Document:

Exhibit 10.67

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                                   $30,600,000
                                 SENIOR SECURED
                       SUPER PRIORITY DEBTOR-IN-POSSESSION
                           LOAN AND SECURITY AGREEMENT

                            Dated as of April 7, 2000

                                  By and Among

                      Safety components international, inc.

                                       and

                        CERTAIN SUBSIDIARIES PARTY HERETO
                                  AS BORROWERS

                          (collectively, the Borrowers)

                                       and

                     THE Subsidiary Guarantors PARTY HERETO

                         (collectively, the Guarantors)

                                       and

                        THE FINANCIAL INSTITUTIONS PARTY
                            HERETO FROM TIME TO TIME

                                  (the Lenders)

                                       and

                              BANK OF AMERICA, N.A.

                                   (the Agent)

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                              TABLE OF CONTENTS(1)

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<S>      <C>                                                                                             <C>
ARTICLE 1     DEFINITIONS..................................................................................2

         SECTION 1.1.    Definitions.......................................................................2

         SECTION 1.2.    General..........................................................................30

ARTICLE 2     REVOLVING LOAN FACILITY AND TERM LOAN FACILITY..............................................30

         SECTION 2.1.    Revolving Loans..................................................................30

         SECTION 2.2.    Manner of Borrowing Revolving Loans..............................................31

         SECTION 2.3.    Repayment of Revolving Loans.....................................................32

         SECTION 2.4.    Revolving Loan Note..............................................................33

         SECTION 2.5.    Term Loans.......................................................................34

         SECTION 2.6.    Manner of Borrowing Term Loans...................................................34

         SECTION 2.7.    Repayment of Term Loans..........................................................34

         SECTION 2.8.    Term Loan Note...................................................................34

ARTICLE 3     LETTER OF CREDIT FACILITY...................................................................34

         SECTION 3.1.    Agreement to Issue...............................................................34

         SECTION 3.2.    Amounts..........................................................................35

         SECTION 3.3.    Conditions.......................................................................35

         SECTION 3.4.    Issuance of Letters of Credit....................................................35

         SECTION 3.5.    Duties of the Issuing Bank.......................................................36

         SECTION 3.6.    Payment of Reimbursement Obligations.............................................36

         SECTION 3.7.    Participations...................................................................36

         SECTION 3.8.    Indemnification, Exoneration.....................................................38

         SECTION 3.9.    Supporting Letter of Credit; Cash Collateral.....................................38

         SECTION 3.10.   Letters of Credit under Pre-Petition Loan Agreement..............................39

ARTICLE 4     GENERAL LOAN PROVISIONS.....................................................................40

         SECTION 4.1.    Interest.........................................................................40

         SECTION 4.2.    Certain Fees.....................................................................41

         SECTION 4.3.    Manner of Payment................................................................42

         SECTION 4.4.    General..........................................................................43
</TABLE>

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(1)  This Table of Contents is included for reference purposes only and does not
     constitute part of the Loan and Security Agreement.

                                       i
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<S>      <C>                                                                                             <C>
         SECTION 4.5.    Loan Accounts; Statements of Account.............................................43

         SECTION 4.6.    Termination of Agreement.........................................................43

         SECTION 4.7.    Making of Loans..................................................................44

         SECTION 4.8.    Settlement Among Lenders.........................................................46

         SECTION 4.9.    Mandatory Prepayments............................................................49

         SECTION 4.10.   Payments Not at End of Interest Period; Failure to Borrow........................50

         SECTION 4.11.   Assumptions Concerning Funding of LIBOR Loans....................................50

         SECTION 4.12.   Notice of Conversion or Continuation.............................................50

         SECTION 4.13.   Conversion or Continuation.......................................................51

         SECTION 4.14.   Maximum Number of LIBOR Loans; Minimum Increments................................51

         SECTION 4.15.   Changed Circumstances............................................................51

         SECTION 4.16.   Cash Collateral Account..........................................................53

         SECTION 4.17.   Borrowers' Agent.................................................................54

         SECTION 4.18.   Joint and Several Liability......................................................54

         SECTION 4.19.   Obligations Absolute.............................................................54

         SECTION 4.20.   Waiver of Suretyship Defenses....................................................55

         SECTION 4.21.   Superpriority Nature of Secured Obligations......................................55

ARTICLE 5     CONDITIONS PRECEDENT........................................................................56

         SECTION 5.1.    Conditions Precedent to Loans and Letters of Credit..............................56

         SECTION 5.2.    All Loans; Letters of Credit.....................................................59

         SECTION 5.3.    Conditions as Covenants..........................................................60

ARTICLE 6     REPRESENTATIONS AND WARRANTIES..............................................................60

         SECTION 6.1.    Representations and Warranties...................................................60

         SECTION 6.2.    Survival of Representations and Warranties, Etc..................................69

ARTICLE 7     SECURITY INTEREST...........................................................................69

         SECTION 7.1.    Security Interest................................................................69

         SECTION 7.2.    Continued Priority of Security Interest..........................................70

ARTICLE 8     COLLATERAL COVENANTS........................................................................71

         SECTION 8.1.    Collection of Receivables........................................................71

         SECTION 8.2.    Verification and Notification....................................................72

         SECTION 8.3.    Disputes, Returns and Adjustments................................................72

         SECTION 8.4.    Invoices.........................................................................73
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<S>      <C>                                                                                             <C>
         SECTION 8.5.    Delivery of Instruments..........................................................73

         SECTION 8.6.    Sales of Inventory...............................................................73

         SECTION 8.7.    Ownership and Defense of Title...................................................73

         SECTION 8.8.    Insurance........................................................................73

         SECTION 8.9.    Location of Offices and Collateral...............................................74

         SECTION 8.10.   Records Relating to Collateral...................................................74

         SECTION 8.11.   Inspection.......................................................................75

         SECTION 8.12.   Information and Reports..........................................................75

         SECTION 8.13.   Power of Attorney................................................................76

         SECTION 8.14.   Assignment of Claims Act.........................................................76

ARTICLE 9     AFFIRMATIVE COVENANTS.......................................................................76

         SECTION 9.1.    Preservation of Corporate Existence and Similar Matters..........................77

         SECTION 9.2.    Compliance with Applicable Law...................................................77

         SECTION 9.3.    Maintenance of Property..........................................................77

         SECTION 9.4.    Conduct of Business..............................................................77

         SECTION 9.5.    Insurance........................................................................77

         SECTION 9.6.    Payment of Taxes and Claims......................................................77

         SECTION 9.7.    Accounting Methods and Financial Records.........................................77

         SECTION 9.8.    Use of Proceeds..................................................................77

         SECTION 9.9.    Hazardous Waste and Substances; Environmental Requirements.......................78

         SECTION 9.10.   Indenture Trustees...............................................................79

         SECTION 9.11.   Post Closing Deliveries..........................................................79

ARTICLE 10    INFORMATION.................................................................................79

         SECTION 10.1.   Financial Statements.............................................................79

         SECTION 10.2.   Accountants' Certificate.........................................................80

         SECTION 10.3.   Officer's Certificate............................................................80

         SECTION 10.4.   Copies of Other Reports..........................................................80

         SECTION 10.5.   Notice of Litigation and Other Matters...........................................81

         SECTION 10.6.   ERISA............................................................................81

         SECTION 10.7.   Accuracy of Information..........................................................82

         SECTION 10.8.   Revisions or Updates to Schedules................................................82
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<S>      <C>                                                                                             <C>
ARTICLE 11    NEGATIVE COVENANTS..........................................................................82

         SECTION 11.1.   Financial Ratios.................................................................82

         SECTION 11.2.   Indebtedness for Money Borrowed..................................................82

         SECTION 11.3.   Guaranties.......................................................................83

         SECTION 11.4.   Investments......................................................................83

         SECTION 11.5.   Capital Expenditures.............................................................83

         SECTION 11.6.   Restricted Dividend Payments and Purchases, Etc..................................83

         SECTION 11.7.   Merger, Consolidation and Sale of Assets.........................................83

         SECTION 11.8.   Transactions with Affiliates.....................................................83

         SECTION 11.9.   Liens............................................................................83

         SECTION 11.10.  Capitalized Lease Obligations....................................................83

         SECTION 11.11.  Operating Leases.................................................................83

         SECTION 11.12.  Limitation on Certain Restrictions on Subsidiaries...............................84

         SECTION 11.13.  Plans............................................................................84

         SECTION 11.14.  Sales and Leasebacks.............................................................84

         SECTION 11.15.  Amendments of Other Agreements...................................................84

         SECTION 11.16.  Fiscal Year......................................................................84

         SECTION 11.17.  Repayments.......................................................................84

ARTICLE 12    DEFAULT.....................................................................................84

         SECTION 12.1.   Events of Default................................................................84

         SECTION 12.2.   Remedies.........................................................................88

         SECTION 12.3.   Application of Proceeds..........................................................90

         SECTION 12.4.   Power of Attorney................................................................90

         SECTION 12.5.   Miscellaneous Provisions Concerning Remedies.....................................91

ARTICLE 13    ASSIGNMENTS.................................................................................91

         SECTION 13.1.   Successors and Assigns; Participations...........................................91

         SECTION 13.2.   Representation of Lenders........................................................94

ARTICLE 14    AGENT.......................................................................................94

         SECTION 14.1.   Appointment of Agent.............................................................94

         SECTION 14.2.   Delegation of Duties.............................................................95

         SECTION 14.3.   Exculpatory Provisions...........................................................95

         SECTION 14.4.   Reliance by Agent................................................................95
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<S>      <C>                                                                                             <C>
         SECTION 14.5.   Notice of Default................................................................96

         SECTION 14.6.   Non-Reliance on Agent and Other Lenders..........................................96

         SECTION 14.7.   Indemnification..................................................................96

         SECTION 14.8.   Agent in Its Individual Capacity.................................................97

         SECTION 14.9.   Successor Agent..................................................................97

         SECTION 14.10.  Notices from Agent to Lenders....................................................97

         SECTION 14.11.  Field Examination Reports; Disclaimer by Lenders.................................97

ARTICLE 15    GUARANTEE...................................................................................98

         SECTION 15.1.   Guarantee........................................................................98

         SECTION 15.2.   Obligations Unconditional........................................................98

         SECTION 15.3.   Waiver of Suretyship Defenses....................................................98

         SECTION 15.4.   Reinstatement....................................................................99

         SECTION 15.5.   Remedies.........................................................................99

         SECTION 15.6.   Continuing Guaranty..............................................................99

ARTICLE 16    MISCELLANEOUS...............................................................................99

         SECTION 16.1.   Notices..........................................................................99

         SECTION 16.2.   Expenses........................................................................100

         SECTION 16.3.   Stamp and Other Taxes...........................................................101

         SECTION 16.4.   Setoff..........................................................................101

         SECTION 16.5.   Litigation......................................................................102

         SECTION 16.6.   Waiver of Rights................................................................102

         SECTION 16.7.   Consent to Advertising and Publicity............................................103

         SECTION 16.8.   Reversal of Payments............................................................103

         SECTION 16.9.   Injunctive Relief...............................................................103

         SECTION 16.10.  Accounting Matters..............................................................103

         SECTION 16.11.  Amendments......................................................................103

         SECTION 16.12.  Assignment......................................................................105

         SECTION 16.13.  Performance of Obligors' Duties.................................................105

         SECTION 16.14.  Indemnification.................................................................105

         SECTION 16.15.  All Powers Coupled with Interest................................................105

         SECTION 16.16.  Survival........................................................................105

         SECTION 16.17.  Titles and Captions.............................................................106
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<S>      <C>                                                                                             <C>
         SECTION 16.18.  Severability of Provisions......................................................106

         SECTION 16.19.  Governing Law...................................................................106

         SECTION 16.20.  Counterparts....................................................................106

         SECTION 16.21.  Reproduction of Documents.......................................................106

         SECTION 16.22.  Term of Agreement...............................................................106

         SECTION 16.23.  Contribution and Indemnification among the Obligors.............................106

         SECTION 16.24.  Restrictions on Actions by Lenders; Sharing of Payments.........................107

         SECTION 16.25.  Agency for Perfection...........................................................107

         SECTION 16.26.  Taxes...........................................................................108

         SECTION 16.27.  Final Agreement.................................................................108

         SECTION 16.28.  Waiver of Consequential Damages, Etc............................................108
</TABLE>

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                             EXHIBITS AND SCHEDULES

EXHIBIT A            FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT B            FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C-1          FORM OF REVOLVING LOAN NOTE
EXHIBIT C-2          FORM OF TERM LOAN NOTE
EXHIBIT D            FORM OF SETTLEMENT REPORT
EXHIBIT E            [RESERVED]
EXHIBIT F            FORM OF COMPLIANCE CERTIFICATE

Schedule C-1         Commitments
Schedule P-1         Projections
Schedule S-1         Senior Claims
Schedule 3.10        Outstanding Letters of Credit
Schedule 5.1(m)      First Day Orders
Schedule 6.1(a)      Organization
Schedule 6.1(b)      Capitalization
Schedule 6.1(c)      Subsidiaries
Schedule 6.1(e)      Compliance with Laws
Schedule 6.1(f)      Principal Business
Schedule 6.1(g)      Governmental Approvals
Schedule 6.1(h)      Title to Properties
Schedule 6.1(i)      Liens
Schedule 6.1(j)      Indebtedness and Guaranties
Schedule 6.1(k)      Litigation
Schedule 6.1(l)      Tax Matters
Schedule 6.1(n)      Material Liabilities
Schedule 6.1(p)      ERISA
Schedule 6.1(s)      Location of Offices and Receivables
Schedule 6.1(t)      Location of Inventory
Schedule 6.1(u)      Equipment
Schedule 6.1(v)      Real Estate
Schedule 6.1(w)      Corporate and Fictitious Names
Schedule 6.1(z)      Employee Relations
Schedule 6.1(aa)     Proprietary Rights
Schedule 6.1(bb)     Trade Names
Schedule 6.1(cc)     Bank Accounts

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         $30,600,000 SENIOR SECURED SUPER PRIORITY DEBTOR-IN-POSSESSION
                          LOAN AND SECURITY AGREEMENT

                            Dated as of April 7, 2000

     SAFETY  COMPONENTS  INTERNATIONAL,  INC., a Delaware  corporation  ("Safety
Components"),   safety   components  FABRIC   TECHNOLOGIES,   INC.,  a  Delaware
corporation,  AUTOMOTIVE  SAFETY  COMPONENTS  INTERNATIONAL,  INC.,  a  Delaware
corporation,  ASCI  HOLDINGS UK (DE),  INC.,  a Delaware  corporation,  and ASCI
HOLDINGS  MEXICO  (DE),  INC.,  a Delaware  corporation,  each as a debtor and a
debtor-in-possession    (collectively,   the   "Debtor   Borrowers"),   VALENTEC
INTERNATIONAL  CORPORATION LLC, a Delaware limited liability  company,  VALENTEC
SYSTEMS, INC., a Delaware corporation, GALION, INC., a Delaware corporation, and
AUTOMOTIVE  SAFETY   COMPONENTS   INTERNATIONAL,   LIMITED,   a  United  Kingdom
corporation (the "Non-Debtor Borrowers", together with the Debtor Borrowers, the
"Borrowers"  and each a  "Borrower"),  and ASCI HOLDINGS  GERMANY (DE),  INC., a
Delaware   corporation,   and  ASCI  HOLDINGS  CZECH  (DE),   INC.,  a  Delaware
corporation,   each  as  a  debtor  and  a  debtor-in-possession   (the  "Debtor
Guarantors",   together  with  any  subsequent  party  hereto  qualifying  as  a
Non-Debtor   Guarantor  (as  defined  below),   the   "Guarantors"  and  each  a
"Guarantor"),  the financial  institutions  party to this Agreement from time to
time (the "Lenders"), and BANK OF AMERICA, N.A., a national banking association,
as agent for the Lenders (the "Agent"), agree as follows:

                              W I T N E S S E T H :
                              ---------------------

     A. On April 10, 2000 (the "Petition Date"), a voluntary petition for relief
under Chapter 11 of Title 11 of the United States Code, 11 U.S.C.  ss.ss. 101 et
seq.  was  filed  by each of the  Debtor  Borrowers  and the  Debtor  Guarantors
(together,  the "Debtors"  and each a "Debtor") in the United States  Bankruptcy
Court  for  the  District  of  Delaware   (the   "Court")  as   administratively
consolidated  Chapter 11 Case No.  [INSERT CASE NUMBER] (the "Chapter 11 Case").
The Debtor Borrowers and the Debtor  Guarantors are and will continue to operate
their  respective   businesses  and  manage  their   respective   properties  as
debtors-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code.

     B. The  Borrowers  have  requested  that the Lenders  and the Issuing  Bank
provide a senior secured super priority  revolving and term loan credit facility
of up to  $30,600,000.  The  Borrowers  intend to utilize  such  facility to (i)
refinance  not in excess of  $17,000,000  (only to the extent that such sums are
not otherwise  paid from funds held by the Borrowers on the Effective  Date, and
subject to the terms of the  Intercreditor  and  Subordination  Agreement,  this
Agreement and the other Loan Documents) of certain  obligations owed pursuant to
that certain  Credit  Agreement  dated as of May 21, 1997 by and among Key Bank,
N.A., as  Administrative  Agent,  the various Lenders party thereto from time to
time,  Safety  Components,  Automotive  Safety Components UK, and Phoenix Airbag
GmbH & Co., KG, a company  organized  under the laws of the Federal  Republic of
Germany (as amended,  restated or modified from time to time, the  "Pre-Petition
Loan  Agreement"),  (ii) fund their working capital  requirements  and guarantee
their letter of credit obligations during the pendency of the Chapter 11 Case as
provided herein, (iii) fund general corporate purposes in the ordinary course of
business  including  capital  expenditures  as  provided  herein,  (iv) fund the
payment of fees and expenses due hereunder,  and (v) fund the payment of certain
administrative,  professional and other such expenses incurred in the Chapter 11
Case, all on the terms and conditions  provided  herein.  The Agent, the Issuing
Bank and the Lenders are willing to extend such  post-petition  financing to the
Borrowers in accordance  with and on the terms and  conditions set forth in this
Agreement  (including,  but not  limited  to,  the grant by each  Obligor to the
Agent,  for the  benefit of

                                        1
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the Secured  Creditors,  of a Lien on and security  interest in, all property of
the Obligors,  whether now owned or hereafter acquired,  as more fully set forth
in the other Loan  Documents  executed by the Borrowers in connection  with this
Agreement and in the Final Order), and on a final basis.

     C. The Obligors'  business is a mutual and  collective  enterprise  and the
Obligors  believe  that the  consolidation  of all  loans  and  other  financial
accommodations  under this Agreement will enhance the aggregate borrowing powers
of the Obligors and  facilitate  the  administration  of the Chapter 11 Case and
their loan relationship with the Agent, the Issuing Bank and the Lenders, all to
the mutual advantage of the Obligors.

     D. Each Obligor  acknowledges that it will receive  substantial  direct and
indirect  benefits  by  reason  of the  making  of  loans  and  other  financial
accommodations to the other Obligors as provided in this Agreement, by virtue of
the Obligors' various  inter-relationships as joint guarantors or joint obligors
and the  beneficiaries  thereof,  as  lessors  and  lessees,  as  suppliers  and
customers, and as joint venturers.

     E. The Agent's,  the Issuing Bank's and the Lenders'  willingness to extend
financial  accommodations  to the  Obligors,  and to administer  each  Obligor's
collateral  security  therefor,  on a combined  basis as more fully set forth in
this Agreement,  is done solely as an  accommodation  to the Obligors and at the
Obligors'  request and in  furtherance  of the Obligors'  mutual and  collective
enterprise.

                                    ARTICLE 1

                                   DEFINITIONS

SECTION 1.1 Definitions.  For the purposes of this Agreement:

     "Account Debtor" means a Person who is obligated on a Receivable.

     "Acquire" or "Acquisition",  as applied to any Business Unit or Investment,
means the  acquiring or  acquisition  of such  Business  Unit or  Investment  by
purchase,  exchange,  issuance  of  stock  or other  securities,  or by  merger,
reorganization or any other method.

     "Affiliate" means, with respect to a Person, any other Person (other than a
Subsidiary) that, (i) directly or indirectly through one or more intermediaries,
controls,  or is  controlled  by, or is under common  control  with,  such given
Person,  (ii) directly or indirectly  beneficially  owns or holds 20% or more of
any class of voting stock or partnership or other voting interest of such Person
or any  Subsidiary  of such Person,  or (iii) 20% or more of the voting stock or
partnership  or  other  voting  interest  of  which is  directly  or  indirectly
beneficially  owned or held by such Person or a Subsidiary  of such Person.  The
term "control"  means the  possession,  directly or indirectly,  of the power to
direct  or cause the  direction  of the  management  and  policies  of a Person,
whether  through  ownership of voting  securities or partnership or other voting
interest, by contract or otherwise.

     "Agency  Account"  means an account of an Obligor  maintained  by it with a
Clearing Bank pursuant to an Agency Account Agreement.

     "Agency Account  Agreement" means an agreement among an Obligor,  the Agent
and a Clearing Bank, in form and substance satisfactory to the Agent, concerning
the  collection of payments that represent the proceeds of Receivables or of any
other Collateral.

                                       2
<PAGE>

     "Agent" means Bank of America,  N.A., a national banking  association,  and
any successor agent appointed pursuant to Section 14.9.

     "Agent's  Office" means the office of the Agent  specified in or determined
in accordance with the provisions of Section 16.1.

     "Aggregate   Revolving  Loan   Obligations"   means,  as  of  any  time  of
determination,  the sum of (a) the aggregate principal amount of Revolving Loans
then outstanding,  plus (b) the aggregate principal amount of all Agent Advances
then outstanding.

     "Agreement"  means and includes this  Agreement,  including all  Schedules,
Exhibits and other  attachments  hereto,  and all amendments,  modifications and
supplements hereto and thereto.

     "Agreement Date" means the date as of which this Agreement is dated.

     "Applicable Inventory Advance Percentage" means 60% in the case of Eligible
Inventory consisting of raw materials and finished goods.

     "Applicable  Law"  means  all  applicable   provisions  of   constitutions,
statutes,  rules,  regulations and orders of all governmental  bodies and of all
orders and decrees of all courts and arbitrators,  including  Environmental Laws
and the Bankruptcy Code.

     "Applicable  Revolver  Margin" means, (a) as to Prime Rate Revolving Loans,
1.25%, and (b) as to LIBOR Revolving Loans, 2.75%.

     "Applicable Term Margin" means, (a) as to Prime Rate Term Loans, 1.50%, and
(b) as to LIBOR Term Loans, 3.00%.

     "ASCI Mexico" means Automotive  Safety  Components  International,  S.A. de
C.V., a Mexican corporation.

     "ASCI  Germany"  means  ASCI  Holdings   Germany  (DE),  Inc.,  a  Delaware
corporation.

     "Asset  Disposition"  means the  disposition of any asset of any Obligor or
any of its US and UK Subsidiaries, other than sales of Inventory in the ordinary
course of business.

     "Assignment and Acceptance"  means an assignment and acceptance in the form
attached hereto as Exhibit A assigning all or a portion of a Lender's interests,
rights and obligations under this Agreement pursuant to Section 13.1.

     "Available Revolving Loan Facility" means, as of any time of determination,
(a) the  Revolving  Loan  Facility,  minus  (b)  the  Aggregate  Revolving  Loan
Obligations, minus (c) the Letter of Credit Reserve.

     "Automotive  Safety Components UK" means Safety  Components' United Kingdom
Subsidiary, Automotive Safety Components International, Limited.

     "Bank of  America"  means Bank of America,  N.A.,  and its  successors  and
assigns.

                                       3
<PAGE>

     "Banking   Relationship"   means  (a)   checking  and   operating   account
relationships  between any Obligor and any Lender (or any Affiliate of a Lender)
and (b) Hedge Agreements between any Obligor and any Lender (or any Affiliate of
a Lender).

     "Bankruptcy  Code"  means the  United  States  Bankruptcy  Code (11  U.S.C.
Section 101 et seq.), as now or hereafter amended, and any successor statute.

     "Benefit  Plan"  means an  "employee  pension  benefit  plan" as defined in
Section 3(2) of ERISA (other than a  Multiemployer  Plan) in respect of which an
Obligor or any Related Company is, or within the immediately preceding six years
was, an "employer" as defined in Section 3(5) of ERISA,  including such plans as
may be established after the Agreement Date.

     "Borrower" has the meaning set forth in the recital clauses hereof.

     "Borrowers' Agent" means Safety Components, acting in its capacity as agent
for the other Borrowers and Obligors, pursuant to Section 4.17.

     "Borrowing"  means a borrowing  of  Revolving  Loans or Term Loans  bearing
interest at the same rate, made by all Lenders on the same date and, in the case
of LIBOR  Loans,  having a  single  Interest  Period,  and the  continuation  or
conversion of an existing Loan or Loans in whole or in part.

     "Borrowing Base" means at any time an amount equal to the lesser of:

          (a) the Revolving Loan Facility minus the sum of

               (i) the Letter of Credit Reserve, plus

               (ii) the Carve-Out Amount, plus

               (iii) the Treasury Management Reserve, plus

               (iv)  such  other   reserves  as  the  Agent  in  its  reasonable
          discretion may establish from time to time, and

          (b) an amount equal to

               (i)  85% (or  such  lesser  percentage  as the  Agent  may in its
          reasonable  discretion  determine from time to time) of the face value
          of Eligible Receivables due and owing at such time, plus

               (ii) the lesser of

                    (A)  the  Applicable  Inventory  Advance  Percentage  of the
               lesser of cost  (determined  on a  first-in-first-out  accounting
               basis) and fair market value, and

                    (B) the Inventory Sublimit, minus

               (iii) the sum of

                                       4
<PAGE>

                    (A) the Letter of Credit Reserve, plus

                    (B) the Carve-Out Amount, plus

                    (C) the Treasury Management Reserve, plus

                    (D) such  other  reserves  as the  Agent  in its  reasonable
               discretion may establish from time to time.

     "Borrowing  Base  Certificate"  means a  certificate  in the form  attached
hereto as Exhibit B.

     "Business Day" means (a) any day other than a Saturday, Sunday or other day
on which banks in Charlotte,  North Carolina are authorized or required to close
and (b) in respect of any  determination  with respect to a LIBOR Loan,  any day
referred to in clause (a) that is also a day on which  tradings are conducted in
the London interbank eurodollar market.

     "Business Unit" means the assets constituting the business or a division or
operating unit thereof of any Person.

     "Capital  Expenditures" means, with respect to any Person, all expenditures
made and  liabilities  incurred for the acquisition of assets (other than assets
which  constitute  a Business  Unit)  which are not,  in  accordance  with GAAP,
treated as expense  items for such  Person in the year made or  incurred or as a
prepaid expense applicable to a future year or years.

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

     "Capitalized   Lease   Obligation"   means   Indebtedness   represented  by
obligations under a Capitalized Lease, and the amount of such Indebtedness shall
be the  capitalized  amount of such  obligations  determined in accordance  with
GAAP.

     "Carve-Out Amount" has the meaning set forth in Section 4.21.

     "Carve-Out Expenses" has the meaning set forth in Section 4.21.

     "Cash Collateral"  means collateral  consisting of cash or Cash Equivalents
on which the  Agent,  for the  benefit  of the  Secured  Creditors,  has a first
priority Lien.

     "Cash Collateral Account" means a special  interest-bearing deposit account
consisting of cash  maintained at the Agent's Office and under the sole dominion
and control of the Agent, for the benefit of the Secured Creditors,  established
pursuant to the provisions of Section 4.16 for the purposes set forth therein.

     "Cash  Equivalents"  means:  (a) marketable  direct  obligations  issued or
unconditionally  guaranteed  by the United  States  Government  or issued by any
agency thereof and backed by the full faith and credit of the United States,  in
each case maturing  within one year from the date of  acquisition  thereof;  (b)
commercial paper maturing no more than one year from the date issued and, at the
time of  acquisition  thereof,  having a rating of at least A-1 from  Standard &
Poor's  Corporation or at least P-1 from Moody's  Investors  Service,  Inc.; (c)
certificates of deposit or bankers'  acceptances issued in Dollar  denominations

                                       5
<PAGE>

and  maturing  within one year from the date of issuance  thereof  issued by any
commercial  bank organized under the laws of the United States of America or any
state thereof or the District of Columbia having combined capital and surplus of
not less than  $100,000,000  and,  unless  issued by the Agent or a Lender,  not
subject  to  setoff or offset  rights  in favor of such  bank  arising  from any
banking  relationship with such bank; and (d) repurchase  agreements in form and
substance and for amounts satisfactory to the Agent.

     "Chapter  11 Case" has the meaning  assigned  to it in the recital  clauses
hereof.

     "Clearing  Bank"  means Bank of America and any other  banking  institution
with which an Agency Account has been established  pursuant to an Agency Account
Agreement.

     "Collateral"  means  and  includes,  collectively,  all of  the  collateral
referred to in the Final  Order and each of the  Security  Documents  and all of
each  Obligor's  right,  title  and  interest  in and to each of the  following,
wherever located and whether now or hereafter existing or now owned or hereafter
acquired or arising,  but in any event  excluding  all  avoidance  actions under
Sections 542,  544,  545,  547,  548,  549,  550,  551,  553(b) or 724(a) of the
Bankruptcy Code:

          (a) all Receivables,

          (b) all Inventory,

          (c) all Contract Rights,

          (d) all General Intangibles,

          (e) all Tax Refund Claims,

          (g) all Equipment,

          (h) all Real Estate,

          (i) all Equity Interests,

          (j) all goods and other  property,  whether or not delivered,  (i) the
     sale or lease of which gives or  purports  to give rise to any  Receivable,
     including  all  merchandise  returned or rejected  by or  repossessed  from
     customers,  or (ii)  securing any  Receivable,  including  all rights as an
     unpaid  vendor or lienor  (including  stoppage  in  transit,  replevin  and
     reclamation) with respect to such goods and other property,

          (k) all mortgages,  deeds to secure debt and deeds of trust on real or
     personal  property,  guaranties,  leases,  security  agreements,  and other
     agreements  and property  which secure or relate to any Receivable or other
     Collateral,  or are acquired for the purpose of securing and  enforcing any
     item thereof,

          (l) all documents of title,  policies and  certificates  of insurance,
     securities, chattel paper and other documents and instruments evidencing or
     pertaining to any and all items of Collateral,

          (m) all files,  correspondence,  computer  programs,  tapes, discs and
     related data processing software which contain  information  identifying or
     pertaining to any Tax Refund Claim

                                       6
<PAGE>

     or any of the  Receivables  or any Account  Debtor,  or showing the amounts
     thereof  or  payments  thereon  or  otherwise  necessary  or helpful in the
     realization thereon or the collection thereof,

          (n)  any  demand,  time,  savings,  passbook,  money  market  or  like
     depository  account,  and all  certificates  of deposit,  maintained with a
     bank, savings and loan association, credit union or like organization,

          (o) all cash  deposited  with the Agent or any Lender or any Affiliate
     of the Agent or any  Lender  or which the  Agent,  for the  benefit  of the
     Secured Creditors, or any Lender or such Affiliate is entitled to retain or
     otherwise  possess  as  collateral  pursuant  to  the  provisions  of  this
     Agreement or any of the Security Documents or any agreement relating to any
     Letters of Credit,

          (p) any other  "property" of the Debtors'  estates pursuant to Section
     541 of the Bankruptcy Code, and

          (q) any and all products and proceeds of the foregoing  (including any
     claim to any item referred to in this definition, and any claim against any
     third  party for loss of,  damage to or  destruction  of any or all of, the
     Collateral or for proceeds payable under, or unearned premiums with respect
     to,  policies of insurance) in whatever form,  including  cash,  negotiable
     instruments  and other  instruments  for the  payment of money,  investment
     property, chattel paper, security agreements and other documents,

     provided that, other than with respect to Automotive  Safety  Components UK
     (which   Subsidiary  herein  pledges  all  of  its  assets  to  secure  the
     Obligations),  the  Collateral  does not  include  any pledge of any of the
     assets of any Obligor's foreign Subsidiaries or any Non-Debtor Guarantor.

     "Collateral Access Agreement" means, with respect to any leased premises of
any  Borrower,  an agreement  executed by the landlord,  warehouseman  or bailee
thereof  and  delivered  to  the  Agent,   pursuant  to  which  such   landlord,
warehouseman  or  bailee  waives  any Lien  rights it may hold in regard to such
Borrower's property, grants access by the Agent to such leased premises, permits
the use of such  leased  premises  by the  Agent and  grants to the Agent  other
rights  consistent  therewith to permit the Agent to exercise any and all rights
with  respect  to  any of the  Collateral,  in  form  and  substance  reasonably
acceptable to the Agent or the inclusion of such findings and decretal  portions
in the Final  Order as  provides  rights  and  protections  that are  reasonably
equivalent to the foregoing and are reasonably  acceptable to the Agent, in lieu
of, the execution and delivery of the above referenced agreements.

     "Commitment"  means,  as to each Lender,  the obligations of such Lender to
make Revolving Loans and Term Loans and to purchase participations in Letters of
Credit,  and which  shall not  exceed the  amount  set forth (i)  opposite  such
Lender's  name on Schedule  C-1, or (ii) from and after the date hereof,  in the
Register (as defined in Section 13.1).

     "Commitment  Percentage"  means,  as to any Lender,  the  percentage of the
Total  Commitment  obtained by dividing  such  Lender's  Commitment by the Total
Commitment.

     "Committee" means the Official Committee of Unsecured Creditors,  appointed
or approved by the applicable United States Trustee in the Chapter 11 Case.

     "Consolidated   EBITDA"  means  the  Obligors'  EBITDA,   calculated  on  a
consolidated basis.

                                       7
<PAGE>

     "Consolidated   Interest   Expense"  means,  for  any  period,   the  total
consolidated  cash interest expense of the Obligors for such period  (calculated
without regard to any  limitations on the payment  thereof)  payable during such
period in respect of all  consolidated  Indebtedness  of the  Obligors  for such
period  (including,  without  duplication,  that  portion of  Capitalized  Lease
Obligations of the Obligors representing the interest factor for such period).

     "Consolidated   Subsidiaries"   means,   as  to  Safety   Components,   the
Subsidiaries  of Safety  Components  whose accounts are at the time in question,
consolidated in accordance  with GAAP and, with respect to  Subsidiaries  formed
after the  Effective  Date,  pursuant  to the  written  consent of the  Required
Lenders,  which consent may be withheld in their  discretion  conditioned  upon,
among  other  things,  the  execution  and  delivery  of  guaranties,   security
agreements,  mortgages and other documents  required by the Required  Lenders in
their discretion, consolidated with those of Safety Components.

     "Contaminant"  means  any  waste,  pollutant,  hazardous  substance,  toxic
substance,  hazardous  waste,  special  waste,  petroleum  or  petroleum-derived
substance or waste, or any constituent of any such substance or waste.

     "Contract  Rights"  means any  rights  under  contracts  not yet  earned by
performance and not evidenced by an instrument or chattel paper, which contracts
relate to or arise out of any of the Receivables or Inventory.

     "Copyrights"  means and  includes,  in each case  whether  now  existing or
hereafter  arising  during  the term of this  Agreement,  all of each  Obligor's
right, title and interest in and to: (a) all copyrights, rights and interests in
copyrights,   works  protectable  by  copyright,   copyright  registrations  and
copyright  applications;  (b)  all  renewals  of any of the  foregoing;  (c) all
income,  royalties,  damages and payments now or  hereafter  due and/or  payable
under any of the  foregoing,  including  damages or payments  for past or future
infringements  of any of the foregoing;  (d) the right to sue for past,  present
and  future  infringements  of  any  of  the  foregoing;   and  (e)  all  rights
corresponding to any of the foregoing throughout the world.

     "Court" has the meaning assigned to it in the recital clauses hereof.

     "Debtor  Borrowers" has the meaning  assigned to it in the recital  clauses
hereof.

     "Debtors" has the meaning assigned to it in the recital clauses hereof.

     "Debtor  Guarantors" has the meaning  assigned to it in the recital clauses
hereof.

     "Default" means any of the events  specified in Section 12.1 which with the
passage  of time or  giving  of  notice  or both  would  constitute  an Event of
Default.

     "Default Margin" means 2%.

     "Disbursement  Account" means one or more accounts maintained by and in the
name of Safety  Components or any other Borrower with a Disbursing  Bank for the
purposes  of  disbursing  Revolving  Loan and Term  Loan  proceeds  and  amounts
deposited thereto.

     "Disbursing  Bank"  means any  commercial  bank with  which a  Disbursement
Account is maintained.

                                       8
<PAGE>

     "Dollar" and "$" mean freely transferable United States dollars.

     "EBITDA"  means,  with respect to any Obligor on a consolidated  basis with
its US and UK Subsidiaries,  for any period,  the Net Income of such Obligor for
such  period,  (a) plus,  without  duplication  and to the  extent  deducted  in
computing Net Income for such period, the sum of (i) income taxes, (ii) Interest
Expense,  (iii) depreciation and amortization  expense, (iv) bankruptcy charges,
and (v) other non-cash charges reasonably acceptable to the Agent, (b) minus, to
the extent included in Net Income for such period, extraordinary gains.

     "ERISA" means the Employee  Retirement  Income  Security Act of 1974, as in
effect from time to time.

     "Effective  Date" means the later of (a) the  Agreement  Date,  and (b) the
first date on which all of the conditions set forth in Article 5 shall have been
fulfilled or waived.

     "Effective  Interest Rate" means: (i) in the case of Revolving Loans,  each
rate of interest per annum on such  Revolving  Loans in effect from time to time
pursuant to the  provisions  of Sections  4.1 (a),  (b) and (f), and (ii) in the
case of Term Loans, each rate of interest per annum on such Term Loans in effect
from time to time pursuant to the provisions of Sections 4.1 (c), (d) and (f).

     "Eligible  Assignee"  means:  (a) a  commercial  bank,  commercial  finance
company  or  other  asset  based  lender,  having  total  assets  in  excess  of
$1,000,000,000;  (b) any Lender listed on the signature page of this  Agreement;
(c) any  Affiliate  of any Lender;  and (d) if an Event of Default  exists,  any
Person  reasonably  acceptable  to the  Agent;  provided  in each  case that the
representation  contained  in Section  13.2 hereof shall be true with respect to
such Person.

     "Eligible  In-Transit  Inventory" means (a) Inventory being imported to the
United States by a Borrower under a documentary Letter of Credit,  provided that
all documents of title with respect  thereto have been  consigned with the Agent
or its  representative  on terms  reasonably  acceptable  to the Agent,  and (b)
finished  goods  Inventory in transit  between the  Borrower's  locations in the
United States,  further provided,  in each case, such Inventory meets all of the
requirements set forth under Eligible Inventory.

     "Eligible  Inventory"  means  Inventory  which the Agent, in its reasonable
discretion, determines to meet all of the following requirements:

          (a) such  Inventory  is  owned by a  Borrower  which is  organized  or
     incorporated  under the laws of the United States (or, in either case,  any
     state or province  thereof) and which has its  principal  place of business
     and chief executive office in the United States,

          (b) such inventory is stored at a location  listed on Schedule  6.1(t)
     or is Eligible In-Transit Inventory,

          (c) such  Inventory  is subject  to the  Security  Interest,  which is
     perfected as to such Inventory,  and is subject to no other Lien whatsoever
     other than a Permitted Lien,

          (d) such Inventory consists of finished goods or raw materials,

                                       9
<PAGE>

          (e) such Inventory does not consist of work-in-process,  griege goods,
     chemicals, dyes, supplies, or packing and shipping materials,

          (f) such  Inventory  is in good  condition  and  meets  all  standards
     imposed by any  governmental  agency,  or department  or division  thereof,
     having regulatory authority over such goods, their use or sale,

          (g) such  Inventory is currently  either usable or salable,  at prices
     approximating  at  least  cost,  in the  normal  course  of the  applicable
     Borrower's business, and is not slow moving or stale,

          (h) such  Inventory is not obsolete or returned or repossessed or used
     goods taken in trade,

          (i) unless such  Inventory  is  Eligible  In-Transit  Inventory,  such
     Inventory is located  within the United  States at one of the locations set
     forth in the most recent Schedule of Inventory delivered to the Agent,

          (j) unless such  Inventory  is  Eligible  In-Transit  Inventory,  such
     Inventory is in the  possession and control of a Borrower and not any third
     party or if the  Inventory is held by a third party bailee and a negotiable
     instrument has not been issued with respect to it (i) a financing statement
     (or  the   equivalent)   which  names  the  third   party   bailee  as  the
     debtor/bailee,  names such Borrower as the secured party/bailor,  names the
     Agent as assignee of the secured  party/bailor,  and contains a description
     of such Inventory  acceptable to the Agent and otherwise in compliance with
     the requirements of Sections 2-326 and 9-114 of the Uniform Commercial Code
     (or the  equivalent)  has been filed in the  appropriate  filing office and
     (ii)  such  other  steps as the Agent may  reasonably  require  in order to
     establish  and  preserve  the  priority of the  Security  Interest  against
     secured  creditors of such third party bailee or such  Borrower  shall have
     been taken,

          (k) if such  Inventory  is located in a  warehouse  or other  facility
     leased by a Non-Debtor Borrower, a Collateral Access Agreement with respect
     to such premises is in effect,

          (l) if  such  Inventory  contains  or  bears  any  Proprietary  Rights
     licensed to a Borrower by any Person,  the Agent shall be satisfied that it
     may sell or otherwise  dispose of such Inventory in accordance with Article
     12 without infringing the rights of the licensor of such Proprietary Rights
     or violating any contract  with such  licensor (and without  payment of any
     royalties  other  than  any  royalties  due  with  respect  to the  sale or
     disposition of such Inventory pursuant to the existing license  agreement),
     and, if the Agent deems it necessary, the applicable Borrower shall deliver
     to the Agent a consent or sublicense  agreement  from such licensor in form
     and substance acceptable to the Agent, and

          (m) such  Inventory is not  determined by the Agent,  on behalf of the
     Secured Creditors,  in its reasonable discretion,  to be ineligible for any
     other reason.

     "Eligible  Machinery and Equipment" means machinery and equipment which the
Agent,  in its  reasonable  discretion,  determines to meet all of the following
requirements:

          (a) such  machinery  and  equipment  is owned by a  Borrower  which is
     organized or incorporated under the laws of the United States or the United
     Kingdom (or, in either case,  any

                                       10
<PAGE>

     state or province  thereof) and which has its  principal  place of business
     and chief executive office in the United States or the United Kingdom,

          (b) such  machinery  and  equipment is stored at a location  listed on
     Schedule 6.1(t),

          (c) such machinery and equipment is subject to the Security  Interest,
     which is perfected as to such machinery and equipment, and is subject to no
     other Lien whatsoever other than a Permitted Lien,

          (d) such  machinery and  equipment is in good  condition and meets all
     standards  imposed by any  governmental  agency,  or department or division
     thereof,  having  regulatory  authority  over such machinery and equipment,
     their use or sale,

          (e) such  machinery  and  equipment  is  currently  either  usable  or
     salable,  and is not obsolete or returned or  repossessed or used machinery
     and equipment taken in trade,

          (f) such  machinery and equipment is located  within the United States
     or the United Kingdom,

          (g) such machinery and equipment is in the possession and control of a
     Borrower and not any third party,

          (h) if such machinery and equipment is located in a warehouse or other
     facility leased by a Borrower,  a Collateral  Access Agreement with respect
     to such premises is in effect,

          (i)  such  machinery  and  equipment  does  not  contain  or bear  any
     Proprietary Rights licensed to a Borrower by any Person, and

          (j) such  machinery and equipment is not  determined by the Agent,  on
     behalf  of the  Secured  Creditors,  in its  reasonable  discretion,  to be
     ineligible for any other reason.

     "Eligible  Receivable"  means a  Receivable  that  consists  of the  unpaid
portion of the obligation stated on the invoice issued to an Account Debtor with
respect to Inventory sold and shipped to or services  performed for such Account
Debtor in the ordinary course of business, net of any credits or rebates owed by
any  Borrower  to the  Account  Debtor,  and that the Agent,  in its  reasonable
discretion, determines to meet all of the following requirements:

          (a)  such  Receivable  is  owned  by  either:  (i)  Automotive  Safety
     Components UK and the Account  Debtor  thereunder is (y) located within the
     United Kingdom,  or (z) any of TRW Inc., Autoliv Inc., or Delphi Automotive
     Systems Corp. or their Affiliates, or (ii) a Borrower which is organized or
     incorporated  under the laws of the United States (or any state or province
     thereof) and which has its principal  place of business and chief executive
     office in the United States,

          (b) such Receivable  represents a complete bona fide transaction which
     requires  no  further  act  under  any  circumstances  on the  part of such
     Borrower to make such Receivable payable by the Account Debtor,

          (c) such Receivable shall not be more than 60 days past due,

          (d) no more  than 120 days  shall  have  elapsed  from the date of the
     original invoice,

                                       11
<PAGE>

          (e) the goods  the sale of which  gave  rise to such  Receivable  were
     shipped or  delivered to the Account  Debtor on an absolute  sale basis and
     not on a bill and hold sale basis,  a consignment  sale basis, a guaranteed
     sale basis,  a sale or return  basis,  or on the basis of any other similar
     understanding,  and no material part of such goods shall have been returned
     or rejected,

          (f) such Receivable is not evidenced by chattel paper or an instrument
     of any kind,  or if such  Receivable  is evidenced  by chattel  paper or an
     instrument, such chattel paper or instrument has been collaterally assigned
     to the Agent,  for the  benefit of the  Secured  Creditors,  pursuant to an
     assignment in form and substance  satisfactory to the Agent,  and is in the
     possession of the Agent,

          (g)  the  Account  Debtor  with  respect  to  such  Receivable  is not
     insolvent or the subject of any bankruptcy or insolvency proceedings of any
     kind or of any  other  proceeding  or  action,  threatened  in  writing  or
     pending,  which  might,  in  the  Agent's  reasonable  discretion,  have  a
     materially  adverse  effect  on such  Account  Debtor,  and is not,  in the
     reasonable  discretion of the Agent,  deemed ineligible for credit or other
     reasons,

          (h) such  Receivable  is not owing by an Account  Debtor having 50% or
     more in face value of its  then-existing  accounts  owing to the  Borrowers
     which are in dispute or ineligible under clause (b) or (c) above,

          (i)  such   Receivable  is  not  owing  by  an  Account  Debtor  whose
     then-existing  accounts  owing to any  Borrower  exceed in face  amount 15%
     (other than with respect to  Receivables  owed by any of TRW Inc.,  Autoliv
     Inc., or Delphi  Automotive  Systems Corp.  or their  Affiliates)  of total
     Eligible Receivables of such Borrower, provided this restriction shall only
     exclude the amount in excess of such concentration limit,

          (j) if such Receivable  arises from the performance of services,  such
     services have been fully  rendered and do not relate to any warranty  claim
     or obligation,

          (k) if such  Receivable is owing by an Account  Debtor that is located
     outside  of the  United  States,  either  (i) such  Receivable  is owned by
     Automotive  Safety  Components UK and the Account Debtor  thereunder is (a)
     located within the United Kingdom, or (b) any of TRW Inc., Autoliv Inc., or
     Delphi  Automotive  Systems  Corp. or their  Affiliates,  or (ii) the goods
     which  gave rise to such  Receivable  were  shipped  after  receipt  by the
     applicable  Borrower from the Account  Debtor of an  irrevocable  letter of
     credit  that  has been  issued  or  confirmed  by a  financial  institution
     acceptable to the Agent, is in form and substance reasonably  acceptable to
     the  Agent,  payable  in the full  face  amount  of the  face  value of the
     Receivable  at a place of payment  located  within the United States or the
     United  Kingdom and has, if requested by the Agent,  been duly  assigned to
     the Agent,

          (l) such Receivable is a valid, legally enforceable  obligation of the
     Account Debtor with respect thereto,

          (m) such  Receivable  is not  subject  to any  presently  asserted  or
     claimed (and no facts exist which are the basis for any future assertion or
     claim)  offset,  deduction,  counterclaim,  dispute or other defense on the
     part of the Account Debtor with respect thereto,  provided this restriction
     shall only exclude the amount of such Receivable that is subject to offset,
     deduction, counterclaim, dispute or defense,

                                       12
<PAGE>

          (n) such  Receivable  is subject to the  Security  Interest,  which is
     perfected  as  to  such  Receivable,  and  is  subject  to  no  other  Lien
     whatsoever,

          (o) such Receivable is evidenced by an invoice or other  documentation
     in form reasonably acceptable to the Agent,

          (p) such  Receivable is not subject to the Assignment of Claims Act of
     1940, as amended from time to time, or any  Applicable Law now or hereafter
     existing  similar in effect  thereto,  or to any other  prohibition  (under
     Applicable  Law, by  contract  or  otherwise)  against  its  assignment  or
     requiring notice of or consent to such assignment, unless all such required
     notices have been given, all such required  consents have been received and
     all other  procedures  have been  complied  with such that such  Receivable
     shall have been duly and validly  assigned to the Agent, for the benefit of
     the Secured Creditors,

          (q) the goods giving rise to such  Receivable were not, at the time of
     the sale  thereof,  subject to any Lien,  except the Security  Interest and
     Permitted Liens,

          (r) no Borrower is in breach of any express or implied  representation
     or warranty  with  respect to the goods the sale of which gave rise to such
     Receivable  nor in breach of any  representation  or warranty,  covenant or
     other  agreement  contained  in the Loan  Documents  with  respect  to such
     Receivable,

          (s) such  Receivable  does not arise out of any  transaction  with any
     Subsidiary,   Affiliate,  creditor,  tenant,  lessor  or  supplier  of  any
     Borrower, provided that, if such Receivable does arise out of a transaction
     with a creditor or supplier of any Borrower, it only shall be deemed not to
     qualify as an Eligible  Receivable by virtue of the account debtor's status
     as a creditor or supplier to the extent that a contra  account  exists with
     respect to such Receivable,

          (t) such  Receivable  does not arise out of finance or similar charges
     by any Borrower or other fees for the time value of money,

          (u) the Account Debtor with respect to such  Receivable is not located
     in any state or jurisdiction  denying creditors access to its courts in the
     absence of qualification  to transact  business in such state or the filing
     of a Notice of Business  Activities Report or other similar filing,  unless
     the  applicable  Borrower  has either  qualified  as a foreign  corporation
     authorized to transact  business in such state or jurisdiction or has filed
     a  Notice  of  Business  Activities  Report  or  similar  filing  with  the
     applicable state or jurisdiction agency for the then current year, and

          (v) neither the Account  Debtor with respect to such  Receivable,  nor
     such Receivable, is determined by the Agent in its reasonable discretion to
     be ineligible for any other reason.

