such  Indemnified
Person or from such  Indemnified  Person's  breach of its  material  obligations
under the Loan  Documents.  This provision shall survive the termination of this
Agreement and the repayment of the Obligations.  If any Indemnified Person makes
any  payment to any other  Indemnified  Person  with  respect to an  Indemnified
Liability as to which Parent or the  Borrowers  were  required to indemnify  the
Indemnified  Person receiving such payment,  the Indemnified  Person making such
payment is entitled to be indemnified and reimbursed by Parent and the Borrowers
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED  PERSON WITH RESPECT TO INDEMNIFIED  LIABILITIES WHICH IN WHOLE
OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY  NEGLIGENT  ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

                                       31

11.   NOTICES.

            Unless otherwise provided in this Agreement,  all notices or demands
by Parent or Borrowers or Lender to the other  relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other  informational  documents which may be sent by first-class  mail,  postage
prepaid)  shall be personally  delivered or sent by registered or certified mail
(postage prepaid, return receipt requested),  overnight courier, electronic mail
(at such email addresses as  Administrative  Borrower or Lender,  as applicable,
may  designate  to each  other in  accordance  herewith),  or  telefacsimile  to
Borrowers in care of  Administrative  Borrower or to Lender, as the case may be,
at its address set forth below:

      If to Administrative  Borrower:   BAIRNCO CORPORATION

                                        300 Primera Blvd., Suite 432
                                        Lake Mary, Florida 32746
                                        Attn: CEO
                                        Fax No.: 407-875-3398

      With copies to:                   OLSHAN GRUNDMAN FROME ROSENZWEIG &
                                        WOLOSKY LLP
                                        65 East 55th Street
                                        New York , New York 10022-1106
                                        Attn:            Steve Wolosky, Esq.
                                        Fax No.:         212-451-2222

      If to Lender:                     STEEL PARTNERS II, L.P.
                                        590 Madison Avenue
                                        New York, New York  10022
                                        Attn:            John McNamara
                                        Fax No.:         (212) 520-2321

      With copies to:                   LITTMAN KROOKS LLP
                                        655 Third Avenue
                                        New York, New York  10017
                                        Attn:            Martin W. Enright, Esq.
                                        Fax No.:         212-490-2990

            Lender and Parent and the  Borrowers may change the address at which
they are to receive  notices  hereunder,  by notice in writing in the  foregoing
manner given to the other party.  All notices or demands sent in accordance with
this  SECTION 11, other than notices by Lender in  connection  with  enforcement
rights against the Collateral  under the provisions of the Code, shall be deemed
received on the earlier of the date of actual  receipt or 3 Business  Days after
the deposit thereof in the mail. Parent and each Borrower  acknowledge and agree
(on behalf of themselves and their  Subsidiaries) that notices sent by Lender in
connection with the exercise of enforcement  rights against Collateral under the
provisions  of the Code  shall be  deemed  sent  when  deposited  in the mail or
personally  delivered,  or, where permitted by law, transmitted by telefacsimile
or any other method set forth above.

                                       32

12.   CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

            (a) THE  VALIDITY  OF THIS  AGREEMENT  AND THE OTHER LOAN  DOCUMENTS
(UNLESS  EXPRESSLY  PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,  INTERPRETATION, AND ENFORCEMENT
HEREOF AND  THEREOF,  AND THE RIGHTS OF THE  PARTIES  HERETO  AND  THERETO  WITH
RESPECT TO ALL MATTERS  ARISING  HEREUNDER OR  THEREUNDER  OR RELATED  HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

            (b) THE  PARTIES  AGREE THAT ALL ACTIONS OR  PROCEEDINGS  ARISING IN
CONNECTION  WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS  SHALL BE TRIED AND
LITIGATED  ONLY IN THE STATE AND TO THE  EXTENT  PERMITTED  BY  APPLICABLE  LAW,
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK,  STATE OF NEW YORK;  PROVIDED,
HOWEVER,  THAT ANY SUIT  SEEKING  ENFORCEMENT  AGAINST ANY  COLLATERAL  OR OTHER
PROPERTY MAY BE BROUGHT,  AT LENDER'S OPTION,  IN THE COURTS OF ANY JURISDICTION
WHERE  LENDER  ELECTS TO BRING  SUCH  ACTION OR WHERE SUCH  COLLATERAL  OR OTHER
PROPERTY MAY BE FOUND. EACH OF THE PARTIES HERETO WAIVE, TO THE EXTENT PERMITTED
UNDER  APPLICABLE  LAW,  ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
NON  CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 12(B).

            (c) EACH OF THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE  RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY
OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY  CLAIMS.  EACH OF THE PARTIES HERETO  REPRESENT THAT EACH HAS REVIEWED
THIS WAIVER AND EACH  KNOWINGLY  AND  VOLUNTARILY  WAIVES ITS JURY TRIAL  RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

13.   [INTENTIONALLY OMITTED]

14.   AMENDMENTS; WAIVERS.

            (a) 14.1  AMENDMENTS  AND  WAIVERS.  No  amendment  or waiver of any
provision  of this  Agreement  or any other Loan  Document,  and no consent with
respect to any departure by any Loan Party therefrom,  shall be effective unless
the same shall be in writing  and signed by Lender and  Administrative  Borrower
(on behalf of all Loan  Parties)  and then any such  waiver or consent  shall be
effective,  but only in the specific  instance and for the specific  purpose for
which  given;  PROVIDED,  HOWEVER,  that no such waiver,  amendment,  or consent
shall, other than in connection with a merger, liquidation,  dissolution or sale
of such  Person  expressly  permitted  by the terms  hereof  or the  other  Loan
Documents,  release  (A) a  Borrower  or  (B)  all or  substantially  all of the
Guarantors  from  any  obligation  for the  payment  of  money  under  the  Loan
Documents, in each case without the written consent of each Lender.

                                       33

      14.2 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Lender to exercise any
right,  remedy,  or option under this Agreement or any other Loan  Document,  or
delay by Lender in exercising  the same,  will operate as a waiver  thereof.  No
waiver by Lender will be effective unless it is in writing, and then only to the
extent specifically  stated. No waiver by Lender on any occasion shall affect or
diminish Lender's rights thereafter to require strict  performance by Parent and
each of the Borrowers of any provision of this Agreement.  Lender's rights under
this Agreement and the other Loan Documents will be cumulative and not exclusive
of any other right or remedy that Lender may have.

15.   [INTENTIONALLY OMITTED]

16.   WITHHOLDING TAXES.

            (a) Any and all  payments by any Loan Party  hereunder  or under any
other Loan  Document  shall be made free and clear of and without  deduction for
any and all present or future taxes,  levies,  imposts,  deductions,  charges or
withholdings,  and all liabilities with respect thereto, EXCLUDING taxes imposed
on the  net  income  of any  Lender  (or any  transferee  or  assignee  thereof,
including a  participation  holder (any such  entity,  a  "TRANSFEREE"))  by the
jurisdiction  in which such Person is  organized  or has its  principal  lending
office  (all  such  nonexcluded  taxes,  levies,  imposts,  deductions,  charges
withholdings and liabilities,  collectively or  individually,  "Taxes").  If any
Loan Party  shall be  required to deduct any Taxes from or in respect of any sum
payable  hereunder to Lender (or any  Transferee),  (i) the sum payable shall be
increased by the amount (an "ADDITIONAL  AMOUNT") necessary so that after making
all required  deductions  (including  deductions  applicable to additional  sums
payable under this SECTION 16) Agent or such Lender (or such  Transferee)  shall
receive an amount equal to the sum it would have received had no such deductions
been made,  (ii) such Loan Party shall make such  deductions and (iii) such Loan
Party shall pay the full amount deducted to the relevant Governmental  Authority
in accordance with applicable law.

            (b) In  addition,  each Loan  Party  agrees  to pay to the  relevant
Governmental  Authority in accordance  with applicable law any present or future
stamp or  documentary  taxes or any other excise or property  taxes,  charges or
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan  Document  ("OTHER  TAXES").  Each Loan Party shall deliver to Lender
official  receipts  in respect  of any Taxes or Other  Taxes  payable  hereunder
promptly after payment of such Taxes or Other Taxes.

            (c) The Loan Parties  hereby  jointly and  severally  indemnify  and
agree to hold Lender harmless from and against Taxes and Other Taxes (including,
without  limitation,  Taxes and Other Taxes imposed on any amounts payable under
this SECTION 16) paid by such  Person,  whether or not such Taxes or Other Taxes
were correctly or legally asserted. Such indemnification shall be paid within 10
days from the date on which  any such  Person  makes  written  demand  therefore
specifying  in  reasonable  detail  the nature and amount of such Taxes or Other
Taxes.

            (d) [Intentionally Omitted]

            (e) [Intentionally Omitted]

            (f) Lender in claiming any indemnity  payment or additional  payment
amounts  payable  pursuant  to this  SECTION  16 shall  use  reasonable  efforts
(consistent  with legal and regulatory  restrictions) to file any certificate or
document  reasonably  requested in writing by the Administrative  Borrower or to
change the jurisdiction of its applicable lending office if the making of such a

                                       34

filing or change  would  avoid  the need for or  reduce  the  amount of any such
indemnity  payment or additional  amount that may thereafter  accrue,  would not
require Lender to disclose any information  Lender deems  confidential and would
not,  in the sole  determination  of Lender,  be  otherwise  disadvantageous  to
Lender.

            (g) The  obligations of the Loan Parties under this SECTION 16 shall
survive the  termination  of this Agreement and the payment of the Term Loan and
all other amounts payable hereunder.

17. GENERAL PROVISIONS.

      17.1  EFFECTIVENESS.  This Agreement shall be binding and deemed effective
when executed by Parent, Borrowers, and Lender whose signatures are provided for
on the signature pages hereof.

      17.2  SECTION  HEADINGS.  Headings  and numbers have been set forth herein
for  convenience  only.  Unless  the  contrary  is  compelled  by  the  context,
everything contained in each Section applies equally to this entire Agreement.

      17.3  INTERPRETATION.  Neither  this  Agreement  nor  any  uncertainty  or
ambiguity herein shall be construed  against any Lender,  Parent,  or Borrowers,
whether  under any rule of  construction  or otherwise.  On the  contrary,  this
Agreement  has  been  reviewed  by  all  parties  and  shall  be  construed  and
interpreted  according  to the  ordinary  meaning  of the  words  used  so as to
accomplish fairly the purposes and intentions of all parties hereto.

      17.4  SEVERABILITY  OF PROVISIONS.  Each provision of this Agreement shall
be severable  from every other  provision of this  Agreement  for the purpose of
determining the legal enforceability of any specific provision.

      17.5  DEBTOR-CREDITOR  RELATIONSHIP.  The relationship  between Lender, on
the one hand, and Parent and Borrowers,  on the other hand, under this Agreement
and the other Loan  Documents is solely that of creditor  and debtor.  No Lender
has (or shall be deemed to have) any fiduciary relationship or duty to Parent or
Borrowers  arising out of or in connection with, and there is no agency or joint
venture  relationship between Lender, on the one hand, and Parent and Borrowers,
on the other hand, by virtue of this  Agreement,  any other Loan Document or any
transaction contemplated herein or therein.

      17.6  COUNTERPARTS;  ELECTRONIC EXECUTION.  This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which,  when executed and delivered,  shall be deemed to be an original,
and all of which,  when taken  together,  shall  constitute but one and the same
Agreement.   Delivery  of  an  executed   counterpart   of  this   Agreement  by
telefacsimile  or other  electronic  method of transmission  shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party  delivering an executed  counterpart of this Agreement by telefacsimile or
other electronic  method of transmission also shall deliver an original executed
counterpart  of this  Agreement but the failure to deliver an original  executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.  The foregoing  shall apply to each other Loan Document  MUTATIS
MUTANDIS.

