Document:

<PAGE>

                                                                    EXHIBIT 10.5
                                   ASSIGNMENT

     This Assignment ("Assignment") is entered into this 27th day of January,
2000 by and between Harry J. Tiffany, III ("Assignor") and CardXX, Inc., a
Nevada corporation ("Assignee").

                                    RECITALS

     A. Assignor is the owner and inventor of certain technology and
intellectual property ("IP") as described on Exhibit A attached hereto.

     B. Assignee desires to acquire rights to the IP upon the terms and
conditions set forth herein.

     C. Assignee is granting Assignor a security interest by a separate Security
Agreement of even date herewith (the "Security Agreement") in the IP to secure
the payment of the amounts due from Assignee to Assignor under this Assignment.

IT IS AGREED:

     1. Assignment. In consideration of the issuance and delivery of 700,000
shares of Assignee's common stock and a payment of $600,000 to be paid by
Assignee to Assignor on or before March 31, 2000 together with an additional
payment of $200,000 to be paid on or before January 1, 2001 (together with
interest on such cash payments from the date each payment is due until paid at
the rate of 10% per annum), Assignor hereby grants to Assignee and Assignee
hereby accepts an assignment of the IP. Assignor has supplied Assignee with
drawings, specifications, instructions, manuals and other documentation
pertaining to the IP which Assignee is currently using in the conduct of its
business. Assignor makes no express or implied warranties of merchantability or
fitness for a particular purpose and Assignee accepts the IP as is.

     2. Ownership. Assignor hereby represents and warrants that, to the best of
Assignor's knowledge and belief, Assignor is the legal and beneficial owner of
the IP free and clear of all liens or other encumbrances, pledges, assignments,
licenses and shop rights.

     IN WITNESS WHEREOF, this Assignment is made the date first above written.

                                        /s/ Harry J. Tiffany, III
                                        ---------------------------------
                                        Harry J. Tiffany, III[EXECUTION COPY]

                                   $15,000,000

                                CREDIT AGREEMENT,

                           dated as of July 30, 1999,

                                      among

                      U.S. AUTOMOTIVE MANUFACTURING, INC.,

                           QUALITY AUTOMOTIVE COMPANY

                                       and

                          US AUTOMOTIVE FRICTION, INC.

                                as the Borrowers,

                                       and

                         CERTAIN FINANCIAL INSTITUTIONS,

                                 as the Lenders,

                                       and

                   IBJ WHITEHALL BUSINESS CREDIT CORPORATION,

                          as the Agent for the Lenders.

<PAGE>

                                Table of Contents

<TABLE>
<CAPTION>
                                                                                                             Page
<S>                                                                                                           <C>
ARTICLE I               DEFINITIONS AND ACCOUNTING TERMS.......................................................2

   SECTION 1.1          Defined Terms..........................................................................2
   SECTION 1.2          Use of Defined Terms..................................................................32
   SECTION 1.3          Cross-References......................................................................32
   SECTION 1.4          Accounting and Financial Determinations...............................................32

ARTICLE II              COMMITMENTS, BORROWING PROCEDURES.....................................................32

   SECTION 2.1          Revolving Loan Commitment.............................................................33
   SECTION 2.2          Lenders Not Permitted or Required To Make Credit Extensions...........................33
   SECTION 2.2.1        Revolving Loans.......................................................................33
   SECTION 2.2.2        Term Loans............................................................................34
   SECTION 2.2.3        CapEx Loans...........................................................................34
   SECTION 2.2.4        Letters of Credit.....................................................................34
   SECTION 2.3          Reduction of the Revolving Loan Commitment Amount.....................................34
   SECTION 2.4          Borrowing Procedures..................................................................34
   SECTION 2.5          Continuation and Conversion Elections.................................................36
   SECTION 2.6          Funding...............................................................................36
   SECTION 2.7          Letters of Credit.....................................................................36
   SECTION 2.7.1        Issuance Procedures...................................................................36
   SECTION 2.7.2        Other Revolving Lenders' Participation................................................37
   SECTION 2.7.3        Disbursements.........................................................................37
   SECTION 2.7.4        Reimbursement.........................................................................38
   SECTION 2.7.5        Deemed Disbursements..................................................................38
   SECTION 2.7.6        Nature of Reimbursement Obligations...................................................39
   SECTION 2.8          Notes.................................................................................39

ARTICLE III             REPAYMENTS, PREPAYMENTS, INTEREST AND FEES............................................40

   SECTION 3.1          Repayments and Prepayments............................................................40
   SECTION 3.1.1        Voluntary Prepayments.................................................................40
   SECTION 3.1.2        Mandatory Repayments and Prepayments..................................................40
   SECTION 3.2          Interest Provisions...................................................................42
   SECTION 3.2.1        Rates.................................................................................42
   SECTION 3.2.2        Post-Default Rates....................................................................43
   SECTION 3.2.3        Payment Dates.........................................................................43
   SECTION 3.3          Fees..................................................................................44
   SECTION 3.3.1        Commitment Fee........................................................................44
   SECTION 3.3.2        Agent's Fees, etc.....................................................................44
   SECTION 3.3.3        Early Termination Fee.................................................................44
</TABLE>

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<TABLE>
<S>                                                                                                           <C>
   SECTION 3.3.4        Letter of Credit Fee..................................................................45
   SECTION 3.4          Collection of Receivables and Payments, etc...........................................45
   SECTION 3.4.1        Establishment of Lock-Box Accounts and Concentration Account; ..........................
                        Collections...........................................................................45
   SECTION 3.4.2        Payments Held in Trust................................................................46
   SECTION 3.4.3        Application of Amounts in Concentration Account.......................................46
   SECTION 3.4.4        Additional Payments...................................................................47
   SECTION 3.4.5        Verification of Receivables...........................................................47
   SECTION 3.4.6        Agent's Loan Account; Monthly Statements..............................................47
   SECTION 3.4.7        Fees and Expenses.....................................................................48
   SECTION 3.5          Reduction in Excess Availability, etc.................................................48

ARTICLE IV              CERTAIN LIBO RATE AND OTHER PROVISIONS................................................48

   SECTION 4.1          LIBO Rate Lending Unlawful............................................................48
   SECTION 4.2          Inability to Determine Rates..........................................................49
   SECTION 4.3          Increased Costs, etc..................................................................49
   SECTION 4.4          Funding Losses........................................................................50
   SECTION 4.5          Taxes.................................................................................51
   SECTION 4.7          Payments, Computations, etc...........................................................52
   SECTION 4.8          Sharing of Payments...................................................................53
   SECTION 4.9          Setoff................................................................................53
   SECTION 4.10         Use of Proceeds.......................................................................54

ARTICLE V               CONDITIONS TO CREDIT EXTENSIONS.......................................................54

   SECTION 5.1          Initial Credit Extension..............................................................54
   SECTION 5.1.1        Resolutions, Good Standing, etc.......................................................54
   SECTION 5.1.2        Agreement.............................................................................55
   SECTION 5.1.3        Delivery of Notes.....................................................................55
   SECTION 5.1.4        Required Consents and Approvals.......................................................55
   SECTION 5.1.5        Documentation Questionnaire...........................................................55
   SECTION 5.1.6        Account Agreements....................................................................55
   SECTION 5.1.7        Borrowing Base Certificate............................................................55
   SECTION 5.1.8        Financial Information, etc............................................................55
   SECTION 5.1.9        Compliance Certificate................................................................56
   SECTION 5.1.10       Corporate Guaranty....................................................................56
   SECTION 5.1.11       Pledged Property......................................................................56
   SECTION 5.1.12       UCC Search Results....................................................................57
   SECTION 5.1.13       Control Agreements....................................................................57
   SECTION 5.1.14       Security Agreement, Filings, etc......................................................57
   SECTION 5.1.15       Solvency Certificate..................................................................57
   SECTION 5.1.16       Closing Date Certificate..............................................................57
   SECTION 5.1.17       Funds Flow Memorandum.................................................................58
   SECTION 5.1.18       Evidence of Insurance.................................................................58
   SECTION 5.1.19       Environmental Matters.................................................................58
</TABLE>

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<TABLE>
<S>                                                                                                           <C>
   SECTION 5.1.20       Payment of Outstanding Indebtedness, etc..............................................58
   SECTION 5.1.21       Bailee Waivers........................................................................58
   SECTION 5.1.22       Appraisals and Collateral Audit Reports...............................................58
   SECTION 5.1.23       Copies of Material Agreements.........................................................59
   SECTION 5.1.24       Opinions of Counsel...................................................................59
   SECTION 5.1.25       Intercreditor Agreement...............................................................59
   SECTION 5.1.26       Agent's Closing Fees, Expenses, etc...................................................59
   SECTION 5.1.27       Accountant's Letter...................................................................59
   SECTION 5.1.28       Cash Collateral Agreement.............................................................59
   SECTION 5.1.29       IBJ Authorization Letter..............................................................59
   SECTION 5.1.30       Cancellation of Existing Intercompany Notes...........................................59
   SECTION 5.1.31       Satisfactory Due Diligence............................................................60
   SECTION 5.2          All Credit Extensions.................................................................60
   SECTION 5.2.1        Compliance with Warranties, No Default, etc...........................................60
   SECTION 5.2.3        Satisfactory Legal Form...............................................................62

ARTICLE VI              REPRESENTATIONS AND WARRANTIES........................................................62

   SECTION 6.1          Organization, etc.....................................................................62
   SECTION 6.2          Due Authorization, Non-Contravention, etc.............................................63
   SECTION 6.3          Government Approval, Regulation, etc..................................................63
   SECTION 6.4          Validity, etc.........................................................................63
   SECTION 6.5          Financial Information.................................................................64
   SECTION 6.6          No Material Adverse Change............................................................64
   SECTION 6.7          Litigation, Labor Controversies, etc..................................................64
   SECTION 6.8          Capitalization........................................................................65
   SECTION 6.9          Ownership of Properties...............................................................65
   SECTION 6.10         Taxes.................................................................................65
   SECTION 6.11         Pension and Benefit Plans.............................................................65
   SECTION 6.12         Environmental Warranties..............................................................66
   SECTION 6.13         Inventory.............................................................................67
   SECTION 6.14         Accuracy of Information...............................................................67
   SECTION 6.15         Documentation Questionnaire...........................................................68
   SECTION 6.16         Absence of Default....................................................................68
   SECTION 6.17         Regulations G, U and X................................................................68
   SECTION 6.18         Government Regulation.................................................................68
   SECTION 6.19         Material Agreements...................................................................69
   SECTION 6.20         Solvency..............................................................................69
   SECTION 6.21         Insurance.............................................................................69
   SECTION 6.22         Compliance with Laws..................................................................69
   SECTION 6.23         Year 2000.............................................................................69
   SECTION 6.24         Senior Indebtedness, etc..............................................................69

ARTICLE VII             COVENANTS.............................................................................70

   SECTION 7.1          Affirmative Covenants.................................................................70
</TABLE>

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<TABLE>
<S>                                                                                                           <C>
   SECTION 7.1.1        Financial Information, Reports, Notices, etc..........................................70
   SECTION 7.1.2        Compliance with Laws; Payment of Obligations..........................................74
   SECTION 7.1.3        Maintenance of Properties.............................................................74
   SECTION 7.1.4        Insurance.............................................................................74
   SECTION 7.1.5        Books and Records; Inspections........................................................76
   SECTION 7.1.6        Environmental Covenants...............................................................77
   SECTION 7.1.7        Rate Protection Agreements............................................................78
   SECTION 7.1.8        As to Intellectual Property Collateral................................................78
   SECTION 7.1.9        Future Subsidiaries...................................................................79
   SECTION 7.1.10       Post-Closing Items, etc...............................................................80
   SECTION 7.2          Negative Covenants....................................................................81
   SECTION 7.2.1        Business Activities...................................................................81
   SECTION 7.2.2        Indebtedness..........................................................................81
   SECTION 7.2.3        Liens.................................................................................82
   SECTION 7.2.4        Financial Condition...................................................................83
   SECTION 7.2.5        Investments...........................................................................83
   SECTION 7.2.7        Capital Expenditures, etc.............................................................84
   SECTION 7.2.8        Take or Pay Contracts.................................................................85
   SECTION 7.2.9        Consolidation, Merger, etc............................................................85
   SECTION 7.2.10       Asset Dispositions, etc...............................................................85
   SECTION 7.2.12       Transactions with Affiliates..........................................................86
   SECTION 7.2.13       Negative Pledges, Restrictive Agreements, etc.........................................86
   SECTION 7.2.14       Management Fees, Expenses, etc........................................................87
   SECTION 7.2.15       Fiscal Year End.......................................................................87
   SECTION 7.2.16       Limitation on Sale and Leaseback Transactions.........................................87
   SECTION 7.2.17       No Speculative Transactions...........................................................87

