Document:

<PAGE>

                                                                   EXHIBIT 10.41

                           LOAN AND SECURITY AGREEMENT

                             Dated January 31, 2001

                                   $25,000,000

          IN FAVOR OF DAWSON, INC., THE FAXON COMPANY, INC., THE TURNER
        SUBSCRIPTION AGENCY, INCORPORATED, MCGREGOR SUBSCRIPTION SERVICE,
 INC., CORPORATE SUBSCRIPTION SERVICES INC., AND DAWSON INFORMATION QUEST, INC.

                            FLEET CAPITAL CORPORATION

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                       PAGE
<S>                                                                                                   <C>

SECTION  1.  CREDIT FACILITY........................................................................     1
         1.1  REVOLVING CREDIT LOANS................................................................     1
              1.1.1  LOANS AND RESERVES.............................................................     1
              1.1.2  USE OF PROCEEDS................................................................     2

SECTION  2.  INTEREST, FEES AND CHARGES.............................................................     2
         2.1  INTEREST..............................................................................     2
              2.1.1  RATES OF INTEREST..............................................................     2
              2.1.2  DEFAULT RATE OF INTEREST.......................................................     2
              2.1.3  MAXIMUM INTEREST...............................................................     2
         2.2  COMPUTATION OF INTEREST AND FEES......................................................     2
         2.3  FACILITY FEES.........................................................................     3
         2.4  INTENTIONALLY DELETED.................................................................     3
         2.5  UNUSED LINE FEE.......................................................................     3
         2.6  INTENTIONALLY DELETED.................................................................     3
         2.7  AUDIT AND APPRAISAL FEES..............................................................     3
         2.8  REIMBURSEMENT OF EXPENSES.............................................................     3
         2.9  BANK CHARGES..........................................................................     4

SECTION  3.  LOAN ADMINISTRATION....................................................................     4
         3.1  MANNER OF BORROWING REVOLVING CREDIT LOANS............................................     4
              3.1.1  LOAN REQUESTS..................................................................     4
              3.1.2  DISBURSEMENT...................................................................     4
              3.1.3  AUTHORIZATION..................................................................     5
              3.1.4  MAXIMUM ADVANCES...............................................................     5
         3.2  PAYMENTS..............................................................................     5
              3.2.1  PRINCIPAL......................................................................     5
              3.2.2  INTEREST.......................................................................     5
              3.2.3  COSTS, FEES AND CHARGES........................................................     6
              3.2.4  OTHER OBLIGATIONS..............................................................     6
         3.3  INTENTIONALLY DELETED.................................................................     6
         3.4  APPLICATION OF PAYMENTS AND COLLECTIONS...............................................     6
         3.5  ALL LOANS TO CONSTITUTE ONE OBLIGATION................................................     6
         3.6  LOAN ACCOUNT..........................................................................     6
         3.7  STATEMENTS OF ACCOUNT.................................................................     6
         3.8  INCREASED COSTS.......................................................................     7

SECTION  4.  TERM AND TERMINATION...................................................................     8
         4.1  TERM OF AGREEMENT.....................................................................     8
         4.2  TERMINATION...........................................................................     8
              4.2.1  TERMINATION BY LENDER..........................................................     8
              4.2.2  TERMINATION BY BORROWER........................................................     8
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                                                    <C>

               4.2.3  INTENTIONALLY DELETED.........................................................     8
               4.2.4  EFFECT OF TERMINATION.........................................................     8

SECTION  5.   SECURITY INTERESTS....................................................................     9
         5.1   SECURITY INTEREST IN COLLATERAL......................................................     9
         5.2   LIEN PERFECTION, FURTHER ASSURANCES..................................................    10
         5.3   REVISED ARTICLE 9....................................................................    11

SECTION  6.   COLLATERAL ADMINISTRATION.............................................................    11
         6.1   GENERAL..............................................................................    11
               6.1.1  LOCATION OF COLLATERAL........................................................    11
               6.1.2  INSURANCE OF COLLATERAL.......................................................    11
               6.1.3  PROTECTION OF COLLATERAL......................................................    11
         6.2   ADMINISTRATION OF ACCOUNTS...........................................................    12
               6.2.1  RECORDS, SCHEDULES AND ASSIGNMENTS OF ACCOUNTS................................    12
               6.2.2  DISCOUNTS, ALLOWANCES, DISPUTES...............................................    12
               6.2.3  TAXES.........................................................................    12
               6.2.4  ACCOUNT VERIFICATION..........................................................    13
               6.2.5  MAINTENANCE OF DOMINION ACCOUNT...............................................    13
               6.2.6  COLLECTION OF ACCOUNTS, PROCEEDS OF COLLATERAL................................    13
         6.3   ADMINISTRATION OF INVENTORY..........................................................    13
               6.3.1  RECORDS AND REPORTS OF INVENTORY..............................................    13
               6.3.2  RETURNS OF INVENTORY..........................................................    13
         6.4   ADMINISTRATION OF EQUIPMENT..........................................................    14
               6.4.1  RECORDS AND SCHEDULES OF EQUIPMENT............................................    14
               6.4.2  DISPOSITIONS OF EQUIPMENT.....................................................    14
         6.5   PAYMENT OF CHARGES...................................................................    14

SECTION  7.   REPRESENTATIONS AND WARRANTIES........................................................    14
         7.1   GENERAL REPRESENTATIONS AND WARRANTIES...............................................    14
               7.1.1   ORGANIZATION AND QUALIFICATION...............................................    14
               7.1.2   CORPORATE POWER AND AUTHORITY................................................    15
               7.1.3   LEGALLY ENFORCEABLE AGREEMENT................................................    15
               7.1.4   CAPITAL STRUCTURE............................................................    15
               7.1.5   CORPORATE NAMES..............................................................    15
               7.1.6   BUSINESS LOCATIONS; AGENT FOR PROCESS........................................    16
               7.1.7   TITLE TO PROPERTIES; PRIORITY OF LIENS.......................................    16
               7.1.8   ACCOUNTS.....................................................................    16
               7.1.9   EQUIPMENT....................................................................    17
               7.1.10  FINANCIAL STATEMENTS; FISCAL YEAR............................................    17
               7.1.11  FULL DISCLOSURE..............................................................    18
               7.1.12  SOLVENT FINANCIAL CONDITION..................................................    18
               7.1.13  SURETY OBLIGATIONS...........................................................    18
               7.1.14  TAXES........................................................................    18
               7.1.15  BROKERS......................................................................    19
               7.1.16  PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES.................................    19
               7.1.17  GOVERNMENTAL CONSENTS........................................................    19
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                    <C>

               7.1.18  COMPLIANCE WITH LAWS.........................................................    19
               7.1.19  RESTRICTIONS.................................................................    20
               7.1.20  LITIGATION...................................................................    20
               7.1.21  NO DEFAULTS..................................................................    20
               7.1.22  LEASES.......................................................................    20
               7.1.23  PENSION PLANS................................................................    20
               7.1.24  TRADE RELATIONS..............................................................    21
               7.1.25  LABOR RELATIONS..............................................................    21
               7.1.26  ENVIRONMENTAL MATTERS........................................................    21
         7.2   CONTINUOUS NATURE OF REPRESENTATIONS AND WARRANTIES..................................    22
         7.3   SURVIVAL OF REPRESENTATIONS AND WARRANTIES...........................................    23

SECTION  8.   COVENANTS AND CONTINUING AGREEMENTS...................................................    23
         8.1   AFFIRMATIVE COVENANTS................................................................    23
               8.1.1   VISITS AND INSPECTIONS.......................................................    23
               8.1.2   NOTICES......................................................................    23
               8.1.3   FINANCIAL STATEMENTS.........................................................    23
               8.1.4   LANDLORD AND STORAGE AGREEMENTS..............................................    25
               8.1.5   SHAREHOLDER FINANCIAL STATEMENTS.............................................    25
               8.1.6   DOMESTIC SUBSIDIARY GUARANTIES...............................................    25
               8.1.7   BORROWING BASE CERTIFICATE...................................................    25
               8.1.8   INTENTIONALLY DELETED........................................................    25
         8.2   NEGATIVE COVENANTS...................................................................    26
               8.2.1   MERGERS; CONSOLIDATIONS; ACQUISITIONS........................................    26
               8.2.2   LOANS........................................................................    26
               8.2.3   TOTAL INDEBTEDNESS...........................................................    26
               8.2.4   AFFILIATE TRANSACTIONS.......................................................    27
               8.2.5   LIMITATION ON LIENS..........................................................    27
               8.2.6   SUBORDINATED DEBT............................................................    27
               8.2.7   DISTRIBUTIONS................................................................    28
               8.2.8   CAPITAL EXPENDITURES.........................................................    28
               8.2.9   DISPOSITION OF ASSETS........................................................    28
               8.2.10  STOCK OF SUBSIDIARIES........................................................    28
               8.2.11  BILL-AND-HOLD SALES, ETC.....................................................    28
               8.2.12  RESTRICTED INVESTMENT........................................................    28
               8.2.13  LEASES.......................................................................    28
               8.2.14  TAX CONSOLIDATION............................................................    28
               8.2.15  BANK ACCOUNTS................................................................    29
               8.2.16  DISTRIBUTION.................................................................    29
               8.2.17  ACCOUNTING CHANGES...........................................................    29
               8.2.18  ORGANIZATION DOCUMENTS.......................................................    29
               8.2.19  RESTRICTIVE AGREEMENTS.......................................................    29
               8.2.20  CONDUCT OF BUSINESS..........................................................    29
         8.3   SPECIFIC BORROWER FINANCIAL COVENANTS................................................    29
               8.3.1   EBITDA.......................................................................    30
         8.4   SPECIFIC PARENT FINANCIAL COVENANTS..................................................    30
               8.4.1   EBITDA.......................................................................    30
</TABLE>

                                      iii

<PAGE>

<TABLE>

<S>                                                                                                    <C>

SECTION  9.  CONDITIONS PRECEDENT...................................................................    31
         9.1  DOCUMENTATION.........................................................................    31
         9.2  NO DEFAULT............................................................................    31
         9.3  OTHER LOAN DOCUMENTS..................................................................    31
         9.4  COLLATERAL EXAMINATION................................................................    31
         9.5  AVAILABILITY..........................................................................    31
         9.6  NO LITIGATION.........................................................................    31
         9.7  FEES..................................................................................    31
         9.8  UCC SEARCHES/FINANCING STATEMENTS.....................................................    31
         9.9  BORROWING BASE CERTIFICATE............................................................    32
         9.10 OFFICER'S CERTIFICATES................................................................    32
         9.11 SECRETARY'S CERTIFICATES..............................................................    32
         9.12 CERTIFICATES OF LEGAL EXISTENCE AND GOOD STANDING AND FOREIGN QUALIFICATION...........    32
         9.13 LEGAL OPINIONS........................................................................    32
         9.14 PAYOFF LETTERS AND TERMINATION STATEMENTS.............................................    32
         9.15 INSURANCE.............................................................................    33
         9.16 FINANCIAL INFORMATION/CASH FLOW PROJECTIONS...........................................    33
         9.17 BLOCKED ACCOUNT ARRANGEMENTS..........................................................    33
         9.18 CASH MANAGEMENT.......................................................................    33
         9.19 REQUEST FOR ADVANCE...................................................................    33
         9.20 ACCOUNT PAYABLE OBLIGATIONS...........................................................    33
         9.21 FRENCH SUBSIDIARY PAYMENT.............................................................    33
         9.22 MISCELLANEOUS.........................................................................    33

SECTION 10.  EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT......................................    33
         10.1  EVENTS OF DEFAULT....................................................................    33
               10.1.1   PAYMENT OF REVOLVING CREDIT NOTE............................................    34
               10.1.2   PAYMENT OF OTHER OBLIGATIONS................................................    34
               10.1.3   MISREPRESENTATIONS..........................................................    34
               10.1.4   BREACH OF SPECIFIC COVENANTS................................................    34
               10.1.5   BREACH OF OTHER COVENANTS...................................................    34
               10.1.6   DEFAULT UNDER SECURITY DOCUMENTS/OTHER AGREEMENTS...........................    34
               10.1.7   OTHER DEFAULTS..............................................................    34
               10.1.8   UNINSURED LOSSES............................................................    35
               10.1.9   ADVERSE CHANGES OR EFFECT...................................................    35
               10.1.10  INSOLVENCY AND RELATED PROCEEDING...........................................    35
               10.1.11  BUSINESS DISRUPTION; CONDEMNATION...........................................    35
               10.1.12  CHANGE OF OWNERSHIP.........................................................    35
               10.1.13  ERISA 35
               10.1.14  CHALLENGE TO AGREEMENT......................................................    36
               10.1.15  REPUDIATION OF OR DEFAULT UNDER GUARANTY AGREEMENT..........................    36
               10.1.16  CRIMINAL FORFEITURE.........................................................    36
               10.1.17  JUDGMENTS...................................................................    36
         10.2  ACCELERATION OF THE OBLIGATIONS......................................................    36
         10.3  OTHER REMEDIES.......................................................................    36
</TABLE>

                                       iv

<PAGE>

<TABLE>
<S>                                                                                                    <C>

               10.3.1  CUMULATIVE RIGHTS............................................................    37
               10.3.2  POSSESSION OF COLLATERAL.....................................................    37
               10.3.3  SELLER DISPOSES OF COLLATERAL................................................    37
               10.3.4  LICENSES.....................................................................    37
               10.3.5  SECURITY INTEREST IN DEPOSITS................................................    38
         10.4  REMEDIES CUMULATIVE, NO WAIVER.......................................................    38

SECTION 11.   MISCELLANEOUS.........................................................................    38
         11.1  POWER OF ATTORNEY....................................................................    38
               11.1.1  ENDORSEMENTS.................................................................    39
               11.1.2  OTHER ACTIONS................................................................    39
         11.2  INDEMNITY............................................................................    39
         11.3  MODIFICATION OF AGREEMENT, SALE OF INTEREST..........................................    40
         11.4  SEVERABILITY.........................................................................    40
         11.5  SUCCESSORS AND ASSIGNS...............................................................    40
         11.6  CUMULATIVE EFFECT, CONFLICT OF TERMS.................................................    40
         11.7  EXECUTION IN COUNTERPARTS............................................................    41
         11.8  NOTICE...............................................................................    41
         11.9  LENDER'S CONSENT.....................................................................    42
         11.10 CREDIT INQUIRIES.....................................................................    42
         11.11 TIME OF ESSENCE......................................................................    42
         11.12 ENTIRE AGREEMENT.....................................................................    42
         11.13 INTERPRETATION.......................................................................    42
         11.14 JOINT AND SEVERAL LIABILITY..........................................................    42
         11.15 SURETY WAIVERS AND CONSENTS..........................................................    43
         11.16 WAIVERS OF EVENTS OF DEFAULT.........................................................    45
         11.17 GOVERNING LAW; CONSENT TO FORUM......................................................    45
         11.18 WAIVERS BY BORROWER..................................................................    46
</TABLE>

                                       v

<PAGE>

                           LOAN AND SECURITY AGREEMENT

         THIS LOAN AND SECURITY AGREEMENT is made this 31st day of January,
2001, among FLEET CAPITAL CORPORATION ("Lender"), a Rhode Island corporation
with an office at One Federal Street, Boston, Massachusetts 02110, as lender,
DAWSON, INC. ("Dawson"), a Delaware corporation with its chief executive office
and principal place of business at 15 Southwest Park, Westwood, Massachusetts
02090, together with THE FAXON COMPANY, INC. ("Faxon"), a Massachusetts
corporation with its chief executive office and principal place of business at
15 Southwest Park, Westwood, Massachusetts 02090, THE TURNER SUBSCRIPTION
AGENCY, INCORPORATED ("Turner"), a Delaware corporation with its chief executive
office and principal place of business at 1001 West Pines Road, Oregon, Illinois
61061; MCGREGOR SUBSCRIPTION SERVICE, INC. ("McGregor"), a Illinois corporation
with its chief executive office and principal place of business at 1001 West
Pines Road, Oregon, Illinois 61061, CORPORATE SUBSCRIPTION SERVICES INC. ("CSS")
a New Jersey corporation with its chief executive office and principal place of
business at 85 Chestnut Ridge Road, Montvale, New Jersey 07645; DAWSON
INFORMATION QUEST, INC. ("IQD"), a California corporation with its chief
executive office and principal place of business at 5838 Edison Place, Carlsbad,
California 92008, (Dawson, Faxon, Turner, McGregor, CSS, and IQD collectively
and individually, the "Borrower"), as borrowers and ROWECOM INC. ("Parent"), a
Delaware corporation with its chief executive office and principal place of
business at 60 Aberdeen Avenue, Cambridge, Massachusetts 02138, as guarantor.
Capitalized terms used in this Agreement have the meanings assigned to them in
Appendix A, General Definitions. Accounting terms not otherwise specifically
defined herein shall be construed in accordance with GAAP consistently applied.

SECTION 1.        CREDIT FACILITY

         Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a Total Credit Facility of up to $25,000,000
available upon Borrower's request therefore, as follows:

         1.1 Revolving Credit Loans.

             1.1.1 LOANS AND RESERVES. Lender agrees, for so long as no Default
or Event of Default exists, to make Revolving Credit Loans to each Borrower from
time to time, as requested by each Borrower in the manner set forth in
subsection 3.1.1 hereof, up to a maximum principal amount at any time
outstanding equal to the lesser of (i) the Individual Formula Amount for such
Borrower at such time or (ii) the Total Credit Facility minus the aggregate
outstanding Revolving Credit Loans to all Borrowers at such time; provided,
however that after the initial advance hereunder, Lender shall have no
obligation to make any Revolving Credit Loan where Borrower's Availability
(after giving effect to the making of such Revolving Credit Loan) shall be less
than $2,500,000. The Indebtedness of each Borrower arising as a result of the
Revolving Credit Loans shall be evidenced by a secured promissory note in the
form of EXHIBIT A hereto (the "Revolving Credit Note"). Lender shall have the
right to establish new or modify existing advance rates, establish reserves in
such amounts, and with respect to such matters, as Lender shall deem necessary
or appropriate, against the amount of Revolving Credit Loans which each

<PAGE>

Borrower may otherwise request under this subsection 1.1.1, including, without
limitation, with respect to (i) price adjustments, damages, unearned discounts,
returned products or other matters for which credit memoranda are issued in the
ordinary course of Borrower's business; (iii) other sums chargeable against each
Borrower's Loan Account as Revolving Credit Loans under any section of this
Agreement; (iv) amounts owing by Borrower to any Person to the extent secured by
a Lien on, or trust over, any Property of Borrower; (v) subscriptions for
products that have not been mailed or otherwise delivered; and (vi) such other
matters, events, conditions or contingencies as to which Lender, in its sole
credit judgment, determines reserves should be established from time to time
hereunder.

             1.1.2 USE OF PROCEEDS. The Revolving Credit Loans shall be used
solely for Borrower's seasonal working capital needs in a manner consistent with
the provisions of this Agreement and all applicable laws.

SECTION 2.        INTEREST, FEES AND CHARGES

         2.1 INTEREST.

             2.1.1 RATES OF INTEREST. Interest shall accrue on the principal
amount of the Revolving Credit Loans outstanding at the end of each day at a
fluctuating rate per annum equal to two percent (2%) plus the Base Rate. The
rate of interest applicable to Revolving Credit Loans shall increase or decrease
by an amount equal to any increase or decrease in the Base Rate, effective as of
the opening of business on the day that any such change in the Base Rate occurs.

             2.1.2 DEFAULT RATE OF INTEREST. Upon and after the occurrence of an
Event of Default, and during the continuation thereof, the principal amount of
all Loans shall bear interest at a rate per annum equal to three percent (3%)
above the interest rate otherwise applicable thereto (the "Default Rate").

             2.1.3 MAXIMUM INTEREST. In no event whatsoever shall the aggregate
of all amounts deemed interest hereunder or under the Revolving Credit Note and
charged or collected pursuant to the terms of this Agreement exceed the highest
rate permissible under any law which a court of competent jurisdiction shall, in
a final determination, deem applicable hereto. If any provisions of this
Agreement or the Revolving Credit Note are in contravention of any such law,
such provisions shall be deemed amended to conform thereto.

         2.2 COMPUTATION OF INTEREST AND FEES. Interest, unused line fees and
collection charges hereunder shall be calculated daily and shall be computed on
the actual number of days elapsed over a year of 360 days. For the purpose of
computing interest hereunder, all items of payment received by Lender shall be
deemed applied by Lender on account of the Obligations (subject to final payment
of such items) on the first Business Day after receipt by Lender of such items
in Lender's account located in Boston, Massachusetts.

         2.3 FACILITY FEES. Borrower shall pay to Lender facility fees of (i)
$750,000 on the Closing Date ($500,000 of which has been paid prior to the
Closing Date), which shall be fully earned and nonrefundable on the Closing Date
and shall be paid concurrently with the initial Loan hereunder and (ii) $250,000
which shall be fully earned on the Closing Date and paid on

                                       2
<PAGE>

the earlier to occur of (a) May 31, 2001 and (b) termination of this Agreement
pursuant to Section 4 hereof or otherwise.

         2.4 INTENTIONALLY DELETED.

         2.5 UNUSED LINE FEE. Borrower shall pay to Lender a fee equal to
one-half of one percent (.50%) per annum of the average monthly amount by which
the Total Credit Facility exceeds the sum of the outstanding principal balance
of the Revolving Credit Loans. The unused line fee shall be payable monthly in
arrears on the first Business Day of each month hereafter.

         2.6 INTENTIONALLY DELETED.

         2.7 AUDIT AND APPRAISAL FEES. Borrower shall pay to Lender audit and
appraisal fees in accordance with Lender's current schedule of fees in effect
from time to time in connection with audits and appraisals of Borrower's books
and records and such other matters as Lender shall deem appropriate, plus all
out-of-pocket expenses incurred by Lender in connection with such audits and
appraisals. Audit fees shall be payable on issuance of an invoice by Lender and
shall be immediately debited from Borrower's account by Lender.

         2.8 REIMBURSEMENT OF EXPENSES. If, at any time or times regardless of
whether or not an Event of Default then exists, Lender or any Participating
Lender incurs legal or accounting expenses or any other costs or out-of-pocket
expenses in connection with (i) the negotiation and preparation of this
Agreement or any of the other Loan Documents, any amendment of or modification
of this Agreement or any of the other Loan Documents; (ii) the administration of
this Agreement or any of the other Loan Documents and the transactions
contemplated hereby and thereby; (iii) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Lender, Borrower or any other
Person) in any way relating to the Collateral, this Agreement or any of the
other Loan Documents or Borrower's affairs; (iv) any attempt to enforce any
rights of Lender or any Participating Lender against Borrower or any other
Person which may be obligated to Lender by virtue of this Agreement or any of
the other Loan Documents, including, without limitation, the Account Debtors; or
(v) any attempt to inspect, verify, protect, preserve, restore, collect, sell,
liquidate or otherwise dispose of or realize upon the Collateral; then all such
legal and accounting expenses, other costs and out of pocket expenses of Lender
shall be charged to Borrower. All amounts chargeable to Borrower under this
Section 2.8 shall be Obligations secured by a lien on all of the Collateral,
shall be payable on demand to Lender or to such Participating Lender, as the
case may be, and shall bear interest from the date such demand is made until
paid in full at the rate applicable to Revolving Credit Loans from time to time.
Borrower shall also reimburse Lender for expenses incurred by Lender in its
administration of the Collateral to the extent and in the manner provided in
Section 6 hereof.

         2.9 BANK CHARGES. Borrower shall pay to Lender, on demand, any and all
fees, costs or expenses which Lender or any Participating Lender pays to a bank
or other similar institution (including, without limitation, any fees paid by
Lender to any Participating Lender) arising out of or in connection with (i) the
forwarding to Borrower or any other Person on behalf of Borrower, by Lender or
any Participating Lender, of proceeds of loans made by Lender to Borrower
pursuant to this Agreement and (ii) the depositing for collection, by Lender or
any Participating

                                       3
<PAGE>

Lender, of any check or item of payment received or delivered to Lender or any
Participating Lender on account of the Obligations.

SECTION 3.        LOAN ADMINISTRATION.

         3.1 MANNER OF BORROWING REVOLVING CREDIT LOANS. Borrowings under the
credit facility established pursuant to Section 1 hereof shall be as follows:

             3.1.1 LOAN REQUESTS. A request for a Revolving Credit Loan shall be
made, or shall be deemed to be made, in the following manner: (i) each Borrower
may give Lender notice of its intention to borrow, in which notice such Borrower
shall specify the amount of the proposed borrowing and the proposed borrowing
date, no later than 1:00 p.m. Boston time one Business Day before the proposed
borrowing date, provided, however, that no such request may be made at a time
when there exists a Default or an Event of Default; and (ii) at which time any
amount required to be paid under this Agreement or the Revolving Credit Note,
whether as interest or for any other Obligation, it shall be deemed irrevocably
to be a request from Borrower for a Revolving Credit Loan on the due date in the
amount required to pay such interest or other Obligation. As an accommodation to
Borrower, Lender may permit telephonic or electronic requests for loans and
electronic transmittal of instructions, authorizations, agreements or reports to
Lender by Borrower. Lender shall have no liability to Borrower for any loss or
damage suffered by Borrower as a result of Lender's honoring of any requests,
execution of any instructions, authorizations or agreements or reliance on any
reports communicated to it telephonically or electronically and purporting to
have been sent to Lender by Borrower and Lender shall have no duty to verify the
origin of any such communication or the authority of the Person sending it.

             3.1.2 DISBURSEMENT. Borrower hereby irrevocably authorizes Lender
to disburse the proceeds of each Revolving Credit Loan requested, or deemed to
be requested, pursuant to this subsection 3.1.2 as follows: (i) the proceeds of
each Revolving Credit Loan requested under subsection 3.1.1(i) shall be
disbursed by Lender in lawful money of the United States of America in
immediately available funds, in the case of the initial borrowing, in accordance
with the terms of the written disbursement letter from Borrower, and in the case
of each subsequent borrowing, by wire transfer to such bank account as may be
agreed upon by Borrower and Lender from time to time or elsewhere if pursuant to
a written direction from Borrower; and (ii) the proceeds of each Revolving
Credit Loan requested under subsection 3.1.1(ii) shall be disbursed by Lender by
way of direct payment of the relevant interest or other Obligation.

             3.1.3 AUTHORIZATION. Borrower hereby irrevocably authorizes Lender,
in Lender's sole discretion, to advance to Borrower, and to charge to Borrower's
Loan Account hereunder as a Revolving Credit Loan, a sum sufficient to pay all
interest accrued on the Obligations during the immediately preceding month and
to pay all costs, fees and expenses at any time owed by Borrower to Lender
hereunder.

                                       4
<PAGE>

             3.1.4 MAXIMUM ADVANCES.

                  (i) The aggregate balance of Revolving Credit Loans
         outstanding at any time shall not exceed the lesser of (a) Total Credit
         Facility or (b) the Formula Amount.

                  (ii) The aggregate balance of Revolving Credit Loans
         outstanding at any time to any individual Borrower shall not exceed the
         lesser of (a) Total Credit Facility or (b) such Borrower's Individual
         Formula Amount.

         3.2 PAYMENTS. The Obligations shall be payable as follows:

             3.2.1 PRINCIPAL. Principal payable on account of Revolving Credit
Loans shall be payable by Borrower to Lender immediately upon the earliest of
(i) the receipt by Lender or Borrower of any proceeds of any of the Collateral,
to the extent of said proceeds, (ii) the occurrence of an Event of Default which
results in acceleration of the maturity and payment of the Obligations, or (iii)
termination of this Agreement pursuant to Section 4 hereof or otherwise;
PROVIDED, HOWEVER; that if an Overadvance shall exist at any time, Borrower
shall immediately repay the Overadvance.