      17.7  REVIVAL AND  REINSTATEMENT  OF  OBLIGATIONS.  If the  incurrence  or
payment of the  Obligations  by any Borrower or any Guarantor or the transfer to
any Lender of any property should for any reason  subsequently be declared to be
void or voidable  under any state or federal law relating to creditors'  rights,
including provisions of the Bankruptcy Code relating to fraudulent  conveyances,
preferences,  or other voidable or recoverable payments of money or transfers of
property (each, a "VOIDABLE  TRANSFER"),  and if the Lender is required to repay
or restore, in whole or in part, any such Voidable Transfer,  or elects to do so

                                       35

upon the  reasonable  advice  of its  counsel,  then,  as to any  such  Voidable
Transfer,  or the amount  thereof that the Lender is required or elects to repay
or restore, and as to all reasonable costs,  expenses, and attorneys fees of the
Lender related  thereto,  the liability of Loan Parties  automatically  shall be
revived,  reinstated,  and  restored  and shall  exist as though  such  Voidable
Transfer had never been made.

      17.8  CONFIDENTIALITY.

            Lender may provide  information  concerning the terms and conditions
of this Agreement and the other Loan Documents to loan  syndication  and pricing
reporting  services and the provision of such information  shall not be a breach
of or  default  under  any  confidentiality  obligation  of  Lender  under  this
Agreement or any other Loan Document.

      17.9  LENDER EXPENSES. Parent and Borrowers,  jointly and severally, agree
to pay any and all Lender Expenses  promptly after demand therefor by Lender and
agrees that their  obligations  contained  in this  SECTION  17.9 shall  survive
payment or satisfaction in full of all other Obligations.

      17.10 USA PATRIOT ACT. Each Lender that is subject to the  requirements of
the USA Patriot Act (Title 111 of Pub.  L. 107-56  (signed  into law October 26,
2001)) (the "ACT") hereby  notifies  Parent and  Borrowers  that pursuant to the
requirements of the Act, it is required to obtain, verify and record information
that identifies Parent and Borrowers,  which  information  includes the name and
address  of Parent and each of the  Borrowers  and other  information  that will
allow such Lender to identify  Parent and each of the  Borrowers  in  accordance
with the Act.

      17.11 INTEGRATION;  RESTATEMENT OF ORIGINAL LSA. This Agreement,  together
with the other Loan Documents,  reflects the entire understanding of the parties
with  respect  to  the  transactions   contemplated  hereby  and  shall  not  be
contradicted or qualified by any other  agreement,  oral or written,  before the
date hereof. The parties hereto agree that as of the Closing of the Closing Date
Transactions, the terms, conditions, agreements, covenants,  representations and
warranties  set forth in the  Original  LSA are hereby  amended and  restated in
their entirety, and as so amended and restated, are replaced and superseded,  by
the terms, conditions, agreements, covenants, representations and warranties set
forth in this Agreement and the other Loan Documents.

      17.12 PARENT AS AGENT FOR  BORROWERS.  Each  Borrower  hereby  irrevocably
appoints  Parent as the borrowing agent and  attorney-in-fact  for all Borrowers
(the "ADMINISTRATIVE BORROWER") which appointment shall remain in full force and
effect unless and until Lender shall have received  prior written  notice signed
by each  Borrower  that  such  appointment  has been  revoked  and that  another
Borrower  has been  appointed  Administrative  Borrower.  Each  Borrower  hereby
irrevocably  appoints and authorizes the Administrative  Borrower (i) to provide
Lender with all notices with  respect to the Term Loan  obtained for the benefit
of any Borrower and all other notices and instructions  under this Agreement and
(ii) to take such action as the Administrative Borrower deems appropriate on its
behalf to the Term Loan and to  exercise  such  other  powers as are  reasonably
incidental thereto to carry out the purposes of this Agreement. It is understood
that the handling of the Loan Account and  Collateral of Borrowers in a combined
fashion,  as more fully set forth herein,  is done solely as an accommodation to
Borrowers in order to utilize the  collective  borrowing  powers of Borrowers in
the most efficient and economical  manner and at their request,  and that Lender
shall not incur  liability to any  Borrower as a result  hereof.  Each  Borrower
expects to derive benefit, directly or indirectly, from the handling of the Loan
Account and the Collateral in a combined fashion since the successful  operation
of each Borrower is dependent on the  continued  successful  performance  of the
integrated  group. To induce the Lender to do so, and in consideration  thereof,
each Borrower  hereby jointly and severally  agrees to indemnify each Lender and
hold each Lender harmless against any and all liability,  expense, loss or claim
of damage or injury,  made  against  the Lender by any  Borrower or by any third

                                       36

party  whosoever,  arising from or incurred by reason of (a) the handling of the
Loan Account and  Collateral of Borrowers as herein  provided,  (b) the Lender's
relying on any  instructions of the  Administrative  Borrower,  or (c) any other
action taken by the Lender  hereunder or under the other Loan Documents,  except
that  Borrowers  will have no liability to the  relevant  Lender-Related  Person
under this  SECTION  17.12 with respect to any  liability  that has been finally
determined by a court of competent jurisdiction to have resulted solely from the
gross negligence or willful  misconduct of such  Lender-Related  Person, or from
such Lender-Related  Person's breach of its material  obligations under the Loan
Documents, as the case may be.

      17.13 INTERCREDITOR  AGREEMENT.  Notwithstanding  anything  herein  to the
contrary,  the liens and security  interests  granted to Lender  pursuant to the
Loan Documents in the Collateral, the right of Lender to receive any payments or
distributions  on account of the  Obligations,  and the exercise of any right or
remedy by Lender with  respect to the  Collateral  hereunder  or under any other
Loan Document are subject to the provisions of the Intercreditor  Agreement.  In
the event of any conflict between the terms of the  Intercreditor  Agreement and
this Agreement with respect to (a) the priority of liens and security  interests
granted to Lender in the  Collateral  pursuant  to the Loan  Documents,  (b) the
right of Lender to  receive  any  payments  or  distributions  on account of the
obligations,  or (c) the rights of Lender under this Agreement, the terms of the
Intercreditor  Agreement shall govern and control as between the Lender,  on the
one hand, and the Working Capital Agent,  on behalf of itself,  and on behalf of
the  Working  Capital  Lenders,  the Term A Agent,  on behalf of itself,  and on
behalf of the Term A Lenders, on the other hand.

      17.14 JUDGMENT   CURRENCY.   (a)  This  is  an   international   financial
transaction  in which the  specification  of a currency  and payment in New York
City is of the essence.  Dollars shall be the currency of account in the case of
all payments pursuant to or arising under this Agreement or under any other Loan
Document,  and all  such  payments  shall  be made to the  Lender's  Account  in
immediately  available funds. To the fullest extent permitted by applicable law,
the  Obligations of each Loan Party to Lender under this Agreement and under the
other Loan  Documents  shall not be  discharged  by any amount paid in any other
currency or in any other manner than to the Lender's  Account to the extent that
the amount so paid after  conversion  under this  Agreement  and transfer to the
Lender's Account does not yield the amount of Dollars in New York City due under
this Agreement and under the other Loan Documents.

            (b) If, for the purposes of obtaining or enforcing  judgment against
the Loan  Parties  in any  court in any  jurisdiction  in  connection  with this
Agreement or any other Loan Document,  it becomes  necessary to convert into any
other  currency  (such  other  currency  being  referred  to  as  the  "JUDGMENT
CURRENCY")  an amount due under this  Agreement or any Loan  Document in Dollars
other  than  Judgment  Currency,  the  conversion  shall  be made at the rate of
exchange  prevailing on the Business Day  immediately  preceding (a) the date of
actual payment of the amount due, in the case of any proceeding in the courts of
any  jurisdiction  that would give effect to such conversion  being made on such
date,  or (b) the  date on  which  the  judgment  is  given,  in the case of any
proceeding in the courts of any other  jurisdiction  (the  applicable date as of
which such  conversion is made pursuant to this SECTION 17.14 being  hereinafter
referred to as the "JUDGMENT CONVERSION DATE").

            (c)  If,  in  the  case  of  any  proceeding  in  the  court  of any
jurisdiction  referred to in subsection (a) above, there is a change in the rate
of exchange  prevailing  between the  Judgment  Conversion  Date and the date of
actual  receipt for value of the amount  due,  the Loan  Parties  shall pay such
additional  amount  (if any,  and in any  event not a lesser  amount)  as may be
necessary to ensure that the amount actually received in the Judgment  Currency,
when converted at the rate of exchange  prevailing on the date of payment,  will
produce the amount of Dollars which could have been purchased with the amount of
the Judgment  Currency  stipulated in the judgment or judicial order at the rate
of  exchange  prevailing  on the  Judgment  Conversion  Date.  The term "rate of
exchange" in this Section  means the Spot Rate at which Lender would be prepared
to sell  Dollars  against  the  Judgment  Currency  (or if  Lender is not in the

                                       37

business  of  selling  Dollars  against  the  Judgment  Currency,  the Spot Rate
applicable to such  transactions  published by the banking  institution at which
Lender maintains the Lender's Account).

            (d) Any amount due from the Loan Parties  under this  SECTION  17.14
shall not be affected by judgment being obtained for any other amounts due under
or in respect of this Agreement or any other Loan Document.

      17.15 IMMUNITY.  To  the  extent  that  any  Loan  Party  or  any  of  its
Subsidiaries has or hereafter may acquire any immunity  (sovereign or otherwise)
from  jurisdiction  of any  court or from  set-off  or from any  legal  process,
action, suit or proceeding (whether through service or notice,  attachment prior
to judgment, attachment in aid of execution, execution of judgment or otherwise)
with  respect to itself or any of its  property,  the  Parent and each  Borrower
hereby  irrevocably waives (on behalf of itself and its Subsidiaries) and agrees
not to plead or claim such immunity in respect of its Obligations  hereunder and
under the other Loan Documents to which it is a party to the extent permitted by
applicable law and,  without  limiting the  generality of the foregoing,  agrees
that the waivers set forth in this SECTION 17.15 shall be to the fullest  extent
permitted  under the  Foreign  Sovereign  Immunities  Act of 1976 of the  United
States and are intended to be irrevocable for purposes of such Act.

                          [Signature pages to follow.]

                                       38

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.

BORROWERS:                               ARLON, INC.,
                                         a Delaware corporation

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

                                         ARLON VISCOR LTD.,
                                         a Texas limited partnership

                                         By: ARLON ADHESIVES & FILMS, INC.
                                         General Partner

                                         By:     By:
                                         Title:  Title:

                                         ARLON SIGNTECH, LTD.,
                                         a Texas limited partnership

                                         By: ARLON ADHESIVES & FILMS, INC.
                                         General Partner

                                         By:     By:
                                         Title:  Title:

                                         KASCO CORPORATION,
                                         a Delaware corporation

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

                                         SOUTHERN SAW ACQUISITION CORPORATION,
                                         a Delaware corporation

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

PARENT:                                  BAIRNCO CORPORATION,
                                         a Delaware corporation

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

                                       39

LENDER:                                  STEEL PARTNERS II, L.P.,
                                         a Delaware limited partnership, as
                                         Lender

                                         By:  STEEL PARTNERS, L.L.C
                                                 General Partner

                                                 -------------------------------
                                         By:
                                                 -------------------------------

                                                 Warren Lichtenstein
                                                 Managing Member

                                       40

                                                                  EXECUTION COPY

                                                  LK LLP Draft of July 5, 2007

                                  SCHEDULE 1.1

As  used  in the  Agreement,  the  following  terms  shall  have  the  following
definitions:

            "ACCOUNT" means an account (as that term is defined in the Code).

            "ACCOUNT  DEBTOR"  means any Person who is  obligated on an Account,
chattel paper, or a general intangible.

            "ACT" has the meaning specified therefor in SECTION 17.10.

             "ADDITIONAL  DOCUMENTS"  has  the  meaning  specified  therefor  in
SECTION 5.17.

            "ADMINISTRATIVE  BORROWER"  has the  meaning  specified  therefor in
SECTION 17.12.