ARTICLE VIII            EVENTS OF DEFAULT.....................................................................87

   SECTION 8.1          Listing of Events of Default..........................................................87
   SECTION 8.1.1        Non-Payment of Obligations............................................................87
   SECTION 8.1.2        Breach of Representations and Warranties..............................................88
   SECTION 8.1.3        Non-Performance of Certain Covenants and Obligations..................................88
   SECTION 8.1.4        Non-Performance of Other Covenants and Obligations....................................88
   SECTION 8.1.5        Default on Other Indebtedness.........................................................88
   SECTION 8.1.6        Judgments.............................................................................88
   SECTION 8.1.7        Pension Plans.........................................................................89
   SECTION 8.1.8        Control of the Borrowers..............................................................89
   SECTION 8.1.9        Bankruptcy, Insolvency, etc...........................................................89
   SECTION 8.1.10       Impairment of Loan Documents, Security, etc...........................................90
   SECTION 8.1.11       Non-Payment of Taxes..................................................................90
   SECTION 8.1.12       Impairment of Material Agreements, etc................................................90
   SECTION 8.1.13       Subordinated Debt Documents...........................................................90
   SECTION 8.1.14       Intercreditor Agreement...............................................................91
   SECTION 8.1.15       Convertible Debentures................................................................91
   SECTION 8.2          Action if Bankruptcy..................................................................91
</TABLE>

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<TABLE>
<S>                                                                                                           <C>
   SECTION 8.3          Action if Other Event of Default......................................................91
   SECTION 8.4          Foreclosure on Collateral.............................................................91
   SECTION 8.5          Payments Upon Acceleration............................................................91

ARTICLE IX              THE AGENT.............................................................................92

   SECTION 9.1          Actions...............................................................................92
   SECTION 9.2          Funding Reliance, etc.................................................................93
   SECTION 9.3          Exculpation...........................................................................93
   SECTION 9.4          Successor.............................................................................93
   SECTION 9.5          Loans by IBJW.........................................................................94
   SECTION 9.6          Credit Decisions......................................................................94
   SECTION 9.7          Copies, etc...........................................................................94
   SECTION 9.8          Certain Collateral Matters............................................................94
   SECTION 9.9          Application to Issuers................................................................95

ARTICLE X               MISCELLANEOUS PROVISIONS..............................................................95

   SECTION 10.1         Waivers, Amendments, etc..............................................................95
   SECTION 10.2         Notices...............................................................................96
   SECTION 10.3         Payment of Costs and Expenses.........................................................97
   SECTION 10.4         Indemnification.......................................................................98
   SECTION 10.5         Survival..............................................................................99
   SECTION 10.6         Severability..........................................................................99
   SECTION 10.7         Headings..............................................................................99
   SECTION 10.8         Execution in Counterparts, Effectiveness, etc........................................100
   SECTION 10.9         Governing Law; Entire Agreement......................................................100
   SECTION 10.10        Successors and Assigns...............................................................100
   SECTION 10.11        Sale and Transfer of Loans and Notes;
                        Participations in Loans and Notes....................................................100
   SECTION 10.11.1      Assignments..........................................................................100
   SECTION 10.11.2      Participations.......................................................................102
   SECTION 10.12        Other Transactions...................................................................102
   SECTION 10.13        Guaranty of Borrowers................................................................102
   SECTION 10.14        Forum Selection and Consent to Jurisdiction..........................................104
   SECTION 10.15        Waiver of Jury Trial, etc............................................................105
   SECTION 10.16        Waiver of Certain Claims.............................................................106
   SECTION 10.17        Borrower Consents, Notices, etc......................................................106
   SECTION 10.18        Sanford Leased Premises..............................................................106
</TABLE>

<PAGE>

SCHEDULE I        Disclosure Schedule
SCHEDULE II       Percentages
SCHEDULE III      Administrative Information

EXHIBIT A         Form of Revolving Note
EXHIBIT B         Form of Term Note
EXHIBIT C         Form of CapEx Note
EXHIBIT D-1       Form of Borrowing Request
EXHIBIT D-2       Form of Continuation/Conversion Notice
EXHIBIT D-3       Form of Issuance Request
EXHIBIT E         Form of Borrowing Base Certificate
EXHIBIT F         Form of Compliance Certificate
EXHIBIT G         Form of Pledge Agreement
EXHIBIT H         Form of Security Agreement
EXHIBIT I-1       Form of Lock-Box Agreement
EXHIBIT I-2       Form of Concentration Account Agreement
EXHIBIT J         Form of Corporate Guaranty
EXHIBIT K         Form of Closing Date Certificate
EXHIBIT L         Form of Solvency Certificate
EXHIBIT M         Form of Lender Assignment Agreement
EXHIBIT N-1       Form of Opinion of New York Counsel to the Borrowers
EXHIBIT N-2       Form of Opinion of Local Counsel to the Borrowers
EXHIBIT O         Form of Real Estate Mortgage
EXHIBIT P         Form of Intercreditor Agreement
EXHIBIT Q         Form of Cash Collateral Account

<PAGE>

                                CREDIT AGREEMENT

     CREDIT  AGREEMENT,  dated  as of  July  30,  1999,  among  U.S.  AUTOMOTIVE
MANUFACTURING, INC. ("USAM"), a Delaware corporation, QUALITY AUTOMOTIVE COMPANY
("QAC"),  a Delaware  corporation,  US AUTOMOTIVE  FRICTION,  INC.  ("USAF"),  a
Delaware  corporation  (USAM,  QAC and USAF are  referred to  individually  as a
"Borrower"  and  collectively  as  the   "Borrowers"),   the  various  financial
institutions as are or may become parties hereto (collectively,  the "Lenders"),
and IBJ  WHITEHALL  BUSINESS  CREDIT  CORPORATION  ("IBJW"),  as agent  (in such
capacity, the "Agent") for the Lenders.

                              W I T N E S S E T H:

     WHEREAS,  QAC is a direct,  Wholly-Owned  Subsidiary (such capitalized term
and all other capitalized terms used in these recitals without  definition shall
have the  meanings  provided  for in  Article I hereto)  of USAM,  and USAF is a
direct, wholly-owned Subsidiary of QAC;

     WHEREAS,  the  Borrowers  are  engaged  in the  manufacture,  assembly  and
distribution of new and rebuilt automotive friction products;

     WHEREAS,  the Borrowers  desire to obtain from the Lenders a Revolving Loan
Commitment pursuant to which

          (a)  Revolving  Loans will be made by the Lenders from time to time in
     an aggregate  principal  amount at any one time  outstanding  not to exceed
     $15,000,000,  provided that the aggregate  outstanding  principal amount of
     all Revolving  Loans,  together with the aggregate amount of all Letters of
     Credit Outstandings and the aggregate  outstanding  principal amount of all
     Term Loans and CapEx Loans,  shall not at any one time exceed the lesser of
     (i) the Revolving  Loan  Commitment  Amount or (ii) (x) the Borrowing  Base
     Amount in effect at such time (y) minus (A)  $1,000,000  on the date of the
     initial  Credit  Extension  and (B)  $360,000  (or such  lesser  amount  as
     provided  in Section  3.5) at all times  following  the date of the initial
     Credit  Extension  (the  amounts  referred  to in  subclause  (y) being the
     "Excess Availability Requirement");

          (b) Term  Loans  will be made by the  Lenders  from time to time in an
     aggregate  principal  amount  not to  exceed  $2,625,000  (the  "Term  Loan
     Sublimit");

          (c) CapEx  Loans will be made by the  Lenders  from time to time in an
     aggregate  principal  amount  at any one  time  outstanding  not to  exceed
     $1,000,000 (the "CapEx Loan Sublimit"); and

          (d)  Letters of Credit  will be issued by the Issuer from time to time
     in a maximum aggregate  principal amount at any one time outstanding not to
     exceed $500,000 (the "Letter of Credit Sublimit"); and

<PAGE>

     WHEREAS,  the  Lenders  are  willing,  on  the  terms  and  subject  to the
conditions  hereinafter set forth (including Article V), to extend the Revolving
Loan Commitment and make such Loans to, and issue (or participate in) Letters of
Credit for the account of, the Borrowers.

     NOW, THEREFORE, the parties hereto hereby agree as follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

     SECTION 1.1 Defined Terms. The following terms (whether or not underscored)
when used in this Agreement,  including its preamble and recitals, shall, except
where the context otherwise requires, have the following meanings (such meanings
to be equally applicable to the singular and plural forms thereof):

     "Account"  means any "account" (as that term is defined in Section 9-106 of
the U.C.C.) of any Person.

     "Account  Debtor" is defined in clause (e) of the  definition  of "Eligible
Account".

     "Affiliate"  of any  Person  means  any other  Person  which,  directly  or
indirectly,  controls,  is  controlled  by or is under common  control with such
Person  (excluding any trustee under, or any committee with  responsibility  for
administering,  any Plan).  A Person shall be deemed to be  "controlled  by" any
other Person if such other Person possesses, directly or indirectly, power

          (a) to vote 10% or more of the  securities  (on a fully diluted basis)
     or other  interests  having  ordinary  voting  power  for the  election  of
     directors or managing general partners; or

          (b) to direct or cause the direction of the management and policies of
     such Person whether by contract or otherwise.

     "Agent" is defined in the preamble and includes  each other Person as shall
have subsequently been appointed as the successor Agent pursuant to Section 9.4.

     "Agreement" means this Credit Agreement, as amended, supplemented, restated
or otherwise modified from time to time.

     "Alternate  Base Rate" shall mean,  for any day, the higher of (a) the rate
of interest per annum publicly announced from time to time by IBJ Whitehall Bank
& Trust Company as its base  commercial  lending rate in effect at its principal
office in New York City and (b) the rate which is 1/2 of 1% in excess of Federal
Funds Effective Rate.

     "Applicable  Margin" means (a) with respect to the unpaid  principal amount
of each Base Rate Loan that is a Revolving Loan,  .75% per annum,  and that is a
Term Loan or CapEx  Loan,  1.00% per annum,  and (b) with  respect to the unpaid
principal  amount of each LIBO Rate  Loan

                                      -2-
<PAGE>

that is a  Revolving  Loan,  3.00% per  annum,  and that is a Term Loan or CapEx
Loan, 3.25% per annum.

     "Assigned Agreements" is defined in the Security Agreement.

     "Assignee Lender" is defined in clause (a) of Section 10.11.1.

     "Assignor Lender" is defined in clause (a) of Section 10.11.1.

     "Authorized Officer" means, relative to any Obligor,  those of its officers
whose  signatures and incumbency  shall have been certified to the Agent and the
Lenders pursuant to Section 5.1.1.

     "Base Rate Loan" means a Loan bearing  interest at a  fluctuating  interest
rate determined by reference to the Alternate Base Rate.

     "Borrower" and "Borrowers" are defined in the preamble.

     "Borrower Representative" means QAC.

     "Borrowing"  means the Loans of the same type and, in the case of LIBO Rate
Loans, having the same Interest Period, made by all Lenders on the same Business
Day and pursuant to the same Borrowing Request in accordance with Section 2.1.

     "Borrowing Base Amount" means, at any time, an amount equal to the sum of

          (a) (i) up to 85% of the  aggregate  amount of Net Amount of  Eligible
     Accounts at such time;

plus

          (ii) up to 60% of the  aggregate  amount  of Net  Amount  of  Eligible
          Inventory and Net Amount of Eligible Processed Cores at such time;

plus

          (iii) up to 45% of the aggregate  amount of Net Amount of Eligible Raw
     Materials and Net Amount of Eligible Unprocessed Cores at such time;

plus

          (iv)  up to 100% of the  amount  on  deposit  in the  cash  collateral
     account

     pursuant to the Cash Collateral Agreement;

minus

          (b) the Eligibility Reserves then in effect.

                                      -3-
<PAGE>

Clause (a) of the  definition  of  Borrowing  Base  Amount  shall  initially  be
computed by USAM in each Borrowing Base Certificate  delivered from time to time
by USAM to the Agent  pursuant to clause (i) of Section  7.1.1.  The Agent shall
have the right to review such  computations  and, if such  computations have not
been computed in accordance  with the terms of this  Agreement,  the Agent shall
have the right to adjust such  computations,  such  adjustment  to be binding on
USAM absent manifest error.

     "Borrowing  Base  Certificate"  means the Borrowing Base  Certificate  duly
completed  and  executed  by the chief  executive  Authorized  Officer  of USAM,
substantially  in the form of  Exhibit E  hereto,  together  with  such  changes
thereto as the Agent may from time to time reasonably request for the purpose of
monitoring USAM's compliance therewith.

     "Borrowing  Request"  means  a  Borrowing  Request,  duly  executed  by  an
Authorized Officer of the Borrower Representative,  in substantially the form of
Exhibit D-1 hereto.