             3.2.2 INTEREST. Interest accrued on the Revolving Credit Loans
shall be due on the earliest of (i) the first calendar day of each month (for
the immediately preceding month), computed through the last calendar day of the
preceding month, (ii) the occurrence of an Event of Default which results in
acceleration of the maturity and payment of the Obligations or (iii) termination
of this Agreement pursuant to Section 4 hereof or otherwise.

             3.2.3 COSTS, FEES AND CHARGES. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided in
this Agreement (or upon demand), to Lender or to any other Person designated by
Lender.

             3.2.4 OTHER OBLIGATIONS. The balance of the Obligations requiring
the payment of money, if any, shall be payable by Borrower to Lender as and when
provided in this Agreement, the Other Agreements or the Security Documents, or
on demand, whichever is earlier.

         3.3 INTENTIONALLY DELETED.

         3.4 APPLICATION OF PAYMENTS AND COLLECTIONS. All items of payment
received by Lender by 12:00 noon, Boston time, on any Business Day shall be
deemed received on that Business Day. All items of payment received after 12:00
noon, Boston time, on any Business Day shall be deemed received on the following
Business Day. Borrower irrevocably waives the right to direct the application of
any and all payments and collections at any time or times hereafter received by
Lender from or on behalf of Borrower, and Borrower does hereby irrevocably agree
that Lender shall have the continuing exclusive right to apply and reapply any
and all such payments and collections received at any time or times hereafter by
Lender or its agent against the Obligations, in such manner as Lender may deem
advisable, notwithstanding any entry by Lender upon any of its books and
records. If as the result of collections of Accounts as authorized by subsection
6.2.6 hereof a credit balance exists in the Loan Account, such credit

                                       5
<PAGE>

balance shall not accrue interest in favor of Borrower, but shall be available
to Borrower at any time or times for so long as no Default or Event of Default
exists.

         3.5 ALL LOANS TO CONSTITUTE ONE OBLIGATION. The Loans shall constitute
one general Obligation of Borrower, and shall be secured by Lender's Lien upon
all of the Collateral.

         3.6 LOAN ACCOUNT. Lender shall enter all Loans as debits to the Loan
Account and shall also record in the Loan Account all payments made by Borrower
on any Obligations and all proceeds of Collateral which are finally paid to
Lender, and may record therein, in accordance with customary accounting
practice, other debits and credits, including interest and all charges and
expenses chargeable to Borrower.

         3.7 STATEMENTS OF ACCOUNT. Lender will account to Borrower periodically
with a statement of Loans, charges and payments made pursuant to this Agreement,
and such account rendered by Lender shall be deemed final, binding and
conclusive upon Borrower unless Lender is notified by Borrower in writing to the
contrary within 30 days of the date each accounting is mailed to Borrower. Such
notice shall only be deemed an objection to those items specifically objected to
therein.

         3.8 INCREASED COSTS. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) adopted after the date of this Agreement and having
general applicability to all banks within the jurisdiction in which Lender
operates, or any interpretation or application thereof by any governmental
authority charged with the interpretation or application thereof, or the
compliance of Lender therewith, shall:

                  (i) (1) subject Lender to any tax with respect to this
         Agreement (other than (a) any tax based on or measured by net income or
         otherwise in the nature of a net income tax, including, without
         limitation, any franchise tax or any similar tax based on capital, net
         worth or comparable basis for measurement and (b) any tax collected by
         a withholding on payments and which neither is computed by reference to
         the net income of the payee nor is in the nature of an advance
         collection of a tax based on or measured by the net income of the
         payee) or (2) change the basis of taxation of payments to Lender of
         principal, fees, interest or any other amount payable hereunder or
         under any Loan Documents (other than in respect of (a) any tax based on
         or measured by net income or otherwise in the nature of a net income
         tax, including, without limitation, any franchise tax or any similar
         tax based on capital, net worth or comparable basis for measurement and
         (b) any tax collected by a withholding on payments and which neither is
         computed by reference to the net income of the payee nor is in the
         nature of an advance collection of a tax based on or measured by the
         net income of the payee);

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

                                       6
<PAGE>

                  (iii) impose on Lender any other condition with respect to any
         Loan Document;

and the result of any of the foregoing is to increase the cost to Lender of
making, renewing or maintaining Loans hereunder by an amount that Lender deems
to be material or to reduce the amount of any payment (whether of principal,
interest or otherwise) in respect of any of the Loans by an amount that Lender
deems to be material, then, in any such case, Borrower shall pay Lender, upon
demand following its receipt of notice of the imposition of such increased
costs, such additional amount as will compensate Lender for such additional cost
or such reduction, as the case may be, to the extent Lender has not otherwise
been compensated, with respect to a particular Loan. An officer of Lender shall
determine the amount of such additional cost or reduced amount using reasonable
averaging and attribution methods and shall certify the amount of such
additional cost or reduced amount to Borrower, which certification shall include
a written explanation of such additional cost or reduction to Borrower. Such
certification shall be conclusive absent manifest error. If Lender claims any
additional cost or reduced amount pursuant to this Section 3.8, then Lender
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to designate a different lending office or to file any certificate or document
reasonably requested by Borrower if the making of such designation or filing
would avoid the need for, or reduce the amount of, any such additional cost or
reduced amount and would not, in the sole discretion of Lender, be otherwise
disadvantageous to Lender.

SECTION 4.        TERM AND TERMINATION

         4.1 TERM OF AGREEMENT. Subject to Lender's right to cease making Loans
to Borrower upon or after the occurrence of any Default or Event of Default or
as otherwise provided under this Agreement, this Agreement shall be in effect
from the date hereof, through and including May 31, 2001 (the "Maturity Date").

         4.2 Termination.

             4.2.1 TERMINATION BY LENDER. Lender may terminate this Agreement
without notice upon or after the occurrence of an Event of Default.

             4.2.2 TERMINATION BY BORROWER. Upon at least 90 days prior written
notice to Lender, Borrower may, at its option, terminate this Agreement;
PROVIDED, HOWEVER, no such termination shall be effective until Borrower has
paid all of the Obligations in full in immediately available funds. Any notice
of termination given by Borrower shall be irrevocable unless Lender otherwise
agrees in writing, and Lender shall have no obligation to make any Loans on or
after the termination date stated in such notice. Borrower may elect to
terminate this Agreement in its entirety only. No section of this Agreement or
type of Loan available hereunder may be terminated singly.

             4.2.3 Intentionally Deleted.

             4.2.4 EFFECT OF TERMINATION. All of the Obligations shall be
immediately due and payable upon the Maturity Date, the termination date stated
in any notice of termination of this Agreement or upon Termination pursuant to
4.2.1 hereof. All undertakings, agreements, covenants, warranties and
representations of Borrower contained in the Loan Documents shall

                                       7
<PAGE>

survive any such termination and Lender shall retain its Liens in the Collateral
and all of its rights and remedies under the Loan Documents notwithstanding such
termination until Borrower has paid the Obligations to Lender, in full, in
immediately available funds, together with any facility fee that may be due
pursuant to Section 2.3 hereof. Notwithstanding the payment in full of the
Obligations, Lender shall not be required to terminate its Liens in the
Collateral unless, with respect to any loss or damage Lender may incur as a
result of dishonored checks or other items of payment received by Lender from
Borrower or any Account Debtor and applied to the Obligations, Lender shall, at
its option, (i) have received a written agreement, executed by Borrower and by
any Person whose loans or other advances to Borrower are used in whole or in
part to satisfy the Obligations, indemnifying Lender from any such loss or
damage; or (ii) have retained such monetary reserves and Liens on the Collateral
for such period of time as Lender, in its sole discretion, may deem necessary to
protect Lender from any such loss or damage.

SECTION 5.        SECURITY INTERESTS

         5.1 SECURITY INTEREST IN COLLATERAL. To secure the prompt payment and
performance to Lender of the Obligations, each Borrower hereby grants to Lender
a continuing Lien upon all of Borrower's assets, including all of the following
Property and interests in Property of Borrower, whether now owned or existing or
hereafter created, acquired or arising and wheresoever located:

                  (i) Accounts;

                  (ii) Inventory;

                  (iii) Equipment;

                  (iv) General Intangibles;

                  (v) Investment Property;

                  (vi) Chattel Paper, Documents and Instruments;

                  (vii) Letter-of-Credit Rights;

                  (viii) Payment Intangibles;

                  (ix) Supporting Obligations;

                  (x) Subsidiary stock;

                  (xi) All monies (including deposit accounts) and other
         Property of any kind now or at any time or times hereafter in the
         possession or under the control of Lender or a bailee or Affiliate of
         Lender;

                  (xii) All accessions to, substitutions for and all
         replacements, products and cash and non-cash proceeds of (i) through
         (xi) above, including, without limitation,

                                       8
<PAGE>

         proceeds of and unearned premiums with respect to insurance policies
         insuring any of the Collateral;

                  (xiii) all of Borrower's right, title and interest in and to
         (a) its respective goods and other property including, but not limited
         to, all merchandise returned or rejected by customers, relating to or
         securing any of the Accounts; (b) all of Borrower's rights as a
         consignor, a consignee, an unpaid vendor, mechanic, artisan, or other
         lien or, including stoppage in transit, setoff, detinue, replevin,
         reclamation and repurchase; (c) all additional amounts due to Borrower
         from any customer relating to the Receivables; (d) other property,
         including warranty claims, relating to any goods securing this
         Agreement; (e) to the extent Borrower are not expressly prohibited by
         the terms of the following to grant a security interest in such rights,
         all of Borrower's contract rights, rights of payment which have been
         earned under a contract right, instruments, documents, chattel paper,
         warehouse receipts, deposit accounts, money, securities and investment
         property; (f) if and when obtained by Borrower, all real and personal
         property of third parties in which Borrower has been granted a lien or
         security interest as security for the payment or enforcement of
         Accounts; and (g) any other goods, personal property or real property
         now owned or hereafter acquired in which Borrower has expressly granted
         a security interest or may in the future grant a security interest to
         Lender hereunder, or in any amendment or supplement hereto or thereto,
         or under any other agreement between Lender and Borrower;

                  (xiv) all of Borrower's ledger sheets, ledger cards, files,
         correspondence, records, books of account, business papers, computers,
         computer software (owned by Borrower or in which either has an
         interest), computer programs, tapes, disks and documents relating to
         any of the assets or property described in this definition;

                  (xv) all of the collateral referred to in the Loan Documents
         and all other property and assets that is intended to be subject to any
         Lien in favor of the Lender for the benefit of the Lender; and

                  (xvi) all proceeds and products of any of the assets or
         property described in this definition in whatever form, including, but
         not limited to: cash, deposit accounts (whether or not comprised solely
         of proceeds), certificates of deposit, insurance proceeds (including
         hazard, flood and credit insurance), negotiable instruments, investment
         property and other instruments for the payment of money, chattel paper,
         security agreements, documents, eminent domain proceeds, condemnation
         proceeds and tort claim proceeds.

         5.2 LIEN PERFECTION, FURTHER ASSURANCES. Borrower shall execute such
UCC-1 financing statements as are required by the Code and such other
instruments, assignments or documents as are necessary to perfect Lender's Lien
upon any of the Collateral and shall take such other action as may be required
to perfect or to continue the perfection of Lender's Lien upon the Collateral.
Unless prohibited by applicable law, Borrower hereby authorizes Lender to
execute and file any such financing statement or other instrument on Borrower's
behalf. The parties agree that a photographic or other reproduction of this
Agreement shall be sufficient as a financing statement and may be filed in any
appropriate office in lieu thereof. At Lender's

                                       9
<PAGE>

request, Borrower shall also promptly execute or cause to be executed and shall
deliver to Lender any and all documents, instruments and agreements deemed
necessary by Lender to give effect to or carry out the terms or intent of the
Loan Documents. At Lender's request, Borrower shall execute all documents,
mortgages or other instruments as Lender may request to secure and perfect a
lien in favor of the Lender on all real property owned by each Borrower and
shall provide title insurance, surveys and other information and documents as
its Lender may request in connection therewith.

         5.3 REVISED ARTICLE 9. It is intended that, with respect to any term
used herein to describe Collateral, which term is defined in either (or both)
the Code as in effect on the date when this Agreement was executed by the
Borrowers or in Revised Article 9, the meaning given that term shall be the more
encompassing of the two definitions.

SECTION 6.        COLLATERAL ADMINISTRATION

         6.1 General.

             6.1.1 LOCATION OF COLLATERAL. All Collateral, other than Inventory
in transit and motor vehicles, will at all times be kept by Borrower and its
Subsidiaries at one or more of the business locations set forth in Schedule
6.1.1 hereto and shall not, without the prior written approval of Lender, be
moved therefrom except, for (i) sales of Inventory in the ordinary course of
business; and (ii) removals in connection with dispositions of Equipment that
are authorized by subsection 6.4.2 hereof.

             6.1.2 INSURANCE OF COLLATERAL. Borrower shall maintain and pay for
insurance upon all Collateral wherever located and with respect to Borrower's
business, covering casualty, hazard, public liability and such other risks in
such amounts and with such insurance companies as are satisfactory to Lender.
(Based on information delivered to the Lender from the Borrower on or prior to
the Closing Date, the Borrower has satisfactory insurance as of the Closing
Date.) Borrower shall deliver the originals of such policies to Lender with
satisfactory lender's loss payable endorsements, naming Lender as sole loss
payee, assignee and/or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than thirty (30) days prior written notice to Lender in the event of
cancellation of the policy for any reason whatsoever and a clause specifying
that the interest of Lender shall not be impaired or invalidated by any act or
neglect of Borrower or the owner of the Property or by the occupation of the
premises for purposes more hazardous than are permitted by said policy. If
Borrower fails to provide and pay for such insurance, Lender may, at its option,
but shall not be required to, procure the same and charge Borrower therefore.
Borrower agrees to deliver to Lender, promptly as rendered, true copies of all
reports made in any reporting forms to insurance companies.

             6.1.3 PROTECTION OF COLLATERAL. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, any and all excise, property, sales, and use taxes imposed by any
state, federal, or local authority on any of the Collateral or in respect of the
sale thereof shall be borne and paid by Borrower. If Borrower fails to promptly
pay any portion thereof when due, Lender may, at its option, but shall not be
required to, pay the same and charge Borrower therefore. Lender shall not be
liable or responsible in any way for the

                                       10
<PAGE>

safekeeping of any of the Collateral or for any loss or damage thereto or for
any diminution in the value thereof, or for any act or default of any
warehouseman, carrier, forwarding agency, or other Person whomsoever, but the
same shall be at Borrower's sole risk.

         6.2 Administration of Accounts.

             6.2.1 RECORDS, SCHEDULES AND ASSIGNMENTS OF ACCOUNTS. Borrower
shall keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Lender on such periodic basis as Lender
shall request a sales and collections report for the preceding period, in form
satisfactory to Lender. On or before the fifteenth day of each month from and
after the date hereof, Borrower shall deliver to Lender, in form acceptable to
Lender, a detailed aged trial balance of all Accounts existing as of the last
day of the preceding month, specifying the names, addresses, face value, dates
of invoices and due dates for each Account Debtor obligated on an Account so
listed ("Schedule of Accounts"), and, upon Lender's request therefore, copies of
proof of delivery and the original copy of all documents, including, without
limitation, repayment histories and present status reports relating to the
Accounts so scheduled and such other matters and information relating to the
status of then existing Accounts as Lender shall reasonably request. In
addition, if Accounts become ineligible because they fall within one of the
specified categories of ineligibility set forth in the definition of Eligible
Accounts or otherwise established by Lender, Borrower shall notify Lender of
such occurrence on the first Business Day following such occurrence and the
Borrowing Base shall thereupon be adjusted to reflect such occurrence. If
requested by Lender, Borrower shall execute and deliver to Lender formal written
assignments of all of its Accounts weekly or daily, which shall include all
Accounts that have been created since the date of the last assignment, together
with copies of invoices or invoice registers related thereto.

             6.2.2 DISCOUNTS, ALLOWANCES, DISPUTES. If Borrower grants any
rebates, discounts, allowances or credits that are not shown on the face of the
invoice for the Account involved, Borrower shall report such rebates, discounts,
allowances or credits, as the case may be, to Lender as part of the next
required Schedule of Accounts Borrowing Base Certificate. If any amounts due and
owing are in dispute between Borrower and any Account Debtor, Borrower shall
provide Lender with written notice thereof at the time of submission of the next
Schedule of Accounts, explaining in detail the reason for the dispute, all
claims related thereto and the amount in controversy. Upon and after the
occurrence of an Event of Default, Lender shall have the right to settle or
adjust all disputes and claims directly with the Account Debtor and to
compromise the amount or extend the time for payment of the Accounts upon such
terms and conditions as Lender may deem advisable, and to charge the
deficiencies, costs and expenses thereof, including attorney's fees, to
Borrower.

             6.2.3 TAXES. If an Account includes a charge for any tax payable to
any governmental taxing authority, Lender is authorized, in its sole discretion,
to pay the amount thereof to the proper taxing authority for the account of
Borrower and to charge Borrower therefore, provided, however that Lender shall
not be liable for any taxes to any governmental taxing authority that may be due
by Borrower.

             6.2.4 ACCOUNT VERIFICATION. Whether or not a Default or an Event of
Default has occurred, any of Lender's officers, employees or agents shall have
the right, at any time or times

                                       11
<PAGE>

hereafter, in the name of Lender, any designee of Lender or Borrower, to verify
the validity, amount or any other matter relating to any Accounts by mail,
telephone, electronic communication or otherwise. Borrower shall cooperate fully
with Lender in an effort to facilitate and promptly conclude any such
verification process.

             6.2.5 MAINTENANCE OF DOMINION ACCOUNT. Borrower shall maintain a
Dominion Account pursuant to a lockbox arrangement acceptable to Lender with
such banks as may be selected by Borrower and be acceptable to Lender. Borrower
shall issue to any such banks an irrevocable letter of instruction directing
such banks to deposit all payments or other remittances received in the lockbox
to the Dominion Account for application on account of the Obligations. All funds
deposited in the Dominion Account shall immediately become the property of
Lender and Borrower shall obtain the agreement by such banks in favor of Lender
to waive any offset rights against the funds so deposited. Lender assumes no
responsibility for such lockbox arrangement, including, without limitation, any
claim of accord and satisfaction or release with respect to deposits accepted by
any bank thereunder.

             6.2.6 COLLECTION OF ACCOUNTS, PROCEEDS OF COLLATERAL. To expedite
collection, Borrower shall endeavor in the first instance to make collection of
its Accounts for Lender. All remittances received by Borrower on account of
Accounts, together with the proceeds of any other Collateral, shall be held as
Lender's property by Borrower as trustee of an express trust for Lender's
benefit and Borrower shall immediately deposit same in kind in the Dominion
Account. Lender retains the right at all times after the occurrence of a Default
or an Event of Default to notify Account Debtors that Accounts have been
assigned to Lender and to collect Accounts directly in its own name and to
charge the collection costs and expenses, including attorneys' fees to Borrower.

         6.3 ADMINISTRATION OF INVENTORY.

             6.3.1 RECORDS AND REPORTS OF INVENTORY. Borrower shall keep
accurate and complete records of its Inventory. Borrower shall to furnish Lender
Inventory reports in form and detail satisfactory to Lender at such times as
Lender may request, but at least once each month, not later than the twentieth
day of such month. At Lender's request, Borrower shall conduct a physical
inventory and shall provide to Lender a report based on each such physical
inventory promptly thereafter, together with such supporting information as
Lender shall request.

             6.3.2 RETURNS OF INVENTORY. If at any time or times hereafter any
Account Debtor returns any Inventory to Borrower the shipment of which generated
an Account on which such Account Debtor is obligated in excess of $50,000,
Borrower shall immediately notify Lender of the same, specifying the reason for
such return and the location, condition and intended disposition of the returned
Inventory.

         6.4 ADMINISTRATION OF EQUIPMENT.

             6.4.1 RECORDS AND SCHEDULES OF EQUIPMENT. Borrower shall keep
accurate records itemizing and describing the kind, type, quality, quantity and
value of its Equipment and all dispositions made in accordance with subsection
6.4.2 hereof, and shall furnish Lender with a current schedule containing the
foregoing information on at least an annual basis and more often

                                       12
<PAGE>

if requested by Lender. Immediately on request therefore by Lender, Borrower
shall deliver to Lender any and all evidence of ownership, if any, of any of the
Equipment.

             6.4.2 DISPOSITIONS OF EQUIPMENT. Borrower will not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Lender; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Equipment which, in the aggregate during
any consecutive twelve-month period, has a fair market value or book value,
whichever is less, of $50,000 or less, provided that all proceeds thereof are
remitted to Lender for application to the Loans, or (ii) replacements of
Equipment that is substantially worn, damaged or obsolete with Equipment of like
kind, function and value, provided that the replacement Equipment shall be
acquired prior to or concurrently with any disposition of the Equipment that is
to be replaced, the replacement Equipment shall be free and clear of Liens other
than Permitted Liens that are not Purchase Money Liens, and Borrower shall have
given Lender at least 5 days prior written notice of such disposition.

         6.5 PAYMENT OF CHARGES. All amounts chargeable to Borrower under
Section 6 hereof shall be Obligations secured by all of the Collateral, shall be
payable on demand and shall bear interest from the date such advance was made
until paid in full at the rate applicable to Revolving Credit Loans from time to
time.

SECTION 7.        REPRESENTATIONS AND WARRANTIES

         7.1 GENERAL REPRESENTATIONS AND WARRANTIES. To induce Lender to enter
into this Agreement and to make advances hereunder, Borrower and Parent warrant,
represent and covenant to Lender that:

             7.1.1 ORGANIZATION AND QUALIFICATION. Each of Parent, Borrower and
their Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each of
Parent, Borrower and their domestic Subsidiaries is duly qualified and is
authorized to do business and is in good standing as a foreign corporation in
each state or jurisdiction listed on SCHEDULE 7.1.1 hereto and in all other
states and jurisdictions where the character of its Properties or the nature of
its activities make such qualification necessary.

             7.1.2 CORPORATE POWER AND AUTHORITY. Each of Parent, Borrower and
their Subsidiaries is duly authorized and empowered to enter into, execute,
deliver and perform this Agreement and each of the other Loan Documents to which
it is a party. The execution, delivery and performance of this Agreement and
each of the other Loan Documents have been duly authorized by all necessary
corporate action and do not and will not (i) require any consent or approval of
the shareholders of Parent, Borrower or any of their Subsidiaries; (ii)
contravene Parent's, Borrower's or any of their Subsidiaries' charter, articles
or certificate of incorporation or by-laws; (iii) violate, or cause Parent,
Borrower or any of their Subsidiaries to be in default under, any provision of
any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award in effect having applicability to Parent, Borrower or any
of their Subsidiaries; (iv) result in a breach of or constitute a default under
any indenture or loan or credit agreement or any other agreement, lease or
instrument to which Parent, Borrower or any of their

                                       13
<PAGE>

Subsidiaries is a party or by which it or its Properties may be bound or
affected; or (v) result in, or require, the creation or imposition of any Lien
(other than Permitted Liens) upon or with respect to any of the Properties now
owned or hereafter acquired by Parent, Borrower or any of their Subsidiaries.

             7.1.3 LEGALLY ENFORCEABLE AGREEMENT. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement will be, a legal,
valid and binding obligation of each of Parent, Borrower and their Subsidiaries
enforceable against it in accordance with its respective terms.

             7.1.4 CAPITAL STRUCTURE. SCHEDULE 7.1.4 hereto states (i) the
correct name of Parent, Borrower and the Subsidiaries of Parent and Borrower,
their jurisdiction of incorporation and the percentage of the Voting Stock owned
by Parent, Borrower and each of their Subsidiaries, (ii) the name of each of
Parent's, Borrower's and their Subsidiaries' corporate or joint venture
Affiliates and the nature of the affiliation, (iii) the number, nature and
holder of all outstanding Securities of Borrower and each of their Subsidiaries
and (iv) the number of authorized, issued and treasury shares of Parent,
Borrower and each of their Subsidiaries. Parent and Borrower has good title to
all of the shares it purports to own of the stock of each of their Subsidiaries,
free and clear in each case of any Lien other than Permitted Liens. All such
shares have been duly issued and are fully paid and non-assessable. There are no
outstanding options to purchase, or any rights or warrants to subscribe for, or
any commitments or agreements to issue or sell, or any Securities or obligations
convertible into, or any powers of attorney relating to, shares of the capital
stock of Borrower or any of their Subsidiaries. To the best of their knowledge
there are no outstanding agreements or instruments binding upon any of Parent's
or Borrower's shareholders relating to the ownership of their shares of capital
stock.

             7.1.5 CORPORATE NAMES. Neither Parent nor Borrower nor any of their
Subsidiaries have been known as or used any corporate, fictitious or trade names
except those listed on SCHEDULE 7.1.5 hereto. Except as set forth on SCHEDULE
7.1.5, neither Parent nor Borrower nor any of its Subsidiaries have been the
surviving corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person.

             7.1.6 BUSINESS LOCATIONS; AGENT FOR PROCESS. Each of Parent's,
Borrower's and their domestic Subsidiaries' chief executive office and other
places of business are as listed on SCHEDULE 7.1.6 hereto. During the preceding
one-year period, neither Parent nor Borrower nor any of their Subsidiaries have
had an office, place of business or agent for service of process other than as
listed on SCHEDULE 7.1.6. Except as shown on SCHEDULE 7.1.6, no Inventory is
stored with a bailee, warehouseman or similar party, nor is any Inventory
consigned to any Person.

             7.1.7 TITLE TO PROPERTIES; PRIORITY OF LIENS. Each of Parent,
Borrower and their Subsidiaries has good, indefeasible and marketable title to
and fee simple ownership of, or valid and subsisting leasehold interests in, all
of its real Property, and good title to all of the Collateral and all of its
other Property, in each case, free and clear of all Liens except Permitted
Liens. Borrower has paid or discharged all lawful claims which, if unpaid, might
become a Lien against any of Borrower's Properties that is not a Permitted Lien.
The Liens granted to Lender under Section 5 hereof are first priority Liens,
subject only to Permitted Liens.

                                       14
<PAGE>

             7.1.8 ACCOUNTS. Lender may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by Borrower with
respect to any Account or Accounts. Unless otherwise indicated in writing to
Lender, with respect to each Account:

                  (i) It is genuine and in all respects what it purports to be,
         and it is not evidenced by a judgment;

                  (ii) It arises out of a completed, bona fide sale and delivery
         of goods or rendition of services by Borrower in the ordinary course of
         its business and in accordance with the terms and conditions of all
         purchase orders, contracts or other documents relating thereto and
         forming a part of the contract between Borrower and the Account Debtor;

                  (iii) It is for a liquidated amount maturing as stated in the
         duplicate invoice covering such sale or rendition of services (a copy
         of which shall be furnished to Lender upon its request);

                  (iv) Such Account, and Lender's security interest therein, is
         not, and will not (by voluntary act or omission of Borrower) be in the
         future, subject to any offset, Lien, deduction, defense, dispute,
         counterclaim or any other adverse condition except for disputes
         resulting in returned goods where the amount in controversy is deemed
         by Lender to be immaterial, and each such Account is absolutely owing
         to Borrower and is not contingent in any respect or for any reason;

                  (v) Borrower has made no agreement with any Account Debtor
         thereunder for any extension, compromise, settlement or modification of
         any such Account or any deduction therefrom, except discounts or
         allowances which are granted by Borrower in the ordinary course of its
         business for prompt payment and which are reflected in the calculation
         of the net amount of each respective invoice related thereto and are
         reflected in the Schedules of Accounts submitted to Lender pursuant to
         subsection 6.2.1 hereof,

                  (vi) There are no facts, events or occurrences which in any
         way impair the validity or enforceability of any Accounts or tend to
         reduce the amount payable thereunder from the face amount of the
         invoice and statements delivered to Lender with respect thereto;

                  (vii) To the best of Borrower's knowledge, the Account Debtor
         thereunder (1) had the capacity to contract at the time any contract or
         other document giving rise to the Account was executed and (2) such
         Account Debtor is Solvent; and

                  (viii) To the best of Borrower's knowledge, there are no
         proceedings or actions which are threatened or pending against any
         Account Debtor thereunder which might result in any material adverse
         change in such Account Debtor's financial condition or the
         collectibility of such Account.