            "AFFILIATE"  means,  as applied to any Person,  any other Person who
controls,  is controlled by, or is under common control with, such Person and in
the case of any Loan Party,  the immediate  family  members,  spouses and lineal
descendants of individuals  that are Affiliates of such Loan Party. For purposes
of this  definition,  "control"  means the  possession,  directly or  indirectly
through one or more  intermediaries,  of the power to direct the  management and
policies of a Person,  whether through the ownership of Stock,  by contract,  or
otherwise;  PROVIDED,  HOWEVER,  that,  for  purposes  of  SECTION  6.13  of the
Agreement:  (a) any Person which owns directly or indirectly  10% or more of the
Stock  having  ordinary  voting  power for the  election of  directors  or other
members of the governing  body of a Person or 10% or more of the  partnership or
other  ownership  interests of a Person (other than as a limited partner of such
Person)  shall be deemed an  Affiliate  of such  Person,  (b) each  director (or
comparable  manager)  of a Person  shall be  deemed to be an  Affiliate  of such
Person, and (c) each partnership in which a Person is a general partner shall be
deemed an  Affiliate  of such  Person.  Notwithstanding  anything  herein to the
contrary, in no event shall the Agent or any Lender be considered an "Affiliate"
of any Loan Party solely by virtue of having entered into any Loan Document.

            "AGREEMENT" means the Credit Agreement to which this SCHEDULE 1.1 is
attached.

             "AUTHORIZED PERSON" means any one of the individuals  identified on
SCHEDULE A-2.

            "BANKRUPTCY  CODE" means (i) title 11 of the United States Code, and
(ii) any similar legislation in any relevant  jurisdiction,  in each case, as in
effect from time to time.

            "BASE  RATE  OF  INTEREST"  means  the  rate  of  interest  publicly
announced by the Reference  Bank in New York,  New York from time to time as its
reference  rate, base rate or prime rate. The reference rate, base rate or prime
rate is determined from time to time by the Reference Bank as a means of pricing
some loans to its borrowers and neither is tied to any external rate of interest
or index nor necessarily  reflects the lowest rate of interest  actually charged
by the Reference  Bank to any  particular  class or category of customers.  Each
change in the Base Rate  shall be  effective  from and  including  the date such
change is publicly announced as being effective.

            "BASE RATE MARGIN" means 6.75 percentage points.

            "BOARD OF  DIRECTORS"  means the board of directors  (or  comparable
managers) of Parent or any committee thereof duly authorized to act on behalf of
the board of directors (or comparable managers).

            "BORROWER" and "BORROWERS"  have the respective  meanings  specified
therefor in the preamble to the Agreement.

            "BUSINESS  DAY"  means any day that is not a  Saturday,  Sunday,  or
other day on which banks are authorized or required to close in the state of New
York,  except that, if a determination of a Business Day shall relate to a LIBOR
Rate Loan, the term "Business Day" also shall exclude any day on which banks are
closed for dealings in Dollar deposits in the London interbank market.

            "CANADIAN  GUARANTY" means a Guaranty  executed and delivered by the
Canadian  Obligor  in favor of Lender,  in form and  substance  satisfactory  to
Lender.

            "CANADIAN  OBLIGOR" means Atlantic  Service  Company  Limited,  an
Ontario corporation.

            "CANADIAN  SECURITY  AGREEMENT" means a Security  Agreement executed
and delivered by the Canadian Obligor in favor of Lender,  in form and substance
satisfactory to Lender.

            "CANADIAN SECURITY DOCUMENTS" means the Canadian Security Agreement,
the Quebec  Security  Documents,  and such other  instruments,  agreements,  and
documents governed by the laws of Canada or any political  subdivision  thereof,
as Lender may require in order to secure the obligations of the Canadian Obligor
under the Canadian Guaranty.

            "CAPITAL  EXPENDITURES"  means,  with  respect to any Person for any
period,  the aggregate of all  expenditures by such Person and its  Subsidiaries
during such period that are capital  expenditures  as  determined  in accordance
with GAAP, whether such expenditures are paid in cash or financed.

            "CAPITAL  LEASE  OBLIGATION"  means that portion of the  obligations
under a Capital  Lease that is required to be  capitalized  in  accordance  with
GAAP.

            "CAPITAL LEASE" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.

            "CASH  EQUIVALENTS"  means (a) marketable direct  obligations issued
by, or unconditionally guaranteed by, the United States or issued by any agency
thereof  and backed by the full faith and credit of the United  States,  in each
case maturing within 1 year from the date of acquisition thereof, (b) marketable
direct  obligations  issued by any state of the United  States or any  political
subdivision  of any such state or any public  instrumentality  thereof  maturing
within  1 year  from  the  date  of  acquisition  thereof  and,  at the  time of
acquisition,  having  one of the two  highest  ratings  obtainable  from  either
Standard  & Poor's  Rating  Group  ("S&P") or Moody's  Investors  Service,  Inc.
("Moody's"),  (c) commercial  paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least  P-1 from  Moody's,  (d)  certificates  of  deposit  or
bankers' acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank  organized  under the laws of the United  States or any state
thereof having at the date of acquisition  thereof  combined capital and surplus
of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank
that  satisfies  the criteria  described in clause (d) above,  or (ii) any other
bank organized  under the laws of the United States or any state thereof so long
as the  amount  maintained  with any such  other  bank is less  than or equal to

$100,000  and is insured  by the  Federal  Deposit  Insurance  Corporation,  (f)
Investments in money market funds substantially all of whose assets are invested
in the types of assets described in clauses (a) through (e) above.

            "CFC"  means a  controlled  foreign  corporation  (as  that  term is
defined in the IRC).

            "CHANGE  OF  CONTROL"  means  that  (a)  Permitted  Holders  fail to
beneficially  own,  directly or indirectly,  at least 25% of the Stock of WHX or
(b) a majority  of the  members of WHX's Board of  Directors  do not  constitute
Continuing  Directors  or  (c)  WHX  fails  to  own  and  control,  directly  or
indirectly, 100% of the Stock of Parent.

            "CLOSING  DATE" means the date of the  refinancing  of the Term Loan
hereunder.

            "CLOSING DATE TRANSACTIONS" means, collectively, (a) the refinancing
of the Term  Loan,  (b) the making of the  Working  Capital  Term Loan,  (c) the
making of the Working  Capital  Advances to be made on the Closing Date, (d) the
making of the Term A Loan,  (e) the issuance of the Working  Capital  Letters of
Credit to be issued on the Closing Date,  (f) the repayment of the  Indebtedness
owing to the Existing Lender and the portion of the Indebtedness  owed to Lender
that is  outstanding  under  the  Original  LSA and which is to be repaid on the
Closing Date, and the termination of the Existing Lender's credit facilities and
the amendment and  restatement  of the Original LSA pursuant to this  Agreement,
and (g) the payment of all fees and expenses in connection with the foregoing.

            "CODE" means the New York Uniform Commercial Code, as in effect from
time to time.

            "COLLATERAL"  means all assets and  interests in assets and proceeds
thereof now owned or hereafter acquired by Parent or its Subsidiaries in or upon
which a Lien is granted under any of the Loan Documents.

            "COLLATERAL  ACCESS  AGREEMENT"  means  a  landlord  waiver,  bailee
letter, or  acknowledgement  agreement of any lessor,  warehouseman,  processor,
consignee,  or other  Person in  possession  of,  having a Lien upon,  or having
rights  or  interests  in  Parent's  or its  Subsidiaries'  books  and  records,
Equipment,  or Inventory,  in each case, in form and substance  satisfactory  to
Agent.

            "COLLECTIONS" means ALL cash, checks, notes, instruments,  and other
items of payment (including  insurance proceeds,  proceeds of cash sales, rental
proceeds, and tax refunds).

            "COMPLIANCE  CERTIFICATE"  means a certificate  substantially in the
form of EXHIBIT C-1 delivered by the chief financial officer of Parent to Agent.

            "CONTINUING DIRECTOR" means (a) any member of the Board of Directors
who was a director (or  comparable  manager) of WHX on the Closing Date, (b) any
individual who becomes a member of the Board of Directors after the Closing Date
if such  individual  was  appointed  or  nominated  for election to the Board of
Directors by a majority of the  Continuing  Directors,  but  excluding  any such
individual  originally  proposed  for  election  in  opposition  to the Board of
Directors  in office at the  Closing  Date in an actual or  threatened  election
contest  relating to the election of the directors (or  comparable  managers) of
WHX and whose  initial  assumption  of office  resulted from such contest or the
settlement  thereof or (c) any  individual  who becomes a member of the Board of
Directors  after the Closing Date if such  individual was appointed or nominated
by Permitted Holder for or Permitted Holder voted in favor of such  individual's
election to the Board of Directors.

            "CONTROL AGREEMENT" means a control agreement, in form and substance
satisfactory  to  Lender,  executed  and  delivered  by  Parent  or  one  of its
Subsidiaries,  Lender,  Term A Agent,  Working  Capital Agent and the applicable
securities  intermediary  (with  respect to a Securities  Account) or bank (with
respect to a Deposit Account).

            "COPYRIGHT SECURITY AGREEMENT" has the meaning specified therefor in
the Security Agreement.

            "DAILY  BALANCE"  means,  as of any date of  determination  and with
respect to any Obligation, the amount of such Obligation owed at the end of such
day.

            "DEFAULT"  means an event,  condition,  or  default  that,  with the
giving of notice, the passage of time, or both, would be an Event of Default.

            "DEPOSIT ACCOUNT" means any deposit account (as that term is defined
in the Code).

            "DESIGNATED  ACCOUNT" means the Deposit Account of  Administrative
Borrower identified on SCHEDULE D-1.

            "DESIGNATED  ACCOUNT  BANK" has the  meaning  specified  therefor in
SCHEDULE D-1.

            "DOLLARS" or "$" means United States dollars.

            "DOMESTIC SUBSIDIARY" means a Subsidiary organized under the laws of
the United States or any jurisdiction thereof.

            "EBITDA"  has  the  meaning  ascribed  to such  term  in the  Senior
Financing Agreements.

            "EMPLOYEE  PLAN"  means  an  employee  benefit  plan  (other  than a
Multiemployer  Plan)  covered by Title IV of ERISA and  maintained  (or that was
maintained at any time during the six (6) calendar  years  preceding the date of
any  borrowing  hereunder)  for  employees of any Loan Party or any of its ERISA
Affiliates.

            "ENVIRONMENTAL  ACTIONS"  means  any  written  complaint,   summons,
citation,  written notice, directive,  order, claim, litigation,  investigation,
judicial or administrative proceeding,  judgment, letter, or other communication
from any  Governmental  Authority,  or any third party  involving  violations of
Environmental  Laws or  releases  of  Hazardous  Materials  from (a) any assets,
properties,  or businesses of any Loan Party, any Subsidiary of a Loan Party, or
any of  their  predecessors  in  interest,  (b)  from  adjoining  properties  or
businesses,  or (c)  from  or  onto  any  facilities  which  received  Hazardous
Materials generated by any Loan Party, any Subsidiary of a Loan Party, or any of
their predecessors in interest.

            "ENVIRONMENTAL LAW" means any applicable federal, state, provincial,
foreign or local statute, law, rule,  regulation,  ordinance,  code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter  in effect and in each case as amended,  or any judicial or
administrative  interpretation thereof, including any judicial or administrative
order,  consent  decree or judgment,  in each case, to the extent binding on any
Loan Party or any Subsidiary of a Loan Party,  relating to the environment,  the
effect of the environment on employee health,  or Hazardous  Materials,  in each
case as amended from time to time.

            "ENVIRONMENTAL   LIABILITIES"   means  all   liabilities,   monetary
obligations,  losses, damages,  punitive damages,  consequential damages, treble
damages,  costs and expenses  (including all reasonable fees,  disbursements and

expenses of counsel,  experts,  or consultants,  and costs of investigation  and
feasibility studies),  fines, penalties,  sanctions,  and interest incurred as a
result of any claim or demand, or Remedial Action required,  by any Governmental
Authority or any third party, and which relate to any Environmental Action.

            "ENVIRONMENTAL  LIEN"  means  any Lien in favor of any  Governmental
Authority for Environmental Liabilities.

            "EQUIPMENT" means equipment (as that term is defined in the Code).

            "ERISA" means the Employee  Retirement  Income Security Act of 1974,
as  amended,  and any  successor  statute  thereto  or the  non-U.S.  equivalent
thereof.