     "Business Day" means

          (a) any day on which the Agent is open for  business  and is neither a
     Saturday  or Sunday nor a legal  holiday on which banks are  authorized  or
     required to be closed in New York, New York; and

          (b) relative to the making,  continuing,  prepaying or repaying of any
     LIBO Rate Loan,  any day which is a Business  Day  described  in clause (a)
     above and which is also a day on which  dealings  in Dollars are carried on
     in the interbank eurodollar market.

     "CapEx Loans" is defined in Section 2.1.

     "CapEx  Note"  means a  promissory  note of each  Borrower  payable  to any
Lender, in the form of Exhibit C hereto (as such promissory note may be amended,
endorsed or otherwise  modified  from time to time),  evidencing  the  aggregate
Indebtedness of such Borrower to such Lender  resulting from  outstanding  CapEx
Loans,  and also means all other  promissory notes accepted from time to time in
substitution therefor or renewal thereof.

     "CapEx Sublimit" is defined in the third recital.

     "Capital Expenditures" means, for any period, the sum of

          (a) the  aggregate  amount of all  expenditures  of the  Borrowers and
     their  Subsidiaries  for fixed or  capital  assets or  additions  to plant,
     property or equipment (including replacements and capitalized repairs) made
     during such period which, in accordance  with GAAP,  would be classified as
     capital expenditures; and

          (b) the aggregate amount of all Capitalized Lease Liabilities payments
     during such period.

     "Capitalized  Lease  Liabilities"  means all  monetary  obligations  of the
Borrowers and their Subsidiaries  under any leasing or similar  arrangement with
respect to any real or personal

                                      -4-
<PAGE>

property  which,  in accordance  with GAAP,  would be classified as  capitalized
leases,  and, for purposes of this Agreement and each other Loan  Document,  the
amount of such obligations shall be the capitalized  amount thereof,  determined
in accordance  with GAAP, and the stated  maturity  thereof shall be the date of
the last  payment of rent or any other  amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee without payment
of a penalty.

     "Cash   Collateral   Agreement"   means  the  Cash  Collateral   Agreement,
substantially  in the  form of  Exhibit  Q  hereto,  as  amended,  supplemented,
restated or otherwise modified from time to time.

     "Cash Equivalent Investment" means, at any time:

          (a) any  evidence  of  Indebtedness,  maturing  not more than one year
     after the date of  issuance,  issued or  guaranteed  by the  United  States
     Government;

          (b) commercial paper, maturing not more than nine months from the date
     of issuance and rated at least A-1 by Standard & Poor's  Corporation or P-1
     by Moody's Investors Service, Inc., which is issued by

               (i) a  corporation  (other  than  an  Affiliate  of any  Obligor)
          organized  under the laws of any state of the United  States or of the
          District of Columbia, or

               (ii) any Lender or any Affiliate thereof;

          (c) any  certificate  of deposit or bankers  acceptance,  maturing not
     more  than one year  after  such  time,  which is  issued  by a Lender or a
     commercial  banking  institution  that is a member of the  Federal  Reserve
     System and has a combined capital and surplus and undivided  profits of not
     less than $1,000,000,000; or

          (d) any  repurchase  agreement  entered into with any Lender (or other
     commercial  banking  institution of the stature  referred to in clause (c))
     secured by a fully  perfected  Lien in any securities of the type described
     in any of clauses (a) through  (c),  having a market value at the time such
     repurchase  agreement  is  entered  into  of  not  less  than  100%  of the
     repurchase obligation thereunder of such Lender or other commercial banking
     institution.

     "CERCLA" means the Comprehensive Environmental Response,  Compensation, and
Liability Act of 1980, as amended from time to time.

     "CERCLIS" means the Comprehensive Environmental Response Compensation,  and
Liability Information System from time to time.

     "Change in Control"

          (a) the  failure of (i) Martin  Chevalier  to be  President  and Chief
     Executive Officer of USAM or (ii) John Kohut to be Chairman of USAM;

                                      -5-
<PAGE>

          (b) the  failure of USAM at any time to own  beneficially  (or through
     ownership of QAC) 100% of the issued and outstanding shares of common stock
     of any of the other Borrowers  (whether  voting or non-voting),  on a fully
     diluted  basis,  such shares to be held free and clear of all Liens  (other
     than Liens in favor of the Agent or otherwise permitted by the terms of the
     Intercreditor Agreement);

          (c) the failure of the Borrowers at any time to own beneficially  100%
     of the  issued  and  outstanding  shares  of  common  stock of any of their
     Subsidiaries (whether voting or non-voting), on a fully diluted basis, such
     shares to be held free and clear of all Liens (other than Liens in favor of
     the Agent);

          (d) any "person" or "group" (as such terms are used in Sections  13(d)
     and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
     Act")),  excluding  the Investor  Group,  shall  become,  or obtain  rights
     (whether  by means or  warrants,  options  or  otherwise)  to  become,  the
     "beneficial  owner" (as  defined in Rules  13(d)-3  and  13(d)-5  under the
     Exchange Act), directly or indirectly,  of more than 20% of the outstanding
     common stock of USAM; or

          (e) the  failure at any time of Martin  Chevalier  or John Kohut to be
     members of the board of directors of USAM.

     "Code" means the Internal  Revenue  Code of 1986,  as amended,  reformed or
otherwise modified from time to time.

     "Collateral"  means the common  stock of the  Subsidiaries  of USAM and any
assets of the  Borrowers,  any of their  Subsidiaries  or of any  other  Obligor
subject to a Lien pursuant to any Loan Document.

     "Commitment Termination Event" means

          (a) the occurrence of any Default described in clauses (a) through (d)
     of Section 8.1.9; or

          (b) the occurrence  and  continuance of any other Event of Default and
     either

               (i) the  declaration of the Loans to be due and payable  pursuant
          to Section 8.3, or

               (ii) the giving of notice by the Agent,  acting at the  direction
          of the Required  Lenders,  to the Borrowers  that the  Revolving  Loan
          Commitment has been terminated.

     "Commonly Controlled Entity" means an entity,  whether or not incorporated,
which is under common  control  with any Borrower  within the meaning of Section
4001 of ERISA or is a part of a group which  includes  any Borrower and which is
treated as a single employer under Section 414 of the Code.

                                      -6-
<PAGE>

     "Compliance  Certificate"  means a Compliance  Certificate duly executed by
the chief executive  Authorized  Officer of USAM,  substantially  in the form of
Exhibit F hereto,  together with such changes thereto as the Agent may from time
to time  reasonably  request for the  purpose of  monitoring  compliance  by the
Borrowers with the financial covenants contained herein.

     "Concentration  Account" means the concentration  account maintained by the
Concentration  Bank  in  connection  with  this  Agreement  and the  other  Loan
Documents.

     "Concentration   Account   Agreement"  means  the   Concentration   Account
Agreement, substantially in the form of Exhibit I-2 attached hereto, executed by
the Concentration Bank in favor of the Agent.

     "Concentration Bank" shall mean IBJW or another financial  institution that
is acceptable to the Agent.

     "Contingent  Liability" means any agreement,  undertaking or arrangement by
which any Person  guarantees,  endorses or otherwise  becomes or is contingently
liable  upon (by direct or  indirect  agreement,  contingent  or  otherwise,  to
provide  funds for  payment,  to supply  funds to, or  otherwise to invest in, a
debtor,  or  otherwise  to assure a  creditor  against  loss) the  indebtedness,
obligation  or  any  other   liability  of  any  other  Person  (other  than  by
endorsements  of  instruments  in the course of  collection),  or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The principal amount of any Person's  obligation under any Contingent  Liability
shall  (subject  to any  limitation  set  forth  therein)  be  deemed  to be the
outstanding  principal amount (or maximum  principal  amount,  if larger) of the
debt, obligation or other liability guaranteed thereby.

     "Continuation/Conversion  Notice"  means a  Continuation/Conversion  Notice
duly  executed  by  an  Authorized  Officer  of  the  Borrower   Representative,
substantially in the form of Exhibit D-2 hereto.

     "Convertible  Debenture  Debt" means the  principal  and interest and other
amounts owing pursuant to the Convertible Debenture Documents.

     "Convertible Debenture Documents" means, collectively, each 8.0% Redeemable
Convertible Debenture, dated June 30, 1998, between USAM and Advantage (Bermuda)
Fund,  Ltd.,   Dominion   Capital  Fund,  Ltd.,  and  Canadian   Advantage  Ltd.
Partnership,  together  with  all  agreements  and  documents  entered  into  in
connection therewith.

     "Corporate  Guaranty" means the Corporate  Guaranty,  substantially  in the
form of Exhibit J hereto,  as amended,  supplemented,  amended  and  restated or
otherwise modified from time to time.

     "Credit  Extension" means, as the context may require,  (a) the making of a
Revolving  Loan,  CapEx Loan or Term Loan or (b) the  issuance  of any Letter of
Credit,  or the  extension of any Stated  Expiry Date of any existing  Letter of
Credit, by an Issuer.

                                      -7-
<PAGE>

     "Credit Extension Request" means, as the context may require, any Borrowing
Request or Issuance Request.

     "Default" means any Event of Default or any condition,  occurrence or event
which,  after  notice  or lapse of time or both,  would  constitute  an Event of
Default.

     "Defaulting  Lender"  shall mean any Lender with  respect to which a Lender
Default is in effect.

     "Disclosure  Schedule"  means the Disclosure  Schedule  attached  hereto as
Schedule I, as it may be amended,  supplemented or otherwise  modified from time
to time by any Borrower  with the written  consent of the Agent and the Required
Lenders.

     "Documentation Questionnaire" is defined in Section 6.15.

     "Dollar" and the symbol "$" mean lawful money of the United States.

     "Domestic Office" means,  relative to any Lender, the office of such Lender
designated as such on Schedule III hereto or  designated in a Lender  Assignment
Agreement,  or such other office of a Lender (or any successor or assign of such
Lender)  within  the  United  States as may be  designated  from time to time by
notice from such Lender to USAM and the Agent.

     "Domestic  Subsidiary"  means  each  Subsidiary  of the  Borrowers  that is
organized  under the laws of any State of the  United  States of  America or the
District of Columbia.

     "EBITDA" means,  for any period,  the sum,  without  duplication,  for such
period, of

          (a) Net Income during such period;

plus

          (b) the amount  deducted,  in  determining  Net Income,  of all income
     taxes  (whether paid or deferred) of the  Borrowers and their  Subsidiaries
     during such period;

plus

          (c) Interest Expense during such period;

plus

          (d) the amount  deducted,  in  determining  Net  Income,  representing
     amortization  and  depreciation  of  assets  of  the  Borrowers  and  their
     Subsidiaries during such period.

     "Effective Date" means the date this Agreement becomes  effective  pursuant
to Section 10.8.

                                      -8-
<PAGE>

     "Eligibility Reserves" means such reserves as the Agent, in its sole credit
judgment,  may from time to time establish against the gross amounts of Eligible
Inventory,  Eligible Accounts, Eligible Raw Materials,  Eligible Processed Cores
and Eligible  Unprocessed  Cores,  to reflect risks or  contingencies  which may
affect  such items and which  have not  already  been taken into  account in the
determination of Eligible Inventory,  Eligible Accounts, Eligible Raw Materials,
Eligible Processed Cores and Eligible  Unprocessed Cores, as the case may be. In
establishing  Eligibility Reserves,  the Agent may consider those factors which,
in its sole judgment, may affect the value of any Eligible Receivable,  Eligible
Inventory,   Eligible  Raw  Materials,  Eligible  Processed  Cores  or  Eligible
Unprocessed  Cores,  including  the  enforceability  or  priority of the Agent's
security interest  thereon,  the amount which the Agent and the Lenders would be
likely to receive (after giving  consideration to delays in payment and costs of
enforcement) in the  liquidation of the  Collateral,  the financial and business
climate of the  Borrowers'  industry,  changes  in the  collection  history  and
dilution  with  respect to the  Borrowers'  Accounts,  changes in respect of the
Borrowers'  Inventory and other items  comprising  the Borrowing Base Amount and
any other event which could  reasonably  be expected to result in any Default or
Event of Default.