             7.1.9 EQUIPMENT. The Equipment is in good operating condition and
repair, and all necessary replacements of and repairs thereto shall be made so
that the value and operating

                                       15
<PAGE>

efficiency of the Equipment shall be maintained and preserved, reasonable wear
and tear excepted. Borrower will not permit any of the Equipment to become
affixed to any real Property leased to Borrower so that an interest arises
therein under the real estate laws of the applicable jurisdiction unless the
landlord of such real Property has executed a landlord waiver or leasehold
mortgage in favor of and in form acceptable to Lender, and Borrower will not
permit any of the Equipment to become an accession to any personal Property
other than Equipment that is subject to first priority (except for Permitted
Liens) Liens in favor of Lender.

             7.1.10 FINANCIAL STATEMENTS; FISCAL YEAR.

                  (i) The Consolidated and consolidating balance sheets of
         Parent, Borrower and such other Persons described therein (including
         the accounts of all Subsidiaries of Parent for the respective periods
         during which a Subsidiary relationship existed) as of December 31,
         1998, December 31, 1999 and December 31, 2000, and the related
         statements of income, changes in stockholder's equity, and changes in
         financial position for the periods ended on such dates, have been
         prepared in accordance with GAAP, and present fairly the financial
         positions of Borrower and such Persons at such dates and the results of
         Borrower's operations for such periods. Since September 30, 2000, there
         has been no material change in the condition, financial or otherwise,
         of Parent or Borrower and such other Persons as shown on the
         Consolidated balance sheet as of such date and no change in the
         aggregate value of Equipment and real Property owned by Parent and
         Borrower or such other Persons, except changes in the ordinary course
         of business, none of which individually or in the aggregate has been
         materially adverse. The fiscal year of Parent, Borrower and each of
         their Subsidiaries ends on December 31 of each year.

                  (ii) The assumptions used in preparation of the projections of
         the Parent and Borrower delivered to the Lender were reasonable when
         made are reasonable through the Closing Date. Such projections have
         been prepared by the executive and financial personnel of the Parent
         and Borrower in light of the business of each. Such projections have
         been prepared in good faith, have a reasonable basis and represent the
         good faith opinion of the Parent and Borrower as to the projected
         results of the operations of the Parent and Borrower as of the Closing
         Date. The Parent and Borrower do not have, on the Closing Date, any
         material obligations (whether accrued, matured, absolute, actual,
         contingent or otherwise) that are not reflected in the projections. No
         material facts as of the Closing Date have occurred since the
         preparation of the projections that would cause the projections, taken
         as a whole, not to be reasonably attainable. It being acknowledged that
         the projections are not a guarantee of future performance.

             7.1.11 FULL DISCLOSURE. The financial statements referred to in
subsection 7.1.10 hereof do not, nor does this Agreement or any other written
statement of Parent or Borrower to Lender, contain any untrue statement of a
material fact or omit a material fact necessary to make the statements contained
therein or herein not misleading. There is no fact which Parent or Borrower has
failed to disclose to Lender in writing which materially affects adversely or,
so far as Parent or Borrower can now foresee, will materially affect adversely
the Properties, business, prospects, profits or condition (financial or
otherwise) of Parent, Borrower or any of their Subsidiaries or the ability of
Parent, Borrower or their Subsidiaries to perform this Agreement or

                                       16
<PAGE>

the other Loan Documents. The Collateral Certificates and the information
contained therein are true and correct as of the Closing Date.

             7.1.12 SOLVENT FINANCIAL CONDITION. Each of Parent, Borrower and
their Subsidiaries is now and, after giving effect to the Loans to be hereunder,
at all times will be, Solvent.

             7.1.13 SURETY OBLIGATIONS. Except as provided for in the Loan
Documents or in documents in favor of the Publishers, copies of which have been
attached to the Officers' Certificate, neither Parent nor Borrower nor any of
their Subsidiaries is obligated as surety or indemnitor under any surety or
similar bond or other contract issued or entered into any agreement to assure
payment, performance or completion of performance of any undertaking or
obligation of any Person.

             7.1.14 TAXES. Parent's federal tax identification number is
04-3370008. Dawson's federal tax identification number is 36-3657731. Faxon's
federal tax identification number is 04-2128264. Turner's federal tax
identification number is 13-5444680. McGregor's federal tax identification
number is 36-3369331. CSS's federal tax identification number is 02-3125044.
IQD's federal tax identification number is 33-0776038. Parent, Borrower and each
of their Subsidiaries has filed all federal, state and local tax returns and
other reports it is required by law to file and has paid, or made provision for
the payment of, all taxes, assessments, fees, levies and other governmental
charges upon it, its income and Properties as and when such taxes, assessments,
fees, levies and charges that are due and payable. The provision for taxes on
the books of Parent, Borrower and their Subsidiaries are adequate for all years
not closed by applicable statutes, and for its current fiscal year.

             7.1.15 BROKERS. To the best of their knowledge there are no claims
for brokerage commissions, finder's fees or investment banking fees in
connection with the transactions contemplated by this Agreement.

             7.1.16 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Each of
Parent, Borrower and their domestic Subsidiaries owns or possesses all the
patents, trademarks, service marks, trade names, copyrights and licenses
necessary for the present and planned future conduct of their business without
any known conflict with the rights of others. All such patents, trademarks,
service marks, tradenames, copyrights, licenses and other similar rights are
listed on SCHEDULE 7.1.16 hereto.

             7.1.17 GOVERNMENTAL CONSENTS. Each of Parent, Borrower and their
Subsidiaries has, and is in good standing with respect to, all governmental
consents, approvals, licenses, authorizations permits, certificates, inspections
and franchises necessary to continue to conduct its business as heretofore
proposed to be conducted by it and to own or lease and operate its Properties as
now owned or leased by it.

             7.1.18 COMPLIANCE WITH LAWS. The execution, delivery and
performance by each of the Parent, Borrower and their Subsidiaries of the Loan
Documents will not (a) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of any property
of the Parent, Borrower or their Subsidiaries under, any indenture,

                                       17
<PAGE>

mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate
charter or by-laws, or any other material agreement or instrument to which the
Parent, Borrower or their Subsidiaries are bound or by which the Parent,
Borrower or their Subsidiaries or any of their respective properties may be
bound or affected. Each of Parent, Borrower and their Subsidiaries has duly
complied with, and its Properties, business operations and leaseholds are in
compliance in all material respects with, the provisions of all federal, state
and local laws, rules and regulations applicable to Parent, Borrower or such
Subsidiary, as applicable, its Properties or the conduct of its business and
there have been no citations, notices or orders of noncompliance issued to
Parent, Borrower or any of their Subsidiaries under any such law, rule or
regulation. Each of Parent, Borrower and their Subsidiaries has established and
maintains an adequate monitoring system to insure that it remains in compliance
in all material respects with all federal, state and local laws, rules and
regulations applicable to it. No Inventory has been produced in violation of the
Fair Labor Standards Act (29 U.S.C. 201 et M.), as amended.

             7.1.19 RESTRICTIONS. Neither Parent nor Borrower nor any of their
Subsidiaries is a party or subject to any contract, agreement, or charter or
other corporate restriction, which materially and adversely affects its business
or the use or ownership of any of its Properties. Neither Parent nor Borrower
nor any of their Subsidiaries is a party or subject to any contract or agreement
which restricts its right or ability to incur Indebtedness, other than as set
forth on SCHEDULE 7.1.19 hereto, none of which prohibit the execution of or
compliance with this Agreement or the other Loan Documents by Parent, Borrower
or any of their Subsidiaries, as applicable.

             7.1.20 LITIGATION. Except as set forth on SCHEDULE 7.1.20 hereto,
there are no actions, suits, proceedings or investigations pending, or to the
knowledge of Borrower, threatened, against or materially affecting Parent,
Borrower or any of their Subsidiaries, or the business, operations, Properties,
prospects, profits or condition of Parent, Borrower or any of their
Subsidiaries. Neither Parent nor Borrower nor any of their Subsidiaries is in
default with respect to any order, writ, injunction, judgment, decree or rule of
any court, governmental authority or arbitration board or tribunal.

             7.1.21 NO DEFAULTS. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or
Parent's or Borrower's performance hereunder, constitute a Default or an Event
of Default. Neither Parent nor Borrower nor any of their Subsidiaries is in
default, and no event has occurred and no condition exists which constitutes, or
which with the passage of time or the giving of notice or both would constitute,
a default in the payment of any Indebtedness to any Person for Money Borrowed.

             7.1.22 LEASES. SCHEDULE 7.1.22 hereto is a complete listing of all
capitalized leases of Parent, Borrower and their Subsidiaries and SCHEDULE
7.1.22 hereto is a complete listing of all operating leases of Parent, Borrower
and their domestic Subsidiaries. Each of Parent, Borrower and their domestic
Subsidiaries is in full compliance with all of the terms of each of its
respective capitalized and operating leases.

             7.1.23 PENSION PLANS. Except as disclosed on SCHEDULE 7.1.23
hereto, neither Parent nor Borrower nor any of their Subsidiaries has any Plan.
Parent, Borrower and each of their Subsidiaries is in full compliance with the
requirements of ERISA and the regulations

                                       18
<PAGE>

promulgated hereunder with respect to each Plan. No fact or situation that could
result in a material adverse change in the financial condition of Parent,
Borrower or any of their Subsidiaries exists in connection with any Plan.
Neither Parent nor Borrower nor any of their Subsidiaries has any withdrawal
liability in connection with a Multiemployer Plan.

             7.1.24 TRADE RELATIONS. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Parent, Borrower or any of their Subsidiaries
and, to the best of their knowledge, any customer or any group of customers,
whose purchases individually or in the aggregate are material to the business of
Parent, Borrower or any of their Subsidiaries, or with any material supplier,
and there exists no present condition or state of facts or circumstances which
would materially affect adversely Parent, Borrower or any of their Subsidiaries
or prevent Parent, Borrower or any of their Subsidiaries from conducting such
business after the consummation of the transaction contemplated by this
Agreement in substantially the same manner in which it has heretofore been
conducted.

             7.1.25 LABOR RELATIONS. Except as described on SCHEDULE 7.1.25
hereto, neither Parent, Borrower nor any of their Subsidiaries is a party to any
collective bargaining agreement. There are no material grievances, disputes or
controversies with any union or any other organization of Parent's, Borrower's
or any of their Subsidiaries' employees, or threats of strikes, work stoppages
or any asserted pending demands for collective bargaining by any union or
organization.

             7.1.26 ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE
7.1.26 hereto:

         (a) Each of Parent, Borrower and their Subsidiaries has obtained all
permits, licenses and other authorizations required under all Environmental Laws
to carry on its business as now being conducted, except to the extent failure to
have any such permit, license or authorization would not reasonably be expected
to have a material adverse effect on the business of such entity. Each of such
permits, licenses and authorizations is in full force and effect, and each of
Parent, Borrower and their Subsidiaries is in compliance with the terms and
conditions thereof except to the extent any such non-compliance would not
reasonably be expected to have a material adverse effect on the business of such
entity.

         (b) Neither Parent, Borrower nor any of their Subsidiaries has received
written notice of any demand, request for information, citation, penalty,
summons or order; no compliant has been served on Parent, Borrower or any of
their Subsidiaries and no investigation or review is pending or threatened by
any governmental or other entity with respect to any alleged failure by Parent,
Borrower or any of their Subsidiaries to have any permit, license or other
authorization required under any Environmental Law in connection with the
conduct of the business of Parent, Borrower or any of their Subsidiaries or with
respect to any violation by Parent, Borrower or any of their Subsidiaries.

         (c) Neither Parent, Borrower nor any of their Subsidiaries owns,
operates or leases a treatment, storage or disposal facility requiring a permit
under the Resource Conservation and Recovery Act of 1976, as amended or under
any comparable state statute.

                                       19
<PAGE>

         (d) Except as permitted or authorized under Environmental Laws, no
Hazardous Materials have been released by Parent, Borrower or any of their
Subsidiaries at, on or under any site or facility now owned, operated or leased
by Parent, Borrower or any of their Subsidiaries that would have a material
adverse effect on the business of Parent, Borrower or any of their Subsidiaries.

         (e) Neither Parent, Borrower nor any of their Subsidiaries has received
written notice that any site or facility to which it transported or arranged for
the transportation of any Hazardous Material is (i) listed on the National
Priorities List ("NPL") under the Comprehensive Environmental Response,
Compensation and ( Liability Act of 1980, as amended ("CERCLA"), (ii) listed for
possible inclusion on the NPL by the Environmental Protection Agency in the
Comprehensive Environmental Response and Liability Information System, as
provided for by 40 C.F.R. ss. 300.5 ("CERCLIS"), or on any similar state or
local list or (iii) the subject of Federal, state or local enforcement actions
or other investigations that may lead to Environmental Claims against Parent,
Borrower or any of their Subsidiaries.

         (f) Neither Parent, Borrower nor any of their Subsidiaries has received
written notice that any site or facility owned, operated or leased by Parent,
Borrower or any of their Subsidiaries is listed or proposed for listing on the
NPL or CERCLIS.

         (g) No Liens have been imposed under any Environmental Laws on any site
or facility owned or operated by Parent, Borrower or any of their Subsidiaries,
and, no government action has been taken to subject any such site or facility to
such Liens, and neither Parent, Borrower nor any of their Subsidiaries has
placed any notice or restriction relating to the presence of Hazardous Materials
at any site or facility presently owned by it in any deed to the real property
on which such site or facility is located.

         (h) All site investigations, studies, audits, reviews or other reports
in the possession of Parent, Borrower or any of their Subsidiaries concerning
environmental conditions at or affecting any site or facility how owned,
operated or leased by Parent, Borrower or any of their Subsidiaries have been
made available to the Lender.

         7.2 CONTINUOUS NATURE OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of Parent's, Borrower's or their Subsidiaries' business or
operations that would render the information in any exhibit attached hereto
either inaccurate, incomplete or misleading, so long as Lender has consented to
such changes or such changes are expressly permitted by this Agreement. Without
limiting the generality of the foregoing, each loan request made pursuant to
subsection 3.1.1 hereof shall constitute Parent and Borrower's reaffirmation, as
of the date of each such loan request, of each representation, warranty or other
statement made or furnished to Lender by or on behalf of Parent, Borrower, any
Subsidiary of Parent, or other Guarantor in this Agreement, any of the other
Loan Documents, or any instrument, certificate or financial statement furnished
in compliance with or in reference thereto.

                                       20
<PAGE>

         7.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Parent and Borrower contained in this Agreement or any of the
other Loan Documents shall survive the execution, delivery and acceptance
thereof by Lender and the parties thereto and the closing of the transactions
described therein or related thereto.

SECTION 8. COVENANTS AND CONTINUING AGREEMENTS8.1 AFFIRMATIVE COVENANTS. During
the term of this Agreement, and thereafter for so long as there are any
Obligations to Lender, Parent and Borrower covenant that, unless otherwise
consented to by Lender in writing, they shall:

             8.1.1 VISITS AND INSPECTIONS. Permit representatives of Lender,
from time to time, as often as may be reasonably requested, to visit and inspect
the Properties of Parent, Borrower and each of their Subsidiaries, inspect,
audit and make extracts from its books and records, and discuss with its
officers, its employees and its independent accountants, Parent's, Borrower's
and each of their Subsidiaries' business, assets, liabilities, financial
condition, business prospects and results of operations, including (i) field
audits and (ii) weekly inspections of Parent and of Borrower to verify the
amount and proper application of proceeds from accounts receivable, the status
of all accounts payable, the amount of cash or other liquidity available to
Parent and to Borrower and the conformity of findings to Parent's and Borrower's
Cash Flow Projections and Borrower's Borrowing Base Certificate. All field
audits and inspections would be reimbursable by Borrower in accordance with
Lender's standard practice. The current rate reimbursable to Lender with respect
to field audits is $650 per day per auditor plus out-of-pocket expenses.

             8.1.2 NOTICES. Promptly notify Lender in writing of the occurrence
of any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading.

             8.1.3 FINANCIAL STATEMENTS. Keep, and cause each Subsidiary to
keep, adequate records and books of account with respect to its business
activities in which proper entries are made in accordance with GAAP reflecting
all its financial transactions; and cause to be prepared and furnished to Lender
the following (all to be prepared in accordance with GAAP applied on a
consistent basis, unless Borrower's certified public accountants concur in any
change therein and such change is disclosed to Lender and is consistent with
GAAP):

                  (i) not later than ninety (90) days after the close of each
         fiscal year of Borrower (beginning with fiscal year ended December 31,
         2000), unqualified audited financial statements of Parent, Borrower and
         their Subsidiaries as of the end of such year, on a Consolidated basis,
         certified by a firm of independent certified public accountants of
         recognized standing selected by Borrower but acceptable to Lender
         (except for a qualification for a change in accounting principles with
         which the accountant concurs and a going concern qualification as to
         the Parent);

                  (ii) not later than forty-five (45) days after the end of each
         fiscal quarterly accounting period, including the last quarter of
         Borrower's fiscal year and beginning with the Borrower's fiscal quarter
         ended December 31, 2000, unaudited interim financial statements of
         Parent, Borrower and their Subsidiaries as of the end of

                                       21
<PAGE>

         such quarter and of the portion of Borrower's financial year then
         elapsed, certified by the Chief Financial Officer of the Borrower as
         prepared in accordance with GAAP and fairly presenting the financial
         position and results of operations of Parent, Borrower and their
         Subsidiaries for such quarter and period subject only to changes from
         audit and year-end adjustments and except that such statements need not
         contain notes;

                  (iii) not later than twenty (20) days after the end of each
         month hereafter, including the last month of Borrower's fiscal year and
         beginning with the Borrower's fiscal month ended January 31, 2001,
         unaudited interim financial statements and cash budgets in form
         satisfactory to Lender each of Parent, Borrower and their Subsidiaries
         as of the end of such month and of the portion of Borrower's financial
         year then elapsed, on a Consolidated and consolidating basis, certified
         by the principal financial officer of the Borrower as prepared in
         accordance with GAAP and fairly presenting the Consolidated financial
         position and results of operations of Parent, Borrower and their
         Subsidiaries for such month and period subject only to changes from
         audit and year-end adjustments and except that such statements need not
         contain notes;

                  (iv) promptly after the sending or filing thereof, as the case
         may be, copies of any proxy statements, financial statements or reports
         which Parent or Borrower has made available to its shareholders and
         copies of any regular, periodic and special reports or registration
         statements which Parent or Borrower files with the Securities and
         Exchange Commission or any governmental authority which may be
         substituted therefore, or any national securities exchange;

                  (v) promptly after the filing thereof, copies of any annual
         report to be filed with ERISA in connection with each Plan;

                  (vi) copies of all communications, reports or financial
         statements, made available to Publishers pursuant to the Publisher Note
         Purchase Documents; and

                  (vii) such other data and information (financial and
         otherwise) as Lender, from time to time, may reasonably request,
         bearing upon or related to the Collateral or Parent's, Borrower's and
         each of their Subsidiaries' financial condition or results of
         operations.

         Concurrently with the delivery of the financial statements described in
clause (i) of this subsection 8.1.3, Parent and Borrower shall forward to Lender
a copy of the accountants' letter to Parent's and Borrower's management that is
prepared in connection with such financial statements and also shall cause to be
prepared and shall furnish to Lender a certificate of the aforesaid certified
public accountants certifying to Lender that based upon their examination of the
financial statements of Parent, Borrower and their Subsidiaries performed in
connection with their examination of said financial statements, they are not
aware of any Default or Event of Default, or, if they are aware of such Default
or Event of Default, specifying the nature thereof, and acknowledging, in a
manner satisfactory to Lender, that they are aware that Lender is relying on
such financial statements in making its decisions with respect to the Loans.
Concurrently with the delivery of the financial statements described in clauses
(i), (ii) and (iii) of this subsection 8.1.3, or more frequently if requested by
Lender, Borrower shall cause to be prepared and

                                       22
<PAGE>

furnished to Lender a Compliance Certificate in the form of EXHIBIT B hereto
executed by the Chief Financial Officer of Borrower.

             8.1.4 LANDLORD AND STORAGE AGREEMENTS. Provide Lender with copies
of all agreements between Borrower or any of their Subsidiaries and any landlord
or warehouseman which owns any premises at which any Inventory may, from time to
time, be kept.

             8.1.5 SHAREHOLDER FINANCIAL STATEMENTS. Deliver or cause to be
delivered to Lender financial statements for the Shareholder in form and
substance satisfactory to Lender at such intervals and covering such time
periods as Lender may request.

             8.1.6 DOMESTIC SUBSIDIARY GUARANTIES. The Parent and Borrower will
cause each Person that becomes a domestic Subsidiary of each at any time after
the Closing Date to execute and deliver to the Lender, within 15 days of such
Person becoming a Subsidiary, a Subsidiary Guaranty in respect of the Revolving
Credit Note. As the time each such Subsidiary executes such Subsidiary Guaranty,
the Parent and Borrower shall cause such domestic Subsidiary to deliver to
Lender a certificate of the secretary or assistant secretary of such Subsidiary
attaching and certifying as true, complete and accurate copies of the
constitutive documents of such Subsidiary and corporate resolutions (or
equivalent) authorizing such transaction, in each case certified as true and
correct by an appropriate officer of such Subsidiary.

             8.1.7 BORROWING BASE CERTIFICATE. Deliver or cause to be delivered
to Lender every Business Day a certificate in a form approved by Lender setting
forth the Borrowing Base updated daily (the "Borrowing Base Certificate"). Such
certificate shall demonstrate with respect to any Eligible Accounts stated
therein that Borrower has made full payment and/or delivery of services and
goods to the publisher/vendor related to the Eligible Account.

             8.1.8 INTENTIONALLY DELETED.

         8.2 NEGATIVE COVENANTS. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Parent and
Borrower covenant that, unless Lender has first consented thereto in writing,
they will not:

             8.2.1 MERGERS; CONSOLIDATIONS; ACQUISITIONS. Merge or consolidate,
or permit any Subsidiary of Parent or Borrower to merge or consolidate, with any
Person; nor acquire, nor permit any of Parent's or Borrower's Subsidiaries to
acquire, all or any substantial part of the Properties of any Person.

             8.2.2 LOANS. Make, or permit any Subsidiary of Parent or Borrower
to make, any loans or other advances of money (other than for salary, travel
advances, advances against commissions and other similar advances in the
ordinary course of business) to any Person.

             8.2.3 TOTAL INDEBTEDNESS. Create, incur, assume, or suffer to
exist, or permit any Subsidiary of Borrower to create, incur or suffer to exist,
any Indebtedness, except:

                  (i) Obligations owing to Lender;

                                       23
<PAGE>

                  (ii) Subordinated Debt existing on the date of this Agreement;

                  (iii) Accounts payable to trade creditors and current
         operating expenses (other than for Money Borrowed) which are not aged
         more than 120 days from billing date or more than 30 days from the due
         date, in each case incurred in the ordinary course of business and paid
         within such time period, unless the same are being actively contested
         in good faith and by appropriate and lawful proceedings; and Borrower
         or such Subsidiary shall have set aside such reserves, if any, with
         respect thereto as are required by GAAP and deemed adequate by Borrower
         or such Subsidiary and its independent accountants;

                  (iv) Obligations to pay Rentals permitted by subsection
         8.2.13;

                  (v) Permitted Purchase Money Indebtedness;

                  (vi) contingent liabilities arising out of endorsements of
         checks and other negotiable instruments for deposit or collection in
         the ordinary course of business;

                  (vii) Indebtedness subordinated to the Obligations on terms
         reasonably satisfactory to the Lenders so long as (a) no Default or
         Event of Default has occurred and is continuing and (b) the proceeds of
         such debt is applied to outstanding advances under the Revolving
         Credit.

                  (viii) Indebtedness not included in paragraphs (i) through
         (vii) above which does not exceed at any time, in the aggregate, the
         sum of $100,000.

                  (ix) Notwithstanding any other provision of this Agreement,
         the Parents' foreign Subsidiaries may borrow funds and secure their
         obligations in respect of such borrowings by granting liens on their
         assets, and transfer such funds to Parent solely to the extent that
         such funds are used to pay off the Montrose Debenture.

             8.2.4 AFFILIATE TRANSACTIONS. Except as set forth on Schedule
8.2.4, enter into, or be a party to, or permit any Subsidiary of Parent or
Borrower to enter into or be a party to, any transaction with any Affiliate of
Parent or Borrower or stockholder, except in the ordinary course of and pursuant
to the reasonable requirements of Parent's or Borrower's or such Subsidiary's
business and upon fair and reasonable terms which are fully disclosed to Lender
and are no less favorable to Parent or Borrower than would obtain in a
comparable arm's length transaction with a Person not an Affiliate or
stockholder of Parent or Borrower or such Subsidiary.

             8.2.5 LIMITATION ON LIENS. Create or suffer to exist, or permit any
Subsidiary of Borrower to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:

                  (i) Liens at any time granted in favor of Lender;

                  (ii) Liens for taxes (excluding any Lien imposed pursuant to
         any of the provisions of ERISA) not yet due, or being contested in the
         manner described in

                                       24
<PAGE>

         subsection 7.1.14 hereto, but only if in Lender's judgment such Lien
         does not adversely affect Lender's rights or the priority of Lender's
         Lien in the Collateral;

                  (iii) Liens arising in the ordinary course of Parent's or
         Borrower's business by operation of law or regulation, but only if
         payment in respect of any such Lien is not at the time required and
         such Liens do not, in the aggregate, materially detract from the value
         of the Property of Borrower or materially impair the use thereof in the
         operation of Borrower's business;

                  (iv) Purchase Money Liens securing Permitted Purchase Money
         Indebtedness;

                  (v) such other Liens as appear on Schedule 8.2.5 hereto;

                  (vi) Liens as provided for under the Publisher Note Purchase
         Documents; and

                  (vii) such other Liens as Lender may hereafter approve in
         writing.

             8.2.6 SUBORDINATED DEBT. Make, or permit any Subsidiary of Borrower
to make, any payment of any part or all of any Subordinated Debt or take any
other action or omit to take any other action in respect of any Subordinated
Debt, except in accordance with the Intercreditor Agreements relative thereto.

             8.2.7 DISTRIBUTIONS. Declare or make, or permit any domestic
Subsidiary of Parent or Borrower to declare or make, any Distributions.

             8.2.8 CAPITAL EXPENDITURES. Make Capital Expenditures (including,
without limitation, by way of capitalized leases) which, in the aggregate, as to
Parent, Borrower and their Subsidiaries, exceed $100,000.

             8.2.9 DISPOSITION OF ASSETS. Sell, lease or otherwise dispose of
any of, or permit any domestic Subsidiary of Parent or Borrower to sell, lease
or otherwise dispose any of, its Properties, including any disposition of
Property as part of a sale and leaseback transaction, to or in favor of any
Person, except (i) sales of Inventory in the ordinary course of business for so
long as no Event of Default exists hereunder, (ii) a transfer of Property to
Borrower by Parent or a Subsidiary of Borrower or (iii) dispositions expressly
authorized by this Agreement. All proceeds from any permitted sales or transfers
shall be applied to the Obligations under the Revolving Credit Note.