            "ERISA  AFFILIATE"  means  (a) any  Person  subject  to ERISA  whose
employees  are treated as employed by the same  employer as the  employees  of a
Loan Party or a  Subsidiary  of a Loan Party under IRC Section  414(b),  (b) any
trade or business  subject to ERISA whose  employees  are treated as employed by
the same  employer as the  employees of a Loan Party or a  Subsidiary  of a Loan
Party under IRC Section 414(c),  (c) solely for purposes of Section 302 of ERISA
and Section 412 of the IRC, any  organization  subject to ERISA that is a member
of an  affiliated  service group of which a Loan Party or a Subsidiary of a Loan
Party is a member  under IRC  Section  414(m),  or (d)  solely for  purposes  of
Section  302 of ERISA and Section  412 of the IRC,  any Person  subject to ERISA
that is a party to an  arrangement  with a Loan Party or a Subsidiary  of a Loan
Party and whose employees are aggregated with the employees of a Loan Party or a
Subsidiary of a Loan Party under IRC Section 414(o), or the non-U.S.  equivalent
thereof.

            "EVENT OF DEFAULT" has the meaning specified therefor in SECTION 7.

            "EXCHANGE  ACT" means the  Securities  Exchange  Act of 1934,  as in
effect from time to time.

            "EXISTING  LENDER"  means  Bank of  America,  N.A.  and  each of the
lenders party to the credit facilities agented by Bank of America, N.A.

            "EXTRAORDINARY  RECEIPTS"  means any Net Cash  Proceeds  received by
Parent  or any of its  Subsidiaries  not in the  ordinary  course  of  business,
including as a result of, without duplication, (a) foreign, United States, state
or local tax refunds  (other than  amounts  automatically  applied to future tax
payments or  representing  overpayments  of  estimated  taxes for the current or
immediately  preceding tax year), (b) pension plan  reversions,  (c) proceeds of
insurance (including key man life insurance and business interruption insurance,
but excluding any casualty insurance), (d) judgments, proceeds of settlements or
other  consideration  of any kind in  connection  with any cause of action,  (e)
indemnity payments, and (f) any purchase price adjustment received in connection
with any purchase agreement.

            "FUNDING  LOSSES"  has the  meaning  specified  therefor  in SECTION
2.10(B)(II).

            "FUNDS FLOW  AGREEMENT"  means a funds flow  agreement,  in form and
substance  reasonably  satisfactory  to Lender,  executed and  delivered by Loan
Parties, Lender, Term A Agent, and Working Capital Agent.

            "GAAP" means generally accepted  accounting  principles as in effect
from time to time in the United States, consistently applied.

            "GOVERNING  DOCUMENTS"  means,  with  respect  to  any  Person,  the
certificate  or  articles of  incorporation,  by-laws,  or other  organizational
documents of such Person.

            "GOVERNMENTAL   AUTHORITY"   means  any   federal,   state,   local,
supra-national or other  governmental or administrative  body,  instrumentality,
board,  department,  or agency or any court,  tribunal,  administrative  hearing
body, arbitration panel, commission, or other similar dispute-resolving panel or
body.

            "GUARANTORS"  means (a) Parent,  and (b) each  Subsidiary  of Parent
(other than  Borrowers,  or any other  Subsidiary  that is a CFC and that is not
required to guaranty the Obligations  pursuant to Section 5.16), and "Guarantor"
means any one of them.

            "GUARANTY" means that certain general  continuing  guaranty executed
and  delivered  by each  Guarantor  in favor of Lender,  for the  benefit of any
Lender, in form and substance satisfactory to Lender.

            "HAZARDOUS  MATERIALS"  means (a)  substances  that are  defined  or
listed  in,  or  otherwise  classified  pursuant  to,  any  applicable  laws  or
regulations  as  "hazardous   substances,"   "hazardous  materials,"  "hazardous
wastes," "toxic substances," or any other formulation  intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity,   reactivity,   carcinogenicity,   reproductive  toxicity,  or  "EP
toxicity",  (b) oil, petroleum,  or petroleum derived  substances,  natural gas,
natural gas liquids,  synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any  radioactive  materials,  and (d)  asbestos  in any  form  or  electrical
equipment  that  contains  any oil or  dielectric  fluid  containing  levels  of
polychlorinated biphenyls in excess of 50 parts per million.

            "HEDGE  AGREEMENT"  means any and all  agreements,  or documents now
existing or  hereafter  entered into by Parent or any of its  Subsidiaries  that
provide for an interest  rate,  credit,  commodity or equity swap,  cap,  floor,
collar, forward foreign exchange transaction, currency swap, cross currency rate
swap,  currency option,  or any combination of, or option with respect to, these
or similar  transactions,  for the  purpose of  hedging  Parent's  or any of its
Subsidiaries'  exposure to  fluctuations  in interest or exchange  rates,  loan,
credit exchange, security, or currency valuations or commodity prices.

            "INDEBTEDNESS" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures,  notes, or other similar instruments
and all  reimbursement  or other  obligations  in  respect of letters of credit,
bankers acceptances,  interest rate swaps, or other financial products,  (c) all
obligations as a lessee under Capital Leases, (d) all obligations or liabilities
of  others  secured  by a Lien on any  asset  of a Person  or its  Subsidiaries,
irrespective  of whether  such  obligation  or  liability  is  assumed,  (e) all
obligations  to pay the  deferred  purchase  price of assets  (other  than trade
payables  incurred in the ordinary  course of business,  repayable in accordance
with  customary  trade  practices),   (f)  all  obligations  owing  under  Hedge
Agreements,  and  (g) any  obligation  guaranteeing  or  intended  to  guarantee
(whether directly or indirectly guaranteed,  endorsed,  co-made,  discounted, or
sold  with  recourse)  any  obligation  of any  other  Person  that  constitutes
Indebtedness under any of clauses (a) through (f) above.

            "INDEMNIFIED  LIABILITIES"  has the  meaning  specified  therefor in
SECTION 10.3.

            "INDEMNIFIED  PERSON" has the meaning specified  therefor in SECTION
10.3.

            "INSOLVENCY PROCEEDING" means any proceeding commenced by or against
any Person under any provision of the  Bankruptcy  Code or under any other state
or  federal  bankruptcy  or  insolvency  law,  assignments  for the  benefit  of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization,  arrangement, or other similar
relief.

            "INTERCREDITOR  AGREEMENT" means an intercreditor agreement executed
and  delivered  by  Lender,   Term  A  Agent  and  Working  Capital  Agent,  and
acknowledged  and consented to by each Borrower and each Guarantor,  as amended,
supplemented, restated or otherwise modified from time to time.

            "INTEREST  EXPENSE"  means,  for any period,  the  aggregate  of the
interest expense of Parent and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.

            "INVENTORY" means inventory (as that term is defined in the Code).

            "INVESTMENT"  means,  with respect to any Person,  any investment by
such Person in any other  Person  (including  Affiliates)  in the form of loans,
guarantees,  advances, capital contributions (excluding (a) commission,  travel,
and  similar  advances  to  officers  and  employees  of such Person made in the
ordinary course of business,  and (b) BONA FIDE Accounts arising in the ordinary
course  of  business   consistent  with  past  practice),   or  acquisitions  of
Indebtedness,  Stock,  or all or  substantially  all of the assets of such other
Person (or of any division or business line of such other Person), and any other
items that are or would be classified as investments on a balance sheet prepared
in accordance with GAAP.

            "IRC" means the  Internal  Revenue  Code of 1986,  as in effect from
time to time.

            "JUDGMENT  CONVERSION  DATE" has the meaning  specified  therefor in
SECTION 17.14.

            "JUDGMENT  CURRENCY" has the meaning  specified  therefor in SECTION
17.14.

            "KASCO" means Kasco Corporation, a Delaware corporation.

            "KASCO  NON-RECURRING  EXPENSES"  means,  with respect to any period
specified on SCHEDULE K-1, the lesser of (a) the actual  amount  expended by the
Parent and its  Subsidiaries  in respect of the items  specified on SCHEDULE K-1
during such  period,  and (b) the amount  specified  on SCHEDULE K-1 during such
period.

            "LENDER"  and has the  meaning  set  forth  in the  preamble  to the
Agreement.

            "LENDER'S ACCOUNT" means the Deposit Account of Lender identified on
SCHEDULE A-1.

            "LENDER EXPENSES" means all (a) costs or expenses  (including taxes,
and insurance  premiums) required to be paid by a Loan Party or its Subsidiaries
under any of the Loan Documents that are paid, advanced,  or incurred by any one
or more  members of the Lender  Group,  (b) fees or charges  paid or incurred by
Agent in connection  with any Lender's  transactions  with Loan Parties or their
Subsidiaries,  including,  fees  or  charges  for  photocopying,   notarization,
couriers and messengers,  telecommunication,  public record searches  (including
tax lien,  judgment lien,  litigation,  and UCC searches and including  searches
with the patent and trademark office, the copyright office, or the department of
motor vehicles), filing, recording,  publication,  appraisal (including periodic
collateral  appraisals  or  business  valuations  to the  extent of the fees and
charges (and up to the amount of any  limitation)  contained in the  Agreement),
real  estate  surveys,   real  estate  title  policies  and  endorsements,   and
environmental  audits,  (c) costs and  expenses  incurred  by any  Lender in the
disbursement  of funds to (or on  behalf  of)  Borrowers  (by wire  transfer  or

otherwise),  (d)  charges  paid or  incurred  by any Lender  resulting  from the
dishonor of checks,  (e)  reasonable  costs and expenses paid or incurred by any
Lender to correct any default or enforce any provision of the Loan Documents, or
in gaining possession of, maintaining,  handling, preserving, storing, shipping,
selling,  preparing  for sale, or  advertising  to sell the  Collateral,  or any
portion thereof,  irrespective of whether a sale is consummated,  (f) audit fees
and expenses  (including  travel,  meals,  and lodging) of Lender related to any
inspections  or audits  to the  extent  of the fees and  charges  (and up to the
amount of any limitation)  contained in the Agreement,  (g) reasonable costs and
expenses of third party  claims or any other suit paid or incurred by any one or
more Lenders in enforcing or defending the Loan Documents or in connection  with
the transactions contemplated by the Loan Documents or the Lender's relationship
with any Loan Party or any  Subsidiary  of a Loan  Party,  (h)  Agent's and each
Lender's  reasonable costs and expenses  (including  attorneys fees) incurred in
advising,  structuring,  drafting,  reviewing,  administering (including travel,
meals, and lodging),  syndicating  (including rating the Term Loan), or amending
the Loan  Documents,  and (i) Agent's  and each  Lender's  reasonable  costs and
expenses (including attorneys, accountants, consultants, and other advisors fees
and  expenses)  incurred  in  terminating,   enforcing   (including   attorneys,
accountants,  consultants,  and other  advisors  fees and  expenses  incurred in
connection  with a "workout," a  "restructuring,"  or an  Insolvency  Proceeding
concerning  any Loan Party or any  Subsidiary  of a Loan Party or in  exercising
rights or remedies under the Loan  Documents),  or defending the Loan Documents,
irrespective  of  whether  suit is  brought,  or in taking any  Remedial  Action
concerning the Collateral.

            "LENDER-RELATED  PERSON"  means,  with  respect to any Lender,  such
Lender,  together  with  such  Lender's  Affiliates,  Related  Funds,  officers,
directors, employees, attorneys, and agents.

            "LEVERAGE RATIO" has the meaning ascribed to such term in the Senior
Financing Agreements.

            "LIEN" means any  mortgage,  deed of trust,  pledge,  hypothecation,
assignment, charge, deposit arrangement,  encumbrance, easement, lien (statutory
or  other),  security  interest,  or other  security  arrangement  and any other
preference,  priority,  or  preferential  arrangement  of  any  kind  or  nature
whatsoever,  including any  conditional  sale contract or other title  retention
agreement,  the interest of a lessor under a Capital  Lease and any synthetic or
other  financing lease having  substantially  the same economic effect as any of
the foregoing.

            "LIENS"  means the Liens  granted  by any Loan  Party to any  Lender
under the Loan Documents.

            "LOAN ACCOUNT" has the meaning specified therefor in SECTION 2.8.