     "Environmental  Laws" means all federal,  state, local and foreign laws now
or hereafter in effect  relating to pollution or protection of the  environment,
including  laws  relating  to  emissions,  discharges,  Releases  or  threatened
Releases  of  pollutants,  Contaminants,  chemicals,  or  industrial,  toxic  or
hazardous  substances  or wastes into the  environment  (including  ambient air,
surface water, ground water, or land), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, removal, transport,
or handling of pollutants,  Contaminants,  chemicals,  or  industrial,  toxic or
hazardous  substances or wastes, and any and all regulations,  notices or demand
letters  issued,  entered,  promulgated  or approved  thereunder;  such laws and
regulations  include  but are  not  limited  to

                                       13
<PAGE>

the  Resource  Conservation  and  Recovery  Act, 42  U.S.C.ss.6901  et seq.,  as
amended; the Comprehensive  Environmental  Response,  Compensation and Liability
Act, 42 U.S.C.ss.9601 et seq., as amended;  the Toxic Substances Control Act, 15
U.S.C.ss.2601 et seq., as amended; the Clean Air Act, 46 U.S.C.ss. 7401 et seq.,
as amended;  and all federal,  state,  local and foreign lien and  environmental
cleanup programs.

     "Environmental  Lien" means a Lien in favor of any governmental  entity for
(a) any liability under Environmental Laws or (b) damages arising from, or costs
incurred by such  governmental  entity in response  to, a Release or  threatened
Release of Contaminant into the environment.

     "Equipment"  means all machinery,  apparatus,  equipment,  motor  vehicles,
tractors,  trailers,  rolling  stock,  fittings and fixtures and other  tangible
personal  property (other than Inventory) of every kind and description  used in
the Obligors' business  operations or owned by an Obligor or in which an Obligor
has an interest, and all parts,  accessories and special tools and all increases
and accessions thereto and substitutions and replacements therefor.

     "Equity  Interest  Pledge  Agreements"  means  an  agreement  between  each
respective Obligor, the Agent and the Lenders in form acceptable to the Agent in
its sole  discretion  providing for the pledge of all Equity  Interests owned by
such Obligor to secure the Secured Obligations.

     "Equity  Interests"  means,  as applied to any Person,  any capital  stock,
general or limited partnership interests, limited liability company interests or
other equity interests of such Person,  including but not limited to any and all
Investment Property of such Person, regardless of class or designation,  and all
warrants,  options,  purchase  rights,  conversion  or exchange  rights,  voting
rights, calls or claims of any character with respect thereto.

     "Event of  Default"  means any of the events  specified  in  Section  12.1,
provided that any requirement for notice or lapse of time or any other condition
has been satisfied.

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

     "Fee Letter"  means,  collectively,  the March 22, 2000 fee letter  between
Bank of America and Safety  Components,  and any other letter agreement  between
Safety  Components  and Bank of  America  with  respect  to fees  payable by the
Obligors in connection with this Agreement.

     "Final  Order" means the order of the Court  entered in the Chapter 11 Case
after a final hearing under  Bankruptcy Rule 4001(c)(2) or such other procedures
as approved by the Court and acceptable to the Agent, reasonably satisfactory in
form and  substance to the Agent and the  Lenders,  and from which no appeal has
been timely filed,  or if timely filed, no stay of such order pending appeal has
been granted or such appeal has been dismissed (unless the Agent and the Lenders
waive  such  requirement),  together  with  all  extensions,  modifications  and
amendments  thereto,  which,  among other matters but not by way of  limitation,
authorizes the Borrowers to obtain credit,  incur Indebtedness,  and grant Liens
under  this  Agreement  and the other  Loan  Documents,  as the case may be, and
provides for the super priority of the Agent and the Lenders' claims, all as set
forth in such order.

                                       14
<PAGE>

     "Financial  Officer"  means  the  Chief  Financial  Officer,  Treasurer  or
Controller of Safety Components.

     "Financing  Statements" means any and all Uniform Commercial Code financing
statements (or other similar documents),  in form and substance  satisfactory to
the Agent,  executed  and  delivered  by the  Obligors to the Agent,  naming the
Agent,  for the  benefit of the Secured  Creditors,  as secured  party,  and the
Obligors as debtor, in connection with this Agreement.

     "Fixed  Charges"  for any period  shall  mean the sum of: (i)  Consolidated
Interest Expense for such period, and (ii) the aggregate principal amount of all
scheduled  payments of Indebtedness  (including the principal portion of rentals
under any Capitalized Lease Obligations but excluding any repayment of Loans not
accompanied  by a permanent  reduction in the Total  Commitment)  required to be
made during such period.

     "Fixed  Charge  Coverage  Ratio" for any period shall mean the ratio of (x)
Consolidated EBITDA, minus Capital Expenditures and minus taxes paid in cash, to
(y) Fixed Charges for such period.

     "Funded  Indebtedness"  means (a) all Indebtedness under this Agreement and
(b) all  other  Indebtedness  for Money  Borrowed,  including  all  Subordinated
Indebtedness.

     "GAAP" means generally accepted accounting principles  consistently applied
and maintained throughout the period indicated;  provided, however, that, in the
event that changes shall be mandated by the Financial Accounting Standards Board
or any  similar  accounting  authority  of  comparable  standing,  or  shall  be
recommended by Safety Components'  independent public accountants,  such changes
shall  be  included  in  GAAP  as  applicable  to  Safety   Components  and  its
Subsidiaries only from and after such date as the Borrowers' Agent, the Required
Lenders and the Agent shall have amended this Agreement to the extent  necessary
to reflect any such changes in the financial covenants set forth in Article 11.

     "General  Intangibles"  means all of the  Obligors'  now owned or hereafter
acquired  general  intangibles and other intangible  personal  property of every
kind and  nature  which  relate  to or arise  out of any of the  Receivables  or
Inventory, including all of the following which relate to or arise out of any of
the  Receivables  or  Inventory:  all  Proprietary  Rights,  corporate  or other
business  records,  inventions,   designs,  blueprints,  plans,  specifications,
goodwill,   computer   software,   customer  lists,   registrations,   licenses,
franchises,   rights  and  claims  against  carriers  and  shippers,  rights  to
indemnification, business interruption insurance and proceeds thereof, property,
casualty or any similar type of  insurance  and any  proceeds  thereof,  and any
letter of credit, guarantee, claims, security interest or other security held by
or granted to any Obligor to secure  payment by an Account  Debtor of any of the
Receivables.

     "Governmental  Approvals" means all  authorizations,  consents,  approvals,
licenses and exemptions of,  registrations and filings with, and reports to, all
governmental  bodies,  whether  federal,  state,  local or foreign  national  or
provincial and all agencies thereof.

     "Guarantor" has the meaning set forth in the recital clauses hereof.

     "Guaranty",  "Guaranteed" or to "Guarantee" as applied to any obligation of
another Person shall mean and include (a) a guaranty  (other than by endorsement
of negotiable  instruments  for collection in the ordinary  course of business),
directly or indirectly,  in any manner, of any part or all of such obligation of
such other  Person,  and (b) an  agreement,  direct or indirect,  contingent  or
otherwise,

                                       15
<PAGE>

and whether or not constituting a guaranty,  the practical effect of which is to
assure  the  payment  or  performance  (or  payment  of  damages in the event of
nonperformance)  of any  part or all of such  obligation  of such  other  Person
whether by (i) the purchase of  securities  or  obligations,  (ii) the purchase,
sale or lease (as lessee or  lessor)  of  property  or the  purchase  or sale of
services  primarily  for the purpose of enabling the  guarantor  with respect to
such obligation to make any payment or performance (or payment of damages in the
event of nonperformance) of or on account of any part or all of such obligation,
or to assure the owner of such obligation  against loss,  (iii) the supplying of
funds to or in any other manner  investing in the guarantor with respect to such
obligation,  (iv) repayment of amounts drawn down by beneficiaries of letters of
credit,  or (v) the supplying of funds to or investing in a Person on account of
all or any part of such Person's  obligation  under a Guaranty of any obligation
or indemnifying or holding harmless, in any way, such Person against any part or
all of such obligation,  excluding,  in any event,  indemnification  obligations
arising in the ordinary course of business.

     "Hedge  Agreements"  means  interest rate swap,  cap or collar  agreements,
interest rate future or option  contracts,  currency swap  agreements,  currency
future or option contracts, and other similar agreements.

     "Indebtedness" of any Person means, without duplication, the following: (a)
all  obligations  for  Money  Borrowed  or for the  deferred  purchase  price of
property  or  services  (other  than  trade   payables),   (b)  all  obligations
(including, during the noncancellable term of any lease in the nature of a title
retention agreement,  all future payment obligations under such lease discounted
to their present value in accordance with GAAP) secured by any Lien to which any
property or asset  owned or held by such  Person is subject,  whether or not the
obligation  secured  thereby  shall have been  assumed by such  Person,  (c) all
obligations  of other  Persons which such Person has  Guaranteed,  including all
obligations  of such Person  consisting  of recourse  liability  with respect to
accounts  receivable  sold or  otherwise  disposed  of by such  Person,  (d) all
obligations of such Person in respect of Hedge  Agreements,  and (e) in the case
of the Borrowers  (without  duplication),  all  obligations  under the Revolving
Loans and the Term Loans.

     "Indenture"  means that certain  Indenture dated as of July 24, 1997 by and
among  Safety  Components,  the  Subsidiary  Guarantors  named  therein  and IBJ
Schroder  Bank &  Trust  Company,  as well as any  amendments  or  modifications
thereto.

     "Indenture  Trustee" means Bank of New York, as successor Indenture Trustee
for IBJ Schroder  Bank & Trust Company  pursuant to the terms of the  Indenture,
and any subsequent successor Indenture Trustee thereunder.

     "Initial  Loans"  means  the  Revolving  Loans and Term  Loans  made to the
Borrowers on the Effective Date pursuant to the Initial Notice of Borrowing.

     "Initial  Notice of Borrowing"  means the Notice of Borrowing  given by the
Borrowers with respect to the Initial Loans, which shall also specify the method
of disbursement.

     "Interbank  Offered  Rate"  means,  with  respect to any LIBOR Loan for the
Interest Period applicable thereto, the per annum rate of interest determined by
the Agent (each such  determination to be conclusive and binding absent manifest
error) as of two Business Days prior to the first day of such Interest Period as
the effective rate at which deposits in immediately  available  funds in Dollars
are being  offered or quoted to major banks in the London  interbank  market for
deposits for a term comparable to such Interest Period and in the amount of such
LIBOR Loan,  which rate shall be determined from the display  designated as Page
3750 of Dow Services,  Inc. In the event Page 3750 shall be unavailable  for any
reason or the Agent in good  faith  elects to no  longer  use such  service  for
determining  such rate under

                                       16
<PAGE>

this Agreement, such rate may be determined by the Agent from any other interest
rate reporting service of recognized standing that the Agent shall select.

     "Intercreditor  and  Subordination  Agreement" means the  Intercreditor and
Subordination  Agreement,  dated as of April 7, 2000,  between the Agent and the
Pre-Petition Lenders.

     "Interest  Payment  Date"  means  the  first  day of  each  calendar  month
commencing  on May 1,  2000  and  continuing  on the  first  day of  each  month
thereafter until the Secured Obligations have been irrevocably paid in full.

     "Interest  Period"  means,  with  respect  to each LIBOR  Loan,  the period
commencing  on the date of the making or  continuation  of or conversion to such
LIBOR Loan and ending one month  thereafter;  provided,  that:  (a) any Interest
Period  that  would  otherwise  end on a day that is not a  Business  Day shall,
subject  to the  provisions  of  clause  (c)  below,  be  extended  to the  next
succeeding  Business  Day unless such  Business  Day falls in the next  calendar
month, in which case such Interest Period shall end on the immediately preceding
Business Day; (b) any 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)  shall,  subject to
clause (c) below,  end on the last  Business  Day of a calendar  month;  (c) any
Interest Period that would otherwise end after the Termination Date shall end on
the  Termination  Date; and (d)  notwithstanding  clause (c) above,  no Interest
Period  shall  have a  duration  of less than one  month  and if any  applicable
Interest Period would be for a shorter period, such Interest Period shall not be
available hereunder.

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

     "Inventory"  means all  inventory  as such term is defined  in the  Uniform
Commercial Code and shall include,  without  limitation,  (a) all goods intended
for sale or lease by the Obligors, or for display or demonstration, (b) all work
in process,  (c) all raw  materials  and other  materials  and supplies of every
nature  and  description  used or  which  might be used in  connection  with the
manufacture,  packing, shipping, advertising,  selling, leasing or furnishing of
such goods or otherwise used or consumed in the Obligors' business,  and (d) all
documents evidencing and general intangibles relating to any of the foregoing.

     "Inventory  Appraisal"  means  the  inventory  appraisal  prepared  by  the
Inventory Appraiser and delivered to the Agent pursuant to Section 8.12(f).

     "Inventory Appraiser" has the meaning set forth in Section 8.12(f).

     "Inventory Sublimit" means $5,000,000.

     "Investment"  means,  with respect to any Person,  (a) the  acquisition  or
ownership by such Person of any share of capital stock, evidence of Indebtedness
or other security issued by any other Person, (b) any loan, advance or extension
of credit to, or  contribution  to the capital of, any other  Person,  excluding
advances to employees in the ordinary course of business for business  expenses,
(c) any  Guaranty  of the  obligations  of any other  Person,  and (d) any other
similar  investment (other than the Acquisition of a Business Unit) in any other
Person.

     "Investment Property" means "investment property" as defined in the Uniform
Commercial  Code as in effect in the State of Georgia,  as amended  from time to
time,  including  without

                                       17
<PAGE>

limitation all  securities,  whether  certificated or  uncertificated,  security
entitlements, security accounts, commodity contracts and commodity accounts.

     "IRS" means the Internal Revenue Service.

     "Issuing  Bank"  means Bank of  America,  in its  capacity as issuer of any
Letter of Credit, or any successor thereto.

     "Interest  Expense"  means,  with  respect to any Person on a  consolidated
basis for any period,  interest  expense and loan fees  determined in accordance
with GAAP,  and  including  capitalized  and  non-capitalized  interest  and the
interest component of Capitalized Lease Obligations.  Unless the context clearly
provides otherwise, any reference to Interest Expense in this Agreement shall be
to the Interest Expense of Safety Components and its US and UK Subsidiaries.

     "Lender"  means  at any  time  any  financial  institution  party  to  this
Agreement  at such time,  including  any such  Person  becoming  a party  hereto
pursuant to the provisions of Article 13, and its  successors  and assigns,  and
"Lenders"  means  at any time all of the  financial  institutions  party to this
Agreement at such time,  including  any such  Persons  becoming  parties  hereto
pursuant to the provisions of Article 13, and their successors and assigns.

     "Letter of Credit"  means any Letter of Credit  issued by the Issuing  Bank
for the account of the Borrowers pursuant to Article 3.

     "Letter of Credit Amount" means, with respect to any Letter of Credit,  the
aggregate  maximum amount at any time available for drawing under such Letter of
Credit.

     "Letter of Credit Facility" means the amount of up to $1,000,000.

     "Letter  of Credit  Obligations"  means,  at any  time,  the sum of (a) the
Reimbursement  Obligations of the Borrowers at such time, plus (b) the aggregate
Letter of Credit Amount of Letters of Credit  outstanding at such time, plus (c)
the aggregate Letter of Credit Amount of Letters of Credit the issuance of which
has been authorized by the Agent and the Issuing Bank pursuant to Section 3.4(b)
but that have not yet been issued, in each case as determined by the Agent.

     "Letter of Credit  Reserve"  means,  at any time,  the aggregate  Letter of
Credit  Obligations at such time,  other than Letter of Credit  Obligations that
are fully secured by Cash Collateral.

     "Liabilities"  of any Person  means all items  (except for items of capital
stock,   additional  paid-in  capital  or  retained  earnings,   or  of  general
contingency  or deferred tax reserves)  which in  accordance  with GAAP would be
included in  determining  total  liabilities as shown on the liability side of a
balance  sheet of such Person as at the date as of which  Liabilities  are to be
determined.

     "LIBOR"  means,  with  respect  to any LIBOR Loan for the  Interest  Period
applicable  thereto, a simple per annum interest rate determined pursuant to the
following formula:

           LIBOR =                 Interbank Offered Rate
                       -----------------------------------------------
                                1 - LIBOR Reserve Percentage

LIBOR shall be adjusted  automatically as of the effective date of any change in
the LIBOR Reserve Percentage.

                                       18
<PAGE>

     "LIBOR  Loan"  means any Loan  bearing  interest  at a rate  determined  by
reference to LIBOR,  including any such Loans  continued as or converted  into a
LIBOR Loan on the same day by the Lenders for the same Interest Period.

     "LIBOR Reserve  Percentage" means that percentage  (expressed as a decimal)
which  is in  effect  from  time to time  under  Regulation  D of the  Board  of
Governors of the Federal Reserve System,  as such regulation may be amended from
time to time, or any successor  regulation,  as the maximum reserve  requirement
(including any basic,  supplemental,  emergency,  special, or marginal reserves)
applicable with respect to  Eurocurrency  liabilities as that term is defined in
Regulation  D (or  against  any other  category  of  liabilities  that  includes
deposits by reference to which the interest rate of LIBOR Loans is  determined),
whether  or not any  Lender  has any  Eurocurrency  liabilities  subject to such
reserve  requirement  at that time.  LIBOR Loans  shall be deemed to  constitute
Eurocurrency  liabilities  and as  such  shall  be  deemed  subject  to  reserve
requirements  without  benefit of credits for  proration,  exceptions or offsets
that may be available from time to time to any Lender. As of the Agreement Date,
the LIBOR Reserve Percentage is 0%.

     "LIBOR Revolving Loan" means a LIBOR Loan  outstanding  under the Revolving
Loan Facility.

     "LIBOR  Term  Loan"  means a LIBOR  Loan  outstanding  under  the Term Loan
Facility.

     "Lien" means,  as applied to the property of any Person:  (a) any mortgage,
deed to secure debt, deed of trust, lien, pledge,  charge,  lease constituting a
Capitalized  Lease  Obligation,   conditional  sale  or  other  title  retention
agreement, or other security interest, security title or encumbrance of any kind
in  respect  of any  property  of such  Person,  or upon the  income or  profits
therefrom, (b) any arrangement,  express or implied, under which any property of
such Person is transferred,  sequestered or otherwise identified for the purpose
of subjecting  the same to the payment of  Indebtedness  or  performance  of any
other obligation in priority to the payment of the general,  unsecured creditors
of such Person,  (c) any Indebtedness  which is unpaid more than sixty (60) days
after the same shall have become due and  payable  and which if unpaid  might by
law  (including  bankruptcy  and insolvency  laws),  or otherwise,  be given any
priority whatsoever over the claims of post-petition unsecured creditors of such
Person, and (d) the filing of, or any agreement to give, any financing statement
under  the  Uniform  Commercial  Code  or its  equivalent  in any  jurisdiction,
excluding informational financing statements relating to leased property.

     "Loan"  means any  Revolving  Loan or Term Loan,  as well as all such loans
collectively, as the context requires.

     "Loan Account" and "Loan Accounts" shall have the meanings ascribed thereto
in Section 4.5.

     "Loan Documents" means collectively this Agreement, the Notes, the Security
Documents,  the Fee Letter,  all Collateral  Access  Agreements,  and each other
instrument,  agreement or document executed by any Obligor,  or any Affiliate or
Subsidiary of any Obligor, in connection with this Agreement,  whether prior to,
on or after the Effective Date, and each other instrument, agreement or document
referred to herein or contemplated hereby.

     "Lockbox" means each post office box specified in a Lockbox Agreement.

                                       19
<PAGE>

     "Lockbox  Agreement" means each agreement between an Obligor and a Clearing
Bank  concerning  the   establishment   of  a  Lockbox  for  the  collection  of
Receivables.

     "Materially   Adverse   Effect"   means  any  act,   omission,   situation,
circumstance,  event or  undertaking  (other  than the filing of the  Chapter 11
Case,  the issuance of default  notices  under the  Indenture  and  otherwise as
disclosed in the financial  statements and other financial  reports furnished to
the Agent and the Lenders prior to the Petition Date) which would,  singly or in
any   combination   with  one  or  more  other  acts,   omissions,   situations,
circumstances,  events or  undertakings  have,  or reasonably be expected by the
Agent to have,  a  materially  adverse  effect  upon (a) the  business,  assets,
properties,   liabilities,   condition  (financial  or  otherwise),  results  of
operations  or business  prospects  of Safety  Components  and its  Consolidated
Subsidiaries taken as a whole, (b) the value of the Collateral, (c) the Security
Interest or the priority of the Security Interest, (d) the respective ability of
any Obligor or any of their  Subsidiaries  to perform any  material  obligations
under this  Agreement or any other Loan Document to which it is a party,  or (e)
the legality,  validity,  binding effect, or enforceability of any Loan Document
or the  ability  of the Agent or any Lender to  enforce  any rights or  remedies
under or in connection with any Loan Document.

     "Minimum Commitment" means $5,000,000.

     "Money Borrowed"  means, as applied to  Indebtedness,  (a) Indebtedness for
money borrowed,  (b) Indebtedness,  whether or not in any such case the same was
for money borrowed, (i) represented by notes payable, and drafts accepted,  that
represent  extensions  of credit,  (ii)  constituting  obligations  evidenced by
bonds,  debentures,  notes or similar instruments,  or (iii) upon which interest
charges  are  customarily  paid or that was issued or assumed as full or partial
payment for  property  (other than trade credit that is incurred in the ordinary
course of business),  (c)  Indebtedness  that  constitutes  a Capitalized  Lease
Obligation,  (d) Indebtedness under Hedge Agreements,  and (e) Indebtedness that
is such by virtue  of  clause  (c) of the  definition  thereof,  but only to the
extent that the  obligations  Guaranteed are obligations  that would  constitute
Indebtedness for Money Borrowed.

     "Mortgages"  means  and  includes  any and all of the  mortgages,  deeds of
trust,  deeds to secure debt,  assignments  and orders of the Court  pursuant to
which the Agent receives,  for the benefit of the Secured  Creditors,  a Lien on
all  Real  Estate  of  the  Obligors,  and  all  amendments,  modifications  and
supplements thereto.

     "Multiemployer  Plan"  means a  "multiemployer  plan" as defined in Section
4001(a)(3)  of ERISA to which an Obligor or a Related  Company  is  required  to
contribute or has contributed within the immediately preceding six years.

     "Net Income" means, with respect to any Person on a consolidated  basis for
any period,  its net income (or deficit)  determined  in  accordance  with GAAP.
Unless the context clearly  provides  otherwise,  any reference to Net Income in
this Agreement shall be to the Net Income of Safety Components and its US and UK
Subsidiaries.

     "Net  Outstandings"  of any Lender means,  at any time,  the sum of (a) all
amounts paid by such Lender  (other than  pursuant to Section 14.7) to the Agent
in respect of Revolving  Loans,  Term Loans or otherwise  under this  Agreement,
minus (b) all amounts paid by the Agent to such Lender which are received by the
Agent and which,  pursuant to this  Agreement,  are paid over to such Lender for
application in reduction of the outstanding  principal  balance of the Revolving
Loans and the Term Loans.

                                       20
<PAGE>

     "Net  Proceeds"  means  proceeds  received  by any Obligor in cash from any
Asset  Disposition  (including  payments  under  notes or other debt  securities
received in connection with any Asset Disposition),  net of: (a) the transaction
costs of such sale, lease, transfer or other disposition;  (b) any tax liability
arising  from  such  transaction;  and  (c)  amounts  applied  to  repayment  of
Indebtedness (other than the Secured Obligations) secured by a Lien on the asset
or property disposed.

     "Non-Debtor Borrower" has the meaning assigned to it in the recital clauses
hereof.

     "Non-Debtor  Guarantor"  shall  mean  any  Guarantor  that is not a  Debtor
Guarantor.

     "Non-Ratable Loan" has the meaning specified in Section 4.8(b).

     "Note"  means any of the  Revolving  Loan  Notes or the Term Loan Notes and
"Notes" means more than one such Note.

     "Noteholders"   means  the   holders  of  those   certain  10  1/8%  Senior
Subordinated Notes Due 2007, Series B pursuant to the terms of the Indenture.

     "Noteholders  Restructuring  Agreement"  means that  certain  restructuring
agreement by and among  Borrowers  and the Required  Noteholder  Representatives
providing,  among other things, for the conversion of all Indebtedness under the
Indenture to equity  interests  in Safety  Components,  on terms and  conditions
satisfactory to the Agent.

     "Notice of Borrowing" means a written notice, or telephonic notice followed
by a  confirming  same-day  written  notice,  requesting a Borrowing of either a
Prime Rate Revolving  Loan, a LIBOR  Revolving Loan, a Prime Rate Term Loan or a
LIBOR Term Loan which is given by telex or facsimile  transmission in accordance
with the  applicable  provisions of Sections 2.2 or 2.6 and which  specifies (i)
the  amount  of the  requested  Borrowing,  and (ii)  the date of the  requested
Borrowing.

     "Notice of Conversion or Continuation" has the meaning specified in Section
4.12.

     "Obligor"  means any  Borrower,  any  Guarantor and any other Person liable
with respect to the Secured Obligations,  whether as maker, endorser, guarantor,
pledgor or otherwise, and whether such liability is direct, indirect, primary or
secondary, and "Obligors" means all of such Persons collectively.

     "Operating  Lease"  means  any lease  (other  than a lease  constituting  a
Capitalized Lease Obligation) of real or personal property.

     "Orderly  Liquidation  Value"  means  the  value,  based on the net  median
recovery percentage and other methodology reasonably acceptable to the Agent, as
determined from time to time by an Inventory Appraiser.

     "PBGC" means the Pension  Benefit  Guaranty  Corporation  and any successor
agency.

     "Patent  Assignment"  means the Conditional  Assignment and Patent Security
Agreement,  dated as of the Agreement  Date,  made by the Obligors to the Agent,
for the benefit of the Secured Creditors.

                                       21
<PAGE>

     "Patents"  means  and  includes,  in each  case  whether  now  existing  or
hereafter arising during the term of this Agreement, all of the Obligors' right,
title and  interest in and to (a) any and all  patents and patent  applications,
(b) inventions and  improvements  described and claimed  therein,  (c) reissues,
divisions,   continuations,   renewals,   extensions  and  continuations-in-part
thereof, (d) income,  royalties,  damages,  claims and payments now or hereafter
due  and/or  payable  under and with  respect  thereto,  including  damages  and
payments for past and future infringements  thereof, (e) rights to sue for past,
present and future  infringements  thereof,  and (f) all rights corresponding to
any of the foregoing throughout the world.

     "Permitted  Investments" means Investments in: (a) negotiable  certificates
of deposit and time  deposits  issued by Bank of America or by any United States
bank or trust company having capital, surplus and undivided profits in excess of
$100,000,000,  (b) any direct  obligation of the United States of America or any
agency or instrumentality  thereof which has a remaining maturity at the time of
purchase  of not more than one year and  repurchase  agreements  relating to the
same, (c) sales of inventory on credit in the ordinary  course of business,  (d)
shares of capital stock,  evidence of Indebtedness or other security acquired in
consideration  for or as evidence of past-due or restructured  Receivables in an
aggregate face amount of such Receivables at any time not to exceed $50,000, (e)
Guaranties  permitted  pursuant to Section  11.3,  (f) loans and advances to any
Borrower from any other Obligor, for the purpose of providing working capital in
the ordinary course of business, to the extent permitted by the Court, (g) loans
to employees for recruiting and hiring purposes,  to the extent permitted by the
Court, (h) other  Investments of up to $50,000 in the aggregate at any time, and
(i) other Investments consented to by the Agent in writing.

     "Permitted  Liens" means:  (a) Liens securing taxes,  assessments and other
governmental  charges or levies  (excluding any Lien imposed  pursuant to any of
the  provisions  of ERISA or the  Federal Tax Lien Act of 1966) or the claims of
materialmen,   mechanics,   carriers,   warehousemen  or  landlords  for  labor,
materials,  supplies or rentals incurred in the ordinary course of business, but
(i) in all cases only if payment shall not at the time be required to be made in
accordance  with  Section  9.6 or the  Bankruptcy  Code  and (ii) in the case of
warehousemen's  or  landlords'  Liens,  only if such  liens  do not  exceed  the
respective  amounts (if any) set forth in the Final Order,  (b) Liens consisting
of deposits or pledges  made in the  ordinary  course of business in  connection
with,  or  to  secure  payment  of,  obligations  under  workers'  compensation,
unemployment  insurance or similar  legislation  or under payment or performance
bonds,  and utility  deposits  required by order of the Court, if any, (c) Liens
constituting  encumbrances in the nature of zoning restrictions,  easements, and
rights  or  restrictions  of record  on the use of real  property,  which do not
materially  detract from the value of such property or impair the use thereof in
the business of the Obligors or their Subsidiaries, (d) Permitted Purchase Money
Liens not to exceed $500,000 in the aggregate,  (e) Liens of the Agent,  for the
benefit of the Secured  Creditors,  arising  under this  Agreement and the other
Loan Documents,  (f) reclamation  claims against the Borrowers not exceeding the
respective  amounts,  if any, set forth in the Final Order,  (g) Liens which, by
virtue of the entry of,  and  pursuant  to the terms of, the  Intercreditor  and
Subordination  Agreement,  the  Final  Order,  or any  other  order of the Court
granting such Liens,  are  subordinate and inferior to the Liens of the Agent on
the  Collateral,  (h) a Lien for Carve-Out  Expenses not exceeding the Carve-Out
Amount, (i) Liens securing the Senior Claims, provided,  however, that the liens
and  claims  of  the   Pre-Petition   Lenders  (whether  in  their  capacity  as
Pre-Petition Lenders or in their capacity as Post-Petition Subordinated Lenders)
shall be  subordinate  in all  respects to the liens and claims of the Agent and
the Lenders under this  Agreement and the other Loan  Documents  pursuant to the
Intercreditor  and  Subordination  Agreement and Bankruptcy Code Section 364(d),
(j) Liens  arising in the ordinary  course of business  which do not  materially
detract  from  the  value of or  interfere  with  the use of  properties  of the
Borrowers  or  otherwise  materially  impair the  business or  operation  of the
Borrowers  provided that the  indebtedness  secured by such Liens may not exceed
$500,000 in the aggregate.

                                       22
<PAGE>

     "Permitted Purchase Money Lien" means a lien to secure Permitted Purchase
Money Indebtedness.

     "Permitted  Purchase Money  Indebtedness" means Purchase Money Indebtedness
incurred after the Agreement Date (a) which is secured by a Purchase Money Lien,
(b) the aggregate  principal  amount of which does not exceed an amount equal to
the lesser of (i) the cost (including the principal amount of such Indebtedness,
whether or not assumed) of the property (other than  Inventory)  subject to such
Lien,  and (ii) the fair value of such  property  (other than  Inventory) at the
time of its  acquisition,  provided  that  the  aggregate  amount  of  Permitted
Purchase Money  Indebtedness  shall not exceed  $500,000 during the term of this
Agreement.  For the purposes of this  definition,  the  principal  amount of any
Purchase Money  Indebtedness  consisting of Capitalized Leases shall be computed
as a Capitalized Lease Obligation.

     "Person"  means an  individual,  limited  liability  company,  corporation,
partnership, association, trust or unincorporated organization, joint venture or
other entity or a government or any agency or political subdivision thereof.

     "Petition  Date" has the  meaning  assigned  to it in the  recital  clauses
hereof.

     "Plan" means any employee  benefit plan as defined in Section 3(3) of ERISA
in  respect  of which an  Obligor  or any  Related  Company  is, or  within  the
immediately preceding six years was, an "employer" as defined in Section 3(5) of
ERISA.

     "Post  Petition  Subordinated  Lenders"  means each Person  qualifying as a
"Lender"  pursuant  to and  as  defined  in the  Post  Petition  Lenders  Credit
Agreement.

     "Post-Petition  Lenders Credit  Agreement" means that certain  Subordinated
Debtor-in-Possession  Agreement  dated April 7, 2000,  by and among the Obligors
and the Pre-Petition  Lenders (in their capacity as  Post-Petition  Subordinated
Lenders)  providing,  among other things, for the restructuring of the liens and
claims  held by the  Pre-Petition  Lenders  pursuant  to the  Pre-Petition  Loan
Agreement.

     "Pre-Petition  Loans" means  "Loans" as defined in and made pursuant to the
Pre-Petition Loan Agreement.

     "Pre-Petition  Loan Agreement" shall have the meaning assigned to it in the
recital clauses hereof.

     "Pre-Petition  Lenders"  means each  Person  qualifying  as a  "Lender"  as
defined in and pursuant to the Pre-Petition Loan Agreement.

     "Prime Rate" means on any day the interest rate per annum equal to the rate
of  interest  publicly  announced  by the Agent at its head  office in  Atlanta,
Georgia  as its  "prime"  rate,  as in  effect on the last  Business  Day of the
calendar  month  immediately  preceding  the month in which such day falls.  The
Agent lends at rates above and below the Prime Rate.

     "Prime Rate Loan" means any Prime Rate  Revolving  Loan, or Prime Rate Term
Loan, and "Prime Rate Loans" means more than one such Loan.

                                       23
<PAGE>

     "Prime Rate Revolving  Loan" means each Borrowing of Prime Rate Loans under
the  Revolving  Loan Facility on the same day, a specified  principal  amount of
Prime  Rate  Loans  outstanding  under  the  Revolving  Loan  Facility,  and any
Non-Ratable Revolving Loan.

     "Prime Rate Term Loan" means each  Borrowing  of Prime Rate Loans under the
Term Loan Facility on the same day, a specified  principal  amount of Prime Rate
Loans outstanding under the Term Loan Facility, and any Non-Ratable Term Loan.

     "Projections"  means, for Safety Components and its US and UK Subsidiaries,
(a) the forecasted  Borrowing Base calculations and cash flow statements for the
period from April 1, 2000,  through  March 31, 2001,  prepared on a weekly basis
and attached hereto as Schedule P-1, and (b) the quarterly  budgets delivered to
the Agent after the Agreement Date pursuant to Section 10.1(c)  hereof,  in each
case together with appropriate  supporting details and a statement of underlying
assumptions.

     "Proportionate  Share" or  "Ratable",  as applied  to a Lender,  means such
Lender's  share  of an  amount  in  Dollars  or  other  property  at the time of
determination equal to (i) the Commitment  Percentage of such Lender, or (ii) if
the Commitments are terminated,  the percentage of the total principal amount of
Loans (plus Letter of Credit  Obligations)  outstanding at such time obtained by
dividing the principal  amount of the Loans (plus Letter of Credit  Obligations)
then  owing to such  Lender by the  total  principal  amount of all Loans  (plus
Letter of Credit Obligations) then owing to all Lenders.

     "Proprietary  Rights"  means all of the  Obligors'  now owned and hereafter
arising during the term of this Agreement or acquired Patents,  Copyrights,  and
Trademarks,  including those  Proprietary  Rights set forth on Schedule  6.1(aa)
hereto,  and all  other  rights  under  any of the  foregoing,  all  extensions,
renewals, reissues, divisions,  continuations,  and continuations-in-part of any
of  the  foregoing,  and  all  rights  to  sue  for  past,  present  and  future
infringement of any of the foregoing.

     "Purchase Money Indebtedness" means (a) Indebtedness  created to secure the
payment of all or any part of the  purchase  price of any  property  (other than
Inventory),  (b) any Indebtedness  incurred at the time of or within thirty (30)
days prior to or after the  acquisition of any property  (other than  Inventory)
for the purpose of financing all or any part of the purchase price thereof,  and
(c) any renewals,  extensions or refinancings  thereof, but not any increases in
the  principal  amounts  thereof  outstanding  at the time of any such  renewal,
extension or refinancing.

     "Purchase Money Lien" means any Lien securing Purchase Money  Indebtedness,
but only if such Lien  shall at all  times be  confined  solely to the  property
(other than  Inventory)  the purchase  price of which was  financed  through the
incurrence of the Purchase Money Indebtedness secured by such Lien.

     "Real Estate"  means all of the Obligors' now or hereafter  owned or leased
estates in real  property,  including  the real  property  described on Schedule
6.1(v).

     "Receivables"  means  and  includes,  as to each  Obligor,  (a) any and all
rights  to the  payment  of money or other  forms of  consideration  of any kind
(whether  classified  under the Uniform  Commercial  Code as accounts,  contract
rights,  chattel paper,  general  intangibles,  or otherwise) including accounts
receivable,  letters  of credit  and the right to  receive  payment  thereunder,
chattel paper, tax refunds, insurance proceeds,  Contract Rights, notes, drafts,
instruments,  documents,  acceptances,  and all  other  debts,  obligations  and
liabilities in whatever form from any Person,  (b) all guarantees,  security and
Liens for  payment  thereof,  (c) all  goods,  whether  now  owned or  hereafter
acquired,  and whether  sold,  delivered,  undelivered,  in transit or returned,
which may be  represented  by, or the sale or lease of which

                                       24
<PAGE>

may have given rise to, any such right to payment or other debt,  obligation  or
liability, and (d) all proceeds of any of the foregoing.

     "Reimbursement  Agreement" means, with respect to a Letter of Credit,  such
form of  application  therefor  and  form of  reimbursement  agreement  therefor
(whether in a single  document  or several  documents)  as the Issuing  Bank may
employ  in the  ordinary  course  of  business  for its own  account,  with such
modifications  thereto  as may be  agreed  upon  by the  Issuing  Bank  and  the
Borrowers,  provided that such  application and agreement and any  modifications
thereto are not inconsistent with the terms of this Agreement.

     "Reimbursement   Obligations"   means  the   reimbursement   or   repayment
obligations  of the  Borrowers  to the Issuing  Bank  pursuant to Section 3.6 or
pursuant to a  Reimbursement  Agreement  with  respect to amounts that have been
drawn under Letters of Credit.

     "Related  Company" means any (a) corporation  which is a member of the same
controlled  group of  corporations  (within the meaning of Section 414(b) of the
Internal  Revenue  Code) as any  Obligor;  (b)  partnership  or  other  trade or
business (whether or not incorporated)  under common control (within the meaning
of Section 414(c) of the Internal Revenue Code) with any Obligor;  or (c) member
of the same  affiliated  service group (within the meaning of Section  414(m) of
the Internal Revenue Code) as any Obligor,  any corporation  described in clause
(a) above or any partnership, trade or business described in clause (b) above.

     "Release" means release,  spill,  emission,  leaking,  pumping,  injection,
deposit, disposal,  discharge,  dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any property, including the movement of
Contaminants through or in the air, soil, surface water or groundwater.

     "Remedial Action" means actions required to (i) clean up, remove,  treat or
in any other way address Contaminants in the indoor or outdoor environment; (ii)
prevent  the Release or threat of Release or  minimize  the  further  Release of
Contaminants  so they do not migrate or endanger or threaten to endanger  public
health  or  welfare  or the  indoor or  outdoor  environment;  or (iii)  perform
pre-remedial studies and investigations and post-remedial monitoring and care.

     "Reportable  Event" has the meaning set forth in Section  4043(c) of ERISA,
but shall not include a Reportable  Event as to which the  provision  for thirty
(30) days notice to the PBGC is waived under applicable regulations.

     "Required  Lenders"  means,  at any time, any  combination of Lenders whose
Commitment  Percentages at such time  aggregate in excess of 66 2/3%;  provided,
however, that if any Lender shall have failed to fund its Proportionate Share of
any Loan in accordance  with the terms of this  Agreement,  then, for so long as
such  failure  continues,   the  term  "Required  Lenders"  shall  mean  Lenders
(excluding such Lender whose failure to fund its Proportionate Share of any Loan
has not been cured) whose Commitment  Percentages  (computed after excluding the
defaulting Lender's Commitment from the Total Commitment) at such time aggregate
in excess of 66 2/3%;  provided further,  however,  that if the Commitments have
been terminated,  the term "Required Lenders" shall mean Lenders (excluding each
Lender whose  failure to fund its  Proportionate  Share of any Loan has not been
cured) holding Loans (plus Letter of Credit Obligations)  representing in excess
of 66 2/3% of the  aggregate  principal  amount  of Loans  and  Letter of Credit
Obligations  (excluding the Loans and Letter of Credit  Obligations owing to the
defaulting Lender) outstanding at such time.

                                       25
<PAGE>

     "Required Noteholder  Representatives"  means Noteholders that collectively
hold in  excess  of two  thirds  in  amount  of  those  certain  10 1/8%  Senior
Subordinated Notes Due 2007, Series B, under the terms of the Indenture.

     "Restricted  Dividend Payment" means any dividend,  distribution or payment
on or with  respect to (a) any shares of a Person's  capital  stock  (other than
dividends  payable solely in shares of its capital stock) or (b) any partnership
or other ownership interest in a Person, excluding,  however, any such dividend,
distribution  or  payment  to  Safety  Components  by any  Subsidiary  of Safety
Components.

     "Restricted  Payment"  means  (a) any  redemption  or  prepayment  or other
retirement, prior to the stated maturity thereof or prior to the due date of any
regularly scheduled installment or amortization payment with respect thereto, of
any Indebtedness for Money Borrowed,  (b) any redemption,  retirement or payment
with respect to Subordinated  Indebtedness other than as permitted under Section
9.8 and pursuant to the terms of the Intercreditor and Subordination  Agreement,
(c) the  payment by any Person of the  principal  amount of or  interest  on any
Indebtedness  (other than trade debt) owing to a shareholder,  partner or equity
holder of such Person or to any  Affiliate of any such  shareholder,  partner or
equity holder,  (d) the payment of any management,  consulting or similar fee by
any Person to any shareholder, executive officer or director of such Person.

     "Restricted  Purchase"  means  any  payment  on  account  of the  purchase,
redemption or other  acquisition  or retirement by a Person of any (a) shares of
such Person's  capital stock (except shares  acquired on the conversion  thereof
into other shares of capital stock of such Person),  (b) a partnership  interest
in such Person, if such Person is a partnership, or (c) a membership interest in
such Person, if such Person is a limited liability company.

     "Revolving Loan Facility" means the principal amount of $25,000,000 or such
lesser or greater amount as shall be agreed upon from time to time in writing by
the Agent, the Lenders and the Borrowers.

     "Revolving  Loans"  means loans made to the  Borrowers  pursuant to Section
2.1.

     "Revolving  Loan Note" means each Revolving Loan Note made by the Borrowers
payable to the order of a Lender evidencing the joint and several  obligation of
the  Borrowers to pay the  aggregate  unpaid  principal  amount of the Revolving
Loans made to them by such Lender (and any promissory  note or notes that may be
issued from time to time in  substitution,  renewal,  extension,  replacement or
exchange  therefor,  whether payable to such Lender or to a different  Lender in
connection  with a  Person  becoming  a  Lender  after  the  Effective  Date  or
otherwise),  substantially  in the form of Exhibit C-1  hereto,  with all blanks
properly  completed,  either as originally executed or as the same may from time
to time be supplemented, modified, amended, renewed, extended or refinanced.

     "Safety Components" means Safety Components International, Inc., a Delaware
corporation.

     "Schedule of Inventory" means a schedule  delivered by the Borrowers' Agent
to the Agent pursuant to the provisions of Section 8.12(b).

     "Schedule of  Receivables"  means a schedule  delivered  by the  Borrowers'
Agent to the Agent pursuant to the provisions of Section 8.12(a).

                                       26
<PAGE>

     "Secured Creditors" means,  collectively,  the Agent, the Issuing Bank, the
Lenders, and each Affiliate of each of the foregoing.

     "Secured  Obligations"  means,  in each case  whether now in  existence  or
hereafter arising,  (a) the principal of, and interest and premium,  if any, on,
the Loans,  and any fees payable in connection with the Loans or this Agreement,
(b) the Reimbursement  Obligations and all other obligations of the Borrowers to
the  Issuing  Bank,  the Agent or any  Lender  arising  in  connection  with the
issuance  of  Letters  of  Credit,   and  (c)  all  indebtedness,   liabilities,
obligations,  covenants and duties of the Obligors to the Agent,  the Lenders or
any other Secured Creditor of every kind,  nature and description  arising under
or in respect of this Agreement, the Notes or any of the other Loan Documents or
the Banking  Relationship,  whether direct or indirect,  absolute or contingent,
due or not due, contractual or tortious, liquidated or unliquidated, and whether
or not  evidenced  by any note,  and  whether  or not for the  payment of money,
including  fees required to be paid pursuant to Article 4 and expenses  required
to be paid or reimbursed pursuant to Section 16.2.

     "Security Documents" means this Agreement,  the Financing  Statements,  the
Patent  Assignment,  the  Trademark  Assignment,  the UK  Debenture,  the Equity
Interest  Pledge  Agreements,  the  Mortgages,  the Final  Order and each  other
writing executed and delivered by an Obligor securing the Secured Obligations.

     "Security  Interest"  means the Liens of the Agent,  for the benefit of the
Secured  Creditors,  on and in the Collateral  effected  hereby or by any of the
Security Documents or pursuant to the terms hereof or thereof.

     "Senior Claims" means (a) the Liens and claims in favor of the Pre-Petition
Lenders  (in  their  capacity  as  Post-Petition  Subordinated  Lenders)  on the
Collateral as security for the obligations  evidenced by the  Pre-Petition  Loan
Agreement,  provided that such Liens and claims are subject to the Intercreditor
and Subordination Agreement and, to the extent provided under such Intercreditor
and  Subordination  Agreement  and this  Agreement,  are  junior to the Lien and
claims of the Agent pursuant to this Agreement and the other Loan Documents, and
(b) those other claims or liens that have  priority  over the claims or Liens of
the Agent,  the Issuing  Bank,  and the  Lenders,  to the extent  allowed and as
specifically set forth on Schedule S-1 attached hereto.

     "Settlement Date" means each Business Day after the Effective Date selected
by the  Agent in its  sole  discretion  subject  to and in  accordance  with the
provisions of Section 4.8(b) as of which a Settlement Report is delivered by the
Agent and on which settlement is to be made among the Lenders in accordance with
the provisions of Section 4.8.

     "Settlement  Report" means each report,  substantially in the form attached
hereto as Exhibit D,  prepared  by the Agent and  delivered  to each  Lender and
setting forth,  among other things,  as of the Settlement Date indicated thereon
and as of the next preceding Settlement Date, the aggregate principal balance of
all  Revolving  Loans  and Term  Loans  outstanding,  each  Lender's  Commitment
Percentage  thereof,  each Lender's Net Outstandings  and all Non-Ratable  Loans
made,  and all payments of  principal,  interest and fees  received by the Agent
from the Borrowers during the period beginning on such next preceding Settlement
Date and ending on such Settlement Date.

     "Subordinated Indebtedness" means (a) the Indebtedness of Safety Components
evidenced by the  Pre-Petition  Loan  Agreement  and the  Post-Petition  Lenders
Credit Agreement,  including principal thereof and interest and premium, if any,
thereon,  together with any and all

                                       27
<PAGE>

Indebtedness  related thereto, and (b) any other Indebtedness for Money Borrowed
which is in an amount, and is expressly  subordinated to the Secured Obligations
on terms and  conditions,  acceptable  to the Agent and the Required  Lenders in
their discretion.

     "Subsidiary"  (a) when used to determine  the  relationship  of a Person to
another Person, means a Person of which an aggregate of 50% or more of the stock
of any class or classes or 50% or more of other ownership  interests is owned of
record or beneficially by such other Person,  or by one or more  Subsidiaries of
such other Person,  or by such other Person and one or more Subsidiaries of such
Person, (i) if the holders of such stock, or other ownership interests,  (A) are
ordinarily,  in the absence of contingencies,  entitled to vote for the election
of a  majority  of  the  directors  (or  other  individuals  performing  similar
functions) of such Person,  even though the right so to vote has been  suspended
by the happening of such a contingency, or (B) are entitled, as such holders, to
vote for the election of a majority of the directors (or individuals  performing
similar functions) of such Person, whether or not the right so to vote exists by
reason of the  happening  of a  contingency,  or (ii) in the case of such  other
ownership  interests,  if such ownership interests  constitute a majority voting
interest,  and (b) when used with respect to a Plan, ERISA or a provision of the
Internal  Revenue Code  pertaining  to employee  benefit  plans,  also means any
corporation,  trade or  business  (whether or not  incorporated)  which is under
common  control with any Obligor and is treated as a single  employer  with such
Obligor  under  Section  414(b)  or (c) of the  Internal  Revenue  Code  and the
regulations thereunder.

     "Supporting Letter of Credit" has the meaning specified in Section 3.9.

     "Tax Refund Claims" means all tax refund claims and all rights with respect
thereto, including all rights to settle or compromise the amount of such claims,
to file amendments and other documents with respect thereto,  and to receive the
proceeds thereof.

     "Term Loan Facility" means $5,600,000.

     "Term Loan" means any loan made to the Borrowers pursuant to Section 2.5.

     "Term Loan Note" means each Term Loan Note made by the Borrowers payable to
the  order of a Lender  evidencing  the  joint  and  several  obligation  of the
Borrowers to pay the aggregate unpaid principal amount of the Term Loans made to
them by such  Lender (and any  promissory  note or notes that may be issued from
time  to time in  substitution,  renewal,  extension,  replacement  or  exchange
therefor,  whether payable to such Lender or to a different Lender in connection
with a  Person  becoming  a  Lender  after  the  Effective  Date or  otherwise),
substantially  in the form of  Exhibit  C-2  hereto,  with all  blanks  properly
completed, either as originally executed or as the same may from time to time be
supplemented, modified, amended, renewed, extended or refinanced.

     "Termination  Date" means the earliest of: (a) April 7, 2001;  (b) the date
that the Agent elects pursuant to Section 12.2 to terminate the Borrowers' right
to receive  Loans or  accommodations  for  Letters  of  Credit;  (c) the date of
prepayment  in full  by the  Borrowers  of the  Loans  in  accordance  with  the
provisions  of Section 4.6; (d)  thirty-five  (35) days  following  the Petition
Date,  if the Final  Order has not been  entered by the Court by such date;  (e)
unless the Agent and the Lenders agree otherwise,  the date upon which a plan of
reorganization  confirmed  in the  Chapter  11  Case  of the  Borrowers  becomes
effective  that does not provide for the payment in full of all amounts  owed to
the Agent and the DIP Lenders under this Agreement and the other Loan Documents,
and (f) the date of the  closing  of a sale of all or  substantially  all of the
Borrowers'  assets  pursuant to Section 363 of the Bankruptcy  Code, a confirmed
plan of reorganization or a liquidation  pursuant to Chapter 7 of the Bankruptcy
Code.