             8.2.10 STOCK OF SUBSIDIARIES. Permit any of their Subsidiaries to
issue any additional shares of its capital stock.

             8.2.11 BILL-AND-HOLD SALES, ETC. Make a sale to any customer on a
bill-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis.

                                       25
<PAGE>

             8.2.12 RESTRICTED INVESTMENT. Make or have, or permit any
Subsidiary of Borrower to make or have, any Restricted Investment.

             8.2.13 LEASES. Become, or permit any of their Subsidiaries to
become, a lessee under any operating lease (other than a lease under which
Parent or Borrower or any of their Subsidiaries is lessor) of Property if the
aggregate Rentals payable during any current or future period of 12 consecutive
months under the lease in question and all other leases under which Parent or
Borrower or any of their Subsidiaries is then lessee would exceed $50,000. The
term "Rentals" means, as of the date of determination, all payments which the
lessee is required to make by the terms of any lease.

             8.2.14 TAX CONSOLIDATION. File or consent to the filing of any
consolidated income tax return with any Person other than the Parent or
Subsidiary of Parent or Borrower.

             8.2.15 BANK ACCOUNTS. Create or maintain an account for collecting
or holding cash or cash equivalents with any Person, unless such account (i) is
subject to a Blocked Account Agreement in form and substance satisfactory to
Lender, (ii) owned by CSS and at all times has cash or cash equivalents of a
value less than $250,000 or (iii) owned by the Parent. All such accounts of the
Borrower are listed on Schedule 8.2.15 hereto.

             8.2.16 DISTRIBUTION. The Parent and Borrower shall not, and shall
not permit any of their Subsidiaries to create or suffer to exist any
encumbrance or restriction on the ability of each to make any Distribution,
except for encumbrances or restrictions (i) pursuant to the Loan Documents, (ii)
existing under applicable law or (iii) pursuant to the Publisher Note Purchase
Documents.

             8.2.17 ACCOUNTING CHANGES. The Parent and Borrower shall not, and
shall not permit any of their Subsidiaries to, make any significant change in
accounting treatment or reporting practices, except as may be required by GAAP,
or establish a fiscal year different from the fiscal year.

             8.2.18 ORGANIZATION DOCUMENTS. The Parent and Borrower shall not,
and shall not permit any of their Subsidiaries to, amend, modify or otherwise
change any of the terms or provisions in any of its organization documents as in
effect on the Closing Date, except for changes that do not affect in any way
such entity's rights and obligations to enter into and perform the Loan
Documents to which it is a party and to pay all of the Obligations and that do
not otherwise have a material adverse effect on the Parent, Borrower or their
Subsidiaries.

             8.2.19 RESTRICTIVE AGREEMENTS. The Parent and Borrower shall not,
and shall not permit any of their Subsidiaries to, enter into or become party to
any Restrictive Agreement other than the Publisher Note Purchase Documents
disclosed in Schedule 8.2.19 hereto, provided that none of such disclosed
agreements shall be amended without prior notice to and the consent of the
Lender.

             8.2.20 CONDUCT OF BUSINESS. The Parent and Borrower shall not, and
shall not permit any of their Subsidiaries to, engage in any business other than
the business engaged in by it on the Closing Date and any business or activities
which are substantially similar, related or incidental thereto.

                                       26
<PAGE>

         8.3 SPECIFIC BORROWER FINANCIAL COVENANTS. During the term of this
Agreement, and thereafter for so long as there are any Obligations to Lender,
Borrower and Parent covenants that, unless otherwise consented to by Lender in
writing, it shall:

             8.3.1 EBITDA. The Borrower (excluding CSS) shall maintain EBITDA as
follows:

                  (i) not less than $3,366,000 for the month ending January 31,
         2001;

                  (ii) not less than $(2,638,000) for the two-month period
         ending February 28, 2001;

                  (iii) not less than $(2,283,000) for the three-month period
         ending March 31, 2001;

                  (iv) not less than $(1,646,000) for the four-month period
         ending April 30, 2001 and

                  (v) not less than $(841,000) for the five-month period ending
         May 31, 2001.

         8.4 SPECIFIC PARENT FINANCIAL COVENANTS. During the term of this
Agreement, and thereafter for so long as there are any Obligations to Lender,
Parent and Borrower covenant that, unless consented to in writing, Parent shall:

             8.4.1 EBITDA. Parent and CSS, collectively shall maintain EBITDA as
follows:

                  (i) not less than $(1,200,000) for the month ending January
         31, 2001;

                  (ii) not less than $(2,489,000) for the two-month period
         ending February 28, 2001;

                  (iii) not less than $(3,689,000) for the three-month period
         ending March 31, 2001;

                  (iv) not less than $(4,934,000) for the four-month period
         ending April 30, 2001; and

                  (v) not less than $(6,134,000) for the five-month period
         ending May 31, 2001.

SECTION 9.        CONDITIONS PRECEDENT

         Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Lender
under the other sections of

                                       27
<PAGE>

this Agreement, Lender shall not be required to make any Loan under this
Agreement unless and until each of the following conditions has been and
continues to be satisfied:

         9.1 DOCUMENTATION. Lender shall have received, in form and substance
satisfactory to Lender and its counsel, a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments and certificates as Lender and its counsel shall require in
connection therewith from time to time, all in form and substance satisfactory
to Lender and its counsel.

         9.2 NO DEFAULT. No Default or Event of Default shall exist under any
Loan Document.

         9.3 OTHER LOAN DOCUMENTS. Each of the conditions precedent set forth in
the Other Agreements and Security Documents shall have been satisfied.

         9.4 COLLATERAL EXAMINATION. Lender shall have completed Collateral
examinations and field audits, the results of which shall be satisfactory in
form and substance to Lender, of the Receivables, inventory, General
Intangibles, and Equipment of Borrower and all books and records in connection
therewith;

         9.5 AVAILABILITY. Availability shall not be less than $5,000,000
immediately after each advance by the Lender hereunder, except after the initial
advance where Availability shall not be less than $2,500,000 immediately after
such advance.

         9.6 NO LITIGATION. 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 or the consummation of the transactions contemplated hereby.

         9.7 FEES. Lender shall have received all fees payable to Lender on or
prior to the Closing Date pursuant to Section 2 hereof.

         9.8 UCC SEARCHES/FINANCING STATEMENTS. Lender shall have received (i)
certified UCC-11 lien searches in all jurisdictions where Collateral is located
and (ii) UCC-1 Financing Statements executed by the Borrower necessary to
perfect the Lender's first-priority security interest in the Collateral and such
statements have been filed in the appropriate locations.

         9.9 BORROWING BASE CERTIFICATE. Lender shall have received a Borrowing
Base Certificate dated as of the Closing Date.

         9.10 OFFICER'S CERTIFICATES. Lender shall have received the executed
Officer's Certificates.

         9.11 SECRETARY'S CERTIFICATES. The Lender shall have received a
certificate of the Secretary or an Assistant Secretary (or Clerk or Assistant
Clerk) of the Parent and the Borrower (i) attaching a true and complete copy of
the articles or certificate of incorporation certified by the Secretary of State
of such entity's jurisdiction of incorporation; (ii) attaching a true and
complete copy of the by-laws of such entity; (iii) attaching a true and complete
set of resolutions

                                       28
<PAGE>

of each entity approving the transaction contemplated hereby; and (iv)
certifying as to the name and signatures of the officers of each entity
authorized to sign this Agreement, the Revolving Credit Note, the Security
Documents, the Other Documents or any other document to be delivered by the
Parent or the Borrower hereunder.

         9.12 CERTIFICATES OF LEGAL EXISTENCE AND GOOD STANDING AND FOREIGN
QUALIFICATION. The Lender shall have received (i) certificates of legal
existence and good standing issued by the Secretaries of State of each
jurisdiction where the Parent and Borrower is incorporated and (ii) certificates
of foreign qualifications issued by the Secretaries of State of each
jurisdiction where the Parent and/or the Borrower is qualified to conduct
business as a foreign corporation.

         9.13 LEGAL OPINIONS. The Lender shall have received (i) a legal opinion
of Bingham, Dana LLP; Chapman and Cutler; Blank, Rome, Comisky & McCauley, LLP,
and counsel to the Parent, the Borrower and the Shareholder, as to the
transactions contemplated by this Agreement both in form and substance
satisfactory to the Lender which shall include an opinion regarding the
likelihood of the substantive consolidation Parent and Borrower upon the
bankruptcy filing of either entity and (ii) copies of all legal opinions issued
to Publishers in connection with their loans to the Parent and any of their
Subsidiaries.

         9.14 PAYOFF LETTERS AND TERMINATION STATEMENTS. The Lender shall have
received payoff letters and UCC-3 Termination Statements and/or any instrument
necessary to terminate the security interests granted to all third parties
(other than Liens permitted hereunder) and provide evidence of satisfaction of
all obligations of the Borrower to such third parties.

         9.15 INSURANCE. The Lender shall have received from the Borrower
evidence of all insurance required pursuant to Section 6.1.2 hereof naming the
Lender as loss payee and as an additional insured under each policy then in
force.

         9.16 FINANCIAL INFORMATION/CASH FLOW PROJECTIONS. The Lender shall have
received the Financial Statements and Cash Flow Projections from the Parent, the
Borrower and the Shareholder (as applicable).

         9.17 BLOCKED ACCOUNT ARRANGEMENTS. The Lender shall have received from
the Borrower executed Blocked Account Agreements for all accounts of the
Borrower.

         9.18 CASH MANAGEMENT. The Lender shall have received from the Borrower
executed agreements relating to the Borrower's cash management (including lock
box agreement) in form and substance satisfactory to Lender.

         9.19 REQUEST FOR ADVANCE. The Lender shall have received a written
request from Borrower specifying the amount of the initial Revolving Credit
Loan.

         9.20 ACCOUNT PAYABLE OBLIGATIONS. The Lender shall have received
evidence of past due accounts payable obligations due to certain publishers and
certification of sources and uses satisfactory to the Lender.

                                       29
<PAGE>

         9.21 FRENCH SUBSIDIARY PAYMENT. RoweCom France SAS shall have paid at
least $1,000,000 of an intercompany account receivable to Parent, which Parent
shall have transferred to Dawson on terms and conditions satisfactory to Lender.

         9.22 MISCELLANEOUS. The Lender shall have received all other documents,
instruments, information or consents it deems necessary.

SECTION 10.       EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT

         10.1 EVENTS OF DEFAULT. The occurrence of one or more of the following
events shall constitute an "Event of Default":

             10.1.1 PAYMENT OF REVOLVING CREDIT NOTE. Borrower shall fail to pay
any installment of principal, interest, costs or premium, if any, owing on the
Revolving Credit Note on the due date of such installment.

             10.1.2 PAYMENT OF OTHER OBLIGATIONS. Parent, Borrower or Guarantor
shall fail to pay any of the Obligations that are not evidenced by the Revolving
Credit Note on the due date thereof (whether due at stated maturity, on demand,
upon acceleration or otherwise).

             10.1.3 MISREPRESENTATIONS. Any representation, warranty or other
statement made or furnished to Lender by or on behalf of Parent, Borrower, any
Subsidiary of Borrower or any Guarantor in any of the Loan Documents or any
instrument, certificate or financial statement furnished in compliance with, in
connection with or in reference thereto proves to have been false or misleading
in any material respect when made or furnished or when reaffirmed pursuant to
Section 7.2 hereof.

             10.1.4 BREACH OF SPECIFIC COVENANTS. Parent or Borrower shall fail
or neglect to perform, keep or observe any covenant contained in Sections 5, 6
or 8 hereof on the date that Parent or Borrower is required to perform, keep or
observe such covenant.

             10.1.5 BREACH OF OTHER COVENANTS. Parent or Borrower shall fail or
neglect to perform, keep or observe any covenant contained in this Agreement
(other than a covenant which is dealt with specifically elsewhere in Section
10.1 hereof) and the breach of such other covenant is not cured to Lender's
satisfaction within 15 days after the sooner to occur of Borrower's receipt of
notice of such breach from Lender or the date on which such failure or neglect
first becomes known to any officer of Borrower.

             10.1.6 DEFAULT UNDER SECURITY DOCUMENTS/OTHER AGREEMENTS. Any event
of default shall occur under, or Parent or Borrower shall default in the
performance or observance of any term, covenant, condition or agreement
contained in, any of the Security Documents or the Other Agreements and such
default shall continue beyond any applicable grace period.

             10.1.7 OTHER DEFAULTS. There shall occur any default or event of
default on the part of Parent, Borrower or any of their Subsidiaries under any
agreement, document or instrument to which Parent, Borrower or any of their
Subsidiaries is a party or by which Parent, Borrower, any of their Subsidiaries
or any of its Property is bound, creating or relating to any Indebtedness (other
than the Obligations) if the payment or maturity of such Indebtedness is

                                       30

<PAGE>

accelerated in consequence of such event of default or demand for payment of
such Indebtedness is made.

             10.1.8 UNINSURED LOSSES. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered by insurance.

             10.1.9 ADVERSE CHANGES OR EFFECT. There shall occur any material
adverse change in the financial condition or business prospects of Parent,
Borrower or any Guarantor or there shall have occurred any event or occurrence
which shall have a material adverse effect on the Parent or any Borrower or
their ability to pay the Obligations in full.

             10.1.10 INSOLVENCY AND RELATED PROCEEDING. Parent, Borrower or any
Guarantor shall cease to be Solvent or shall suffer the appointment of a
receiver, trustee, custodian or similar fiduciary, or shall make an assignment
for the benefit of creditors, or any petition for an order for relief shall be
filed by or against Parent, Borrower or any Guarantor under the Bankruptcy Code
(if against Parent, Borrower or any Guarantor, the continuation of such
proceeding for more than 30 days), or Parent, Borrower or any Guarantor shall
make any offer of settlement, extension or composition to their respective
unsecured creditors generally.

             10.1.11 BUSINESS DISRUPTION; CONDEMNATION. There shall occur a
cessation of a substantial part of the business of Parent, Borrower, any
Subsidiary of Parent or Borrower or any Guarantor for a period which
significantly affects Parent's, Borrower's or such Guarantor's capacity to
continue its business, consistent with its financial position as of the Closing
Date; or Parent, Borrower, any Subsidiary of Parent or Borrower or any Guarantor
shall suffer the loss or revocation of any license or permit now held or
hereafter acquired by Parent, Borrower or such Guarantor which is necessary to
the continued or lawful operation of its business; or Parent, Borrower or any
Guarantor shall be enjoined, restrained or in any way prevented by court,
governmental or administrative order from conducting all or any material part of
its business affairs; or any material lease or agreement pursuant to which
Parent, Borrower or any Guarantor leases, uses or occupies any Property shall be
canceled or terminated prior to the expiration of its stated term; or any part
of the Collateral with a value individually or in the aggregate in excess of
$50,000 shall be taken through condemnation or the value of such Property shall
be impaired through condemnation.

             10.1.12 CHANGE OF OWNERSHIP. Parent shall cease to own and control,
beneficially and of record, directly or indirectly, all of the issued and
outstanding capital stock of any of its Subsidiaries.

             10.1.13 ERISA. A Reportable Event shall occur which Lender, in its
sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if Parent, Borrower, any Subsidiary of Borrower or any
Guarantor is in "default" (as defined in Section 4219(c)(5) of ERISA) with
respect to payments to a Multi-employer Plan resulting from Parent's,
Borrower's, such Subsidiary's or such Guarantor's complete or partial withdrawal
from such Plan.

                                       31
<PAGE>

             10.1.14 CHALLENGE TO AGREEMENT. Parent, Borrower, any Subsidiary of
Parent or Borrower or any Guarantor, or any Affiliate of any of them, shall
challenge or contest in any action, suit or proceeding the validity or
enforceability of this Agreement, or any of the other Loan Documents, the
legality or enforceability of any of the Obligations or the perfection or
priority of any Lien granted to Lender or any of the Loan Documents shall cease
to be in full force and effect or shall be declared by a court or other
governmental authority of competent jurisdiction to be void, voidable or
unenforceable against Parent or Borrower.

             10.1.15 REPUDIATION OF OR DEFAULT UNDER GUARANTY AGREEMENT. Any
Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by
such Guarantor, or shall repudiate such Guarantor's liability thereunder or
shall be in default under the terms thereof.

             10.1.16 CRIMINAL FORFEITURE. Parent, Borrower, any Subsidiary of
Parent or Borrower or any Guarantor shall be criminally indicted or convicted
under any law that could lead to a forfeiture of any Property of Parent or
Borrower, any Subsidiary of Parent or Borrower or any Guarantor.

             10.1.17 JUDGMENTS. Any money judgment, writ of attachment or
similar process is filed against Parent, Borrower, any Subsidiary of Parent or
Borrower or any Guarantor, or any of their respective Property for payment of
money in excess of the sum of $50,000 individually or in the aggregate which
shall not be discharged within sixty (60) days from the date of entry thereof.

         10.2 ACCELERATION OF THE OBLIGATIONS. Without in any way limiting the
right of Lender to demand payment of any portion of the Obligations payable on
demand in accordance with the Loan Documents, upon or at any time after the
occurrence of an Event of Default, all or any portion of the Obligations shall,
at the option of Lender and without presentment, demand protest or further
notice by Lender, become at once due and payable and Borrower shall forthwith
pay to Lender, the full amount of such Obligations, provided, that upon the
occurrence of an Event of Default specified in subsection 10.1.10 hereof, all of
the Obligations shall become automatically due and payable without declaration,
notice or demand by Lender.

         10.3 OTHER REMEDIES. Upon and after the occurrence of an Event of
Default, Lender shall have and may exercise from time to time the following
rights and remedies:

             10.3.1 CUMULATIVE RIGHTS. All of the rights and remedies of a
secured party under the Code or under other applicable law, and all other legal
and equitable rights to which Lender may be entitled (including without
limitation seeking the appointment of a State or Federal court receiver), all of
which rights and remedies shall be cumulative and shall be in addition to any
other rights or remedies contained in this Agreement or any of the other Loan
Documents, and none of which shall be exclusive.

             10.3.2 POSSESSION OF COLLATERAL. The right to take immediate
possession of the Collateral, and to (i) require Borrower to assemble the
Collateral, at Borrower's expense, and make it available to Lender at a place
designated by Lender which is reasonably convenient to

                                       32
<PAGE>

both parties, and (ii) enter any premises where any of the Collateral shall be
located and to keep and store the Collateral on said premises until sold.

             10.3.3 SELLER DISPOSES OF COLLATERAL. The right to sell or
otherwise dispose of all or any Collateral in its then condition, or after any
further manufacturing or processing thereof, at public or private sale or sales,
with such notice as may be required by law, in lots or in bulk, for cash or on
credit, all as Lender, in its sole discretion, may deem advisable. Borrower
agrees that ten (10) days written notice to Borrower of any public or private
sale or other disposition of Collateral shall be reasonable notice thereof, and
such sale shall be at such locations as Lender may designate in said notice.
Lender shall have the right to conduct such sales on Borrower's premises,
without charge therefore, and such sales may be adjourned from time to time in
accordance with applicable law. Lender shall have the right to sell, lease or
otherwise dispose of the Collateral, or any part thereof, for cash, credit or
any combination thereof, and Lender may purchase all or any part of the
Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Obligations. The proceeds realized from the sale of any Collateral
may be applied, after allowing two (2) Business Days for collection, first to
the costs, expenses and attorneys' fees incurred by Lender in collecting the
Obligations, in enforcing the rights of Lender under the Loan Documents and in
collecting, retaking, completing, protecting, removing, storing, advertising for
sale, selling and delivering any Collateral, second to the interest due upon any
of the Obligations; and third, to the principal of the Obligations. If any
deficiency shall arise, Parent, Borrower and each Guarantor shall remain jointly
and severally liable to Lender therefore.

             10.3.4 LICENSES. Lender is hereby granted a license or other right
to use, without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses and
all franchise agreements shall inure to Lender's benefit. The Lender agrees not
to exercise its rights under such license until after the occurrence and
continuance of an Event of Default.

             10.3.5 SECURITY INTEREST IN DEPOSITS. Borrower hereby grants to
Lender, and each Participating Lender a lien, security interest and right of
setoff as security for all Obligations to Lender or to such Participating
Lender, whether now existing or hereafter arising, upon and against all
deposits, credits, Collateral or other Property, now or hereafter in the
possession, custody, safekeeping or control of Lender, any Participating Lender,
or any entity under the control of Fleet Financial Group, Inc., or in transit to
any of them. At any time, when an Event of Default exists or has occurred and is
continuing, without demand or notice, Lender and each Participating Lender may
set off the same or any part thereof or cause such set off to occur and apply
the same to any liability or obligation of Borrowers even though unmatured and
regardless of the adequacy of any other Collateral securing the Obligations. ANY
AND ALL RIGHTS TO REQUIRE LENDER OR ANY PARTICIPATING LENDER TO EXERCISE ITS
RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE
OBLIGATIONS PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWERS, ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED.

                                       33
<PAGE>

         10.4 REMEDIES CUMULATIVE, NO WAIVER. All covenants, conditions,
provisions, warranties, guaranties indemnities, and other undertakings of Parent
or Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any exhibit or schedule or in any Guaranty Agreement given to Lender or
contained in any other agreement between Lender and Parent, or between Lender
and Borrower, heretofore, concurrently, or hereafter entered into, shall be
deemed cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions, or agreements of Parent or Borrower herein contained. The
failure or delay of Lender to require strict performance by Parent or Borrower
of any provision of this Agreement or to exercise or enforce any rights, Liens,
powers, or remedies hereunder or under any of the aforesaid agreements or other
documents or security or Collateral shall not operate as a waiver of such
performance, Liens, rights, powers and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in full force and effect
until all Loans and all other Obligations owing or to become owing from Parent
or Borrower to Lender shall have been fully satisfied. None of the undertakings,
agreements, warranties, covenants and representations of Parent or Borrower
contained in this Agreement or any of the other Loan Documents and no Event of
Default by Borrower under this Agreement or any other Loan Documents shall be
deemed to have been suspended or waived by Lender, unless such suspension or
waiver is by an instrument in writing specifying such suspension or waiver and
is signed by a duly authorized representative of Lender and directed to
Borrower.

SECTION 11.       MISCELLANEOUS

         11.1 POWER OF ATTORNEY. Borrower hereby irrevocably designates, makes,
constitutes and appoints Lender (and all Persons designated by Lender) as
Borrower's true and lawful attorney (and agent-in-fact) and Lender, or Lender's
agent, may, without notice to Borrower and in either Borrower's or Lender's
name, but at the cost and expense of Borrower:

             11.1.1 ENDORSEMENTS. Endorse Borrower's name on any checks, notes,
acceptances, drafts, money orders or any other evidence of payment or proceeds
of the Collateral which come into the possession of Lender or under Lender's
control.

             11.1.2 OTHER ACTIONS. At such time or times upon or after the
occurrence and continuance of an Event of Default as Lender or its agent in its
sole discretion may determine: (i) demand payment of the Accounts from the
Account Debtors, enforce payment of the Accounts by legal proceedings or
otherwise, and generally exercise all of Borrower's rights and remedies with
respect to the collection of the Accounts; (ii) settle, adjust, compromise,
discharge or release any of the Accounts or other Collateral or any legal
proceedings brought to collect any of the Accounts or other Collateral; (iii)
sell or assign any of the Accounts and other Collateral upon such terms, for
such amounts and at such time or times as Lender deems advisable; (iv) take
control, in any manner, of any item of payment or proceeds relating to any
Collateral; (v) prepare, file and sign Borrower's name to a proof of claim in
bankruptcy or similar document against any Account Debtor or to any notice of
lien, assignment or satisfaction of lien or similar document in connection with
any of the Collateral; (vi) receive, open and dispose of all mail addressed to
Borrower and to notify postal authorities to change the address for delivery
thereof to such address as Lender may designate; (vii) endorse the name of
Borrower upon any of the items of payment or proceeds relating to any Collateral
and deposit the same to the account of

                                       34
<PAGE>

Lender on account of the Obligations; (viii) endorse the name of Borrower upon
any chattel paper, document, instrument, invoice, freight bill, bill of lading
or similar document or agreement relating to the Accounts, Inventory and any
other Collateral; (ix) use Borrower's stationery and sign the name of Borrower
to verifications of the Accounts and notices thereof to Account Debtors; (x) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory, Equipment
and any other Collateral; (xi) make and adjust claims under policies of
insurance; and (xii) do all other acts and things necessary, in Lender's
determination, to fulfill Borrower's obligations under this Agreement.

         11.2 INDEMNITY. Parent and Borrower hereby agrees to indemnify Lender
and hold Lender harmless from and against any liability, loss, damage, suit,
action or proceeding ever suffered or incurred by Lender (including any claim
from any broker or similar Person for fees arising from this transaction and
reasonable attorneys fees and legal expenses) as the result of Parent's or
Borrower's failure to observe, perform or discharge Parent's or Borrower's
duties hereunder or in any way related to the Loan Documents or transactions
contemplated thereby. In addition, Parent and Borrower shall defend Lender
against and save it harmless from all claims of any Person with respect to the
Collateral or the Loan Documents or transactions contemplated thereby. Without
limiting the generality of the foregoing, these indemnities shall extend to any
claims asserted against Lender by any Person under any Environmental Laws or
similar laws by reason of Parent's, Borrower's or any other Person's failure to
comply with laws applicable to solid or hazardous waste materials or other toxic
substances. Notwithstanding any contrary provision in this Agreement, the
obligation of Parent and Borrower under this Section 11.2 shall survive the
payment in full of the Obligations and the termination of this Agreement.

         11.3 MODIFICATION OF AGREEMENT, SALE OF INTEREST. This Agreement may
not be modified, altered or amended, except by an agreement in writing signed by
Lender and Borrower. The Borrower may not sell, assign or transfer any interest
in this Agreement, any of the other Loan Documents, or any of the Obligations,
or any portion thereof, including, without limitation, Borrower's rights, title,
interests, remedies, powers, and duties hereunder or thereunder. Borrower hereby
consents to Lender's participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of this Agreement and any of the
other Loan Documents, or of any portion hereof or thereof, including, without
limitation, Lender's rights, title, interests, remedies, powers, and duties
hereunder or thereunder. In the case of an assignment, the assignee shall have,
to the extent of such assignment, the same rights, benefits and obligations as
it would if it were "Lender" hereunder and Lender shall be relieved of all
obligations hereunder upon any such assignments. Parent and Borrower agree that
they will use their best efforts to assist and cooperate with Lender in any
manner reasonably requested by Lender to effect the sale of participations in or
assignments of any of the Loan Documents or any portion thereof or interest
therein, including, without limitation, assisting in the preparation of
appropriate disclosure documents. Parent and Borrower further agree that Lender
may disclose credit and other information regarding Parent and Borrower, their
Subsidiaries and any Guarantor to any potential participant or assignee.

         11.4 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be

                                       35
<PAGE>

ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

         11.5 SUCCESSORS AND ASSIGNS. This Agreement, the Other Agreements and
the Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Lender permitted under Section 11.3
hereof.

         11.6 CUMULATIVE EFFECT, CONFLICT OF TERMS. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided herein or in any of
the other Loan Documents by specific reference to the applicable provision of
this Agreement, if any provision contained in this Agreement is in direct
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.

         11.7 EXECUTION IN 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 and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.