            "LOAN DOCUMENTS" means this Agreement,  the Canadian  Guaranty,  the
Canadian  Security  Documents,  the Cash Management  Agreements,  the Collateral
Access Agreements, the Control Agreements, the Copyright Security Agreement, the
Guaranty,  the  Intercreditor and Subordination  Agreement,  the Mortgages,  the
Patent  Security  Agreement,  the Security  Agreement,  the  Trademark  Security
Agreement,  any note or notes  executed  by a Borrower in  connection  with this
Agreement and payable to a Lender,  and any other agreement entered into, now or
in the future, by any Loan Party or any of their Subsidiaries, and any Lender in
connection with this Agreement.

            "LOAN PARTY" means any Borrower or any Guarantor.

            "MATERIAL ADVERSE CHANGE" means (a) a material adverse change in the
business, prospects,  operations,  results of operations, assets, liabilities or
condition (financial or otherwise) of Borrowers and their Subsidiaries, taken as

a whole, (b) a material  impairment of a Borrower's or any of its  Subsidiaries'
ability to perform its  obligations  under the Loan  Documents  to which it is a
party or of Lender's  ability to enforce  the  Obligations  or realize  upon the
Collateral,  or (c) a material  impairment of the  enforceability or priority of
the Liens with respect to the  Collateral as a result of an action or failure to
act on the part of a Borrower or a Subsidiary of a Borrower.

            "MATERIAL  CONTRACT"  means,  with  respect to any Person,  (i) each
contract or agreement to which such Person or any of its Subsidiaries is a party
involving  aggregate  consideration  payable  to  or  by  such  Person  or  such
Subsidiary  of  $250,000 or more (other  than  purchase  orders in the  ordinary
course  of the  business  of such  Person  or such  Subsidiary  and  other  than
contracts  that by their terms may be terminated by such Person or Subsidiary in
the  ordinary  course of its  business  upon less  than 60 days  notice  without
penalty or premium), (ii) the Related Transaction Documents, and (iii) all other
contracts  or  agreements  material  to  the  business,  operations,   condition
(financial or otherwise), performance, prospects or properties of such Person or
such Subsidiary.

            "MATURITY DATE" has the meaning specified therefor in SECTION 3.2.

            "MOODY'S" has the meaning  specified  therefor in the  definition of
Cash Equivalents.

            "MORTGAGE  POLICY"  has the meaning  specified  therefor in SCHEDULE
3.1(Y).

            "MORTGAGES"  means,  individually  and  collectively,  one  or  more
mortgages,  deeds of trust, or deeds to secure debt, executed and delivered by a
Loan  Party or a  Subsidiary  of a Loan  Party in favor of  Lender,  in form and
substance satisfactory to Lender, that encumber the Real Property Collateral.

            "MULTIEMPLOYER  PLAN"  means a  "multiemployer  plan" as  defined in
Section  4001(a)(3)  of  ERISA  to which  any  Loan  Party  or any of its  ERISA
Affiliates has contributed to, or has been obligated to contribute,  at any time
during the preceding six (6) years.

            "NET CASH PROCEEDS" means:

                  (a) with respect to any sale or disposition by a Loan Party or
a Subsidiary of a Loan Party of property or assets,  the amount of cash proceeds
received  (directly  or  indirectly)  from  time to  time  (whether  as  initial
consideration or through the payment of deferred  consideration) by or on behalf
of a Loan Party or a Subsidiary of a Loan Party,  in connection  therewith after
deducting  therefrom  only (i) the  amount of any  Indebtedness  secured  by any
Permitted  Lien on any asset  (other than (A)  Indebtedness  owing to any Lender
under this Agreement or the other Loan Documents and (B) Indebtedness assumed by
the  purchaser  of such  asset)  which is  required  to be,  and is,  repaid  in
connection with such sale or disposition, (ii) reasonable fees, commissions, and
expenses  related  thereto  and  required  to be  paid by a Loan  Party  or such
Subsidiary of a Loan Party in connection with such sale or disposition and (iii)
taxes  paid  or  payable  to any  taxing  authorities  by a Loan  Party  or such
Subsidiary of a Loan Party in connection with such sale or disposition,  in each
case to the extent, but only to the extent, that the amounts so deducted are, at
the time of receipt of such cash,  actually  paid or payable to a Person that is
not an  Affiliate  of a Loan  Party or a  Subsidiary  of a Loan  Party,  and are
properly attributable to such transaction; and

                  (b)  with  respect  to  the  issuance  or  incurrence  of  any
Indebtedness by a Loan Party or a Subsidiary of a Loan Party, or the issuance by
a Loan Party or a  Subsidiary  of a Loan  Party of any shares of its Stock,  the
aggregate  amount of cash received  (directly or  indirectly)  from time to time

(whether  as initial  consideration  or through the  payment or  disposition  of
deferred  consideration)  by or on behalf of a Loan Party or such  Subsidiary in
connection with such issuance or incurrence,  after deducting therefrom only (i)
reasonable  fees,  commissions,  and expenses related thereto and required to be
paid by a Loan Party or such  Subsidiary  in  connection  with such  issuance or
incurrence, (ii) taxes paid or payable to any taxing authorities by a Loan Party
or such Subsidiary in connection with such issuance or incurrence,  in each case
to the extent, but only to the extent,  that the amounts so deducted are, at the
time of receipt of such cash,  actually  paid or payable to a Person that is not
an Affiliate  of a Loan Party or  Subsidiary  of a Loan Party,  and are properly
attributable to such transaction.

            "NEW LENDING OFFICE" has the meaning  specified  therefor in SECTION
16(D).

            "OBLIGATIONS"  means all loans (including the Term Loan),  Advances,
debts,  principal,  interest  (including  any interest  that  accrues  after the
commencement  of an  Insolvency  Proceeding  regardless  of  whether  allowed or
allowable  in whole or in part as a claim  in any such  Insolvency  Proceeding),
premiums,  liabilities (including all amounts charged to Borrowers' Loan Account
pursuant to the Agreement), obligations (including indemnification obligations),
fees,  charges,  costs,  Lender  Expenses  (including  any fees or expenses that
accrue after the commencement of an Insolvency Proceeding, regardless of whether
allowed  or  allowable  in whole  or in part as a claim  in any such  Insolvency
Proceeding), lease payments,  guaranties,  covenants, and duties of any kind and
description  owing by Loan Parties to any Lender pursuant to or evidenced by the
Loan  Documents and  irrespective  of whether for the payment of money,  whether
direct or indirect,  absolute or contingent,  due or to become due, now existing
or hereafter arising, and including all interest not paid when due and all other
expenses or other  amounts that Loan Parties are required to pay or reimburse by
the Loan Documents or by law or otherwise in connection with the Loan Documents.
Any reference in the Agreement or in the Loan Documents to the Obligations shall
include all or any portion thereof and any extensions, modifications,  renewals,
or alterations thereof, both prior and subsequent to any Insolvency Proceeding.

            "ORIGINAL LSA" has the meaning specified therefor in the Recitals to
this Agreement.

            "OTHER  SUBORDINATED  INDEBTEDNESS" means any Indebtedness (i) which
is expressly  subordinated in right of payment to all Indebtedness  evidenced by
the Working Capital  Indebtedness  and the Term A Indebtedness  and subordinated
to, or pari passu with, the Indebtedness evidenced by this Agreement, (ii) which
does not  mature  prior to the date  that is  six-months  following  the  stated
maturity date for each of the foregoing Indebtedness, whichever is latest, (iii)
which does not contain a cash interest  payment  requirement  and (iv) which has
terms and conditions reasonably acceptable to Lender.

            "OTHER TAXES" has the meaning specified therefor in SECTION 16(B).

            "PARENT" has the meaning  specified  therefor in the preamble to the
Agreement.

            "PARTICIPANT REGISTER" has the meaning specified therefor in SECTION
13.1(F).

            "PATENT SECURITY  AGREEMENT" has the meaning  specified  therefor in
the Security Agreement.

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

            "PERMITTED DISCRETION" means a determination made in the exercise of
reasonable (from the perspective of a secured lender) business judgment.

            "PERMITTED  DISPOSITIONS"  means (a) sales or other  dispositions of
Equipment  that is  substantially  worn,  damaged,  or obsolete in the  ordinary
course of business; PROVIDED that the Net Cash Proceeds from such sales or other

dispositions do not exceed $100,000 in the aggregate during any fiscal year, and
such  Equipment is sold (or otherwise  disposed of) for fair market  value,  (b)
sales of Inventory to buyers in the ordinary course of business,  (c) the use or
transfer of money or Cash  Equivalents in a manner that is not prohibited by the
terms of the Agreement or the other Loan Documents,  and (d) the licensing, on a
non-exclusive basis, of patents, trademarks,  copyrights, and other intellectual
property rights in the ordinary course of business.

            "PERMITTED   HOLDER"  means  Steel   Partners  II,  L.P.  and  its
Affiliates.

            "PERMITTED  INVESTMENTS"  means  (a)  Investments  in cash  and Cash
Equivalents,  (b)  Investments in negotiable  instruments  for  collection,  (c)
advances made in connection  with purchases of goods or services in the ordinary
course of business, and (d) Investments received in settlement of amounts due to
a Loan Party or any Subsidiary of a Loan Party  effected in the ordinary  course
of  business  or owing to a Loan  Party or any  Subsidiary  of a Loan Party as a
result  of  Insolvency  Proceedings  involving  an  Account  Debtor  or upon the
foreclosure  or  enforcement  of  any  Lien  in  favor  of a Loan  Party  or any
Subsidiary of a Loan Party.

            "PERMITTED  KASCO  SALE  TRANSACTION"  means  the sale of all of the
Stock or substantially  all of the assets of Kasco and its Subsidiaries  subject
to satisfaction of the conditions set forth in the Permitted Kasco Sale Letter.

            "PERMITTED KASCO SALE LETTER" means that certain side letter between
Borrowers  and  Senior  Agents,  in form and  substance  satisfactory  to Senior
Agents,  pertaining to the sale of all of the Stock or substantially  all of the
assets of Kasco and its Subsidiaries.

            "PERMITTED  LIENS"  means  (a) Liens  held by  Lender to secure  the
Obligations  (provided  that such  Liens are  subject to the  provisions  of the
Subordination  Agreement),  (b) Liens for unpaid  taxes,  assessments,  or other
governmental  charges or levies that either (i) are not yet delinquent,  or (ii)
do not have priority over the Liens and the underlying  taxes,  assessments,  or
charges or levies are the subject of Permitted Protests, (c) judgment Liens that
do not  constitute an Event of Default under SECTION 7.7 of the  Agreement,  (d)
Liens set forth on SCHEDULE  P-2,  provided  that any such Lien only secures the
Indebtedness   that  it  secures  on  the  Closing  Date  and  any   Refinancing
Indebtedness  in respect  thereof,  (e) the interests of lessors under operating
leases,  (f)  purchase  money Liens or the  interests of lessors  under  Capital
Leases to the extent  that such Liens or  interests  secure  Permitted  Purchase
Money  Indebtedness  and so long as (i) such  Lien  attaches  only to the  asset
purchased or acquired and the proceeds thereof,  and (ii) such Lien only secures
the Indebtedness that was incurred to acquire the asset purchased or acquired or
any Refinancing  Indebtedness in respect thereof, (g) Liens arising by operation
of law in favor of warehousemen,  landlords,  carriers, mechanics,  materialmen,
laborers,  or suppliers,  incurred in the ordinary course of business and not in
connection with the borrowing of money,  and which Liens either (i) are for sums
not yet delinquent,  or (ii) are the subject of Permitted Protests, (h) Liens on
amounts  deposited in connection with obtaining  worker's  compensation or other
unemployment  insurance,  (i) Liens on amounts  deposited in connection with the
making or entering into of bids,  tenders,  or leases in the ordinary  course of
business and not in connection with the borrowing of money, (j) Liens on amounts
deposited as security for surety or appeal bonds in  connection  with  obtaining
such bonds in the ordinary course of business,  (k) (i) with respect to any Real
Property Collateral,  any encumbrance or restriction  contained in Schedule B of
the title insurance  policies for such Real Property which have been approved by
Lenders,   shown  on  the  surveys   listed  on  SCHEDULE   P-3,   encumbrances,
restrictions,  easements,  rights of way,  and zoning  restrictions  that do not
materially  interfere with or impair the use or operation thereof, and (ii) with
respect  to all other  Real  Property,  encumbrances,  restrictions,  easements,
rights of way, and zoning restrictions that do not materially  interfere with or
impair the use or operation thereof,  (l) Liens held by Working Capital Agent to
secure the Working Capital  Indebtedness,  and (m) Liens held by Term A Agent to

secure the Term A Indebtedness.  For the avoidance of doubt and  notwithstanding
anything else to the contrary  contained  herein,  under no circumstances  shall
Permitted  Liens include any Liens imposed under the IRC or ERISA,  or otherwise
that secures any liability or obligation with respect to any Employee Plan.