     "Eligible Account" means, at any time of determination thereof, any Account
(or part thereof) of any Borrower which the Agent, in its sole credit  judgment,
determines  to be eligible for the purpose of making  Credit  Extensions  to the
Borrowers.  Without  limiting the Agent's  discretion,  no Account of a Borrower
shall be an Eligible Account unless each of the following  requirements has been
fulfilled to the satisfaction of the Agent:

          (a) such Borrower has lawful and absolute title to such Account,  free
     and clear of all Liens,  other than the Liens in favor of the Agent for the
     benefit of the Lenders;

          (b) the  Agent  has a  legal,  valid,  binding,  perfected  and  first
     priority security interest in such Account under the U.C.C.:

          (c) (i) with  regard  to an  Account  as to which  any  United  States
     federal or state  governmental  agency or  instrumentality  is the  Account
     Debtor,  such  Borrower has complied  with the  Assignment of Claims Act of
     1940, as amended (31 U.S.C.ss. 3727; 41 U.S.C.ss. 15), by delivering to the
     Agent a notice of  assignment  in favor of the Agent  under such Act and in
     compliance  with  applicable  provisions  of  31  C.F.R.ss.7-103.8  and  41
     C.F.R.ss.1-30.7, or with similar state law; and

               (ii)  such  Account  is not an  Account  as to  which  any  other
          government or agency of such government is the Account Debtor;

          (d) such  Borrower  has the full and  unqualified  right to assign and
     grant a security interest in such Account to the Agent;

          (e) such Account is payable in Dollars, is the legal,  valid,  binding
     and  enforceable  obligation  of the  Person  who is  obligated  under such
     Account  (the  "Account  Debtor")  and is payable  within 90 days after the
     invoice date (which  invoice shall be delivered to the Account Debtor on or
     within 60 days after such  Account  is  created as  provided  in clause (h)
     below);

                                      -9-
<PAGE>

          (f) such Account is not subject to any dispute,  setoff,  counterclaim
     or  other  claim  or  defense  on the part of the  Account  Debtor  denying
     liability under such Account, in whole or in part;

          (g) such Account is  evidenced  by an invoice  rendered to the Account
     Debtor and evidences monetary obligations;

          (h) such  Account is a bona fide  Account  which arose in the ordinary
     course of business, and with respect to which,

               (i) in the case of an  Account  arising  from the sale of  goods,
          such  goods have been  shipped or  delivered  to and  accepted  by the
          Account  Debtor,  such Account was created as a result of a sale on an
          absolute basis and not on a consignment,  approval,  bill-and-hold  or
          sale-and-return  basis and all  other  actions  necessary  to create a
          binding  obligation on the part of the Account Debtor for such Account
          have been taken; and

               (ii) in the case of an Account  relating to the sale of services,
          such  services  have been  performed or completed  and accepted by the
          Account  Debtor and all other  actions  necessary  to create a binding
          obligation on the part of the Account Debtor have been taken; and

               (iii) the goods or services  upon which such  Account  arose were
          not for personal, family or household purposes;

          (i) with respect to such Account, the Account Debtor is not

               (i)  an  Affiliate,   Subsidiary,  officer,  director,  employee,
          supplier or creditor of such Borrower or any of its Subsidiaries;

               (ii) organized or located in a jurisdiction other than the United
          States;

               (iii) a domestic or foreign government or any agency,  department
          or  instrumentality  thereof  (except  to  the  extent  clause  (c) is
          complied with);

               (iv) the subject of any reorganization, bankruptcy, receivership,
          custodianship  or  insolvency  or any  other  condition  of  the  type
          described in clauses (a) through (d) of Section 8.1.9; or

               (v) a natural  Person  (unless  such  Person  operates  as a sole
          proprietorship or similar commercial entity);

          (i) that part of such Account  which is (i)  outstanding  more than 90
     days past the original  invoice date with respect thereto or (ii) more than
     60 days overdue;

          (j) such Account is not an Account owing by an Account Debtor

                                      -10-
<PAGE>

               (i) more than 50% of the  Accounts  of which are (i)  outstanding
          more than 90 days past the original  invoice date with respect thereto
          or (ii) more than 60 days overdue;

               (ii) whose Accounts are in an aggregate dollar amount exceeding a
          credit limit determined by the Agent;

          (k) payment  with respect to such Account is evidenced by a promissory
     note, draft,  trade acceptance or other instrument for the payment of money
     and the Agent does not have possession thereof;

          (l) such  Account has not been placed with a lawyer or other agent for
     collection;

          (m) all amounts  payable  pursuant to such Account  shall be paid to a
     Lock-Box Account or the Concentration Account;

          (n) such Borrower has not made any agreement  with the Account  Debtor
     of such Account for any deduction therefrom, except a discount or allowance
     allowed by such Borrower in the ordinary course of its business;

          (o) such  Account  complies  with  all  material  requirements  of all
     applicable laws, rules and regulations;

          (p) such Account is not with respect to an Account  Debtor  located in
     New Jersey,  Minnesota or another State or jurisdiction  denying  creditors
     access to its  courts in the  absence  of a Notice of  Business  Activities
     Report or other similar filing, unless such Borrower is duly qualified as a
     foreign  corporation in each such State or  jurisdiction  or has duly filed
     and has a currently effective Notice of Business Activities Report or other
     similar filing;

          (q) to the best of such  Borrower's  knowledge,  there  are no  facts,
     events or occurrences which in any material respect may impair the validity
     or  enforceability  of such  Account  or may reduce  materially  the amount
     payable thereunder as shown on such Borrower's aged trial balance delivered
     pursuant to Section 7.1.1 or such Borrower's books and records and invoices
     and statements delivered to Agent and/or Lenders with respect thereto;

          (r) such Borrower has no knowledge of any fact or  circumstance  which
     could  reasonably  be  expected  to  impair   materially  the  validity  or
     collectibility  of such Account or render it ineligible  under the criteria
     set forth in clauses (a) through (s) above; and

          (s) in the Agent's sole credit judgment,

               (i) the relevant Account Debtor is creditworthy; and

                                      -11-
<PAGE>

               (ii) the collectibility of such Account is not impaired,  whether
          as a result of the Account Debtor's  unwillingness or inability to pay
          or otherwise.

The Agent may, in the exercise of its sole credit  discretion on prior notice to
USAM, impose,  reduce or otherwise modify the standards of eligibility set forth
in this definition. If any Account at any time ceases to be an Eligible Account,
such  Account  shall  promptly  be  excluded  from the  calculation  of Eligible
Accounts.

     "Eligible  Inventory"  means,  at any time of  determination  thereof,  any
Inventory  of the  Borrowers  which  the  Agent,  in its sole  credit  judgment,
determines  to be eligible for the purpose of making  Credit  Extensions  to the
Borrowers.  Without limiting the Agent's discretion,  no Inventory of a Borrower
shall be Eligible  Inventory  unless it arose in the ordinary course of business
of such Borrower and each of the following  requirements  has been  fulfilled to
the satisfaction of the Agent:

          (a) such  Inventory is located in the United  States on real  property
     that is  either  (i)  owned by such  Borrower,  free and clear of any Liens
     other than of the nature  referred to in clause (a) or (h) of Section 7.2.3
     or (ii) located in or with, as the case may be, a public warehouse or third
     party described in Section 3.1.1 of the Security  Agreement  (provided that
     such  Borrower  shall have  delivered  to the Agent or  landlord  or bailee
     waiver, as applicable, as required by in clause (a) of Section 6.13);

          (b) such Borrower has full and unqualified right to assign and grant a
     Lien in such Inventory to the Agent for the benefit of the Lenders;

          (c) such  Borrower has full and lawful title to such  Inventory,  free
     and clear of all Liens,  other than any Liens in favor of the Agent for the
     benefit of the Lenders;

          (d) the  Agent  has a  legal,  valid,  binding,  perfected  and  first
     priority security interest in such Inventory under the U.C.C.;

          (e) none of such Inventory shall consist of

               (i) items in the  custody  of third  parties  for  processing  or
          manufacture;

               (ii) items in such  Borrower's  possession  but  intended by such
          Borrower for return to the suppliers thereof;

               (iii) items belonging to third parties (other than such Borrower)
          that have been  consigned  to such  Borrower or are  otherwise in such
          Borrower's custody or possession; or

               (iv)  items  in  such  Borrower's  custody  and  possession  on a
          sale-on-approval  or  sale-or-return  basis or  subject  to any  other
          repurchase or return agreement; and

          (f) none of such Inventory

                                      -12-
<PAGE>

               (i) is obsolete,  unsalable,  damaged or otherwise unfit for sale
          or  further  processing  in the  ordinary  course  of such  Borrower's
          business;

               (ii) is a work in process; or

               (iii) is in the  Agent's  discretion,  slow  moving,  obsolete or
          unmerchantable; and

          (g) that part of such Inventory which is less than twice the amount of
     product  constituting  Inventory that was sold by the Borrowers  during the
     preceding 12 months.

The Agent may, in the exercise of its sole credit  discretion on prior notice to
USAM, impose,  reduce or otherwise modify the standards of eligibility set forth
in  this  definition.  If any  Inventory  ceases  at  any  time  to be  Eligible
Inventory,  such Inventory  shall  promptly be excluded from the  calculation of
Eligible Inventory.

     "Eligible Processed Cores" means, at any time of determination thereof, any
Processed Cores of the Borrowers  which the Agent, in its sole credit  judgment,
determines  to be eligible for the purpose of making  Credit  Extensions  to the
Borrowers.  Without  limiting the Agent's  discretion,  no  Processed  Core of a
Borrower  shall be an Eligible  Processed  Core unless it arose in the  ordinary
course of business of such Borrower and each of the following  requirements  has
been fulfilled to the satisfaction of the Agent:

          (a) such  Processed  Core is  located  in the  United  States  on real
     property that is either (i) owned by such  Borrower,  free and clear of any
     Liens other than of the nature  referred to in clause (a) or (h) of Section
     7.2.3 or (ii) located in or with, as the case may be, a public warehouse or
     third party described in Section 3.1.1 of the Security Agreement  (provided
     that such Borrower  shall have delivered to the Agent or landlord or bailee
     waiver, as applicable, as required by in clause (a) of Section 6.13);

          (b) such Borrower has full and unqualified right to assign and grant a
     Lien in such Processed Core to the Agent for the benefit of the Lenders;

          (c) such  Borrower has full and lawful title to such  Processed  Core,
     free and clear of all Liens, other than any Liens in favor of the Agent for
     the benefit of the Lenders;

          (d) the  Agent  has a  legal,  valid,  binding,  perfected  and  first
     priority security interest in such Processed Core under the U.C.C.;

          (e) none of such Processed Cores shall consist of

               (i) items in the  custody  of third  parties  for  processing  or
          manufacture;

               (ii) items in such  Borrower's  possession  but  intended by such
          Borrower for return to the suppliers thereof;

                                      -13-
<PAGE>

               (iii) items belonging to third parties (other than such Borrower)
          that have been  consigned  to such  Borrower or are  otherwise in such
          Borrower's custody or possession; or

               (iv)  items  in  such  Borrower's  custody  and  possession  on a
          sale-on-approval  or  sale-or-return  basis or  subject  to any  other
          repurchase or return agreement;

          (f) none of such Processed Cores

               (i) is obsolete,  unsalable,  damaged or otherwise unfit for sale
          or  further  processing  in the  ordinary  course  of such  Borrower's
          business;

               (ii) is a work in process; or

               (iii) is in the  Agent's  discretion,  slow  moving,  obsolete or
          unmerchantable; and

          (g) the  aggregate  fair  market  value  of all such  Processed  Cores
     located at any one location is not less than $100,000.

The Agent may, in the exercise of its sole credit  discretion on prior notice to
USAM, impose,  reduce or otherwise modify the standards of eligibility set forth
in this  definition.  If any Processed Core ceases at any time to be an Eligible
Processed  Core,  such  Processed  Core  shall  promptly  be  excluded  from the
calculation of Eligible Processed Cores.

     "Eligible Raw Material"  means, at any time of determination  thereof,  any
Raw  Material of the  Borrowers  which the Agent,  in its sole credit  judgment,
determines  to be eligible for the purpose of making  Credit  Extensions  to the
Borrowers.  Without  limiting  the  Agent's  discretion,  no Raw  Material  of a
Borrower shall be Eligible Raw Material  unless it arose in the ordinary  course
of business of such  Borrower and each of the  following  requirements  has been
fulfilled to the satisfaction of the Agent:

          (a) such Raw Material is located in the United States on real property
     that is  either  (i)  owned by such  Borrower,  free and clear of any Liens
     other than of the nature  referred to in clause (a) or (h) of Section 7.2.3
     or (ii) located in or with, as the case may be, a public warehouse or third
     party described in Section 3.1.1 of the Security  Agreement  (provided that
     such  Borrower  shall have  delivered  to the Agent or  landlord  or bailee
     waiver, as applicable, as required by in clause (a) of Section 6.13);

          (b) such Borrower has full and unqualified right to assign and grant a
     Lien in such Raw Material to the Agent for the benefit of the Lenders;

          (c) such Borrower has full and lawful title to such Raw Material, free
     and clear of all Liens,  other than any Liens in favor of the Agent for the
     benefit of the Lenders;

                                      -14-
<PAGE>

          (d) the  Agent  has a  legal,  valid,  binding,  perfected  and  first
     priority security interest in such Raw Material under the U.C.C.;

          (e) none of such Raw Material shall consist of

               (i) items in the  custody  of third  parties  for  processing  or
          manufacture;

               (ii) items in such  Borrower's  possession  but  intended by such
          Borrower for return to the suppliers thereof;

               (iii) items belonging to third parties (other than such Borrower)
          that have been  consigned  to such  Borrower or are  otherwise in such
          Borrower's custody or possession; or

               (iv)  items  in  such  Borrower's  custody  and  possession  on a
          sale-on-approval  or  sale-or-return  basis or  subject  to any  other
          repurchase or return agreement;

          (f) none of such Raw Material

               (i) is obsolete,  unsalable,  damaged or otherwise unfit for sale
          or  further  processing  in the  ordinary  course  of such  Borrower's
          business;

               (ii) is a work in process; or

               (iii) is in the  Agent's  discretion,  slow  moving,  obsolete or
          unmerchantable; and

          (g) the aggregate fair market value of all such Raw Materials  located
     at any one location is not less than $100,000.