         11.8 NOTICE. Except as otherwise provided herein, all notices, requests
and demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, one
Business Day after deposit in the mail, postage prepaid, or with an overnight
courier or, in the case of facsimile notice, when sent, addressed as follows:

         If to a Lender:

         c/o Fleet Capital Corporation
         One Federal Street
         Boston, MA 02110
         Attn:  Mr. Ruben Klein
         Fax:  (617) 654-1167

         with a copy to:

         Goodwin Procter LLP
         Exchange Place
         53 State Street
         Boston, MA 02109
         Attn: Steven M. Ellis, P.C.
         Fax:  (617) 523-1231

                                       36
<PAGE>

         If to Parent or Borrower:

         Dawson, Inc.
         15 Southwest Park
         Westwood, MA  02090
         Attn: Dr. Richard Rowe
         Fax:  (781) 329-9875

         with a copy to:

         Bingham, Dana LLP
         150 Federal Street
         Boston, MA 02110
         Attn: Brian Keeler, Esq.
         Fax: (617) 951-8736

or to such other address as each party may designate for itself by notice given
in accordance with this Section 11.8; PROVIDED, HOWEVER, that any notice,
request or demand to or upon Lender pursuant to Sections 3 or 4 hereof shall not
be effective until received by Lender.

         11.9 LENDER'S CONSENT. Whenever Lender's consent is required to be
obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or event,
Lender shall be authorized to give or withhold such consent in its sole and
absolute discretion and to condition its consent upon the giving of additional
collateral security for the Obligations, the payment of money or any other
matter.

         11.10 CREDIT INQUIRIES. Parent and Borrower hereby authorize and
permits Lender to respond to usual and customary credit inquiries from third
parties concerning Parent, Borrower or any of their Subsidiaries or any
Guarantor.

         11.11 TIME OF ESSENCE. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.

         11.12 ENTIRE AGREEMENT. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.

         11.13 INTERPRETATION. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.

         11.14 JOINT AND SEVERAL LIABILITY. All Loans, made or issued hereunder
are made to or for the benefit of each Borrower. Each Borrower is jointly and
severally, directly and primarily liable for the full and indefeasible payment
when due and performance of all Obligations and for

                                       37
<PAGE>

the prompt and full payment and performance of all of the promises, covenants,
representations, and warranties made or undertaken by each Borrower under this
Agreement and Loan Documents and each Borrower agrees that such liability is
independent of the duties, obligations, and liabilities of each Borrower. In
furtherance of the foregoing, each Borrower jointly and severally, absolutely
and unconditionally guarantees to Lender and agrees to be liable for the full
and indefeasible payment and performance when due of all the Obligations. This
guarantee is a continuing guarantee, and shall apply to all Obligations whenever
arising.

         11.15 Surety Waivers and Consents.

                  (i) Each Borrower acknowledges that each is jointly and
         severally, unconditionally and absolutely, primarily and directly
         liable for the performance and payment of the obligations and, in full
         recognition of that fact, each Borrower consents and agrees that Lender
         may, at any time and from time to time, without notice or demand
         (except as provided in and in accordance with the terms of this
         Agreement), whether before or after any actual or purported
         termination, repudiation or revocation of this Agreement by each
         Borrower, and without affecting the enforceability or continuing
         effectiveness hereof as to each Borrower: (a) increase, extend, or
         otherwise change the time for payment; (b) accept new or additional
         instruments, documents, or agreements in exchange for or relative to
         any of the Loan Documents or the Obligations or any part thereof, (c)
         accept partial payments on the Obligations; (d) receive and hold
         additional security or guarantees for the Obligations or any part
         thereof; (e) release, recover, terminate, waive, abandon, fail to
         perfect, subordinate, exchange, substitute, transfer, or, after an
         Event of Default, enforce any Collateral, security or guarantees, and
         after an Event of Default, apply any Collateral or security and direct
         the order or manner of sale thereof as Lender in its sole and absolute
         discretion may determine; (f) release any Person from any personal
         liability with respect to the Obligations or any part thereof; (g)
         release on terms satisfactory to Lender or by operation of applicable
         laws or, after an Event of Default, liquidate or enforce any
         Obligations and any Collateral or security therefore or guaranty
         thereof in any manner, after an Event of Default, consent to the
         transfer of any Collateral or security and bid and purchase at any
         sale; or (h) consent to the merger, change, or any other restructuring
         or termination of the corporate existence of any Borrowers, and
         correspondingly restructure the Obligations, and any such merger,
         change, restructuring, or termination shall not affect the liability of
         any Borrower or the continuing effectiveness hereof, or the
         enforceability hereof with respect to all or any part of the
         Obligations.

                  (ii) Lender may enforce this Agreement independently as to
         each Borrower and independently if any other remedy or security Lender
         at any time may have or hold in connection with the Obligations, and it
         shall not be necessary for Lender to marshal assets in favor of any
         Borrower or to proceed upon or against or exhaust any Collateral or
         security or remedy before proceeding to enforce this Agreement. Each
         Borrower expressly waives any right to require Lender to marshal assets
         in favor of any Borrower or any guarantor of the obligations or to
         proceed against any Borrower and, after an Event of Default, agrees
         that Lender may proceed against any Borrower or any Collateral in such
         order as Lender shall determine in its sole and absolute discretion.

                                       38
<PAGE>

                  (iii) Lender may file a separate action or actions against any
         Borrower, whether such action is brought or prosecuted with respect to
         any security or against any guarantor of the Obligations, or whether
         any other Person is joined in any such action or actions.

                  (iv) Lender's rights hereunder shall be reinstated and
         revived, and the enforceability of this Agreement shall continue, with
         respect to any amount at any time paid on account of the Obligations
         which thereafter shall be required to be restored or returned by
         Lender, all as though such amount had not been paid. The rights of
         Lender created or granted herein and the enforceability of this
         Agreement at all times shall remain effective to cover the full amount
         of all the obligations even though the Obligations (including any part
         thereof or any Collateral, other security or guaranty therefore) may be
         or hereafter may become invalid or otherwise unenforceable as against
         any Borrower and whether or not any Borrower shall have any personal
         liability with respect thereto.

                  (v) Each Borrower expressly waives any and all defenses now or
         hereafter arising or asserted by reason of (a) any disability or other
         defense of any Borrower with respect to the Obligations; (b) the
         unenforceability or invalidity of any security or guaranty for the
         Obligations or the lack of perfection or continuing perfection of
         failure of priority of any security for the Obligations; (c) the
         cessation for any cause whatsoever of the liability of any Borrower
         (other than by reason of the full payment and performance of all
         Obligations as required herein); (d) any failure of Lender to marshal
         assets in favor of any Borrower; (e) any failure of Lender to give
         notice to any Borrower of sale or other disposition of Collateral or
         any defect in any notice that may be given in connection with any such
         sale or disposition of Collateral securing the Obligations; (f) any act
         or omission of Lender or others that directly or indirectly results in
         or aids the discharge or release of any Borrower or the Obligations or
         any security or guaranty therefore by operation of law or otherwise;
         (g) any law which provides that the obligation of a surety or guarantor
         must neither be larger in amount nor in other respects more burdensome
         than that of the principal or which reduces a surety's or guarantor's
         obligation in proportion to the principal obligation; (h) any failure
         of Lender to file or enforce a claim in any bankruptcy or other
         proceeding with respect to any Borrower, or (i) the avoidance of any
         lien or security interest in assets of any Borrower in favor of Lender
         for any reason. Until such time, if any, as all of the Obligations have
         been indefeasibly paid and performed in full and no portion of any
         commitment of Lender to Borrowers under any Loan Document remains in
         effect, each Borrower's indebtedness, claims and rights of subrogation,
         contribution, reimbursement, or indemnity against the other shall be
         fully and completely subordinated to the indefeasible repayment in full
         of the Obligations, and each Borrower expressly waives until such
         indefeasible payment any right to enforce any remedy that is now has or
         hereafter may have against any other Person and waives the benefit of,
         or any right to participate in, any Collateral now or hereafter held by
         Lender.

                  (vi) To the fullest extent permitted by applicable law, each
         Borrower expressly waives and agrees not to assert, any and all
         defenses in their favor based upon an election of remedies by Lender
         which destroys, diminishes, or affects either

                                       39
<PAGE>

         subrogation rights and/or any rights to proceed against each other, or
         any party liable to Lender, for reimbursement, contribution, indemnity,
         or otherwise.

                  (vii) Each Borrower warrants and agrees that each of the
         waivers and consents set forth herein are made after consultation with
         legal counsel and with full knowledge of their significance and
         consequences, with the understanding that events giving rise to any
         defense or right waived may diminish, destroy, or otherwise adversely
         affect rights which each Borrower otherwise may have against each
         other, Lender, or others, or against Collateral, and that, under the
         circumstances, the waivers and consents herein given are not contrary
         to public policy or law. If any of the waivers or consents herein are
         determined to be contrary to any applicable law or public policy, such
         waivers and consents shall be effective to the maximum permitted by
         law.

         11.16 WAIVERS OF EVENTS OF DEFAULT. Lender, in its sole and absolute
discretion, may waive Events of Default hereunder. Any such waiver must be in
writing and will be limited to the specific Event of Default and period
identified in such waiver. To the extent Lender's rights or remedies are
predicated on the occurrence of an Event of Default and Lender has waived such
Event of Default, Lender will not exercise such rights or remedies. No waiver
will limit or diminish the rights and remedies of Lender with regard to any
other Default or Event of Default existing at such time or any Default or Event
of Default arising thereafter.

         11.17 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
BOSTON, MASSACHUSETTS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS: PROVIDED,
HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION
OTHER THAN THE COMMONWEALTH OF MASSACHUSETTS, THE LAWS OF SUCH JURISDICTION
SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF LENDER'S LIEN
UPON SUCH COLLATERAL AND THE ENFORCEMENT OF LENDER'S OTHER REMEDIES IN RESPECT
OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE
DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND
REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF
BORROWER OR LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS, EASTERN DIVISION, SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
BORROWER AND LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF
OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE
TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES

                                       40
<PAGE>

PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER
OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.

         11.18 WAIVERS BY BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY
JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR
TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF
LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS; AND (v) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE
FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS
AGREEMENT AND THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE
DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED
THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY
WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.

                            [Signature Page Follows]

                                       41
<PAGE>

IN WITNESS WHEREOF, this Loan and Security Agreement has been duly executed in
on the day and year specified at the beginning of this Agreement.

                                   BORROWER
                                   DAWSON, INC.

/s/ Cecilia Chen                   By: /s/ Richard R.Rowe
----------------------                 ----------------------------------------
Witness                            Name:  Dr. Richard R. Rowe
                                   Title: President

                                   THE FAXON COMPANY, INC.

/s/ Cecilia Chen                   By: /s/ Richard R.Rowe
----------------------                 ----------------------------------------
Witness                            Name:  Dr. Richard R. Rowe
                                   Title: President

                                   THE TURNER SUBSCRIPTION AGENCY, INCORPORATED

/s/ Cecilia Chen                   By: /s/ Richard R.Rowe
-----------------------                ----------------------------------------
Witness                            Name:  Dr. Richard R. Rowe
                                   Title: President

                                   MCGREGOR SUBSCRIPTION SERVICE, INC.

/s/ Cecilia Chen                   By: /s/ Richard R.Rowe
-----------------------                ----------------------------------------
Witness                            Name:  Dr. Richard R. Rowe
                                   Title: President

                                   CORPORATE SUBSCRIPTION SERVICES INC.

/s/ Cecilia Chen                   By: /s/ Richard R.Rowe
-----------------------                ----------------------------------------
Witness                            Name:  Dr. Richard R. Rowe
                                   Title: President

                                       42

<PAGE>

                                    DAWSON INFORMATION QUEST, INC.

/s/ Cecilia Chen                    By: /s/ Richard R. Rowe
------------------------                ---------------------------------------
Witness                             Name:  Dr. Richard R. Rowe
                                    Title: President

                                    PARENT

                                    ROWECOM INC.

/s/ Cecilia Chen                    By: /s/ Richard R.Rowe
------------------------                ---------------------------------------
Witness                             Name:  Dr. Richard R. Rowe
                                    Title: President

                                    Accepted in Boston, Massachusetts

                                    LENDER

                                    FLEET CAPITAL CORPORATION

/s/ Christine Flattery              By: /s/ Ruben Klein
------------------------                ---------------------------------------
Witness                             Name:  Ruben Klein
                                    Title: Senior Vice President

                                       43
<PAGE>

Appendix A        General Definitions

Exhibit A         Form of Revolving Credit Note

Exhibit B         Form of Compliance Certificate

Exhibit C         Form of Officer's Certificate

Schedule 7.1.1    Jurisdictions in which Parent, Borrower and each their
                  Subsidiaries are Authorized to do Business

Schedule 7.1.4    Capital Structure of Parent, Borrower and each of their
                  Subsidiaries

Schedule 7.1.5    Corporate Names

Schedule 7.1.6    Parent's, Borrower's and each of their Subsidiary's Business
                  Locations

Schedule 7.1.16   Patents, Trademarks, Copyrights and Licenses

Schedule 7.1.19   Contracts Restricting Borrower's Right to Incur Debts

Schedule 7.1.20   Litigation

Schedule 7.1.22   Capitalized Leases/Operating Leases

Schedule 7.1.23   Pension Plans

Schedule 7.1.25   Labor Contracts

Schedule 7.1.26   Environmental Matters

Schedule 8.2.4    Affiliate Transactions

Schedule 8.2.5    Permitted Liens

Schedule 8.2.15   Bank Accounts

Schedule 8.2.19   Restrictive Agreements<PAGE>

================================================================================
                                                                   EXHIBIT 10.42

                                  ROWECOM INC.

                                   $9,000,000

            FLOATING RATE SENIOR SECURED NOTES DUE DECEMBER 28, 2001

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

                             NOTE PURCHASE AGREEMENT
                                  -------------

                          Dated as of January 31, 2001

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

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                         PAGE

<S>                                                                              <C>
1.       AUTHORIZATION OF NOTES................................................   1

2.       SALE AND PURCHASE OF NOTES............................................   1

3.       CLOSING...............................................................   1

4.       CONDITIONS TO CLOSING.................................................   2

         4.1.     REPRESENTATIONS AND WARRANTIES...............................   2

         4.2.     PERFORMANCE; NO DEFAULT......................................   2

         4.3.     COMPLIANCE CERTIFICATES......................................   2

         4.4.     OPINIONS OF COUNSEL..........................................   3

         4.5.     GOOD STANDING CERTIFICATES...................................   3

         4.6.     SALE OF OTHER NOTES..........................................   3

         4.7.     PAYMENT OF VENDOR RECEIVABLES................................   3

         4.8.     PAYMENT OF FEES AND EXPENSES.................................   3

         4.9.     FLEET CREDIT AGREEMENT.......................................   3

         4.10.    CHANGES IN CORPORATE STRUCTURE...............................   4

         4.11.    SUBSIDIARY GUARANTY..........................................   4

         4.12.    EVIDENCE OF PERFECTION AND PRIORITY OF LIENS.................   4

         4.13.    NO LABOR DISPUTES............................................   4

         4.14.    COMPLIANCE WITH LAWS AND OTHER AGREEMENTS....................   4

         4.15.    NO MATERIAL ADVERSE CHANGE...................................   4

         4.16.    OTHER FINANCING DOCUMENTS....................................   4

         4.17.    PROCEEDINGS SATISFACTORY.....................................   5

5.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................   5

         5.1.     ORGANIZATION; POWER AND AUTHORITY............................   5

         5.2.     AUTHORIZATION, ETC...........................................   6

         5.3.     FULL DISCLOSURE..............................................   6

         5.4.     ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES.........   6

         5.5.     FINANCIAL STATEMENTS; DEBT; PROJECTIONS; FISCAL YEAR.........   6

         5.6.     COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.................   7

         5.7.     GOVERNMENTAL AUTHORIZATIONS, ETC.............................   7

         5.8.     LITIGATION; OBSERVANCE OF STATUTES AND ORDERS................   8

         5.9.     TAXES........................................................   8

         5.10.    TITLE TO PROPERTY; PRIORITY OF LIENS.........................   8

</TABLE>
                                       ii

<PAGE>

<TABLE>
<S>                                                                              <C>
         5.11.    CORPORATE NAMES..............................................   8

         5.12.    BUSINESS LOCATIONS; AGENT FOR SERVICE OF PROCESS.............   9

         5.13.    SOLVENT FINANCIAL CONDITION..................................   9

         5.14.    SURETY OBLIGATIONS...........................................   9

         5.15.    BROKERS......................................................   9

         5.16.    INTELLECTUAL PROPERTY........................................   9

         5.17.    GOVERNMENTAL APPROVALS.......................................   9

         5.18.    RESTRICTIONS.................................................  10

         5.19.    NO DEFAULTS..................................................  10

         5.20.    LEASES.......................................................  10

         5.21.    PENSION PLANS................................................  10

         5.22.    TRADE RELATIONS..............................................  10

         5.23.    LABOR RELATIONS..............................................  11

         5.24.    NOT A REGULATED ENTITY.......................................  11

         5.25.    MARGIN STOCK; APPLICATION OF PROCEEDS........................  11

         5.26.    EQUIPMENT....................................................  11

         5.27.    FLEET CREDIT DOCUMENTS.......................................  11

6.       REPRESENTATIONS OF THE PURCHASER......................................  11

7.       GENERAL COVENANTS.....................................................  12

         7.1.     VISITS AND INSPECTIONS.......................................  12

         7.2.     NOTICES......................................................  12

         7.3.     FINANCIAL AND OTHER INFORMATION..............................  12

         7.4.     LANDLORD AND STORAGE AGREEMENTS..............................  14

         7.5.     PROJECTIONS..................................................  14

         7.6.     TAXES........................................................  14

         7.7.     COMPLIANCE WITH LAWS.........................................  14

         7.8.     INSURANCE....................................................  15

         7.9.     INTELLECTUAL PROPERTY........................................  15

         7.10.    PLEDGED SHARES...............................................  15

         7.11.    PAYMENT OF NOTES AND MAINTENANCE OF OFFICE...................  15

         7.12.    INTENTIONALLY OMITTED........................................  15

         7.13.    DOMESTIC SUBSIDIARY GUARANTIES...............................  15

         7.14.    ORDER PROCESSING.............................................  15

         7.15.    COMMITMENT LETTER............................................  16

         7.16.    FAXON ASSIGNMENT OF CLAIMS...................................  16

         7.17.    FLEET'S RELEASE OF LIENS.....................................  16
</TABLE>

                                      iii

<PAGE>
<TABLE>
<S>                                                                              <C>
8.       PAYMENTS..............................................................  16

         8.1.     INTEREST PAYMENTS............................................  16

         8.2.     PRINCIPAL PAYMENTS...........................................  16

         8.3.     PAYMENTS AMONG NOTEHOLDERS...................................  17

         8.4.     NOTATION OF NOTES ON PAYMENT.................................  17

         8.5.     NO OTHER PAYMENTS OF PRINCIPAL; ACQUISITION OF NOTES.........  17

9.       NEGATIVE COVENANTS....................................................  18

         9.1.     MERGERS; CONSOLIDATIONS; ACQUISITIONS........................  18

         9.2.     LOANS........................................................  18

         9.3.     DEBT.........................................................  18

         9.4.     AFFILIATE TRANSACTIONS.......................................  19

         9.5.     LIENS........................................................  19

         9.6.     SUBORDINATED DEBT............................................  20

         9.7.     DISTRIBUTIONS................................................  20

         9.8.     CAPITAL EXPENDITURES.........................................  20

         9.9.     DISPOSITION OF ASSETS........................................  20

         9.10.    LIMITATION ON ISSUANCE OF STOCK..............................  21

         9.11.    BILL AND HOLD SALES, ETC.....................................  21

         9.12.    RESTRICTED INVESTMENTS.......................................  21

         9.13.    LEASES.......................................................  21

         9.14.    TAX CONSOLIDATION............................................  21

         9.15.    BANK ACCOUNTS................................................  21

         9.16.    UPSTREAM PAYMENTS............................................  22

         9.17.    ACCOUNTING CHANGES...........................................  22

         9.18.    ORGANIZATION DOCUMENTS.......................................  22

         9.19.    RESTRICTIVE AGREEMENTS.......................................  22

         9.20.    LIMITATION ON SIDE AGREEMENTS................................  22

         9.21.    CONDUCT OF BUSINESS..........................................  22

10.      FINANCIAL COVENANTS...................................................  22

         10.1.    MINIMUM EBITDA OF THE COMPANY................................  22

         10.2.    MINIMUM EBITDA OF DAWSON.....................................  23

         10.3.    MAXIMUM OPERATING EXPENSES...................................  23

11.      EVENTS OF DEFAULT.....................................................  23

12.      DEFAULT REMEDIES......................................................  26

         12.1.    ACCELERATION OF MATURITY NOTES...............................  26

         12.2.    OTHER REMEDIES...............................................  27

         12.3.    NONWAIVER; REMEDIES CUMULATIVE...............................  27

         12.4.    ANNULMENT OF ACCELERATION OF NOTES...........................  27
</TABLE>
                                       iv
<PAGE>
<TABLE>

<S>                                                                             <C>
13.      REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.........................  27

         13.1.    REGISTRATION OF NOTES........................................  27

         13.2.    EXCHANGE OF NOTES............................................  28

         13.3.    REPLACEMENT OF NOTES.........................................  28

         13.4.    ISSUANCE TAXES...............................................  29

14.      PAYMENTS ON NOTES.....................................................  29

         14.1.    PLACE OF PAYMENT.............................................  29

         14.2.    MANNER OF PAYMENT............................................  29

15.      EXPENSES, ETC.........................................................  30

         15.1.    TRANSACTION EXPENSES.........................................  30

         15.2.    SURVIVAL.....................................................  30

16.      SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT..........  30

17.      AMENDMENT AND WAIVER..................................................  30

         17.1.    REQUIREMENTS.................................................  30

         17.2.    SOLICITATION OF HOLDERS OF NOTES.............................  31

         17.3.    BINDING EFFECT, ETC..........................................  31

         17.4.    NOTES HELD BY THE COMPANY, ETC...............................  31

18.      NOTICES...............................................................  31

19.      REPRODUCTION OF DOCUMENTS.............................................  32

20.      CONFIDENTIAL INFORMATION..............................................  32

21.      INTENTIONALLY OMITTED.................................................  33

22.      MISCELLANEOUS.........................................................  33

         22.1.    INDEMNIFICATION OF EACH HOLDER OF NOTES......................  33

         22.2.    SUCCESSORS AND ASSIGNS.......................................  33

         22.3.    SEVERABILITY.................................................  34

         22.4.    CONSTRUCTION.................................................  34

         22.5.    COUNTERPARTS.................................................  34

         22.6.    GOVERNING LAW................................................  34

         22.7.    INTERCREDITOR AGREEMENT......................................  34
</TABLE>

                                       v

<PAGE>

      SCHEDULE A                --   INFORMATION RELATING TO PURCHASERS

      SCHEDULE B                --   DEFINED TERMS

      SCHEDULE 4.10             --   Changes in Corporate Structure

      SCHEDULE 5.4              --   Subsidiaries of the Company and
                                       Ownership of Subsidiary Stock

      SCHEDULE 5.5              --   Financial Statements

      SCHEDULE 5.8              --   Certain Litigation

      SCHEDULE 5.9              --   Tax Information

      SCHEDULE 5.11             --   Corporate Names

      SCHEDULE 5.12             --   Business Locations

      SCHEDULE 5.14             --   Surety Obligations

      SCHEDULE 5.15             --   Bank Accounts

      SCHEDULE 5.16             --   Intellectual Property

      SCHEDULE 5.18             --   Restrictive Agreements

      SCHEDULE 5.20             --   Leases

      SCHEDULE 5.21             --   Pension Plans

      SCHEDULE 5.23             --   Labor Relations

      SCHEDULE 5.25             --   Use of Proceeds

      SCHEDULE 9.4              --   Affiliate Transactions

      SCHEDULE 9.5              --   Liens

      SCHEDULE 9.15             --   Bank Accounts

      EXHIBIT 1                 --   Form of Floating Rate Senior Note due
                                     December 28, 2001

      EXHIBIT 4.11              --   Form of Subsidiary Guaranty

      EXHIBIT 7.18              --   Form of Federal Assignment of Claims

      ANNEX 1                   --   Address of the Company
                                     Address of Agent

                                       vi

<PAGE>

                                  ROWECOM INC.
                               60 ABERDEEN STREET
                               CAMBRIDGE, MA 02138

            Floating Rate Senior Secured Notes due December 28, 2001

                                                          As of January 31, 2001

TO EACH OF THE PURCHASERS LISTED IN
         THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

                  RoweCom Inc., a Delaware corporation (the "COMPANY"), agrees
with you as follows:

1. AUTHORIZATION OF NOTES.

     The Company will authorize the issue and sale of $9,000,000 aggregate
principal amount of its Floating Rate Senior Secured Notes due December 28, 2001
(the "NOTES", such term to include any such notes issued in substitution
therefor pursuant to Section 13 of this Agreement or the Other Agreements (as
hereinafter defined)). The Notes shall be substantially in the form set out in
Exhibit 1, with such changes therefrom, if any, as may be approved by you and
the Company. Certain capitalized terms used in this Agreement are defined in
Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.

2. SALE AND PURCHASE OF NOTES.

     Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount specified opposite your
name in Schedule A at the purchase price of 100% of the principal amount
thereof. Contemporaneously with entering into this Agreement, the Company is
entering into separate Note Purchase Agreements (the "OTHER AGREEMENTS")
identical with this Agreement with each of the other purchasers named in
Schedule A (the "OTHER PURCHASERS"), providing for the sale at such Closing to
each of the Other Purchasers of Notes in the principal amount specified opposite
its name in Schedule A. Your obligation hereunder and the obligations of the
Other Purchasers under the Other Agreements are several and not joint
obligations and you shall have no obligation under any Other Agreement and no
liability to any Person for the performance or non-performance by any Other
Purchaser thereunder.

3. CLOSING.

     The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Bingham Dana at 10:00 a.m., local time,
at a closing (the "CLOSING") on February 5, 2001 or on such other Business Day
thereafter on or prior to February 6, 2001 as may be agreed upon by the Company
and you and the Other Purchasers. At the Closing the Company will

<PAGE>

deliver to you the Notes to be purchased by you in the form of a single Note (or
such greater number of Notes in denominations of at least $100,000 as you may
request) dated the date of funding applicable to you and registered in your name
(or in the name of your nominee), against delivery by you to the Company or its
order of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the account on
behalf of the Company to account number RoweCom Escrow Account Acct # 54205-0;
Attn: Joe Feil at Wilmington Trust Company; ABA #031100092. If at the Closing
the Company shall fail to tender such Notes to you as provided above in this
Section 3, or any of the conditions specified in Section 4 shall not have been
fulfilled to your satisfaction, you shall, at your election, be relieved of all
further obligations under this Agreement, without thereby waiving any rights you
may have by reason of such failure or such nonfulfillment.

4. CONDITIONS TO CLOSING.

     Your obligation to purchase and pay for the Notes to be sold to you at the
Closing is subject to the fulfillment to your satisfaction, prior to or at the
Closing, of the following conditions precedent, and the failure by the Company
to satisfy all such conditions on the Closing Date shall relieve you, at your
election, of all such obligations; PROVIDED, HOWEVER that the Company in all
cases shall remain liable in respect of its obligations under Section 15.

     4.1. REPRESENTATIONS AND WARRANTIES.

          The representations and warranties of the Company in this Agreement
     shall be correct when made and at the time of the Closing.