            "PERMITTED MERGER" means the merger, effective as of April 24, 2007,
of BZ  Acquisition  Corp.,  a Delaware  corporation  and an  affiliate  of Steel
Partners II, L.P. ("BZ"),  with and into Bairnco with Bairnco  continuing as the
surviving entity,  pursuant to that certain Agreement and Plan of Merger,  dated
as of February 23,  2007,  by and among Steel  Partners II, L.P.,  BZ and Baimco
(the "BZ MERGER  AGREEMENT"),  and as assigned by Steel Partners II, L.P. to WHX
pursuant to the Stock  Purchase  Agreement,  dated as of April 12, 2007,  by and
between Steel Partners II, L.P. and WHX.

            "PERMITTED PRIORITY LIENS" means any Permitted Lien that has (and is
permitted to have)  priority  over the Liens in favor of the Lender  pursuant to
any applicable law or agreement.

            "PERMITTED  PROTEST"  means  the  right  of  Parent  or  any  of its
Subsidiaries  to  protest  any  Lien  (other  than  any Lien  that  secures  the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
United States federal tax lien), or rental payment,  provided that (a) a reserve
with  respect  to such  obligation  is  established  on  Parent's  or any of its
Subsidiaries'  books and records in such amount as is required  under GAAP,  (b)
any such protest is instituted  promptly and prosecuted  diligently by Parent or
any of its  Subsidiaries,  as  applicable,  in  good  faith,  and (c)  Agent  is
satisfied that,  while any such protest is pending,  there will be no impairment
of the enforceability, validity, or priority of any of the Agent's Liens.

            "PERMITTED  PURCHASE MONEY  INDEBTEDNESS"  means,  as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate  principal  amount  outstanding  at any  one  time  not in  excess  of
$1,000,000.

            "PERSON"  means natural  persons,  corporations,  limited  liability
companies,  limited  partnerships,   general  partnerships,   limited  liability
partnerships,  joint ventures,  trusts,  land trusts,  business trusts, or other
organizations,  irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.

            "PROTECTIVE  ADVANCES" has the meaning specified therefor in SECTION
2.2(C)(I).

            "PURCHASE MONEY  INDEBTEDNESS"  means  Indebtedness  (other than the
Obligations, but including Capital Lease Obligations),  incurred at the time of,
or within 20 days after,  the acquisition of any fixed assets for the purpose of
financing all or any part of the acquisition cost thereof.

            "QUALIFIED CASH" means, as of any date of determination,  the amount
of unrestricted  cash and Cash  Equivalents of Borrowers and their  Subsidiaries
that is in  Deposit  Accounts  or in  Securities  Accounts,  or any  combination
thereof,  and which such Deposit Account or Securities Account is the subject of
a  Control  Agreement  and is  maintained  by a  branch  office  of the  bank or
securities intermediary located within the United States.

            "QUEBEC  SECURITY  DOCUMENTS" means (i) a Deed of Hypothec and Issue
of Bonds in favour of Lender,  as fonde de  pouvoir  under  Article  2692 of the
Civil Code of Quebec,  to be executed before a notary of the Province of Quebec,
(ii) a bond issued by a Canadian  Obligor  pursuant to such Deed of Hypothec and
Issue of Bonds, and (iii) a pledge agreement to be granted by a Canadian Obligor
in respect of any bond issued under such Deed of Hypothec and Issue of Bonds.

            "RATING  AGENCIES"  has the  meaning  specified  therefor in SECTION
2.14.

            "REAL  PROPERTY" means any estates or interests in real property now
owned or hereafter  acquired by any Loan Party or a Subsidiary of any Loan Party
and the improvements thereto.

            "REAL  PROPERTY  COLLATERAL"  means the Real Property  identified on
SCHEDULE  R-1 and any Real  Property  hereafter  acquired by a Loan Party or any
Subsidiary of a Loan Party.

            "RECORD" means information that is inscribed on a tangible medium or
that  is  stored  in an  electronic  or  other  medium  and  is  retrievable  in
perceivable form.

            "REFERENCE  BANK" means  JPMorgan  Chase Bank, its successors or any
other commercial bank designated by Lender to the  Administrative  Borrower from
time to time.

            "REFINANCING   INDEBTEDNESS"   means  refinancings,   renewals,   or
extensions  of  Indebtedness  so long as: (a) such  refinancings,  renewals,  or
extensions  do  not  result  in an  increase  in  the  principal  amount  of the
Indebtedness  so  refinanced,  renewed,  or  extended,  (b)  such  refinancings,
renewals,  or  extensions do not result in an increase in the cash interest rate
with respect to the Indebtedness so refinanced,  renewed, or extended,  (c) such
refinancings,  renewals,  or  extensions  do not result in a  shortening  of the
average  weighted  maturity  of the  Indebtedness  so  refinanced,  renewed,  or
extended,  nor are they on  terms  or  conditions  that,  taken as a whole,  are
materially  more  burdensome  or  restrictive  to  Loan  Parties,   (d)  if  the
Indebtedness that is refinanced,  renewed, or extended was subordinated in right
of payment to the Obligations, then the terms and conditions of the refinancing,
renewal,  or extension must include  subordination terms and conditions that are
at least as favorable to Lender as those that were applicable to the refinanced,
renewed, or extended Indebtedness,  and (e) the Indebtedness that is refinanced,
renewed,  or extended is not recourse to any Person that is liable on account of
the  Obligations  other than those Persons which were  obligated with respect to
the Indebtedness that was refinanced, renewed, or extended.

            "RELATED  FUND"  means  a fund,  money  market  account,  investment
account or other  account  managed by a Lender or an Affiliate of such Lender or
its investment manager.

            "RELATED  TRANSACTION  DOCUMENTS" means,  collectively,  the Working
Capital Documents and the Term A Debt Documents.

            "REMEDIAL  ACTION" means all actions taken to (a) clean up,  remove,
remediate,  contain,  treat,  monitor,  assess,  evaluate, or in any way address
Hazardous  Materials  in the  indoor or  outdoor  environment,  (b)  prevent  or
minimize a release or threatened  release of Hazardous  Materials so they do not
migrate or endanger or  threaten  to  endanger  public  health or welfare or the
indoor or outdoor  environment,  (c) restore or reclaim natural resources or the
environment,   (d)  perform  any  pre-remedial   studies,   investigations,   or
post-remedial  operation and  maintenance  activities,  or (e) conduct any other
actions with respect to Hazardous Materials authorized by Environmental Laws.

            "REPLACEMENT  LENDER" has the meaning specified  therefor in SECTION
14.2(A).

            "REPORT" has the meaning specified therefor in SECTION 15.16.

            "REPORTABLE  EVENT"  means an event in Section  4043 of ERISA (other
than an event not subject to the  provision  for 30-day notice to the PBGC under
the regulations promulgated under such Section).

            "REQUIRED  LENDERS" means, at any time,  Lenders whose aggregate pro
rata share of the Obligations exceed 50%.

            "SEC" means the United States Securities and Exchange Commission and
any successor thereto.

            "SECURITIES  ACCOUNT"  means a  securities  account (as that term is
defined in the Code).

            "SECURITIZATION" has the meaning specified therefor in SECTION 2.14.

            "SECURITY  AGREEMENT"  means  a  security  agreement,  in  form  and
substance  satisfactory  to Lender,  executed and  delivered  by  Borrowers  and
Guarantors to Lender, as Secured Party.

            "SENIOR  FINANCING  AGREEMENTS"  has the  meaning  set  forth in the
Recitals to this Agreement.

            "SOLVENT"  means,  with respect to any Person on a particular  date,
that, at fair valuations, the sum of such Person's assets is greater than all of
such Person's debts.

            "SPOT RATE" means the prevailing spot rate of exchange of the Lender
(or, if such rate is not available from the Lender, the bank at which the Lender
maintains the Lender's Account) for the purpose of conversion of one currency to
another,  at or around 1:00 p.m. (New York City time),  on the date on which any
such conversion of currency is to be made under this Agreement.

            "S&P" has the meaning  specified  therefor in the definition of Cash
Equivalents.

            "STOCK"   means   all   shares,   options,   warrants,    interests,
participations,  or other equivalents  (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other  "equity  security"  (as such term is  defined  in Rule  3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).

            "SUBORDINATION  AGREEMENT" means an Intercreditor  and Subordination
Agreement  executed and  delivered by Lender,  Term A Agent and Working  Capital
Agent, and acknowledged and consented to by each Borrower and each Guarantor, as
amended, supplemented, restated or otherwise modified from time to time.

            "SUBSIDIARY" of a Person means a corporation,  partnership,  limited
liability  company,  or other entity in which that Person directly or indirectly
owns or controls  the shares of Stock  having  ordinary  voting power to elect a
majority of the board of directors  (or appoint  other  comparable  managers) of
such corporation, partnership, limited liability company, or other entity.

            "TAX PARTY" has the meaning specified therefore in SECTION 4.28.

            "TAXES" has the meaning specified therefor in SECTION 16(A).

            "TERM A AGENT" means the "Agent" as such term is defined in the Term
A Credit  Agreement  and any  Person  acting  in a  similar  capacity  under any
amendment, restatement, supplement, replacement or refinancing thereof.

            "TERM A CREDIT AGREEMENT" means that certain Credit Agreement, dated
as of even date herewith, by and among Parent,  Borrowers, Term A Agent, and the

lenders  from  time to  time  party  thereto,  as  such  is  amended,  modified,
supplemented,  restated,  replaced or refinanced from time to time in accordance
with the terms  thereof,  the  terms of this  Agreement,  and the  Intercreditor
Agreement.

            "TERM A DEBT DOCUMENTS" means the ["Loan Documents"] as such term is
defined  in the Term A  Credit  Agreement  and any  documents,  instruments  and
agreements   entered  into  in  connection   with  any  amendment,   supplement,
restatement,   replacement  or  refinancing   thereof,  as  amended,   modified,
supplemented or restated from time to time in accordance with the terms thereof,
the terms of the Agreement, and the Intercreditor Agreement.

            "TERM A  INDEBTEDNESS"  means the  Indebtedness  incurred  by Parent
under the Term A Debt  Documents  in an aggregate  principal  amount of not less
than   $40,000,00   plus  the  amount  of  interest   accrued  thereon  that  is
paid-in-kind,  minus the aggregate  amount of all repayments and  prepayments of
the principal of the obligations  under the Term A Debt Credit  Agreement (other
than repayments or prepayments of such term loan  obligations in connection with
a Refinancing thereof).

            "TERM A LOAN"  has the  meaning  set forth in the  Recitals  to this
Agreement.

            "TERM LOAN" has the meaning specified therefor in SECTION 2.1.

            "TERM LOAN AMOUNT" means $31,814,319.56..

            "TERMINATION EVENT" means (i) a Reportable Event with respect to any
Employee  Plan,  with respect to which the  reporting  requirement  has not been
waived, (ii) any event that causes any Loan Party or any of its ERISA Affiliates
directly to incur liability under Section 409, 502(i),  502(l), 515, 4062, 4063,
4064,  4069,  4201,  4204 or 4212 of ERISA or  Section  4971 or 4975 of the IRC,
(iii) the filing of a notice of intent to terminate an Employee Plan (other than
in connection with a standard  termination) or the treatment of an Employee Plan
amendment as a termination  under Section 4041 of ERISA, (iv) the institution of
proceedings by the PBGC to terminate an Employee Plan, or (v) any other event or
condition which might reasonably  constitute grounds under Section 4042 of ERISA
for the  termination  of, or the  appointment  of a trustee to  administer,  any
Employee Plan.