                                       28
<PAGE>

     "Termination  Event"  means (a) a  Reportable  Event,  (b) the  filing of a
notice of intent to terminate a Plan or the  treatment of a Plan  amendment as a
termination  under Section 4041 of ERISA,  or (c) the institution of proceedings
to terminate a Plan by the PBGC under Section 4042 of ERISA,  or the appointment
by the PBGC of a trustee to administer any Plan.

     "Total  Commitment" means the sum of the Commitments,  but in any event, an
amount not to exceed $30,600,000.

     "Trademark  Assignment"  means the  Conditional  Assignment  and  Trademark
Security Agreement,  dated as of the Agreement Date, made by the Obligors to the
Agent, for the benefit of the Secured Creditors.

     "Trademarks"  means and  includes  in each case  whether  now  existing  or
hereafter arising during the term of this Agreement, all of the Obligors' right,
title and interest in and to (a) trademarks  (including  service  marks),  trade
names and trade styles and the  registrations  and applications for registration
thereof and the  goodwill of the  business  symbolized  by the  trademarks,  (b)
licenses  of the  foregoing,  whether as  licensee  or  licensor,  (c)  renewals
thereof, (d) income, royalties, damages and payments now or hereafter due and/or
payable with respect thereto,  including  damages,  claims and payments for past
and future infringements thereof, (e) rights to sue for past, present and future
infringements thereof,  including the right to settle suits involving claims and
demands for  royalties  owing,  and (f) all rights  corresponding  to any of the
foregoing throughout the world.

     "Treasury Management Reserve" means a reserve established by the Agent from
time to time in its reasonable discretion in connection with its cash management
relationship with the Borrowers, which reserve as of the Agreement Date is $0.

     "Type" means,  when used in respect of any Loan or  Borrowing,  the rate by
reference  to  which  interest  on such  Loan or on the  Loans  comprising  such
Borrowing is determined.

     "UK Debenture" means that certain  debenture  executed by Automotive Safety
Components  UK granting a security  interest to the Agent and the Lenders in all
of Automotive Safety Components UK's owned Collateral.

     "Unfunded  Vested Accrued  Benefits" means with respect to any Plan subject
to Title IV of ERISA at any time,  the amount (if any) by which (a) the  present
value of all vested nonforfeitable benefits under such Plan exceeds (b) the fair
market value of all Plan assets allocable to such benefits, all determined as of
the then most recent valuation date for such Plan.

     "Uniform  Commercial  Code" means the Uniform  Commercial Code as in effect
from time to time in the  State of  Georgia  or in any  other  state the laws of
which are required by Section 9-103 thereof to be applied in connection with the
issue of perfection of security interests.

     "US and UK Subsidiaries"  means all Subsidiaries of the Obligors located in
the United States and the United Kingdom.

     SECTION 1.2. General.

     (a) All terms of an accounting nature not specifically defined herein shall
have the meaning ascribed thereto by GAAP.

                                       29
<PAGE>

     (b)  The  terms  accounts,   chattel  paper,  contract  rights,  documents,
equipment, instruments, general intangibles,  investment property and inventory,
as and when used in this  Agreement  or the Security  Documents,  shall have the
meanings given those terms in the Uniform Commercial Code.

     (c)  Unless  otherwise  specified,  a  reference  in  this  Agreement  to a
particular section or subsection is a reference to that section or subsection of
this  Agreement,  and the words  "hereof,"  "herein,"  "hereunder"  and words of
similar import, when used in this Agreement,  refer to this Agreement as a whole
and not to any particular provision, section or subsection of this Agreement.

     (d) Wherever from the context it appears  appropriate,  each term stated in
either the  singular or plural  shall  include  the  singular  and  plural,  and
pronouns  stated in the  masculine,  feminine or neuter gender shall include the
masculine, the feminine and the neuter.

     (e) Words denoting individuals include corporations and vice versa.

     (f) Unless otherwise  specified,  the word "including" means "including but
not limited to".

     (g) References to any  legislation or statute or code, or to any provisions
of any  legislation  or statute  or code,  shall  include  any  modification  or
reenactment of, or any legislative, statutory or code provision substituted for,
such legislation, statute or code or provision thereof.

     (h)  References  to any document or agreement  (including  this  Agreement)
shall  include  references  to such  document or agreement as amended,  novated,
supplemented,  modified,  reissued or replaced from time to time, so long as and
to  the  extent  that  such  amendment,  novation,   supplement,   modification,
reissuance  or  replacement  is  either  not  prohibited  by the  terms  of this
Agreement or is consented  to by the Required  Lenders (or Lenders,  as the case
may be) and the Agent.

     (i) References to any Person include its successor or permitted substitutes
and assigns.

     (j) Each reference to a time of day shall refer to Atlanta, Georgia time.

                                   ARTICLE 2

                 REVOLVING LOAN FACILITY AND TERM LOAN FACILITY

     SECTION 2.1.  Revolving Loans. Upon the terms and subject to the conditions
of, and in reliance upon the  representations  and warranties  made under,  this
Agreement,  each Lender agrees,  severally,  but not jointly,  to make Revolving
Loans (on a final  basis as that term is  commonly  used in the  context  of the
Bankruptcy  Code) to the Borrowers  from time to time from the Effective Date to
but not including the Termination  Date, as requested or deemed requested by the
Borrowers in accordance  with the terms of Section 2.2, in amounts equal to such
Lender's  Commitment  Percentage of each such Loan requested or deemed requested
hereunder up to an aggregate  amount at any one time  outstanding  equal to such
Lender's Commitment  Percentage of the Borrowing Base; provided,  however,  that
the  Aggregate  Revolving  Loan  Obligations  (after  giving effect to the Loans
requested)  shall not exceed the Borrowing Base. It is expressly  understood and
agreed that the Lenders may and at present intend to use the Borrowing Base as a
maximum ceiling on Revolving Loans to the Borrowers;  provided, however, that it
is agreed that should the  Revolving  Loans exceed the ceiling so  determined or
any other limitation set

                                       30
<PAGE>

forth in this  Agreement,  such Revolving  Loans shall  nevertheless  constitute
Secured  Obligations and, as such, shall be entitled to all benefits thereof and
security  therefor.  The principal  amount of any Revolving Loan which is repaid
pursuant to Section  2.3(c) may be reborrowed by the  Borrowers,  subject to the
terms and  conditions of this  Agreement,  in accordance  with the terms of this
Section 2.1. The Agent's and each Lender's books and records reflecting the date
and the amount of each Revolving  Loan and each  repayment of principal  thereof
shall  constitute  prima  facie  evidence  of the  accuracy  of the  information
contained therein, subject to the provisions of Section 4.5.

     SECTION 2.2.  Manner of Borrowing  Revolving  Loans.  Borrowings  under the
Revolving Loan Facility shall be made as follows:

          (a) Requests for Borrowing.

               (i) Prime Rate  Revolving  Loans.  A request for a Borrowing of a
          Prime  Rate  Revolving  Loan  shall be made,  or shall be deemed to be
          made, in the following manner:

                    (A) with respect to the initial  Borrowing to be made on the
               Effective  Date,  the  Borrowers  shall give the Agent an Initial
               Notice of Borrowing on the proposed date of the  Borrowing,  and,
               as to subsequent  Prime Rate Revolving Loans, the Borrowers shall
               give the Agent a Notice of  Borrowing  before  12:00 p.m.  on the
               proposed   Borrowing   date,   all  of  which  notices  shall  be
               irrevocable,

                    (B)  whenever  a  check  or  other  item is  presented  to a
               Disbursing Bank for payment against a Disbursement  Account in an
               amount greater than the then  available  balance in such account,
               such Disbursing Bank shall, and is hereby irrevocably  authorized
               by the Borrowers to, give the Agent notice thereof,  which notice
               shall be deemed to be an  irrevocable  request  for a Prime  Rate
               Revolving  Loan on the date of such notice in an amount  equal to
               the  excess  of such  check or other  item  over  such  available
               balance,

                    (C) unless  payment is otherwise  made by the Obligors,  the
               becoming  due  of any  amount  required  to be  paid  under  this
               Agreement  or any of the Notes as interest  shall be deemed to be
               an irrevocable request for a Prime Rate Revolving Loan on the due
               date in the amount required to pay such interest,

                    (D) unless  payment is otherwise  made by the Obligors,  the
               becoming due of any other Secured  Obligation  shall be deemed to
               be an irrevocable  request for a Prime Rate Revolving Loan on the
               due date in the amount  then so due,  and such  request  shall be
               irrevocable, and

                    (E) the  receipt  by the  Agent  of  notification  from  the
               Issuing  Bank to the effect  that a drawing has been made under a
               Letter of Credit and that the Borrowers  have failed to reimburse
               the Issuing  Bank  therefor in  accordance  with the terms of the
               Letter of Credit,  the  Reimbursement  Agreement  and  Article 3,
               shall be deemed to be an  irrevocable  request  for a Prime  Rate
               Revolving Loan on the date such  notification  is received in the
               amount of such drawing which is so unreimbursed.

               (ii) LIBOR  Revolving  Loans.  The  Borrowers may request a LIBOR
          Loan under the Revolving Loan Facility by giving the Agent a Notice of
          Borrowing  (which

                                       31
<PAGE>

          notice  shall be  irrevocable)  not later than 12:00 p.m.  on the date
          three  Business  Days  before  the date on which the  requested  LIBOR
          Revolving  Loan is to be made;  provided  the  Borrowers  shall not be
          permitted to request,  and the Lenders  shall not be required to make,
          LIBOR  Revolving Loans at any time during the existence of an Event of
          Default.

               (iii)  Notification  of  Lenders.  Unless  the Agent has  elected
          periodic settlements pursuant to Section 4.8, the Agent shall promptly
          notify the Lenders of any Notice of  Borrowing  given or deemed  given
          pursuant  to  this  Section  2.2(a)  by  12:00  noon  on the  proposed
          Borrowing date (in the case of Prime Rate Revolving  Loans) or by 3:00
          p.m.  three  Business Days before the proposed  Borrowing date (in the
          case of LIBOR  Revolving  Loans).  Not later  than  1:00  p.m.  on the
          proposed Borrowing date, each Lender will make available to the Agent,
          for the  account  of the  Borrowers,  at the  Agent's  Office in funds
          immediately  available to the Agent,  an amount equal to such Lender's
          Commitment  Percentage  of such  Prime  Rate  Revolving  Loan or LIBOR
          Revolving Loan, as the case may be.

          (b) Disbursement of Loans. Each Borrower hereby irrevocably authorizes
     the Agent to disburse the proceeds of each Borrowing  requested,  or deemed
     to be requested, pursuant to this Section 2.2 as follows:

               (i) the  proceeds  of each  Borrowing  requested  under  Sections
          2.2(a)(i)(A)   (other  than  the  Borrowing  of  the  Initial  Loans),
          2.2(a)(i)(B) or 2.2(a)(ii)  shall be disbursed by the Agent in Dollars
          in  immediately  available  funds by wire  transfer to a  Disbursement
          Account or, in the absence of a Disbursement Account, by wire transfer
          to such other  account as may be agreed upon by the  Borrowers and the
          Agent from time to time,  and the proceeds of the Initial  Loans under
          Section 2.2(a)(i)(A) shall be disbursed in accordance with the Initial
          Notice of Borrowing;

               (ii)  the  proceeds  of each  Borrowing  deemed  requested  under
          Sections 2.2(a)(i)(C) or (D) shall be disbursed by the Agent by way of
          direct payment of the relevant interest or Secured Obligation; and

               (iii) the  proceeds  of each  Borrowing  deemed  requested  under
          Section  2.2(a)(i)(E)  shall be disbursed by the Agent directly to the
          Issuing Bank on behalf of the Borrowers.

     SECTION 2.3.  Repayment of Revolving  Loans.  The  Revolving  Loans will be
repaid as follows:

          (a) Whether or not any Default or Event of Default has  occurred,  the
     outstanding principal amount of all the Revolving Loans is due and payable,
     and  shall  be  repaid  by the  Borrowers  in  full,  not  later  than  the
     Termination Date;

          (b) If at any time the Aggregate Revolving Loan Obligations exceed the
     Borrowing  Base in effect  at such  time,  the  Borrowers  shall  repay the
     Revolving  Loans in an amount  sufficient  to reduce the  aggregate  unpaid
     principal amount of such Revolving Loans by an amount equal to such excess,
     together  with  accrued and unpaid  interest on the amount so repaid to the
     date of repayment;

                                       32
<PAGE>

          (c) Each  Borrower  hereby  instructs the Agent to repay the Revolving
     Loans  outstanding  on any day in an amount  equal to the  amount,  if any,
     received by the Agent on such day pursuant to Section 8.1(b); provided that
     payments  received  in excess of  outstanding  Revolving  Loans or payments
     received  on  account  of LIBOR  Loans  which  would  otherwise  result  in
     prepayment of such Loans prior to the end of the Interest Period applicable
     thereto may (in the absence of an Event of Default),  upon the  instruction
     of the Borrowers to the Agent not later than 1:00 p.m. on any Business Day,
     be applied to the Cash Collateral Account; and

          (d) Each LIBOR Loan is due and payable on the last day of the Interest
     Period applicable  thereto,  except to the extent converted or continued in
     accordance with Sections 4.12 and 4.13.

Repayments  pursuant  to  Sections  2.3(b) or (c) shall be applied  first to the
Prime  Rate  Revolving  Loans and then,  subject  to the  provisions  of Section
2.3(c), to LIBOR Revolving Loans.

     SECTION 2.4.  Revolving Loan Note.  Each Lender's  Revolving  Loans and the
joint and several  obligation  of the  Borrowers to repay such  Revolving  Loans
shall also be  evidenced  by a Revolving  Loan Note payable to the order of such
Lender. Each Revolving Loan Note shall be dated as of the Agreement Date (or the
later  date of any  Assignment  and  Acceptance)  and shall be duly and  validly
executed and delivered by the Borrowers.

     SECTION 2.5. Term Loans.  Upon the terms and subject to the  conditions of,
and in  reliance  upon the  representations  and  warranties  made  under,  this
Agreement,  each Lender agrees,  severally,  but not jointly, to make Term Loans
(on a final basis as that term is commonly used in the context of the Bankruptcy
Code) to the Borrowers on the Effective  Date, as requested or deemed  requested
by the Borrowers in  accordance  with the terms of Section 2.6, in amounts equal
to such Lender's  Commitment  Percentage  of each such Loan  requested or deemed
requested  hereunder up to an aggregate amount at any one time outstanding equal
to  such  Lender's  Commitment  Percentage  with  respect  to such  Term  Loans;
provided,  however,  that the  aggregate  amount of Term Loans  extended  to the
Borrowers  shall not exceed the amount of the Term Loan Facility.  The principal
amount  of any Term Loan  which is repaid  pursuant  to  Section  2.7 may not be
reborrowed by the Borrowers  under the Term Loan.  The Agent's and each Lender's
books and records  reflecting the date and the amount of each Term Loan and each
repayment of principal  thereof  shall  constitute  prima facie  evidence of the
accuracy of the  information  contained  therein,  subject to the  provisions of
Section 4.5.

     SECTION  2.6.  Manner of Borrowing  Term Loans.  Each Lender shall make the
amount  of such  Lender's  Commitment  Percentage  with  respect  to Term  Loans
available  to the Agent in same day funds,  to such  account of the Agent as the
Agent may  designate,  not later than 1:00 p.m.  (Atlanta,  Georgia time) on the
Effective  Date.  After the Agent's  receipt of the proceeds of such Term Loans,
the Agent shall make the  proceeds of such Term Loans  available to the Borrower
on such Effective Date by  transferring  same day funds equal to the proceeds of
such Term Loans received by the Agent to the Disbursement Account.

     SECTION 2.7.  Repayment  of Term Loans.  The  principal  amount of the Term
Loans  shall be payable in sixty (60) equal  monthly  installments  of  $94,000,
commencing June 1, 2000, and on the first day of each calendar month thereafter,
and  applied,  based  upon each  Lender's  Commitment  Percentage  with  respect
thereto,  to repayment of the Term Loans.  Any  remaining  unpaid  principal and
interest on the Term Loans  shall be due and payable in full on the  Termination
Date. Each regularly scheduled installment shall be payable to the Agent for the
account of the Lenders based upon their  respective  Commitment  Percentage with
respect the Term Loans.

                                       33
<PAGE>

     SECTION 2.8.  Term Loan Note.  Each  Lender's  Term Loans and the joint and
several  obligation  of the  Borrowers  to repay such Term  Loans  shall also be
evidenced  by a Term Loan Note  payable to the order of such  Lender.  Each Term
Loan Note  shall be dated as of the  Agreement  Date (or the  later  date of any
Assignment and Acceptance) and shall be duly and validly  executed and delivered
by the Borrowers.

                                   ARTICLE 3

                            LETTER OF CREDIT FACILITY

     SECTION  3.1.  Agreement  to  Issue.  Upon the  terms  and  subject  to the
conditions  of, and in reliance upon the  representations  and  warranties  made
under,  this Agreement,  the Issuing Bank agrees to issue for the account of the
Borrowers one or more Letters of Credit in accordance  with this Article 3, from
time to time during the period  commencing on the  Effective  Date and ending on
the Termination Date.

     SECTION 3.2.  Amounts.  The Issuing Bank shall not have any  obligation  to
issue any  Letter of Credit at any  time:  (a) if,  after  giving  effect to the
issuance of the requested  Letter of Credit,  (i) the aggregate Letter of Credit
Obligations of the Borrowers  would exceed the Letter of Credit Facility then in
effect  or (ii) the  Aggregate  Revolving  Loan  Obligations  would  exceed  the
Borrowing  Base (after  reduction for the Letter of Credit Reserve in respect of
such  Letter of  Credit);  or (b) which has a term longer than ninety days or an
expiration  date  after  the last  Business  Day that is more than five (5) days
prior to the Termination Date.

     SECTION 3.3.  Conditions.  The  obligation of the Issuing Bank to issue any
Letter of Credit is subject to the satisfaction of (a) the conditions  precedent
contained in Article 5 and (b) the following additional  conditions precedent in
a manner satisfactory to the Agent and the Issuing Bank: (i) the Borrowers shall
have  delivered  to the  Issuing  Bank and the  Agent at such  times and in such
manner as the Issuing Bank or the Agent may prescribe an application in form and
substance satisfactory to the Issuing Bank and the Agent for the issuance of the
Letter of Credit,  a Reimbursement  Agreement and such other documents as may be
required  pursuant to the terms thereof,  and the form and terms of the proposed
Letter of Credit shall be  satisfactory  to the Issuing Bank and the Agent;  and
(ii)  as of the  date  of  issuance,  no  order  of  any  court,  arbitrator  or
governmental  authority  having  jurisdiction or authority over the Issuing Bank
shall purport by its terms to enjoin or restrain  banks  generally  from issuing
letters  of  credit  of the type and in the  amount  of the  proposed  Letter of
Credit,  and no law,  rule or regulation  applicable  to banks  generally and no
request  or  directive  (whether  or not  having  the  force  of law)  from  any
governmental authority with jurisdiction over banks generally shall prohibit, or
request that the Issuing Bank  refrain  from,  the issuance of letters of credit
generally or the issuance of such Letter of Credit.

     SECTION 3.4. Issuance of Letters of Credit.

     (a) Request for Issuance. The Borrowers shall give the Issuing Bank and the
Agent written notice of the  Borrowers'  request for the issuance of a Letter of
Credit no later than three  Business Days prior to the proposed date of issuance
of the Letter of Credit.  Such notice shall be irrevocable and shall specify the
original  face  amount of the Letter of Credit  requested,  the  effective  date
(which date shall be a Business  Day) of issuance  of such  requested  Letter of
Credit,  whether  such  Letter of Credit may be drawn in a single or in multiple
draws,  the date on which such  requested  Letter of Credit is to expire  (which
date shall be a Business Day more than

                                       34
<PAGE>

ten (10) days prior to the Termination  Date), the purpose for which such Letter
of  Credit is to be  issued,  and the  beneficiary  of the  requested  Letter of
Credit.  The  Borrowers  shall  attach to such  notice the form of the Letter of
Credit that the Borrowers request to be issued.

     (b) Responsibilities of the Agent; Issuance. The Agent shall determine,  as
of the  Business Day  immediately  preceding  the  requested  effective  date of
issuance  of the  Letter of Credit set forth in the  notice  from the  Borrowers
pursuant to Section  3.4(a),  the amount of the unused Letter of Credit Facility
and the Borrowing Base. If (i) the form of the Letter of Credit delivered by the
Borrowers to the Agent is  acceptable to the Issuing Bank and the Agent in their
sole discretion,  (ii) the undrawn face amount of the requested Letter of Credit
is less than or equal to the lesser of (A) the unused Letter of Credit  Facility
and (B) the Borrowing Base less the Aggregate  Revolving Loan  Obligations,  and
(iii) if requested by the Agent,  the Agent has received a certificate  or other
assurance from the Borrowers stating that the applicable conditions set forth in
Article 5 have been  satisfied,  then the Issuing  Bank will cause the Letter of
Credit to be issued.

     (c)  Notice of  Issuance.  Promptly  after the  issuance  of any  Letter of
Credit,  the Issuing Bank shall give the Agent written or facsimile  notice,  or
telephonic notice confirmed promptly  thereafter in writing,  of the issuance of
such Letter of Credit, and the Agent shall give each Lender written or facsimile
notice, or telephonic notice confirmed  promptly  thereafter in writing,  of the
issuance of such Letter of Credit.

     (d) No  Extension  or  Amendment.  No Letter of Credit shall be extended or
amended  unless the  requirements  of this  Section  3.4 are met as though a new
Letter of Credit were being requested and issued.

     SECTION 3.5.  Duties of the Issuing Bank. Any action taken or omitted to be
taken by the Issuing Bank under or in connection  with any Letter of Credit,  if
taken or omitted in the absence of gross negligence or willful misconduct, shall
not result in any  liability  of the  Issuing  Bank to any Lender or relieve any
Lender of its obligations  hereunder to the Issuing Bank. In determining whether
to pay under any Letter of Credit,  the Issuing Bank shall have no obligation to
any Lender  other than to confirm  that any  documents  required to be delivered
under such Letter of Credit in connection  with such drawing have been presented
and  appear on their  face to comply  with the  requirements  of such  Letter of
Credit.

     SECTION 3.6. Payment of Reimbursement Obligations.

     (a) Payment to Issuer.  Notwithstanding  any  provisions to the contrary in
any  Reimbursement  Agreement,  the  Borrowers  jointly and  severally  agree to
reimburse the Issuing Bank for any drawings (whether partial or full) under each
Letter of Credit issued by the Issuing Bank and agree to pay to the Issuing Bank
the amount of all other  Reimbursement  Obligations and other amounts payable to
the Issuing Bank under or in connection  with such Letter of Credit  immediately
when due,  irrespective of any claim,  setoff,  defense or other right which the
Borrowers may have at any time against the Issuing Bank or any other Person.

     (b) Recovery or  Avoidance  of Payments.  In the event any payment by or on
behalf  of  the  Borrowers  with  respect  to  any  Letter  of  Credit  (or  any
Reimbursement  Obligation  relating thereto) received by the Issuing Bank, or by
the Agent  and  distributed  by the Agent to the  Lenders  on  account  of their
respective participations therein, is thereafter set aside, avoided or recovered
from  the  Issuing  Bank or the  Agent  in  connection  with  any  receivership,
liquidation  or bankruptcy  proceeding,  the Lenders  shall,  upon demand by the
Agent, pay to the Agent, for the

                                       35
<PAGE>

account  of  the  Agent  or  the  Issuing  Bank,  their  respective   Commitment
Percentages  of such  amount  set  aside,  avoided or  recovered  together  with
interest at the rate  required to be paid by the Agent upon the amount  required
to be repaid by it.

     SECTION 3.7. Participations.

     (a) Purchase of  Participations.  Immediately  upon issuance by the Issuing
Bank of a Letter of Credit,  each Lender shall be deemed to have irrevocably and
unconditionally  purchased  and  received,  without  recourse  or  warranty,  an
undivided  interest  and  participation  in such Letter of Credit  equal to such
Lender's  Commitment  Percentage  of the  face  amount  thereof  (including  all
obligations of the Borrowers with respect  thereto,  other than amounts owing to
the Issuing Bank under  Section  4.2(d),  and any security  therefor or guaranty
pertaining thereto).

     (b)  Sharing of Letter of Credit  Payments.  In the event that the  Issuing
Bank makes a payment  under any Letter of Credit and the Issuing  Bank shall not
have been repaid such amount  pursuant  to Section  3.6,  then the Issuing  Bank
shall be deemed to have made a  Non-Ratable  Loan in the amount of such payment,
and  notwithstanding  the  occurrence  or  continuance  of a Default or Event of
Default at the time of such payment,  such  Non-Ratable Loan shall be subject to
the provisions of Section 4.8 and the absolute obligations of the Lenders to pay
for their respective participation interests therein.

     (c) Sharing of Reimbursement Obligation Payments. Whenever the Issuing Bank
receives  a  payment  from  or on  behalf  of  the  Borrowers  on  account  of a
Reimbursement  Obligation as to which the Agent has previously  received for the
account of the Issuing Bank payment from a Lender  pursuant to this Section 3.7,
the  Issuing  Bank  shall  promptly  pay to the Agent,  for the  benefit of such
Lender, such Lender's  Commitment  Percentage of the amount of such payment from
the Borrowers in Dollars. Each such payment shall be made by the Issuing Bank on
the Business Day on which the Issuing Bank receives immediately  available funds
pursuant to the immediately  preceding sentence, if received prior to 11:00 a.m.
on such Business Day and otherwise on the next succeeding Business Day.

     (d) Documentation.  Upon the request of any Lender, the Agent shall furnish
to such  Lender  copies of any  Letter of  Credit,  Reimbursement  Agreement  or
application  for any  Letter  of  Credit  and such  other  documentation  as may
reasonably be requested by such Lender.

     (e) Obligations Irrevocable.  Notwithstanding the occurrence or continuance
of a Default  or Event of  Default  or other  failure  of any  condition  to the
issuance of Letters of Credit  hereunder  subsequent to the Letters of Credit to
be issued on the  Effective  Date,  unless the Issuing Bank shall have  received
notice from the Required  Lenders  (which  notice shall become  effective on the
third  Business  Day after  receipt of such  notice by the  Issuing  Bank unless
otherwise  agreed by the Issuing Bank) prior to a proposed  issuance date of any
Letter of Credit that such Lenders will not  participate in any Letter of Credit
to be issued on such date,  the  Issuing  Bank may assume  that each Lender will
participate  in such Letter of Credit in  accordance  with this Section 3.7, and
the Issuing  Bank may, in reliance  upon such  assumption,  issue such Letter of
Credit for the account of the Borrowers.  The obligations of each Lender to make
payments  to  the  Agent  with  respect  to  any  Letter  of  Credit  and  their
participations  therein  pursuant  to the  provisions  of Section  4.8 hereof or
otherwise and the  obligations  of the Borrowers to make payments to the Issuing
Bank or to the Agent,  for the account of Lenders,  shall be irrevocable,  shall
not be subject to any qualification or exception whatsoever and shall be made in
accordance  with the terms and  conditions of this Agreement  (assuming,  in the
case of the obligations of the Lenders to make

                                       36
<PAGE>

such payments, that the Letter of Credit has been issued in accordance with this
Article  3),  including  any of the  following  circumstances:  (i) any  lack of
validity or enforceability of this Agreement or any of the other Loan Documents;
(ii) the  existence  of any  claim,  setoff,  defense or other  right  which the
Borrowers may have at any time against a beneficiary named in a Letter of Credit
or any  transferee  of any  Letter of Credit  (or any  Person  for whom any such
transferee  may be acting),  any Lender,  the Issuing Bank or any other  Person,
whether  in  connection  with  this  Agreement,   any  Letter  of  Credit,   the
transactions  contemplated herein or any unrelated  transactions  (including any
underlying  transactions  between  the  Borrowers  or any other  Person  and the
beneficiary named in any Letter of Credit); (iii) any draft,  certificate or any
other document  presented under the Letter of Credit upon which payment has been
made in good faith and according to its terms proving to be forged,  fraudulent,
invalid or insufficient in any respect or any statement  therein being untrue or
inaccurate in any respect; (iv) the surrender or impairment of any Collateral or
any other security for the Secured  Obligations or the performance or observance
of any of the  terms of any of the Loan  Documents;  (v) the  occurrence  of any
Default  or Event of  Default;  or (vi) the  Agent's  failure  to deliver to the
Lenders the notice provided for in Section 3.4(c).

     SECTION 3.8. Indemnification, Exoneration.

     (a)  Indemnification.  In addition to amounts payable as elsewhere provided
in this  Article  3, the  Borrowers  jointly  and  severally  agree to  protect,
indemnify,  pay and save the Issuing  Bank,  the Lenders and the Agent  harmless
from and against  any and all claims,  demands,  liabilities,  damages,  losses,
costs,  charges and expenses  (including  reasonable  attorneys' fees) which the
Issuing  Bank,  any  Lender  or  the  Agent  may  incur  or be  subject  to as a
consequence,  directly  or  indirectly,  of (i) the  issuance  of any  Letter of
Credit, other than as a result of its gross negligence or willful misconduct, as
determined  by a court of  competent  jurisdiction,  or (ii) the  failure of the
Issuing  Bank to honor a drawing  under any  Letter of Credit as a result of any
act or omission,  whether rightful or wrongful, of any present or future de jure
or de facto governmental authority (all such acts or omissions being hereinafter
referred to collectively as "Government Acts").

     (b)  Assumption  of Risk by the  Borrowers.  As among  the  Borrowers,  the
Issuing Bank, the Lenders and the Agent,  the Borrowers  assume all risks of the
acts and  omissions  of, or  misuse of any of the  Letters  of  Credit  by,  the
respective  beneficiaries  of such Letters of Credit.  In furtherance and not in
limitation of the foregoing,  subject to the provisions of the  applications for
the issuance of Letters of Credit,  the Issuing Bank,  the Lenders and the Agent
shall not be responsible  for: (i) the form,  validity,  sufficiency,  accuracy,
genuineness  or  legal  effect  of  any  document  submitted  by any  Person  in
connection with the  application for and issuance of and  presentation of drafts
with  respect to any of the Letters of Credit,  even if it should prove to be in
any or all respects  invalid,  insufficient,  inaccurate,  fraudulent or forged;
(ii) the validity or sufficiency of any instrument  transferring or assigning or
purporting  to transfer or assign any Letter of Credit or the rights or benefits
thereunder  or  proceeds  thereof,  in whole or in part,  which  may prove to be
invalid or ineffective  for any reason;  (iii) the failure of the beneficiary of
any Letter of Credit to comply  duly with  conditions  required in order to draw
upon such Letter of Credit; (iv) errors,  omissions,  interruptions or delays in
transmission or delivery of any messages,  by mail, cable,  telegraph,  telex or
otherwise,  whether or not they be in cipher;  (v) errors in  interpretation  of
technical terms;  (vi) any loss or delay in the transmission or otherwise of any
document  required  in order to make a drawing  under any Letter of Credit or of
the proceeds thereof;  (vii) the misapplication by the beneficiary of any Letter
of Credit of the proceeds of any drawing under such Letter of Credit;  or (viii)
any  consequences  arising from causes  beyond the

                                       37
<PAGE>

control of the Lenders or the Agent,  including any Government Acts. None of the
foregoing  shall  affect,  impair or prevent  the  vesting of any of the Issuing
Bank's or the Agent's rights or powers under this Section 3.8.

     (c) Exoneration.  In furtherance and extension,  and not in limitation,  of
the  specific  provisions  set forth  above,  any action taken or omitted by the
Agent,  the Issuing  Bank or any Lender under or in  connection  with any of the
Letters  of Credit or any  related  certificates,  if taken or  omitted  in good
faith,  shall not result in any liability of the Issuing Bank, any Lender or the
Agent to the  Borrowers  or relieve the  Borrowers  of any of their  obligations
hereunder to any such Person.

     SECTION  3.9.   Supporting   Letter  of  Credit;   Cash   Collateral.   If,
notwithstanding  the  provisions  of  Section  3.2(b),  any  Letter of Credit is
outstanding on the Termination  Date, then on or prior to the Termination  Date,
or in any case upon the occurrence of an Event of Default,  the Borrowers shall,
promptly on demand by the Agent, deposit with the Agent, for the Ratable benefit
of the Lenders,  with respect to each Letter of Credit then outstanding,  as the
Agent shall specify, either (a) a standby letter of credit (a "Supporting Letter
of  Credit")  in form and  substance  satisfactory  to the Agent and the Issuing
Bank, issued by an issuer  reasonably  satisfactory to the Agent and the Issuing
Bank in an amount equal to the  greatest  amount for which such Letter of Credit
may be drawn,  under which Supporting  Letter of Credit the Agent is entitled to
draw amounts  necessary to reimburse the Agent, the Issuing Bank and the Lenders
for  payments  made by the Agent,  the Issuing  Bank and the Lenders  under such
Letter of Credit or under any  reimbursement or guaranty  agreement with respect
thereto,  or (b) Cash Collateral in an amount  necessary to reimburse the Agent,
the Issuing  Bank and the Lenders for  payments  made by the Agent,  the Issuing
Bank and the Lenders under such Letter of Credit or under any  reimbursement  or
guaranty  agreement with respect  thereto.  Such Supporting  Letter of Credit or
Cash  Collateral  shall be held by the Agent for the benefit of the Issuing Bank
and the  Lenders,  as  security  for,  and to provide  for the  payment  of, the
Reimbursement  Obligations.  In  addition,  the Agent may at any time  after the
Termination  Date apply any or all of such Cash Collateral to the payment of any
or all of the  Secured  Obligations  then  due and  payable.  At the  Borrowers'
request, but subject to the Agent's reasonable approval,  the Agent shall invest
any  Cash  Collateral  consisting  of cash or any  proceeds  of Cash  Collateral
consisting  of cash in Cash  Equivalents,  and  any  commissions,  expenses  and
penalties incurred by the Agent in connection with any investment and redemption
of such Cash Collateral shall be Secured  Obligations  hereunder  secured by the
Collateral,  shall bear  interest  at the rates  provided  herein for Prime Rate
Revolving  Loans,  and shall be charged to the Borrowers' Loan Accounts,  or, at
the Agent's option,  shall be paid out of the proceeds of any earnings  received
by the Agent from the investment of such Cash  Collateral as provided  herein or
out of such cash itself.  The Agent makes no  representation  or warranty as to,
and shall not be responsible for, the rate of return, if any, earned on any Cash
Collateral.  Any earnings on Cash  Collateral  shall be held as additional  Cash
Collateral on the terms set forth in this Section 3.9.

     SECTION 3.10. Letters of Credit under Pre-Petition Loan Agreement. Schedule
3.10 contains a schedule of certain active and standby  letters of credit issued
prior to the Effective Date pursuant to the Pre-Petition  Loan Agreement for the
account of the Borrowers. On the Effective Date, any and all such active letters
of credit,  to the extent still  outstanding,  shall  automatically  and without
further  action of the parties  thereto,  be replaced by like  Letters of Credit
issued  pursuant  to this  Article  3, up to a maximum  aggregate  amount not to
exceed $234,000.  On or prior to the fourth day prior to the applicable maturity
date of any such other existing standby letters of credit,  such standby letters
of credit  shall,  upon the  Borrowers'  request as set forth in Section 3.4 and
subject to the terms and  conditions  of

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<PAGE>

this Article 3, be replaced by a like Letter of Credit from the Issuing Bank, up
to a maximum aggregate amount not to exceed $766,000.  Subject to the provisions
hereof,  the face amount of all such active and standby  letters of credit shall
be  included  in the  calculation  of  Letter  of  Credit  Obligations,  and all
liabilities  of the  Borrowers  with  respect to such  letters  of credit  shall
constitute Secured Obligations.

                                   ARTICLE 4

                             GENERAL LOAN PROVISIONS

     SECTION 4.1. Interest.

     (a) Prime  Rate  Revolving  Loans.  Subject  to the  provisions  of Section
4.1(f),  the Borrowers will pay interest on the unpaid  principal amount of each
Prime  Rate  Revolving  Loan,  for each day from the day such Loan is made until
such Loan is paid (whether at maturity, by reason of acceleration, or otherwise)
or is converted to a Loan of a different  Type, at a rate per annum equal to the
sum of (i) the  Applicable  Revolver  Margin  and (ii) the Prime  Rate,  payable
monthly in arrears as it  accrues on each  Interest  Payment  Date and when such
Prime Rate Revolving Loan is due (whether at maturity, by reason of acceleration
or otherwise).

     (b) LIBOR Revolving Loans. Subject to the provisions of Section 4.1(f), the
Borrowers  will pay  interest  on the  unpaid  principal  amount  of each  LIBOR
Revolving Loan for the applicable  Interest  Period at a rate per annum equal to
the sum of (i) the Applicable Revolver Margin and (ii) LIBOR, payable in arrears
as it accrues on each Interest  Payment Date, and when such LIBOR Revolving Loan
is due (whether at maturity, by reason of acceleration or otherwise).

     (c) Prime Rate Term Loans. Subject to the provisions of Section 4.1(f), the
Borrowers  will pay interest on the unpaid  principal  amount of each Prime Rate
Term  Loan,  for each day from the day such Loan is made until such Loan is paid
(whether at maturity,  by reason of acceleration,  or otherwise) or is converted
to a Loan of a different  Type,  at a rate per annum equal to the sum of (i) the
Applicable Term Margin and (ii) the Prime Rate, payable monthly in arrears as it
accrues on each Interest  Payment Date and when such Prime Rate Term Loan is due
(whether at maturity, by reason of acceleration or otherwise).

     (d) LIBOR Term Loans.  Subject to the  provisions  of Section  4.1(f),  the
Borrowers  will pay interest on the unpaid  principal  amount of each LIBOR Term
Loan for the applicable  Interest Period at a rate per annum equal to the sum of
(i) the Applicable Term Margin and (ii) LIBOR,  payable in arrears as it accrues
on each Interest  Payment Date, and when such LIBOR Term Loan is due (whether at
maturity, by reason of acceleration or otherwise).

     (e) Other Secured Obligations.  The Borrowers will, to the extent permitted
by Applicable  Law, pay interest on the unpaid  principal  amount of any Secured
Obligation  that is due and payable,  other than the Loans,  in accordance  with
Sections  4.1(a) or (f), as  applicable,  as if such Secured  Obligation  were a
Prime Rate Revolving Loan.

     (f)  Default  Rate.  If there  shall  occur and be  continuing  an Event of
Default, at the election of the Required Lenders, the unpaid principal amount of
the  Loans and other  Secured  Obligations  shall no  longer  bear  interest  in
accordance  with the terms of Sections  4.1(a),  (b), (c), (d) or (e), but shall
bear  interest  for each day from the date of such Event of  Default  until such
Event of Default  shall  have been cured or waived at a rate per annum  equal to
the sum of (i) the

                                       39
<PAGE>

Default  Margin  and (ii) the rate  otherwise  applicable  to such Loan or other
Secured  Obligation,  payable on demand.  The interest  rate provided for in the
preceding  sentence shall,  to the extent  permitted by Applicable Law, apply to
and accrue on the amount of any  judgment  entered  with  respect to any Secured
Obligation.

     (g)  Calculation  of Interest.  The interest rates provided for in Sections
4.1(a),  (b),  (c), (d), (e) and (f) shall be computed on the basis of a year of
360 days and the actual number of days elapsed.

     (h) Maximum Rate. It is not intended by the Lenders,  and nothing contained
in this  Agreement  or the Notes shall be deemed,  to  establish  or require the
payment  of a rate of  interest  in  excess of the  maximum  rate  permitted  by
Applicable Law (the "Maximum Rate").  If, in any month,  the Effective  Interest
Rate,  absent such  limitation,  would have exceeded the Maximum Rate,  then the
Effective  Interest  Rate for that month shall be the Maximum  Rate,  and, if in
future  months,  the Effective  Interest  Rate would  otherwise be less than the
Maximum Rate, then the Effective  Interest Rate shall remain at the Maximum Rate
until such time as the amount of interest  paid  hereunder  equals the amount of
interest  which  would  have been paid if the same had not been  limited  by the
Maximum Rate. In the event, upon payment in full of the Secured Obligations, the
total amount of interest  paid or accrued  under the terms of this  Agreement is
less than the total amount of interest  which would have been paid or accrued if
the Effective Interest Rate had at all times been in effect,  then the Borrowers
shall,  to the extent  permitted by Applicable Law, pay to the Lenders an amount
equal to the  excess,  if any,  of (i) the lesser of (A) the amount of  interest
which  would have been  charged if the Maximum  Rate had, at all times,  been in
effect and (B) the amount of interest which would have accrued had the Effective
Interest  Rate,  at all times,  been in effect  and (ii) the amount of  interest
actually paid or accrued under this Agreement. In the event the Lenders receive,
collect or apply as interest any sum in excess of the Maximum Rate,  such excess
amount shall be applied to the reduction of the principal balance of the Secured
Obligations,  and if no such principal is then outstanding,  such excess or part
thereof remaining, shall be paid to the Borrowers.

     SECTION 4.2. Certain Fees.

     (a) Closing Fee. As additional  consideration  for the extensions of credit
provided for hereunder,  the Borrowers  shall pay to the Agent, on behalf of the
Lenders in accordance with their respective  Commitment  Percentages,  a closing
fee in the amount set forth in the Fee  Letter.  The closing  fee  provided  for
herein shall  compensate the Lenders for the internal costs  associated with the
origination,  structuring, processing, approving and closing of the transactions
contemplated by this Agreement,  including administrative,  general overhead and
lost opportunity  costs, but not including any out-of-pocket  expenses for which
the  Borrowers  have  agreed to  reimburse  the  Agent,  including  the  Agent's
out-of-pocket  expenses  incurred  (and per diem charges  accrued) in connection
with its due  diligence  examination  of the  Obligors  and the  closing  of the
transactions  contemplated  by this  Agreement.  The  closing fee shall be fully
earned when due and shall not be subject to refund or rebate.

     (b) Agent  Fee;  Field  Exam Fee.  For  administration  and other  services
performed by the Agent in connection with its continuing  administration of this
Agreement,  the Borrowers shall pay to the Agent,  for its own account,  and not
for the  account  of the  Lenders,  the  Agent  and  field  examination  fees in
accordance with the terms of the Fee Letter.  The fees payable  pursuant to this
Section 4.2(b) shall be fully earned by the Agent on the date payment thereof is
due and shall not be subject to refund or rebate.

                                       40
<PAGE>

     (c)  Unused  Line Fee.  In  connection  with and as  consideration  for the
holding available for the use of the Borrowers  hereunder the full amount of the
Revolving  Loan  Facility,  the Borrowers  will pay a fee to the Agent,  for the
Ratable  benefit of the Lenders,  for each day from the Effective Date until the
Termination  Date,  in an  amount  equal to 0.375%  per  annum of the  Available
Revolving  Loan  Facility  for such day.  Such fee shall be  payable  monthly in
arrears  on each  Interest  Payment  Date,  shall be fully  earned  when due and
payable  and shall not be subject to refund or rebate,  and shall be  calculated
based on a year of 360 days and the actual number of days elapsed.

     (d) Letter of Credit Fees.

          (i) The Borrowers  shall pay to the Agent,  for the Ratable benefit of
     the  Lenders,  Letter of  Credit  fees on a per  annum  basis  equal to the
     Applicable  Revolver  Margin for LIBOR  Revolving  Loans  multiplied by the
     average  daily  aggregate  Letter of Credit Amount of all Letters of Credit
     from time to time outstanding during the term of this Agreement.  Such fees
     shall be payable to the Agent,  for the  Ratable  benefit of the Lenders in
     accordance with their respective Commitment Percentages, monthly in arrears
     on each Interest  Payment Date, and shall be calculated  based on a year of
     360 days and the actual number of days elapsed.

          (ii) The  Borrowers  shall pay to the  Agent,  for the  account of the
     Issuing  Bank,  (A) the  standard  fees and charges of the Issuing Bank for
     issuing, administering, amending, renewing, paying and canceling letters of
     credit,  as and when assessed,  and (B) a facing fee equal to 0.125% of the
     face amount of each Letter of Credit, due upon issuance.

     (e) Collection Fee. During the period from and including the Effective Date
to and including the  Termination  Date, the Borrowers will pay to the Agent for
its own account on the first day of each month an amount of interest computed at
the Effective  Interest Rate  applicable to Prime Rate  Revolving  Loans on each
remittance received by the Agent against Receivables (as contemplated by Section
8.1 hereof) during the preceding  month,  from the close of business on the date
of receipt of each such  remittance  until the close of  business  on the second
Business Day following the receipt of the remittance, as compensation for delays
in the collection and clearance of checks and other remittances.

     (f)  General.  All fees shall be fully earned by the  identified  recipient
thereof  when due and  payable  and,  except as  otherwise  set forth  herein or
required by applicable  law, shall not be subject to refund or rebate.  All fees
provided for in this Section 4.2 are for  compensation for services and are not,
and shall not be deemed to be,  interest  or a charge for the use of money.  The
Borrowers  acknowledge that all of the terms of the Fee Letter shall survive the
execution, delivery and closing of this Agreement.

     SECTION 4.3. Manner of Payment.

     (a) Except as otherwise  expressly provided in Section 8.1(b), each payment
(including  prepayments)  by the  Borrowers  on account of the  principal  of or
interest on the Loans or of any other amounts  payable to the Lenders under this
Agreement  or any Note  shall  be made not  later  than  12:00  noon on the date
specified for payment under this Agreement to the Agent,  for the account of the
Lenders, at the Agent's Office, in Dollars,  in immediately  available funds

                                       41
<PAGE>

and shall be made without any setoff,  counterclaim or deduction whatsoever. Any
payment  received  after  such time but  before  1:00 p.m.  on such day shall be
deemed a payment  on such date for the  purposes  of Section  12.1,  but for all
other purposes shall be deemed to have been made on the next succeeding Business
Day.

     (b) The  Borrowers  hereby  irrevocably  authorize  each  Lender  and  each
Affiliate  of such Lender and each  participant  herein to charge any account of
the Borrowers  maintained with such Lender or such Affiliate or participant with
such  amounts  as may be  necessary  from  time  to  time  to  pay  any  Secured
Obligations (whether or not owed to such Lender, Affiliate or participant) which
are not paid when due.

     SECTION 4.4. General. If any payment under this Agreement or any Note shall
be specified to be made upon a day which is not a Business Day, it shall be made
on the next  succeeding  day which is a Business Day and such  extension of time
shall in such case be included in computing interest, if any, in accordance with
such payment.

     SECTION 4.5. Loan Accounts; Statements of Account.

     (a) Each Lender  shall open and maintain on its books a loan account in the
Borrowers' name (each, a "Loan Account" and collectively,  the "Loan Accounts").
Each such Loan  Account  shall show as debits  thereto each Loan made under this
Agreement by such Lender to the  Borrowers  and as credits  thereto all payments
received  by such  Lender and  applied to  principal  of such Loan,  so that the
balance of the loan account at all times reflects the principal  amount due such
Lender from the Borrowers.

     (b) The  Agent  shall  maintain  on its  books a  control  account  for the
Borrowers  in which shall be recorded (i) the amount of each  disbursement  made
hereunder,  (ii) the amount of any  principal  or interest  due or to become due
from the  Borrowers  hereunder,  and (iii) the amount of any sum received by the
Agent hereunder from the Borrowers and each Lender's Ratable share therein.

     (c) The entries made in the accounts  pursuant to  subsections  (a) and (b)
shall  be prima  facie  evidence,  in the  absence  of  manifest  error,  of the
existence and amounts of the obligations of the Borrowers  therein  recorded and
in case of discrepancy between such accounts,  in the absence of manifest error,
the accounts maintained pursuant to subsection (b) shall be controlling.

     (d) The Agent will  account  separately  to the  Borrowers  monthly  with a
statement of Loans,  charges and payments made to and by the Borrowers  pursuant
to this  Agreement,  and such  accounts  rendered  by the Agent  shall be deemed
final,  binding and  conclusive,  save for manifest  error,  unless the Agent is
notified by the Borrowers in writing to the contrary  within thirty (30) days of
the date the  account  to the  Borrowers  was so  rendered.  Such  notice by the
Borrowers shall be deemed an objection to only those items specifically objected
to therein.  Failure of the Agent to render such account  shall in no way affect
the rights of the Agent or of the Lenders hereunder.

     SECTION 4.6. Termination of Agreement.  The Borrowers shall have the right,
at any time,  to terminate  this  Agreement  upon not less than thirty (30) days
prior  written  notice  to the  Agent  of  their  intention  to  terminate  this
Agreement,  which notice shall specify the effective  date of such  termination.
Upon  receipt of such  notice,  the Agent  shall  promptly  notify  each  Lender
thereof.  On the

                                       42
<PAGE>

date specified in such notice,  such  termination  shall be effected,  provided,
that the Borrowers shall, on or prior to such date, pay to the Agent, for itself
and the account of the Secured Creditors,  in same day funds, an amount equal to
all Secured  Obligations  then  outstanding,  including all (a) accrued interest
thereon, (b) all accrued fees provided for hereunder, (c) any amounts payable to
the Lenders pursuant to this Article 4 or Sections 16.2, 16.3 and 16.14, and (d)
any other amounts  payable to the Agent or any Secured  Creditor under any other
Loan Document. In addition thereto, the Borrowers shall deliver to the Agent (i)
an indemnity or Cash  Collateral in form and  substance  acceptable to the Agent
with  respect  to any  checks  or other  instruments  received  by the Agent and
credited to the Borrowers in calculating the payoff amount,  and (ii) in respect
of each outstanding  Letter of Credit,  either a Supporting  Letter of Credit or
Cash Collateral as provided in Section 3.9. Following a notice of termination as
provided  for in  this  Section  4.6 and  upon  payment  in full of the  amounts
specified in this Section 4.6, this Agreement shall be terminated and the Agent,
the Issuing Bank, the Lenders and the Obligors shall have no further obligations
to any other party hereto,  except for any indemnity obligations which expressly
survive the termination of this Agreement.

     SECTION 4.7. Making of Loans.

     (a) Nature of Obligations of Lenders to Make Loans.  The obligations of the
Lenders under this  Agreement to make the Loans are several and are not joint or
joint and several.