          4.2. PERFORMANCE; NO DEFAULT.

               The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by it prior to or at the Closing and after giving effect to the
issue and sale of the Notes (and the application of the proceeds thereof as
contemplated by Schedule 5.25) no Default or Event of Default shall have
occurred and be continuing.

          4.3. COMPLIANCE CERTIFICATES.

          (a) OFFICER'S CERTIFICATE. The Company shall have delivered to you an
     Officer's Certificate, dated the Closing Date, certifying that the
     conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled;

          (b) COMPANY SECRETARY OR ASSISTANT SECRETARY'S CERTIFICATE. The
     Company shall have delivered to you a certificate, dated the Closing Date,
     and executed by the Secretary or the Assistant Secretary of the Company who
     shall certify that the following documents, which shall be attached
     thereto, are true and correct: (a) resolutions and other corporate
     proceedings relating to the authorization, execution and delivery of the
     Notes, this Agreement and the other Financing Documents, (b) copy of its
     articles of incorporation and all amendments thereto, (c) copy of its
     by-laws and all amendments thereto, and (d) a good standing certificate
     issued by the Secretary of State of the state of Delaware; and

          (c) GUARANTOR SECRETARY'S CERTIFICATE. Each Subsidiary Guarantor shall
     have delivered to you a certificate, dated the Closing Date, and executed
     by the Assistant Secretary or Secretary of such Subsidiary Guarantor who
     shall certify that the following documents, which shall be attached
     thereto, are true and correct: (a) resolutions and other corporate
     proceedings relating to the authorization, execution and delivery of the
     Subsidiary Guaranty and the other Financing Documents to which it is a
     party, (b) copy

<PAGE>

     of such Subsidiary Guarantor's articles of incorporation and all amendments
     thereto, (c) copy of such Subsidiary Guarantor's by-laws and all amendments
     thereto, and (d) a good standing certificate issued by the Secretary of
     State of such Subsidiary Guarantor's state of formation.

     4.4. OPINIONS OF COUNSEL.

          You shall have received opinions in form and substance satisfactory
to you, dated the Closing Date (a) from Bingham Dana LLP, counsel
for the Company, the Subsidiary Guarantors and Richard Rowe in a form and
substance satisfactory to you and the Other Purchasers (and the Company hereby
instructs its counsel to deliver such opinion to you), (b) from Chapman and
Cutler, counsel to McGregor Subscription Service, Inc., a Subsidiary Guarantor,
(c) Blank, Rome Comisky & McCauley, LLP, counsel to CSS, and (d) copies of all
legal opinions issued to Fleet in connection with the Fleet Credit Agreement
(and the Company hereby instructs its counsel to deliver such opinions to you).

     4.5. GOOD STANDING CERTIFICATES.

          You shall have received good standing certificates for the Company and
each Subsidiary Guarantor, issued by the Secretary of State or other
appropriate official of such party's jurisdiction of organization and each
jurisdiction where the conduct of such party's business activities or ownership
of its Property necessitates qualification.

     4.6. SALE OF OTHER NOTES.

          Contemporaneously with the Closing the Company shall sell to the Other
Purchasers and the Other Purchasers shall purchase the Notes to be purchased by
them at the Closing as specified in Schedule A.

     4.7. PAYMENT OF VENDOR RECEIVABLES.

          The Company or any Subsidiary Guarantor shall have paid on or before
the Closing Date all Vendor Receivables as indicated in pay-off letters
delivered by you and each of the Other Purchasers to the Company or any
Subsidiary Guarantor.

     4.8. PAYMENT OF FEES AND EXPENSES.

          The Company shall have paid on or before the Closing Date all fees and
disbursements required to be paid pursuant to Section 15 and pursuant
to the separate commitment letters between you, the Other Purchasers and the
Company.

     4.9. FLEET CREDIT AGREEMENT.

          (a) FLEET CREDIT AGREEMENT. Dawson and the other parties thereto shall
     have entered into the Fleet Credit Agreement, which agreement, and all
     documents and instruments executed and delivered in connection therewith,
     shall be in form and substance satisfactory to you. The Company shall
     deliver to you a copy of a fully executed counterpart of the Fleet Credit
     Agreement, certified as true and correct by an officer of Dawson. Pursuant
     to the Fleet Credit Agreement, the Company and the Subsidiary Guarantors
     shall have received proceeds in an amount which is sufficient, together
     with the proceeds of the Notes, to repay the Vendor Receivables and make
     the other payments to be made at the Closing, from borrowings under the
     Fleet Credit Agreement.

<PAGE>

          (b) NO DEFAULTS; SATISFACTION OF CONDITIONS PRECEDENT. No event shall
     have occurred and no condition shall exist that shall prohibit the Company
     and the Subsidiary Guarantors from borrowing under the Fleet Credit
     Agreement and all conditions precedent to closing specified in the Fleet
     Credit Agreement shall have been satisfied on or prior to the Closing Date
     and you shall have received such evidence of the satisfaction of such
     conditions precedent as you shall deem appropriate.

     4.10. CHANGES IN CORPORATE STRUCTURE.

          Except as specified in Schedule 4.10, neither the Company nor
any Subsidiary shall have changed its jurisdiction of incorporation or been a
party to any merger or consolidation and shall not have succeeded to all or any
substantial part of the liabilities of any other entity, at any time following
the date of the most recent financial statements referred to in Schedule 5.5.
4.11.    SUBSIDIARY GUARANTY.

          Dawson and all other Domestic Subsidiaries shall have executed
and delivered to you and the Other Purchasers a guaranty (as amended from time
to time, each a "SUBSIDIARY GUARANTY," and collectively, the "SUBSIDIARY
GUARANTIES"), substantially in the form of Exhibit 4.11, guarantying the
obligations and indebtedness of the Company under this Agreement, the Notes and
the other Financing Documents. 4.12. EVIDENCE OF PERFECTION AND PRIORITY OF
LIENS.

          You or the Agent on your behalf shall have received for filing
any filing or recordation necessary to perfect the Liens of Agent in the
Collateral and evidence in form satisfactory to you that such Liens constitute
valid and perfected security interests and Liens, and that there are no other
Liens upon any Collateral except for Permitted Liens.

     4.13. NO LABOR DISPUTES.

          You shall have received assurances satisfactory to you that
there are no threats of strikes or work stoppages by any employees, or
organization of employees, of the Company or any Subsidiary which you reasonably
determine may have a Material Adverse Effect.

     4.14. COMPLIANCE WITH LAWS AND OTHER AGREEMENTS.

          You shall have determined or received assurances satisfactory
to you that none of the Financing Documents or any of the transactions
contemplated thereby violate any Applicable Law, court order or agreement
binding upon any Obligor.

     4.15. NO MATERIAL ADVERSE CHANGE.

          No material adverse change in the financial condition of any Obligor
or in the quality, quantity or value of any Collateral shall have occurred
since September 30, 2000.

     4.16. OTHER FINANCING DOCUMENTS.

          (a) RICHARD ROWE PLEDGE AGREEMENT. Richard Rowe shall have executed
     and delivered to the Agent with copies to you and the Other Purchasers the
     Richard Rowe Pledge Agreement pledging all shares of stock and warrants
     legally or beneficially owned by him in RoweCom Inc. together with
     Irrevocable Stock Powers and Irrevocable Warrant Powers fully executed in
     blank.

<PAGE>

          (b) PLEDGE AGREEMENTS. The Company shall have delivered to the Agent
     with copies to you and the Other Purchasers executed copies of the Pledge
     Agreements.

          (c) SECURITY AGREEMENTS. The Company shall have delivered to the Agent
     with copies to you and the Other Purchasers executed copies of (i) a
     Security Agreement dated the date hereof between the Company and the Agent,
     and (ii) a Security Agreement dated the date hereof among the Subsidiary
     Guarantors and the Agent.

          (d) INTELLECTUAL PROPERTY SECURITY AGREEMENT. The Company shall have
     executed and delivered to the Agent with copies to you and the Other
     Purchasers the Intellectual Property Security Agreement dated the date
     hereof by and among the Company, the Subsidiary Guarantors and the Agent.

          (e) COLLATERAL AGENCY AGREEMENT. The Company shall have executed and
     delivered to the Agent with copies to you and the Other Purchasers a
     Collateral Agency Agreement dated the date hereof among the Company, the
     Subsidiary Guarantors, the Agent, you and the Other Purchasers.

          (f) SUBORDINATION AGREEMENTS. The Company shall have executed and
     delivered to you and the Other Purchasers the Subordination Agreements.

          (g) GUARANTOR SECURITY DOCUMENTS. The Subsidiary Guarantors shall have
     executed and delivered to you and the Other Purchasers the Guarantor
     Security Documents.

          (h) . The Company shall have executed and delivered to you and the
     Other Purchasers a fully executed Intercreditor Agreement.

     4.17. PROCEEDINGS SATISFACTORY.

          All proceedings taken in connection with the issuance and sale
of the Notes and all documents and papers relating thereto shall be satisfactory
to you and your special counsel. You and your special counsel shall have
received copies of such documents and papers as you or they may reasonably
request in connection therewith or in connection with your special counsel's
closing opinion, all in form and substance satisfactory to you and your special
counsel.

5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

          The Company represents and warrants to you that:

     5.1. ORGANIZATION; POWER AND AUTHORITY.

          Each of the Company and the Subsidiary Guarantors is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each of the
Company and the Subsidiary Guarantors has the corporate power and authority to
own or hold under lease the Properties it purports to own or hold under lease,
to transact the business it transacts and proposes to transact, to execute and
deliver this Agreement and the Other Agreements and the Notes and to perform the
provisions hereof and thereof.

<PAGE>

     5.2. AUTHORIZATION, ETC.

          This Agreement, the Other Agreements, the Notes and each of
the other Financing Documents have been duly authorized by all necessary
corporate action on the part of the Company and the Subsidiary Guarantors party
thereto, and this Agreement constitutes, and upon execution and delivery thereof
each Note will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, and each of the
other Financing Documents when delivered will be a legal, valid and binding
obligation of each of the Company and its Subsidiary Guarantors thereto
enforceable against them in accordance with the respective terms of such
Financing Documents except as such enforceability may be limited by (I)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (II) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law); and each of the other Financing Documents
when delivered will be a legal, valid and binding obligation of each of the
Company and its Subsidiary Guarantors thereto enforceable against them in
accordance with the respective terms of such Financing Documents.

     5.3. FULL DISCLOSURE.

          The financial statements referred to in Section 5.5 hereof do
not contain any untrue statement of a material fact and neither this Agreement
nor any other written statement contains or omits any material fact necessary to
make the statements contained herein or therein not materially misleading. There
is no fact or circumstances in existence on the Closing Date which the Company
has failed to disclose to you and the Other Purchasers in writing that may
reasonably be expected to have a Material Adverse Effect. The Collateral
Certificates and the information contained therein are true and correct as of
the Closing Date.

     5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES.

          (a) Schedule 5.4 is (except as noted therein) a complete and correct
     list of the Company's Subsidiaries, showing, as to each Subsidiary, the
     correct name thereof, the jurisdiction of its organization, and the
     percentage of shares of each class of its capital stock or similar equity
     interests outstanding owned by the Company and each other Subsidiary.

          (b) All of the outstanding shares of capital stock or similar equity
     interests of each Subsidiary shown in Schedule 5.4 as being owned by the
     Company and its Subsidiaries have been validly issued, are fully paid and
     nonassessable and are owned by the Company or another Subsidiary free and
     clear of any Lien (except as otherwise disclosed in Schedule 5.4).

          (c) Each Subsidiary identified in Schedule 5.4 is a corporation or
     other legal entity duly organized, validly existing and in good standing
     under the laws of its jurisdiction of organization, and is duly qualified
     as a foreign corporation or other legal entity and is in good standing in
     each jurisdiction in which such qualification is required by law, other
     than those jurisdictions as to which the failure to be so qualified or in
     good standing would not, individually or in the aggregate, reasonably be
     expected to have a Material Adverse Effect. Each such Subsidiary has the
     corporate or other power and authority to own or hold under lease the
     Properties it purports to own or hold under lease and to transact the
     business it transacts and proposes to transact.

     5.5. FINANCIAL STATEMENTS; DEBT; PROJECTIONS; FISCAL YEAR.

          (a) FINANCIAL STATEMENTS. The Company has delivered to you copies of
     the financial statements of the Company and its Subsidiaries listed on
     Schedule 5.5(a). All of said financial statements (including in each case
     the related schedules and notes) fairly present in all material respects
     the consolidated financial position of the Company and its

<PAGE>

     Subsidiaries as of the respective dates specified in such Schedule and the
     consolidated results of their operations and cash flows for the respective
     periods so specified and have been prepared in accordance with GAAP
     consistently applied throughout the periods involved except as set forth in
     the notes thereto (subject, in the case of any interim financial
     statements, to normal year-end adjustments).

          (b) DEBT. Schedule 5.5(b) lists all Debt for Money Borrowed of the
     Company and the Subsidiary Guarantors as of the Closing Date, after giving
     effect to the transactions contemplated by the Financing Documents and the
     Fleet Credit Agreement, and provides the following information with respect
     to each item of such Debt: the obligor, each guarantor thereof and each
     other Person similarly liable in respect thereof, the holder thereof, the
     outstanding amount, the current portion of the outstanding amount, the
     final maturity, required sinking fund payments, and a description of the
     collateral securing such Debt.

          (c) PROJECTIONS. The Company has delivered to you projected financial
     statements of the Company and its Subsidiaries described on Schedule 5.5(c)
     (collectively, the "PROJECTIONS"). The assumptions used in preparation of
     the Projections were reasonable when made and continue to be reasonable.
     Such Projections have been prepared by the executive and financial
     personnel of the Company in light of the business of the Company. Such
     Projections have been prepared in good faith, have a reasonable basis and
     represent the good faith opinion of the Company as to the projected results
     of the operations of the Company and its Subsidiaries. No material facts
     have occurred since the preparation of the Projections that would cause the
     Projections, taken as a whole, not to be reasonably attainable, (it being
     acknowledged the Projections are not a guaranty of future performance) and
     the Company and its Subsidiaries do not have, on the Closing Date, any
     material obligations (whether accrued, matured, absolute, actual,
     contingent or otherwise) that are not reflected in the Projections.

          (d) FISCAL YEAR. The fiscal year of the Company ends on the last day
     of December in each year.

     5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.

          The execution, delivery and performance by the Obligors of
this Agreement, the Financing Documents and the Notes will not (a) contravene,
result in any breach of, or constitute a default under, or result in the
creation of any Lien in respect of any Property of the Company or any Subsidiary
under, any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease, corporate charter or by-laws, or any other Material agreement
or instrument to which the Company or any Subsidiary is bound or by which the
Company or any Subsidiary or any of their respective Properties may be bound or
affected unless permitted by the Financing Documents, (b) conflict with or
result in a breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or Governmental Authority
applicable to the Company or any Subsidiary or (c) violate any provision of any
Applicable Law and the Company and each Subsidiary has established and maintains
an adequate monitoring system to insure that it remains in compliance in all
material respects with all federal, state and local laws, rules and regulations
applicable to it. No Inventory of the Company or any Subsidiary has been
produced in violation of the Fair Labor Standards Act (29 U.S.C. 201 et M.), as
amended.

     5.7. GOVERNMENTAL AUTHORIZATIONS, ETC.

          No consent, approval or authorization of, or registration,
filing or declaration with, any Governmental Authority is required in connection
with the execution, delivery or performance by the Company and the Subsidiary
Guarantors of this Agreement, the Notes or any of the Financing Documents.

<PAGE>

     5.8. LITIGATION; OBSERVANCE OF STATUTES AND ORDERS.

          (a) Except as disclosed in Schedule 5.8, there are no actions, suits
     or proceedings pending or, to the knowledge of the Company, threatened
     against or affecting the Obligors or any of the Company's Subsidiaries or
     any Property of the Obligors or the Company's Subsidiaries in any court or
     before any arbitrator of any kind or before or by any Governmental
     Authority that, individually or in the aggregate, would reasonably be
     expected to have a Material Adverse Effect.

          (b) None of the Obligors or any of the Company's Subsidiaries are in
     default under any order, judgment, decree or ruling of any court,
     arbitrator or Governmental Authority or is in violation of any applicable
     law, ordinance, rule or regulation (including without limitation
     Environmental Laws) of any Governmental Authority, WHICH default or
     violation, individually or in the aggregate, would reasonably be expected
     to have a Material Adverse Effect.

     5.9. TAXES.

          The FEIN of each of the Company and the Subsidiary Guarantors
is as shown on Schedule 5.9 hereto. Each Obligor and the Company's Subsidiaries
has filed all federal, state and local tax returns and other reports it is
required by law to file and has paid, or made provision for the payment of, all
Taxes upon it, its income and Properties as and when such Taxes are due and
payable, except to the extent being Properly Contested. The provision for Taxes
on the books of the Company and each Subsidiary are adequate for all years not
closed by applicable statutes, and for its current Fiscal Year.

     5.10. TITLE TO PROPERTY; PRIORITY OF LIENS.

          The Company and each Subsidiary has good, indefeasible and
marketable title to and fee simple ownership of, or valid and subsisting
leasehold interests in, all of its real Property, and good title to all of its
personal Property, including all Property reflected in the financial statements
referred to in Section 5.5, in each case free and clear of all Liens except
Permitted Liens. The Company has paid or discharged, and has caused each
Subsidiary to pay and discharge, all lawful claims which, if unpaid, might
become a Lien against any Properties of the Company or such Subsidiary that is
not a Permitted Lien. The Liens granted to Agent pursuant to this Agreement and
the other Financing Documents are Liens with priority only subject to those
granted in favor of the holders of Fleet Debt in the manner described in the
Intercreditor Agreement and subject only to those other Permitted Liens which
are expressly permitted by the terms of this Agreement or the Intercreditor
Agreement to have priority over the Liens of Agent.

     5.11. CORPORATE NAMES.

          Neither the Company nor any Subsidiary has been known as or
used any corporate, fictitious or trade names except those listed on Schedule
5.11 hereto. Except as set forth on Schedule 5.11, neither the Company nor any
Subsidiary has been the surviving corporation of a merger or consolidation or
acquired all or substantially all of the assets of any Person.

     5.12. BUSINESS LOCATIONS; AGENT FOR SERVICE OF PROCESS.

          As of the Closing Date, the chief executive office and other
places of business of the Company and each Subsidiary Guarantor are as listed on
Schedule 5.12 hereto. During the one-year period preceding the Closing Date,
neither the Company nor any Subsidiary Guarantor has had an office, place of
business or agent for service of process other than as listed on

<PAGE>

Schedule 5.12. Except as shown on Schedule 5.12, on the Closing Date, no
Inventory of the Company or any Subsidiary Guarantor is stored with a bailee,
warehouseman or similar Person, nor is any Inventory of the Company or any
Subsidiary Guarantor consigned to any Person. As of the Closing Date, the
Persons listed on Schedule 5.12 have consigned Inventory to the Company in the
amounts referenced therein and at Agent's request, the Company shall certify to
the Agent from time to time on the next Compliance Certificate that is to be
delivered to the Agent by the Company under this Agreement after any such
request, the amount, type and name of the owner of any consigned Inventory.
5.13. SOLVENT FINANCIAL CONDITION.

          Each of the Company and its Subsidiaries, after giving effect to the
issuance of the Notes and the consummation of the other transactions described
in the Financing Documents, is Solvent.

     5.14. SURETY OBLIGATIONS.

          Except as set forth on Schedule 5.12 hereto, on the Closing
Date, neither the Company nor any of its Subsidiaries is obligated as surety or
indemnitor under any surety or similar bond or other contract issued or entered
into any agreement to assure payment, performance or completion of performance
of any undertaking or obligation of any Person.

     5.15. BROKERS.

          To the best of the Company's knowledge, there are no claims
against it for brokerage commissions, finder's fees or investment banking fees
in connection with the transactions contemplated by this Agreement or any of the
other Financing Documents.

     5.16. INTELLECTUAL PROPERTY.

          The Company and its Subsidiaries each owns or has the lawful
right to use all Intellectual Property necessary for the present and planned
future conduct of its business without any conflict with the rights of others;
there is no objection to, or pending (or, to the Company's knowledge,
threatened) Intellectual Property Claim which could reasonably be expected to
have a Material Adverse Effect, and the Company is not aware of any grounds for
challenge or objection thereto; and, except as may be disclosed on Schedule
5.16, neither the Company nor any Subsidiary pays any royalty or other
compensation to any Person for the right to use any Intellectual Property. All
such patents, trademarks, service marks, tradenames, copyrights, licenses and
other similar rights are listed on Schedule 5.16, to the extent they are
registered under any Applicable Law or are otherwise material to the Company's
or any Subsidiary's business.

     5.17. GOVERNMENTAL APPROVALS.

          Each of the Company and its Subsidiaries has, and is in good
standing with respect to, Governmental Approval necessary to continue to conduct
its business as heretofore or proposed to be conducted by it and to own or lease
and operate its Properties as now owned or leased by it.

     5.18. RESTRICTIONS.

          Neither the Company nor any Subsidiary is a party or subject
to any contract, agreement, or charter or other corporate restriction, which has
or could be reasonably expected to have a Material Adverse Effect. Neither the
Company nor any Subsidiary is a party or subject to any Restrictive Agreements
(including, without limitation, any agreement or contract that restricts

<PAGE>

its right or ability to issue capital stock or rights with respect thereto),
except as set forth on Schedule 5.18, none of which prohibit the execution or
delivery of any of the Financing Documents by any Obligor or the performance by
any Obligor of its obligations under any of the Financing Documents to which it
is a party, in accordance with the terms of such Financing Documents.

     5.19. NO DEFAULTS.

          No event has occurred and no condition exists which would,
upon or after the execution and delivery of the Financing Document or the
Obligors' performance hereunder, constitute a Default or an Event of Default.
Neither the Company nor any Subsidiary is in default, and no event has occurred
and no condition exists which constitutes or which with the passage of time or
the giving of notice or both would constitute a default, under any Material
Contract or in the payment of any Debt to any Person for Money Borrowed.

     5.20. LEASES.

          Schedule 5.20 is a complete listing of (a) all Material
capitalized leases of the Company and its Subsidiaries and (b) all material
operating leases of the Company and the Subsidiary Guarantors on the Closing
Date. Each of the Company and its Subsidiaries is in substantial compliance with
all of the terms of each of its respective capitalized and operating leases and
there is no basis upon which the lessors under any such leases could terminate
same or declare the Company or any of the Subsidiaries in default thereunder.

     5.21. PENSION PLANS.

          Except as disclosed on Schedule 5.21, neither the Company nor
any Subsidiary has any Plan on the Closing Date. The Company and each of the
Subsidiaries is in substantial compliance with the requirements of ERISA and the
regulations promulgated thereunder with respect to each Plan. No fact or
situation that is reasonably likely to result in a material adverse change in
the financial condition of the Company or any Subsidiary exists in connection
with any Plan. Except as disclosed on Schedule 5.21, neither the Company nor any
of the Subsidiaries has any withdrawal liability in connection with a
Multiemployer Plan.

     5.22. TRADE RELATIONS.

          There exists no actual or threatened termination, cancellation or
limitation of, or any modification or change in, the business relationship
between the Company or any of its Subsidiaries and, to the best of their
knowledge, any customer or any group of customers, whose purchases individually
or in the aggregate are material to the business of the Company or such
Subsidiary, or with any material supplier, and there exists no present condition
or state of facts or circumstances which would materially affect adversely the
Company or any Subsidiary or prevent the Company or any Subsidiary from
conducting such business after the consummation of the transaction contemplated
by this Agreement in substantially the same manner in which it has heretofore
been conducted.

     5.23. LABOR RELATIONS.

          Except as described on Schedule 5.23, neither the Company nor
any of its Subsidiaries is a party to any collective bargaining agreement. There
are no Material grievances, disputes or controversies with any union or any
other organization of the Company's or any Subsidiary's employees, or, to the
Company's knowledge, any threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization.

<PAGE>

     5.24. NOT A REGULATED ENTITY.

          Neither the Company nor any Subsidiary Guarantor is (a) an
"investment company" or a "person directly or indirectly controlled by or acting
on behalf of an investment company" within the meaning of the Investment Company
Act of 1940; (b) a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935; or (iii) subject to regulation under the Federal Power Act, the
Interstate Commerce Act, any public utilities code or any other Applicable Law
regarding its authority to incur Debt.

     5.25. MARGIN STOCK; APPLICATION OF PROCEEDS.

          Neither the Company nor any Subsidiary Guarantor is engaged,
principally or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. The Company
and its Subsidiaries shall apply the proceeds from the sale of the Notes as
specified on Schedule 5.25.

     5.26. EQUIPMENT.

          The Equipment of the Company and the Subsidiary Guarantors is
in good operating condition and repair, and all necessary replacements of and
repairs thereto shall be made so that the value and operating efficiency of the
Equipment of the Company and the Subsidiary Guarantors shall be maintained and
preserved, reasonable wear and tear excepted. Neither the Company nor any
Subsidiary Guarantor will permit any of its Equipment to become affixed to any
real Property leased to such Subsidiary Guarantor so that an interest arises
therein under the real estate laws of the applicable jurisdiction unless the
landlord of such real Property has executed a landlord waiver or leasehold
mortgage in favor of and in form acceptable to Agent, and no such Subsidiary
Guarantor will permit any of its Equipment to become an accession to any
personal Property other than Equipment that is subject to Liens in favor of you
and the other Purchasers and other Permitted Liens.

     5.27. FLEET CREDIT DOCUMENTS.

          The Company has provided to you true, correct and complete
copies of the Fleet Credit Agreement and each of the other agreements and
instruments executed in connection therewith (collectively, the "FLEET CREDIT
DOCUMENTS"), and there is no agreement or understanding between or among the
Company and the other parties to the Fleet Credit Documents except as set forth
in the Fleet Credit Documents.

6. REPRESENTATIONS OF THE PURCHASER.

          You represent to the Company that you are purchasing the Notes for
your own account or for an account of one or more Affiliate or for one or more
separate accounts maintained by you or for the account of one or more pension or
trust funds and not with a view to the distribution thereof, PROVIDED that the
disposition of such Property shall at all times be within your control. You
understand that the Notes have not been registered under the Securities Act and
may be resold only if registered pursuant to the provisions of the Securities
Act or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required
by law, and that the Company is not required to register the Notes.

7. GENERAL COVENANTS

          Each of the Company and the Subsidiary Guarantors covenant that on and
after the Closing Date and so long as any of the Obligations shall be
outstanding:

<PAGE>

     7.1. VISITS AND INSPECTIONS.

          The Company shall permit your representatives and representatives of
the Other Purchasers, from time to time, as often as may be reasonably
requested, to (a) visit and inspect the Properties of the Company and its
Subsidiaries, (b) inspect, audit and make extracts from its or their books and
records, (c) discuss on a monthly basis or more frequently as herein described,
with its or their officers, employees and independent accountants, the Company
and its Subsidiaries' business, assets, liabilities, financial condition,
business prospects and results of operations, (d) conduct field audits and (e)
conduct weekly inspections of the Company and its Subsidiaries to verify the
amount and proper application of proceeds from accounts receivable, the status
of all accounts payable, the amount of cash or other liquidity available to the
Company and the conformity of findings to the Company and its Subsidiaries'
Projections. Expenses incurred by the holders of the Notes in connection with
this Section shall be paid by the Company in accordance with Section 15.1.

     7.2. NOTICES.

          The Company shall promptly notify each holder of Notes in
writing of the occurrence of any event or the existence of any fact which
renders any representation or warranty in this Agreement or any of the other
Financing Documents inaccurate, incomplete or misleading.