The Agent may, in the exercise of its sole credit  discretion on prior notice to
USAM, impose,  reduce or otherwise modify the standards of eligibility set forth
in this  definition.  If any Raw Material  ceases at any time to be Eligible Raw
Material,  such Raw Material shall promptly be excluded from the  calculation of
Eligible Raw Material.

     "Eligible  Unprocessed Cores" means, at any time of determination  thereof,
any  Unprocessed  Cores of the  Borrowers  which the Agent,  in its sole  credit
judgment,  determines to be eligible for the purpose of making Credit Extensions
to the Borrowers.  Without limiting the Agent's discretion, no Unprocessed Cores
of a  Borrower  shall be an  Eligible  Unprocessed  Core  unless it arose in the
ordinary  course  of  business  of  such  Borrower  and  each  of the  following
requirements has been fulfilled to the satisfaction of the Agent:

          (a) such  Unprocessed  Core is located  in the  United  States on real
     property that is either (i) owned by such  Borrower,  free and clear of any
     Liens other than of the nature  referred to in clause (a) or (h) of Section
     7.2.3 or (ii) located in or with, as the case may be, a public warehouse or
     third party described in Section 3.1.1 of the Security Agreement

                                      -15-
<PAGE>

     (provided  that such Borrower shall have delivered to the Agent or landlord
     or bailee waiver,  as  applicable,  as required by in clause (a) of Section
     6.13);

          (b) such Borrower has full and unqualified right to assign and grant a
     Lien in such Unprocessed Core to the Agent for the benefit of the Lenders;

          (c) such Borrower has full and lawful title to such Unprocessed  Core,
     free and clear of all Liens, other than any Liens in favor of the Agent for
     the benefit of the Lenders;

          (d) the  Agent  has a  legal,  valid,  binding,  perfected  and  first
     priority security interest in such Unprocessed Core under the U.C.C.;

          (e) none of such Unprocessed Cores shall consist of

               (i) items in the  custody  of third  parties  for  processing  or
          manufacture;

               (ii) items in such  Borrower's  possession  but  intended by such
          Borrower for return to the suppliers thereof;

               (iii) items belonging to third parties (other than such Borrower)
          that have been  consigned  to such  Borrower or are  otherwise in such
          Borrower's custody or possession; or

               (iv)  items  in  such  Borrower's  custody  and  possession  on a
          sale-on-approval  or  sale-or-return  basis or  subject  to any  other
          repurchase or return agreement;

          (f) none of such Unprocessed Cores

               (i) is obsolete,  unsalable,  damaged or otherwise unfit for sale
          or  further  processing  in the  ordinary  course  of such  Borrower's
          business;

               (ii) is a work in process; or

               (iii) is in the  Agent's  discretion,  slow  moving,  obsolete or
          unmerchantable; and

          (g) the  aggregate  fair market  value of all such  Unprocessed  Cores
     located at any one jurisdiction is not less than $100,000.

The Agent may, in the exercise of its sole credit  discretion on prior notice to
USAM, impose,  reduce or otherwise modify the standards of eligibility set forth
in this definition. If any Unprocessed Core ceases at any time to be an Eligible
Unprocessed  Core,  such  Unprocessed  Core shall  promptly be excluded from the
calculation of Eligible Inventory.

     "Environmental Consultant" is defined in clause (b) of Section 7.1.6.

                                      -16-
<PAGE>

     "Environmental Laws" means all applicable federal, state or local statutes,
laws,  ordinances,  codes, rules,  regulations and guidelines (including consent
decrees and  administrative  orders)  relating  to public  health and safety and
protection of the environment, preservation or reclamation of natural resources,
the  management,  Release  of any  Hazardous  Material  or to health  and safety
matters,  including  CERCLA,  the Resource  Conservation  and Recovery  Act, the
Federal Water Pollution  Control Act, as amended by the Clean Water Act of 1977,
33 U.S.C.  ss.ss.1251 et seq., the Clean Air Act of 1970, 42 U.S.C.ss.ss.7401 et
seq., the Toxic Substances Control Act of 1976, 15 U.S.C.ss.ss.2601 et seq., the
Occupational  Safety and Health Act of 1970, as amended,  29 U.S.C.,ss.ss.651 et
seq.,  the  Emergency  Planning  and  Community  Right-to-Know  Act of 1986,  42
U.S.C.ss.ss.11001  et seq., the Safe Drinking Water Act of 1974, as amended,  42
U.S.C.ss.ss.300(f)  et seq.,  the  Hazardous  Materials  Transportation  Act, 49
U.S.C.  ss.ss.5101 et seq., and any similar or implementing  state or local law,
and all amendments or regulations promulgated under any of the foregoing.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended,  and any  successor  statute  of  similar  import,  together  with  the
regulations thereunder,  in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.

     "Event of Default" is defined in Section 8.1.

     "Excess Availability Requirement" is defined in the third recital.

     "Excluded Foreign  Subsidiaries" means any Foreign Subsidiary the pledge of
all or any  part  of  whose  capital  stock  or  other  property  or  assets  as
Collateral,  or the  guaranty of the  Obligations  by,  would result in material
adverse tax  consequences  to the Borrowers,  provided that for purposes of this
definition  (a) the term "Foreign  Subsidiary"  shall not include any Subsidiary
(i) which is  properly  treated as a  partnership  or branch of a Borrower  or a
Domestic  Subsidiary  for United States federal income tax purposes and (ii) the
pledge of all of any part of whose capital stock or other  property or assets as
Collateral,  or the guaranty of the Obligations by, would not result in material
adverse  tax  consequences  to the  Borrowers  and (b) any  determination  as to
whether a Subsidiary is an Excluded Foreign  Subsidiary shall be approved by the
Agent.

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

     "Fiscal Month" means any month of a Fiscal Year.

     "Fiscal Quarter" means any quarter of a Fiscal Year.

                                      -17-
<PAGE>

     "Fiscal Year" means any period of twelve consecutive calendar months ending
on December 31.  References to a Fiscal Year with a number  corresponding to any
calendar year (e.g.,  "Fiscal Year 1999") refer to the Fiscal Year ending during
such calendar year.

     "Fixed Charge Coverage Ratio" means, for any period, the ratio of,

          (a) (i) EBITDA;

less

               (ii)  the   aggregate   amount   of  all   non-financed   Capital
          Expenditures made by the Borrowers and their Subsidiaries;

to

          (b) the sum of

               (i) Interest Expense;

plus

               (ii)  all  scheduled   payments  of  principal  of   Indebtedness
          (including scheduled payments of the Term Loans and CapEx Loans);

plus

               (iii) all income  taxes paid in cash or accrued by the  Borrowers
          and their Subsidiaries.

     "Foreign  Subsidiary"  means each Subsidiary of the Borrowers that is not a
Domestic Subsidiary.

     "F.R.S.  Board" means the Board of Governors of the Federal  Reserve System
or any successor thereto.

     "GAAP" is defined in Section 1.4.

     "Hard Costs" means the purchase price of new  equipment,  provided that the
foregoing shall not include,  in any event,  any other costs,  fees and expenses
related  to  the  foregoing  (including,   without  limitation,   the  costs  of
installation, site preparation and the like).

     "Hazardous Material" means

          (a) any "hazardous substance", as defined by CERCLA;

          (b) any "hazardous waste", as defined by the Resource Conservation and
     Recovery Act;

                                      -18-
<PAGE>

          (c) any petroleum product; or

          (d) any  pollutant or  contaminant  or  hazardous,  dangerous or toxic
     chemical,  material  or  substance  within the  meaning  of any  applicable
     federal,   state  or  local  law,  regulation,   ordinance  or  requirement
     (including  consent  decrees  and  administrative  orders)  relating  to or
     imposing liability or standards of conduct concerning any hazardous,  toxic
     or dangerous  waste,  substance  or  material,  all as amended or hereafter
     amended.

     "Hedging Obligations" means, with respect to any Person, all liabilities of
such Person under any Rate Protection Agreement.

     "herein",  "hereof",  "hereto",  "hereunder" and similar terms contained in
this  Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular Section,
paragraph or provision of this Agreement or such other Loan Document.

     "IBJW" is defined in the preamble.

     "Impermissible   Qualification"   means,   relative   to  the   opinion  or
certification of any independent public accountant as to any financial statement
of any Obligor, any qualification or exception to such opinion or certification

          (a) which is of a "going concern" or similar nature;

          (b) which  relates  to the  limited  scope of  examination  of matters
     relevant to such financial statement; or

          (c) which  relates to the treatment or  classification  of any item in
     such financial  statement and which,  as a condition to its removal,  would
     require an  adjustment  to such item the effect of which  would be to cause
     there to exist a Default or Event of Default.

     "including"   means  including  without  limiting  the  generality  of  any
description  preceding  such term,  and, for purposes of this Agreement and each
other Loan  Document,  the parties  hereto  agree that where  general  words are
followed by a specific  listing of items, the general words shall be given their
widest meaning, and shall not be limited by an enumeration of specific matters.

     "Indebtedness" of any Person means, without duplication:

          (a) all obligations of such Person for borrowed  money,  including all
     obligations of such Person evidenced by bonds,  debentures,  notes or other
     similar instruments;

          (b) all  obligations,  contingent or  otherwise,  relative to the face
     amount of all  letters  of  credit,  whether  or not  drawn,  and  banker's
     acceptances issued for the account of such Person;

                                      -19-
<PAGE>

          (c) all  obligations  of such Person as lessee under leases which have
     been or should be, in accordance with GAAP,  recorded as Capitalized  Lease
     Liabilities;

          (d) net  liabilities  of such  Person  with  respect  to each  Hedging
     Obligation;

          (e) whether or not so included as liabilities in accordance with GAAP,
     all  obligations  of such  Person  to pay the  deferred  purchase  price of
     property or  services  (excluding  trade  accounts  payable  arising in the
     ordinary course of business),  and indebtedness (excluding prepaid interest
     thereon)  secured by a Lien on property  owned or being  purchased  by such
     Person  (including  indebtedness  arising under  conditional sales or other
     title retention  agreements),  whether or not such indebtedness  shall have
     been assumed by such Person or is limited in recourse;

          (f) all  obligations  of such Person to  purchase,  redeem,  retire or
     otherwise  acquire for value any capital stock (other than common stock) of
     such Person;

          (g) the  liquidation  value  of any  preferred  capital  stock of such
     Person or its  Subsidiaries  held by any Person  other than such Person and
     its Wholly-Owned Subsidiaries;

          (h)  all  obligations  and  liabilities  secured  by any  Lien on such
     Person's property or assets, even though such Person shall not have assumed
     or become liable for the payment thereof;

          (i) all accrued and unfunded  obligations  and  liabilities  under any
     Plan; and

          (j) all Contingent Liabilities of such Person in respect of any of the
     foregoing.

For all purposes of this Agreement, the Indebtedness of any Person shall include
the  Indebtedness  of any partnership or joint venture in which such Person is a
general partner or a joint venturer.

     "Indemnified Liabilities" is defined in Section 10.4.

     "Indemnified Parties" is defined in Section 10.4.

     "Intellectual  Property  Collateral" has the meaning provided for such term
in the Security Agreement.

     "Intercreditor   Agreement"  means  the   Subordination  and  Intercreditor
Agreement,   substantially  in  the  form  of  Exhibit  P  hereto,  as  amended,
supplemented, restated or otherwise modified from time to time.

     "Interest  Expense"  means,  for any  period,  the  aggregate  consolidated
interest expense of the Borrowers and their  Subsidiaries for such period (other
than pay-in-kind  interest),  as determined in accordance with GAAP,  including,
without  duplication,  the portion of any Capitalized  Lease  Liabilities of the
Borrowers and their Subsidiaries allocable to interest expense, all commissions,
discounts  and other fees charged with respect to letters of credit and

                                      -20-
<PAGE>

bankers'  acceptance  financing,  the amortization of debt discounts and the net
costs under Rate Protection Agreements, in each case paid or payable during such
period.