     (b)  Assumption  by Agent.  Subject to the  provisions  of Section  4.8 and
notwithstanding  the  occurrence or continuance of a Default or Event of Default
or other failure of any condition to the making of Loans hereunder subsequent to
the Loans to be made on the Effective Date, unless the Agent shall have received
notice from the Required  Lenders in accordance  with the  provisions of Section
4.7(c)  (and such  notice  shall  have  become  effective)  prior to a  proposed
borrowing  date that such  Lenders  will not make  available  to the Agent  such
Lenders'  Ratable  portion of the amount to be borrowed on such date,  the Agent
may assume  that each Lender will make such  portion  available  to the Agent in
accordance with Section 2.2(a) and 2.6, and the Agent may, in reliance upon such
assumption, make available to the Borrowers on such date a corresponding amount.
If and to the extent any Lender shall not make such Ratable portion available to
the Agent,  such Lender and the Borrowers  severally agree to repay to the Agent
forthwith on demand such  corresponding  amount,  together with interest thereon
for each day from the date such amount is made available to the Borrowers  until
the date such amount is repaid to the Agent at the  Effective  Interest Rate or,
if lower,  subject to Section  4.1(f),  the Maximum  Rate.  If such Lender shall
repay to the Agent  such  corresponding  amount,  the  amount  so  repaid  shall
constitute  such  Lender's  Commitment  Percentage  of the  Loan  made  on  such
borrowing date for purposes of this Agreement. The failure of any Lender to make
its  Commitment  Percentage of any Loan available  shall not (without  regard to
whether the  Borrowers  shall have  returned the amount  thereof to the Agent in
accordance  with  this  Section  4.7)  relieve  it or any  other  Lender  of its
obligation,  if any,  hereunder to make its  Commitment  Percentage of such Loan
available on such borrowing  date,  but no Lender shall be  responsible  for the
failure  of any other  Lender  to make its  Commitment  Percentage  of such Loan
available on the borrowing date.

     (c)  Delegation of Authority to Agent.  Without  limiting the generality of
Section 14.1, each Lender expressly  authorizes the Agent to determine on behalf
of such Lender (i) any reduction or increase of advance rates  applicable to the
Borrowing  Base,  so long as such  advance  rates do not at any time  exceed the
rates  set  forth  in the  Borrowing  Base  definition,  (ii)  the  creation  or
elimination of any reserves  (other than the Letter of Credit  Reserve)  against
the Revolving  Loan Facility and the  Borrowing  Base,  and (iii) whether or not
Inventory  or  Receivables  shall be deemed to  constitute  Eligible  Inventory,
Eligible In-Transit Inventory,  or

                                       43
<PAGE>

Eligible  Receivables.  Such  authorization  may be  withdrawn  by the  Required
Lenders  by giving the Agent  written  notice of such  withdrawal  signed by the
Required Lenders;  provided,  however, that unless otherwise agreed by the Agent
such withdrawal of authorization  shall not become effective until the thirtieth
Business Day after receipt of such notice by the Agent. Thereafter, the Required
Lenders shall jointly instruct the Agent in writing  regarding such matters with
such frequency as the Required Lenders shall jointly determine. Unless and until
the Agent shall have received written notice from the Required Lenders as to the
existence  of a Default,  an Event of Default or some other  circumstance  which
would  relieve  the  Lenders  of  their  respective  obligations  to make  Loans
hereunder,  which notice shall be in writing and shall be signed by the Required
Lenders and shall  expressly  state that the  Required  Lenders do not intend to
make available to the Agent such Lenders'  Ratable share of Loans made after the
effective  date of such notice,  the Agent shall be entitled to continue to make
the  assumptions  described  in  Section  4.7(b).  The notice  described  in the
preceding  sentence  shall  become  effective  on the third  Business  Day after
receipt of such notice by the Agent unless  otherwise  agreed by the Agent.  The
Agent shall not be required to make any Loan as to which it shall have  received
notice by a Lender of such Lender's intention not to make its Ratable portion of
such Loan  available to the Agent.  Any withdrawal of  authorization  under this
Section  4.7(c)  shall not affect the  validity of any Loans made (or Letters of
Credit issued) prior to the effectiveness thereof.

     (d) Agent Advances. The Agent is hereby authorized by the Borrowers and the
Lenders,  from  time to time in the  Agent's  sole  discretion,  (i)  after  the
occurrence of a Default or an Event of Default,  or (ii) at any time that any of
the other applicable  conditions  precedent set forth in Article 5 have not been
satisfied,  to make  Revolving  Loans to the  Borrowers on behalf of the Lenders
which the  Agent,  in its  reasonable  business  judgment,  deems  necessary  or
desirable (A) to preserve or protect the Collateral, or any portion thereof, (B)
to enhance the likelihood of, or maximize the amount of,  repayment of the Loans
and other Secured Obligations,  or (C) to pay any other amount chargeable to the
Obligors  pursuant to the terms of this  Agreement,  including  costs,  fees and
expenses as described  in Section  16.2 (any of the  advances  described in this
Section 4.7(d) being hereinafter referred to as "Agent Advances"); provided that
(x) the  Required  Lenders  may at any time  revoke  the  Agent's  authorization
contained in this Section 4.7(d) to make Agent Advances,  any such revocation to
be in  writing  and to  become  effective  on the third  Business  Day after the
Agent's receipt thereof,  and (y) the Agent shall not allow more than $5,000,000
in Agent  Advances  to be  outstanding  under  this  Section  4.7(d) at any time
without the consent of all the Lenders. All Agent Advances shall be repayable by
the  Borrowers  on  demand  and  secured  by the  Collateral,  shall  constitute
Revolving Loans and Secured  Obligations  hereunder,  and shall bear interest at
the rate  applicable to Prime Rate Revolving  Loans from time to time. The Agent
shall  notify  each  Lender in  writing of each such  Agent  Advance.  All Agent
Advances shall constitute  Non-Ratable  Loans, as defined in Section 4.8(b), and
shall be subject to the provisions thereof.

     (e)  Replacement of Certain  Lenders.  If a Lender (the "Affected  Lender")
shall have  failed to fund its  Proportionate  Share of any Loan  requested  (or
deemed  requested) by the Borrowers which such Lender is obligated to fund under
the terms of this  Agreement and which failure has not been cured,  then, in any
such case and in addition to any other rights and remedies  that the Agent,  any
other Lender or the Borrowers may have against such Affected  Lender,  the Agent
or the Borrowers'  Agent may make written demand on such Affected Lender (with a
copy to the Borrowers' Agent, in case of demand by the Agent, and with a copy to
the  Agent,  in the case of demand by the  Borrowers'  Agent)  for the  Affected
Lender to assign,  and such Affected Lender shall assign pursuant to one or more
duly executed Assignment and Acceptances within five (5) Business Days after the
date of such demand, to one or more Lenders willing to accept such assignment or
assignments,  or to one or

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<PAGE>

more  Eligible  Assignees  (to the extent  willing to accept such  assignment or
assignments)  designated by the Agent or the  Borrowers'  Agent  (provided  such
Eligible  Assignee  is  reasonably  acceptable  to the Agent and, if no Event of
Default exists,  the Borrowers' Agent), all of such Affected Lender's rights and
obligations under this Agreement  (including its Commitments and all Loans owing
to it) in accordance  with Article 13. The Affected  Lender shall be entitled to
receive,  in cash and concurrently  with the execution and delivery of each such
Assignment and Acceptance,  all amounts owed to the Affected Lender hereunder or
under any other Loan  Document,  including the aggregate  outstanding  principal
amount of the Loans owed to such Lender,  together with accrued interest thereon
through the date of such assignment. Upon the replacement of any Affected Lender
pursuant to this Section  4.7(e),  such Affected  Lender shall cease to have any
participation  in,  entitlement  to,  or other  right  to share in the  Security
Interest  or any other  Lien of the Agent in any  Collateral  and such  Affected
Lender  shall have no further  liability  to the Agent,  any Lender or any other
Person under any of the Loan  Documents  (except as provided in Section 14.7 and
elsewhere in this  Agreement as to events or  transactions  which occur prior to
the replacement of such Affected Lender).

     SECTION 4.8. Settlement Among Lenders.

     (a) It is agreed that each  Lender's Net  Outstandings  are intended by the
Lenders to be equal at all times to such Lender's  Commitment  Percentage of the
aggregate  principal  amount  of all  Loans  outstanding.  Notwithstanding  such
agreement,  the  several and not joint  obligation  of each Lender to fund Loans
made in accordance  with the terms of this Agreement  ratably in accordance with
such  Lender's  Commitment  Percentage  and each  Lender's  right to receive its
Ratable share of principal  payments on Loans in accordance  with its Commitment
Percentage,  the Lenders agree that in order to facilitate the administration of
this Agreement and the other Loan Documents that settlement  among them may take
place on a periodic basis in accordance with the provisions of this Section 4.8.

     (b)  Settlement  Procedures  as to Loans.  To the  extent and in the manner
hereinafter  provided in this  Section 4.8,  settlement  among the Lenders as to
Loans may occur periodically on Settlement Dates determined from time to time by
the  Agent,  which  may  occur  before or after  the  occurrence  or during  the
continuance  of a Default  or Event of  Default  and  whether  or not all of the
conditions  set forth in  Section  5.2 have been met.  On each  Settlement  Date
payments  shall be made by or to Bank of  America  and the other  Lenders in the
manner  provided in this Section 4.8 in accordance  with the  Settlement  Report
delivered by the Agent pursuant to the provisions of this Section 4.8 in respect
of such  Settlement  Date so that as of each  Settlement  Date, and after giving
effect to the  transactions to take place on such Settlement Date, each Lender's
Net Outstandings  shall equal such Lender's  Commitment  Percentage of the Loans
outstanding.

          (i)  Selection  of  Settlement  Dates.  If the  Agent  elects,  in its
     discretion,  but  subject  to the  consent  of Bank of  America,  to settle
     accounts among the Lenders with respect to principal  amounts of Loans less
     frequently than each Business Day, then the Agent shall designate  periodic
     Settlement  Dates which may occur on any Business  Day after the  Effective
     Date;  provided,  however,  that the Agent shall  designate as a Settlement
     Date any  Business  Day which is an Interest  Payment  Date;  and  provided
     further,  that a  Settlement  Date shall  occur at least once  during  each
     seven-day period. The Agent shall designate a Settlement Date by delivering
     to each  Lender a  Settlement  Report  not  later  than  12:00  noon on the
     proposed  Settlement Date, which Settlement Report shall be with respect to
     the period  beginning on the next preceding  Settlement  Date and ending on
     such designated Settlement Date.

                                       45
<PAGE>

          (ii) Non-Ratable  Loans and Payments.  Between  Settlement  Dates, the
     Agent shall request and Bank of America may (but shall not be obligated to)
     advance to the  Borrowers  out of Bank of America's  own funds,  the entire
     principal  amount of any  Revolving  Loan  requested  or  deemed  requested
     pursuant to Section  2.2(a) or any Agent  Advance made  pursuant to Section
     4.7(d) (any such  Revolving  Loan or Agent Advance  being  referred to as a
     "Non-Ratable Loan"). The making of each Non-Ratable Loan by Bank of America
     shall be deemed to be a purchase by Bank of America of a 100% participation
     in  each  other  Lender's  Commitment  Percentage  of the  amount  of  such
     Non-Ratable Loan. All payments of principal,  interest and any other amount
     with respect to such  Non-Ratable  Loan shall be payable to and received by
     the  Agent  for the  account  of Bank of  America.  Upon  demand by Bank of
     America,  with notice thereof to the Agent,  each other Lender shall pay to
     Bank of America, as the repurchase of such  participation,  an amount equal
     to 100% of such Lender's  Commitment  Percentage of the principal amount of
     such  Non-Ratable   Loan.  Any  payments  received  by  the  Agent  between
     Settlement  Dates which in accordance  with the terms of this Agreement are
     to be applied to the  reduction  of the  outstanding  principal  balance of
     Revolving Loans,  shall be paid over to and retained by Bank of America for
     such  application,  and such  payment to and  retention  by Bank of America
     shall be deemed, to the extent of each other Lender's Commitment Percentage
     of  such  payment,  to  be a  purchase  by  each  such  other  Lender  of a
     participation   in  the  Revolving  Loans   (including  the  repurchase  of
     participations in Non-Ratable  Loans) held by Bank of America.  Upon demand
     by another Lender,  with notice thereof to the Agent, Bank of America shall
     pay to the Agent, for the account of such other Lender,  as a repurchase of
     such  participation,  an amount  equal to such  other  Lender's  Commitment
     Percentage of any such amounts (after application thereof to the repurchase
     of any participations of Bank of America in such other Lender's  Commitment
     Percentage  of any  Non-Ratable  Loans) paid only to Bank of America by the
     Agent.

          (iii) Net  Decrease in  Outstandings.  If on any  Settlement  Date the
     increase,  if any, in the dollar  amount of any Lender's  Net  Outstandings
     which is required to comply  with the first  sentence of Section  4.8(a) is
     less than such Lender's  Commitment  Percentage of amounts  received by the
     Agent but paid only to Bank of America since the next preceding  Settlement
     Date, such Lender and the Agent, in their respective  records,  shall apply
     such Lender's Commitment Percentage of such amounts to the increase in such
     Lender's Net Outstandings,  and Bank of America shall pay to the Agent, for
     the account of such Lender, the excess allocable to such Lender.

          (iv) Net  Increase  in  Outstandings.  If on any  Settlement  Date the
     increase,  if any, in the dollar  amount of any Lender's  Net  Outstandings
     which is  required  to comply  with the first  sentence  of Section  4.8(a)
     exceeds such  Lender's  Commitment  Percentage  of amounts  received by the
     Agent but paid only to Bank of America since the next preceding  Settlement
     Date, such Lender and the Agent, in their respective  records,  shall apply
     such Lender's Commitment Percentage of such amounts to the increase in such
     Lender's Net Outstandings,  and such Lender shall pay to the Agent, for the
     account of Bank of America, any excess.

          (v) No Change in Outstandings.  If a Settlement  Report indicates that
     no Loans  have  been  made  during  the  period  since  the next  preceding
     Settlement  Date, then such Lender's  Commitment  Percentage of any amounts
     received  by the Agent but paid  only to Bank of  America  shall be paid by
     Bank of  America  to the  Agent,  for the  account

                                       46
<PAGE>

     of such Lender.  If a Settlement  Report indicates that the increase in the
     dollar  amount of a Lender's Net  Outstandings  which is required to comply
     with the first sentence of Section 4.8(a) is exactly equal to such Lender's
     Commitment  Percentage  of amounts  received  by the Agent but paid only to
     Bank of America since the next preceding  Settlement  Date, such Lender and
     the  Agent,  in  their  respective  records,   shall  apply  such  Lender's
     Commitment  Percentage of such amounts to the increase in such Lender's Net
     Outstandings.

          (vi) Return of Payments. If any amounts received by Bank of America in
     respect of the  Secured  Obligations  are later  required to be returned or
     repaid  by  Bank  of  America  to  the   Borrowers   or  their   respective
     representatives  or  successors  in  interest,   whether  by  court  order,
     settlement  or  otherwise,  in  excess  of  Bank  of  America's  Commitment
     Percentage of all such amounts required to be returned by all Lenders, each
     other  Lender  shall,  upon  demand by Bank of America  with  notice to the
     Agent, pay to the Agent for the account of Bank of America, an amount equal
     to the excess of such  Lender's  Commitment  Percentage of all such amounts
     required to be returned by all Lenders  over the amount,  if any,  returned
     directly by such Lender.

          (vii) Payments to Agent, Lenders.

               (A)  Payment by any  Lender to the Agent  shall be made not later
          than 1:00 p.m. on the Business Day such payment is due,  provided that
          if such  payment is due on demand by another  Lender,  such  demand is
          made on the paying  Lender not later than 10:00 a.m. on such  Business
          Day.  Payment  by the  Agent  to any  Lender  shall  be  made  by wire
          transfer,  promptly  following  the  Agent's  receipt of funds for the
          account of such Lender and in the type of funds received by the Agent,
          provided  that if the Agent  receives  such  funds at or prior to 1:00
          p.m.,  the Agent  shall pay such funds to such  Lender by 2:00 p.m. on
          such  Business  Day.  If a  demand  for  payment  is  made  after  the
          applicable time set forth above, the payment due shall be made by 2:00
          p.m. on the first Business Day following the date of such demand.

               (B) If a Lender shall,  at any time,  fail to make any payment to
          the Agent required hereunder, the Agent may, but shall not be required
          to,  retain  payments  that  would  otherwise  be made to such  Lender
          hereunder  and  apply  such   payments  to  such  Lender's   defaulted
          obligations  hereunder,  at such time, and in such order, as the Agent
          may elect in its sole discretion.

               (C) With  respect to the payment of any funds under this  Section
          4.8(b),  whether  from the  Agent to a Lender  or from a Lender to the
          Agent, the party failing to make full payment when due pursuant to the
          terms hereof  shall,  upon demand by the other party,  pay such amount
          together with  interest on such amount at the Federal Funds  Effective
          Rate.

     (c) Settlement of Other Secured Obligations.  All other amounts received by
the Agent on account  of, or applied by the Agent to the payment of, any Secured
Obligation owed to the Lenders  (including fees payable to the Lenders  pursuant
to Sections  4.2(c) and (d) and proceeds from the sale of, or other  realization
upon, all or any part of the Collateral  following an Event of Default) that are
received by the Agent on or prior to 1:00 p.m. on a Business Day will be paid by
the Agent to each Lender on the same Business Day, and any such amounts that are
received by

                                       47
<PAGE>

the  Agent  after  1:00  p.m.  will be paid by the  Agent to each  Lender on the
following  Business  Day.  Unless  otherwise  stated  herein,  the  Agent  shall
distribute  fees  payable to the Lenders  pursuant  to  Sections  4.2(c) and (d)
ratably to the Lenders based on each Lender's  Commitment  Percentage  and shall
distribute proceeds from the sale of, or other realization upon, all or any part
of the Collateral  following an Event of Default ratably to the Lenders based on
the amount of the Secured Obligations then owing to each Lender.

     (d)  Allocation  of  Payments.  All  monies to be  applied  to the  Secured
Obligations, whether such monies represent voluntary payments by the Obligors or
are received  pursuant to demand for payment or realized from any disposition of
Collateral, shall be allocated among the Agent and such of the Lenders and other
holders of the Secured Obligations as are entitled thereto (and, with respect to
monies allocated to the Lenders, on a Ratable basis unless otherwise provided in
this Section 4.8(d)): (i) first, to Bank of America to pay principal and accrued
interest on any portion of any  Non-Ratable  Loan which Bank of America may have
advanced  on behalf of any  Lender  (other  than  itself)  and for which Bank of
America has not been reimbursed by such Lender or the Obligors;  (ii) second, to
the Agent to pay the amount of  expenses  that have not been  reimbursed  to the
Agent by the Obligors or the Lenders,  together with interest  accrued  thereon;
(iii) third, to the Agent to pay any  indemnified  amount that has not been paid
to the Agent by the  Obligors or the Lenders,  together  with  interest  accrued
thereon;  (iv) fourth, to the Agent to pay any fees due and payable to the Agent
under this Agreement;  (v) fifth, to the Lenders for any indemnified amount that
they have paid to the Agent and for any expenses  that they have  reimbursed  to
the Agent;  (vi) sixth,  to the Lenders in payment of the unpaid  principal  and
accrued interest in respect of the Loans and any other Secured  Obligations then
outstanding  and held by any Lender to be shared  among the Lenders on a Ratable
basis,  or on such  other  basis as may be agreed  upon in writing by all of the
Lenders (which  agreement or agreements may be entered into without notice to or
the consent or approval of the Obligors),  and (vii) seventh,  to the holders of
the other  Secured  Obligations  who are not  Lenders on a pro rata  basis.  The
allocations  set forth in this Section 4.8(d) are solely to determine the rights
and  priorities  of the Agent and the  Lenders  as among  themselves  and may be
changed  by the Agent and the  Lenders  without  notice  to, or the  consent  or
approval  of, the  Obligors or any other  Person.  Whenever  allocation  is made
pursuant to this Section  4.8(d) to the holder of Secured  Obligations  in which
another  Lender  acquires a  participation,  the monies  received by such holder
shall be shared as between such holder and such participants on a Ratable basis.

     SECTION 4.9. Mandatory Prepayments.

     (a) Prepayments from Asset Dispositions.  Without limiting the restrictions
set forth in Sections 8.7 and 11.7, the Obligors agree that immediately upon the
receipt  by  any  Obligor  of  the  proceeds  of any  Asset  Disposition  of the
Collateral,  the  Obligors  shall  apply 100% of such  proceeds  as  provided in
Section  4.9(c).  Concurrently  with the  making  of any such  application,  the
Borrowers'  Agent  shall  deliver to the Agent a  certificate  of the  Financial
Officer demonstrating the calculations of the amount required to be applied and,
in the case of the application of the Net Proceeds from Asset Dispositions,  the
amount of such Net Proceeds to be applied as provided in Section 4.9(c).

     (b) Prepayments from Equity Offerings. In the event that, at any time after
the Effective  Date,  any Obligor  issues  capital stock or other  securities or
receives an additional capital contribution in respect of existing capital stock
or other  securities  (excluding any such issuance to, or receipt from,  another
Obligor or a Consolidated Subsidiary of Safety Components, and further excluding
any such  issuance  to, or  receipt  pursuant  to the  terms of the  Noteholders

                                       48
<PAGE>

Restructuring  Agreement),  no later than the second  Business Day following the
date of receipt of the proceeds from such issuance, the Obligors shall (i) apply
such  proceeds,   net  of  underwriting  discounts  and  commissions  and  other
reasonable costs associated  therewith,  as provided in Section 4.9(c), and (ii)
the  Borrowers'  Agent shall deliver to the Agent a certificate of the Financial
Officer  demonstrating the calculations of the amount required to be applied and
the amount of such net proceeds to be applied as provided in Section 4.9(c).

     (c) Application of Proceeds of Prepayments.  All prepayments of the Secured
Obligations pursuant to this Section 4.9 shall be applied as follows: (i) first,
to repay any fees, expenses or charges payable to the Agent under this Agreement
and the  other  Loan  Documents,  (ii)  second,  as a  mandatory  prepayment  of
installments  of  principal  under the Term Loans in inverse  order of maturity,
(iii) third,  to accrued  interest  and fees under the Term Loans,  (iv) fourth,
once all  principal,  interest and fees under Term Loans have been paid in full,
as  a  mandatory   prepayment  of  principal   under   Revolving  Loans  with  a
corresponding  permanent  reduction of the Total Commitment with respect to such
Revolving  Loans,  (v) fifth,  to accrued  interest and fees under the Revolving
Loans,  and (vi) sixth,  then to the other  Secured  Obligations,  provided that
payments  shall be first  applied as  provided  above to Prime Rate Loans to the
extent thereof and then to LIBOR Loans, and provided further that payments shall
be first  applied to Prime Rate  Loans to the extent  thereof  and then to LIBOR
Loans and any payments  received which would otherwise  result in the prepayment
of LIBOR Loans prior to the end of the Interest Period  applicable  thereto may,
upon the request of the Borrowers' Agent, in the absence of an Event of Default,
be applied to the Cash Collateral Account,  with any excess to be deposited with
the Agent to be held as Cash Collateral for the Secured  Obligations and applied
by the Agent from time to time to outstanding  Loans promptly upon the making of
such Loans or, after the Termination Date, to any of the Secured  Obligations as
set forth in Section 4.8(d).

     SECTION 4.10. Payments Not at End of Interest Period; Failure to Borrow. If
for any reason any payment of  principal  with respect to any LIBOR Loan is made
on any day prior to the last day of the Interest Period applicable to such LIBOR
Loan or,  after  having  given a Notice of  Borrowing  with respect to any LIBOR
Revolving  Loan or a Notice of  Conversion or  Continuation  with respect to any
Loan to be continued as or converted into a LIBOR Loan, such Loan is not made or
is not continued as or converted into a LIBOR Loan due to the Borrowers' failure
to borrow or to fulfill the  applicable  conditions  set forth in Article 5, the
Borrowers  shall pay to each Lender upon the request of the Agent or such Lender
an amount  sufficient  to  compensate  the Agent and such Lender for any and all
losses or expenses which the Agent or such Lender has sustained or incurred as a
consequence  thereof.  The Borrowers shall pay such amount upon  presentation by
the Agent (or as to any Lender, by such Lender) of a statement setting forth the
amount and the Agent's (or such Lender's)  calculation  thereof pursuant hereto,
which statement shall be deemed true and correct absent manifest error.

     SECTION 4.11. Assumptions Concerning Funding of LIBOR Loans. Calculation of
all amounts  payable to the Lenders under this Article 4 shall be made as though
each Lender had actually funded or committed to fund its LIBOR Loans through the
purchase  of an  underlying  deposit  in an  amount  equal to the  amount of its
Ratable share thereof and having a maturity  comparable to the relevant Interest
Period for such LIBOR Loan;  provided,  however,  each Lender may fund its LIBOR
Loans in any manner it deems fit and the foregoing  assumption shall be utilized
only for the calculation of amounts payable under this Article 4.

     SECTION 4.12. Notice of Conversion or Continuation.  Whenever the Borrowers
desire,  subject to the  provisions of Section  4.13, to convert an  outstanding
Loan into a Loan or Loans of a different Type or to continue all or a portion of
an outstanding LIBOR Loan for a subsequent  Interest Period, the

                                       49
<PAGE>

Borrowers  shall  notify  the  Agent  by  telephone  or in  writing  by telex or
facsimile  transmission (which notice shall be irrevocable) not later than 11:00
a.m.  on the date three  Business  Days  before  the day on which such  proposed
conversion or  continuation  is to be effective  (and such effective date of any
continuation  shall be the last day of the  Interest  Period for the  applicable
LIBOR Loan), provided the Borrowers shall not be permitted to convert Loans into
(or continue  Loans as) LIBOR Loans at any time during the existence of an Event
of Default.  Each such notice (a "Notice of Conversion or  Continuation")  shall
(a) identify the Loan to be converted or continued,  the  aggregate  outstanding
principal  balance  thereof  and, if a LIBOR Loan,  the last day of the Interest
Period  applicable  to  such  Loan,  (b)  specify  the  effective  date  of such
conversion or continuation, and (c) specify the principal amount of such Loan to
be converted or continued  and, if  converted,  the Type or Types into which the
same is to be converted,  and shall,  if notice thereof was originally  given by
telephone,  be immediately followed by a signed, written confirmation thereof by
the Borrowers in a form  acceptable to the Agent,  provided that if such written
confirmation  differs in any respect from the action  taken by the Lenders,  the
records of the Agent shall control absent manifest error.

     SECTION 4.13. Conversion or Continuation. Provided that no Event of Default
shall have occurred and be continuing (but subject to the provisions of Sections
4.12  and  4.15),  the  Borrowers  may  request  that  all  or any  part  of any
outstanding  Loan be  converted  into a Loan or Loans of a different  Type or be
continued as a Loan or Loans of the same Type, in the same  aggregate  principal
amount, on any Business Day (which, in the case of continuation of a LIBOR Loan,
shall be the last day of the  Interest  Period  applicable  to such Loan),  upon
notice (which  notice shall be  irrevocable)  given in  accordance  with Section
4.12.

     SECTION 4.14. Maximum Number of LIBOR Loans; Minimum Increments.

     (a) If the Agent does not receive a notice of election in  accordance  with
Section  4.12 with  respect  to the  continuation  of a LIBOR  Loan  within  the
applicable  time limits  specified in said Section 4.12, or if, when such notice
must be given, an Event of Default exists or such Type of Loan is not available,
the  Borrowers  shall be deemed to have  elected to  convert  such LIBOR Loan in
whole into a Prime Rate Loan on the last day of the Interest Period therefor.

     (b) Notwithstanding the foregoing, the Borrowers may not select an Interest
Period that would end, but for the  provisions  of the  definition  of "Interest
Period," after the Termination Date.

     (c) In no event  shall  there be more than  four  LIBOR  Loans  outstanding
hereunder at any time. For the purpose of this  subsection  (d), each LIBOR Loan
having  a  distinct  Interest  Period  shall be  deemed  to be a  separate  Loan
hereunder.

     (d) Each  LIBOR  Loan  shall  be in a  minimum  amount  of  $3,000,000  and
increments of $500,000 in excess thereof.

     SECTION 4.15. Changed Circumstances.

     (a) If the introduction of or any change in or in the interpretation of (in
each case,  after the date hereof) any law or regulation  makes it unlawful,  or
any governmental  authority asserts, after the date hereof, that it is unlawful,
for any Lender to perform its  obligations  hereunder  to make LIBOR Loans or to
fund or maintain  LIBOR Loans  hereunder,  such Lender shall notify the Agent of
such event and the Agent shall notify the Borrowers of such event, and the right
of the Borrowers to select LIBOR Loans for any subsequent  Interest Period or in
connection  with any subsequent  conversion of any Loan shall be suspended until
the Agent  shall  notify  the  Borrowers  that the  circumstances  causing  such
suspension no longer exist, and the Borrowers shall forthwith prepay in full all
LIBOR

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<PAGE>

Loans then  outstanding,  and shall pay all interest accrued thereon through the
date of such  prepayment  or  conversion,  unless the  Borrowers,  within  three
Business  Days after such notice from the Agent,  request the  conversion of all
LIBOR Loans then outstanding into Prime Rate Loans;  provided,  that if the date
of such  repayment  or proposed  conversion  is not the last day of the Interest
Period  applicable to such LIBOR Loan,  the Borrowers  shall also pay any amount
due pursuant to Section 4.10.

     (b) If the Agent  shall,  at least one  Business Day before the date of any
requested  Loan or the effective date of any  conversion or  continuation  of an
existing  Loan to be made or continued  as or converted  into a LIBOR Loan (each
such  requested  Loan made and Loan to be  converted  or  continued,  a "Pending
Loan"),  notify the Borrowers that LIBOR will not adequately reflect the cost to
the Lenders of making or funding  such  Pending Loan as a LIBOR Loan or that the
Interbank  Offered  Rate is not  reasonably  determinable,  including  from  any
interest rate reporting  service of recognized  standing,  then the right of the
Borrowers to select LIBOR Loans for such Pending Loan, any subsequent Loan or in
connection  with any subsequent  conversion or continuation of any Loan shall be
suspended  until the Agent shall  notify the  Borrowers  that the  circumstances
causing such  suspension  no longer  exist,  and each Pending Loan and each such
subsequent  Loan requested to be made,  continued or converted  shall be made or
continued as or converted into a Prime Rate Loan.

     (c) If, due to either (i) the introduction of or any change (other than any
change by way of imposition or increase of reserve requirements  included in the
LIBOR Reserve Percentage) in or in the interpretation of, in each case after the
date  hereof,  any law or  regulation  (except to the extent such  introduction,
change or  interpretation  affects  taxes  measured by net income),  or (ii) the
compliance  with a guideline or request  (except to the extent such guideline or
request  affects  taxes  measured by net income)  from any central bank or other
governmental  authority (whether nor not having the force of law) made after the
date  hereof,  there shall be any increase in the cost to any Lender of agreeing
to make or making,  funding or maintaining LIBOR Loans (other than as separately
provided for in Section  4.15(d)),  then the Borrowers  shall from time to time,
within  thirty (30) days after demand by such Lender (with a copy of such demand
to the  Agent),  pay to the  Agent for the  account  of such  Lender  additional
amounts sufficient to compensate such Lender for such increased cost.

     (d) If (i) the adoption of or change in,  after the date  hereof,  any law,
rule,  regulation or guideline regarding capital  requirements for banks or bank
holding companies,  or any change,  after the date hereof, in the interpretation
or  application   thereof  by  any  governmental   authority  charged  with  the
interpretation or administration thereof, or (ii) compliance by such Lender with
any guideline,  request or directive, made or promulgated after the date hereof,
of any such entity regarding  capital adequacy  (whether or not having the force
of law),  has the  effect of  reducing  the  return on a  Lender's  capital as a
consequence of its  maintaining  its Loans or commitment to make Loans hereunder
to a level  below that  which  such  Lender  could  have  achieved  but for such
adoption, change or compliance (taking into consideration such Lender's policies
with respect to capital  adequacy  immediately  before such adoption,  change or
compliance  and  assuming  the  full   utilization  of  such  Lender's   capital
immediately before such adoption, change or compliance) or if any change in law,
regulation,  treaty or official  directive or the  interpretation or application
thereof  by  any  court  or by  any  governmental  authority  charged  with  the
administration  thereof or the  compliance  with any guideline or request of any
central bank or other governmental authority (whether or not having the force of
law)  subjects a Lender to any tax with  respect to  payments  of  principal  or
interest or any other  amounts  payable  hereunder by the Borrowers or otherwise
with respect to the  transactions  contemplated  hereby (except for taxes on the
overall net income of such Lender imposed by the United States of America or any
political subdivision thereof), in each case by any amount deemed

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<PAGE>

by such  Lender  to be  material,  then such  Lender  shall  promptly  after its
determination of such occurrence notify the Borrowers and the Agent thereof. The
Borrowers  agree to pay to the  Agent,  for the  account of such  Lender,  as an
additional  fee from time to time,  within thirty (30) days after demand by such
Lender,  such  amount  as such  Lender  certifies  to be the  amount  that  will
compensate it for such reduction or tax.

     (e)  Before  giving any notice  pursuant  to Section  4.15(a) or making any
demand  pursuant  to  Sections  4.15(c) or (d),  each  Lender  agrees to use its
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions)  to designate a different  lending  office if the making of such a
designation would avoid the need for such notice or demand, or reduce the amount
of such  increased  cost,  reduction  in  return or tax and  would  not,  in the
judgment of such Lender, be otherwise disadvantageous to such Lender.

     (f) A  certificate  of the  Lender  claiming  compensation  under  Sections
4.15(c) or (d) shall be  conclusive  in the  absence  of  manifest  error.  Such
certificate  shall set forth the nature of the  occurrence  giving  rise to such
compensation,  the additional amount or amounts to be paid to it hereunder,  and
the method by which such amounts were determined.  In determining such amount, a
Lender may use any reasonable averaging and attribution methods.

     SECTION 4.16. Cash Collateral Account. The Borrowers shall establish a Cash
Collateral Account with the Agent in which to deposit  Collateral  consisting of
cash or Cash Equivalents from time to time: (a) representing  payments  received
pursuant  to  Sections  2.3(c) and 4.9 in excess of then  outstanding  Revolving
Loans or on account of LIBOR Loans which would otherwise  result in repayment of
such Loans prior to the end of the Interest Period applicable thereto,  (b) with
respect to Letter of Credit Obligations (i) at the request of the Agent upon the
occurrence of an Event of Default, or (ii) for the purposes set forth in Section
4.6 in the event of termination of this Agreement,  or (c) for any other purpose
appropriate   under  this   Agreement  to  provide   security  for  the  Secured
Obligations. On the last day of the applicable Interest Period as to any amounts
deposited to the Cash  Collateral  Account  pursuant to clause (a) above or if a
drawing under a Letter of Credit occurs with respect to any amounts deposited to
the Cash Collateral  Account pursuant to clause (b) above,  each Borrower hereby
authorizes the Agent to use the monies deposited in the Cash Collateral  Account
to make  payment to the payee with  respect  to such Loan or  drawing.  The Cash
Collateral  Account  shall be in the name of the Agent and the Agent  shall have
sole dominion and control over, and sole access to, the Cash Collateral Account.
Neither  any  Borrower  nor any  Person  claiming  on behalf of or  through  any
Borrower  shall  have any right to  withdraw  any of the funds  held in the Cash
Collateral  Account.  Each Borrower  agrees that it will not at any time sell or
otherwise  dispose of any interest in the Cash  Collateral  Account or any funds
held  therein or create or permit to exist any Lien upon or with  respect to the
Cash  Collateral  Account or any funds held  therein,  except as  provided in or
contemplated by this Agreement.  The Agent shall exercise reasonable care in the
custody and  preservation of any funds held in the Cash  Collateral  Account and
shall be deemed to have exercised such care if such funds are accorded treatment
substantially  equivalent to that which the Agent accords other funds  deposited
with  the  Agent,  it  being  understood  that  the  Agent  shall  not  have any
responsibility  for taking any necessary  steps to preserve  rights  against any
parties with respect to any funds held in the Cash Collateral  Account.  Subject
to the right of the Agent to withdraw funds from the Cash Collateral  Account as
provided herein, the Agent will, so long as no Default or Event of Default shall
have  occurred and be  continuing,  from time to time invest funds on deposit in
the Cash Collateral Account, reinvest proceeds of any such investments which may
mature or be sold,  and invest  interest or other income  received from any such
investments,  in each case,  in Cash  Equivalents,  as the  Borrowers may direct
prior to the  occurrence  of a Default or Event of Default  and as the Agent may
select after the occurrence and during the  continuance of a Default or Event of
Default.  Such  proceeds,  interest  and  income,  which are not so  invested or
reinvested in Cash Equivalents,  shall be deposited and held by the Agent in the
Cash Collateral  Account.  The Agent makes no  representation or warranty as to,

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<PAGE>

and shall not be responsible for, the rate of return, if any, earned in any Cash
Collateral.  Any earnings on Cash  Collateral  shall be held as additional  Cash
Collateral on the terms set forth in this Section 4.16.

     SECTION  4.17.  Borrowers'  Agent.  Each of the Obligors  other than Safety
Components hereby appoints Safety Components as, and Safety Components shall act
under this Agreement as, the agent, attorney-in-fact and legal representative of
such  other  Borrowers  and  Obligors  for all  purposes,  including  requesting
Borrowings and receiving account statements and other notices and communications
to the Obligors (or any of them) from the Agent, the Issuing Bank or any Lender.
The  Agent,  the  Issuing  Bank and the  Lenders  may  rely,  and shall be fully
protected  in  relying,  on any Notice of  Borrowing,  Notice of  Conversion  or
Continuation,  request for a Letter of Credit, disbursement instruction, report,
information  or any  other  notice  or  communication  made or given  by  Safety
Components, whether in its own name, on behalf of any other Obligor or on behalf
of "the  Borrowers" or "the  Obligors," and neither the Agent,  the Issuing Bank
nor any Lender  shall have any  obligation  to make any  inquiry or request  any
confirmation from or on behalf of any other Obligors as to the binding effect on
it of any such Notice, request, instruction,  report, information,  other notice
or  communications,  nor shall the joint and several  character of the Obligors'
liability for the Secured Obligations be affected,  provided that the provisions
of this Section 4.17 shall not be construed so as to preclude any Borrower  from
directly requesting  Borrowings or taking other actions permitted to be taken by
"a Borrower"  hereunder.  The Agent and each Lender  intend to maintain a single
Loan Account in the name of "Safety  Components  International,  Inc." hereunder
and each Borrower  expressly  agrees to such  arrangement and confirms that such
arrangement  shall  have no effect on the joint  and  several  character  of its
liability for the Secured Obligations.

     SECTION 4.18. Joint and Several Liability.

     (a) Joint and Several Liability.  The Secured  Obligations shall constitute
one joint and several  direct and general  obligation  of all of the  Borrowers.
Notwithstanding anything to the contrary contained herein, each of the Borrowers
shall  be  jointly  and  severally,  with  each  other  Borrower,  directly  and
unconditionally  liable to the Agent,  the Issuing  Bank and the Lenders for all
Secured  Obligations  and shall have the obligations of co-maker with respect to
the Loans,  the Notes and the  Secured  Obligations,  it being  agreed  that the
advances to each Borrower  inure to the benefit of all  Borrowers,  and that the
Agent,  the  Issuing  Bank and the  Lenders are relying on the joint and several
liability of the  Borrowers as co-makers in extending  the Loans  hereunder  and
issuing Letters of Credit. Each Borrower hereby  unconditionally and irrevocably
agrees that upon default in the payment when due (whether at stated maturity, by
acceleration  or  otherwise)  of any  principal  of, or interest on, any Loan or
other Secured  Obligation  payable to the Agent, the Issuing Bank or any Lender,
it will forthwith pay the same, without notice or demand.

     (b) No Reduction in Obligations.  No payment or payments made by any of the
Borrowers or any other Person or received or collected by the Agent, the Issuing
Bank or any Lender from any of the  Borrowers  or any other  Person by virtue of
any action or proceeding or any setoff or  appropriation  or  application at any
time  or  from  time  to  time in  reduction  of or in  payment  of the  Secured
Obligations shall be deemed to modify,  reduce,  release or otherwise affect the
liability of each Borrower under this  Agreement,  which shall remain liable for
the Secured  Obligations until the Secured  Obligations are paid in full and the
Term Loan Facility and the Revolving Loan Facility are terminated.

     SECTION 4.19.  Obligations Absolute.  Each Borrower agrees that the Secured
Obligations  will be paid  strictly  in  accordance  with the  terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction  affecting any of such terms or the rights of the Agent, the
Issuing Bank or any Lender with respect thereto.  All Secured  Obligations shall
be  conclusively   presumed  to

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<PAGE>

have been created in reliance hereon. The liabilities under this Agreement shall
be  absolute  and  unconditional  irrespective  of: (a) any lack of  validity or
enforceability  of any Loan  Documents  or any  other  agreement  or  instrument
relating thereto; (b) any change in the time, manner or place of payments of, or
in any other term of, all or any part of the Secured  Obligations,  or any other
amendment or waiver thereof or any consent to departure therefrom, including any
increase in the Secured  Obligations  resulting from the extension of additional
credit to any Borrower or other Obligor or otherwise;  (c) any taking, exchange,
release or  non-perfection  of any  collateral,  or any release or  amendment or
waiver  of or  consent  to  departure  from any  guaranty  for all or any of the
Secured  Obligations;  (d)  any  change,  restructuring  or  termination  of the
corporate  structure or existence of any Borrower or other  Obligor;  or (e) any
other circumstance which might otherwise constitute a defense available to, or a
discharge of, any Borrower or a Guarantor.  This Agreement  shall continue to be
effective  or be  reinstated,  as the case may be, if at any time any payment of
any of the Secured Obligations is rescinded or must otherwise be returned by the
Agent,  the  Issuing  Bank or any  Lender  upon the  insolvency,  bankruptcy  or
reorganization of any Borrower or other Obligor or otherwise, all as though such
payment had not been made.

     SECTION 4.20. Waiver of Suretyship Defenses.  Each Borrower agrees that the
joint and several liability of the Borrowers  provided for in Section 4.18 shall
not be  impaired  or  affected by any  modification,  supplement,  extension  or
amendment  of any  contract  or  agreement  to which  the  other  Borrowers  may
hereafter  agree  (other than an  agreement  signed by the Agent and the Lenders
specifically  releasing such  liability),  nor by any delay,  extension of time,
renewal,  compromise or other indulgence  granted by the Agent, the Issuing Bank
or any Lender with respect to any of the Secured  Obligations,  nor by any other
agreements  or  arrangements  whatever  with the other  Borrowers or with anyone
else, each Borrower hereby waiving all notice of such delay, extension, release,
substitution,  renewal, compromise or other indulgence, and hereby consenting to
be bound thereby as fully and effectually as if it had expressly  agreed thereto
in advance. The liability of each Borrower is direct and unconditional as to all
of the Secured Obligations, and may be enforced without requiring the Agent, the
Issuing  Bank or any  Lender  first to  resort  to any  other  right,  remedy or
security. Each Borrower hereby expressly waives promptness, diligence, notice of
acceptance  and any other notice  (except to the extent  expressly  provided for
herein  or in  another  Loan  Document)  with  respect  to any  of  the  Secured
Obligations,  the  Notes,  this  Agreement  or any other Loan  Document  and any
requirement  that the Agent,  the Issuing  Bank or any Lender  protect,  secure,
perfect or insure any Lien or any property  subject thereto or exhaust any right
or take any action  against any Borrower or any other Person or any  collateral,
including any rights any Borrower may otherwise have under O.C.G.A.  ss. 10-7-24
or any successor statute or any analogous statute in any jurisdiction  under the
laws of which any Borrower is  incorporated  or in which any  Borrower  conducts
business.

     SECTION  4.21.  Superpriority  Nature of Secured  Obligations.  All Secured
Obligations  shall  constitute  administrative  expenses of the Borrowers in the
Chapter 11 Case with priority under Section  364(c) of the Bankruptcy  Code over
any and all other administrative  expenses of the kind specified in, among other
Sections,  Sections 105, 503(b) and 507(b) of the Bankruptcy  Code,  subject and
subordinate  only to (i)  Permitted  Liens,  (ii) Senior  Claims,  and (iii) the
following  (hereafter  referred  to  as  the  "Carve-Out  Expenses"):  fees  and
disbursements  incurred on and after the Petition Date by professionals retained
pursuant  to court  order in the  Chapter 11 Case  pursuant  to  Section  327 or
Section 1103 of the Bankruptcy  Code by the Borrowers or the Committee,  up to a
maximum  aggregate  amount unpaid on the Termination Date not to exceed $500,000
(such  dollar  amount  being  referred  to  herein  as the  "Carve-Out  Amount")
(determined without regard to fees and expenses which may be awarded and paid on
an  interim  basis or any  pre-petition  retainer  paid to  Debtors'  counsel in
connection with or related to the Chapter 11 Case), and any statutorily mandated
costs  and fees of the Clerk of the Court and the  United  States  Trustee  with
respect to the Chapter 11 Case.  The  Carve-Out  Expenses  shall not include any
other  claims  that  are or may be  senior  to or  pari  passu  with  any of the
Carve-Out  Expenses or any professional fees and expenses of a Chapter 7 trustee
and the Carve-Out  Expenses shall

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<PAGE>

not  include  any fees or  disbursements  related  to the  preparation  for,  or
commencement or prosecution  of, any claims or proceedings  against the Agent or
any Secured  Creditor or their claims or security  interests in or Liens on, the
Collateral  whether under this Agreement or any other Loan Document.  Other than
the Senior Claims and the Carve-Out  Expenses,  no other claim having a priority
superior or pari passu to that  granted to the Agent,  the Issuing  Bank and the
Lenders  by the Final  Order  shall be  granted or  approved  while any  Secured
Obligations under this Agreement remain outstanding. Notwithstanding anything in
this  Section  4.21 to the  contrary,  the Liens and claims of the Agent and the
Lenders with respect to the Secured  Obligations  under this  Agreement  and the
other Loan  Documents  shall  "prime"  the Liens and claims of the  Pre-Petition
Lenders (whether in their capacity as Pre-Petition  Lenders or in their capacity
as Post-Petition Subordinated Lenders) under the Pre-Petition Loan Agreement and
the Post-Petition  Lenders Credit Agreement in accordance with the Intercreditor
and Subordination Agreement and Bankruptcy Code Section 364(d).

                                   ARTICLE 5

                              CONDITIONS PRECEDENT

     SECTION  5.1.  Conditions   Precedent  to  Loans  and  Letters  of  Credit.
Notwithstanding  any other provision of this  Agreement,  the Initial Loans will
not be made,  and no Letters of Credit  will be issued,  and the  provisions  of
Articles 7, 8, 9 and 10 will not become effective, until the fulfillment of each
of the following conditions prior to or contemporaneously with the making of the
first to be made of such Loans or issuance of such Letters of Credit:

          (a)  Financial  Condition.  The Obligors  shall have  delivered to the
     Agent the Projections required hereunder.

          (b) Fees. The Borrowers shall have paid all of the fees payable on the
     Effective Date.

          (c) Security  Interests.  The Agent shall have  received  satisfactory
     evidence  that the Agent (for the benefit of the Secured  Creditors)  has a
     valid  and  perfected  security  interest  as of  such  date  in all of the
     Collateral,  subject  only to  Permitted  Liens,  and  that  such  security
     interest  is of a first  priority  subject  only  to  Senior  Claims  or as
     provided for by the Final Order.

          (d)  Intercreditor  and  Subordination  Agreement.  The  Agent and the
     Pre-Petition Lenders (in both their capacity Pre-Petition Lenders and their
     capacity as  Post-Petition  Subordinated  Lenders) shall have each executed
     the Intercreditor  and Subordination  Agreement in a form acceptable to the
     Agent, which Intercreditor and Subordination Agreement shall have provided,
     among other things,  for the  subordination  of any and all secured  claims
     against the Obligors retained by the Pre-Petition Lenders (whether in their
     capacity as  Pre-Petition  Lenders or in their  capacity  as  Post-Petition
     Subordinated  Lenders) to the various liens and priority  claims granted to
     the  Agent and the  Lenders  pursuant  to this  Agreement,  the other  Loan
     Documents and the Final Order.

          (e)  Noteholders   Restructuring  Agreement.  The  Borrowers  and  the
     Required  Noteholder  Representatives  shall have executed the  Noteholders
     Restructuring  Agreement providing,  among other things, for the conversion
     of all Indebtedness of the Obligors under the Indenture to equity interests
     in Safety Components,  on terms and conditions satisfactory to the Agent in
     its sole discretion.

                                       55
<PAGE>

          (f)  Post-Petition  Lenders  Credit  Agreement.  The Borrowers and the
     Pre-Petition  Lenders shall have executed the Post-Petition  Lenders Credit
     Agreement  providing,  among other  things,  for the  restructuring  of the
     Pre-Petition  Lenders' claims and liens pursuant to the  Pre-Petition  Loan
     Agreement, on terms and conditions satisfactory to the Agent.

          (g)  Closing  Documents.  The Agent  shall have  received  each of the
     following  documents,  all of  which  shall  be  satisfactory  in form  and
     substance to the Agent and its counsel and to the Lenders:

               (i)  certified   copies  of  the  articles  or   certificate   of
          incorporation  and bylaws (or  equivalent  constitutive  documents) of
          each Obligor as in effect on the Effective Date,

               (ii)  certified  copies  of  all  corporate   action,   including
          shareholder approval, if necessary, taken by each Obligor to authorize
          the execution,  delivery and performance of this Agreement,  the other
          Loan Documents, and in the case of the Borrowers, the borrowings under
          this Agreement,

               (iii)  certificates  of incumbency and specimen  signatures  with
          respect to each of the officers of each Obligor  authorized to execute
          and deliver this  Agreement and the other Loan  Documents on behalf of
          each Obligor  executing any document,  certificate or instrument to be
          delivered  in  connection  with  this  Agreement  or  the  other  Loan
          Documents  and, in the case of the  Borrowers,  to request  borrowings
          under this Agreement,

               (iv) a certificate  evidencing  the good standing of each Obligor
          in  the   jurisdiction  of  its   incorporation   and  in  each  other
          jurisdiction  in which it is  required  to be  qualified  as a foreign
          corporation to transact its business as presently conducted,

               (v) copies of all  financial  statements  referred  to in Section
          6.1(n) and meeting the requirements thereof,

               (vi) a certification  from the principal officers of the Obligors
          as to such factual matters as shall be requested by the Agent,

               (vii)  certificates  or binders of insurance  relating to each of
          the policies of insurance  covering  any of the  Collateral,  together
          with loss payable clauses which comply with the terms of Section 8.8,

               (viii) a  certificate  of the  Financial  Officer  (or such other
          officer  of  Safety  Components  as may be  acceptable  to the  Agent)
          stating that, to the best of his knowledge and based on an examination
          sufficient to enable him to make an informed statement, (A) all of the
          representations  and  warranties  made or deemed to be made under this
          Agreement are true and correct as of the Effective Date,  after giving
          effect to the Loans to be made at such time and the application of the
          proceeds thereof, and (B) no Default or Event of Default exists,

               (ix) a Borrowing Base Certificate  prepared as of the last Friday
          before the Effective  Date, and a Schedule of Inventory and a Schedule
          of  Receivables  prepared as of the last Friday  before the  Effective
          Date,

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<PAGE>

               (x) a Collateral  Access  Agreement with respect to each premises
          leased by a Non-Debtor Borrower on which any Collateral is located,

               (xi)  Agency   Account   Agreements   and  the  related   Lockbox
          Agreements,  each duly  executed by the  applicable  Borrowers and the
          Clearing Bank party thereto,

               (xii) the  Initial  Notice of  Borrowing,  duly  executed  by the
          Borrowers' Agent,

               (xiii) copies of each of the other Loan  Documents  duly executed
          by the parties  thereto,  together with evidence  satisfactory  to the
          Agent of the due  authorization  and binding  effect of each such Loan
          Document on such party,

               (xiv) the legal  opinion of  Borrowers'  United States and United
          Kingdom counsel in form and substance satisfactory to the Agent.