     7.3. FINANCIAL AND OTHER INFORMATION.

          The Company shall:

          (a) keep, and cause each Subsidiary to keep, adequate records and
     books of account with respect to its business activities in which proper
     entries are made in accordance with GAAP reflecting all its financial
     transactions; and cause to be prepared and furnished to each holder of
     Notes the following (all to be prepared in accordance with GAAP applied on
     a consistent basis, unless the Company's certified public accountants
     concur in any change therein and such change is disclosed to each holder of
     Notes and is consistent with GAAP);

          (b) deliver not later than ninety (90) days after the close of each
     Fiscal Year (beginning with Fiscal Year ended December 31, 2000),
     unqualified audited financial statements of the Company and its
     Subsidiaries as of the end of such year, on a Consolidated and
     consolidating basis, certified by a firm of independent certified public
     accountants of recognized standing selected by the Company but acceptable
     to Required Holders (except for a qualification for a change in accounting
     principles with which the accountant concurs and a going concern
     qualification as to the Company);

          (c) deliver not later than forty-five (45) days after the end of each
     Fiscal Quarterly accounting period, including the last quarter of the
     Company's Fiscal Year and beginning with the Company's Fiscal Quarter ended
     December 31, 2000, unaudited interim financial statements of the Company
     and its Subsidiaries as of the end of such quarter and of the portion of
     the Company's financial year then elapsed, on a Consolidated and
     consolidating basis, certified by the Chief Financial Officer of the
     Company as prepared in accordance with GAAP and fairly presenting the
     financial position and results of operations of the Company and its
     Subsidiaries for such quarter and period subject only to changes from audit
     and year-end adjustments and except that such statements need not contain
     notes;

          (d) deliver not later than twenty (20) days after the end of each
     month hereafter, including the last month of the Company's Fiscal Year and
     beginning with the Company's fiscal month ended January 31, 2001, unaudited
     interim financial statements

<PAGE>

     and cash budgets in form satisfactory to the Required Holders, of each of
     the Company and its Subsidiaries as of the end of such month and of the
     portion of the Company's financial year then elapsed, on a Consolidated and
     consolidating basis, certified by the principal financial officer of the
     Company as prepared in accordance with GAAP and fairly presenting the
     Consolidated financial position and results of operations of the Company
     and its Subsidiaries for such month and period subject only to changes from
     audit and year-end adjustments and except that such statements need not
     contain notes;

          (e) deliver promptly after the sending or filing thereof, as the case
     may be, copies of any proxy statements, financial statements or reports
     which the Company or Dawson has made available to its shareholders and
     copies of any regular, periodic and special reports or registration
     statements which the Company and its Subsidiaries files with the SEC or any
     Governmental Authority which may be substituted therefor, or any national
     securities exchange;

          (f) promptly after the filing thereof, deliver copies of any annual
     report to be filed with ERISA in connection with each Plan;

          (g) promptly after the sending to any holder of Notes, deliver any
     statement, report or certificate of the Company or any Subsidiary,
     including without limitation any previously furnished to any holder of
     Debt, copies of such statement, report or certificate to the extent that
     the information contained in such statement, report or certificate has not
     already been delivered to each holder of Notes;

          (h) promptly after the execution thereof, deliver copies of all
     amendments, waivers and modifications to the Fleet Credit Agreement or any
     Acceptable Credit Facility;

          (i) on or before the 10th day of each calendar month, the Company
     shall provide a report to each holder of Notes with respect to its efforts
     to raise additional equity or Debt financing;

          (j) promptly after (and in any event within 3 Business Days of)
     becoming aware (A) of the existence of any condition or event which
     constitutes a Default or an Event of Default, or (B) that the holder of any
     Note, or of any Debt, shall have given notice or taken any other action
     with respect to a claimed Default, Event of Default, or default or event of
     default, a notice specifying the nature of the claimed Default, Event of
     Default, or default or event of default and the notice given or action
     taken (if any) by such holder and what action the Company is taking or
     proposes to take with respect thereto; and

          (k) deliver such other data and information (financial and otherwise)
     as any holder of Notes, from time to time, may reasonably request, bearing
     upon or related to the Collateral or the Company, Subsidiary Guarantors and
     each of their Subsidiaries' financial condition or results of operations;

          Concurrently with the delivery of the financial statements described
in this Section 7.3(b), the Company and Subsidiary Guarantors shall forward to
each holder of Notes a copy of the accountants' letter to the Company's
management that is prepared in connection with such financial statements and
also shall cause to be prepared and shall furnish to each holder of Notes a
certificate of the aforesaid certified public accountants certifying to each
such holder of Notes that based upon their examination of the financial
statements of the Company and its Subsidiaries performed in connection with
their examination of said financial statements, they are not aware of any
Default or Event of Default, or, if they are aware of such Default or Event of
Default, specifying the nature thereof, and acknowledging, in a manner
satisfactory to each holder of

<PAGE>

Notes, that they are aware that each such holder of Notes is relying on such
financial statements in making its decisions with respect to the Notes.
Concurrently with the delivery of the financial statements described in clauses
(b), (c) and (d) of this Section 7.3, or more frequently if requested by any
holder of Notes, the Company shall cause to be prepared and furnished to each
holder of Notes a Compliance Certificate executed by the Chief Financial Officer
of the Company.

     7.4. LANDLORD AND STORAGE AGREEMENTS.

          The Company shall provide each holder of Notes with copies of
all agreements between the Company or any of its Subsidiary Guarantors and any
landlord or warehouseman which owns any premises at which any Inventory of the
Company or any Subsidiary Guarantor may, from time to time, be kept. 7.5.
PROJECTIONS.

          The Company shall, (a) no later than 30 days prior to the end of each
Fiscal Year of the Company, deliver to each holder of Notes the Projections of
the Company and its Subsidiaries for the forthcoming Fiscal Year, and (b)
deliver to each holder of Notes on or before the 15th day of each month, the
updated Projections of the Company for the current Fiscal Year which take
account of the results of the preceding month and senior management's current
view of the prospects of the Company.

     7.6. TAXES.

          The Company shall pay and discharge all Taxes prior to the date on
which such Taxes become delinquent or penalties attach thereto, except and to
the extent only that such Taxes are being Properly Contested.

     7.7. COMPLIANCE WITH LAWS.

          The Company shall comply with all Applicable Law, including ERISA, all
Environmental Laws, OSHA, FLSA and all laws, statutes, regulations and
ordinances regarding the collection, payment and deposit of Taxes, and obtain
and keep in force any and all Governmental Approvals necessary to the ownership
of its Properties or to the conduct of its business, to the extent that any such
failure to comply, obtain or keep in force could be reasonably expected to have
a Material Adverse Effect. Without limiting the generality of the foregoing, if
any Environmental Release shall occur at or on any of the Properties of the
Company or any Subsidiary Guarantor, the Company shall, or shall cause the
applicable Subsidiary Guarantor to, act promptly and diligently to investigate
and report to each holder of Notes and all appropriate Governmental Authorities
the extent of, and to make appropriate remedial action to eliminate, such
Environmental Release all in accordance with applicable Environmental Laws.

     7.8. INSURANCE.

          In addition to the insurance required pursuant to the Financing
Documents with respect to the Collateral, each of the Company and Subsidiary
Guarantors shall maintain with financially sound and reputable insurers, (a)
insurance with respect to its Properties and business against such casualties
and contingencies of such type (including product liability, workers'
compensation, larceny, embezzlement, or other criminal misappropriation
insurance) and in such amounts as is customary in the business of the Company or
any Subsidiary Guarantor, as the case may be and (b) business interruption
insurance in an amount not less than $13,860,886.

<PAGE>

     7.9. INTELLECTUAL PROPERTY.

          The Company shall, promptly after applying for or otherwise acquiring
any Intellectual Property, deliver to each holder of Notes (or the Agent for
their benefit), in form and substance acceptable to the Required Holders and in
recordable form, all documents necessary for the holders of Notes to perfect
their Lien on such Intellectual Property.

     7.10. PLEDGED SHARES.

          The Company shall pledge to the Agent, for the benefit of itself and
each holder of Notes from time to time, a security interest in 100% of the
Equity Interests of each Subsidiary Guarantor.

     7.11. PAYMENT OF NOTES AND MAINTENANCE OF OFFICE.

          The Company will punctually pay, or cause to be paid, the principal
of, and interest on, the Notes, as and when the same shall become due according
to the terms hereof and of the Notes, and will maintain an office at the address
of the Company as provided on Annex 1 hereto where notices, presentations and
demands in respect hereof or the Notes may be made upon it. Such office will be
maintained at such address until such time as the Company notifies the holders
of the Notes of any change of location of such office, which will in any event
be located within the United States of America.

     7.12. INTENTIONALLY OMITTED.

     7.13. DOMESTIC SUBSIDIARY GUARANTIES.

          The Company will cause each Person that becomes a Domestic Subsidiary
at any time after the Closing Date to execute and deliver to the holders of
Notes, within 15 days of such Person becoming a Domestic Subsidiary, a
Subsidiary Guaranty in respect of the Notes, substantially in the form of
Exhibit 4.11 to this Agreement. At the time each such Domestic Subsidiary
executes such Subsidiary Guaranty, the Company shall cause such Domestic
Subsidiary to deliver to each holder of Notes a certificate of the secretary or
assistant secretary of such Domestic Subsidiary attaching and certifying as
true, complete and accurate copies of the constitutive documents of such
Domestic Subsidiary and corporate resolutions (or equivalent) authorizing such
transaction, in each case certified as true and correct by an appropriate
officer of such Domestic Subsidiary.

     7.14. ORDER PROCESSING.

          (a) Within 5 Business Days of the Closing Date, the Company and the
     Subsidiary Guarantors shall process all orders with you and the Other
     Purchasers that the Company and the Subsidiary Guarantors have received
     from its customers through the Closing Date with respect to products sold
     by you and the Other Purchasers.

          (b) The Company will, and will cause each Subsidiary to, place and
     process orders with you and the Other Purchasers immediately upon, and in
     no case later than 5 Business Days of, receipt of orders or order requests
     from the Company's or its Subsidiary's customers to the Company or any
     Subsidiary for products sold by you and the Other Purchasers.

     7.15. COMMITMENT LETTER.

          On or before August 31, 2001, the Company shall deliver to each holder
of Notes a copy of a fully executed commitment letter evidencing the commitment
by a financing institution or investors to commit not less than $9,000,000 in
borrowings or as an investment, as

<PAGE>

the case may be, in the Company on or before September 15, 2001, such commitment
letter to be on terms and conditions and from investors reasonably acceptable to
the Required Holders.

     7.16. FAXON ASSIGNMENT OF CLAIMS.

          The Company shall cause The Faxon Company, Inc. to deliver a Federal
Assignment of Claims in the form attached hereto as Exhibit 7.18 executed by The
Faxon Company, Inc.

     7.17. FLEET'S RELEASE OF LIENS.

          Upon the satisfaction in full of the senior obligations under
the Fleet Credit Agreement, the Company will, and will cause each of its direct
and indirect Subsidiaries to, promptly obtain from the holders of Fleet Debt who
have a security interest in any Collateral (a) releases and termination
statements affecting such Collateral and (b) any stock certificates evidencing
equity interests in such Subsidiaries being held by the holders of Fleet Debt
which shall then be promptly turned over to the Agent.

8. PAYMENTS

     8.1. INTEREST PAYMENTS.

          Interest on the Notes shall be computed on the basis of a 360-day year
     of twelve 30-day months and shall accrue on the unpaid principal balance of
     each of the Notes from time to time outstanding from and including the date
     of such Note at a rate per annum equal to the Floating Rate, payable on the
     Maturity Date and, to the extent permitted by law in respect of any Note,
     on any overdue payment of principal and any overdue payment of interest,
     payable on demand, at a rate per annum equal to the lesser of:

          (a) the Maximum Legal Rate of Interest; and

          (b) the Floating Rate plus two percent (2%) per annum (the "DEFAULT
     RATE").

     All overdue payments shall compound interest on a monthly basis at the rate
     set forth above.

     8.2. PRINCIPAL PAYMENTS.

          (a) OPTIONAL PRINCIPAL PAYMENTS. The Company may pay the principal
     amount of the Notes in whole or in part, at any time without premium or
     penalty, in a minimum aggregate principal amount of $50,000 (or, if the
     aggregate outstanding principal amount of the Notes is less than $50,000 at
     such time, then such principal amount) and in multiples of $10,000,
     together with interest on such principal amount then being paid accrued to
     the payment date.

          (b) REQUIRED PRINCIPAL PAYMENTS. The Company shall be required to
     prepay the principal amount of Notes in the amounts and in the manner as
     described pursuant to Section 9.3(j), Section 9.3(k), Section 9.9(d) and
     Section 9.10 together with interest on such principal amount then being
     paid accrued to the payment date.

          (c) NOTICE OF PAYMENT. The Company will give notice of any payment of
     the Notes pursuant to this Section 8.2 to each holder of Notes not less
     than five (5) days nor more than twenty (20) days before the specified
     payment date, stating:

              (i) the specified payment date;

<PAGE>

              (ii) that such payment is to be made pursuant to this Section 8.2
          and the explanation of which clause (a) or (b) is relevant;

              (iii) the principal amount of each Note to be paid on such date;
          and

              (iv) the interest to be paid on each such Note, accrued to the
          specified payment date.

          Notice of payment having been so given to each holder of Notes, the
aggregate principal amount of the Notes to be paid stated in such notice, and
interest thereon accrued to the specified payment date, shall become due and
payable on the specified payment date.

     8.3. PAYMENTS AMONG NOTEHOLDERS.

          If at the time any payment of the principal of the Notes made
pursuant to Section 8.2 is made and there is more than one Note outstanding, the
aggregate principal amount of each such required or optional partial payment of
the Notes shall be allocated among the Notes at the time outstanding pro rata in
proportion to the respective unpaid principal amounts of all such outstanding
Notes.

     8.4. NOTATION OF NOTES ON PAYMENT.

          Upon any partial payment of a Note, the holder of such Note may (but
shall not be required to), at its option:

          (a) surrender such Note to the Company pursuant to Section 13.2 in
     exchange for a new Note in a principal amount equal to the principal amount
     remaining unpaid on the surrendered Note;

          (b) make such Note available to the Company for notation thereon of
     the portion of the principal so paid; or

          (c) mark such Note with a notation thereon of the portion of the
     principal so paid.

          In case the entire principal amount of any Note is paid, such Note
shall be surrendered to the Company for cancellation and shall not be reissued,
and no Note shall be issued in lieu of the paid principal amount of any Note.

     8.5. NO OTHER PAYMENTS OF PRINCIPAL; ACQUISITION OF NOTES.

          Except for payments of principal made in accordance with this
Section 8, the Company may not make any payment of principal in respect of the
Notes. The Company will not, and will not permit any Subsidiary or any Affiliate
to, directly or indirectly, acquire or make any offer to acquire any Notes.

9. NEGATIVE COVENANTS

          The Company  covenants that on and after the Closing Date and so long
as any of the Obligations shall be outstanding:

<PAGE>

     9.1. MERGERS; CONSOLIDATIONS; ACQUISITIONS.

          The Company shall not, and shall not permit any Subsidiary to,
merge or consolidate with any Person; nor acquire, nor permit any of the
Company's Subsidiaries to acquire, all or any substantial part of the Properties
of any Person.

     9.2. LOANS.

          The Company shall not, and shall not permit any Subsidiary to, make
any loans or other advances of money (other than for salary, travel advances,
advances against commissions and other similar advances in the ordinary course
of business) to any Person.

     9.3. DEBT.

          The Company shall not, and shall not permit any Subsidiary to, create,
incur, assume, guarantee or suffer to exist any Debt, except:

          (a) the Notes;

          (b) Fleet Debt existing on the Closing Date and Fleet Debt existing
     pursuant to an Acceptable Credit Facility;

          (c) Permitted Subordinated Debt;

          (d) Accounts payable to trade creditors and current operating expenses
     (other than for Money Borrowed or Accounts payable to you and the Other
     Purchasers) which are not aged more than 120 days from billing date or more
     than 30 days from the due date, in each case incurred in the ordinary
     course of business and paid within such time period, unless the same are
     being Properly Contested; and the Company or such Subsidiary shall have set
     aside such reserves, if any, with respect thereto as are required by GAAP
     and deemed adequate by the Company or such Subsidiary and its independent
     accountants;

          (e) Obligations to pay Rentals permitted by Section 9.13;

          (f) Permitted Purchase Money Debt;

          (g) contingent liabilities arising out of endorsements of checks and
     other negotiable instruments for deposit or collection in the ordinary
     course of business;

          (h) Debt that is not included in any of the preceding paragraphs of
     this Section 9.3, is not secured by a Lien (unless such Lien is a Permitted
     Lien) and does not exceed at any time, in the aggregate, the sum of
     $100,000 as to the Company and all of the Subsidiary Guarantors;

          (i) Loans permitted by Section 9.2;

          (j) Debt incurred, the net cash proceeds of which are used to pay the
     Montrose Debenture so long as any excess net cash proceeds are applied as
     provided in clause (k) of this Section 9.3;

          (k) Additional unsecured Debt, so long as (i) no Default or Event of
     Default has occurred and is continuing at the time of the incurrence
     thereof, and (ii) (A) if such Debt is incurred prior to the full
     indefeasible payment of the Fleet Debt, but in no event later than May 31,
     2001, such Debt is subordinated to the Obligations on terms reasonably
     satisfactory to the Required Holders and the aggregate amount of all cash
     proceeds generated from any and all such incurrences of additional Debt
     shall be, in any

<PAGE>

     event, applied as a Debt Prepayment Application on May 31, 2001, or (B) if
     such Debt is incurred after the full indefeasible payment of the Fleet
     Debt, the amount of all cash proceeds generated from the incurrence of such
     additional Debt is applied contemporaneously to a Debt Prepayment
     Application; and

          (l) (i) Debt of a Foreign Subsidiary existing on the Closing Date or
     incurred pursuant to a credit facility existing on the Closing Date (in the
     case of any such credit facility, as such facility is in effect on the
     Closing Date and without giving effect to any amendment thereto unless such
     amended facility, if treated as a refinancing or replacement of the
     pre-amendment facility, would be permitted by the following clause (ii),
     and (ii) refinancings or replacements of any such Debt or credit facility,
     PROVIDED, with respect to each such refinancing or replacement, that the
     maximum aggregate principal amount thereof does not exceed the maximum
     principal amount of the refinanced or replaced Debt or facility, is used
     for similar business purposes, and is not subject to restrictions on
     Upstream Payments that are materially more restrictive than those to which
     the refinanced or replaced Debt or facility was subject.

     9.4. AFFILIATE TRANSACTIONS.

          Except as set forth on Schedule 9.4 or as permitted by Section
9.9, the Company shall not, and shall not permit any Subsidiary to, enter into,
or be a party to, any transaction with any Affiliate of the Company or any of
its Subsidiaries or stockholder, except in the ordinary course of and pursuant
to the reasonable requirements of the Company's or such Subsidiary's business
and upon fair and reasonable terms which are fully disclosed to each holder of
Notes and are no less favorable to the Company or such Subsidiary than would
obtain in a comparable arm's length transaction with a Person not an Affiliate
or stockholder of the Company or such Subsidiary.

     9.5. LIENS.

          The Company shall not, and shall not permit any Subsidiary Guarantor
to, create or suffer to exist any Lien upon any of its Property, income or
profits, whether now owned or hereafter acquired, except the following
(collectively, "PERMITTED LIENS"):

          (a) Liens at any time granted in favor of Agent;

          (b) Liens for Taxes (excluding any Lien imposed pursuant to any of the
     provisions of ERISA) not yet due or being Properly Contested, but only if
     permitted (i) pursuant to the Fleet Credit Agreement, or (ii) after the
     Fleet Debt is paid, in the Required Holders' judgment such Lien does not
     adversely affect the rights or the priority of the holders of Notes in the
     Collateral;

          (c) Liens arising in the ordinary course of the Company's or
     Subsidiary Guarantor's business by operation of law or regulation, but only
     if payment in respect of any such Lien is not at the time required and such
     Liens do not, in the aggregate, materially detract from the value of the
     Property of the Company or such Subsidiary Guarantor or materially impair
     the use thereof in the operation of the Company's or such Subsidiary
     Guarantor's business;

          (d) Purchase Money Liens securing Permitted Purchase Money Debt;

          (e) Liens arising from the incurrence of additional Debt permitted by
     Section 9.3(j) so long as such Liens are junior in right to the Liens
     granted to the Agent pursuant to the Financing Documents;

<PAGE>

          (f) such other Liens as appear on Schedule 9.5 hereto;

          (g) Liens in favor of the holders of Fleet Debt as provided for under
     the Fleet Credit Documents; and

          (h) such other Liens as the Required Holders in their sole discretion
     may hereafter approve in writing.

     9.6. SUBORDINATED DEBT.

          The Company shall not, and shall not permit any Subsidiary to,
make any payment of any part or all of any Subordinated Debt or take any other
action or omit to take any other action in respect of any Subordinated Debt,
except as provided in the Subordination Agreement relative to the Montrose
Debenture.

     9.7. DISTRIBUTIONS.

          The Company shall not, and shall not permit any Subsidiary to, declare
or make any Distributions, except for Upstream Payments.

     9.8. CAPITAL EXPENDITURES.

          The Company shall not, and shall not permit any Subsidiary to,
make Capital Expenditures (including expenditures by way of Capital Leases)
which in the aggregate, as to the Company and Subsidiary, exceed $100,000 during
the period from the Closing Date through the Maturity Date.

     9.9. DISPOSITION OF ASSETS.

          The Company shall not, and shall not permit any Subsidiary to,
sell, Transfer, lease or otherwise dispose of any of its or their respective
Properties, including any disposition of Property as part of a
Sale-and-Leaseback Transaction, to or in favor of any Person, except:

          (a) sales of Inventory of the Company or any Subsidiary in the
     ordinary course of business so long as no Event of Default exists
     hereunder;

          (b) a Transfer of Property to the Company by a Subsidiary;

          (c) a Transfer of Property from a Foreign Subsidiary to another
     Foreign Subsidiary; and

          (d) sales, Transfers, leases or other disposition of Property for
     which cash proceeds are generated so long as after giving effect to such
     sale, Transfer, lease or other disposition, (i) no Default or Event of
     Default shall exist and (ii) the entire Net Proceeds Amount above $500,000
     received is applied promptly, and in any event within 10 Business Days of
     receipt of such Net Proceeds Amount, (A) if such Net Proceeds Amount is
     received prior to the full indefeasible payment of the Fleet Debt, but in
     no event later than May 31, 2001, to prepayment of the Fleet Debt, provided
     however, that an amount equal to the total of all Net Proceeds Amounts
     received prior to May 31, 2001 shall be, in any event, applied as a Debt
     Prepayment Application on May 31, 2001, or (B) if such Net Proceeds Amount
     is received after the full indefeasible payment of the Fleet Debt, to a
     Debt Prepayment Application.

<PAGE>

     9.10. LIMITATION ON ISSUANCE OF STOCK.

          The Company will not permit any of the Company's Subsidiaries,
directly or indirectly, to issue any shares of its Capital Stock, Equity
Interests or other securities (or warrants, rights or options to acquire shares
or other equity securities); provided, that so long as no Default or Event of
Default shall exist, the Company or any Subsidiary may issue shares of its
Capital Stock or other Equity Interests (a) upon exercise of the Company's
currently outstanding Class A Common Stock Purchase Warrants so long as the Net
Proceeds Amount is used to pay the remaining balance under the Montrose
Debenture and any remaining Net Proceeds Amount thereof is used as provided in
clause (b) of this Section 9.10; and (b) so long as the Net Proceeds Amount
received in connection with such issuance is applied contemporaneously, (i) if
such Net Proceeds Amount is received prior to the full indefeasible payment of
the Fleet Debt but in no event later than May 31, 2001, to prepayment of the
Fleet Debt, provided however, that an amount equal to the total of all Net
Proceeds Amounts received prior to May 31, 2001 shall be, in any event, applied
as a Debt Prepayment Application on May 31, 2001, or (ii) if such Net Proceeds
Amount is received after the full indefeasible payment of the Fleet Debt, as a
Debt Prepayment Application.

     9.11. BILL AND HOLD SALES, ETC.

          The Company shall not, and shall not permit any Subsidiary Guarantor
to, on or after the Closing Date, make any sale to any customer on a bill and
hold, guaranteed sale, sale and return, sale on approval or consignment basis,
or any sale on a repurchase or return basis.

     9.12. RESTRICTED INVESTMENTS.

          The Company shall not, and shall not permit any Subsidiary Guarantor
to, make or have any Restricted Investment.

     9.13. LEASES.

          The Company shall not, and shall not permit any Subsidiary to,
become a lessee under any operating lease (other than a lease under which the
Company or any Subsidiary is lessor) of Property if the aggregate Rentals
payable during any current or future period of 12 consecutive months under the
lease in question and all other leases under which the Company or any Subsidiary
is then lessee would exceed $50,000. 9.14. TAX CONSOLIDATION.

          The Company shall not, and shall not permit any Subsidiary Guarantor
to, file or consent to the filing of any consolidated income tax return with any
Person other than the Company or a Subsidiary.

     9.15. BANK ACCOUNTS.

          The Company shall not permit any Subsidiary to create or maintain an
account for collecting or holding cash or cash equivalents with any Person,
unless such account (a) is permitted by the Required Holders or (b) owned by CSS
and at all times has cash or cash equivalents of a value less than $250,000. All
such accounts of the Company's Subsidiaries are listed on Schedule 9.15 hereto
and are hereby permitted.

     9.16. UPSTREAM PAYMENTS.

          The Company shall not, and shall not permit any Subsidiary to,
create or suffer to exist any encumbrance or restriction on the ability of a
Subsidiary to make any Upstream Payment, except for encumbrances or restrictions
(a) pursuant to the Financing Documents and

<PAGE>

the Fleet Credit Documents; (b) existing under Applicable Law; or (c) existing
pursuant to documents relating to Debt permitted by Section 9.3(l) hereof.

     9.17. ACCOUNTING CHANGES.

          The Company shall not, and shall not permit any Subsidiary Guarantor
to, make any significant change in accounting treatment or reporting practices,
except as may be required by GAAP, or establish a fiscal year different from the
Fiscal Year.

     9.18. ORGANIZATION DOCUMENTS.

          The Company shall not, and shall not permit any Subsidiary Guarantor
to, amend, modify or otherwise change any of the terms or provisions in any of
its Organization Documents as in effect on the Closing Date, except for changes
that do not affect in any way the Company's or such Subsidiary Guarantor's
rights and obligations to enter into and perform the Financing Documents to
which it is a party and to pay all of the Obligations and that do not otherwise
have a Material Adverse Effect. 9.19. RESTRICTIVE AGREEMENTS.

          The Company shall not, and shall not permit any Subsidiary Guarantor
to, enter into or become party to any Restrictive Agreement other than those
disclosed in Schedule 5.18 hereto or permitted by the Fleet Credit Documents,
provided that none of such disclosed agreements shall be amended without prior
notice to and the consent of the Required Holders.

     9.20. LIMITATION ON SIDE AGREEMENTS.

          The Company shall not, and shall not permit any Subsidiary Guarantor
to, enter into any amendments, waivers or other agreements with you and the
Other Purchasers relating to the subject matter of the Financing Documents
(other than as provided in Section 17 of this Agreement).

     9.21. CONDUCT OF BUSINESS.

          The Company shall not, and shall not permit any Subsidiary Guarantor
to, engage in any business other than the business engaged in by it on the
Closing Date and any business or activities which are substantially similar,
related or incidental thereto.