     "Interest  Period"  means,  relative  to any LIBO  Rate  Loan,  the  period
beginning  on (and  including)  the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Section 2.4 or 2.5
and shall end on (but  exclude) the day which  numerically  corresponds  to such
date one, two or three months thereafter, as the relevant Borrower may select in
its relevant notice pursuant to Section 2.4 or 2.5; provided, however, that

          (a) the Borrowers shall not be permitted to select Interest Periods to
     be in effect at any one time which have expiration  dates occurring on more
     than three different dates;

          (b) if such Interest  Period would otherwise end on a day which is not
     a  Business  Day,  such  Interest  Period  shall end on the next  following
     Business Day (unless such next following Business Day is the first Business
     Day of a  calendar  week or month,  as the case may be, in which  case such
     Interest  Period  shall  end  on  the  Business  Day  next  preceding  such
     numerically corresponding day);

          (c) if there is no numerically  corresponding  day in such month, such
     Interest Period shall end on the last Business Day of such month; and

          (d) the  Borrowers  shall not be permitted to select,  and there shall
     not be applicable,  any Interest Period that would be broken by reason of a
     mandatory  payment of Term Loans required pursuant to clause (b) of Section
     3.1.2 or any  Interest  Period for any Loan which  would end later than the
     Stated Maturity Date for such Loan.

     "Inventory"  means all present and future  inventory  merchandise and goods
intended for sale, lease or other disposition,  including,  without  limitation,
all raw materials, work in process, finished goods, returned goods and materials
and supplies of any kind,  nature or  description  which are or might be used in
connection with the  manufacture,  packing,  shipping,  advertising,  selling or
finishing of any such goods,  all  documents of title or documents  representing
the same and all records, files and writings with respect thereto.

     "Investment" means, relative to any Person,

          (a) any  loan or  advance  made by such  Person  to any  other  Person
     (excluding  commission,   travel  and  similar  advances  to  officers  and
     employees made in the ordinary course of business);

          (b) any  Contingent  Liability of such Person  incurred in  connection
     with loans or advances described in clause (a); and

          (c) any ownership or similar interest held by such Person in any other
     Person.

The amount of any Investment  shall be the original  principal or capital amount
thereof less all returns of principal or equity thereon (and without  adjustment
by reason of the financial

                                      -21-
<PAGE>

condition of such other  Person) and shall,  if made by the transfer or exchange
of  property  other  than  cash,  be deemed  to have  been  made in an  original
principal or capital amount equal to the fair market value of such property.

     "Issuance Request" means an Issuance Request duly executed by an Authorized
Officer of the Borrower Representative, substantially in the form of Exhibit D-3
attached hereto.

     "Issuer" means IBJW in its capacity as issuer of the Letters of Credit.  At
the request of IBJW,  another  Lender or an  Affiliate  of IBJW may issue one or
more Letters of Credit hereunder.

     "Lender  Assignment  Agreement"  means a  Lender  Assignment  Agreement  in
substantially the form of Exhibit M hereto.

     "Lender  Default" shall mean (a) the refusal (which has not been retracted)
of a Lender to make  available  its  portion  of any Credit  Extension  or (b) a
Lender having  notified in writing the  Borrowers  and/or the Agent that it does
not intend to comply with its obligations under Section 2.1 or 2.2.

     "Lenders" is defined in the preamble and shall  include,  each person named
on Schedule II attached  hereto and  specified as such in any Lender  Assignment
Agreement.

     "Lending  Office" means,  as the context may require,  the Domestic  Office
and/or LIBOR Office.

     "Letter of Credit" is defined in Section 2.1.

     "Letter of Credit  Outstandings" means, on any date, an amount equal to the
sum of

          (a) the then aggregate amount which is undrawn and available under all
     issued and outstanding Letters of Credit;

          plus

          (b)  the  then  aggregate   amount  of  all  unpaid  and   outstanding
     Reimbursement Obligations.

     "Letter of Credit Sublimit" is defined in the third recital.

     "LIBO Rate" is defined in Section 3.2.1.

     "LIBO Rate Loan"  means a Loan  bearing  interest,  at all times  during an
Interest Period applicable to such Loan, at a fixed rate of interest  determined
by reference to the LIBO Rate (Reserve Adjusted).

     "LIBO Rate (Reserve Adjusted)" is defined in Section 3.2.1.

                                      -22-
<PAGE>

     "LIBOR  Office"  means,  relative to any Lender,  the office of such Lender
designated as such on Schedule III hereto or  designated in a Lender  Assignment
Agreement,  or such other office of a Lender as designated  from time to time by
notice from such Lender to the Borrowers  and the Agent,  whether or not outside
the United States,  which shall be making or maintaining LIBO Rate Loans of such
Lender hereunder.

     "LIBOR Reserve Percentage" is defined in Section 3.2.1.

     "Lien"  means  any  security  interest,  mortgage,  pledge,  hypothecation,
assignment,  deposit  arrangement,  encumbrance,  lien (statutory or otherwise),
charge  against  or  interest  in  property  to  secure  payment  of a  debt  or
performance  of an obligation or other priority or  preferential  arrangement of
any kind or nature whatsoever.

     "Loan" means, as the context may require, a Revolving Loan, CapEx Loan or a
Term Loan.

     "Loan Account" is defined in Section 3.4.6.

     "Loan Document" means this Agreement, the Notes, Letters of Credit, the Fee
Letter, the Security  Agreement,  the Pledge Agreement,  the Corporate Guaranty,
the Cash  Collateral  Agreement,  each Real Estate  Mortgage (from and after the
delivery  thereof),  any Rate  Protection  Agreement with a Lender,  each Lender
Assignment Agreement, the Documentation  Questionnaire and each other instrument
or  document  executed  and  delivered  pursuant to or in  connection  with this
Agreement and the other Loan Documents.

     "Lock-Box Accounts" is defined in clause (a) of Section 3.4.1.

     "Lock-Box  Agreement" means each Lock-Box  Agreement,  in substantially the
form of Exhibit I-1 attached hereto,  executed by each Lock-Box Bank in favor of
the Agent.

     "Lock-Box Banks" is defined in clause (a) of Section 3.4.

     "Material  Adverse Effect" shall mean a material  adverse effect on (i) the
business, assets, operations,  properties, condition (financial or otherwise) or
prospects of the Borrowers and their  Subsidiaries,  taken as a whole,  (ii) the
ability of any Borrower or any other  Obligor to perform or pay its  Obligations
in  accordance  with the terms hereof or of any other Loan  Document,  (iii) the
Agent's  security  interest on the  Collateral  or the priority of such security
interest,  (iv) the  value of the  Collateral  or the  amount  the Agent and the
Lenders  would be likely to receive  (after  giving  consideration  to delays in
payment and costs of  enforcement)  in the  liquidation of the Collateral or (v)
the validity or  enforceability  of any Loan Document or the rights and remedies
available to the Agent or the Lenders under any Loan Document.

     "Material Agreements" is defined in Section 5.1.23.

     "Material  Environmental  Amount" means an amount  payable by the Borrowers
and their  Subsidiaries  in excess of $100,000  for remedial  costs,  compliance
costs (other than in the

                                      -23-
<PAGE>

ordinary course of business),  compensatory  damages,  punitive damages,  fines,
penalties or any combination thereof, in each case with respect to Environmental
Laws.

     "Multiemployer  Plan" means a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.

     "Net  Amount of  Eligible  Accounts"  means the  gross  amount of  Eligible
Accounts  less sales,  excise or similar  taxes,  and less  returns,  discounts,
claims, credits and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed in respect of such Eligible Accounts.

     "Net Amount of Eligible  Inventory"  means the value of Eligible  Inventory
computed  at the lower of cost  (computed  on a "first in,  first out" basis) or
market, less returns, discounts, claims, credits and allowances of any nature at
any time issued, owing, granted, outstanding, available or claimed in respect of
such Eligible Inventory.

     "Net Amount of Eligible Raw  Materials"  means the gross amount of Eligible
Raw Materials,  less returns,  discounts,  claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding,  available or claimed in
respect of such Eligible Raw Materials.

     "Net Amount of Eligible Processed Cores" means the gross amount of Eligible
Processed Cores, less returns, discounts,  claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding,  available or claimed in
respect of such Eligible Processed Cores.

     "Net  Amount of  Eligible  Unprocessed  Cores"  means  the gross  amount of
Eligible  Unprocessed  Cores,  less  returns,  discounts,  claims,  credits  and
allowances  of any  nature  at any time  issued,  owing,  granted,  outstanding,
available or claimed in respect of such Eligible Unprocessed Cores.

     "Net Debt Proceeds"  means, in the case of the issuance,  placement or sale
of any  Indebtedness  of the type  referred  to in clause (a) of the  definition
thereof (excluding  Indebtedness permitted to be outstanding pursuant to Section
7.2.2 on the date hereof), the sum of

          (a) the  gross  cash  proceeds  received  by the  Borrowers  and their
     Subsidiaries   from  such   issuance,   placement   or  sale  of  permitted
     Indebtedness  (including  any cash  payments  received  by way of  deferred
     payment of principal pursuant to a permitted promissory note or installment
     receivable or otherwise, but only as and when received);

minus

          (b) in  connection  with  the  issuance,  placement  or  sale  of such
     permitted Indebtedness,  all reasonable and customary fees and expenses and
     underwriters'  discounts and commissions actually paid by the Borrowers and
     their Subsidiaries to Persons other than any of the Borrowers, any of their
     Subsidiaries or any of their Affiliates.

          "Net Disposition Proceeds" means the sum of

                                      -24-
<PAGE>

          (a) the  gross  cash  proceeds  received  by the  Borrowers  and their
     Subsidiaries (i) from any Permitted  Disposition or (ii) as a result of the
     taking  of  any  of  their  assets  under  the  power  of  eminent  domain,
     condemnation or similar proceeding, including any cash payments received by
     way of a deferred  payment of  principal  pursuant to a  permitted  note or
     installment receivable or otherwise, but only when and as received;

minus

          (b) in the case of clause (i) only,  (i) all  reasonable and customary
     fees and expenses  with respect to legal,  investment  banking,  brokerage,
     accounting and other  professional  fees actually incurred by the Borrowers
     and their Subsidiaries in connection with such Permitted  Disposition which
     have not been paid to any of the Borrowers,  any of their  Subsidiaries  or
     any of their  Affiliates  and (ii) all taxes  actually  paid or  reasonably
     estimated by the Borrowers (determined in good faith by the chief financial
     officer  of  USAM)  to be  payable  in  cash  pursuant  to  such  Permitted
     Disposition  in the  same  year  or  the  next  following  year  after  the
     occurrence of such Permitted Disposition; provided, however, that if, after
     the payment of all taxes with respect to such  Permitted  Disposition,  the
     amount of estimated  taxes, if any,  pursuant to clause (ii) above exceeded
     the amount actually paid in cash in respect of such Permitted  Disposition,
     the aggregate amount of such excess shall be immediately payable,  pursuant
     to clause (d) of Section 3.1.2, as Net Disposition Proceeds.

     "Net Income" means,  for any period,  the sum of all amounts  (exclusive of
all  amounts  in  respect  of any  extraordinary  gains  or  losses)  which,  in
accordance  with  GAAP,  would be  included  as net  income on the  consolidated
statements  of income of the  Borrowers  and their  Subsidiaries  at such  time;
provided  that there shall be excluded  from Net Income the income of any Person
in  which  any  other  Person   (other  than  the  Borrowers  or  any  of  their
Subsidiaries)  has a joint  interest,  except  to the  extent  of the  amount of
dividends or other  distributions  (a) that the Borrowers or their  Subsidiaries
have  the  power  to  cause  such  Person  to make  to the  Borrowers  or  their
Subsidiaries  during such period and such dividend or other  distribution is not
prohibited by the terms of any  agreement  binding upon such Person or otherwise
or (b) that,  to the extent not  already  included  in Net Income for any period
pursuant  to clause (a) above,  were  actually  paid to the  Borrowers  or their
Subsidiaries by such Person during such period.

     "Net Insurance Proceeds" means the insurance proceeds received by the Agent
pursuant  to  clause  (d) of  Section  7.1.4  and  constituting  "Net  Insurance
Proceeds" as therein provided.

     "Net Securities Proceeds" means, in the case of the issuance,  placement or
sale of equity  securities or any obligations  convertible  into or exchangeable
for, or giving any Person a right,  option or warrant to acquire such securities
or such  convertible or exchangeable  obligations (in each case whether pursuant
to a public or private  offering),  from and after the Effective Date (excluding
the proceeds of the  foregoing  that are  applied,  in  accordance  with Section
3.1.2,  contemporaneously with the issuance, placement or sale thereof, to repay
the Permitted Borrower Subordinated Debt), the sum of

                                      -25-
<PAGE>

          (a) the  gross  cash  proceeds  received  by the  Borrowers  and their
     Subsidiaries  from such  issuance,  placement or sale of equity  securities
     (including  any  cash  payments  received  by way of  deferred  payment  of
     principal pursuant to a permitted promissory note or installment receivable
     or otherwise, but only as and when received);

minus

          (b) in connection with such issuance, placement or sale of such equity
     securities,   all   reasonable   and   customary   fees  and  expenses  and
     underwriters'  discounts and commissions actually paid by the Borrowers and
     their Subsidiaries to Persons other than any of the Borrowers, any of their
     Subsidiaries or any of their Affiliates.