               (xv) the Agent shall have (i) received the results of its initial
          field  examination  of  the  Borrowers'  Receivables,  Inventory,  and
          Indebtedness,  which results shall be satisfactory  to the Agent,  and
          (ii)  reviewed to its  satisfaction  each of the  Borrowers'  customer
          supply contracts,  and received  satisfactory evidence that no default
          or event of  default  (other  than with  respect  to the filing of the
          Chapter 11 Case)  presently  exists with respect to any such  contract
          that has not been waived.

               (xvi) such other  documents and  instruments  as the Agent or any
          Lender may reasonably request.

          (h) Notes.  Each Lender shall have received a Revolving  Loan Note and
     Term Loan Note duly executed and delivered by the Borrowers, complying with
     the terms of Sections 2.4 and 2.8.

          (i) Other Security Documents. The Agent shall have received each other
     Security Document, in form and substance  satisfactory to the Agent and the
     Lenders,  duly  executed and  delivered  by the  applicable  Borrowers  and
     Guarantors, including the Patent Assignment and the Trademark Assignment.

          (j)   Availability.   The  Agent  shall  be  provided   with  evidence
     satisfactory to it that, as of the Effective  Date,  after giving effect to
     the  Initial  Loans  and the  issuance  of any  Letters  of  Credit  on the
     Effective Date, (a) the Borrowing Base at such time minus (b) the aggregate
     principal  amount of the  Initial  Loans plus the face value of all initial
     Letters of Credit to be issued (including Letters of Credit issued pursuant
     to Section  3.10) is not less than  $10,000,000  (after  disbursements  and
     advances,  and with all obligations of the Borrowers current based on terms
     agreed to or  acquiesced in by vendors in the Chapter 11 Case or consistent
     with the Borrowers' usual payment practices).

          (k) No Injunctions,  Etc. Other than the filing of the Chapter 11 Case
     and those  matters  reflected on Schedule  6.1(k),  no action,  proceeding,
     investigation,  regulation  or  legislation  shall  have  been  instituted,
     threatened or proposed before any court, governmental agency or legislative
     body to enjoin,  restrain, or prohibit, or to obtain damages in respect of,
     or  which  is  related  to or  arises  out of this  Agreement,  Noteholders
     Restructuring   Agreement,   or  the   consummation  of  the   transactions
     contemplated hereby or thereby, or which, in the Lenders'

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<PAGE>

     discretion,  would  make it  inadvisable  to  consummate  the  transactions
     contemplated by this Agreement.

          (l) Materially Adverse Effect.  Excluding the filing of the Chapter 11
     Cases, there shall have been no change in the business, assets, management,
     operations, financial condition or prospects of the Obligors since December
     25, 1999, which change, in the reasonable  judgment of the Agent, will have
     a Materially Adverse Effect.

          (m) Bankruptcy Case Matters.

               (i) The Court  shall have  entered the Final  Order,  in form and
          substance satisfactory to the Agent,

               (ii) The Borrowers shall have obtained  appropriate  Court orders
          approving their cash management system,  all as reasonably  acceptable
          to the Agent,

               (iii)  The  orders  described  on  Schedule  5.1(m)  in form  and
          substance reasonably satisfactory to the Agent shall have been entered
          in the Chapter 11 Case,

               (iv) The  automatic  stay  shall  have  been  modified  to permit
          creation and  perfection  of the Agent's,  the Issuing  Banks' and the
          Lenders'   Liens  and   security   interests   and  shall   have  been
          automatically  vacated, to the extent set forth in the Final Order, to
          permit enforcement of the Agent's, the Issuing Banks' and the Lenders'
          rights and remedies under the Loan Documents, and

               (v) The Debtor  Borrowers  and the Debtor  Guarantors  shall have
          filed a motion with the Court seeking  approval for the retention of a
          financial  advisor and crisis manager for the Debtor Borrowers and the
          Debtor   Guarantors   acceptable  to  the  Agent  in  its   reasonable
          discretion.

     SECTION  5.2.  All Loans;  Letters of Credit.  At the time of the making of
each  Loan,  including  the  Initial  Loans and all  subsequent  Loans,  and the
issuance of each Letter of Credit:

          (a) all of the  representations  and  warranties  made or deemed to be
     made under this  Agreement and the other Loan  Documents  shall be true and
     correct at such time both with and without  giving effect to the Loan to be
     made at such time (and the  application  of the  proceeds  thereof)  or the
     Letter of Credit to be issued at such time,

          (b) the  corporate  actions  of the  Obligors  referred  to in Section
     5.1(g)(ii)  shall  remain in full force and effect  and the  incumbency  of
     officers  shall be as stated in the  certificates  of incumbency  delivered
     pursuant to Section  5.1(g)(iii) or as subsequently  modified and reflected
     in a certificate of incumbency delivered to the Agent,

          (c) the credit  requested  would not cause the  aggregate  outstanding
     amount of the Loans (including Letter of Credit  Obligations) to exceed the
     amount  then  authorized  by the Final  Order,  and no order  modifying  or
     vacating  such order shall have been  entered,  and either (i) no appeal of
     such order shall have been timely filed or, (ii) if such an appeal has been
     taken, no stay of such order pending appeal has been granted or such appeal
     has been dismissed, and

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          (d)  Except  in the case of the  Initial  Loans,  the  Agent  shall be
     provided  with  evidence  satisfactory  to it  that,  as of the time of the
     making of such Loan or the issuance of such Letter of Credit,  after giving
     effect to the making of such Loan or the issuance of such Letter of Credit,
     (a) the  Borrowing  Base at such  time  minus (b) the  aggregate  principal
     amount of all Revolving  Loans plus the face value of all Letters of Credit
     (including  Letters of Credit otherwise issued pursuant to Section 3.10 but
     excluding the Letter of Credit described below) is not less than $2,000,000
     (after disbursements and advances,  and with all post-petition  obligations
     of the  Obligors  current  based on terms  agreed  to or  acquiesced  in by
     vendors  and  consistent  with  the  Obligors'  usual  payment  practices),
     provided that the minimum availability contemplated herein shall include an
     allocation  of up to $638,000 for a  replacement  standby  letter of credit
     issued  pursuant  to Section  3.10 (or up to  $638,000  in cash  collateral
     pledged in  respect  of such  letter of credit  that  expires  prior to the
     Termination Date in accordance with clause (b) of Section 3.2).

     Each request or deemed request for any Borrowing  hereunder shall be deemed
     to be a  certification  by the Borrowers to the Agent and the Lenders as to
     the  matters  set  forth in this  Section  5.2 and the Agent  may,  without
     waiving either condition, consider the conditions specified in this Section
     5.2 fulfilled and a representation by the Borrowers to such effect made, if
     no written  notice to the  contrary  is  received by the Agent prior to the
     making of the Loan then to be made or the  issuance of the Letter of Credit
     then to be issued.

     SECTION 5.3.  Conditions as  Covenants.  In the event that the Lenders make
the Initial Loans or a Letter of Credit is issued prior to the  satisfaction  of
all conditions  precedent set forth in Section 5.1, and such  conditions are not
waived in writing by the Agent,  the  Borrowers  shall  nevertheless  cause such
condition or conditions to be satisfied within thirty (30) days after the making
of such Initial Loans or the issuance of such Letter of Credit.

                                   ARTICLE 6

                         REPRESENTATIONS AND WARRANTIES

     SECTION 6.1.  Representations  and Warranties.  Each Obligor represents and
warrants to the Agent and to the Lenders as follows:

          (a) Organization; Power; Qualification. Each Obligor is a corporation,
     duly organized, validly existing and in good standing under the laws of its
     jurisdiction  of  incorporation,  having the power and authority to own its
     properties and to carry on its business as now being and hereafter proposed
     to be  conducted  and,  except as set  forth on  Schedule  6.1(a),  is duly
     qualified and authorized to do business in each  jurisdiction  in which the
     character of its  properties  or the nature of its business  requires  such
     qualification or authorization, except where the failure to be so qualified
     or authorized  would not constitute or cause a Materially  Adverse  Effect.
     The  jurisdictions  in which each  Obligor is qualified to do business as a
     foreign corporation are listed on Schedule 6.1(a).

          (b) Capitalization.  The outstanding capital stock of each Obligor has
     been duly and validly issued and is fully paid and  nonassessable,  and the
     number and owners of such shares of capital  stock of each  Obligor are set
     forth on Schedule 6.1(b).  The issuance and sale of each Obligor's  capital
     stock have been registered or qualified under applicable federal, state and
     foreign  securities  laws or are exempt  therefrom.  Except as set forth on
     Schedule 6.1(b), there are no shareholder agreements, options, subscription
     agreements or other agreements or  understandings

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     to which any Obligor is a party in effect with respect to the capital stock
     of  such  Obligor,   including  agreements  providing  for  special  voting
     requirements  or  arrangements  for approval of corporate  actions or other
     matters relating to corporate  governance or restrictions on share transfer
     or providing for the issuance of any securities  convertible into shares of
     the capital stock of such Obligor,  any warrants or other rights to acquire
     any shares or  securities  convertible  into such shares,  or any agreement
     that obligates such Obligor,  either by its terms of at the election of any
     other Person, to repurchase such shares under any circumstances.

          (c)  Subsidiaries.  Schedule  6.1(c)  correctly sets forth the name of
     each Subsidiary of the Obligors,  its  jurisdiction of  incorporation,  the
     name of its immediate  parent or parents,  and the percentage of its issued
     and outstanding  securities  owned by an Obligor or any other Subsidiary of
     an  Obligor  and  indicating  whether  such  Subsidiary  is a  Consolidated
     Subsidiary. Except as set forth on Schedule 6.1(c), (i) no Subsidiary of an
     Obligor  has  issued  any  securities   convertible  into  shares  of  such
     Subsidiary's  capital  stock or any  options,  warrants or other  rights to
     acquire any shares or  securities  convertible  into such shares,  (ii) the
     outstanding  stock and  securities  of each  Subsidiary of each Obligor are
     owned  by  Safety  Components  or  a  wholly-owned   Subsidiary  of  Safety
     Components,  or by Safety  Components  and one or more of its  wholly-owned
     Subsidiaries,  free and clear of all Liens, warrants, options and rights of
     others of any kind whatsoever,  and (iii) no Obligor has any  Subsidiaries.
     The  outstanding  capital stock of each Subsidiary of the Obligors has been
     duly and validly issued and is fully paid and  nonassessable by the issuer,
     and the number and owners of the shares of such capital stock are set forth
     on Schedule 6.1(c).

          (d)  Authorization of Agreement,  Notes, Loan Documents and Borrowing.
     Each Obligor has the right and power, and has taken all necessary action to
     authorize such Obligor, to execute,  deliver and perform this Agreement and
     each of the other Loan Documents to which it is a party in accordance  with
     their respective terms. This Agreement and each of the other Loan Documents
     have been duly  executed and delivered by the duly  authorized  officers of
     each Obligor party thereto and each is, or each when executed and delivered
     in  accordance  with this  Agreement  will be, a legal,  valid and  binding
     obligation of each Obligor party thereto,  enforceable  in accordance  with
     its terms.

          (e) Compliance of Agreement,  Notes, Loan Documents and Borrowing with
     Laws, Etc. Except as set forth on Schedule 6.1(e), the execution,  delivery
     and  performance  of this Agreement and each of the other Loan Documents in
     accordance with their respective terms and the borrowings  hereunder do not
     and will not,  by the passage of time,  the giving of notice or  otherwise,
     (i)  require  any  Governmental  Approval  or violate  any  Applicable  Law
     relating to any Obligor or any of its  Subsidiaries,  (ii)  conflict  with,
     result  in a breach  of or  constitute  a default  under  the  articles  or
     certificate  of  incorporation  or  by-laws  of any  Obligor  or any of its
     Subsidiaries,  or (iii) result in or require the creation or  imposition of
     any Lien  upon or with  respect  to any  property  now  owned or  hereafter
     acquired by any Obligor or any of its Subsidiaries  other than the Security
     Interest.

          (f) Business. The Obligors are engaged principally in the business set
     forth on Schedule 6.1(f).

          (g) Compliance with Law; Governmental Approvals.

               (i)  Except  as set  forth on  Schedule  6.1(g)  or as  otherwise
          provided in Sections  6.1(l) or 9.6,  each  Obligor and each of its US
          and UK  Subsidiaries  (A) has all

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          Governmental Approvals,  including permits relating to federal, state,
          local and foreign  Environmental  Laws,  ordinances  and  regulations,
          required by any Applicable Law for it to conduct its business, each of
          which is in full force and effect,  is final and not subject to review
          on appeal and is not the subject of any  pending or, to the  knowledge
          of any Obligor,  threatened attack by direct or collateral proceeding,
          and (B) is in compliance with each Governmental Approval applicable to
          it and in compliance  with all other  Applicable  Laws relating to it,
          including  all  Environmental  Laws and all  occupational  health  and
          safety  laws  applicable  to  any  Obligor,  any  of  the  US  and  UK
          Subsidiaries,  or their respective  properties,  except in the case of
          (A) or (B) for instances of  noncompliance  which would not, singly or
          in the  aggregate,  cause a  Default  or  Event of  Default  or have a
          Materially Adverse Effect.

               (ii) Without  limiting the  generality of the above,  except with
          respect to matters  which  could not  reasonably  be expected to have,
          singly or in the  aggregate,  a  Materially  Adverse  Effect:  (A) the
          operations  of each  Obligor  and each of the US and UK  Subsidiaries,
          comply in all material  respects  with all  applicable  environmental,
          health and safety requirements of Applicable Law; (B) each Obligor and
          each of the US and UK  Subsidiaries  has obtained  all  environmental,
          health and safety permits necessary for its operation except where the
          failure to obtain such permits would  constitute or cause a Materially
          Adverse  Effect,  and all such  permits are in good  standing and each
          Obligor and each of its  Subsidiaries is in compliance in all material
          respects with all terms and  conditions  of such permits;  (C) neither
          any Obligor nor any of its US and UK Subsidiaries  with respect to any
          of its respective  present or past property or operations has received
          notice  of any  specific  order  from or  agreement  with  any  public
          authority or party respecting (x) any environmental,  health or safety
          requirements  of Applicable Law, (y) any Remedial  Action,  or (z) any
          liabilities  and costs arising from the Release or threatened  Release
          of a Contaminant into the  environment;  (D) none of the operations of
          any Obligor or of any of the US and UK  Subsidiaries is subject to any
          judicial or  administrative  proceeding  alleging a  violation  of any
          environmental,  health or safety requirement of Applicable Law; (E) to
          the knowledge of the Obligors, none of the present nor past operations
          of any Obligor or any of the US and UK  Subsidiaries is the subject of
          any  investigation  by any public  authority  evaluating  whether  any
          Remedial  Action is  needed to  respond  to a  Release  or  threatened
          Release of a Contaminant into the environment; (F) neither any Obligor
          nor any of the US and UK  Subsidiaries  has filed any notice under any
          requirement of Applicable Law  indicating  past or present  treatment,
          storage or  disposal  of a  hazardous  waste,  as that term is defined
          under 40 CFR Part 261 or any state equivalent; (G) neither any Obligor
          nor any of the US and UK  Subsidiaries  has filed any notice under any
          requirement  of  Applicable  Law  reporting a Release of a Contaminant
          into  the  environment;  (H)  except  in  compliance  in all  material
          respects with applicable  Environmental Laws, during the course of any
          Obligor's  ownership of or operations  on the Real Estate,  there have
          been no (1) generation,  treatment,  recycling, storage or disposal of
          hazardous  waste, as that term is defined under 40 CFR Part 261 or any
          state  equivalent,  (2) use of  underground  storage  tanks or surface
          impoundments,  (3) use of asbestos-containing materials, or (4) use of
          polychlorinated  biphenyls  (PCB) used in hydraulic  oils,  electrical
          transformers  or other  equipment;  (I) neither any Obligor nor any of
          its US and UK  Subsidiaries  has  entered  into  any  negotiations  or
          agreements  with any Person  (including  any prior owner of any of the
          Real  Estate or other  property of any Obligor or any of its US and UK
          Subsidiaries) relating to any Remedial Action or environmental related
          claim;  (J) neither any Obligor nor any of the US and UK  Subsidiaries
          has  received  any notice or claim to the effect  that it is or may be
          liable to any

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          Person  as  a  result  of  the  Release  or  threatened  Release  of a
          Contaminant into the  environment;  (K) neither any Obligor nor any of
          its US and UK Subsidiaries  has any material  contingent  liability in
          connection  with any Release or threatened  Release of any Contaminant
          into  the  environment;  (L) to the  knowledge  of  the  Obligors,  no
          Environmental  Lien has  attached  to any of the Real  Estate or other
          property of any Obligor or of any of the US and UK  Subsidiaries;  (M)
          the presence and condition of all  asbestos-containing  material which
          is on or part of the Real Estate  (excluding any raw materials used in
          the manufacture of products or products  themselves) do not violate in
          any  material   respect  any  currently   applicable   requirement  of
          Applicable  Law;  and (N) neither any Obligor nor any of its US and UK
          Subsidiaries   manufactures,   distributes  or  sells,   or  has  ever
          manufactured,    distributed   or   sold,   products   which   contain
          asbestos-containing material.

               (iii) Each Obligor has notified the Agent of the receipt by it or
          any  of  its  US and UK  Subsidiaries  of  any  notice  of a  material
          violation of any Environmental Laws and occupational health and safety
          laws  applicable to such  Obligor,  US and UK  Subsidiaries  or any of
          their respective properties.

          (h) Title to Properties.  Except as set forth on Schedule 6.1(h), each
     Obligor has valid and legal title to or leasehold  interest in all personal
     property,  Real  Estate and other  assets used in its  business,  including
     those reflected on the most recent balance sheets of the Obligors delivered
     pursuant to Section 6.1(n).

          (i)  Liens.  Except  as set  forth  on  Schedule  6.1(i),  none of the
     properties  and  assets of any  Obligor  is  subject  to any  Lien,  except
     Permitted  Liens.  Other than the Financing  Statements and with respect to
     Permitted Liens, no financing  statement under the Uniform  Commercial Code
     or similar laws of any jurisdiction or other  instrument  evidencing a Lien
     which  names  any  Obligor  as  debtor  has  been  filed  (and has not been
     terminated)  in any  jurisdiction,  and no  Obligor  has  signed  any  such
     financing   statement  or  other  instrument  or  any  security   agreement
     authorizing  any  secured  party  thereunder  to file  any  such  financing
     statement or instrument, except to perfect Permitted Liens.

          (j)  Indebtedness  and  Guaranties.  Schedule 6.1(j) is a complete and
     correct  listing of all  Indebtedness  for Money Borrowed and Guaranties of
     each  Obligor.  Except as set forth on Schedule  6.1(j),  each  Obligor has
     performed and is in compliance  with all of the terms of such  Indebtedness
     and Guaranties and all instruments and agreements relating thereto,  and no
     default or event of  default,  or event or  condition  which with notice or
     lapse of time or both would  constitute such a default or event of default,
     exists with respect to any such Indebtedness or Guaranty.

          (k)  Litigation.  Except for the filing of the  Chapter 11 Case and as
     set forth on Schedule  6.1(k),  there are no actions,  suits or proceedings
     pending (nor, to the knowledge of any Obligor, are there any actions, suits
     or proceedings threatened,  or any reasonable basis therefor) against or in
     any  other  way  relating  to or  affecting  any  Obligor  or  any  of  its
     Subsidiaries or any of any Obligor's or any of its Subsidiaries' properties
     in any  court or  before  any  arbitrator  of any kind or  before or by any
     governmental  body,  except actions,  suits or proceedings of the character
     normally incident to the kind of business  conducted by the Obligors or any
     of their Subsidiaries which, if adversely  determined,  would not singly or
     in the aggregate have a Materially Adverse Effect, and there are no strikes
     or walkouts in  progress,  pending or  contemplated,  relating to any

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     labor  contracts  to which any  Obligor is a party,  relating  to any labor
     contracts being negotiated, or otherwise.

          (l) Tax Returns and Payments.  Except as set forth on Schedule 6.1(l),
     all United  States  federal,  state and local as well as foreign  national,
     provincial  and local and other tax returns of each Obligor and each of its
     Subsidiaries required by Applicable Law to be filed at or prior to the date
     hereof (taking into account any extensions) have been timely filed, and all
     United States federal, state and local and foreign national, provincial and
     local and other taxes, assessments and other governmental charges or levies
     upon each Obligor and each of its  Subsidiaries  and each Obligor's and any
     of its Subsidiaries' property, income, profits and assets which have become
     due and payable at or prior to the date  hereof  (taking  into  account any
     extensions)  have  been  paid,  except  any  such  nonpayment  which in the
     aggregate  would have a materially  Adverse  Effect or which is at the time
     permitted  under Section 9.6. Except as set forth in Schedule  6.1(l),  the
     charges, accruals and reserves on the books of each Obligor and each of its
     Subsidiaries  in  respect  of United  States  federal,  state and local and
     foreign  national,  provincial  and local  taxes for each  fiscal  year and
     portions  thereof  covered by such books and records are in the judgment of
     each Obligor adequate, and no Obligor has been notified by any Governmental
     Authority of any reason to anticipate any additional assessments for any of
     such years  which,  singly or in the  aggregate,  might  have a  Materially
     Adverse Effect.

          (m) [RESERVED]

          (n) Financial Statements.

               (i) The  Obligors  have  furnished  to the Agent and the  Lenders
          copies  of  the  unaudited   consolidated   balance  sheet  of  Safety
          Components and its Consolidated  Subsidiaries as of December 25, 1999,
          and of the related  statements  of  operations  and cash flows for the
          nine-month  period  then  ended.  On or before the date of the initial
          Loans hereunder, the Obligors will have furnished to the Agent and the
          Lenders  copies of the annual  audited  consolidated  balance sheet of
          Safety  Components and its  Consolidated  Subsidiaries as of March 27,
          1999, and the related audited  consolidated  statements of operations,
          cash flows and shareholder's  equity for the fiscal year ended on such
          date,  reported on by Arthur  Andersen LLP. Such financial  statements
          present (or will  present)  fairly,  in all material  respects,  as of
          their  respective  dates  and in  accordance  with  GAAP  (subject  to
          year-end  adjustments  and but for the  omission of  footnotes  in the
          unaudited  statements) the consolidated  financial condition of Safety
          Components and its Consolidated  Subsidiaries as of such dates and the
          consolidated  results  of  operations  of  Safety  Components  and its
          Consolidated Subsidiaries for the periods ended on such dates.

               (ii) The  Obligors  have  furnished  to the Agent and the Lenders
          copies of the  Projections.  The Projections  have been be prepared by
          Safety  Components in light of the past  operations of the business of
          Safety  Components and the US and UK Subsidiaries  and represent as of
          the respective  dates thereof the best reasonable  estimates of Safety
          Components and its senior management concerning the course of business
          of Safety Components and the US and UK Subsidiaries.

               (iii)  Except  as   disclosed  or  reflected  in  the   financial
          statements described in clause (i) above, including footnotes thereto,
          or as  set  forth  on  Schedule  6.1(n)  no  Obligor  nor  any  of its
          Consolidated Subsidiaries has any material liabilities,  contingent or

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<PAGE>

          otherwise, and there were no material unrealized or anticipated losses
          of any Obligor or any of its Consolidated Subsidiaries.

          (o)  Adverse  Change.  Since  the  date  of  the  unaudited  financial
     statements  of the  Obligors  delivered  to the Agent  pursuant  to Section
     6.1(n)(i) and excluding the effect of the Chapter 11 Case,  (i) no material
     adverse change has occurred in the business, assets, liabilities, financial
     condition,  results of operations  or business  prospects of any Obligor or
     any of the US and UK Subsidiaries, and (ii) no event has occurred or failed
     to  occur  which  has had,  or may  have,  singly  or in the  aggregate,  a
     Materially Adverse Effect.

          (p) ERISA:

               (i) Neither any Obligor  nor any  Related  Company  maintains  or
          contributes  to any Benefit  Plan other than those  listed on Schedule
          6.1(p).

               (ii) No Benefit Plan has been terminated or partially terminated,
          and no Multiemployer Plan is insolvent or in reorganization,  nor have
          any  proceedings  been  instituted to terminate any Benefit Plan or to
          the knowledge of the Obligors to reorganize any Multiemployer Plan.

               (iii)  Neither any Obligor nor any Related  Company has withdrawn
          from any  Benefit  Plan or  Multiemployer  Plan,  nor has a  condition
          occurred  which  if  continued  would  cause  a  material   withdrawal
          liability on the part of the Borrowers or any Related Company.

               (iv) Neither any Obligor nor any Related Company has incurred any
          material  withdrawal   liability,   including  contingent   withdrawal
          liability,  to any  Multiemployer  Plan pursuant to Title IV of ERISA,
          nor has a condition occurred which if continued would cause a material
          withdrawal  liability  on the  part of the  Borrowers  or any  Related
          Company.

               (v) Neither any Obligor nor any Related  Company has incurred any
          material  liability  to the PBGC  other  than for  required  insurance
          premiums which have been paid when due.

               (vi) No Reportable Event has occurred with respect to a Plan that
          could result in a material liability for any Obligor.

               (vii) No Benefit  Plan has an  "accumulated  funding  deficiency"
          (whether  or not  waived) as  defined  in  Section  302 of ERISA or in
          Section 412 of the Internal Revenue Code.

               (viii) Each Plan is in  substantial  compliance  with ERISA,  and
          neither  any  Obligor  nor  any  Related   Company  has  received  any
          communication from a governmental  agency asserting that a Plan is not
          in compliance with ERISA.

               (ix) Each Plan which is intended to be a qualified  Plan has been
          determined  by the IRS to be  qualified  under  Section  401(a) of the
          Internal  Revenue  Code as currently in effect or will be submitted to
          the IRS  for  such  determination  prior  to the  end of the  remedial
          amendment period under Section 401(b) of the Internal Revenue Code and
          the

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          regulations  promulgated  thereunder  and  neither any Obligor nor any
          Related  Company knows or has reason to know why each such Plan should
          not continue to be so  qualified,  and each trust related to such Plan
          that has been submitted to the IRS for  determination of exempt status
          has been determined to be exempt from federal income tax under Section
          501(a) of the  Internal  Revenue  Code or will be submitted to the IRS
          for a determination of exempt status.

               (x) Except as provided on  Schedule  6.1(p),  neither any Obligor
          nor any Related  Company  maintains  or  contributes  to any  employer
          welfare benefit plan within the meaning of Section 3(l) of ERISA which
          provides  benefits to employees after  termination of employment other
          than as required  by Section  601 or 608 of ERISA or Section  4980B of
          the Code.

               (xi)  Schedule B to the most recent  annual report filed with the
          IRS with respect to each  Benefit Plan and  furnished to the Lender is
          complete and  accurate.  Since the date of each such Schedule B, there
          has been no adverse change in funding status or financial condition of
          the Benefit Plan relating to such Schedule B.

               (xii)  Neither any Obligor nor any Related  Company has failed to
          make a required installment under Subsection (m) of Section 412 of the
          Internal  Revenue Code or any other payment required under Section 412
          of the  Internal  Revenue  Code on or  before  the due  date  for such
          installment  or other  payment,  except to the extent any such failure
          has been cured.

               (xiii) Neither any Obligor nor any Related Company is required to
          provide  security to a Benefit Plan under  Section  401(a)(29)  of the
          Internal  Revenue Code due to a Benefit Plan amendment that results in
          an increase in current liability for the plan year.

               (xiv) Neither any Obligor, nor any Related Company, nor any other
          "party-in-interest"   or  "disqualified   person"  has  engaged  in  a
          nonexempt  "prohibited  transaction,"  as such  terms are  defined  in
          Section 4975 of the Internal Revenue Code and Section 406 of ERISA, in
          connection  with any Plan or has taken or  failed  to take any  action
          which  would  constitute  or  result  in  a  Termination  Event  which
          prohibited transaction or Termination Event could result in a material
          liability of an Obligor.

               (xv)  Neither any  Obligor nor any Related  Company has failed to
          comply  with the health care  continuation  coverage  requirements  of
          Section 4980B of the Internal Revenue Code in respect of employees and
          former  employees of such  Obligor or such  Related  Company and their
          dependents  and  beneficiaries  which alone or in the aggregate  would
          subject  such  Obligor  or  such  Related   Company  to  any  material
          liability.

               (xvi)  Neither any Obligor nor any Related  Company has failed to
          make a  required  contribution  or payment  to a  Multiemployer  Plan.
          Except as provided on Schedule  6.1(p),  to the best knowledge of each
          Obligor  neither any Obligor  nor any Related  Company  shall have any
          obligation to make contributions to any Multiemployer Plan on or after
          the Effective Date.

          (q) Absence of Defaults.  No Obligor is in default  under its articles
     or certificate of incorporation or by-laws and no post-Petition  Date event
     has  occurred,  which has not been  remedied,  cured or  waived,  (i) which
     constitutes a Default or an Event of Default, or (ii) which

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     constitutes,  or which with the passage of time or giving of notice or both
     would  constitute,  a default or event of default by any Obligor  under any
     material  agreement  entered into after the Petition  Date (other than this
     Agreement) or judgment,  decree or order to which any Obligor is a party or
     by which any Obligor or any of their properties may be bound or which would
     require any Obligor to make any payment under any such agreement, judgment,
     decree or order prior to the scheduled  maturity date therefor,  except for
     defaults  existing  on the date of this  Agreement  or  resulting  from the
     filing of the  Chapter 11 Case,  and  except,  in the case only of any such
     agreement, for alleged defaults arising from actions which are permitted by
     the Bankruptcy Code or the Court or which are being contested in good faith
     by appropriate proceedings and with respect to which reserves in respect of
     any Obligor's reasonably anticipated liability have been established on the
     books of such Obligor.

          (r) Accuracy and Completeness of Information.

               (i) All written  information,  reports and other  papers and data
          produced by or on behalf of the Obligors and furnished to the Agent or
          any Lender were, at the time the same were so furnished,  complete and
          correct in all material respects,  to the extent necessary to give the
          recipient a true and accurate knowledge of the subject matter. No fact
          is known to any  Obligor  which has had, or may in the future have (so
          far as such Obligor can foresee),  a Materially  Adverse  Effect which
          has not  been set  forth in the  financial  statements  or  disclosure
          delivered  prior to the  Effective  Date,  in each case referred to in
          Section  6.1(n),  or in such  written  information,  reports  or other
          papers or data or otherwise  disclosed in writing to the Agent and the
          Lenders prior to the Agreement Date. No document  furnished or written
          statement made to the Agent or any Lender by any Obligor or any of its
          Subsidiaries  in  connection  with  the  negotiation,  preparation  or
          execution  of  this  Agreement  or  any of the  other  Loan  Documents
          contains or will contain any untrue  statement  of a fact  material to
          the  creditworthiness  of any Obligor or omits or will omit to state a
          material  fact  necessary  in order to make the  statements  contained
          therein not misleading.

               (ii) No  Obligor  has any  reason to  believe  that any  document
          furnished or written  statement made to the Agent or any Lender by any
          Person other than the  Obligors in  connection  with the  negotiation,
          preparation  or execution  of this  Agreement or any of the other Loan
          Documents  contained  any  incorrect  statement of a material  fact or
          omitted  to  state a  material  fact  necessary  in  order to make the
          statements made, in light of the  circumstances  under which they were
          made, not misleading.

          (s) Receivables.

               (i) Status.

                    (A) Each Receivable  reflected in the computations  included
               in any Borrowing Base Certificate  meets the criteria  enumerated
               in the definition of Eligible Receivables, except as disclosed in
               such  Borrowing  Base  Certificate  or as  disclosed  in a timely
               manner in a subsequent Borrowing Base Certificate or otherwise in
               writing to the Agent.

                    (B) No Obligor has any knowledge of any fact or circumstance
               not  disclosed to the Agent in a Borrowing  Base  Certificate  or
               otherwise   in  writing   which  would  impair  the  validity  or
               collectibility of any Eligible  Receivables of

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<PAGE>

               $25,000 or more or of Eligible  Receivables  which (regardless of
               the individual amount thereof) aggregate $50,000 or more.

               (ii) Chief Executive  Office.  The chief executive office of each
          Obligor and the books and records relating to the Receivables (and the
          General  Intangibles and Tax Refund Claims) are located at the address
          or addresses set forth on Schedule  6.1(s);  no Obligor has maintained
          its  chief  executive  office  or books and  records  relating  to any
          Receivables  at any other  address  at any time  during the five years
          immediately  preceding  the  Agreement  Date  except as  disclosed  on
          Schedule 6.1(s).

          (t) Inventory.

               (i) Schedule of Inventory. All Inventory included in any Schedule
          of  Inventory  or Borrowing  Base  Certificate  delivered to the Agent
          pursuant  to  Section  8.12  meets  the  criteria  enumerated  in  the
          definition of Eligible Inventory, except as disclosed in such Schedule
          of Inventory or Borrowing Base Certificate or in a subsequent Schedule
          of  Inventory  or  Borrowing   Base   Certificate,   or  as  otherwise
          specifically disclosed in writing to the Agent.

               (ii)  Condition.  All Eligible  Inventory  is in good  condition,
          meets all standards imposed by any governmental  agency, or department
          or division  thereof,  having  regulatory  authority  over such goods,
          their use or sale,  and is currently  either  usable or salable in the
          normal  course of the  applicable  Obligor's  business,  except to the
          extent  reserved  against in the financial  statements  referred to in
          Section 6.1(n) or delivered  pursuant to Article 10 or as disclosed on
          a Schedule of  Inventory  delivered  to the Agent  pursuant to Section
          8.12(b).

               (iii)  Location.  All  Inventory  is located on the  premises set
          forth on  Schedule  6.1(t) or is  Inventory  in transit to one of such
          locations,  except as otherwise  disclosed in writing to the Agent. No
          Obligor  has,  in the last four  months,  located  such  Inventory  at
          premises other than those set forth on Schedule 6.1(t).

          (u)  Equipment.  All  Equipment  is in good  order  and  repair in all
     material  respects  and is located on the  premises  set forth on  Schedule
     6.1(u).

          (v) Real Property.  No Obligor owns any Real Estate or leases any Real
     Estate other than that described on Schedule 6.1(v).

          (w) Corporate and Fictitious Names.  Except as otherwise  disclosed on
     Schedule 6.1(w),  during the five-year period preceding the Agreement Date,
     no  Obligor,  nor any  predecessor  thereof,  has been known as or used any
     corporate or fictitious name other than the corporate names of the Obligors
     on the Effective Date.

          (x) Federal Reserve  Regulations.  No Obligor is engaged and none will
     engage,  principally or as one of its important activities, in the business
     of  extending  credit for the purpose of  "purchasing"  or  "carrying"  any
     "margin  stock"  (as  each  of the  quoted  terms  is  defined  or  used in
     Regulation U of the Board of Governors of the Federal Reserve  System).  No
     part of the proceeds of any of the Loans will be used for so  purchasing or
     carrying margin stock or, in any event, for any purpose which violates,  or
     which would be inconsistent with, the provisions of Regulation T, U or X of
     such Board of  Governors.  If  requested  by the Agent or any  Lender,  the

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     Obligors  will  furnish  to the  Agent  and  the  Lenders  a  statement  or
     statements in conformity with the requirements of said Regulation T, U or X
     to the foregoing effect.

          (y) Investment Company Act. No Obligor is an "investment company" or a
     company  "controlled"  by an  "investment  company"  (as each of the quoted
     terms  is  defined  or used  in the  Investment  Company  Act of  1940,  as
     amended).

          (z) Employee Relations.  Each Obligor has a stable work force in place
     and is not, except as set forth on Schedule 6.1(z), party to any collective
     bargaining  agreement  nor has  any  labor  union  been  recognized  as the
     representative  of any  Obligor's  employees,  and no Obligor  knows of any
     pending,  threatened or contemplated  strikes, work stoppage or other labor
     disputes involving any Obligor's employees.

          (aa)  Proprietary  Rights.  Schedule  6.1(aa) sets forth a correct and
     complete  list  of all of the  Obligor's  Proprietary  Rights.  None of the
     Obligor's  Proprietary  Rights is subject  to any  licensing  agreement  or
     similar  arrangement  except as set forth on Schedule 6.1(aa) or as entered
     into in the sale or distribution of any Obligor's Inventory in the ordinary
     course of business.  To the best of each Obligor's  knowledge,  (i) none of
     the  Proprietary  Rights  infringes on or conflicts with any other Person's
     property,  and (ii) no other  Person's  property  infringes on or conflicts
     with the Proprietary Rights in each case in any manner which could cause or
     constitute  a  Materially  Adverse  Effect.  To the best of each  Obligor's
     knowledge the Proprietary  Rights described on Schedule 6.1(aa)  constitute
     all of the property of such type  necessary to the current and  anticipated
     future conduct of each Obligor's business.

          (bb) Trade  Names.  All trade names or styles  under which any Obligor
     sells  Inventory  or  Equipment  or  creates   Receivables,   or  to  which
     instruments  in  payment of  Receivables  are made  payable,  are listed on
     Schedule 6.1(bb).

          (cc) Bank Accounts, Lockboxes, Etc. Schedule 6.1(cc) is a complete and
     correct list of all checking  accounts,  deposit  accounts,  lockboxes  and
     other bank accounts maintained by any Obligor.

     SECTION  6.2.  Survival  of  Representations   and  Warranties,   Etc.  All
representations   and   warranties   set  forth  in  this   Article  6  and  all
representations or warranties contained in any certificate, financial statement,
or other instrument,  delivered by or on behalf of any Obligor pursuant to or in
connection with this Agreement or any of the other Loan Documents (including any
such  representation  or warranty  made in or in  connection  with any amendment
thereto)  shall  constitute  representations  and  warranties  made  under  this
Agreement. All representations and warranties made under this Agreement shall be
made or  deemed  to be made at and as of the  Agreement  Date,  at and as of the
Effective  Date,  and  at  and  as  of  the  date  of  each  Loan,  except  that
representations  and warranties which, by their terms are applicable only to one
such  date  shall  be  deemed  to be  made  only  at and as of  such  date.  All
representations  and  warranties  made or deemed to be made under this Agreement
shall survive and not be waived by the execution and delivery of this Agreement,
any  investigation  made by or on  behalf  of the  Agent or any  Lender,  or any
borrowing hereunder.

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                                   ARTICLE 7

                                SECURITY INTEREST

     SECTION 7.1. Security Interest.

     (a) To secure  the  payment,  observance  and  performance  of the  Secured
Obligations,  each  Obligor  hereby  mortgages,  pledges  and assigns all of its
right, title and interest in and to the Collateral to the Agent, for the benefit
of the  Secured  Creditors,  and  grants to the  Agent,  for the  benefit of the
Secured  Creditors,  a continuing  security  interest in, and a continuing  Lien
upon, all of its right, title and interest in and to the Collateral.

     (b) As additional security for all of the Secured Obligations, each Obligor
grants to the Agent,  the Lenders and the  Affiliates  of the  Lenders,  for the
benefit of the Secured  Creditors,  a security  interest  in, and assigns to the
Agent,  the Lenders and the  Affiliates  of the Lenders,  for the benefit of the
Secured  Creditors,  all of such Obligor's right,  title and interest in and to,
any deposits or other sums at any time  credited by or due from the Agent,  each
Lender and each  Affiliate  of a Lender to such  Obligor,  or credited by or due
from any participant of any Lender to such Obligor, with the same rights therein
as if the deposits or other sums were credited by or due from such Lender.  Each
Obligor  hereby  authorizes  the Agent,  each Lender and each  Affiliate of such
Lender and each  participant to pay or deliver to the Agent,  for the account of
the Secured Creditors, without any necessity on the Agent's or any Lender's part
to  resort  to other  security  or  sources  of  reimbursement  for the  Secured
Obligations,  at any time  during the  continuation  of any Event of Default and
without further notice to any Obligor (such notice being expressly waived),  any
of the aforesaid  deposits (general or special,  time or demand,  provisional or
final) or other sums for application to any Secured Obligation,  irrespective of
whether any demand has been made or whether such Secured  Obligation  is mature,
and the rights given the Agent,  the Lenders,  their Affiliates and participants
hereunder are cumulative with such Person's other rights and remedies, including
other rights of setoff.  The Agent will promptly notify the Borrowers'  Agent of
its receipt of any such funds for  application to the Secured  Obligations,  but
failure to do so will not affect the  validity or  enforceability  thereof.  The
Agent  may  give  notice  of the  above  grant  of a  security  interest  in and
assignment of the aforesaid deposits and other sums, and authorization,  to, and
make any  suitable  arrangements  with,  any Lender,  any such  Affiliate of any
Lender  or  participant  for  effectuation  thereof,  and  each  Obligor  hereby
irrevocably  appoints  the Agent as its  attorney  to  collect  any and all such
deposits  or other sums to the extent any such  payment is not made to the Agent
or any Lender by such Lender, Affiliate or participant.

     SECTION 7.2. Continued Priority of Security Interest.

     (a) The Security  Interest  granted by each  Obligor  shall at all times be
valid,  perfected and enforceable  against each Obligor and all third parties in
accordance  with the  terms  of this  Agreement,  as  security  for the  Secured
Obligations,  and the  Collateral  shall not at any time be subject to any Liens
that are prior to, on a parity with or junior to the  Security  Interest,  other
than Permitted Liens.

     (b) Each Obligor shall, at its sole cost and expense,  take all action that
may be necessary or desirable,  or that the Agent may reasonably  request, so as
at all times to maintain the validity,  perfection,  enforceability  and rank of
the Security  Interest in the Collateral in conformity with the  requirements of
Section  7.2(a),  or to enable the Agent and the  Lenders to exercise or enforce
their rights hereunder,  including:  (i) paying all taxes, assessments and other
claims

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lawfully levied or assessed on any of the Collateral,  except to the extent that
such taxes,  assessments  and other  claims  constitute  Permitted  Liens,  (ii)
obtaining,  after the Agreement Date,  Collateral Access Agreements and consents
and sublicense  agreements from licensors of Proprietary Rights to such Obligor,
(iii)  delivering  to the  Agent,  for the  benefit  of the  Secured  Creditors,
endorsed or  accompanied  by such  instruments  of  assignment  as the Agent may
specify,  and stamping or marking, in such manner as the Agent may specify,  any
and all  chattel  paper,  instruments,  letters  and  advices  of  guaranty  and
documents  evidencing or forming a part of the Collateral,  and (iiii) executing
and delivering  financing  statements,  pledges,  designations,  hypothecations,
notices and  assignments in each case in form and substance  satisfactory to the
Agent   relating  to  the  creation,   validity,   perfection,   maintenance  or
continuation of the Security Interest under the Uniform Commercial Code or other
Applicable Law.

     (c) The  Agent  is  hereby  authorized  to file  one or more  financing  or
continuation statements or amendments thereto without the signature of or in the
name of any Obligor for any purpose described in Section 7.2(b).  The Agent will
give the  Borrowers'  Agent  notice  of the  filing  of any such  statements  or
amendments,  which notice shall specify the locations  where such  statements or
amendments were filed. A carbon, photographic, xerographic or other reproduction
of  this  Agreement  or of any of the  Security  Documents  or of any  financing
statement  filed in connection  with this Agreement is sufficient as a financing
statement.

     (d) Each Obligor  shall mark its books and records as directed by the Agent
and as may be necessary  or  appropriate  to  evidence,  protect and perfect the
Security  Interest  and shall  cause its  financial  statements  to reflect  the
Security Interest.

                                   ARTICLE 8

                              COLLATERAL COVENANTS

     Until the Term Loan Facility and the Revolving Loan Facility each have been
terminated and all the Secured  Obligations  have been paid in full,  unless the
Required  Lenders  shall  otherwise  consent in the manner  provided  in Section
16.11:

     SECTION 8.1. Collection of Receivables

     (a) At the  written  request  of the  Agent,  the  Obligors  will cause all
monies,  checks,  notes,  drafts and other payments  relating to or constituting
proceeds of trade  accounts  receivable to be forwarded to a Lockbox for deposit
in an  Agency  Account  in  accordance  with  the  procedures  set  out  in  the
corresponding  Agency  Account  Agreement.  The Obligors will promptly cause all
monies,  checks,  notes,  drafts and other payments  relating to or constituting
proceeds of  Receivables,  of any other  Collateral,  and of any trade  accounts
receivable  that  are  not  forwarded  to a  Lockbox,  to be  transferred  to or
deposited in an Agency  Account.  In  particular,  each Obligor will: (i) advise
each Account Debtor on trade accounts receivable to address all remittances with
respect to  amounts  payable on account  thereof to a  specified  Lockbox,  (ii)
advise  each other  Account  Debtor that makes  payment to such  Obligor by wire
transfer,  automated  clearinghouse  transfer or similar  means to make  payment
directly to an Agency  Account,  and (iii) stamp all invoices  relating to trade
accounts  receivable  with a legend  satisfactory  to the Agent  indicating that
payment is to be made to such Obligor via a specified Lockbox.

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<PAGE>

     (b) The Obligors and the Agent shall cause all  collected  balances in each
Agency Account to be transmitted  daily by wire  transfer,  depository  transfer
check or  other  means  in  accordance  with  the  procedures  set  forth in the
corresponding Agency Account Agreement,  to the Agent at the Agent's Office: (i)
for application,  on account of the Secured Obligations, as provided in Sections
2.3(c),  12.2, and 12.3,  such credits to be entered as of the Business Day they
are received if they are received prior to 1:30 p.m. and to be conditioned  upon
final payment in cash or solvent  credits of the items giving rise to them,  and
(ii) with respect to the balance,  so long as no Default or Event of Default has
occurred and is continuing, for transfer by wire transfer or depository transfer
check to a Disbursement Account.

     (c) Any monies,  checks,  notes,  drafts or other  payments  referred to in
subsection  (a) of this  Section  8.1 which,  notwithstanding  the terms of such
subsection, are received by or on behalf of an Obligor will be held in trust for
the Agent and will be delivered to the Agent or a Clearing  Bank, as promptly as
possible, in the exact form received,  together with any necessary  endorsements
for  application  by the  Agent  directly  to the  Secured  Obligations,  or, if
applicable,  for deposit in the Agency Account  maintained  with a Clearing Bank
and processing in accordance with the terms of the corresponding  Agency Account
Agreement.

     (d)  Notwithstanding  the  foregoing,  subsections  (a) through (c) of this
Section 8.1 shall not apply to ASCI Mexico,  provided  that the  Borrowers  only
shall pay or  otherwise  transfer  funds to ASCI Mexico as payment for  services
rendered in  connection  with the  improvement  or  completion by ASCI Mexico of
Inventory of the Borrowers pursuant to Section 11.6.

     (e)  Notwithstanding  the  foregoing,  subsections  (a) through (c) of this
Section 8.1 shall not apply to Automotive  Safety  Components UK, but,  instead,
the  provisions  of  this  subsection  (e)  shall  apply  to  Automotive  Safety
Components UK,  provided that,  within forty five days after the Effective Date,
Automotive  Safety  Components UK shall  establish and  thereafter  maintain its
principal   operating  accounts  with  the  Agent's  designated  United  Kingdom
Affiliate.  Upon  written  notice  given  by  the  Agent  to  Automotive  Safety
Components  UK (which  may be given by notice  to the  Borrowers'  Agent) of the
occurrence of an Event of Default (the "Notice"),  Automotive  Safety Components
UK will cause all moneys,  checks,  notes, drafts and other payments relating to
or  constituting  proceeds of  Receivables,  or of any other  Collateral,  to be
forwarded to a Lockbox for deposit in an Agency  Account in accordance  with the
procedures  set  out in  the  corresponding  Agency  Account  Agreement,  and in
particular  Automotive  Safety Components UK will (i) advise each Account Debtor
to address all  remittances  with  respect to amounts  payable on account of any
Receivables to a specified  Lockbox,  (ii) advise each other Account Debtor that
makes payment to Automotive  Safety  Components UK by wire  transfer,  automated
clearinghouse  transfer or similar  means to make payment  directly to an Agency
Account, and (iii) stamp all invoices relating to any such amounts with a legend
satisfactory  to the Agent  indicating  that payment is to be made to Automotive
Safety  Components UK via a specified  Lockbox.  After the giving of the Notice,
Automotive Safety Components UK and the Agent shall cause all collected balances
in each  such  Agency  Account  to be  transmitted  daily  by wire  transfer  or
depository  transfer  check or Automated  Clearing  House transfer in accordance
with the procedures set forth in the  corresponding  Agency Account Agreement to
the Agent at the  Agent's  Office for  application  on  account  of the  Secured
Obligations  as provided in subsection  (b) above.  Any moneys,  checks,  notes,
drafts or other payments referred to above which are received by or on behalf of
Automotive  Safety  Components UK will be held in trust for the Agent and, after
the giving of the Notice,  will be delivered to the Agent at the Agent's  Office
as promptly as possible in the exact form received,  together with any necessary
endorsements.

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     SECTION 8.2. Verification and Notification.  The Agent shall have the right
at any time and from time to time, (a) in the name of the Agent,  the Lenders or
in the name of any Obligor,  to verify the validity,  amount or any other matter
relating to any Receivables by mail, telephone,  telegraph or otherwise,  (b) to
review, audit and make extracts from all records and files related to any of the
Receivables,  and (c) to notify the Account Debtor under any  Receivables of the
assignment  of such  Receivables  to the Agent,  for the  benefit of the Secured
Creditors,  and to direct such Account Debtor to make payment of all amounts due
or to become  due  thereunder  directly  to the  Agent,  for the  account of the
Secured  Creditors,  and,  upon  such  notification  and at the  expense  of the
Obligors, to enforce collection of any such Receivables and to adjust, settle or
compromise  the amount or payment  thereof,  in the same  manner and to the same
extent as the Obligors might have done.