10. FINANCIAL COVENANTS.

         The Company  covenants that on and after the Closing Date and so long
as any of the Obligations shall be outstanding:

     10.1. MINIMUM EBITDA OF THE COMPANY.

          The Company will not permit EBITDA of the Company and CSS,
collectively, to be less than (or greater than in the case of a loss) the
amounts specified below during the following periods:

          (a) $(1,200,000) for the month ending January 31, 2001;

          (b) $(2,489,000) for the two-month period ending February 28, 2001;

          (c) $(3,689,000) for the three-month period ending March 31, 2001;

          (d) $(4,934,000) for the four-month period ending April 30, 2001; and

<PAGE>

          (e) $(6,134,000) for the five-month period ending May 31, 2001.

          10.2. MINIMUM EBITDA OF DAWSON.

          The Company will not permit EBITDA of Dawson and its Subsidiaries to
be less than (or greater than in the case of a loss) the amounts specified below
during the following periods:

          (a) $3,366,000 for the month ending January 31, 2001;

          (b) $(2,638,000) for the two-month period ending February 28, 2001;

          (c) $(2,283,000) for the three-month period ending March 31, 2001;

          (d) $(1,646,000) for the four-month period ending April 30, 2001; and

          (e) $(841,000) for the five-month period ending May 31, 2001.

          10.3. MAXIMUM OPERATING EXPENSES.

          The Company and its Subsidiaries will not permit the Consolidated
operating expenses of the Company and its Subsidiaries (as determined in
accordance with GAAP) for any period of three (3) consecutive calendar months
ending on any date described in the table set forth below to exceed the amount
set forth opposite such period in such table:

                           PERIOD               AMOUNT

                  June 30, 2001                 $11,000,000
                  July 31, 2001                 Maximum Operating
                                                Expense Amount
                  August 31, 2001               Maximum Operating
                  Expense Amount

11. EVENTS OF DEFAULT

          An "EVENT OF DEFAULT" exists at any time if any of the following
occurs and is continuing thereafter for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or otherwise):

          (a) PAYMENTS ON NOTES. The Company fails to make any payment of
     principal, interest or any other amount on any Note on or before the date
     such payment is due (whether due at stated maturity, on demand, upon
     acceleration or otherwise); or

          (b) PAYMENT OF OBLIGATIONS. Any Obligor fails to make any payment of
     any Obligation on the due date thereof (whether due at stated maturity, on
     demand, upon acceleration or otherwise); or

          (c) OTHER DEFAULTS.

              (i) COVENANT DEFAULTS - the Company or any Subsidiary Guarantor
          fails to comply with any provision of Section 7, Section 9 or Section
          10; or

<PAGE>

              (ii) OTHER DEFAULTS - any Obligor fails to comply with any other
          provision hereof or of any other Financing Document, and such failure
          continues for more than 15 days after the sooner to occur of Obligor's
          receipt of notice of such breach from Required Holders or the date on
          which such failure or neglect first became known to any officer of the
          Company or such Subsidiary Guarantor or Richard Rowe, as the case may
          be; or

          (d) WARRANTIES OR REPRESENTATIONS. Any warranty, representation or
     other written statement by or on behalf of any Obligor contained in any
     Financing Document, in any written amendment, supplement, modification or
     waiver with respect to any Financing Document or in any instrument
     furnished in compliance herewith or in reference hereto, shall have been
     false or misleading in any material respect when made; or

          (e) DEFAULT IN RESPECT OF OTHER DEBT. There shall occur any default or
     event of default on the part of the Company and its Subsidiaries under any
     agreement, document or instrument to which the Company or any of its
     Subsidiaries is a party or by which the Company or any Subsidiary or any of
     its Property is bound, creating or relating to any Debt (other than the
     Obligations) if the payment or maturity of such Debt is accelerated in
     consequence of such event of default or demand for payment of such Debt is
     made; or

          (f) INSOLVENCY.

              (i) INVOLUNTARY BANKRUPTCY PROCEEDINGS:

                  (A) a receiver, liquidator, custodian or trustee of any
              Obligor, or of all or any substantial part of the Property of any
              of them, is appointed by court order; or an order for relief is
              entered with respect any Obligor, or any Obligor is adjudicated
              bankrupt or insolvent;

                   (B) all or any substantial part of the Property of any
              Obligor is sequestered by court order; or

                   (C) a petition is filed against any Obligor under any
              bankruptcy, reorganization, winding-up, arrangement, insolvency,
              readjustment of debt, dissolution or liquidation law of any
              jurisdiction, whether now or hereafter in effect, and is not
              dismissed within thirty (30) days after such filing;

              (ii) VOLUNTARY PETITIONS. any Obligor files a petition in
          voluntary bankruptcy or seeks relief under any provision of any
          bankruptcy, reorganization, winding-up, arrangement, insolvency,
          readjustment of debt, dissolution or liquidation law of any
          jurisdiction, whether now or hereafter in effect, or consents to the
          filing of any petition against it under any such law; or

              (iii) ASSIGNMENTS FOR BENEFIT OF CREDITORS, ETC. any Obligor makes
          an assignment for the benefit of its creditors, or admits in writing
          its inability, or fails, to pay its debts generally as they become
          due, or consents to the appointment of a receiver, liquidator or
          trustee of the any Obligor or of all or a substantial part of its
          Property; or

          (g) UNDISCHARGED FINAL JUDGMENTS. A final judgment or final, judgments
     for the payment of money aggregating in excess of $50,000 is or are
     outstanding against one

<PAGE>

     or more of the Obligors or any Subsidiary of the Company and any one of
     such judgments shall have been outstanding for more than 60 days from the
     date of its entry and shall not have been discharged in full or stayed; or

          (h) FINANCING DOCUMENTS. Any Financing Document shall cease to be in
     full force and effect or shall be declared by a court or other Governmental
     Authority of competent jurisdiction to be void, voidable or unenforceable
     against any Obligor or any Affiliate; the validity or enforceability of any
     Financing Document against any Obligor or any Affiliate shall be contested
     by any Obligor or Affiliate; or any Obligor or Affiliate shall deny that
     any Obligor has any further liability or obligation under any Financing
     Document or any provision thereof; or

          (i) UNINSURED LOSSES. Any material loss, theft, damage or destruction
     of any of the Collateral not fully covered by insurance; or

          (j) MATERIAL ADVERSE EFFECT. There shall occur any event or condition
     that has a Material Adverse Effect or there shall have occurred any event
     or occurrence which shall have a material adverse effect on the Company or
     any Subsidiary Guarantor or their ability to pay the Obligations in full;
     or

          (k) BUSINESS DISRUPTION; CONDEMNATION. There shall occur a cessation
     of a substantial part of the business of the Company, or any of its
     Subsidiaries (other than as a result of a transaction permitted by Section
     9.1 hereof) for a period which significantly affects such Obligor's
     capacity to continue its business, consistent with its financial position
     as of the Closing Date, on a profitable basis; or any Obligor shall suffer
     the loss or revocation of any license or permit now held or hereafter
     acquired by such Obligor which is necessary to the continued or lawful
     operation of its business; or any Obligor shall be enjoined, restrained or
     in any way prevented by court, governmental or administrative order from
     conducting all or any material part of its business affairs; or any
     material lease or agreement pursuant to which any Obligor leases or
     occupies any premises on which any Collateral is located shall be canceled
     or terminated prior to the expiration of its stated term; or any material
     part of the Collateral with a value individually or in the aggregate in
     excess of $50,000 shall be taken through condemnation or the value of such
     Property shall be impaired through condemnation; or

          (l) ERISA. A Reportable Event shall occur which could reasonably be
     expected to constitute grounds for the termination by the PBGC of any Plan
     or for the appointment by the appropriate United States district court of a
     trustee for any Plan, or if any Plan shall be terminated or any such
     trustee shall be requested or appointed, or if the any Obligor is in
     "default" (as defined in Section 4219(c)(5) of ERISA) with respect to
     payments to a Multiemployer Plan resulting from such Obligor's complete or
     partial withdrawal from such Plan; or

          (m) CHALLENGE TO FINANCING DOCUMENTS. Any Obligor or any of its
     Affiliates shall challenge or contest in any action, suit or proceeding the
     validity or enforceability of any of the Financing Documents, the legality
     or enforceability of any of the Obligations or the perfection or priority
     of any Lien granted to Agent or any of the holders of Notes, or any of the
     Financing Documents ceases to be in full force or effect for any reason
     other than a full or partial waiver or release by Agent and the holders of
     the Notes in accordance with the terms thereof; or

          (n) REPUDIATION OF OR DEFAULT UNDER SUBSIDIARY GUARANTY. Any
     Subsidiary Guarantor shall revoke or attempt to revoke the Subsidiary
     Guaranty signed by such Subsidiary Guarantor, shall repudiate such
     Subsidiary Guarantor's liability thereunder, or shall be in default under
     the terms thereof; or

<PAGE>

          (o) CHANGE IN CONTROL. A Change in Control occurs; or

          (p) CRIMINAL FORFEITURE. Any Obligor or any Subsidiary of the Company
     or the Subsidiary Guarantor shall be convicted under any criminal law that
     could lead to a forfeiture of any Property of such Obligor; or

          (q) CAPITAL INFUSION. The Company and its Subsidiaries shall have
     failed to obtain at least US$9,000,000 (or its equivalent) in additional
     Debt or cash equity investments on or before September 15, 2001.

12. DEFAULT REMEDIES

     12.1. ACCELERATION OF MATURITY NOTES.

          (a) ACCELERATION ON EVENT OF DEFAULT.

              (i) AUTOMATIC. If any Event of Default specified in Section 11(f)
          shall exist, all of the Notes at the time outstanding shall
          automatically become immediately due and payable together with
          interest accrued thereon, without presentment, demand, protest or
          notice of any kind, all of which are hereby expressly waived.

              (ii) BY ACTION OF HOLDERS. If any Event of Default (other than an
          Event of Default specified in Section 11(f)) shall exist, the Required
          Holders may exercise any right, power or remedy permitted to such
          holder or holders by law, and shall have, in particular, without
          limiting the generality of the foregoing, the right to declare, the
          entire principal of, and all interest accrued on, all the Notes then
          outstanding to be due and payable, and such Notes shall thereupon
          become forthwith due and payable, without any presentment, demand,
          protest or other notice of any kind, all of which are hereby expressly
          waived, and the Company shall forthwith pay to the holder or holders
          of all the Notes then outstanding the entire principal of, and
          interest accrued on, the Notes.

          (b) ACCELERATION ON PAYMENT DEFAULT. During the existence of an Event
     of Default described in Section 11(a), and irrespective of whether the
     Notes then outstanding shall have become due and payable pursuant to
     Section 12.1(a)(ii), any holder of Notes who or which shall have not
     consented to any waiver with respect to such Event of Default may, at his
     or its option, by notice in writing to the Company, declare the Notes then
     held by such holder to be, and such Notes shall thereupon become, forthwith
     due and payable together with all interest accrued thereon, without any
     presentment, demand, protest or other notice of any kind, all of which are
     hereby expressly waived, and the Company shall forthwith pay to such holder
     the entire principal of and interest accrued on such Notes.

     12.2. OTHER REMEDIES.

          During the existence of an Event of Default, irrespective of
whether the Notes then outstanding shall become due and payable pursuant to
Section 12.1, and irrespective of whether any holder of Notes then outstanding
shall otherwise have pursued or be pursuing any other rights or remedies, any
holder of Notes may proceed to protect and enforce its rights hereunder and
under such Notes by exercising such remedies as are available to such holder in
respect thereof under applicable law, either by suit in equity or by action at
law, or both, whether for specific performance of any agreement contained herein
or in aid of the exercise of any power granted herein; PROVIDED, HOWEVER, that
the maturity of such holder's Notes may be accelerated only in accordance with
Section 12.1.

<PAGE>

     12.3. NONWAIVER; REMEDIES CUMULATIVE.

          No course of dealing on the part of any holder of Notes nor
any delay or failure on the part of any holder of Notes to exercise any right
shall operate as a waiver of such right or otherwise prejudice such holder's
rights, powers and remedies. All rights and remedies of each holder of Notes
hereunder and under applicable law are cumulative to, and not exclusive of, any
other rights or remedies any such holder of Notes would otherwise have.

     12.4. ANNULMENT OF ACCELERATION OF NOTES.

          If a declaration is made pursuant to Section 12.1, then and in
every such case, the Required Holders may, by written instrument filed with the
Company, rescind and annul such declaration, and the consequences thereof;
PROVIDED, HOWEVER, that at the time such declaration is annulled and rescinded:

          (a) no judgment or decree shall have been entered for the payment of
     any moneys due on or pursuant hereto or the Notes;

          (b) all arrears of interest upon all of the Notes and all of the other
     sums payable hereunder and under the Notes (except any principal of, or
     interest on, the Notes which shall have become due and payable by reason of
     such declaration under Section 12.1 shall have been duly paid; and

          (c) each and every other Default and Event of Default shall have been
     waived pursuant to Section 17 or otherwise made good or cured;

and PROVIDED FURTHER that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereon.

13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES

     13.1. REGISTRATION OF NOTES.

          The Company shall keep a register for the registration and
registration of transfers of Notes. The name and address of each holder of one
or more Notes, each transfer thereof and the name and address of each transferee
of one or more Notes shall be registered in such register. Prior to due
presentment for registration of transfer, the Person in whose name any Note
shall be registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof, and the Company shall not be affected by any notice or
knowledge to the contrary. The Company shall give to any holder of a Note that
is an accredited investor, promptly upon request therefor, a complete and
correct copy of the names and addresses of all registered holders of Notes.

     13.2. EXCHANGE OF NOTES.

          (a) EXCHANGE OF NOTES. Upon surrender of any Note to the Company for
     registration of transfer or exchange (and in the case of a surrender for
     registration of transfer, duly endorsed or accompanied by a written
     instrument of transfer duly executed by the registered holder of such Note
     or his attorney duly authorized in writing and accompanied by the address
     for notices of each transferee of such Note or part thereof), the Company
     shall execute and deliver, at the Company's expense (except as provided
     below), one or more new Notes (as requested by the holder thereof) in
     exchange therefor, in an aggregate principal amount equal to the unpaid
     principal amount of the surrendered Note. Each such new Note shall be
     payable to such Person as such holder may request and shall be
     substantially in the form of the Note set forth in Exhibit 1. Each such new
     Note shall be dated and bear interest from the date to which interest shall
     have been paid on the surrendered Note or dated the date of the surrendered
     Note if no interest shall have been paid thereon. The Company may require
     payment of a sum sufficient to cover any stamp tax or governmental charge
     imposed in respect of any such transfer of Notes. The Notes shall not be
     transferred in denominations of less than US$100,000, PROVIDED that a

<PAGE>

     holder of Notes may transfer its entire holding of Notes regardless of the
     principal amount of such holder's Notes.

          (b) COSTS. The Company will pay the cost of delivering to or from such
     holder's home office or custodian bank from or to the Company, insured to
     the reasonable satisfaction of such holder, the surrendered Note and any
     Note issued in substitution or replacement for the surrendered Note. The
     Company may require payment of a sum sufficient to cover any stamp tax or
     governmental charge imposed in respect of any such transfer of Notes.

     13.3. REPLACEMENT OF NOTES.

          Upon receipt by the Company from the registered holder of a
Note of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of a
Purchaser, notice from such Purchaser of such loss, theft, destruction or
mutilation), and:

          (a) in the case of loss, theft or destruction, of indemnity reasonably
     satisfactory to the Company; provided, HOWEVER, that if the holder of such
     Note is a Purchaser, the unsecured agreement of indemnity of such Person
     shall be deemed to be satisfactory; or

          (b) in the case of mutilation, upon surrender and cancellation
     thereof;

the Company at its own expense will execute and deliver, in lieu thereof, a
replacement Note, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon.

     13.4. ISSUANCE TAXES.

          The Company will pay all Taxes (if any) due in connection with
and as the result of the initial issuance and sale of the Notes and in
connection with any modification, waiver or amendment of this Agreement or the
Notes and shall save each holder of Notes harmless without limitation as to time
against any and all liabilities with respect to all such Taxes.

14. PAYMENTS ON NOTES.

     14.1. PLACE OF PAYMENT.

          Subject to Section 14.2, payments of principal and interest
becoming due and payable on the Notes shall be made as set forth in Schedule A.
The Company may at any time, by notice to each holder of a Note, change the
place of payment of the Notes so long as such place of payment shall be either
the principal office of the Company in such jurisdiction or the principal office
of a bank or trust company in such jurisdiction. 14.2. MANNER OF PAYMENT.

          (a) MANNER OF PAYMENT. So long as you or your nominee shall be the
     holder of any Note, and notwithstanding anything contained in Section 14.1
     or in such Note to the contrary, the Company will pay all sums becoming due
     on such Note for principal and interest by the method and at the address
     specified for such purpose below your name in Schedule A, or by such other
     method or at such other address as you shall have from time to time
     specified to the Company in writing for such purpose, without the
     presentation or surrender of such Note or the making of any notation
     thereon, except that upon written request of the Company made concurrently
     with or reasonably promptly after payment or prepayment in full of any
     Note, you shall surrender such Note for cancellation, reasonably promptly
     after any such request, to the Company at its principal executive office or
     at the place of payment most recently designated by the Company pursuant to
     Section 14.1. In the absence of such written direction, all amounts payable
     with respect to each Note shall be paid by check mailed and addressed to
     the registered holder of such Note at the address shown in the register
     maintained by the Company

<PAGE>

     pursuant to Section 13.1. Prior to any sale or other disposition of any
     Note held by you or your nominee you will, at your election, either endorse
     thereon the amount of principal paid thereon and the last date to which
     interest has been paid thereon or surrender such Note to the Company in
     exchange for a new Note or Notes pursuant to Section 13.2. The Company will
     afford the benefits of this Section 14.2 to any Person that is the direct
     or indirect transferee of any Note purchased by you under this Agreement
     and that has made the same agreement relating to such Note as you have made
     in this Section 14.2.

          (b) PAYMENTS DUE ON HOLIDAYS. If any payment due on, or with respect
     to, any Note shall fall due on a day other than a Business Day, then such
     payment shall be made on the first Business Day following the day on which
     such payment shall have so fallen due; provided that if all or any portion
     of such payment shall consist of a payment of interest, for purposes of
     calculating such interest, such payment shall be deemed to have been
     originally due on such first following Business Day, such interest shall
     accrue and be payable to (but not including) the actual date of payment,
     and the amount of the next succeeding interest payment shall be adjusted
     accordingly.

          (c) PAYMENTS, WHEN RECEIVED. Any payment to be made to the holders of
     Notes hereunder or under the Notes shall be deemed to have been made on the
     Business Day such payment actually becomes available at such holder's bank
     prior to the close of business of such bank, provided that interest for one
     day at the non-default interest rate of the Notes shall be due on the
     amount of any such payment that actually becomes available to such holder
     at such holder's bank after 12:00 noon (local time of such bank).

          (d) PAYMENTS IN UNITED STATES DOLLARS. All payments under this
     Agreement and the Notes shall be made in United States Dollars.

15. EXPENSES, ETC.

     15.1. TRANSACTION EXPENSES.

          Whether or not the transactions contemplated hereby are consummated,
the Company will pay all costs and expenses (including reasonable attorneys'
fees of a special counsel and, if reasonably required, local or other counsel)
incurred by you and each Other Purchaser or holder of a Note in connection with
such transactions and in connection with any amendments, waivers or consents
under or in respect of this Agreement or the Notes (whether or not such
amendment, waiver or consent becomes effective), including, without limitation:
(a) the costs and expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Agreement or the
Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by reason of being a holder of any Note, (B) the costs and expenses of the
Agent, and (C) the costs and expenses, including financial advisors' fees and
their attorneys' fees, incurred in connection with the insolvency or bankruptcy
of the Company or any Subsidiary or in connection with any work-out or
restructuring of the transactions contemplated hereby and by the Notes. The
Company will pay, and will save you and each other holder of a Note harmless
from, all claims in respect of any fees, costs or expenses if any, of brokers
and finders (other than those retained by you).

15.2. SURVIVAL.

          The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.

<PAGE>

16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

          All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this Agreement.
Subject to the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Company and supersede all
prior agreements and understandings relating to the subject matter hereof.

17. AMENDMENT AND WAIVER.

     17.1. REQUIREMENTS.

          This Agreement, the Other Agreements and the Notes may be amended, and
the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term
(as it is used therein), will be effective as to you unless consented to by you
in writing, and (b) no such amendment or waiver may, without the written consent
of the holder of each Note at the time outstanding affected thereby, (I) subject
to the provisions of Section 12 relating to acceleration or rescission, change
the amount or time of any prepayment or payment of principal of, or reduce the
rate or change the time of payment or method of computation of interest on, the
Notes, (II) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver, or
(III) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20, or any defined term
as used in such Sections.

     17.2. SOLICITATION OF HOLDERS OF NOTES.

          (a) SOLICITATION. The Company will provide each holder of the Notes
     (irrespective of the amount of Notes then owned by it) with sufficient
     information, sufficiently far in advance of the date a decision is
     required, to enable such holder to make an informed and considered decision
     with respect to any proposed amendment, waiver or consent in respect of any
     of the provisions hereof or of the Notes. The Company will deliver executed
     or true and correct copies of each amendment, waiver or consent effected
     pursuant to the provisions of this Section 17 to each holder of outstanding
     Notes promptly following the date on which it is executed and delivered by,
     or receives the consent or approval of, the requisite holders of Notes.

          (b) PAYMENT. The Company will not directly or indirectly pay or cause
     to be paid any remuneration, whether by way of supplemental or additional
     interest, fee or otherwise, or grant any security, to any holder of Notes
     as consideration for or as an inducement to the entering into by any holder
     of Notes or any waiver or amendment of any of the terms and provisions
     hereof unless such remuneration is concurrently paid, or security is
     concurrently granted, on the same terms, ratably to each holder of Notes
     then outstanding even if such holder did not consent to such waiver or
     amendment.

     17.3. BINDING EFFECT, ETC.

          Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.

<PAGE>

     17.4. NOTES HELD BY THE COMPANY, ETC.

          Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement or the Notes, or have directed the taking of any
action provided herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal amount of Notes
then outstanding, Notes directly or indirectly owned by the Company or any of
its Affiliates shall be deemed not to be outstanding.

18. NOTICES.

          All notices and communications provided for hereunder or under
the Notes shall be in writing and shall be delivered (A) by facsimile
transmission if the sender on the same day sends a confirming copy of such
notice by a recognized overnight delivery service (charges prepaid), or (B) by
registered or certified mail with return receipt requested (postage prepaid), or
(C) by a recognized overnight delivery service (with charges prepaid). Any such
notice must be sent:

              (i) if to you or your nominee, to you or it at the address
          specified for such communications in Schedule A, or at such other
          address as you or it shall have specified to the Company in writing,

              (ii) if to any other holder of any Note, to such holder at such
          address as such other holder shall have specified to the Company in
          writing,

              (iii) if to the Agent, to the address set forth in Annex 1; or

              (iv) if to the Company, to the Company at its address set forth in
          Annex 1, or at such other address as the Company shall have specified
          to the holder of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

19. REPRODUCTION OF DOCUMENTS.

          This Agreement and all documents relating thereto, including,
without limitation, (A) consents, waivers and modifications that may hereafter
be executed, (B) documents received by you at the Closing (except the Notes
themselves), and (C) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.

20. CONFIDENTIAL INFORMATION.

          For the purposes of this Section 20, "CONFIDENTIAL INFORMATION" means
information delivered to you by or on behalf of the Company or any Subsidiary
Guarantor in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature, and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Company or its Subsidiaries, PROVIDED that
such term does not include information that (A) was publicly known or otherwise
known to you prior to the time of such disclosure, (B) subsequently becomes
publicly known through no act or omission by you or any person acting on your
behalf, (C) otherwise becomes known to you other than through disclosure by the
Company or any Subsidiary Guarantor or (D) constitutes financial statements
delivered to you

<PAGE>

under Section 7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good faith to protect confidential information of third
parties delivered to you, PROVIDED that you may deliver or disclose Confidential
Information to (I) your directors, officers, employees, agents, attorneys and
affiliates, (to the extent such disclosure reasonably relates to the
administration of the investment represented by your Notes), (II) your financial
advisors and other professional advisors who agree to hold confidential the
Confidential Information substantially in accordance with the terms of this
Section 20, (III) any other holder of any Note, (IV) any Person to which you
sell or offer to sell such Note or any part thereof or any participation therein
(if such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (V) any Person
from which you offer to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (VI) any federal or state
regulatory authority having jurisdiction over you, (VII) any nationally
recognized rating agency that requires access to information about your
investment portfolio, or (VIII) any other Person to which such delivery or
disclosure may be necessary or appropriate (W) to effect compliance with any
law, rule, regulation or order applicable to you, (X) in response to any
subpoena or other legal process, (Y) in connection with any litigation to which
you are a party or (Z) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under your Notes and this Agreement. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 20 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 20.

21. INTENTIONALLY OMITTED.

22. MISCELLANEOUS.

     22.1. INDEMNIFICATION OF EACH HOLDER OF NOTES.

          From and at all times after the Closing Date, and in addition
to all other rights and remedies of each holder of Notes against the Company,
the Company agrees to indemnify and hold harmless each holder of Notes and each
director, trustee, officer, employee, agent, investment advisor and affiliate of
each such holder (each, an "INDEMNIFIED PARTY") against any and all claims
(whether valid or not), losses, damages, liabilities, costs and expenses of any
kind or nature whatsoever (including, without limitation, reasonable attorneys'
fees, costs and expenses), incurred by or asserted against any Indemnified
Party, from and after the Closing Date, whether direct, indirect or
consequential, as a result of or arising from or in any way relating to any
suit, action or proceeding (including any inquiry or investigation) by any
Person, whether threatened or initiated, asserting a claim for any legal or
equitable remedy against any Person under any statute or regulation, including,
but not limited to, any federal or state securities laws, or under any common
law or equitable cause or otherwise, arising from or in connection with the
negotiation, preparation, execution, performance or enforcement of this
Agreement, the Notes or the other Financing Documents or any transactions
contemplated herein or therein, or any of the transactions contemplated
hereunder or thereunder, whether or not such Indemnified Party is a party to any
such action, proceeding, suit or the target of any such inquiry or
investigation; PROVIDED, HOWEVER, that no Indemnified Party shall have the right
to be indemnified hereunder for any liability resulting from the willful
misconduct or gross negligence of such Indemnified Party or breach by such
Indemnified Party of its own obligations under this Agreement. All of the
foregoing losses, damages, costs and expenses of any Indemnified Party shall be
payable as and when incurred upon demand by such Indemnified Party and shall be
additional obligations hereunder. The rights of the Indemnified Parties under
this Section 22.1 shall survive the termination of this Agreement.

<PAGE>

22.2. SUCCESSORS AND ASSIGNS.

          All covenants and other agreements contained in this Agreement
and in the Intercreditor Agreement by or on behalf of any of the parties hereto
bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether so
expressed or not. You may not assign your rights under this Agreement unless the
successor or assignee first agrees to be bound by the terms and provisions of
the Intercreditor Agreement and such successor or assignee agrees to sign a
joinder to the Intercreditor Agreement.

22.3. SEVERABILITY.

          Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

22.4. CONSTRUCTION.

          Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.

22.5. COUNTERPARTS.

          This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute
one instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.

22.6. GOVERNING LAW.

          This Agreement shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the law of the
Commonwealth of Massachusetts excluding choice-of-law principles of the law of
such State that would require the application of the laws of a jurisdiction
other than such State.

22.7. INTERCREDITOR AGREEMENT.

          This Agreement, the Other Agreements and the other Financing Documents
are subject to the terms of the Intercreditor Agreement.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00024-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00024-of-00352.parquet"}]]