     "Net  Worth"  means,  at  any  time,  the  sum  of  all  amounts   (without
duplication)   which,  in  accordance   with  GAAP,   would  be  included  under
shareholders' equity on a consolidated balance sheet of USAM at such time.

     "Non-Defaulting  Lender"  shall mean each  Lender  other than a  Defaulting
Lender.

     "Non-U.S. Lender" is defined in Section 4.6.

     "Note" means,  as the context may require,  either a Revolving Note, a Term
Note or a CapEx Note.

     "Obligations"  means  all  obligations  (monetary  or  otherwise)  of  each
Borrower  and each  other  Obligor  arising  under or in  connection  with  this
Agreement, the Notes and each other Loan Document, including principal, interest
(including post-default interest and interest accruing after the commencement of
any bankruptcy,  insolvency or similar proceeding  referred to in Section 8.1.9,
whether or not a claim for post-filing or  post-petition  interest is allowed in
any such proceeding),  reimbursement obligations,  fees, indemnities,  costs and
expenses  (including the fees and disbursements of counsel to the Agent and each
Lender required to be paid by the Borrowers) that are owing under this Agreement
and the other Loan  Documents,  in each case  whether now  existing or hereafter
incurred, direct or indirect, absolute or contingent, and due or to become due.

     "Obligor"  means a Borrower or any other Person (other than the Agent,  any
Issuer or any Lender) obligated under any Loan Document.

     "Organic  Document"  means,  relative  to  any  Obligor,  its  articles  of
incorporation,  its by-laws and all  shareholder  agreements,  voting trusts and
similar arrangements applicable to any of its authorized shares of capital stock
as amended,  supplemented,  restated or otherwise  modified from time to time in
accordance with Section 7.2.11.

     "Participant" is defined in Section 10.11.2.

     "PBGC"  means the  Pension  Benefit  Guaranty  Corporation  and any  entity
succeeding to any or all of its functions under ERISA.

                                      -26-
<PAGE>

     "Pension  Plan" means any  employee  benefit plan which is covered by ERISA
and in respect of which any of the Borrowers or a Commonly  Controlled Entity is
(or, if such plan were  terminated  at such time,  would under  Section  4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

     "Percentage"  means,  relative  to any  Lender,  the  percentage  set forth
opposite  the name of such  Lender on  Schedule II hereto or set forth in a duly
executed Lender  Assignment  Agreement,  as such percentage may be adjusted from
time to time pursuant to each Lender Assignment Agreement executed and delivered
by such Lender and its Assignee Lender pursuant to Section 10.11.

     "Permitted  Borrower  Subordinated Debt" means the principal,  interest and
other amounts owing under the Subordinated Debt Documents.

     "Permitted Capital  Expenditures"  means Capital  Expenditures  incurred on
account the purchase of machinery  and  equipment  useful in the business of the
Borrowers as provided in Section 7.2.1.

     "Permitted   Disposition"   means  any  sale,  lease,   transfer  or  other
disposition  of  assets  (including   without   limitation   capital  stock  and
receivables) of any of the Borrowers or any of their  Subsidiaries not otherwise
permitted  by  clause  (a) or (c) of  Section  7.2.10,  provided  that  (a)  the
Borrowers shall receive only cash consideration therefor, (b) the aggregate fair
market value of all such  dispositions  shall not exceed  $150,000 in any Fiscal
Year,  (c) the Borrowers and their  Subsidiaries  shall have received fair value
therefor and (d) both  immediately  before and after giving  effect to each such
disposition  no  Default  or  Event  of  Default  shall  have  occurred  and  be
continuing.

     "Permitted Encumbrances" means Liens permitted under Section 7.2.3.

     "Person"  means  any  natural  person,  corporation,   partnership,   firm,
association, trust, government, governmental agency or any other entity, whether
acting in an individual, fiduciary or other capacity.

     "Plan" means any Pension Plan or Welfare Plan.

     "Pledge Agreement" means the Pledge Agreement, substantially in the form of
Exhibit  G  hereto,  as the  same  may be  amended,  supplemented,  restated  or
otherwise modified from time to time.

     "Processed  Cores"  means  previously  used  brake  shoes  which  have been
reconditioned  through a process  of  removing  remaining  previously  installed
friction  material,  cleaning and repainting so as to be  immediately  ready and
available for installation of new friction material.

     "QAC" is defined in the preamble.

                                      -27-
<PAGE>

     "Rate Protection Agreement" means any interest rate cap agreement, interest
rate  collar  agreement  or  similar  arrangement  designed  to protect a Person
against fluctuations in interest rates.

     "Raw  Materials"  means  friction  materials,  steel parts,  fasteners  and
associated  hardware and materials used in the manufacture  and  distribution of
disk pads and drum brakes.

     "Real  Estate  Mortgages"  is defined in clause  (c)(ii) of Section  5.2.2,
together  with any and all  mortgages,  deeds of trust  and  other  real  estate
security  instruments  securing  the Credit  Extensions,  as amended,  restated,
amended and restated or otherwise modified from time to time.

     "Real Estate  Mortgage  Notes"  means the demand  bearer  promissory  notes
secured by the Real Estate Mortgages.

     "Realty" means all of the Borrowers' and their  Subsidiaries'  right, title
and interest in any land, buildings, improvements,  fixtures, other interests in
real estate and any leasehold interest in any of the foregoing.

     "Realty   Permits"  means,   collectively,   all  building,   construction,
environmental  and other permits,  licenses,  franchises,  approvals,  consents,
authorizations and other approvals required in connection with the construction,
ownership, use, occupation or operation of the Realty.

     "Receivables"  means with  respect to any Person all of such  Person's  now
owned and  hereafter  arising or  acquired  Accounts  (whether  or not earned by
performance), including Accounts owned to such Person by any of its Subsidiaries
or Affiliates,  together with all interest, late charges, penalties,  collection
fees,  and other sums which  shall be due and  payable  in  connection  with any
Account;  proceeds of any letters of credit  naming such Person as  beneficiary;
contract rights,  chattel paper,  instruments,  documents,  investment property,
general intangibles  (including without limitation chooses in action,  causes of
action, tax refunds,  tax refund claims and other amounts payable to such Person
from or with  respect  to any Plan) and all forms of  obligations  owing to such
Person  (including  without  limitation,  in  respect  of loans,  advances,  and
extensions  of  credit  by such  Person  to its  Subsidiaries  and  Affiliates);
guarantees and other security for any of the foregoing;  goods represented by or
the  sale,  lease  of  delivery  of  which  gave  rise to any of the  foregoing;
merchandise  returned to or repossessed by such Person and rights of stoppage in
transit,  replevin,  and reclamation;  and other rights or remedies of an unpaid
vendor, lienor, or secured party.

     "Refunding Loans" is defined in clause (b)(ii) of Section 2.4.

     "Reimbursement Obligation" is defined in Section 2.7.4.

     "Release"  means a  "release"  or  "threatened  release"  as such terms are
defined in CERCLA.

     "Reportable Event" means (a) any of the events set forth in Section 4043(b)
of ERISA,  other than those  events as to which the thirty day notice  period is
waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC Reg ss. 2615, (b)
withdrawal  from a Plan  described in Section

                                      -28-
<PAGE>

4063 of ERISA,  (c) a cessation of  operations  described in Section  4062(e) of
ERISA,  (d) an amendment to a Plan  necessitating  the posting of security under
Section  401(a)(29) of the Code, or (e) a failure to make a payment  required by
Section 412(m) of the Code of Section 302(e) of ERISA when due.

     "Required  Lenders" means, at the time any  determination  thereof is to be
made,  Non-Defaulting Lenders holding more than 51% of the then aggregate unused
Commitments  and  unpaid  principal  amount of the  Notes  and  Letter of Credit
Outstandings  (excluding  the  aggregate  unpaid  principal  amount of Notes and
Letter of Credit outstandings held by Defaulting Lenders).

     "Resource  Conservation  and Recovery Act" means  collectively the Resource
Conservation  and  Recovery  Act of  1976  and the  Hazardous  and  Solid  Waste
Amendments of 1984, as amended, 42 U.S.C. ss.ss.6901, et seq., as in effect from
time to time.

     "Revolving Loans" is defined in Section 2.1.

     "Revolving Loan Commitment" is defined in Section 2.1.

     "Revolving Loan  Commitment  Amount" means  $15,000,000,  as such amount is
reduced from time to time pursuant to Section 2.3.

     "Revolving Loan Commitment Termination Date" means the earliest of

          (a) July 30, 2002;

          (b) the  date  on  which  the  Revolving  Loan  Commitment  Amount  is
     terminated in full or reduced to zero pursuant to Section 2.3; and

          (c) the date on which any Commitment Termination Event occurs.

Upon the occurrence of any event described above, the Revolving Loan Commitments
shall terminate automatically and without any further action.

     "Revolving  Note" means a promissory  note of each Borrower  payable to any
Lender, in the form of Exhibit A hereto (as such promissory note may be amended,
endorsed or otherwise  modified  from time to time),  evidencing  the  aggregate
Indebtedness  of  such  Borrower  to  such  Lender  resulting  from  outstanding
Revolving Loans, and also means all other promissory notes accepted from time to
time in substitution therefor or renewal thereof.

     "Rolling  Period" means,  as of any date of  calculation,  the  immediately
preceding  twelve  Fiscal  Months,  provided,  however,  that prior to the first
twelve full Fiscal Months  following the date of the initial  Credit  Extension,
the Rolling Period as of the date of  calculation  of the Fixed Charge  Coverage
Ratio shall be based solely upon the actual  number of full Fiscal  Months since
the date of the initial Credit Extension (with such results not to be annualized
but to be cumulative for such period).

                                      -29-
<PAGE>

     "Security Agreement" means the Security Agreement substantially in the form
of Exhibit H hereto, as amended,  supplemented,  restated or otherwise  modified
from time to time.

     "Settlement Date" means (a) the date of the initial Credit  Extension,  (b)
the Wednesday of each calendar  week, or, if such day is not a Business Day, the
next  succeeding  Business  Day and (c) the day any  Default or Event of Default
shall have occurred and be continuing.

     "Solvent" means, when used with respect to any Person, that, as of any date
of  determination,  (a) the amount of the "present fair  saleable  value" of the
assets  of  such  Person  will,  as of  such  date,  exceed  the  amount  of all
"liabilities of such Person,  contingent or otherwise", as of such date, as such
value is  established  and such  liabilities  are evaluated in  accordance  with
Section  101(32) of the  federal  Bankruptcy  Code and the state laws  governing
determinations  of the  insolvency  of debtors of New York and each state  where
such Person is doing  business or has its principal  place of business,  (b) the
present fair saleable value of the tangible and intangible assets of such Person
will,  as of such date,  be greater  than the amount the will be required to pay
the  liability  of such Person on its debts as such debts  become  absolute  and
matured,  (c) such Person will not have, as of such date, an unreasonably  small
amount of capital with which to conduct its  business,  and (d) such Person will
be able to pay its debts as they mature.  For purposes of this  definition,  (i)
"debt"  means  liability  on a "claim" and (ii)  "claim"  means any (x) right to
payment,  whether  or not  such a right  is  reduced  to  judgment,  liquidated,
unliquidated,  fixed,  contingent,  matured,  unmatured,  disputed,  undisputed,
legal,  equitable,  secured or unsecured or (y) right to an equitable remedy for
breach of performance  if such breach gives rise to a right to payment,  whether
or not such  right  to an  equitable  remedy  is  reduced  to  judgment,  fixed,
contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

     "Single  Employer Plan" means any Pension Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.

     "Stated  Amount" of each Letter of Credit means the total amount  available
to be drawn under such Letter of Credit upon the issuance thereof.

     "Stated Expiry Date" is defined in Section 2.7.1.

     "Stated Maturity Date" means July 30, 2002.

     "Subordinated Debt Documents" means, collectively, the Amended and Restated
Promissory  Note,  dated August 29,  1997,  of QAC in favor of John W. Kohut and
Linda S. Ram and in the aggregate  original  principal amount of  $1,802,158.27,
the Guaranty, dated August 29, 1997, of USAM in favor of John W. Kohut and Linda
S. Ram, the Amended and Restated  Promissory Note, dated August 29, 1997, of QAC
in favor of Martin  Chevalier  and  Malvina B.  Chevalier  and in the  aggregate
original principal amount of $2,697,841.73, the Guaranty, dated August 29, 1997,
of USAM in favor of Martin Chevalier and Malvina B. Chevalier,  the Stock Pledge
and  Security  Agreement,  August 29, 1997 among USAM,  each  Subordinated  Debt
Holder and QAC, as all of the  foregoing is amended by the First  Amendment  and
Modification Agreement,  dated as of the date hereof, among the Persons that are
parties to the foregoing agreements.