     SECTION 8.3. Disputes, Returns and Adjustments.

     (a) In the event any  amounts  due and owing  under any  Receivable  for an
amount in excess of  $100,000  are in dispute  between an Account  Debtor and an
Obligor, the Borrowers' Agent shall provide the Agent with prompt written notice
thereof.

     (b) The Borrowers' Agent shall notify the Agent promptly of all returns and
credits  in excess of  $100,000  in respect of any  Receivable  (other  than any
re-bill or correction arising in the ordinary course of the Obligors' business),
which notice shall specify the Receivable affected.

     (c) The Obligors may, in the ordinary  course of business  unless a Default
or an Event of Default has occurred and is  continuing,  grant any  extension of
time for payment of any  Receivable or  compromise,  compound or settle the same
for less than the full amount  thereof,  or release  wholly or partly any Person
liable  for the  payment  thereof,  or allow any credit or  discount  whatsoever
therein;  provided that (i) no such action results in the reduction of more than
5% in the amount payable with respect to any Receivable or of more than $200,000
with respect to all Receivables in fiscal year 2000 (in each case, excluding the
allowance of credits or discounts  generally available to Account Debtors in the
ordinary  course of the Obligors'  business and  appropriate  adjustments to the
accounts of Account  Debtors in the ordinary  course of business),  and (ii) the
Agent  is  promptly   notified  of  the  amount  of  such  adjustments  and  the
Receivable(s) affected thereby.

     SECTION 8.4. Invoices.

     (a) No  Obligor  will use any  invoices  other  than  invoices  in the form
delivered to the Agent prior to the Agreement  Date without  giving the Agent at
least thirty (30) days prior  notice of the intended use of a different  form of
invoice together with a copy of such different form.

     (b) Upon the request of the Agent, each Obligor shall deliver to the Agent,
at the  Obligors'  expense,  copies of  customers'  invoices or the  equivalent,
original shipping and delivery  receipts or other proof of delivery,  customers'
statements,  customer  address  lists,  the  original  copy  of  all  documents,
including   repayment   histories  and  present  status  reports,   relating  to
Receivables and such other documents and information relating to the Receivables
as the Agent shall specify.

     SECTION 8.5. Delivery of Instruments. In the event any Receivable is at any
time evidenced by a promissory  note,  trade  acceptance or any other instrument
for the payment of money, the Obligors will immediately  thereafter deliver such
instrument to the Agent, appropriately endorsed to the Agent, for the benefit of
the Secured Creditors.

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     SECTION 8.6.  Sales of  Inventory.  All sales of Inventory  will be made in
compliance with all requirements of Applicable Law.

     SECTION 8.7. Ownership and Defense of Title.

     (a) Except for Permitted Liens, the Obligors shall at all times be the sole
owner or lessee of each and every  item of  Collateral  and shall not create any
lien on, or sell, lease, exchange, assign, transfer, pledge, hypothecate,  grant
a security  interest or security  title in or  otherwise  dispose of, any of the
Collateral  or any  interest  therein,  except  for  sales of  Inventory  in the
ordinary course of business,  for cash or on open account or on terms of payment
ordinarily  extended  to its  customers,  and except for  dispositions  that are
otherwise expressly permitted under this Agreement.  The inclusion of "proceeds"
of the Collateral  under the Security  Interest shall not be deemed a consent by
the Agent or the Lenders to any other sale or other  disposition  of any part or
all of the Collateral.

     (b) Each Obligor  shall  defend its title or leasehold  interest in and to,
and the Security  Interest in, the Collateral  against the claims and demands of
all Persons.

     SECTION 8.8. Insurance.

     (a) The Obligor shall at all times maintain  insurance on the Inventory and
Equipment  against loss or damage by fire, theft (excluding theft by employees),
burglary,  pilferage,  loss in transit and such other hazards as the Agent shall
reasonably  specify,  in amounts not to exceed those  obtainable at commercially
reasonable  rates and under policies issued by insurers  acceptable to the Agent
in the exercise of its reasonable judgment. All premiums on such insurance shall
be paid by the Obligors and copies of the policies  delivered to the Agent.  The
Obligors  will  not use or  permit  the  Inventory  to be used in  violation  of
Applicable  Law or in any manner which might render  inapplicable  any insurance
coverage.

     (b) All insurance  policies  required  under Section  8.8(a) shall name the
Agent, for the benefit of the Secured  Creditors,  as an additional  insured and
shall contain loss payable  clauses in the form submitted to the Obligors by the
Agent, or otherwise in form and substance  satisfactory to the Agent, naming the
Agent, for the benefit of the Secured Creditors, as loss payee, as its interests
may appear,  and providing that (i) all proceeds  thereunder shall be payable to
the Agent,  for the benefit of the  Secured  Creditors,  (ii) no such  insurance
shall be affected by any act or neglect of the insurer or owner of the  property
described in such policy,  and (iii) such policy and loss payable clauses may be
canceled,  amended  or  terminated  only upon at least  thirty  (30) days  prior
written notice given to the Agent.

     (c) Any  proceeds of  insurance  referred to in this  Section 8.8 which are
paid to the Agent,  for the account of the Secured  Creditors,  shall be, at the
option of the Required Lenders in their sole  discretion,  either (i) applied to
replace the damaged or  destroyed  property,  or (ii)  applied to the payment or
prepayment  of the  Secured  Obligations;  provided  that in the event  that the
proceeds  from any  single  casualty  do not  exceed  $100,000,  then,  upon the
Borrowers'  Agent's  written  request to the Agent,  provided that no Default or
Event of Default shall have occurred and be  continuing,  such proceeds shall be
disbursed by the Agent to the Obligors  pursuant to such procedures as the Agent
shall reasonably  establish for application to the replacement of the damaged or
destroyed property.

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     SECTION 8.9. Location of Offices and Collateral.

     (a) No Obligor  will change the location of its chief  executive  office or
the place where it keeps its books and records  relating  to the  Collateral  or
change its name, its identity or corporate structure without giving the Agent at
least thirty (30) days prior written notice thereof.

     (b) All Inventory  and  Equipment,  other than  Inventory in transit to any
such  location,  will at all times be kept by each Obligor at the  locations set
forth on  Schedules  6.1(t) and (u),  and shall not,  without the prior  written
consent of the Agent, be removed therefrom except pursuant to sales of Inventory
permitted under Section 8.7(a).

     (c) If any Inventory is in the  possession or control of any of an agent or
processor of an Obligor,  such  Obligor  shall notify such agent or processor of
the Security  Interest (and shall promptly  provide copies of any such notice to
the Agent and the  Lenders)  and,  upon the  occurrence  of an Event of Default,
shall instruct them (and cause them to acknowledge such instruction) to hold all
such Inventory for the account of the Lenders,  subject to the  instructions  of
the Agent.

     SECTION 8.10. Records Relating to Collateral.

     (a) Each Obligor will at all times (i) keep  complete and accurate  records
of Inventory on a basis  consistent with past practices of such Obligor so as to
permit  comparison  of Inventory  records  relating to different  time  periods,
itemizing  and  describing  the kind,  type and quantity of  Inventory  and such
Obligor's  cost therefor and a current price list for such  Inventory,  and (ii)
keep complete and accurate records of all other Collateral.

     (b) Each Obligor will prepare a physical listing of all Inventory, wherever
located, at least annually, and shall deliver such listing to the Agent promptly
after completion thereof.

     SECTION  8.11.  Inspection.  The  Agent  and each  Lender  (by any of their
officers,  employees  or agents)  shall have the right,  to the extent  that the
exercise of such right shall be within the control of the Obligors,  at any time
or times to: (a) visit the  properties  of the Obligors and their  Subsidiaries,
inspect  the  Collateral  and  the  other  assets  of  the  Obligors  and  their
Subsidiaries,  and inspect and make  extracts  from the books and records of the
Obligors  and their  Subsidiaries,  including  management  letters  prepared  by
independent accounts, upon reasonable prior notice all during customary business
hours at such  premises;  (b)  discuss  the  Obligors'  and their  Subsidiaries'
business, assets,  liabilities,  financial condition,  results of operations and
business prospects,  insofar as the same are reasonably related to the rights of
the Agent or the  Lenders  hereunder  or under any of the other Loan  Documents,
with  the  Obligors'  and  their  Subsidiaries'  (i)  principal  officers,  (ii)
independent  accountants,  and  (iii)  any other  Person  (except  that any such
discussion with any third parties shall be conducted only in accordance with the
Agent's  or  such  Lender's  standard  operating   procedures  relating  to  the
maintenance of the  confidentiality  of confidential  information of borrowers);
and (c) verify the amount, quantity, value and condition of, or any other matter
relating to, any of the Collateral and in this  connection to review,  audit and
make extracts from all records and files related to any of the  Collateral.  The
Obligors  will  deliver  to the  Agent,  for the  benefit  of the  Lenders,  any
instrument  necessary  for the Agent to obtain  records from any service  bureau
maintaining  records on behalf of the Obligors or any of their  Subsidiaries (or
any of them) .

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<PAGE>

     SECTION 8.12. Information and Reports.

     (a) Schedule of  Receivables.  The  Borrowers'  Agent shall  deliver to the
Agent,  not  later  than  the 15th  day of each  fiscal  month,  a  Schedule  of
Receivables  which (i) shall be as of the last  Business Day of the  immediately
preceding  fiscal  month,  (ii)  shall  be  reconciled  to  the  Borrowing  Base
Certificate  as of such last  Business Day, and (iii) shall set forth a detailed
aged trial balance of all of the Obligors' then existing Receivables, specifying
the names,  addresses  and balance due for each  Account  Debtor  obligated on a
Receivable so listed.

     (b) Schedule of Inventory. The Borrowers' Agent shall deliver to the Agent,
not later than the 15th day of each fiscal month,  a Schedule of Inventory as of
the last Business Day of the immediately  preceding fiscal month,  itemizing and
describing the kind, type and quantity of the Obligors' Inventory, the Obligors'
cost thereof, and the location thereof

     (c) Accounts  Payable  Listings.  The Borrowers' Agent shall deliver to the
Agent, no later than fifteen (15) days after the end of each fiscal month of the
Obligors,  a listing of all of the Obligors'  then existing trade payables as of
the last Business Day of such fiscal month,  specifying  the name of and balance
due to each trade  creditor of the Obligors and the invoice number of each trade
payable.  Upon the Agent's  request,  the Borrowers'  Agent shall deliver to the
Agent monthly detailed trade payable agings in form acceptable to the Agent.

     (d) Borrowing Base  Certificate.  The Borrowers' Agent shall deliver to the
Agent a  Borrowing  Base  Certificate,  (i) on a daily  basis  with  respect  to
Receivables,  prepared and updated as of the immediately preceding Business Day,
(ii) on a daily basis with respect to Inventory,  prepared and updated as of the
last day of the immediately  preceding fiscal week, and (iii) not later than the
15th day of each fiscal month,  reconciled against the aged trial balance of all
the  Obligors'  then  existing  Receivables  as of the last  Business Day of the
immediately preceding fiscal month.

     (e) Additional  Information.  The Agent may in its discretion  from time to
time request that the Obligors deliver the schedules,  certificates and listings
described  in  Sections  8.12(a),  (b),  (c) and (d) more or less  often  and on
different schedules than specified in such Sections and the Obligors will comply
with such requests.  The Obligors will also furnish to the Agent and each Lender
such  other  information  with  respect to the  Collateral  as the Agent or such
Lender may from time to time reasonably request.

     (f) Inventory  Appraisals and Reports.  At any time upon the request of the
Agent or the Required  Lenders,  the Obligors shall, at their expense,  promptly
provide the Agent with (i) current appraisals of all of the Obligors'  Inventory
(on an orderly  liquidation value basis and/or such other bases as the Agent may
request),  which  appraisals  shall be prepared by an appraisal firm  reasonably
satisfactory  to the  Agent  or the  Required  Lenders,  as the case may be (the
"Inventory  Appraiser") and shall be in form and scope satisfactory to the Agent
or the Required Lenders, as the case may be.

     SECTION 8.13. Power of Attorney.  Each Obligor hereby appoints the Agent as
its attorney,  with power (a) to endorse the name of such Obligor on any checks,
notes,  acceptances,  money orders, drafts or other forms of payment or security
that may come into the Agent's or any Lender's  possession,  and (b) to sign the
name  of  such  Obligor  on any  invoice  or  bill  of  lading  relating  to any
Receivable,  Inventory  or other  Collateral,  on any drafts  against  customers
related to letters  of credit,  on  schedules  and  assignments  of  Receivables
furnished  to the Agent or any  Lender  by the  Obligors  (or any

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of them),  on notices  of  assignment,  financing  statements  and other  public
records  relating to the  perfection or priority of the Security  Interest,  and
verifications of account and notices to or from customers.

     SECTION 8.14. Assignment of Claims Act. Upon the request of the Agent after
the  occurrence  of and  during  the  continuance  of an Event of  Default,  the
Obligors (or any of them) shall execute any documents or  instruments  and shall
take such steps or actions  reasonably  required by the Agent so that all monies
due or to become due under any contract with the United  States of America,  the
District of Columbia or any state,  county,  municipality  or other  domestic or
foreign  governmental  entity,  or any  department,  agency  or  instrumentality
thereof,  will  be  assigned  to the  Agent,  for  the  benefit  of the  Secured
Creditors,  and notice given thereof in accordance with the  requirements of the
Assignment  of Claims  Act of 1940,  as  amended,  or any other  laws,  rules or
regulations relating to the assignment of any such contract and monies due to or
to become due.

                                   ARTICLE 9

                              AFFIRMATIVE COVENANTS

     Until the Term Loan Facility and the Revolving Loan Facility each have been
terminated and all the Secured  Obligations  have been paid in full,  unless the
Required  Lenders shall otherwise  consent in the manner provided for in Section
16.11, each Obligor will, and will cause each of its Subsidiaries to:

     SECTION 9.1.  Preservation  of  Corporate  Existence  and Similar  Matters.
Preserve and maintain its corporate existence, rights, franchises,  licenses and
privileges  in the  jurisdiction  of its  incorporation  and  qualify and remain
qualified  as a  foreign  corporation  and  authorized  to do  business  in each
jurisdiction  in which the  character  of its  properties  or the  nature of its
business requires such qualification or authorization.

     SECTION 9.2. Compliance with Applicable Law. Comply with all Applicable Law
relating  to it,  except  to  the  extent  being  contested  in  good  faith  by
appropriate  proceedings  and for which reserves in respect of such Obligor's or
such  Subsidiary's   reasonably   anticipated   liability   therefor  have  been
appropriately established.

     SECTION 9.3. Maintenance of Property. In addition to, and not in derogation
of, the requirements of Section 8.7 and of the Security  Documents,  (a) protect
and preserve all  properties  material to its  business,  including  Copyrights,
Patents,  and  Trademarks,  and  maintain  in good  repair,  working  order  and
condition in all material respects, with reasonable allowance for wear and tear,
all tangible properties,  and (b) from time to time make or cause to be made all
needed and appropriate  repairs,  renewals,  replacements  and additions to such
properties  necessary  for the  conduct of its  business,  so that the  business
carried on in connection therewith may be properly and advantageously  conducted
at all times.

     SECTION 9.4. Conduct of Business.  At all times carry on its business in an
efficient manner and engage only in the business described in Section 6.1(f).

     SECTION 9.5. Insurance.  Maintain,  in addition to the coverage required by
Section 8.8 and the Security  Documents,  insurance with  responsible  insurance
companies against such risks and in such amounts as is customarily maintained by
similar  businesses  (including  business  interruption

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insurance)  or as may be  required  by  Applicable  Law,  and from  time to time
deliver  to the Agent or any  Lender  upon its  request a  detailed  list of the
insurance  then in effect,  stating the names of the  insurance  companies,  the
amounts and rates of the insurance,  the dates of the expiration thereof and the
properties and risks covered thereby.

     SECTION 9.6. Payment of Taxes and Claims. Pay or discharge when due (a) all
taxes,  assessments and  governmental  charges or levies imposed upon it or upon
its income or profits or upon any  properties  belonging to it, except that real
property ad valorem  taxes shall be deemed to have been so paid or discharged if
the same are paid before they become  delinquent,  and (b) all lawful  claims of
materialmen,   mechanics,  carriers,   warehousemen  and  landlords  for  labor,
materials,  supplies and rentals which, if unpaid, might become a Lien on any of
its properties;  provided that this Section 9.6 shall not require the payment or
discharge of any such tax, assessment,  charge, levy or claim (i) which is being
contested in good faith by  appropriate  proceedings  and for which  reserves or
appropriate  provisions  in  respect  of the  reasonably  anticipated  liability
therefor have been  appropriately  established or maintained in accordance  with
GAAP, or (ii) to the extent  nonpayment  thereof is permitted by the  Bankruptcy
Code, any order of the Court or any appellate court having jurisdiction over the
Debtors or pursuant to any plan of  reorganization  or other plan or arrangement
approved by or submitted to the Court or any such  appellate  court for approval
or confirmation.

     SECTION 9.7. Accounting Methods and Financial Records. Maintain a system of
accounting,  and keep such books,  records and accounts (which shall be true and
complete),  as may be required or as may be necessary to permit the  preparation
of financial statements in accordance with GAAP.

     SECTION 9.8. Use of Proceeds. The Borrowers may:

     (a) Use the proceeds of (i) the initial Loans to pay amounts  authorized to
be paid by the Court  pursuant  to the  Final  Order  and the  orders  listed on
Schedule  5.1(m)  (including  fees  and  expenses  of the  Noteholders  and  the
Post-Petition  Subordinated  Lenders),  (ii) the  initial  Loans on or after the
Effective Date to pay up to  $17,000,000  (only to the extent that such sums are
not otherwise  paid by the Borrowers  from funds on hand on the Effective  Date)
upon amounts due under the Pre-Petition Loan Agreement, subject to the terms and
conditions of the Intercreditor and Subordination Agreement,  this Agreement and
the other Loan  Documents,  (iii) the  initial  Loans to pay claims of  critical
trade  vendors  arising  before  Petition  Date,  provided that any and all such
critical  trade  vendors  provide  trade credit to the  Borrowers  following the
Petition  Date on a  dollar-for-dollar  basis  with  respect to any and all such
payments,  and provided further that such payments have been approved by a final
order of the Court,  (iv) the initial Loans to pay fees and expenses required to
be paid on the  Effective  Date and which may become due and owing  pursuant  to
this Agreement and the other Loan Documents, (v) the Loans to pay up to $150,000
in fees and costs incurred in connection with an exit financing credit facility,
after  approval  by the  Court  of such  payments,  (vi)  the  Loans to fund the
issuance  of  Letters  of Credit on the terms  and  conditions  set forth  under
Section  3.10,  (vii) the Loans to make  Capital  Expenditures  on the terms and
conditions  set forth  under  Section  11.5,  and (vii) all other Loans only for
working capital and general business purposes,

     (b) Not use any part of such proceeds to purchase or, to carry or reduce or
retire or refinance any credit  incurred to purchase or carry,  any margin stock
(within the meaning of  Regulation  U of the Board of  Governors  of the Federal
Reserve  System)  or,  in any  event,  for any  purpose  which  would  involve a
violation  of  such  Regulation  U or of  Regulation  T or X of  such

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<PAGE>

Board of  Governors,  or for any purpose  prohibited  by law or by the terms and
conditions of this Agreement, and

     (c) Not allow,  directly  or  indirectly,  the  proceeds  of any Loan to be
transferred  to or used by any  Affiliate of any Obligor that is not a Borrower,
provided that the Borrowers may pay or otherwise transfer an amount of funds not
exceed  $1,000,000  on a monthly  basis to ASCI Mexico as payment  for  services
rendered in  connection  with the  improvement  or  completion by ASCI Mexico of
Inventory of the Borrowers.

     SECTION 9.9. Hazardous Waste and Substances; Environmental Requirements.

     (a) In addition to, and not in derogation of, the  requirements  of Section
9.2 and of the Security  Documents,  comply with all Environmental  Laws and all
Applicable Laws relating to occupational health and safety (except for instances
of  noncompliance  that  are  being  contested  in  good  faith  by  appropriate
proceedings  if  reserves  in respect  of such  Obligor's  or such  Subsidiary's
reasonably anticipated liability therefor have been appropriately  established),
promptly  notify the Agent of its  receipt of any notice of a  violation  of any
such  Environmental  Laws or other such Applicable  Laws, and indemnify and hold
the Agent and the Lenders harmless from all loss, cost, damage, liability, claim
and expense  incurred  by or imposed  upon the Agent or any Lender on account of
such Obligor's or  Subsidiary's  failure to perform its  obligations  under this
Section 9.9.

     (b)  Whenever  such  Obligor  gives  notice to the Agent  pursuant  to this
Section 9.9 with respect to a matter that reasonably could be expected to result
in  liability  to such  Obligor  or  Subsidiary  in  excess of  $250,000  in the
aggregate,  such Obligor shall, at the Agent's request and the Obligors' expense
(i)  cause an  independent  environmental  engineer  acceptable  to the Agent to
conduct an assessment,  including tests where  necessary,  of the site where the
noncompliance or alleged  noncompliance with Environmental Laws has occurred and
prepare  and  deliver to the Agent a report  setting  forth the  results of such
assessment,  a proposed plan to bring such Obligor or Subsidiary into compliance
with such Environmental Laws (if such assessment indicates noncompliance) and an
estimate  of the costs  thereof,  and (ii)  provide to the Agent a  supplemental
report of such engineer whenever the scope of the noncompliance, or the response
thereto or the estimated costs thereof, shall materially adversely change.

     SECTION 9.10. Indenture Trustees. The Borrowers' Agent will, promptly after
learning  thereof,  notify  the Agent in  writing  of any  change in any  Person
serving as an  Indenture  Trustee or the  address of any  Indenture  Trustee for
notice purposes under any Indenture.

     SECTION 9.11. Post Closing  Deliveries.  The Borrowers shall deliver to the
Agent (a) promptly  upon request of the Agent,  the  Financing  Statements  duly
executed by the  Obligors,  and (b) within  thirty (30) days after the Effective
Date, an amendment to this  Agreement and the other Loan  Documents  executed by
ASCI Mexico,  pursuant to which ASCI Mexico shall become a Non-Debtor Guarantor,
with all of the  obligations of a Guarantor  hereunder (but not a  non-Guarantor
Obligor).  The  Obligors  likewise  shall use their  reasonable  best efforts to
obtain  Collateral  Access  Agreements  with  respect  to each of the  locations
identified on Schedule 6.1(t) that are not owned by the Obligors.

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<PAGE>

                                   ARTICLE 10

                                   INFORMATION

     Until the Term Loan Facility and the Revolving Loan Facility each have been
terminated and all the Secured  Obligations  have been paid in full,  unless the
Required  Lenders  shall  otherwise  consent  in the manner set forth in Section
16.11,  the Obligors will furnish to the Agent and to each Lender at the offices
then designated for such notices pursuant to Section 16.1:

     SECTION 10.1. Financial Statements.

     (a) Audited Year-End Statements.  As soon as available,  but not later than
two Business Days after the date that Safety  Components is required to file its
Form  10-K  with  the  Securities  and  Exchange  Commission  or  any  successor
commission (or, if earlier, 120 days after the end of each fiscal year of Safety
Components),  copies of the  consolidating  and  consolidated  balance sheets of
Safety Components and its Consolidated Subsidiaries as at the end of such fiscal
year,  together with copies of the consolidated and consolidating  statements of
operations and shareholders' equity and consolidated statements of cash flows of
Safety  Components and its  Consolidated  Subsidiaries  for such fiscal year, in
each case setting forth in comparative  form the figures for the previous fiscal
year,  reported on without  qualification  (other than qualifications that would
customarily  be given  during  the  pendency  of a  chapter  11 case  under  the
Bankruptcy  Code) by  independent  certified  public  accountants  of nationally
recognized   standing;   provided,   for  fiscal   year  end  2000   only,   the
above-referenced  financial  statements  may be  unaudited if  accompanied  by a
certification  of  independent   certified  public   accountants  of  nationally
recognized  standing as to the  Receivables  and Inventory of the Borrowers,  in
form and substance acceptable to the Agent.

     (b) Monthly  Financial  Statements.  As soon as available  after the end of
each  month,  but in any event  within  thirty  (30) days  after the end of each
fiscal  month of Safety  Components  (sixty  (60) days in the case of the fiscal
month  end  which  is  also  the  fiscal  year  end),  copies  of the  unaudited
consolidating  and  consolidated  balance  sheet of  Safety  Components  and its
Consolidated  Subsidiaries  as at the end of such  fiscal  month and the related
unaudited   consolidating   and   consolidated   statements  of  operations  and
consolidated statements of cash flows for Safety Components and its Consolidated
Subsidiaries  for such  fiscal  month and for the  portion  of the  fiscal  year
through such fiscal  month,  certified by the  Financial  Officer as  presenting
fairly the financial  condition  and results of operations of Safety  Components
and  its   Consolidated   Subsidiaries   (subject  to  normal   year-end   audit
adjustments).

     (c) Quarterly Budget. As soon as available,  but in any event no later than
thirty (30) days prior to the end of each fiscal  quarter of Safety  Components,
an operating budget for Safety Components and its US and UK Subsidiaries for the
following fiscal quarter (on a weekly basis),  in the form customarily  prepared
by management of Safety Components  consistent with past practice and acceptable
to the Agent,  together  with a projection of the  outstanding  Loan balance for
each such period and a statement of the  assumptions  upon which such budget was
prepared.

All such  financial  statements  referred  to in  clauses  (a) and (b)  shall be
complete and correct in all material  respects and prepared in  accordance  with
GAAP (except,  with respect to interim financial  statements described in clause
(b), for the omission of footnotes and for the effect of normal  year-end  audit
adjustments) applied consistently throughout the periods reflected therein.

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     SECTION  10.2.  Accountants'  Certificate.   Together  with  the  financial
statements  referred to in Section  10.1(a) (except for the 2000 fiscal year end
financial  statements),  the  Obligors  shall  deliver  a  certificate  of  such
accountants  addressed to the Agent  stating (a) that in making the  examination
necessary for the certification of such financial  statements,  nothing has come
to their  attention to lead them to believe that any Default or Event of Default
exists and, in  particular,  they have no  knowledge  of any Default or Event of
Default or, if such is not the case, specifying such Default or Event of Default
and its nature,  and (b) whether or not the Obligors were in compliance with the
covenants  contained in Sections 11.1, 11.2,  11.5,  11.10, and 11.11, as at the
date of such financial statements.

     SECTION 10.3. Officer's Certificate.  At the time that the Obligors furnish
the financial  statements  pursuant to Section 10.1(b),  the Obligors shall also
furnish a certificate  of the Financial  Officer,  substantially  in the form of
Exhibit F, (a) setting forth whether or not the Obligors were in compliance with
the requirements of Sections 11.1,  11.2, 11.5,  11.10, and 11.11, as at the end
of each respective  period, (b) stating that the information on the schedules to
this Agreement are complete and accurate as of the date of such  certificate or,
if such is not the case,  attaching to such certificate  updated schedules,  and
(c) stating  that,  based on a reasonably  diligent  examination,  no Default or
Event of Default exists, or, if such is not the case, specifying such Default or
Event of Default and its nature, when it occurred,  whether it is continuing and
the steps being taken by the  Obligors  with respect to such Default or Event of
Default.

     SECTION 10.4. Copies of Other Reports.

     (a) Promptly upon receipt thereof, copies of all reports, if any, submitted
to any Obligor or its Board of Directors by its independent public  accountants,
including any management report.

     (b) As soon as practicable,  copies of all financial statements and reports
that  any  Obligor  shall  send  to  its  shareholders   generally  and  of  all
registration  statements  and all regular or periodic  reports which any Obligor
shall  file  with  the  Securities  and  Exchange  Commission  or any  successor
commission.

     (c) From time to time and as soon as reasonably  practicable following each
request, such forecasts, data, certificates,  reports,  statements,  opinions of
counsel,  documents  or further  information  regarding  the  business,  assets,
liabilities, financial condition, results of operations or business prospects of
any Obligor or any of its Subsidiaries as the Agent or any Lender may reasonably
request  and that  any  Obligor  has or  (except  in the case of legal  opinions
relating  to the  perfection  or  priority  of the  Security  Interest)  without
unreasonable  expense can obtain.  The rights of the Agent and the Lenders under
this Section 10.4 are in addition to and not in derogation of their rights under
any other provision of this Agreement or of any other Loan Document.

     (d) If requested by the Agent or any Lender,  the Obligors  will furnish to
the Agent and the Lenders  statements in  conformity  with the  requirements  of
Federal  Reserve Form U-1 referred to in  Regulation U of the Board of Governors
of the Federal Reserve System.

     (e) Copies of all monthly reports, projections, or other reports respecting
any Obligor's business or financial condition or prospects filed with the Court,
or provided to the U.S.  Trustee or the Committee,  at the time such document is
filed with the Court or provided to the U.S. Trustee or the Committee.

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<PAGE>

     SECTION 10.5. Notice of Litigation and Other Matters. Prompt notice of:

     (a) (i) the  commencement,  to the extent any Obligor is aware of the same,
of  all  proceedings  and  investigations  by  or  before  any  governmental  or
non-governmental body and all actions and proceedings in any court or before any
arbitrator against or in any other way relating to or affecting any Obligor, any
of  its  Subsidiaries  or  any of  any  Obligor's  or  any of its  Subsidiaries'
properties,  assets or  businesses,  which  might,  singly or in the  aggregate,
result  in the  occurrence  of a  Default  or an  Event  of  Default,  or have a
Materially  Adverse Effect,  and (ii) the filing or commencement of any material
contested  matter  or  adversary  proceeding  in the  Chapter  11 Case  (but the
foregoing  may be satisfied  by  including  the Agent and its counsel in a "core
service group," to receive copies of all pleadings under any order  establishing
notice and service  requirements  in the Chapter 11 Case),  and such  additional
information  with  respect  to such  matters  as the  Agent or the  Lenders  may
reasonably request,

     (b) any  amendment  of the articles of  incorporation  or by-laws (or other
constitutive documents) of any Obligor,

     (c) to the extent that any Obligor is aware of the same,  any change in the
business,  assets,  liabilities,  financial condition,  results of operations or
business  prospects of any Obligor or any of its  Subsidiaries  which has had or
may have, singly or in the aggregate, a Materially Adverse Effect and any change
in the executive officers of any Obligor or any of its Subsidiaries, and

     (d) to the extent  that any  Obligor is aware of the same,  any  Default or
Event of Default or any event  which  constitutes  or which with the  passage of
time or giving of notice or both would  constitute a post-Petition  Date default
or event of default  (whether or not any Borrower has  received  notice  thereof
from any other  Person but not  including  defaults  that result from any act or
failure to act of any Borrower which is permitted by the Bankruptcy Code) by any
Obligor or any of its  Subsidiaries  under any material  agreement  entered into
after the Petition  Date (other than this  Agreement),  to which such Obligor or
any of its  Subsidiaries  is a  party  or by  which  such  Borrower,  any of its
Subsidiaries or any of their properties may be bound.

     SECTION  10.6.  ERISA.  As soon as possible and in any event within  thirty
(30)  days  after any  Obligor  knows,  or has  reason  to know,  that:  (a) any
Termination  Event with  respect to a Plan has occurred or will occur that could
result in any material  liability  to any Obligor,  or (b) any Obligor or any of
its  Subsidiaries  is in "default"  (as defined in Section  4219(c)(5) of ERISA)
with  respect to  payments  to a  Multiemployer  Plan  required by reason of any
Obligor's or such Subsidiary's  complete or partial  withdrawal (as described in
Section 4203 or 4205 of ERISA) from such  Multiemployer  Plan, a certificate  of
the  Financial  Officer  setting  forth the details of such event and the action
which is proposed to be taken with respect thereto,  together with any notice or
filing  which may be required by the PBGC or other  agency of the United  States
government with respect to such event.

     SECTION 10.7. Accuracy of Information.  All written  information,  reports,
statements  and other  papers  and data  furnished  to the Agent or any  Lender,
whether  pursuant to this Article 10 or any other provision of this Agreement or
of any other  Loan  Document,  shall  be, at the time the same is so  furnished,
complete  and correct in all material  respects to the extent  necessary to give
the Agent and the Lenders true and accurate knowledge of the subject matter.

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<PAGE>

     SECTION  10.8.  Revisions  or  Updates  to  Schedules.  Should  any  of the
information or disclosures  provided on any of the Schedules originally attached
hereto become outdated or incorrect in any material respect,  the Obligors shall
deliver  to the  Agent  and the  Lenders  as part of the  officer's  certificate
required  pursuant to Section 10.3 such revisions or updates to such Schedule(s)
as may be  necessary  or  appropriate  to update or  correct  such  Schedule(s),
provided that no such revisions or updates to any Schedule(s) shall be deemed to
have amended,  modified or superseded  such  Schedule(s) as originally  attached
hereto, or to have cured any breach of warranty or representation resulting from
the inaccuracy or incompleteness  of any such Schedule(s),  unless and until the
Required Lenders in their sole and absolute  discretion,  shall have accepted in
writing such revisions or updates to such Schedule(s).

                                   ARTICLE 11

                               NEGATIVE COVENANTS

     Until the Term Loan Facility and the Revolving Loan Facility each have been
terminated and all the Secured  Obligations  have been paid in full,  unless the
Required  Lenders  shall  otherwise  consent  in the manner set forth in Section
16.11, the Obligors will not directly or indirectly:

     SECTION 11.1. Financial Ratios.

     (a) Minimum EBITDA. Have Consolidated EBITDA of less than the amounts shown
with respect to the applicable fiscal period:

================================================================================
         Fiscal Period                                       Amount
--------------------------------------------------------------------------------
         Three months ended June 24, 2000                   $2,900,000
         Three months ended September 30, 2000              $2,275,000
         Three months ended December 30, 2000               $2,610,000
         Three months ended March 31, 2001                  $3,000,000
================================================================================

     (b) Minimum Fixed Charge Coverage Ratio. Have a Fixed Charge Coverage Ratio
of less than the ratio shown for the applicable fiscal period:

================================================================================
         Fiscal Period                                       Amount
--------------------------------------------------------------------------------
         Three months ended June 24, 2000                   1.11 to 1
         Six months ended September 30, 2000                1.0 to 1
         Nine months ended December 30, 2000                1.1 to 1
         Twelve months ended March 31, 2001                 1.1 to 1
--------------------------------------------------------------------------------

     (c) Minimum Monthly EBITDA.  Have Consolidated EBITDA for any fiscal month,
determined as of the end of each fiscal month,  of less than fifty percent (50%)
of the amount shown for such month in the Projections.

     SECTION 11.2. Indebtedness for Money Borrowed. Create, assume, or otherwise
become or remain  obligated in respect of, or permit or suffer to exist or to be
created,  assumed or incurred or to be outstanding  any  Indebtedness  for Money
Borrowed,  except that this Section 11.2 shall not apply

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to (a) Indebtedness  for Money Borrowed  represented by the Loans and the Notes,
provided  there  shall be no  increase  in the  principal  amount  thereof,  (b)
Indebtedness  for Money Borrowed  existing on the Petition Date and reflected on
Schedule 6.1(j)  (excluding any such  Indebtedness that is to be paid in full on
the Effective Date), and refinancings  thereof (without any increase in the then
outstanding  principal  balance thereof) upon terms fully disclosed to the Agent
and the Lenders and which are no less favorable to the  applicable  Obligor than
those with respect to the Indebtedness being refinanced,  (c) Permitted Purchase
Money Indebtedness,  (d) Subordinated  Indebtedness,  and (e) Indebtedness under
Hedge Agreements which are reasonably acceptable to the Agent, with a Lender, in
order to manage existing or anticipated interest rate or exchange rate risks and
not for speculative purposes.

     SECTION  11.3.  Guaranties.  Become or remain  liable  with  respect to any
Guaranty of any obligation of any other Person, except for (a) Guarantees of the
Secured  Obligations by the Guarantors,  and (b) Guarantees by an Obligor of the
obligations of any of its  Subsidiaries  under real property lease agreements or
other  agreements  arising in the  ordinary  course of business,  provided  such
Subsidiary is a Borrower or a Guarantor hereunder.

     SECTION 11.4. Investments.  Acquire, after the Agreement Date, any Business
Unit or  Investment  or,  after such date,  maintain any  Investment  other than
Permitted Investments.

     SECTION 11.5. Capital Expenditures.  Make or incur any Capital Expenditures
in the aggregate in excess of $1,300,000 during the first five (5) months of the
Chapter 11 Case, or in excess of $2,600,000  for the fiscal year ended March 31,
2001.

     SECTION 11.6.  Restricted Dividend Payments and Purchases,  Etc. Declare or
make any Restricted Dividend Payment, Restricted Payment or Restricted Purchase,
or allow, directly or indirectly,  the proceeds of any Loan to be transferred to
or used by any  Affiliate of any Obligor that is not a Borrower,  provided  that
the Borrowers may pay or otherwise  transfer funds to ASCI Mexico as payment for
services  rendered in  connection  with the  improvement  or  completion by ASCI
Mexico of Inventory of the Borrowers pursuant to Section 8.1(d).

     SECTION  11.7.  Merger,   Consolidation  and  Sale  of  Assets.   Merge  or
consolidate with any other Person or sell, lease,  transfer or otherwise dispose
of any of its  assets  to any  Person,  other  than  sales of  Inventory  in the
ordinary course of business.

     SECTION 11.8. Transactions with Affiliates. Effect any transaction with any
Affiliate  on a basis less  favorable  to any Obligor  than would be the case if
such transaction had been effected with a Person not an Affiliate.

     SECTION 11.9. Liens.  Create,  assume or permit or suffer to exist or to be
created  or  assumed  any Lien on any of the  Collateral  or other  assets of an
Obligor,  other than  Permitted  Liens.  The  prohibition  provided  for in this
Section 11.9  specifically  includes,  but is not limited to, any efforts by any
Debtor,  or any order  entered  for the  benefit of the  Committee  or any other
party-in-interest in the Chapter 11 Case, to "prime" or create pari passu to any
claims or interests of the Lenders under this Agreement any Lien (other than for
allowed Senior Claims and for the Carve-Out Expenses up to the Carve-Out Amount)
irrespective of whether such claims or interests may be "adequately protected."

     SECTION 11.10. Capitalized Lease Obligations.  Incur or permit to exist any
Capitalized  Lease  Obligations if such Capitalized Lease Obligations when added
to  existing   Capitalized  Lease  Obligations  and  Permitted   Purchase  Money
Indebtedness of the Obligors and their  Subsidiaries would exceed $20,000,000 in
the aggregate.

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<PAGE>

     SECTION  11.11.  Operating  Leases.  Enter into any Operating  Lease if the
aggregate  annual rental payable under all Operating  Leases of the Obligors and
their Subsidiaries would exceed $3,000,000 in the aggregate at any time.

     SECTION 11.12.  Limitation on Certain Restrictions on Subsidiaries.  Create
or otherwise  cause or suffer to exist or become  effective any  encumbrance  or
restriction  on the ability of any  Subsidiary  to (a) pay dividends or make any
other  distributions on its capital stock or any other interest or participation
in its profits owned by an Obligor or any  Subsidiary of an Obligor,  or pay any
Indebtedness owed to an Obligor or a Subsidiary of an Obligor, (b) make loans or
advances to an Obligor or any of an Obligor's Subsidiaries,  or (c) transfer any
of its  properties  or assets to an  Obligor,  except for such  encumbrances  or
restrictions  existing under or by reason of (i) Applicable  Laws, and (ii) this
Agreement and the other Loan Documents.

     SECTION 11.13. Plans. Intentionally Omitted.

     SECTION 11.14.  Sales and Leasebacks.  Enter into any arrangement  with any
Person providing for any Obligor's or its US and UK  Subsidiaries'  leasing from
such  Person any real or  personal  property  which has been or is to be sold or
transferred,  directly or indirectly,  by such Obligor or US and UK Subsidiaries
to such Person.

     SECTION  11.15.  Amendments of Other  Agreements.  Amend in any way (a) the
subordination  provisions applicable to any Subordinated  Indebtedness,  (b) the
Noteholders  Restructuring  Agreement or the Pre-Petition Lenders  Restructuring
Agreement  without the written  consent of the Agent,  (c) the interest rate (or
formula  pursuant to which such interest rate is determined) or principal amount
or  schedule  of  payments  of  principal  and  interest  with  respect  to  any
Subordinated  Indebtedness,  or any other Indebtedness for Money Borrowed, other
than to reduce the  principal  amount or interest rate or extend the schedule of
payments with respect  thereto,  or (d) any other provision of the Indenture if,
in the Agent's  reasonable  judgment,  such amendment would adversely affect the
Agent or any of the other Secured Creditors.

     SECTION 11.16. Fiscal Year. Change the end of its fiscal year from the last
Saturday in March.

     SECTION  11.17.  Repayments.  Except as provided in Section  9.8(a)(iii) or
with respect to the Orders of the Court referenced in Schedule 5.1(m) and except
as specifically permitted hereunder,  the Debtors shall not, without the express
prior written consent of the Required  Lenders,  make any payment or transfer in
an aggregate amount in excess of $100,000 during the term of this Agreement with
respect to any Lien or  Indebtedness  incurred or arising prior to the filing of
the  Chapter  11  Case,  whether  by  way of  "adequate  protection"  under  the
Bankruptcy Code or otherwise; provided that the foregoing shall not prohibit the
Debtors  from  complying  with  Bankruptcy  Code  Section  365 with  respect  to
unexpired  leases  of the  Debtors  or  making  any  payments  to be made to the
Pre-Petition  Lenders (either in their capacity as Pre-Petition Lenders or their
capacity as Post-Petition  Subordinated Lenders) under the Post-Petition Lenders
Credit  Agreement,  subject to the terms of the  Intercreditor and Subordination
Agreement.

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<PAGE>

                                   ARTICLE 12

                                     DEFAULT

     SECTION 12.1. Events of Default.  Notwithstanding the provisions of Section
362 of the Bankruptcy Code and without application or motion to the Court or any
notice  to any  Borrower,  the  occurrence  of any one or more of the  following
events,  regardless of the reason  therefor,  shall  constitute an immediate and
automatic "Event of Default" hereunder:

          (a) Default in Payment.  The Borrowers shall default in any payment of
     principal  of or interest on any Loan or any Note when and as due  (whether
     at maturity, by reason of acceleration or otherwise).

          (b) Other Payment  Default.  Any Obligor shall default in the payment,
     as and when due, of any other  Secured  Obligation,  and such default shall
     continue  for a period  of five (5)  Business  Days  after  written  notice
     thereof has been given to the Borrowers' Agent by the Agent.

          (c)  Misrepresentation.  Any representation or warranty made or deemed
     to be made by any Obligor under this  Agreement or any other Loan Document,
     or any  amendment  hereto or thereto,  shall at any time prove to have been
     incorrect or misleading in any material respect when made.

          (d)  Default  in  Performance.   Any  Obligor  shall  default  in  the
     performance or observance of any term, covenant,  condition or agreement to
     be performed by the Obligors (or any of them), contained in:

               (i)  except  as  specifically  set forth in  clause  (ii)  below,
          Articles 7, 8, 9, 10 or 11 of this Agreement,  provided that the Agent
          may, in its sole discretion,  waive any default under Sections 8.12 or
          10.1,  10.2 and 10.3 as long as such default is not  outstanding  more
          than ten (10) days;

               (ii)  Sections  8.3,  8.4(a),  8.9(b),  8.9(c)  or  10.8  of this
          Agreement  and such  default  shall  continue for a period of ten (10)
          Business  Days  after  written  notice  thereof  has been given to the
          Borrowers' Agent by the Agent; or

               (iii) any other  provision  of this  Agreement  or any other Loan
          Document  (other than as  specifically  provided for otherwise in this
          Section 12.1) and such default  shall  continue for a period of thirty
          (30)  days  after  written  notice  thereof  has  been  given  to  the
          Borrowers' Agent by the Agent.

          (e)  Voluntary  Bankruptcy  Proceeding.  Any  Non-Debtor  Borrower  or
     Non-Debtor  Guarantor shall (i) commence a voluntary case under the federal
     bankruptcy  laws (as now or  hereafter  in  effect),  (ii) file a  petition
     seeking to take advantage of any other laws, domestic or foreign,  relating
     to bankruptcy,  insolvency,  reorganization,  winding up or composition for
     adjustment  of debts,  (iii)  consent to or fail to contest in a timely and
     appropriate  manner any petition  filed against it in an  involuntary  case
     under such  bankruptcy laws or other laws, (iv) apply for or consent to, or
     fail to contest in a timely and appropriate  manner, the appointment of, or
     the taking of possession by, a receiver,  custodian, trustee, or liquidator
     of itself or of a substantial  part of its  property,  domestic or foreign,
     (v) admit in writing  its  inability  to pay its

                                       85
<PAGE>

     debts as they become due, (vi) make a general assignment for the benefit of
     creditors,  or (vii) take any action for the purpose of authorizing  any of
     the foregoing.

          (f)  Involuntary  Bankruptcy  Proceeding.  A case or other  proceeding
     shall be commenced against any Non-Debtor Borrower or Non-Debtor  Guarantor
     in any court of competent jurisdiction seeking (i) relief under the federal
     bankruptcy  laws (as now or  hereafter  in effect) or under any other laws,
     domestic or foreign,  relating to bankruptcy,  insolvency,  reorganization,
     winding up or adjustment of debts,  or (ii) the  appointment  of a trustee,
     receiver, custodian,  liquidator or the like of such Non-Debtor Borrower or
     Non-Debtor  Guarantor  or of all or any  substantial  part  of the  assets,
     domestic or foreign, of such Non-Debtor  Borrower or Non-Debtor  Guarantor,
     and such case or proceeding  shall  continue  undismissed or unstayed for a
     period of sixty (60)  consecutive  calendar  days, or an order granting the
     relief  requested  in  such  case or  proceeding  against  such  Non-Debtor
     Borrower or Non-Debtor  Guarantor (including an order for relief under such
     federal bankruptcy laws) shall be entered.

          (g) Failure of  Agreements.  Any Obligor shall  challenge the validity
     and binding  effect of any  provision of any Loan Document  after  delivery
     thereof or shall state its  intention  to make such a challenge in writing,
     or any Loan  Document,  after  delivery  thereof  hereunder,  shall for any
     reason  (except  to the extent  permitted  by the terms  thereof)  cease to
     create a valid and  perfected  first  priority  Lien (except for  Permitted
     Liens) on, or security  interest in, any of the Collateral  purported to be
     covered thereby.

          (h) Judgment.  Other than with respect to the filing of the Chapter 11
     Case or  matters  reflected  on  Schedule  6.1(k),  a  final,  unappealable
     judgment  or order  for the  payment  of money in an amount  which  exceeds
     $100,000  shall be entered  after the Petition  Date against any Obligor or
     any of its US and UK  Subsidiaries  by any court and such judgment or order
     shall continue undischarged or unstayed for thirty (30) days.

          (i)  Attachment.  Other than with respect to the filing of the Chapter
     11 Case or  matters  reflected  on  Schedule  6.1(k),  a warrant or writ of
     attachment or execution or similar process which exceeds  $100,000 in value
     shall be issued after the Petition Date against any property of any Obligor
     or any of its US and UK  Subsidiaries  and such  warrant or  process  shall
     continue undischarged or unstayed for thirty (30) days.

          (j) ERISA.

               (i) Any Termination Event with respect to a Plan shall occur that
          could result in a material liability to any Obligor, or

               (ii) any Plan shall incur an "accumulated funding deficiency" (as
          defined in Section 412 of the Internal  Revenue Code or Section 302 of
          ERISA) in a material  amount for which a waiver has not been  obtained
          in accordance with the applicable  provisions of the Internal  Revenue
          Code and ERISA, or

               (iii) any Obligor or any of its  Subsidiaries is in "default" (as
          defined in Section  4219(c)(5) of ERISA) with respect to payments in a
          material amount to a Multiemployer Plan resulting from an Obligor's or
          any of its Subsidiaries  complete or partial  withdrawal (as described
          in Section 4203 or 4205 of ERISA) from such Multiemployer Plan.

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          (k)  Change  in  Control.   Except  as  provided  in  the  Noteholders
     Restructuring Agreement, at any time after the Agreement Date, (i) a Person
     or  "group"  of  Persons  (within  the  meaning  of  Section  13(d)  of the
     Securities  Exchange  Act of 1934,  as amended,  and the rules  promulgated
     thereunder),  shall acquire,  beneficially or of record, 33% or more of the
     outstanding  voting stock (stock entitled to vote for election of directors
     excluding  rights subject to a contingency) of Safety  Components,  or (ii)
     during any calendar year,  individuals  who at the beginning of such period
     constituted  the Board of Directors of any Obligor  (together  with any new
     directors whose election by the Board of Directors of such Obligor or whose
     nomination for election by the  shareholders  of such Obligor,  as the case
     may be, was approved by a vote of a majority of the directors then still in
     office who either were  directors at the  beginning of such period or whose
     election or nomination for election was  previously so approved)  cease for
     any reason to constitute a majority of the  directors of such  Obligor,  as
     the case may be, then in office,  or (iii) Safety Components ceases to own,
     directly or  indirectly,  100% of the capital  stock of each other  Obligor
     (less any  qualifying  shares),  or such  ownership  shall cease to vest in
     Safety Components  voting control over any such Obligor,  or (iv) a "Change
     of Control" as defined in the Indenture occurs.

          (l) Change in Management. For any reason (i) the person serving as the
     President  or Chief  Financial  Officer of Safety  Components  is no longer
     actively  involved in such role, or (ii) the  financial  advisor and crisis
     manager to the  Borrowers,  retained by Debtors in accordance  with Section
     5.1(m)(v),   is  no  longer  actively  involved  in  such  role,  unless  a
     replacement  reasonably  satisfactory to the Required  Lenders is appointed
     within 90 days.

          (m)  General   Insecurity.   The  occurrence  of  any  act,  omission,
     circumstance,   event  or   condition   or  series   of  acts,   omissions,
     circumstances,  events or  conditions  which have,  or could  reasonably be
     expected to have,  either  individually  or in the aggregate,  a Materially
     Adverse Effect.

          (n) Events in the Chapter 11 Case.