            "TRADEMARK SECURITY AGREEMENT" has the meaning specified therefor in
the Security Agreement.

            "TRANSFEREE" has the meaning specified therefor in SECTION 16(A).

            "UNITED STATES" means the United States of America.

            "VOIDABLE  TRANSFER" has the meaning  specified  therefor in SECTION
17.7.

            "WHX" means WHX Corporation, a Delaware Corporation.

            "WORKING  CAPITAL  AGENT"  means  Wells  Fargo  Foothill,   Inc.,  a
California corporation, in its capacity as agent for the Working Capital Lenders
under the Working Capital Credit Agreement.

            "WORKING CAPITAL  AVAILABILITY" means "Availability" as such term in
defined in the Working Capital Credit Agreement.

            "WORKING  CAPITAL  CREDIT   AGREEMENT"  means  that  certain  Credit
Agreement  dated as of even date  herewith  by and among the Loan  Parties,  the
Working  Capital  Lenders,  and the  Working  Capital  Agent as such is amended,
modified,  supplemented,  restated, refinanced, renewed or replaced from time to

time in accordance  with the terms  thereof and the terms of this  Agreement and
the Intercreditor Agreement.

            "WORKING  CAPITAL   DOCUMENTS"  means  the  Working  Capital  Credit
Agreement and each other agreement, instrument or document executed or delivered
pursuant to or in connection with the Working Capital Credit Agreement,  as such
documents are amended, modified,  supplemented, or restated from time to time in
accordance with the terms of this Agreement and the Intercreditor Agreement.

            "WORKING CAPITAL  INDEBTEDNESS"  means the Indebtedness  incurred by
the Loan Parties under the Working Capital Credit Agreement.

            "WORKING  CAPITAL LENDERS" means the lenders from time to time party
to the Working Capital Credit Agreement.

                                  SCHEDULE 3.1

      The  obligation of the Lender to refinance the Term Loan is subject to the
fulfillment,  to the satisfaction of Lender, of each of the following conditions
precedent:

            (a) the Closing Date shall occur on or before [July __, 2007];

            (b) Lender  shall  have  received  a letter  duly  executed  by each
Borrower and each  Guarantor  authorizing  Agent to file  appropriate  financing
statements  in such office or offices as may be necessary  or, in the opinion of
Lender,  desirable to perfect the  security  interests to be created by the Loan
Documents;

            (c) Lender shall have received  evidence that appropriate  financing
statements  have been duly filed in such  office or offices as may be  necessary
or, in the  opinion of  Lender,  desirable  to  perfect  the Liens in and to the
Collateral, and Lender shall have received searches reflecting the filing of all
such financing statements;

            (d) Lender shall have received each of the following  documents,  in
form and substance satisfactory to Lender, duly executed, and each such document
shall be in full force and effect:

                       (i) the Copyright Security Agreement,

                      (ii) a  disbursement  letter  executed  and  delivered  by
Borrowers  to Lender,  Term A Agent and  Working  Capital  Agent  regarding  the
extensions  of credit and the  repayment  of the amounts  outstanding  under the
Original LSA to be made on the Closing Date,  the form and substance of which is
satisfactory to Lender,

                     (iii) the Guaranty,

                      (iv) the Intercreditor and Subordination Agreement,

                       (v) the Mortgages,

                      (vi) the Patent Security Agreement,

                     (vii) the Canadian Security Agreement,

                    (viii) the Canadian Guaranty,

                      (ix) the Hypothec,

                       (x) a  letter,  in form  and  substance  satisfactory  to
Lender,  from Bank of America,  N.A. ("EXISTING LENDER") to Agent respecting the
amount  necessary  to repay in full all of the  obligations  of Loan Parties and
their  Subsidiaries  owing to Existing Lender and obtain a release of all of the
Liens existing in favor of Existing  Lender in and to the assets of Loan Parties
and  their  Subsidiaries,   together  with  termination   statements  and  other
documentation  evidencing the termination by Existing Lender of its Liens in and
to the properties and assets of Loan Parties and their Subsidiaries.

                      (xi) the Security Agreement,  [together with copies of all
certificates  representing  the  shares of Stock that are  delivered  to Working

                                      -1-

Capital Agent as Collateral under the Working Capital Credit Agreement], as well
as Stock powers and allonges with respect thereto endorsed in blank,

                     (xii) the Trademark Security Agreement, and

                    (xiii) the  Collateral  Assignment of each  Approved  Policy
with  respect  to  Eligible  Foreign  Accounts  (as each term is  defined in the
Working Capital Credit Agreement).

            (e) Lender shall have received a  certificate  from the Secretary of
each  Borrower (i)  attesting to the  resolutions  of such  Borrower's  Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which such Borrower is a party, (ii) authorizing
specific  officers of such Borrower to execute the same, and (iii)  attesting to
the incumbency and signatures of such specific officers of such Borrower;

            (e) Lender shall have received copies of each  Borrower's  Governing
Documents, as amended,  modified, or supplemented to the Closing Date, certified
by the Secretary of such Borrower;

            (f) Lender shall have received a certificate  of status with respect
to each Borrower,  dated within 10 days of the Closing Date, such certificate to
be issued by the appropriate officer of the jurisdiction of organization of such
Borrower,  which  certificate  shall  indicate  that  such  Borrower  is in good
standing in such jurisdiction;

            (g) Lender shall have received  certificates  of status with respect
to  each  Borrower,  each  dated  within  30  days  of the  Closing  Date,  such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Borrower) in which (i) its failure
to be duly qualified or licensed  would  constitute a Material  Adverse  Change,
which certificates shall indicate that such Borrower is in good standing in such
jurisdictions, and (ii) it maintains any Collateral;

            (h) Lender shall have received a  certificate  from the Secretary of
each  Guarantor (i) attesting to the  resolutions of such  Guarantor's  Board of
Directors  authorizing  its  execution,  delivery,  and  performance of the Loan
Documents to which such Guarantor is a party, (ii) authorizing specific officers
of such Guarantor to execute the same and (iii)  attesting to the incumbency and
signatures of such specific officers of Guarantor;

            (i) Lender shall have received copies of each Guarantor's  Governing
Documents, as amended,  modified, or supplemented to the Closing Date, certified
by the Secretary of such Guarantor;

            (j) Lender shall have received a certificate  of status with respect
to each Guarantor, dated within 10 days of the Closing Date, such certificate to
be issued by the appropriate officer of the jurisdiction of organization of such
Guarantor,  which  certificate  shall  indicate  that such  Guarantor is in good
standing in such jurisdiction;

            (k) Lender shall have received  certificates  of status with respect
to  each  Guarantor,  each  dated  within  30  days of the  Closing  Date,  such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the  jurisdiction  of  organization  of such  Guarantor)  in which  (i) its
failure to be duly  qualified or licensed  would  constitute a Material  Adverse
Change, which certificates shall indicate that such Borrower is in good standing
in such jurisdictions, and (ii) it maintains any Collateral;

                                      -2-

            (l) Lender shall have received a certificate of insurance,  together
with the  endorsements  thereto,  as are  required by SECTION  5.8, the form and
substance of which shall be satisfactory to Agent;

            (m) Lender shall have received  Collateral  Access  Agreements  with
respect to the  following  locations:  [Lake  Mary,  Florida;  Dallas,  Texas (2
locations); San Antonio, Texas (2 locations);  Santa Ana, California;  Montreal,
Canada; ];

            (n) Lender shall have received shall have received Collateral Access
Agreement with respect to 21800 South Cicero, Matteson, Illinois;

            (o) Lender shall have received an opinion of Loan  Parties'  counsel
under New  York,  Delaware,  Texas  and  Canadian  laws,  in form and  substance
satisfactory to Lender;

            (p) Lender shall have received  evidence  that the Canadian  Obligor
has  appointed  an agent in New York City for the  purpose of service of process
and such agent  agrees in writing to give Lender  notice of any  resignation  of
such service agent or other termination of agency;

            (q)  Borrowers  shall  have paid all  Lender  Expenses  incurred  in
connection with the transactions evidenced by this Agreement;

            (r) Lender shall have  received (i)  appraisals of the Real Property
Collateral  satisfactory to Lender,  and (ii) mortgagee title insurance policies
(or  marked  commitments  to issue the same)  for the Real  Property  Collateral
issued by a title  insurance  company  satisfactory  to Agent  (each a "MORTGAGE
POLICY" and,  collectively,  the "MORTGAGE POLICIES") in amounts satisfactory to
Lender assuring  Lender that the Mortgages on such Real Property  Collateral are
valid and  enforceable  first  priority  mortgage  Liens  (subject to  Permitted
Priority  Liens) on such Real Property  Collateral free and clear of all defects
and encumbrances  except Permitted  Liens, and the Mortgage  Policies  otherwise
shall be in form and substance satisfactory to Agent;

            (s) Lender shall have received copies of each of the Working Capital
Documents,  and the Term A Debt  Documents,  together with a certificate  of the
Secretary  of the  Parent  certifying  that (i) each  such  document  is a true,
correct, and complete copy thereof, (ii) each such document is in full force and
effect,  and (iii) none of the Loan  Parties has breached or defaulted in any of
its obligations thereunder;

            (t) Loan Parties and each of their  Subsidiaries shall have received
all  licenses,   approvals  or  evidence  of  other  actions   required  by  any
Governmental  Authority in  connection  with the  execution and delivery by Loan
Parties or their  Subsidiaries of the Loan Documents or with the consummation of
the transactions contemplated thereby;

            (u) Lender  shall have  determined,  in its sole  judgment,  that no
event or development  shall have occurred  since December 31, 2006,  which could
reasonably  be  expected to have a Material  Adverse  Effect  provided  that the
transactions  contemplated  by  this  Agreement  and  the  transactions  made in
connection  with the Permitted  Merger shall not  constitute a Material  Adverse
Effect

            (v) All consents,  authorizations  and approvals of, and filings and
registrations  with,  and all other  actions  in respect  of,  any  Governmental
Authority or other  Person  required in  connection  with the making of the Term

                                      -3-

Loan, the  consummation  of any of the  transactions  contemplated by any of the
Related  Transaction  Documents,  or the conduct of the Loan  Parties'  business
shall have been obtained and shall be in full force and effect; and

            (w) all other  documents and legal  matters in  connection  with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Lender.

            (x) To the extent that any of the closing  documents  referenced  in
this Schedule 3.1 are  duplicative  of closing  documents to be delivered by any
Loan  Party  pursuant  to the  Working  Capital  Documents  or  the  Term A Debt
Documents,  the  parties  shall  endeavor to satisfy  the  requirements  of this
Schedule 3.1 through  delivery of the applicable  Working  Capital  Documents or
Term A Debt  Documents,  as  applicable,  together  with a letter  from the Loan
Parties  authorizing  Lender to rely on any  document so delivered as if it were
addressed directly to Lender.

                                      -4-

                                  SCHEDULE 5.2

      THE TERM "AGENT" IN THIS  SCHEDULE  5.2 SHALL MEAN  "LENDER" AND ALL OTHER
TERMS USED IN THIS SCHEDULE 5.2 AND NOT OTHERWISE  DEFINED HEREIN SHALL HAVE THE
MEANINGS ASCRIBED TO SUCH TERMS IN THE SENIOR FINANCING AGREEMENTS.