               (i) the  bringing  of a  motion,  or the  filing  of any  plan of
          reorganization  or  disclosure  statement  attendant  thereto,  by any
          Borrower in the Chapter 11 Case:  (w) to obtain  additional  financing
          under Section 364(c) or (d) of the  Bankruptcy  Code; (x) to grant any
          Lien upon or affecting any Collateral  other than Permitted  Liens; or
          (y) to use cash  collateral of the Agent under  Section  363(c) of the
          Bankruptcy  Code without the consent of the Agent and the Lenders;  or
          (z) any other  action or actions  adverse to the Agent and the Lenders
          or their  rights  and  remedies  hereunder  or their  interest  in the
          Collateral  that  would,  individually  or in  the  aggregate,  have a
          Materially Adverse Effect; or

               (ii) the  filing  of any  plan of  reorganization  or  disclosure
          statement  attendant thereto by any Borrower or any other Person which
          does not  require  repayment  in full of all the  Secured  Obligations
          under this Agreement; or

               (iii) the entry of an order  confirming a plan of  reorganization
          that  does  not  require  repayment  in  full  of all  of the  Secured
          Obligations under this Agreement; or

               (iv)  the  entry of an order  amending,  supplementing,  staying,
          vacating or otherwise  modifying the Loan Documents or the Final Order
          without the written consent of the Required Lenders; or

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               (v) the allowance of any claim or claims under Section  506(c) of
          the  Bankruptcy  Code against or with respect to any of the Collateral
          of the Secured Creditors; or

               (vi) the  appointment  of an interim or permanent  trustee in the
          Chapter 11 Case or the  appointment  of an  examiner in the Chapter 11
          Case with expanded powers to operate or manage the financial  affairs,
          the business, or reorganization of any Borrower; or

               (vii) the sale without the Agent's and the Lenders'  consent,  of
          all or  substantially  all of any  Borrower's  assets either through a
          sale under  Section 363 of the  Bankruptcy  Code,  through a confirmed
          plan of reorganization in the Chapter 11 Case, or otherwise; or

               (viii) the dismissal of the Chapter 11 Case, or the conversion of
          the Chapter 11 Case from one under  Chapter 11 to one under  Chapter 7
          of the Bankruptcy Code; or

               (ix) the entry of an order by the Court  granting  relief from or
          modifying the automatic stay of Section 362 of the Bankruptcy Code (x)
          to  allow  any  creditor  to  execute  upon or  enforce  a Lien on any
          Collateral,  or (y) with respect to any Lien of or the granting of any
          Lien  on any  Collateral  to  any  State  or  local  environmental  or
          regulatory  agency or  authority,  which in either  case  would have a
          Materially Adverse Effect; or

               (x) the  commencement  by any Person of a suit or action  against
          the Agent,  any Lender or any Issuing  Bank that  asserts any claim or
          legal or  equitable  remedy  which  challenges  the  validity or seeks
          subordination  of the claim or Lien of the Agent or any of the Secured
          Creditors pursuant to this Agreement or the Final Order; or

               (xi) any payment on, or  application  for  authority  to pay, any
          Indebtedness  of the  Borrowers  that arose before the Petition  Date,
          other than (i) payments  made with respect to (a)  employees  (or paid
          for their benefit), (b) taxing authorities, (c) creditors under leases
          or executory  contracts assumed by the Borrowers pursuant to 11 U.S.C.
          365, (d)  customers  for refunds,  or (e) exchanges and rebates in the
          ordinary  course of business,  (ii) the  Borrowers' use of the Initial
          Loans to pay claims of critical trade vendors  arising before Petition
          Date,  provided  that any and all such  critical  trade  vendors  have
          irrevocably   committed  to  extend  trade  credit  to  the  Borrowers
          following the Petition Date on a dollar-for-dollar  basis with respect
          to any and all such payments,  or (iii)  payments  required to be made
          pursuant to or expressly  contemplated by this Agreement,  without the
          Agent's prior written consent.

     SECTION 12.2.  Remedies.  If any Event of Default shall have occurred,  and
during the  continuance of any such Event of Default,  the Agent may, and at the
direction of the Required Lenders in their sole and absolute  discretion  shall,
do any of the following:

          (a) declare the principal of and interest on the Loans and any Note at
     the time outstanding,  and all other amounts owed to the Agent, the Issuing
     Bank  and  the  Lenders  under  this  Agreement  or any of the  other  Loan
     Documents  and all  other  Secured  Obligations,  to be  forthwith  due and
     payable,  whereupon  the same  shall  immediately  become  due and  payable
     without  presentment,  demand,  protest or other notice of any kind, all of
     which are expressly

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     waived,  anything  in this  Agreement  or the other Loan  Documents  to the
     contrary notwithstanding;

          (b) terminate  the Revolving  Loan Facility and any other right of the
     Borrowers to request Borrowings and Letters of Credit hereunder;

          (c)  notify,  or  request  the  Obligors  to  notify,  in  writing  or
     otherwise,  any  Account  Debtor  with  respect  to any  one or more of the
     Receivables  to make  payment to the Agent,  for the benefit of the Secured
     Creditors, or any agent or designee of the Agent, at such address as may be
     specified  by the Agent and if,  notwithstanding  the giving of any notice,
     any Account Debtor shall make payments to the Obligors,  the Obligors shall
     hold all such payments they receive in trust for the Agent, for the account
     of the Secured Creditors,  without commingling the same with other funds or
     property of, or held by, the  Obligors,  and shall  deliver the same to the
     Agent or any such agent or designee of the Agent  immediately  upon receipt
     by the Obligors in the identical form received, together with any necessary
     endorsements;

          (d) settle or adjust disputes and claims directly with Account Debtors
     on Receivables for amounts and on terms which the Agent considers advisable
     and in all such cases only the net amounts  received by the Agent,  for the
     account  of the  Secured  Creditors,  in  payment  of such  amounts,  after
     deductions of costs and attorneys' fees,  shall  constitute  Collateral and
     the Obligors  shall have no further right to make any such  settlements  or
     adjustments or to accept any returns of merchandise;

          (e) enter upon any premises at which  Inventory  or  Equipment  may be
     located and,  without  resistance or  interference  by the  Obligors,  take
     physical  possession of any or all thereof and maintain such  possession on
     such  premises or move the same or any part  thereof to such other place or
     places as the Agent shall  choose,  without being liable to the Obligors on
     account  of any  loss,  damage or  depreciation  that may occur as a result
     thereof, so long as the Agent shall act reasonably and in good faith;

          (f) require the Obligors to, and the Obligors shall, without charge to
     the Agent or any Lender,  assemble the  Inventory or Equipment and maintain
     or  deliver  it  into  the   possession  of  the  Agent  or  any  agent  or
     representative  of the  Agent at such  place or  places  as the  Agent  may
     designate  and as are  reasonably  convenient  to both  the  Agent  and the
     Obligors;

          (g) at the  expense of the  Obligors,  cause any of the  Inventory  or
     Equipment to be placed in a public or field warehouse,  and the Agent shall
     not  be  liable  to  the  Obligors  on  account  of  any  loss,  damage  or
     depreciation that may occur as a result thereof, so long as the Agent shall
     act reasonably and in good faith;

          (h) without  notice,  demand or other process,  and without payment of
     any rent or any other  charge,  enter any of the  Obligors'  premises  and,
     without  breach of the  peace,  until the Agent,  on behalf of the  Secured
     Creditors,  completes the enforcement of its rights in the Collateral, take
     possession  of such  premises  or place  custodians  in  exclusive  control
     thereof,  remain on such premises and use the same and any of the Obligors'
     Equipment, for the purpose of (A) completing any work in process, preparing
     any Inventory for disposition,  and disposing  thereof,  and (B) collecting
     any Receivable,  and the Agent for the benefit of the Secured  Creditors is
     hereby  granted  a license  or  sublicense  and all other  rights as may be
     necessary,  appropriate  or  desirable  to use the  Proprietary  Rights  in
     connection  with the  foregoing,  and the rights of the Obligors  under all
     licenses, sublicenses and franchise agreements shall inure to the Agent for
     the

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     benefit of the Secured Creditors;  provided,  however,  that any use of any
     federally  registered  trademarks  as to any goods  shall be subject to the
     control as to the quality of such goods of the owner of such trademarks and
     the goodwill of the business symbolized thereby;

          (i)  exercise  any  and  all of its  rights  under  any and all of the
     Security Documents;

          (j)  apply  all  funds in the Cash  Collateral  Account  and any other
     Collateral  consisting of cash to the payment of the Secured Obligations in
     any order in which the Agent, on behalf of the Secured Creditors, may elect
     or use such cash in connection with the exercise of any of its other rights
     hereunder or under any of the Security Documents;

          (k)  establish  or cause to be  established  one or more  Lockboxes or
     other arrangement for the deposit of proceeds of Receivables,  and, in such
     case,  the Obligors shall cause to be forwarded to the Agent at the Agent's
     Office,  on a daily basis,  copies of all checks and other items of payment
     and deposit slips related  thereto  deposited in such  Lockboxes,  together
     with  collection  reports in form and substance  satisfactory to the Agent;
     and

          (l) exercise  all of the rights and remedies of a secured  party under
     the  Uniform  Commercial  Code and the  Final  Order  and  under  any other
     Applicable  Law,  including the right,  without  notice except as specified
     below  and with or  without  taking  the  possession  thereof,  to sell the
     Collateral  or any part thereof in one or more parcels at public or private
     sale,  at any  location  chosen by the  Agent,  for cash,  on credit or for
     future  delivery,  and at such price or prices and upon such other terms as
     the Agent may deem commercially reasonable. The Obligors agree that, to the
     extent  notice of sale  shall be  required  by law,  at least ten (10) days
     notice to the Borrowers'  Agent of the time and place of any public sale or
     the time  after  which  any  private  sale is to be made  shall  constitute
     reasonable notification, but notice given in any other reasonable manner or
     at any other reasonable time shall constitute reasonable notification.  The
     Agent shall not be obligated to make any sale of  Collateral  regardless of
     notice of sale  having  been  given.  The Agent may  adjourn  any public or
     private sale from time to time by  announcement at the time and place fixed
     therefor,  and such sale may,  without further notice,  be made at the time
     and place to which it was so adjourned.

; provided, however,  notwithstanding anything to the contrary contained herein,
the  Agent  shall be  permitted  to  exercise  any  remedy  in the  nature  of a
liquidation  of, or  foreclosure  on, any of the  Collateral  only to the extent
permitted by or the Final Order.

     SECTION 12.3.  Application of Proceeds.  All proceeds from each sale of, or
other realization upon, all or any part of the Collateral  following an Event of
Default shall be applied or paid over as follows:  (a) first:  to the payment of
all  costs  and  expenses  incurred  in  connection  with  such  sale  or  other
realization, including reasonable attorneys' fees, (b) second: to the payment of
the Secured  Obligations (with the Obligors remaining liable for any deficiency)
in accordance with Section 4.8(d),  and (c) third:  the balance (if any) of such
proceeds  shall be paid to the Obligors,  subject to any duty imposed by law, or
otherwise to whomsoever  shall be entitled  thereto.  The Obligors  shall remain
jointly and severally liable and will pay, on demand,  any deficiency  remaining
in respect of the Secured Obligations,  together with interest thereon at a rate
per annum equal to the  highest  rate then  payable  hereunder  on such  Secured
Obligations, which interest shall constitute part of the Secured Obligations.

     SECTION 12.4. Power of Attorney. In addition to the authorizations  granted
to the Agent under Section 8.13 or under any other  provision of this  Agreement
or of any other Loan  Document,  during the  continuance of an Event of Default,
each Obligor hereby irrevocably designates,

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makes,  constitutes  and appoints the Agent (and all Persons  designated  by the
Agent from time to time) as such Obligor's true and lawful  attorney,  and agent
in fact, and the Agent,  or any agent of the Agent,  may,  without notice to any
Obligor,  and at such time or times as the  Agent or any such  agent in its sole
discretion  may determine,  in the name of such Obligor,  another  Obligor,  the
Agent or the Lenders, (a) demand payment of the Receivables, (b) enforce payment
of the  Receivables by legal  proceedings or otherwise,  (c) exercise all of the
Obligors' rights and remedies with respect to the collection of Receivables, (d)
settle, adjust, compromise,  extend or renew any or all of the Receivables,  (e)
settle  adjust or  compromise  any legal  proceedings  brought  to  collect  the
Receivables,  (f)  discharge  and release the  Receivables  or any of them,  (g)
prepare,  file  and  sign  the  name of any  Obligor  on any  proof  of claim in
bankruptcy or any similar document against any Account Debtor, (h) prepare, file
and  sign  the  name  of any  Obligor  on any  notice  of  Lien,  assignment  or
satisfaction  of  Lien,  or  similar  document  in  connection  with  any of the
Collateral,  (i)  endorse  the  name of any  Obligor  upon  any  chattel  paper,
document,  instrument,  notice, freight bill, bill of lading or similar document
or agreement relating to the Receivables, the Inventory or any other Collateral,
(j) use the  stationery  of any  Obligor  and sign the  name of any  Obligor  to
verifications of the Receivables and on any notice to the Account  Debtors,  (k)
open the Obligors'  mail,  (l) notify the post office  authorities to change the
address  for  delivery of the  Obligors'  mail to an address  designated  by the
Agent,  and  (m)  use the  information  recorded  on or  contained  in any  data
processing  equipment  and  computer  hardware  and  software  relating  to  the
Receivables, Inventory or other Collateral to which any Obligor has access.

     SECTION 12.5. Miscellaneous Provisions Concerning Remedies.

     (a) Rights Cumulative. The rights and remedies of the Agent and the Lenders
under this  Agreement,  the Notes and each of the other Loan Documents  shall be
cumulative  and not  exclusive of any rights or remedies  which it or they would
otherwise have. In exercising such rights and remedies the Agent and the Lenders
may be  selective  and no  failure  or  delay  by the  Agent  or any  Lender  in
exercising  any right  shall  operate as a waiver of it, nor shall any single or
partial exercise of any power or right preclude its other or further exercise or
the exercise of any other power or right.

     (b) Waiver of  Marshaling.  Each Obligor hereby waives any right to require
any marshaling of assets and any similar right.

     (c)  Limitation  of  Liability.  Nothing  contained  in this  Article 12 or
elsewhere  in this  Agreement  or in any of the other  Loan  Documents  shall be
construed  as  requiring  or  obligating  the Agent,  any Lender or any agent or
designee of the Agent or any Lender to make any  demand,  or to make any inquiry
as to the nature or sufficiency of any payment  received by it, or to present or
file any claim or notice or take any action,  with respect to any  Receivable or
any other  Collateral  or the  monies  due or to  become  due  thereunder  or in
connection  therewith,  or to take any steps  necessary  to preserve  any rights
against prior parties,  and the Agent, the Lenders and their agents or designees
shall have no  liability  to the  Obligors  (or any of them) for  actions  taken
pursuant to this Article 12, any other provision of this Agreement or any of the
other Loan  Documents so long as the Agent or such Lender  shall act  reasonably
and in good faith.

     (d) Appointment of Receiver. In any action under this Article 12, the Agent
shall be  entitled  during  the  continuance  of an Event of Default to seek the
appointment  of a  receiver,  without  notice  of any kind  whatsoever,  to take
possession of all or any portion of the Collateral and to exercise such power as
the Court shall confer upon such receiver.

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                                   ARTICLE 13

                                   ASSIGNMENTS

     SECTION 13.1. Successors and Assigns; Participations.

     (a) This Agreement, the other Loan Documents, and all security interests or
Liens created  hereby or pursuant to any other Loan  Documents  shall be binding
upon Borrower,  the estate of Borrower, and any trustee or successor in interest
of  Borrower  in the  Chapter 11 Case or any  subsequent  case  commenced  under
Chapter 7 of the Bankruptcy Code, and shall not be subject to Section 365 of the
Bankruptcy  Code.  This Agreement and the other Loan Documents  shall be binding
upon, and inure to the benefit of, the Agent,  each Lender and Issuing Bank, and
their respective successors,  assigns,  transferees and endorsees.  The security
interests and Liens created in this Agreement and the other Loan Documents shall
remain valid and  perfected  in the event of the  substantive  consolidation  or
conversion of the Chapter 11 Case or any other  bankruptcy case of Borrower to a
case under Chapter 7 of the Bankruptcy  Code or in the event of dismissal of the
Chapter 11 Case or the release of any  Collateral  from the property of Borrower
or  jurisdiction  of the Court for any reason,  without the  necessity  that the
Agent file financing  statements or otherwise perfect the security  interests or
Liens of the Agent,  Lenders and Issuing Banks under  applicable law. No Obligor
may assign or transfer  any of its rights or  obligations  under this  Agreement
without the prior written consent of each Lender.

     (b) Each Lender may, with the Agent's  consent (and to the extent that such
assignment requires a change of any otherwise Applicable Interest Rate, with the
consent of the Borrower's  Agent),  assign to one or more Eligible Assignees all
or a portion of its  interests,  rights  and  obligations  under this  Agreement
(including  all or a portion  of the Loans at the time owing to it and the Notes
held by it);  provided,  however,  that (i) each such  assignment  shall be of a
constant, and not a varying, percentage of all the assigning Lender's rights and
obligations  under  this  Agreement,  (ii) the amount of the  Commitment  of the
assigning  Lender that is subject to each such assignment  (determined as of the
date the Assignment and Acceptance  with respect to such assignment is delivered
to the Agent)  shall in no event be less than the Minimum  Commitment,  (iii) in
the case of a partial assignment,  the amount of the Commitment that is retained
by the assigning Lender (determined as of the date the Assignment and Acceptance
with respect to such  assignment is delivered to the Agent) shall in no event be
less than the Minimum Commitment, (iv) the parties to each such assignment shall
execute  and  deliver to the Agent,  for its  acceptance  and  recording  in the
Register (as hereinafter  defined) an Assignment and  Acceptance,  together with
any Note or Notes subject to such  assignment,  (v) such  assignment  shall not,
without  the  consent of the  Borrowers'  Agent,  require  any Obligor to file a
registration  statement with the Securities and Exchange  Commission or apply to
or qualify the Loans or the Notes under the blue sky laws of any state, (vi) the
representation  contained  in Section  13.2 hereof shall be true with respect to
any such  proposed  assignee,  and (vii) the  parties to such  assignment  shall
deliver to the Agent a processing fee of $5,000. Upon such execution,  delivery,
acceptance  and  recording,  from and after the effective date specified in each
Assignment and Acceptance,  which effective date shall be at least five Business
Days after the execution thereof,  (x) the assignee  thereunder shall be a party
hereto and, to the extent provided in such  Assignment and Acceptance,  have the
rights  and  obligations  of a Lender  hereunder,  and (y) the  Lender  assignor
thereunder  shall, to the extent provided in such  assignment,  be released from
its obligations under this Agreement.

     (c) By executing and  delivering an Assignment and  Acceptance,  the Lender
assignor  thereunder and the assignee  thereunder confirm to and agree with each
other and the other parties

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hereto as follows: (i) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim,  such Lender assignor 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 the execution,
legality, validity,  enforceability,  genuineness,  sufficiency or value of this
Agreement or any other instrument or document  furnished  pursuant hereto;  (ii)
such  Lender  assignor  makes no  representation  or  warranty  and  assumes  no
responsibility  with respect to the financial  condition of the Obligors (or any
of them) or the  performance  or  observance by the Obligors (or any of them) of
any of their obligations under this Agreement or any other Loan Document;  (iii)
such assignee  confirms that it has received a copy of this Agreement,  together
with copies of the financial  statements  referred to in Section 6.1(n) and such
other  documents and  information  as 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 Agent,  such
Lender assignor or any other Lender, and based on such documents and information
as it shall  deem  appropriate  at the  time,  continue  to make its own  credit
decisions in taking or not taking action under this Agreement; (v) such assignee
confirms  that it is an  Eligible  Assignee;  (vi) 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  thereto;  and (vii) such  assignee  agrees  that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.

     (d) The Agent  shall  maintain  a copy of each  Assignment  and  Acceptance
delivered to it and a register for the recordation of the names and addresses of
the Lenders and the Commitment  Percentage of, and principal amount of the Loans
owing to,  each Lender  from time to time (the  "Register").  The entries in the
Register  shall  be  conclusive,  in the  absence  of  manifest  error,  and the
Obligors, 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 Obligors or any Lender at any
reasonable time and from time to time upon reasonable prior notice.

     (e) Upon  its  receipt  of an  Assignment  and  Acceptance  executed  by an
assigning  Lender  and an  Eligible  Assignee  together  with  any Note or Notes
subject  to such  assignment,  the fee  described  in  clause  (vii) of  Section
13.1(b),  and the  written  consent of the Agent to such  assignment,  the Agent
shall,  if such  Assignment and Acceptance has been completed and is in the form
of  Exhibit  A, (i) accept  such  Assignment  and  Acceptance,  (ii)  record the
information contained therein in the Register,  (iii) give prompt notice thereof
to the Lenders and the  Borrowers'  Agent,  and (iv) promptly  deliver a copy of
such  Assignment and Acceptance to the  Borrowers'  Agent.  Within five Business
Days after  receipt of notice,  the  Borrowers  shall execute and deliver to the
Agent in exchange for the  surrendered  Note or Notes a new Note or Notes to the
order of such Eligible  Assignee in amounts equal to the  Commitment  Percentage
assumed by such Eligible Assignee pursuant to such Assignment and Acceptance and
a new Note or Notes to the order of the  assigning  Lender in an amount equal to
the Commitment  retained by it hereunder.  Such new Note or Notes shall be in an
aggregate  principal  amount  equal to the  aggregate  principal  amount of such
surrendered Note or Notes,  shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially  the form of the assigned
Notes delivered to the assignor Lender.  Each surrendered Note or Notes shall be
cancelled and returned to the Borrowers' Agent.

                                       93
<PAGE>

     (f)  Each  Lender  may,   without  the  consent  of  the   Obligors,   sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations  under this Agreement  (including all or a portion of its
commitments  hereunder  and the  Loans  owing to it and the  Notes  held by it);
provided,  however,  that (i) each such participation  shall be in an amount not
less than the Minimum  Commitment,  (ii) such  Lender's  obligations  under this
Agreement  (including its commitments  hereunder) shall remain unchanged,  (iii)
such Lender shall remain solely  responsible to the other parties hereto for the
performance of such obligations, (iv) such Lender shall remain the holder of the
Notes held by it for all purposes of this Agreement, (v) the Obligors, 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;  provided,  that such Lender may agree with any participant that such
Lender will not,  without such  participant's  consent,  agree to or approve any
waivers or  amendments  which would reduce the principal of or the interest rate
on any Loans,  extend the term or increase the amount of the commitments of such
participant,  reduce  the  amount  of any  fees to  which  such  participant  is
entitled,  extend any scheduled payment date for principal or release Collateral
securing  the Loans (other than  Collateral  disposed of pursuant to Section 8.7
hereof  or  otherwise  in  accordance  with the terms of this  Agreement  or the
Security  Documents),  and (vi) any such  disposition  shall  not,  without  the
consent of the  Borrowers'  Agent,  require any  Obligor to file a  registration
statement with the  Securities  and Exchange  Commission to apply to qualify the
Loans or the Notes  under the blue sky law of any state.  Any  Lender  selling a
participation  to any  bank or other  entity  that is not an  Affiliate  of such
Lender shall give prompt notice thereof to the Borrowers' Agent.

     (g) Any Lender may, in connection with any assignment, proposed assignment,
participation or proposed  participation pursuant to this Section 13.1, disclose
to the assignee,  participant,  proposed assignee or proposed  participant,  any
information  relating to the Obligors and their  Subsidiaries  furnished to such
Lender  by or on  behalf  of the  Obligors;  provided  that,  prior  to any such
disclosure,  each such  assignee,  proposed  assignee,  participant  or proposed
participant  shall agree with the Obligors or such Lender  (which in the case of
an agreement with only such Lender,  the Obligors shall be recognized as a third
party beneficiary  thereof) to preserve the  confidentiality of any confidential
information  relating to the Obligors and their Subsidiaries  received from such
Lender.

     (h)  Notwithstanding  any other provision set forth in this Agreement,  any
Lender may at any time assign and pledge all or any portion of its Loans and its
Note to any Federal Reserve Bank as collateral security pursuant to Regulation A
and  any  Operating  Circular  issued  by such  Federal  Reserve  Bank.  No such
assignment shall release the assigning Lender from its obligations hereunder.

     SECTION 13.2. Representation of Lenders. Each Lender hereby represents that
it will make each Loan hereunder as a commercial loan for its own account in the
ordinary course of its business; provided, however, that subject to Section 13.1
hereof,  the  disposition  of  the  Notes  or  other  evidence  of  the  Secured
Obligations  held by any  Lender  shall at all  times be  within  its  exclusive
control.

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<PAGE>

                                   ARTICLE 14

                                      AGENT

     SECTION 14.1.  Appointment of Agent. Each of the Lenders hereby irrevocably
designates  and appoints  Bank of America as the agent of such Lender under this
Agreement  and the  other  Loan  Documents,  and each  such  Lender  irrevocably
authorizes  the Agent,  as the agent for such  Lender to take such action on its
behalf under the  provisions of this  Agreement and the other Loan Documents and
to exercise  such powers and perform such duties as are  expressly  delegated to
the  Agent  by the  terms  of this  Agreement  and such  other  Loan  Documents,
including  to  make  determinations  as to  the  eligibility  of  Inventory  and
Receivables  and to adjust the advance  ratios  contained in the  definition  of
"Borrowing  Base" (so long as such advance  ratios,  as adjusted,  do not exceed
those set forth in the definition of "Borrowing Base"), together with such other
powers as are reasonably  incidental  thereto.  Notwithstanding any provision to
the contrary elsewhere in this Agreement or such other Loan Documents, the Agent
shall not have any duties or responsibilities,  except those expressly set forth
herein and  therein,  or any  fiduciary  relationship  with any  Lender,  and no
implied  covenants,   functions,   responsibilities,   duties,   obligations  or
liabilities  shall be read into this  Agreement  or the other Loan  Documents or
otherwise exist against the Agent.

     SECTION 14.2. Delegation of Duties. The Agent may execute any of its duties
under this  Agreement  and the other  Loan  Documents  by or  through  agents or
attorneys-in-fact  and shall be  entitled  to advice of counsel  concerning  all
matters  pertaining to such duties.  The Agent shall not be responsible  for the
negligence or misconduct of any agents or attorneys-in-fact  selected by it with
reasonable care.

     SECTION  14.3.  Exculpatory  Provisions.  Neither  the Agent nor any of its
trustees,  officers,   directors,   employees,   agents,   attorneys-in-fact  or
Affiliates shall (a) be liable to any Lender (or any Lender's  participants) for
any action  lawfully  taken or omitted to be taken by it or such Person under or
in connection with this Agreement or the other Loan Documents (except for its or
such Person's own gross negligence or willful misconduct), (b) be responsible in
any  manner to any  Lender  (or any  Lender's  participants)  for any  recitals,
statements,  representations  or warranties made by the Obligors or any of their
Subsidiaries  or any officer  thereof  contained in this  Agreement or the other
Loan  Documents  or in any  certificate,  report,  statement  or other  document
referred to or provided for in, or received by the Agent under or in  connection
with,  this Agreement or the other Loan Documents,  or for the value,  validity,
effectiveness,  genuineness,  enforceability or sufficiency of this Agreement or
the other Loan  Documents  or for any  failure of the  Obligors  or any of their
Subsidiaries to perform their obligations  hereunder or thereunder,  or (c) have
any  obligation  whatsoever to any of the Lenders to assure that the  Collateral
exists or is owned by any Obligor 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 the 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, the Agent may act in
any manner it may deem  appropriate,  in its sole discretion,  given the Agent's
own  interest in the  Collateral  in its capacity as one of the Lenders and that
the Agent shall have no other duty or liability  whatsoever  to any Lender as to
any of the foregoing;  provided that the foregoing  clause (c) shall not relieve
the  Agent  of  liability  with  respect  to its  gross  negligence  or  willful
misconduct.  The  Agent  shall  not be under  any  obligation  to any  Lender to
ascertain  or to  inquire  as to the  observance  or  performance  of any of the
agreements  contained in, or conditions  of, this  Agreement,  or to inspect the
properties, books or records of the Obligors or any of their Subsidiaries.

     SECTION 14.4.  Reliance by Agent.  The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation

                                       95
<PAGE>

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  Borrowers or any of its  Subsidiaries),  independent
accountants  and other  experts  selected  by the Agent.  The Agent may deem and
treat the payee of any Note as the owner  thereof for all  purposes  unless such
Note shall have been  transferred  in accordance  with Section  13.1.  The Agent
shall be fully  justified  in failing or refusing to take any action  under this
Agreement and the other Loan Documents unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its  satisfaction by the Lenders against any and all liability
and expense  which may be incurred  by it by reason of taking or  continuing  to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining  from acting,  under this Agreement and the Notes in accordance
with a request of the Required Lenders, and such request and any action taken or
failure to act  pursuant  thereto  shall be binding upon all the Lenders and all
future holders of the Notes.

     SECTION  14.5.  Notice of  Default.  The Agent  shall not be deemed to have
knowledge  or  notice  of the  occurrence  of any  Default  or Event of  Default
hereunder  unless the Agent has received  notice from a Lender or the Borrowers'
Agent referring to this  Agreement,  describing such Default or Event of Default
and  stating  that such notice is a "notice of  default".  In the event that the
Agent  receives such a notice,  the Agent shall  promptly give notice thereof to
the  Lenders.  The Agent shall take such action with  respect to such Default or
Event of  Default  as shall be  reasonably  directed  by the  Required  Lenders;
provided that unless and until the Agent shall have  received  such  directions,
the Agent may (but shall not be obligated to) continue making Revolving Loans to
the Borrowers on behalf of the Lenders in reliance on the  provisions of Section
4.7 and take such other action, or refrain from taking such action, with respect
to such  Default  or Event of Default  as it shall  deem  advisable  in the best
interests of the Lenders.

     SECTION  14.6.  Non-Reliance  on  Agent  and  Other  Lenders.  Each  Lender
expressly  acknowledges  that  neither  the  Agent  nor  any  of  its  officers,
directors,  employees,  agents,  attorneys-in-fact  or  Affiliates  has made any
representations  or  warranties  to it and that no act by the Agent  hereinafter
taken,   including  any  review  of  the  affairs  of  the  Obligors  and  their
Subsidiaries,  shall be deemed to constitute any  representation  or warranty by
the Agent to any  Lender.  Each  Lender  represents  to the  Agent  that it has,
independently and without reliance upon the Agent or any other Lender, and based
on such  documents and  information as it has deemed  appropriate,  made its own
appraisal  of  and  investigation  into  the  business,  operations,   property,
financial  and other  condition and  creditworthiness  of the Obligors and their
Subsidiaries  and made its own  decision to make its Loans  hereunder  and enter
into this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem  appropriate at the time,  continue to make its
own credit  analysis,  appraisals  and  decisions in taking or not taking action
under  this  Agreement  and  the  other  Loan   Documents,   and  to  make  such
investigation  as it  deems  necessary  to  inform  itself  as to the  business,
operations,  property, financial and other condition and creditworthiness of the
Obligors and their Subsidiaries. Except for notices, reports and other documents
expressly  required to be furnished to the Lenders by the Agent  hereunder or by
the other Loan Documents, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations,  property,  financial and other condition or creditworthiness of the
Obligors and their  Subsidiaries which may come into the possession of the Agent
or any of its  officers,  directors,  employees,  agents,  attorneys-in-fact  or
Affiliates.

     SECTION 14.7. Indemnification.  The Lenders agree to indemnify the Agent in
its capacity as such (to the extent not  reimbursed  by the Obligors and without
limiting the  obligation of the Obligors to do so),  ratably  according to their
respective  Commitment  Percentages,  from and against any and all  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses  or

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<PAGE>

disbursements  of any kind  whatsoever  which may at any time  (including at any
time following the payment of the Notes) be imposed on,  incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement or the
other Loan Documents,  or any documents contemplated by or referred to herein or
therein or the transactions  contemplated  hereby or thereby or any action taken
or  omitted  by the  Agent  under or in  connection  with any of the  foregoing;
provided  that no Lender  shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses  or  disbursements  resulting  solely  from the  Agent's  gross
negligence  or willful  misconduct  or  resulting  solely from  transactions  or
occurrences  that  occur at a time after such  Lender  has  assigned  all of its
interests,  rights and obligations under this Agreement pursuant to Section 13.1
or, in the case of a Lender to which an assignment is made hereunder pursuant to
Section  13.1,  at a  time  before  such  assignment.  The  agreements  in  this
subsection shall survive the payment of the Notes,  the Secured  Obligations and
all other amounts payable hereunder and the termination of this Agreement.

     SECTION  14.8.  Agent  in  Its  Individual  Capacity.  The  Agent  and  its
Affiliates may make loans to, accept  deposits from and generally  engage in any
kind of business with the Obligors and their  Subsidiaries  as if the Agent were
not the Agent  hereunder.  With  respect  to its  Commitment,  the Loans made or
renewed by it and any Note  issued to it and any Letter of Credit  issued by it,
the Agent  shall have and may  exercise  the same  rights and powers  under this
Agreement and the other Loan  Documents  and is subject to the same  obligations
and  liabilities  as and to the  extent  set forth  herein and in the other Loan
Documents for any other Lender. The terms "Lenders" or "Required Lenders" or any
other term shall,  unless the context clearly otherwise  indicates,  include the
Agent in its individual capacity as a Lender or one of the Required Lenders.

     SECTION 14.9.  Successor Agent. The Agent may resign as Agent upon five (5)
days written notice to the Lenders and the Borrowers' Agent; provided,  however,
that such  resignation  shall not take effect  until a successor  agent has been
appointed.  If the Agent shall  resign as Agent under this  Agreement,  then the
Required  Lenders shall appoint from among the Lenders a successor agent for the
Lenders which successor  agent shall be approved by the Borrowers'  Agent (which
approval shall not be  unreasonably  withheld),  whereupon such successor  agent
shall  succeed to the  rights,  powers  and  duties of the  Agent,  and the term
"Agent" shall mean such successor agent effective upon its appointment,  and the
former Agent's rights,  powers and duties as Agent shall be terminated,  without
any other or further act or deed on the part of such former  Agent or any of the
parties to this Agreement or any holders of the Notes.  If the Required  Lenders
have  failed to appoint a  successor  agent  within  thirty  (30) days after the
resignation notice given by the Agent as provided above, then the Agent shall be
entitled to appoint a successor agent from among the Lenders.  After any Agent's
resignation  hereunder as Agent, the provisions of Article 14 shall inure to its
benefit as to any actions  taken or omitted to be taken by it while it was Agent
under this Agreement.

     SECTION  14.10.  Notices from Agent to Lenders.  The Agent shall  promptly,
upon the written  request from any Lender,  forward to each Lender copies of any
written notices, reports or other information supplied to it by the Borrowers or
other  Obligors (but which the  Borrowers or other  Obligors are not required to
supply directly to the Lenders).

     SECTION  14.11.  Field  Examination  Reports;  Disclaimer by Lenders.  Each
Lender:  (a) is deemed to have  requested  that the Agent  furnish  such Lender,
promptly after it becomes  available,  a copy of each field  examination  report
(each a  "Report"  and  collectively,  "Reports")  prepared  by the Agent or its
agents; (b) expressly agrees and acknowledges that neither the Agent nor Bank of
America makes any representation or warranty as to the accuracy of any Report or
shall be liable for any  information  contained  in any  Report;  (c)  expressly
agrees  and  acknowledges  that the  Reports  are not  comprehensive  audits  or
examinations,  that the Agent or other party performing any audit or examination
will  inspect only  specific  information  regarding  the Obligors and will rely
significantly   upon  the

                                       97
<PAGE>

Obligors'  books and records,  as well as on  representations  of the  Obligors'
personnel;  (d) agrees to keep all Reports  confidential  and  strictly  for its
internal  use, and not to  distribute  (except to its  participants)  or use any
Report in any other manner; and (e) without limiting the generality of any other
indemnification  provision  contained in this Agreement,  agrees (i) to hold the
Agent and Bank of America harmless from any action the  indemnifying  Lender may
take or 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 the  Obligors,  or the  indemnifying  Lender's
participation in Letters of Credit, and (ii) to pay and protect,  and indemnify,
defend and hold the Agent and Bank of America  harmless  from and  against,  the
claims,  actions,  proceedings,  damages,  costs,  expenses  and  other  amounts
(including, without limitation reasonable attorneys' fees) incurred by the Agent
and Bank of America as the direct or  indirect  result of any third  parties who
might obtain all or part of any Report through the indemnifying Lender.

                                   ARTICLE 15

                                    GUARANTEE

     SECTION  15.1.  Guarantee.  The  Guarantors  hereby  jointly and  severally
guarantee to the Agent and the other  Secured  Creditors  the prompt  payment in
full when due (whether at stated maturity,  by acceleration or otherwise) of the
Loans and all of the other Secured Obligations, including any interest, fees and
expenses  accrued or incurred  after the filing by or against any Obligor of any
petition  seeking  relief in  bankruptcy  or under any act or law  pertaining to
insolvency  or debtor  relief,  regardless  of whether such  interest,  fees and
expenses are allowable in any such  proceeding  (collectively,  the  "Guaranteed
Obligations"),  in each  case  strictly  in  accordance  with the  terms of this
Agreement and the other Loan  Documents.  The Guarantors  hereby further jointly
and  severally  agree  that if any  Borrower  shall fail to pay in full when due
(whether at stated maturity, by acceleration or otherwise) any of the Guaranteed
Obligations,  the Guarantors  will promptly pay the same,  without any demand or
notice  whatsoever,  and that in the case of any extension of time of payment or
renewal of any of the Guaranteed Obligations,  the same will be promptly paid in
full when due (whether at extended  maturity,  by  acceleration or otherwise) in
accordance with the terms of such extension or renewal.

     SECTION 15.2. Obligations Unconditional.  The obligations of the Guarantors
hereunder are absolute and unconditional, joint and several, irrespective of the
value, genuineness, validity, regularity or enforceability of the obligations of
the  Borrowers   under  this  Agreement  or  any  other  Loan  Document  or  any
substitution,  release or exchange of any other guarantee of or security for any
of  the  Guaranteed  Obligations,  and,  to  the  fullest  extent  permitted  by
Applicable  Law,  irrespective of any other  circumstance  whatsoever that might
otherwise  constitute a legal or  equitable  discharge or defense of a surety or
guarantor,  it being the intent of this Section 15.2 that the obligations of the
Guarantors hereunder shall be absolute and unconditional, and joint and several,
under all circumstances. Without limiting the generality of the foregoing, it is
agreed  that  each  Guarantor's  obligations  hereunder  shall be  absolute  and
unconditional irrespective of: (a) any lack of validity or enforceability of any
Loan Document or any other  agreement or instrument  relating  thereto;  (b) any
change in the time, manner or place of payments of, or in any other term of, all
or any part of the  Guaranteed  Obligations,  or any other  amendment  or waiver
thereof or any consent to  departure  therefrom,  including  any increase in the
Guaranteed  Obligations resulting from the extension of additional credit to any
Borrower or otherwise;  (c) any taking,  exchange,  release or non-perfection of
any collateral, or any release or amendment or waiver of or consent to departure
from any guaranty for all or any of the Guaranteed Obligations;  (d) any change,
restructuring  or  termination  of the  corporate  structure or existence of any
Obligor;  or (e) any other  circumstance  which  might  otherwise  constitute  a
defense available to, or a discharge of, any Guarantor.

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<PAGE>

     SECTION 15.3. Waiver of Suretyship Defenses. Each Guarantor agrees that the
joint and several liability of the Guarantors provided for in Section 15.1 shall
not be  impaired  or  affected by any  modification,  supplement,  extension  or
amendment or any contract or agreement to which the other Obligors may hereafter
agree (other than an agreement signed by the Agent and the Lenders  specifically
releasing  such  liability),  nor by any  delay,  extension  of  time,  renewal,
compromise or other  indulgence  granted by the Agent or any Lender with respect
to  any  of  the  Guaranteed  Obligations,   nor  by  any  other  agreements  or
arrangements  whatever  with  the  other  Obligors  or with  anyone  else,  each
Guarantor  hereby  waiving  all  notice  of  such  delay,  extension,   release,
substitution,  renewal, compromise or other indulgence, and hereby consenting to
be bound thereby as fully and effectually as if it had expressly  agreed thereto
in advance.  The liability of each Guarantor is direct and  unconditional  as to
all of the Guaranteed  Obligations,  and may be enforced  without  requiring the
Agent or any Lender first to resort to any other right, remedy or security. Each
Guarantor hereby expressly waives  promptness,  diligence,  notice of acceptance
and any other notice (except to the extent  expressly  provided for herein or in
another Loan Document) with respect to any of the Guaranteed  Obligations,  this
Agreement or any other Loan Document and any  requirement  that the Agent or any
Lender  protect,  secure,  perfect  or insure any Lien or any  property  subject
thereto or exhaust  any right or take any action  against  any  Borrower  or any
other Person or any collateral, including any rights any Guarantor may otherwise
have under  O.C.G.A.  ss.  10-7-24  or any  successor  statute or any  analogous
statute  in  any  jurisdiction   under  the  laws  of  which  any  Guarantor  is
incorporated or in which any Guarantor conducts business.

     SECTION 15.4.  Reinstatement.  The obligations of the Guarantors  hereunder
shall be  automatically  reinstated if and to the extent that for any reason any
payment  by or on behalf of any  Obligor  in  respect  of any of the  Guaranteed
Obligations  is rescinded or must be otherwise  restored by any holder of any of
the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy
or reorganization or otherwise,  and the Guarantors  jointly and severally agree
that they will  indemnify  each of the Agent and the  Lenders  on demand for all
reasonable costs and expenses  (including fees of counsel) incurred by the Agent
and the Lenders in connection with such rescission or restoration, including any
such costs and expenses  incurred in defending  against any claim  alleging that
such payment  constituted a preference,  fraudulent  transfer or similar payment
under any bankruptcy, insolvency or similar law.

     SECTION 15.5. Remedies. The Guarantors jointly and severally agree that, as
between the Guarantors and the Agent and the Lenders, the Guaranteed Obligations
may be declared to be forthwith due and payable as provided herein (and shall be
deemed  to have  become  automatically  due  and  payable  in the  circumstances
provided herein) for purposes hereof,  notwithstanding  any stay,  injunction or
other  prohibition  preventing such declaration (or such Guaranteed  Obligations
from becoming  automatically  due and payable) as against any Borrower and that,
in the event of such declaration (whether or not the Guaranteed  Obligations are
then  due  and  payable  by any  Borrower),  the  Guaranteed  Obligations  shall
forthwith become due and payable by the Guarantors for purposes hereof.

     SECTION  15.6.  Continuing  Guaranty.  The  guaranty  set forth herein is a
continuing guaranty, and shall apply to all Guaranteed Obligations, whenever and
howsoever arising.

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<PAGE>

                                   ARTICLE 16

                                  MISCELLANEOUS

     SECTION 16.1. Notices.

     (a)  Method of  Communication.  Except  as  specifically  provided  in this
Agreement  or  in  any  of  the  other  Loan  Documents,  all  notices  and  the
determinations,  elections,  requests or similar  communications  hereunder  and
thereunder  shall be in  writing  or by  telephone,  subsequently  confirmed  in
writing. Notices, determinations,  elections, requests or similar communications
in writing  shall be delivered  personally  or sent by  certified or  registered
mail, postage pre-paid, or by overnight courier, telex or facsimile transmission
and shall be deemed received in the case of personal  delivery,  when delivered,
in the case of mailing,  when receipted for, in the case of overnight  delivery,
on the next Business Day after delivery to the courier, and in the case of telex
and  facsimile  transmission,  upon  transmittal,  provided  that in the case of
notices to the Agent,  notice  shall be deemed to have been given only when such
notice is actually  received by the Agent. A telephonic  notice to the Agent, as
understood by the Agent,  will be deemed to be the controlling and proper notice
in the event of a  discrepancy  with or failure to receive a confirming  written
notice.

     (b) Addresses for Notices.  Notices to any party shall be sent to it at the
following  addresses,  or any other  address of which all the other  parties are
notified in writing:

      If to a Borrower or         Safety Components International, Inc.
      any other Obligor:          as Borrowers' Agent
                                  Corporate Center
                                  40 Emery Street
                                  Greenville, South Carolina  29605
                                  Attn:  Mr. Brian P. Menezes, CFO
                                  Fax:  864-240-2726

      with a courtesy copy to:    Luc A. Despins, Esq.
                                  Milbank,  Tweed,  Hadley  &
                                  McCloy    LLP    1    Chase
                                  Manhattan  Plaza  New York,
                                  New  York  10005-1413  Fax:
                                  212-530-5219

      If to the Agent:            Bank of America, N.A.
                                  13th Floor
                                  600 Peachtree Street
                                  Atlanta, Georgia  30308
                                  Attn:  Bob Walker
                                  Fax No.: 404-607-6281

                                      100
<PAGE>

      with a courtesy copy to:    Paul, Hastings, Janofsky & Walker LLP
                                  Suite 2400
                                  600 Peachtree Street
                                  Atlanta, Georgia  30308-2216
                                  Attn:  Jesse H. Austin, III, Esq.
                                  Fax No.:  404-815-2424

      If to a Lender:             At the address of such Lender set forth on the
                                  signature page hereof.

     (a) Agent's Office.  The Agent hereby designates its office located at 30th
Floor,  101  South  Tryon  Street,  Charlotte,  North  Carolina  28255,  or  any
subsequent  office which shall have been  specified  for such purpose by written
notice to the  Borrowers'  Agent,  as the office to which payments due are to be
made and at which Loans will be disbursed.

     SECTION 16.2. Expenses.  The Obligors jointly and severally agree to pay or
reimburse on demand all costs and expenses incurred by the Agent,  including the
reasonable fees and disbursements of counsel or any third-party professional, in
connection  with  (a)  the  negotiation,   preparation,   execution,   delivery,
administration,  syndication,  enforcement and termination of this Agreement and
each of the other  Loan  Documents,  whenever  the same  shall be  executed  and
delivered,  including  (i) the actual costs and expenses  incurred in connection
with the  administration,  syndication and  interpretation of this Agreement and
the other Loan  Documents;  (ii) the actual costs and expenses of  appraisals of
the Collateral;  (iii) the actual costs and expenses of lien searches;  and (iv)
all taxes,  fees and other  charges for  recording  the Mortgages and filing the
Financing  Statements  and  continuations,  and the costs and expenses of taking
other actions to perfect,  protect, and continue the Security Interests; (b) the
actual costs and expenses incurred in connection with preparation, execution and
delivery of any waiver,  amendment,  supplement  or consent by the Agent and the
Lenders relating to this Agreement or any of the other Loan Documents;  (c) sums
paid or incurred to pay any amount or take any action  required of the  Obligors
under the Loan  Documents  that the Obligors  fails to pay or take; (d) costs of
inspections and  verifications  of the Collateral,  including  standard per diem
fees charged by the Agent and all reasonable  out-of-pocket expenses for travel,
lodging and meals in  connection  with  inspections  of the  Collateral  and the
Obligors' operations and books and records by the Agent's employees or agents up
to four times per year and  whenever an Event of Default  exists;  (e) costs and
expenses  of  forwarding  loan  proceeds,  collecting  checks and other items of
payment,  and  establishing and maintaining each  Disbursement  Account,  Agency
Account and Lockbox;  (f) costs and expenses of preserving  and  protecting  the
Collateral;  (g) the actual costs and expenses  incurred in connection  with the
Chapter 11 Case; and (h) consulting, after the occurrence of a Default, with one
or more Persons, including appraisers,  accountants and lawyers,  concerning the
value of any  Collateral  for the Secured  Obligations or related to the nature,
scope or value of any right or remedy of the Agent or any  Lender  hereunder  or
under any of the other Loan  Documents,  including any review of factual matters
in connection  therewith,  which expenses shall include the reasonable  fees and
disbursements of such Persons.

     The Obligors  further  jointly and  severally  agree to pay or reimburse on
demand all costs and  expenses  incurred by the Agent,  the Issuing Bank and the
Lenders, including the reasonable fees and disbursements of counsel, experts and
other  consultants to the Agent, the Issuing Bank and any Lender,  in connection
with (a) any Default or Event of Default or any modification, amendment, waiver,
restructuring  or  forbearance  with  respect  to any of the Loan  Documents  in
connection  with such Default or Event of Default,  and (b) after the occurrence
of an Event of  Default,  any  actions  taken to obtain  payment of the  Secured
Obligations,  enforce the Security Interests, sell or otherwise realize upon the
Collateral,  and otherwise  enforce the provisions of the Loan Documents,  or to
prosecute or defend any claim in any way

                                      101
<PAGE>

arising out of, related to or connected with, this Agreement or any of the other
Loan Documents (except to the extent such reimbursement may be prohibited by the
terms of the Final  Order).  Additionally,  the Obligors  jointly and  severally
agree to pay or  reimburse  on demand  all costs and  expenses  incurred  by the
Lenders,  including  the  reasonable  fees  and  disbursements  of  counsel,  in
connection with the review of this Agreement and the other Loan Documents.

The foregoing  shall not be construed to limit any other  provisions of the Loan
Documents regarding costs and expenses to be paid by the Obligors. Each Borrower
hereby  authorizes  the Agent and the  Lenders  to debit  such  Borrower's  Loan
Accounts (by  increasing  the principal  amount of the  Revolving  Loans) in the
amount of any such costs and expenses owed by the  Borrowers and other  Obligors
when due.

     SECTION  16.3.  Stamp and Other Taxes.  The Obligors  jointly and severally
agree to pay any and all stamp,  registration,  recordation  and similar  taxes,
fees or charges,  and shall  jointly and  severally  indemnify the Agent and the
Lenders  against any and all  liabilities  with respect to or resulting from any
delay in the payment or omission to pay any such taxes,  fees or charges,  which
may be payable or  determined to be payable in  connection  with the  execution,
delivery, performance or enforcement of this Agreement and any of the other Loan
Documents  or the  perfection  of any rights or  security  interest  thereunder,
including the Security Interest.

     SECTION 16.4.  Setoff.  In addition to any rights now or hereafter  granted
under Applicable Law and not by way of limitation of any such rights, during the
continuance  of any Event of Default,  each Lender,  any  participant  with such
Lender in the Loans and each  Affiliate of each Lender are hereby  authorized by
each Obligor at any time or from time to time,  without notice to any Obligor or
to any other Person,  any such notice being hereby expressly  waived,  to setoff
and to  appropriate  and to apply  any and all  deposits  (general  or  special,
including indebtedness evidenced by certificates of deposit,  whether matured or
unmatured) and any other indebtedness at any time held or owing by any Lender or
any  Affiliate  of any  Lender or any  participant  to or for the  credit or the
account  of any  Obligor  against  and on  account  of the  Secured  Obligations
irrespective  or whether or not (a) the Agent or such Lender shall have made any
demand under this Agreement or any of the other Loan Documents, or (b) the Agent
or such Lender shall have declared any or all of the Secured  Obligations  to be
due and  payable  as  permitted  by  Section  12.2  and  although  such  Secured
Obligations shall be contingent or unmatured.  Each Lender acknowledges that the
provisions of this Section shall, as between such Lender and the Agent and other
Lenders, be subject to the provisions of Section 16.24.

     SECTION 16.5. Litigation. THE OBLIGORS, THE AGENT, THE ISSUING BANK AND THE
LENDERS HEREBY  KNOWINGLY,  INTENTIONALLY AND VOLUNTARILY WAIVE TRIAL BY JURY IN
ANY ACTION OR  PROCEEDING  OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION
MAY BE COMMENCED BY OR AGAINST THE  OBLIGORS  (OR ANY OF THEM),  THE AGENT,  THE
ISSUING BANK OR THE LENDERS ARISING OUT OF THIS AGREEMENT, THE COLLATERAL OR ANY
ASSIGNMENT THEREOF OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN
THE OBLIGORS  (OR ANY OF THEM) AND THE AGENT,  THE ISSUING BANK OR ANY LENDER OF
ANY KIND OR NATURE.  THE OBLIGORS,  THE AGENT,  THE ISSUING BANK AND THE LENDERS
HEREBY AGREE THAT THE FEDERAL COURT OF DISTRICT OF DELAWARE OR, AT THE OPTION OF
THE AGENT,  THE ISSUING  BANK OR ANY LENDER,  ANY COURT IN WHICH THE AGENT,  THE
ISSUING BANK OR SUCH LENDER SHALL  INITIATE LEGAL OR EQUITABLE  PROCEEDINGS  AND
WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY, SHALL HAVE
NONEXCLUSIVE  JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES  BETWEEN
THE  OBLIGORS  (OR ANY OF THEM) AND THE AGENT,  THE ISSUING BANK OR SUCH LENDER,
PERTAINING  DIRECTLY OR INDIRECTLY TO THIS AGREEMENT

                                      102
<PAGE>

OR THE OTHER LOAN  DOCUMENTS OR TO ANY MATTER  ARISING  THEREFROM.  EACH OBLIGOR
EXPRESSLY  SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
PROCEEDING  COMMENCED IN SUCH COURTS,  HEREBY  WAIVING  PERSONAL  SERVICE OF THE
SUMMONS AND  COMPLAINT,  OR OTHER PROCESS OR PAPERS ISSUED  THEREIN AND AGREEING
THAT  SERVICE OF SUCH SUMMONS AND  COMPLAINT  OR OTHER  PROCESS OR PAPERS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL  ADDRESSED TO THE  BORROWERS'  AGENT AT THE
ADDRESS OF THE  OBLIGORS SET FORTH IN SECTION  16.1.  SHOULD ANY OBLIGOR FAIL TO
APPEAR OR ANSWER ANY  SUMMONS,  COMPLAINT,  PROCESS  OR PAPERS SO SERVED  WITHIN
THIRTY (30) DAYS AFTER THE MAILING THEREOF, IT SHALL BE DEEMED IN DEFAULT AND AN
ORDER  AND/OR  JUDGMENT  MAY BE ENTERED  AGAINST IT AS DEMANDED OR PRAYED FOR IN
SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE NONEXCLUSIVE CHOICE OF FORUM SET
FORTH IN THIS  SECTION  SHALL NOT BE DEEMED TO PRECLUDE THE  ENFORCEMENT  OF ANY
JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT
TO ENFORCE SAME IN ANY APPROPRIATE JURISDICTION.

     SECTION   16.6.   Waiver  of  Rights.   EACH  OBLIGOR   HEREBY   KNOWINGLY,
INTENTIONALLY  AND  VOLUNTARILY  WAIVES ALL RIGHTS  WHICH SUCH OBLIGOR HAS UNDER
CHAPTER 14 OF TITLE 44 OF THE  OFFICIAL  CODE OF  GEORGIA  OR UNDER ANY  SIMILAR
PROVISION OF  APPLICABLE  LAW TO NOTICE AND TO A JUDICIAL  HEARING  PRIOR TO THE
ISSUANCE  OF A WRIT OF  POSSESSION  ENTITLING  THE AGENT OR ANY  LENDER,  OR THE
SUCCESSORS  AND  ASSIGNS  OF THE  AGENT  OR SUCH  LENDER  TO  POSSESSION  OF THE
COLLATERAL  UPON AN EVENT OF DEFAULT.  WITHOUT  LIMITING THE  GENERALITY  OF THE
FOREGOING  AND WITHOUT  LIMITING  ANY OTHER RIGHT WHICH THE AGENT OR THE LENDERS
MAY HAVE, EACH OBLIGOR CONSENTS THAT IF THE AGENT OR ANY LENDER FILES A PETITION
FOR AN IMMEDIATE  WRIT OF POSSESSION IN COMPLIANCE  WITH SECTIONS  44-14-261 AND
44-14-262  OF THE  OFFICIAL  CODE OF GEORGIA OR UNDER ANY SIMILAR  PROVISION  OF
APPLICABLE LAW, AND THIS WAIVER OR A COPY HEREOF IS ALLEGED IN SUCH PETITION AND
ATTACHED  THERETO,  THE COURT BEFORE  WHICH SUCH  PETITION IS FILED MAY DISPENSE
WITH ALL  RIGHTS  AND  PROCEDURES  HEREIN  WAIVED  AND MAY  ISSUE  FORTHWITH  AN
IMMEDIATE  WRIT OF POSSESSION  IN ACCORDANCE  WITH CHAPTER 14 OF TITLE 44 OF THE
OFFICIAL  CODE OF  GEORGIA  OR IN  ACCORDANCE  WITH  ANY  SIMILAR  PROVISION  OF
APPLICABLE  LAW,  WITHOUT THE  NECESSITY  OF AN  ACCOMPANYING  BOND AS OTHERWISE
REQUIRED BY SECTION  44-14-263 OF THE OFFICIAL CODE OF GEORGIA OR BY ANY SIMILAR
PROVISION  UNDER  APPLICABLE LAW. EACH OBLIGOR HEREBY  ACKNOWLEDGES  THAT IT HAS
READ AND FULLY UNDERSTANDS THE TERMS OF THIS WAIVER AND THE EFFECT HEREOF.

     SECTION 16.7. Consent to Advertising and Publicity.  With the prior written
consent  of the  Borrowers'  Agent,  which  consent  shall  not be  unreasonably
withheld,  the Agent, on behalf of the Lenders, may issue and disseminate to the
public information  describing the credit accommodation entered into pursuant to
this  Agreement,  including  the name and address of each  Obligor,  the amount,
interest rate,  maturity,  collateral and a general description of the Obligors'
business.

     SECTION  16.8.  Reversal of Payments.  The Agent and each Lender shall have
the  continuing and exclusive  right to apply,  reverse and re-apply any and all
payments to any portion of the Secured  Obligations in a manner  consistent with
the terms of this  Agreement.  To the  extent  any  Obligor  makes a payment  or
payments to the Agent,  for the account of the Lenders,  or any Lender  receives
any

                                      103
<PAGE>

payment  or  proceeds  of  the  Collateral  for  the  Obligors'  benefit,  which
payment(s)  or  proceeds  or any  part  thereof  are  subsequently  invalidated,
declared to be  fraudulent  or  preferential,  set aside  and/or  required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal  law,  common law or  equitable  cause,  then,  to the extent of such
payment or proceeds received,  the Secured  Obligations or part thereof intended
to be satisfied  shall be revived and continued in full force and effect,  as if
such payment or proceeds had not been received by the Agent or such Lender.

     SECTION 16.9. Injunctive Relief. Each Obligor recognizes that, in the event
such Obligor fails to perform,  observe or discharge any of its  obligations  or
liabilities  under this Agreement,  any remedy at law may prove to be inadequate
relief to the Agent and the Lenders;  therefore, each Obligor agrees that if any
Event of  Default  shall  have  occurred  and be  continuing,  the Agent and the
Lenders, if the Agent or any Lender so requests,  shall be entitled to temporary
and permanent injunctive relief without the necessity of proving actual damages.

     SECTION   16.10.   Accounting   Matters.   All  financial  and   accounting
calculations,  measurements  and  computations  made for any purpose relating to
this Agreement, including all computations utilized by the Obligors to determine
whether they are in compliance with any covenant contained herein, shall, unless
this Agreement  otherwise  provides or unless  Required  Lenders shall otherwise
consent in writing, be performed in accordance with GAAP.

     SECTION 16.11. Amendments.

     (a)  Except as set  forth in  subsection  (b)  below,  any term,  covenant,
agreement or condition of this  Agreement or any of the other Loan Documents may
be amended or waived,  and any  departure  therefrom  may be consented to by the
Required  Lenders,  if,  but only if,  such  amendment,  waiver or consent is in
writing signed by the Required  Lenders and, in the case of an amendment  (other
than an amendment described in Section 16.11(d)), by the Borrowers' Agent or the
Obligors,  and in any such event,  the failure to observe,  perform or discharge
any such term,  covenant,  agreement or  condition  (whether  such  amendment is
executed or such waiver or consent is given before or after such failure)  shall
not be construed as a breach of such term,  covenant,  agreement or condition or
as a Default or an Event of  Default;  provided  that (i)  without  the  written
consent  of the  Issuing  Bank,  no  amendment  or  waiver  shall be made to any
provision of Article 3 hereof or any of the Issuing Bank's rights or obligations
with respect to Letters of Credit,  (ii) without the written  consent of Bank of
America, no amendment or waiver shall be made to any of Bank of America's rights
or obligations with respect to Non-Ratable  Loans, and (iii) without the written
consent of the Agent,  no amendment or waiver shall be made to any  provision of
Article 14 as such  provisions  apply to the Agent or to any other  provision of
any Loan Document as such provisions relate to the rights and obligations of the
Agent. Unless otherwise specified in such waiver or consent, a waiver or consent
given  hereunder  shall be effective  only in the specific  instance and for the
specific purpose for which given. In the event that any such waiver or amendment
is requested by the Obligors, the Agent and the Lenders may require and charge a
fee in connection therewith and consideration thereof in such amount as shall be
determined by the Agent and the Required Lenders in their discretion.

     (b) Except as  otherwise  set forth in this  Agreement,  without  the prior
unanimous  written consent of the Lenders,  (i) no amendment,  consent or waiver
shall affect the amount or extend the time of the  obligation  of the Lenders to
make  Loans,  extend the  originally  scheduled  time or times of payment of the
principal  of any Loan,  alter the time or times of payment of  interest  on any
Loan or the amount of the principal  thereof or the rate of interest  thereon or
the amount of any commitment fee payable hereunder,  permit any subordination of
the principal or

                                      104
<PAGE>

interest on any Loan, permit the subordination of the Security  Interests in any
material  Collateral  (meaning  Collateral  having a then fair  market  value in
excess of $1,000,000),  or amend the provisions of Article 12 or of this Section
16.11(b),  (ii) no material  Collateral  (meaning  Collateral having a then fair
market value in excess of $1,000,000)  shall be released by the Agent other than
releases of Collateral in connection with the sale of any such Collateral in the
ordinary course of an Obligor's business or as otherwise  specifically permitted
in this  Agreement,  (iii)  no  amendment  shall be made to the  definitions  of
"Commitment",  "Commitment Percentage",  "Proportionate",  "Ratable",  "Required
Lenders" or "Secured  Obligations",  (iv) neither the Agent nor any Lender shall
consent  to  any  amendment  to or  waiver  of  the  amortization,  deferral  or
subordination   provisions  of  any  Subordinated   Indebtedness  or  any  other
instrument or agreement  evidencing or relating to  obligations  of the Obligors
that  are  expressly  subordinate  to any of the  Secured  Obligations  if  such
amendment  or waiver  would be adverse to the  Lenders  in their  capacities  as
Lenders hereunder; and (v) no amendment shall be made that increases the advance
rates set forth in the definition of "Borrowing Base";  provided,  however, that
anything herein to the contrary notwithstanding, the Required Lenders shall have
the right to waive any Default or Event of Default (unless such Default or Event
of Default arises out of a provision of this Agreement which can only be amended
with the  unanimous  consent of the Lenders) and the  consequences  hereunder of
such  Default  or Event of  Default  and shall  have the right to enter  into an
agreement with the Obligors  providing for the forbearance  from the exercise of
any  remedies  provided  hereunder  or under the other  Loan  Documents  without
waiving any Default or Event of Default.

     (c) The  making of Loans  hereunder  by the  Lenders  (or the  issuance  of
Letters of Credit)  during the  existence of a Default or Event of Default shall
not be deemed to constitute a waiver of such Default or Event of Default.

     (d)  Notwithstanding  any  provision  of this  Agreement  or any other Loan
Document to the  contrary,  no consent,  written or  otherwise,  of the Obligors
shall be necessary or required in connection with any amendment to Article 14 or
Section 4.7, and any amendment to such  provisions  shall be effected  solely by
and among the Agent and the Required  Lenders (or Lenders,  as the case may be),
provided that no such amendment shall impose any obligation on the Obligors.

     SECTION 16.12. Assignment. Subject to the provisions of Article 13, all the
provisions of this  Agreement  shall be binding upon and inure to the benefit of
the parties hereto and their respective  successors and assigns,  except that no
Obligor may assign or transfer any of its rights under this Agreement.

     SECTION 16.13. Performance of Obligors' Duties.

     (a) The Obligors'  obligations  under this  Agreement and each of the other
Loan  Documents  shall be  performed  by the  Obligors  at their  sole  cost and
expense.

     (b) If the  Obligors  shall  fail to do any act or thing  which  they  have
covenanted to do under this  Agreement or any of the other Loan  Documents,  the
Agent, on behalf of the Lenders, may (but shall not be obligated to) do the same
or cause it to be done  either in the name of the Agent or the Lenders or in the
name  and on  behalf  of the  Obligors,  and  the  Obligors  hereby  irrevocably
authorize the Agent so to act.

                                      105
<PAGE>

     SECTION 16.14. Indemnification. The Obligors jointly and severally agree to
reimburse  the  Agent,  the  Issuing  Bank  and the  Lenders  and  each of their
Affiliates, agents, employees, officers, directors, Subsidiaries, successors and
assigns (the  "Indemnitees")  for all costs and expenses,  including  reasonable
counsel  fees  and  disbursements,  incurred,  and to  indemnify  and  hold  the
Indemnitees  harmless from and against all losses suffered by, any Indemnitee in
connection with (a) the exercise by the Agent, the Issuing Bank or any Lender of
any right or remedy  granted to it under this Agreement or any of the other Loan
Documents, (b) any claim, and the prosecution or defense thereof, arising out of
or in any way connected with this Agreement or any of the other Loan  Documents,
including any claim  relating to  Environmental  Laws, and (c) the collection or
enforcement of the Secured  Obligations  or any of them,  other than such costs,
expenses and liabilities  arising out of such  Indemnitee's  gross negligence or
willful misconduct.  The agreements in this Section shall survive the payment of
the Notes, the Secured  Obligations and all other amounts payable  hereunder and
the termination of this Agreement.

     SECTION 16.15. All Powers Coupled with Interest. All powers of attorney and
other  authorizations  granted  to the Agent  and the  Lenders  and any  Persons
designated  by the  Agent or the  Lenders  pursuant  to any  provisions  of this
Agreement  or any of the other Loan  Documents  shall be deemed  coupled with an
interest  and shall be  irrevocable  so long as any of the  Secured  Obligations
remain unpaid or unsatisfied.

     SECTION 16.16. Survival. Notwithstanding any termination of this Agreement,
(a)  until  all  Secured  Obligations  have  been  irrevocably  paid  in full or
otherwise satisfied, the Agent, for the benefit of the Secured Creditors,  shall
retain its Security  Interest  and shall retain all rights under this  Agreement
and each of the Security  Documents with respect to such  Collateral as fully as
though this Agreement had not been terminated,  (b) the indemnities to which the
Agent,  the Lenders and the other  indemnitees are entitled under the provisions
of this Article 16 and any other  provision of this Agreement and the other Loan
Documents  shall  continue in full force and effect and shall protect the Agent,
the  Lenders  and the  other  indemnitees  against  events  arising  after  such
termination  as well as before,  and (c) in connection  with the  termination of
this Agreement and the release and  termination of the Security  Interests,  the
Agent, on behalf of itself as agent and the Secured Creditors,  may require such
assurances and indemnities as it shall  reasonably deem necessary or appropriate
to protect the Agent and the Secured  Creditors  against loss on account of such
release and termination, including with respect to credits previously applied to
the Secured Obligations that may subsequently be reversed or revoked.

     SECTION  16.17.  Titles and  Captions.  Titles and  captions  of  Articles,
Sections and subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.

     SECTION 16.18. Severability of Provisions.  Any provision of this Agreement
or  any  other  Loan  Document  which  is  prohibited  or  unenforceable  in any
jurisdiction  shall, as to such jurisdiction,  be ineffective only to the extent
of such prohibition or  unenforceability  without  invalidating the remainder of
such  provision or the remaining  provisions  hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.

     SECTION  16.19.  Governing Law. This  Agreement,  the Notes and each of the
other Loan Documents  shall be construed in accordance  with and governed by the
law of the State of Georgia.

     SECTION 16.20.  Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate  counterparts,  each
of which when so executed  shall be deemed to be an  original,  and all of which
taken together shall constitute one and the same agreement.

                                      106
<PAGE>

     SECTION 16.21. Reproduction of Documents. This Agreement, each of the other
Loan  Documents  and all  documents  relating  thereto,  including (a) consents,
waivers and modifications that may hereafter be executed, (b) documents received
by the Agent or any Lender, and (c) financial statements, certificates and other
information previously or hereafter furnished to the Agent or any Lender, may be
reproduced  by the  Agent  or  such  Lender  by any  photographic,  photostatic,
microfilm,  microcard,  miniature photographic or other similar process and such
Person may  destroy  any  original  document  so  produced.  Each  party  hereto
stipulates   that,  to  the  extent   permitted  by  Applicable  Law,  any  such
reproduction  shall be as admissible  in evidence as the original  itself in any
judicial or administrative  proceeding  (whether or not the original shall be in
existence  and  whether or not such  reproduction  was made by the Agent or such
Lender in the regular  course of business),  and any  enlargement,  facsimile or
further  reproduction  of such  reproduction  shall  likewise be  admissible  in
evidence.

     SECTION 16.22.  Term of Agreement.  This  Agreement  shall remain in effect
from the Agreement Date through the  Termination  Date and thereafter  until all
Secured  Obligations  shall have been irrevocably paid and satisfied in full. No
termination  of this  Agreement  shall affect the rights and  obligations of the
parties hereto arising prior to such termination.

     SECTION 16.23.  Contribution and Indemnification  among the Obligors.  Each
Obligor is  obligated  to repay the  Secured  Obligations  as joint and  several
obligors under this Agreement.  To the extent that any Obligor shall, under this
Agreement as a joint and several obligor,  repay any of the Secured  Obligations
constituting   Loans  made  to  another  Obligor   hereunder  or  other  Secured
Obligations   incurred   directly  and   primarily  by  any  other  Obligor  (an
"Accommodation  Payment"),  then the Obligor making such  Accommodation  Payment
shall be entitled to contribution  and  indemnification  from, and be reimbursed
by, each of the other  Obligors in an amount,  for each of such other  Obligors,
equal to a  fraction  of such  Accommodation  Payment,  the  numerator  of which
fraction is such other Obligor's  "Allocable  Amount" (as defined below) and the
denominator of which is the sum of the Allocable Amounts of all of the Obligors.
As of any date of determination, the "Allocable Amount" of each Obligor shall be
equal to the maximum amount of liability for Accommodation  Payments which could
be asserted  against such Obligor  hereunder  without (a) rendering such Obligor
"insolvent"  within the  meaning  of  Section  101(31) of Title 11 of the United
States Code entitled  "Bankruptcy"  (the  "Bankruptcy  Code"),  Section 2 of the
Uniform  Fraudulent  Transfer  Act  (the  "UFTA"),  Section  2  of  the  Uniform
Fraudulent  Conveyance Act ("UFCA"),  or Section 18-2-22 of the Official Code of
Georgia  Annotated,  (b) leaving such Obligor with unreasonably small capital or
assets,  within the meaning of Section 548 of the Bankruptcy Code,  Section 4 of
the UFTA,  or Section 4 of the UFCA,  or (c) leaving such Obligor  unable to pay
its debts as they become due within the meaning of Section 548 of the Bankruptcy
Code,  Section 4 of the UFTA, or Section 5 of the UFCA. All rights and claims of
contribution,  indemnification  and reimbursement under this Section 16.23 shall
be  subordinate  in right of payment to the prior payment in full of the Secured
Obligations.

     SECTION 16.24. Restrictions on Actions by Lenders; Sharing of Payments.

     (a) Each of the  Lenders  agrees  that it shall not,  without  the  express
consent of the Required Lenders, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of the Required Lenders,  setoff against the
Secured  Obligations,  any  amounts  owing by such  Lender to any Obligor or any
accounts of any Obligor now or hereafter  maintained  with such Lender.  Each of
the Lenders further agrees that it shall not, unless  specifically  requested to
do so by the Agent,  take or cause to be taken any action to enforce  its rights
under this Agreement or against any Obligor,  including the  commencement of any
legal or equitable  proceedings,  to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral.

                                      107
<PAGE>

     (b) Each Lender  agrees that if, as a result of the  exercise of a right of
setoff, banker's lien or counterclaim or other similar right or the receipt of a
secured claim it receives any payment in respect of the Secured Obligations,  it
shall promptly notify the Agent thereof (and the Agent shall promptly notify the
other Lenders).  If, as a result of such payment, such Lender receives a greater
percentage of the Secured  Obligations  owed to it under this Agreement than the
percentage   received  by  any  other  Lender,  such  Lender  shall  purchase  a
participation  (which it shall be deemed to have purchased  simultaneously  upon
the receipt of such payment) in the Secured  Obligations then held by such other
Lenders so that all such  recoveries  of principal  and interest with respect to
all Secured  Obligations  owed to each Lender  shall be pro rata on the basis of
its respective amount of the Secured  Obligations owed to all Lenders,  provided
that if all or part of such  proportionately  greater  payment  received by such
purchasing  Lender is thereafter  recovered by or on behalf of the Obligors from
such Lender,  such purchase  shall be rescinded and the purchase  price paid for
such  participation  shall be  returned  to such  Lender  to the  extent of such
recovery, but without interest.

     (c) Each Lender  which  receives  such a secured  claim shall  exercise its
rights in respect of such secured claim in a manner  consistent  with the rights
of the Lenders entitled under this Section 16.24 to share in the benefits of any
recovery on such secured claim.

     (d) Each  Obligor  expressly  consents to the  foregoing  arrangements  and
agrees that any holder of a participation in any Secured Obligation so purchased
or otherwise  acquired may exercise any and all rights of banker's lien,  setoff
or counterclaim with respect to any and all monies owing by such Obligor to such
holder as fully as if such holder were a holder of such  Secured  Obligation  in
the amount of the participation held by such holder.

     SECTION  16.25.  Agency for  Perfection.  Each Lender hereby  appoints each
other Lender as its agent for the purpose of  perfecting  the Lenders'  security
interest in assets which, in accordance with Article 9 of the Uniform Commercial
Code can be  perfected  only by  possession.  Should any Lender  (other than the
Agent) obtain  possession of any such  Collateral,  such Lender shall notify the
Agent thereof,  and,  promptly upon the Agent's  request  therefor shall deliver
such Collateral to the Agent or in accordance with the Agent's instructions.

     SECTION 16.26.  Taxes. Except as otherwise required by Applicable Law, each
payment by the Obligors  under this  Agreement or the other Loan Documents or in
respect of the Letters of Credit  shall be made without  setoff or  counterclaim
and without withholding for or on account of any present or future taxes imposed
by  or  within  the  jurisdiction  in  which  any  Obligor  is  domiciled,   any
jurisdiction  from which the Obligors  make any payment  hereunder,  or (in each
case)  any  political   subdivision  or  taxing  authority  thereof  or  therein
(excluding  any such tax  imposed on the  overall net income of the Agent or the
Lenders).  If any such  withholding is so required,  the Obligors shall make the
withholding,  pay the amount withheld to the appropriate  governmental authority
before penalties  attach thereto or interest accrues thereon,  and forthwith pay
such  additional  amount  as may be  necessary  to  ensure  that the net  amount
actually  received  free and clear of such taxes  (including  such taxes on such
additional  amount) is equal to the amount which Agent or the Lenders would have
received had such withholding not been made. If the Agent or the Lenders pay any
amount in respect of any such taxes,  penalties or interest,  the Obligors shall
reimburse the Agent or the Lenders (as  appropriate)  for that payment on demand
in the  currency  in which such  payment was made.  If an Obligor  pays any such
taxes,  penalties or interest, it shall deliver official tax receipts evidencing
that payment or certified copies thereof to the Agent on or before the thirtieth
day after payment.

     SECTION 16.27. Final Agreement. This Agreement and the other Loan Documents
are  intended  by the  parties  hereto  as the  final,  complete  and  exclusive
expression of the agreement among them

                                      108
<PAGE>

with respect to the subject matter hereof and thereof,  it being understood that
the Fee  Letter  shall  survive  the  execution,  delivery  and  closing of this
Agreement.  This  Agreement and the other Loan  Documents  supersede any and all
prior oral or written  agreements  between  the parties  hereto  relating to the
subject matter hereof and thereof;  provided,  however, that notwithstanding the
execution  and delivery  hereof,  this  Agreement  shall not be binding upon the
parties  unless and until entry of the Final Order in accordance  with the terms
hereof.  Time is of the essence with respect to the execution and performance of
this Agreement.

     SECTION 16.28. Waiver of Consequential Damages, Etc. THE OBLIGORS AGREE NOT
TO ASSERT ANY CLAIM  AGAINST THE AGENT,  THE ISSUING  BANK,  ANY LENDER,  ANY OF
THEIR AFFILIATES,  OR ANY OF THEIR RESPECTIVE  DIRECTORS,  OFFICERS,  EMPLOYEES,
ATTORNEYS  AND  AGENTS,  ON ANY  THEORY OF  LIABILITY,  FOR  SPECIAL,  INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO ANY OF
THE TRANSACTIONS CONTEMPLATED HEREIN OR IN ANY OTHER LOAN DOCUMENT OR THE ACTUAL
OR  PROPOSED  USE OF THE  PROCEEDS  OF THE LOANS.

                       [Signatures commence on next page.]

                                      109
<PAGE>

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

         BORROWERS:       SAFETY COMPONENTS INTERNATIONAL, INC.,
                          a Delaware Corporation

                          By:
                               ------------------------------------------------
                          Its:
                               ------------------------------------------------

                          SAFETY COMPONENTS FABRIC
                          TECHNOLOGIES, INC., a Delaware corporation,

                          By:
                               ------------------------------------------------
                          Its:
                               ------------------------------------------------

                          AUTOMOTIVE SAFETY COMPONENTS
                          INTERNATIONAL, INC., a Delaware corporation,

                          By:
                               ------------------------------------------------
                          Its:
                               ------------------------------------------------

                          ASCI HOLDINGS UK (DE), INC.,
                          a Delaware corporation,

                          By:
                               ------------------------------------------------
                          Its:
                               ------------------------------------------------

                          ASCI HOLDINGS MEXICO (DE), INC.,
                          a Delaware corporation

                          By:
                               ------------------------------------------------
                          Its:
                               ------------------------------------------------

                                       S-1
<PAGE>

                          VALENTEC INTERNATIONAL
                          CORPORATION LLC,
                          a Delaware limited liability company

                          By:
                               ------------------------------------------------
                          Its:
                               ------------------------------------------------

                          VALENTEC SYSTEMS, INC.,
                          a Delaware corporation

                          By:
                               ------------------------------------------------
                          Its:
                               ------------------------------------------------

                          GALION, INC., a Delaware corporation

                          By:
                               ------------------------------------------------
                          Its:
                               ------------------------------------------------

                          AUTOMOTIVE SAFETY COMPONENTS
                          INTERNATIONAL, LIMITED,
                          a United Kingdom corporation

                          By:
                               ------------------------------------------------
                          Its:
                               ------------------------------------------------

GUARANTORS:               ASCI HOLDINGS GERMANY (DE), INC.,
                          a Delaware corporation

                          By:
                               ------------------------------------------------
                          Its:
                               ------------------------------------------------

                          ASCI HOLDINGS CZECH (DE), INC.,
                          a Delaware corporation

                          By:
                               ------------------------------------------------
                          Its:
                               ------------------------------------------------

                                       S-2
<PAGE>

AGENT:                    BANK OF AMERICA, N.A.,
                          a national banking association, as Agent

                          By:
                               ------------------------------------------------
                          Its:
                               ------------------------------------------------

         Address:         Bank of America, N.A.
                          13th Floor
                          600 Peachtree Street
                          Atlanta, Georgia  30308
                          Attn:  Bob Walker

LENDERS:                  BANK OF AMERICA, N.A.
                          a national banking association, as Lender

                          By:
                               ------------------------------------------------
                          Its:
                               ------------------------------------------------

         Address:         Bank of America, N.A.
                          13th Floor
                          600 Peachtree Street
                          Atlanta, Georgia  30308
                          Attn:  Bob Walker

                                       S-3<PAGE>   1

                                  EXHIBIT 10.1

Execution Copy

Software Agreement

Between:       Tribeworks, Inc., a California corporation ("Tribeworks"), with
               offices located 1620 Montgomery Street, Suite 220, San Francisco,
               California 94111;

And:           Keepsake sprl, a Belgian corporation ("Keepsake") with offices
               located at Avenue Eugene Demolder 38 at 1030 Brussels, Belgium;

And:           Mr. Gilbert Amar ("Amar"), residing at 5, rue Helene at 75017
               Paris, France.

Dated:         November 2, 1999

Preamble

Tribeworks is engaged in developing software applications for web media
developers through the Internet.

Keepsake has extensive experience in development of multimedia publishing
software tools.

Keepsake has developed a software authoring tool distributed under the tradename
"iShell" (the "Software").

Amar has assisted Keepsake in development of the Software.

Tribeworks is commercializing the Software.

In consideration for the premises and covenants included herein, the parties
agree to enter into this Agreement.

Agreement

1. Keepsake is holder of all intellectual property rights, including copyrights
to the Software. The specifications to the Software are specified on Annex A.
The credits regarding the authors of the Software that are imbedded in the
source code shall remain unchanged.

2. Keepsake and Amar warrant to Tribeworks that they are authorized to enter
this Agreement. To the best of the knowledge of Amar and Keepsake, execution of
this Agreement by Keepsake and Amar will not conflict with any rights granted by
Keepsake or Amar in the Software to any third party .Keepsake and Amar further
represent that (i) the Software is proprietary to Keepsake and Amar, and (ii) to
the best of their knowledge, the Software does not infringe upon or conflict
with the intellectual property rights of any third parties in the Software.

<PAGE>   2

3. Keepsake and Amar hereby assign to Tribeworks all of their right, title and
interest to the Software (including without limitation the source code, the
tradename, and other related intellectual property rights). Tribeworks agrees to
pay Keepsake the consideration as specified in Annex B.

4. KEEPSAKE AND AMAR EXPRESSLY DISCLAIM ANY WARRANTIES WITH RESPECT TO THE
SOFTWARE EXCEPT THOSE SPECIFIED IN SECTION 2 ABOVE. THE SOFTWARE IS PROVIDED ON
AN "AS IS BASIS". ANY WARRANTY OF MERCHANT ABILITY OR FITNESS FOR A PARTICULAR
USE OR PURPOSE IS EXPRESSLY DISCLAIMED.

5. Unless there would be a breach of Section 2 above, Keepsake and Amar shall in
no event be liable for any damages (including without limitation, damages for
loss of business profits, business interruption, loss of business information,
or any other pecuniary loss) related directly or indirectly to the Software. In
the event that the provisions of preceding sentence set forth in this Section 5
shall be considered invalid under the laws of the applicable jurisdiction, or in
the event of breach by Keepsake and/or Amar of the provisions of Section 2
hereunder, the parties acknowledge that the total damages due and payable by
Keepsake and/or Amar hereunder shall not exceed twenty-five percent (25%) of the
total aggregate consideration paid by Tribeworks to Keepsake and Amar under this
Agreement.

6. Tribeworks undertakes on a "best effort basis" to commercialize and to
develop the worldwide notoriety of the Software. Tribeworks shall organize a
professional team to support the Software and to respond to any queries
regarding the Software by users.

7. Upon (i) institution by or against Tribeworks of any action for insolvency,
receivership or bankruptcy or any other proceedings for settlement of
Tribeworks' debts, or (ii) Tribeworks' making an assignment for the benefit of
creditors, or (iii) Tribeworks, dissolution or insolvency (the events specified
in clauses (i) through (iii) hereof being referred to herein as "Insolvency
Events"), Tribeworks will grant to Keepsake a royalty-free license to the
Software and any derivative works based on the Software. For purposes hereof,
term "Derivative Works" shall mean all work based on the Software such as a
revision, modification, translation, compilation, or any other form, including a
new work in which the Software may be recast, transformed or adapted (including
but not limited to error corrections or enhancements to the Software). In
connection with the foregoing, Tribeworks shall make available to Keepsake all
documentation relating to the Software or the Derivative Works upon occurrence
of an Insolvency Event.

8. Keepsake shall assist Tribeworks for a period of 12 months after execution of
this Agreement in development of the Software on a "best effort basis". The
relationships of Tribeworks and Keepsake shall be that of an independent
contractor for work performed by Keepsake for Tribeworks under this Section 8.
All work product developed by Keepsake for Tribeworks after the date hereof
under this Section 8 shall constitute the property of Tribeworks. The fees
payable by Tribeworks to Keepsake for this development work are specified in
Annex C. Tribeworks shall deliver to Keepsake such copies of the Software and
Derivative Works to enable Keepsake to perform its duties under this Agreement.
Any copies of the Software and Derivative Works

                                       2
<PAGE>   3

delivered by Tribeworks to Keepsake for this purpose shall be used by Keepsake
for internal purpose only.

9. Commencing as of the effective date of this Agreement, Tribeworks will
perform all development with respect to the Software. Tribeworks' development
work will be headed by Amar.

10. Failure by either party to enforce any provision of this Agreement will not
be deemed a waiver of future enforcement of that or any other provision. This
Agreement is governed by and construed in accordance with the laws of Belgium.
In case of litigation, the courts having exclusive jurisdiction shall always be
the courts in which judicial area the registered office of the defendant is
located. This Agreement, including all annexes thereto, constitutes the entire
Agreement between the parties with respect to the subject matter hereof, and
supersedes and replaces all prior or contemporaneous understandings or
agreements, written or oral regarding such subject matter. Any amendment to this
Agreement should be made exclusively by written means.

IN WITNESS WHEREOF, that parties have executed this Agreement by their duly
authorized representative as of the date specified below.

TRIBEWORKS, INC.

By:  /s/ Duncan Kennedy
   ---------------------------------
     Name: Duncan Kennedy
     Title:   CEO

KEEPSAKE SPRL

By:  /s/  Patrick Soquet
   ---------------------------------
     Name: Patrick Soquet
     Title: Manager

     /s/  Gilbert Amar
------------------------------------
Gilbert Amar

                                            Acknowledged:
                                            PAN WORLD CORPORATION

                                            By:   /s/ Thomas Williams
                                               ---------------------------------
                                               Name: Thomas Williams
                                               Title: President

                                       3
<PAGE>   4

                                                                         Annex A

                           Specifications of Software
                           --------------------------

                             [To come from Patrick]

                            iSHELL 1.0 FOR MACINTOSH
                            ------------------------
KERNEL
Nutshell
iShell Editor
iShell Editor Plugins: EditCache, EditModel, EditText
iShell Runtime
iShell Runtime Plugins: RunCache, RunModel, RunText
iShell Scripts: BLACKHPB.PIC, BLACKVPB.PIC, Compatibility.k, DefaultCursors.k,
DefaultCursors.pic, DefaultEffects.k, DefaultFonts.k, DefaultProgressBar.k,
DefaultScrollbar.k, FHCSB.PIC, FVCSB.PIC, GRAYHPB.PIC, GRAYVPB.PIC, MHBWSB.PIC,
MHCSB.PIC, MVBWSB.PIC, MVCSB.PIC, ToolsCache.k, ToolsInfo.k, ToolsModel.k,
ToolsText.k

                             iSHELL 1.0 FOR WINDOWS
                             ----------------------

KERNEL.dll
Nutshell.dll
iShell Editor.exe
iShell Editor Plugins:EditCache.dll, EditModel.dll, EditText.dll iShell
Runtime.exe iShell Runtime Plugins: RunCache.dll, RunModel.dll, RunText.dll
iShell Scripts: BLACKHPB.PIC, BLACKVPB.PIC, Compatibility.k, DefaultCursors.k,
DefaultCursors.pic, DefaultEffects.k, DefaultFonts.k, DefaultProgressBar.k,
DefaultScrollbar.k, FHCSB.PIC, FVCSB.PIC, GRAYHPB.PIC, GRAYVPB.PIC, MHBWSB.PIC,
MHCSB.PIC, MVBWSB.PIC, MVCSB.PIC, ToolsCache.k, ToolsInfo.k, ToolsModel.k,
ToolsText.k

                                 iSHELL 1.0 SDK
                                 --------------

iShell/- MPW - Startup Items: iShellStartup, keyStartup, qtsdkStartup

iShell/Includes: ICAPI.h, ICGlueCFM.c, ICGlueCFM.o.make, ICKeys.h, ICTypes.h,
iShellVersion.r, iShellVersion.rc, OpenTptInternet.h, OpenTransport.h, System.h

iShell/key/bin: default.msdev, key.exe, key.ini, KeysBug.exe, msdev.mak
iShell/key/includes: KEY.h iShell/key/kernel: ALIEN.k, ANY.k, ARRAY.k,
BOOLEAN.k, CHARACTER.k, COLLECTION.k, DEBUGGER.k, DUMMY.k, HANDLE.k, INTEGER.k,
KERNEL.k, MEMORY.k, MESSAGE.k, NONE.k, POINTER.k, RATIONAL.k, REAL.k,
SIGNATURE.k, STRING.k, TYPE.k, VECTOR.k iShell/key/kernel: DEBUG/, KERNEL,
KERNEL.dll iShell/key/kernel/RELEASE: KERNEL, KERNEL.dll iShell/key/libraries:
KERNEL.lib, KERNEL.stub, StdCLib iShell/key/tools: debug.mpw, default.mpw,
EchoKeyIDs, key, keyBuild, keyBuild.do, keyMark, keyMenu, KeysBug,
keySetProject, keySetProjectDirectories, keySplit, 'MPW Shell.rsrc', mpw.make,
release.mpw

iShell/Libraries: ICGlueCFM.o, OpenTptInetPPC.o, OpenTptInternetLib,
OpenTransportAppPPC.o, OpenTransportLib

iShell/Nutshell: Nutshell.h, Nutshell.k, Nutshell.mpw, Nutshell.msdev,
Nutshell.r, Nutshell.rc
iShell/Nutshell/Sources: Cache.c, Cache.k, Cursor.c, Cursor.k, FileScheme.c,
FileScheme.k, Flaggable.k, HashTable.c, HashTable.k, Helper.c, Helper.k,
HTTPScheme.c, HTTPScheme.k, Modifiers.c, Modifiers.k, Performance.c,
Performance.k, Plugin.c, Plugin.k, Printer.c, Printer.k, Resource.k,
ShellCommand.k, ShellConfiguration.k, ShellElement.k, ShellEvent.k,
ShellItem.k, ShellProject.k,

                                       48
<PAGE>   5

ShellRuntime.c, ShellRuntime.k, Status.c, Status.k, TypeMap.k, URLBuffer.c,
URLBuffer.k, URLCache.c, URLCache.k, URLScheme.k, URLTarget.k, URLTargetLink.k

iShell/Plugins/Cache: EditCache.h, EditCache.k, EditCache.mpw, EditCache.msdev,
EditCache.r, EditCache.rc, RunCache.h, RunCache.k, RunCache.mpw, RunCache.msdev,
RunCache.r, RunCache.rc iShell/Plugins/Cache/Sources: CacheCommand.k,
CacheEvent.k, CacheLoader.c, CacheLoader.k, CacheProgressBar.c,
CacheProgressBar.k

iShell/Plugins/Model: EditModel.h, EditModel.k, EditModel.mpw, EditModel.msdev,
EditModel.r, EditModel.rc, RunModel.h, RunModel.k, RunModel.mpw, RunModel.msdev,
RunModel.r, RunModel.rc iShell/Plugins/Model/Resources: add.cur, EditModel.rsrc,
intersect.cur, replace.cur, substract.cur iShell/Plugins/Model/Sources: Box.c,
Box.k, Clock.c, Clock.k, Conditions.k, Controller.c, Controller.k, Cookies.k,
Document.k, Effect.c, Effect.k, Image.c, Image.k, LaunchCommand.c,
LaunchCommand.k, Media.c, Media.k, ModeCommand.k, Model.c, Model.k, Movie.c,
Movie.k, Panorama.c, Panorama.k, RegionEditor.c, RegionEditor.k,
RuntimeCommand.k, Scheduler.c, Scheduler.k, Scrollbar.k, Scroller.k, Sound.c,
Sound.k, TargetableCommand.k, Tweeners.k, URLCommand.k, VolumeCommand.c,
VolumeCommand.k

iShell/Plugins/Text: EditText.h, EditText.k, EditText.mpw, EditText.msdev,
EditText.r, EditText.rc, RunText.h, RunText.k, RunText.mpw, RunText.msdev,
RunText.r, RunText.rc iShell/Plugins/Text/Sources: DataBuffer.c, DataBuffer.k,
Field.c, Field.k, FontAssociation.c, FontAssociation.k, RTFText.c, RTFText.k,
Text.c, Text.h, Text.k

iShell/Scripts: BLACKHPB.PIC, BLACKVPB.PIC, Compatibility.k, DefaultCursors.k,
DefaultCursors.pic, DefaultEffects.k, DefaultFonts.k, DefaultProgressBar.k,
DefaultScrollbar.k, FHCSB.PIC, FVCSB.PIC, GRAYHPB.PIC, GRAYVPB.PIC, MHBWSB.PIC,
MHCSB.PIC, MVBWSB.PIC, MVCSB.PIC, ToolsCache.k, ToolsInfo.k, ToolsModel.k,
ToolsText.k

iShell/Shell: EditShell.c, EditShell.h, EditShell.k, EditShell.mpw,
EditShell.msdev, EditShell.r, EditShell.rc, EditShell.rh, RunShell.c,
RunShell.h, RunShell.k, RunShell.mpw, RunShell.msdev, RunShell.r, RunShell.rc,
RunShell.rh iShell/Shell/Resources: credits.txt, document.ico, Edit.rsrc,
editor.ico, hand.cur, logo.mov, project.ico, resource.h, Run.rsrc, runtime.ico,
scaleminus.cur, scalenone.cur, scaleplus.cur, splash.bmp, splitx.cur, splity.cur
iShell/Shell/Sources: Command.k, Configuration.k, Element.c, Element.k, Event.k,
Flags.k, IOAlignmentLines.k, IOAttributeLines.k, IOBookmarkLines.k,
IOCheckLines.k, IOCommandLines.k, IOConfiguration.k, IOElementLines.k,
IOEventLines.k, IOGridLines.k, IOHelper.k, IOItemLines.k, IOLines.k,
IOLockLines.k, IOOrderLines.k, IOPaletteLines.k, IOPalettes.k, IOPlugin.k,
IOProjectLines.k, IOResourceLines.k, IOSeedLines.k, IOSettingLines.k,
IOSpecialWords.k, IOToolLines.k, IOWords.k, LayoutCreator.k, LayoutEditor.c,
LayoutEditor.k, LayoutOpener.c, LayoutOpener.k, LayoutRuntime.k,
LayoutScroller.c, LayoutScroller.k, LayoutSelector.c, LayoutSelector.k,
LayoutTracker.c, LayoutTracker.k, LayoutWindow.c, LayoutWindow.k, Plugins.k,
Preferences.k, Project.k, ProjectBookmark.c, ProjectBookmark.k, ProjectCheck.k,
ProjectResource.k, TestDialog.c, TestDialog.k, TestError.k, TestRuntime.k,
TreeScroller.c, TreeScroller.k, TreeSelector.c, TreeSelector.k, TreeWindow.c,
TreeWindow.k, UIAboutCommands.c, UIAboutCommands.k, UIAboutDialog.c,
UIAboutDialog.k, UIAlerts.c, UIAlerts.k, UIAll.h, UIApplication.c,
UIApplication.k, UIApplicationWindow.c, UIApplicationWindow.k, UIButton.c,
UIButton.k, UIClipboard.k, UIColorPicker.c, UIColorPicker.k, UICommand.c,
UICommand.k, UICommandList.c, UICommandList.k, UIContextualCommands.c,
UIContextualCommands.k, UIControl.c, UIControl.k, UIDialog.c, UIDialog.k,
UIDocument.k, UIDocumentWindow.c, UIDocumentWindow.k, UIDrop.c, UIDrop.k,
UIEditCommands.k, UIEffectPicker.c, UIEffectPicker.k, UIFile.c, UIFile.k,
UIFileCommands.k, UIFileDialogs.c, UIFileDialogs.k, UIFindCommands.c,
UIFindCommands.k, UIMenuBar.c, UIMenuBar.k, UIPalette.k, UIPaletteList.k,
UIPaletteView.c, UIPaletteView.k, UIPaletteWindow.c, UIPaletteWindow.k,
UIPlacard.c, UIPlacard.k, UIProject.k, UIProjectCommands.k, UIProjectDialogs.k,
UIScrollBar.c, UIScrollBar.k, UIScroller.c, UIScroller.k, UISelectionCommands.k,
UITarget.k, UITextField.c, UITextField.k, UIView.c, UIView.k, UIWindow.c,
UIWindow.k, UIWindowCommands.k, UIWindowList.c, UIWindowList.k, URLCollector.k,
Utility.k

iShell/Utilities: -compatibility-Plugins.k, -compatibility-Scripts.k,
ConvertAllToMac, ConvertAllToWin, DefaultCursors.rsrc, DoBackupAllFromPC,
DoBackupAllToPC, DoBuildAllDebug, DoBuildAllDebug.bat, DoBuildAllRelease,
DoBuildAllRelease.bat, DoCleanAll, DoCleanAll.bat, DoSearchAll, DoTouchAll,
EchoIcons, EchoIcons.c, EchoIcons.make, EchoOSErrR, EchoOSErrRC, iShell.mak,
iShellMenu, MakeCursors, MakeCursors.c, MakeCursors.make, OSErrTable

                                       49
<PAGE>   6

                 iSHELL KERNEL, KEY COMPILER AND LINKER SOURCES
                 ----------------------------------------------

/iSHELL/keyall: BuildLicense.c, BuildLicense.mak, BuildLicense.make,
CheckLicense.c, CheckLicense.mak, CheckLicense.make, EditorLicense.txt,
InstallLicense, InstallLicense.c, InstallLicense.cpp, InstallLicense.def,
InstallLicense.make, InstallLicense.r, KERNEL.mak, KERNEL.make, KERNEL.r,
KERNEL.rc, KERNEL.stub.make, key.c, key.mak, key.make, key.r, key.rc,
KEY_C_PREFIX.h, KEY_REZ_PREFIX.h, keyAll.c, keyAll.h, keyAny.c, keyAPI.c,
keyArray.c, keyBlock.c, keyChunk.c, keyClass.c, keyCode.c, keyCompile.c,
keyDebug.c, keyDecode.c, keyExport, keyGrammar.g, keyGrammar.i.c, keyHeap.c,
keyInherit.c, keyKernel.c, keyKind.c, keyLink.c, keyMain.c, keyMessage.c,
keyModule.c, keyObject.c, keyRead.c, keyValue.c, keyWrite.c, makeDebug,
makeDebug.bat, makelicenses, makelicenses.bat, makeRelease, makeRelease.bat,
makeSymbol, makeSymbol.bat, RuntimeLicense.txt

                            iSHELL INSTALLER SOURCES
                            ------------------------

/iSHELL/Master: BuildHelp, DoMasterMac, DoMasterMacScript, DoMasterWin.bat,
EditorContents.htm, EditorTemplate.htm, 'License Agreement', License.txt,
MacSetup.vct, PKZIP25.EXE, PluginsContents.htm, PluginsTemplate.htm, 'Read Me',
ReadMe.txt, Register.htm, side.bmp, WinSetup.VCT

                                       50
<PAGE>   7

                                                                         Annex B

                 Consideration Payable by Tribeworks to Keepsake
                 -----------------------------------------------

Upon consummation of the merger between Tribeworks and Pan World Corporation, a
Nevada corporation ("Pan World"), each of Keepsake and Amar will receive the
compensation set forth below:

<TABLE>
<CAPTION>
Keepsake                                                        Amar
--------                                                        ----
<S>                                                             <C>
$30,000 payable prior to October 31, 1999                       $20,000 payable prior to October 31, 1999
$30,000 payable prior to December 31, 1999                      $20,000 payable prior to December 31, 1999
Warrants to purchase 181,818 shares of Pan World                Warrants to purchase 121,212 shares of Pan World
Common Stock at exercise price of $0.33 per share               Common Stock at exercise price of $0.33 per share
</TABLE>

                                       51
<PAGE>   8
Annex C

                     Fees Payable by Tribeworks to Keepsake
                              for Development Work

In consideration for ongoing technical development of iShell, Keepsake will
receive a monthly payment of $9,000USD per month, payable at the end of each
month for the period commencing on the date hereof and ending on the first
anniversary hereof. . [each of Amar and Soqet will receive 9,000 / month for Jan
1, 1999 through the date that they perform services. Amar becomes employee as of
9/1/99 no further obligation. Soquet: Performs services for us.

<TABLE>
<CAPTION>
Acknowledgement:                                             Acknowledgement:
---------------                                              ---------------
<S>                                                          <C>
The undersigned acknowledges that for the period             The undersigned acknowledges that for the period
January 1, 1999 through September __, 1999, the              January 1, 1999 through September __, 1999,
the undersigned has received $9,000 per month from           undersigned has received $9,000 per month from
Tribeworks, Inc. in connection with software                 Tribeworks, Inc. in connection with software
development services performed                               development services performed
</TABLE>

Keepsake, SPRL

By: /s/ Patrick Soquet                              /s/ Gilbert Amar
   -------------------------------                ------------------------------
   Name:  Patrick Soquet                          Gilbert Amar
   Title: Manager

                                       52

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