      Provide Agent (and if so requested by Agent,  with copies for each Lender)
with  each of the  documents  set  forth  below at the  following  times in form
satisfactory to Agent:

================================================================================
Daily           (a) an Account  roll-forward  with supporting  details  supplied
                from sales journals,  collection journals,  credit registers and
                any other records,

                (b) notice of all  claims,  offsets,  or  disputes  asserted  by
                Account   Debtors  with  respect  to  Loan  Parties'  and  their
                Subsidiaries' Accounts, and

                (c) copies of invoices together with corresponding  shipping and
                delivery documents, and credit memos together with corresponding
                supporting  documentation,  with  respect to invoices and credit
                memos in excess of an amount  determined in the sole  discretion
                of Agent, from time to time.
--------------------------------------------------------------------------------
Weekly          (d) Inventory  system/perpetual  reports specifying the cost and
                the   wholesale   market  value  of  Loan   Parties'  and  their
                Subsidiaries'  Inventory,  by category  (i.e.,  finished  goods,
                work-in-process  or  raw  materials),   with  additional  detail
                showing   additions  to  and  deletions   therefrom   (delivered
                electronically  in an  acceptable  format,  if Loan Parties have
                implemented electronic reporting); and

                (e) a detailed reporting of Loan Parties' and their Subsidiaries
                intercompany activity.
--------------------------------------------------------------------------------
Monthly (no     (f) a Working  Capital  Borrowing Base  Certificate,
later than the
15th day of     (g) a detailed aging, by total, of Borrowers' Accounts, together
each month)     with a  reconciliation  and  supporting  documentation  for  any
                reconciling   items  noted  (delivered   electronically   in  an
                acceptable  format,  if Borrowers  have  implemented  electronic
                reporting),

                (h) a  detailed  calculation  of  those  Accounts  that  are not
                eligible for the Working  Capital  Borrowing  Base, if Borrowers
                have not implemented electronic reporting,
--------------------------------------------------------------------------------

                                      -5-

                (i) a detailed Inventory system/perpetual report together with a
                reconciliation to Borrowers' general ledger accounts  (delivered
                electronically  in  an  acceptable  format,  if  Borrowers  have
                implemented electronic reporting),

                (j) a detailed  calculation of Inventory categories that are not
                eligible for the Working  Capital  Borrowing  Base, if Borrowers
                have not implemented electronic reporting,

                (k) a summary  aging,  by  vendor,  of Loan  Parties'  and their
                Subsidiaries'   accounts   payable   and  any  book   overdrafts
                (delivered  electronically in an acceptable format, if Borrowers
                have implemented electronic reporting),  an aging, by vendor, of
                any held checks and detailed listing of all accrued expenses,

                (l)  a  detailed  report   regarding  Loan  Parties'  and  their
                Subsidiaries' cash and Cash Equivalents, including an indication
                of which amounts constitute Qualified Cash,

                (m) a monthly Account  roll-forward,  in a format  acceptable to
                Agent  in its  discretion,  tied  to the  beginning  and  ending
                account receivable balances of Borrowers' general ledgers; and

                (n) a detailed report of all slow moving and obsolete Inventory.
--------------------------------------------------------------------------------
Monthly (no     (o) a reconciliation of Accounts,  trade accounts  payable,  and
later than the  Inventory  of Loan  Parties'  general  ledger  accounts to their
30th day of     monthly financial statements including any book reserves related
each month)     to each category;

                (p) a report  regarding  Loan  Parties' and their  Subsidiaries'
                accrued,  but  unpaid,  taxes  including,   without  limitation,
                property  taxes,  real estate taxes,  ad valorem  taxes,  income
                taxes,   payroll  taxes  and  withholding   taxes  (Canadian  or
                otherwise);  together  with proof of payment of such  applicable
                taxes;

                (q) a  detailed  report by  customer  of all  deferred  revenue,
                together  with a  reconciliation  of such  deferred  revenue  to
                Parent's   general   ledger   accounts  and  monthly   financial
                statements; and

                (r) a detailed reporting of any deemed dividend tax liability.
--------------------------------------------------------------------------------
Semi-Annual     (s)  inventory  appraisal,   which  shall  be  conducted  by  an
                appraiser, and in form and substance satisfactory to Agent.
--------------------------------------------------------------------------------
Annually        (t) a  detailed  list  of  Borrowers'  and  their  Subsidiaries'
                customers, with address and contact information;

                (u) machinery and equipment appraisal,  which shall be conducted
                by an  appraiser,  and in form  and  substance  satisfactory  to
                Agent; and

                (v) real  estate  appraisals,  which  shall be  conducted  by an
                appraiser, and in form and substance satisfactory to Agent.
--------------------------------------------------------------------------------
Upon request    (w) copies of purchase  orders and invoices for Inventory and by
                Agent Equipment acquired by Borrowers or their Subsidiaries, and

                (x) such other  reports as to the  Collateral  or the  financial
                condition of Loan Parties and their  Subsidiaries,  as Agent may
                reasonably request.
================================================================================

                                      -6-

                                  SCHEDULE 5.3

THE TERM "AGENT" IN THIS  SCHEDULE  5.3 SHALL MEAN  "LENDER" AND ALL OTHER TERMS
USED IN THIS  SCHEDULE  5.3 AND NOT  OTHERWISE  DEFINED  HEREIN  SHALL  HAVE THE
MEANINGS ASCRIBED TO SUCH TERMS IN THE SENIOR FINANCING AGREEMENTS.

      Deliver  to Agent,  with  copies  to each  Lender,  each of the  financial
statements,  reports,  or other items set forth set forth below at the following
times in form satisfactory to Agent:

================================================================================

as soon as available, but      (a) an unaudited  consolidated and  consolidating
in any event within 30         balance sheet, income statement, and statement of
days (45 days in the case      cash flow covering Parent's and its Subsidiaries'
of a month that is the         operations during such period, and
end of one of Parent's
fiscal quarters) after         (b) a Compliance Certificate.
the end of each month
during each of Parent's
fiscal years

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

as soon as but in any          (c) audited consolidated  financial statements of
event within 120 days          WHX and available, its Subsidiaries (such audited
after the end of each of       financial  statements to include  balance sheets,
WHX's fiscal years             statements of income and loss, statements of cash
                               flow and statements of shareholders'  equity) and
                               unaudited  consolidating  financial statements of
                               WHX  and its  Subsidiaries  (to  include  balance
                               sheets and  statements  of income and loss),  and
                               the accompanying notes thereto, all in reasonable
                               detail,   fairly   presenting   in  all  material
                               respects the  financial  position and the results
                               of the operations of WHX and its  Subsidiaries as
                               of the end of and for such fiscal year,  together
                               with the  unqualified  opinion (for the avoidance
                               of   doubt,   which   shall   not   include   any
                               qualification  related to (A) "going  concern" or
                               like    qualification    or    exception,     (B)
                               qualification  or  exception  as to the  scope of
                               such audit, or (C) qualification which relates to
                               the treatment or  classification  of any item and
                               which,  as a  condition  to the  removal  of such
                               qualification,  would  require an  adjustment  to
                               such item,  the effect of which would be to cause
                               any noncompliance  with the provisions of Section
                               6.18) with  respect to the  audited  consolidated
                               financial statements,  which accountants shall be
                               an  independent  accounting  firm selected by WHX
                               and  acceptable  to  Agent,   that  such  audited
                               consolidated   financial   statements  have  been
                               prepared  in  accordance  with GAAP,  and present
                               fairly in all  material  respects  the results of
                               operations and financial condition of WHX and its
                               Subsidiaries  as of the end of and for the fiscal
                               year then ended, and

                               (d) a Compliance Certificate.

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

as soon as available, but      (e) copies of Parent's  Projections,  in form and
in any event within 30         substance  (including as to scope and  underlying
days after the start of        assumptions)   satisfactory   to  Agent,  in  its
each of Parent's fiscal        Permitted  Discretion,   for  the  forthcoming  3
years,                         years,  year by  year,  and  for the  forthcoming
                               fiscal  year,  month by month,  certified  by the
                               chief  financial  officer of Parent as being such
                               officer's  good faith  estimate of the  financial
                               performance  of Parent during the period  covered
                               thereby.

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

                                      -1-

if and when filed by any       (f) Form 10-Q quarterly reports, Form 10-K annual
Loan Party,                    reports,  and Form 8-K current  reports,

                               (g) any other filings made by any Loan Party with
                               the SEC, and

                               (h) any other  information  that is  provided  by
                               Parent to its shareholders generally.

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

promptly, but in any           (i)  notice  of such  event  or  condition  and a
event within 5 Business        statement of the curative  action that  Borrowers
Days after a Loan              proposes to take with respect thereto.
Partyhas knowledge of any
event or condition that
constitutes a Default or
an Event of Default,

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

promptly after the             (j) notice of all actions,  suits, or proceedings
commencement thereof, but      brought  by or  against  any  Loan  Party  or any
in event within 5              Subsidiary   of   a   Loan   Party   before   any
Business Days after the        Governmental Authority which reasonably any could
service of process with        be  expected  to  result  in a  Material  Adverse
respect thereto on any         Change.
Loan Party or any
Subsidiary of a Loan
Party,

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

as soon as possible and        (k) a statement of an  Authorized  Officer of the
in any event within 5          applicable  Loan Party  setting forth the details
Business Days after any        of such occurrence and the action,  if any, which
Loan Party or any ERISA        such Loan Party or such ERISA Affiliate  proposes
Affiliate thereof knows        to take with respect thereto.
or has reason to know
that (1) any Reportable        For  purposes  hereof,  "Reportable  Event" shall
Event with respect to any      mean an event  described in Section 4043 of ERISA
Employee Plan has              (other than an event not subject to the provision
occurred, (2) any other        for   30-day   notice  to  the  PBGC   under  the
Termination Event with         regulations promulgated under such Section).
respect to any Employee
Plan has occurred, or (3)
an accumulated funding
deficiency has been
incurred or an
application has been made
to the Secretary of the
Treasury for a waiver or
modification of the
minimum funding standard

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

                                       -2-

--------------------------------------------------------------------------------
(including installment
payments) or an extension
of any amortization
period under Section 412
of the IRC with respect
to an Employee Plan,

--------------------------------------------------------------------------------
promptly and in any event      (l) copies of each  notice  received  by any Loan
within 5 Business Days         Party  or  any  ERISA  Affiliate  thereof  of the
after receipt thereof by       PBGC's intention to terminate any Plan or to have
any Loan Party or any          a trustee appointed to administer any Plan.
ERISA Affiliate thereof
from the PBGC,

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

promptly and in any event      (m)  copies  of  each   Schedule   B   (Actuarial
within 10 Business Days        Information)  to the  annual  report  (Form  5500
after the filing thereof       Series)  with respect to each  Employee  Plan and
with the Internal Revenue      Multiemployer Plan.
Service,

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

promptly and inany event       (n)  notice  of such  event  or  condition  and a
within 10 Business Days        statement of the curative  action that  Borrowers
after any Loan Party or        proposes to take with respect thereto.
any ERISA Affiliate
thereof knows or has
reason to know that a
required installment
within the meaning of
Section 412 of the IRC
has not been made when
due with respect to an
Employee Plan,

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promptly and in any event      (o) a copy of each  notice  received  by any Loan
within 3 Business Days         Party or any ERISA Affiliate  thereof  concerning
after receipt thereof by       the imposition or amount of withdrawal  liability
any Loan Party or any          under  Section 4202 of ERISA or  indicating  that
ERISA Affiliate thereof        such Multiemployer Plan may enter  reorganization
from a sponsor of a            status under Section 4241 of ERISA.
Multiemployer Plan or
from the PBGC,

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                                      -3-

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promptly and in any event      (p) copies of each such notice sent by such Loan
within 10 Business Days        Party or such ERISA Affiliate thereof.
after any Loan Party or any
ERISA Affiliate thereof
sends notice of a plant
closing or mass layoff (as
defined in Worker
Adjustment and Retraining
Notification Act) to
employees,

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promptly and in any event      (q) evidence, in form and substance  satisfactory
within 5 Business Days         to Agent,  that such payment or contribution  has
after the due date for         been made.
any payment or
contribution which was
not paid, but required of
any Loan Party or any
ERISA Affiliate thereof
with respect to any
Employee Plan,

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promptly and in any event      (r) strike, labor dispute, slowdown,  stoppage or
within 5 Business Days         similar  action or grievance  against  against or
after any Loan Party has       involving  any  Loan  Party  if  the  same  could
knowledge of any,              reasonably  be  expected  to  result  in,  either
                               individually  or in  the  aggregate,  a  Material
                               Adverse Change.

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promptly and in any event      (s)   amendment,    termination,    modification,
within 5 Business Days         alteration,  increase,  or change to any Material
after any Loan Party has       Contract if the same could reasonably be expected
knowledge of any,              to result in a Material Adverse Change.

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upon the request of            (t)any  other  information  reasonably  requested
Agent,                         relating to the financial  condition of Borrowers
                               or their Subsidiaries.

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

                                      -4-

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