                                      -30-
<PAGE>

     "Subordinated   Debt  Holder"  means  any  holder  of  Permitted   Borrower
Subordinated Debt.

     "Subordination Provisions" is defined in Section and 8.1.13.

     "Subsidiary"  means,  with respect to any Person,  (a) any  corporation  of
which more than 50% of the  outstanding  capital  stock having  ordinary  voting
power  to  elect a  majority  of the  board  of  directors  of such  corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation  shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly  owned by such Person,  or by
one or more Subsidiaries of such Person, or (b) any partnership,  joint venture,
or other entity as to which such  Person,  or one or more  Subsidiaries  of such
Person owns more than a 50% ownership,  equity or similar  interest or has power
to direct or cause the  direction of management  and  policies,  or the power to
elect the  managing  partner (or the  equivalent),  of such  partnership,  joint
venture or other entity, as the case may be.

     "Taxes" is defined in Section 4.6.

     "Term Loan Sublimit" is defined in the third recital.

     "Term Loans" is defined in Section 2.1.

     "Term Note" means a promissory note of each Borrower payable to any Lender,
substantially  in the form of Exhibit B hereto (as such  promissory  note may be
amended,  endorsed or  otherwise  modified  from time to time),  evidencing  the
aggregate   Indebtedness  of  such  Borrower  to  such  Lender   resulting  from
outstanding  Term Loans, and also means all other promissory notes accepted from
time to time in substitution therefor or renewal thereof.

     "Title Insurer" is defined in clause (b)(iii) of Section 5.2.2.

     "Type" means,  relative to any Loan,  the portion  thereof,  if any,  being
maintained as a Base Rate Loan or a LIBO Rate Loan.

     "U.C.C." means the Uniform  Commercial  Code as from time to time in effect
in the State of New York.

     "United  States" or "U.S."  means the United  States of America,  its fifty
States and the District of Columbia.

     "Unprocessed  Cores"  means  previously  used brake  shoes  with  remaining
friction  material  attached and which are usable in Borrower's  remanufacturing
process.

     "USAF" is defined in the preamble.

     "USAM" is defined in the preamble.

                                      -31-
<PAGE>

     "Welfare  Plan" means a "welfare  plan" (as such term is defined in Section
3(1) of ERISA),  maintained  by any Borrower or for which any Borrower or any of
its Subsidiaries has any contractual liability.

     "Wholly-Owned  Subsidiary"  means any  Subsidiary  of a Person of which the
securities  (except  for  directors'   qualifying  shares)  or  other  ownership
interests  representing  100% of the equity is, at the time any determination is
being made, owned, controlled or held by such Person or one or more Wholly-Owned
Subsidiaries of such Person.

     SECTION 1.2 Use of Defined Terms.  Unless otherwise  defined or the context
otherwise  requires,  terms for which  meanings are  provided in this  Agreement
shall have such  meanings  when used in the  Disclosure  Schedule and each other
Loan Document.

     SECTION 1.3  Cross-References.  Unless otherwise  specified,  references in
this  Agreement  and in each other Loan  Document  to any Article or Section are
references  to such  Article  or Section  of this  Agreement  or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article,  Section or definition  to any clause are  references to such clause of
such Article, Section or definition.

     SECTION 1.4  Accounting  and  Financial  Determinations.  Unless  otherwise
specified,  all accounting terms used herein or in any other Loan Document shall
be interpreted,  all accounting  determinations  and  computations  hereunder or
thereunder  (including  under  Section  7.2.4) shall be made,  and all financial
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, those generally accepted accounting principles ("GAAP") applied
in the  preparation  of the  financial  statements  referred to in clause (a) of
Section  5.1.8.  In the event that any  "Accounting  Change" (as defined  below)
shall occur and such change  results in a change in the method of calculation of
financial  covenants,  standards or terms in this Agreement,  USAM and the Agent
shall  enter  into  negotiations  in  order  to amend  such  provisions  of this
Agreement so as to equitably  reflect such  Accounting  Changes with the desired
result that the criteria for evaluating the Borrowers' financial condition shall
be the same after such Accounting  Changes as if such Accounting Changes had not
been made.  Until such time as such an  amendment  shall have been  executed and
delivered by the Borrowers,  the Agent and the Required  Lenders,  all financial
covenants, standards and terms in this Agreement shall continue to be calculated
or construed as if such Accounting Changes had not occurred. "Accounting Change"
refers to changes in accounting  principles  required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards
Board  of  the  American  Institute  of  Certified  Public  Accountants  or,  if
applicable, the Securities and Exchange Commission.

                                   ARTICLE II

                        COMMITMENTS, BORROWING PROCEDURES
                                    AND NOTES

     SECTION  2.1  Revolving  Loan  Commitment.  On the terms and subject to the
conditions of this Agreement (including Article V), each Lender severally agrees
to make from

                                      -32-
<PAGE>

time  to  time  on any  Business  Day  occurring  prior  to the  Revolving  Loan
Commitment  Termination  Date,  revolving  loans  (relative to each Lender,  its
"Revolving  Loan"),  term loans  (relative to each Lender,  its "Term Loan") and
capital  expenditure loans (relative to each Lender, its "CapEx Loans"), in each
case in an amount equal to such Lender's  Percentage of the aggregate  amount of
the Borrowing of the Loans requested by the Borrower  Representative  to be made
on such day; provided,  that (a) not more than $2,108,000 in aggregate principal
amount of the Term Loans may be made on the date of the initial Credit Extension
and no Term  Loans may be made  after the date that is 90 days after the date of
the initial  Credit  Extension and (b) no CapEx Loans may be made after the date
that is 18 months after the date of initial Credit Extension.  In addition, each
Issuer,  for and on behalf of the  Lenders,  shall issue prior to the  Revolving
Loan Commitment Termination Date standby letters of credit ("Letters of Credit")
with a Stated  Expiry Date not later than one year from such  requested  date of
issuance,  and the Lenders shall  participate  therein as herein  provided.  The
commitment  of each  Issuer and each  Lender  described  in this  Section 2.1 is
herein referred to as its "Revolving Loan Commitment".  On the terms and subject
to the conditions hereof, the Borrower  Representative may (i) from time to time
borrow,  prepay and reborrow the Revolving Loans,  (ii) borrow from time to time
the Term Loans and CapEx Loans and (iii)  request the  issuance or  extension of
the Stated Expiry Date of any Letter of Credit.  No amounts paid or prepaid with
respect to Term Loans and CapEx Loans may be reborrowed.

     SECTION 2.2 Lenders Not Permitted or Required To Make Credit Extensions. No
Lender  shall be  permitted  or required to make any Loan and no Issuer shall be
obligated  to issue or extend  any  Letter  of  Credit,  under any  circumstance
described below in this Section 2.2.

     SECTION 2.2.1  Revolving  Loans.  No Borrowing of Revolving  Loans shall be
made if, after giving effect thereto,

          (a) the aggregate  outstanding  principal  amount of all the Revolving
     Loans,  together  with  the  aggregate  amount  of  all  Letter  of  Credit
     Outstandings  and the outstanding  principal  amount of all the CapEx Loans
     and Term Loans,  (i) of all the Lenders  would exceed the lesser of (x) the
     Revolving Loan  Commitment  Amount or (y) the then existing  Borrowing Base
     Amount  minus the  Excess  Availability  Requirement  or (ii) of any Lender
     would exceed the lesser of (x) such  Lender's  Percentage  of the Revolving
     Loan Commitment Amount or (y) such Lender's Percentage of the then existing
     Borrowing Base Amount minus the Excess Availability Requirement;

          (b) the aggregate  outstanding  principal  amount of all the Revolving
     Loans in respect of those items referred to in clauses (a)(ii) and (iii) of
     the definition of "Borrowing Base Amount" would exceed $5,000,000; or

          (c) the aggregate  outstanding  principal  amount of all the Revolving
     Loans in respect of Eligible Processed Cores and Eligible Unprocessed Cores
     would exceed $1,000,000.

     SECTION  2.2.2 Term  Loans.  No  Borrowing  of Term Loans shall be made if,
after giving effect thereto, the aggregate  outstanding  principal amount of all
the Term Loans (a) of all

                                      -33-
<PAGE>

the Lenders  would exceed the Term Loan Sublimit (or, on the date of the initial
Credit  Extension,  $2,108,000) or (b) of such Lender would exceed such Lender's
Percentage  of the Term Loan  Sublimit  (or, on the date of the  initial  Credit
Extension, $2,108,000).

     SECTION  2.2.3 CapEx  Loans.  No Borrowing of CapEx Loans shall be made if,
after giving effect thereto, the aggregate  outstanding  principal amount of all
the CapEx Loans (a) of all the Lenders  would exceed the lesser of (i) the CapEx
Loan Sublimit or (ii) 80% of the Hard Costs of any new equipment  purchased with
such CapEx  Loans as  provided  in clause (b) of  Section  5.2.2;  or (b) of any
Lender  would  exceed the lesser of (i) such  Lender's  Percentage  of the CapEx
Sublimit or (ii) such  Lender's  Percentage  of 80% of the Hard Costs of any new
equipment  purchased  with such CapEx  Loans as  provided  in clause (b) Section
5.2.2.

     SECTION  2.2.4  Letters of Credit.  No issuance or  extension of the Stated
Expiry  Date of any  Letter  of Credit  shall be made if,  after  giving  effect
thereto,  the aggregate amount of all Letter of Credit Outstandings would exceed
the lesser of (a) the  Revolving  Loan  Commitment  Amount and (b) the Letter of
Credit Sublimit.

     SECTION 2.3 Reduction of the Revolving Loan Commitment Amount. The Borrower
Representative  may, from time to time on any Business Day after the date of the
initial Credit Extension,  voluntarily reduce the unused amount of the Revolving
Loan Commitment Amount;  provided,  however,  that (a) all such reductions shall
require at least one Business  Days' prior notice to the Agent and be permanent,
(b) any partial  reduction of the unused amount of the Revolving Loan Commitment
Amount shall be in a minimum  amount of $500,000 and in an integral  multiple of
$250,000,  (c) the Loans  shall  have been  prepaid to the  extent  required  by
Section 3.1.2. and (d) the fee, if any,  required to be paid pursuant to Section
3.3.3. has been paid.

     SECTION 2.4 Borrowing Procedures.

          (a) Borrowing Requests. By telephonic notice to the Agent on or before
     11:00 a.m. (New York City time),  on a Business Day  (promptly  followed by
     facsimile  transmission  to the Agent,  not later than 1:00 p.m.  (New York
     City time) on such Business Day, of a confirming Notice of Borrowing),  the
     Borrower Representative may from time to time irrevocably request that Base
     Rate  Loans be made on such  Business  Day or another  Business  Day within
     three  Business  Days of such Business Day, or that LIBO Rate Loans be made
     three Business Days thereafter;  provided,  that no Loan shall be made as a
     LIBO Rate Loan after the day that is one month prior to the Revolving  Loan
     Commitment  Termination Date. All (i) Base Rate Loans may be in any minimum
     or multiple  amount and (ii) LIBO Rate Loans shall be in the minimum amount
     of  $500,000  and  an  integral  multiple  of  $100,000.  If  the  Borrower
     Representative  requests  any LIBO  Rate  Loans on the date of the  initial
     Credit Extension it shall have executed an indemnity  agreement in form and
     substance  satisfactory  to the Agent.  The  proceeds of all Loans shall be
     used solely for the purposes described in Section 4.10.

     (b) Funding by Lenders.

          (i)  Initial  Credit  Extension.  On the  date of the  initial  Credit
     Extension  each Lender  shall  deposit  with the Agent same day funds in an
     amount equal to such

                                      -34-
<PAGE>

     Lender's  Percentage  of the requested  Borrowing.  To the extent funds are
     received from the Lenders, the Agent shall make such funds available to the
     relevant   Borrower  by  wire   transfer  to  the   accounts  the  Borrower
     Representative  shall have specified in its Borrowing Request.  No Lender's
     obligation to make any Loan shall be affected by any other Lender's failure
     to make any Loan.

          (ii) Subsequent Credit  Extensions.  Each Borrowing of any Loans after
     the date of the initial Credit Extension shall be advanced by IBJW (for and
     on behalf of the Lenders) to the relevant  Borrower by wire transfer to the
     account the Borrower  Representative  shall have specified in its Borrowing
     Request.  On or before  1:00 p.m.  (New York City time) on each  Settlement
     Date, each Lender (other than IBJW) irrevocably  agrees that it will make a
     Revolving Loan, CapEx Loan and/or Term Loan (each a "Refunding Loan") in an
     amount equal to such Lender's Percentage of the then aggregate  outstanding
     principal amount of all the Revolving Loans, CapEx Loans and/or Term Loans,
     respectively. The proceeds of the Refunding Loans shall be applied to repay
     the Revolving  Loans,  CapEx Loans and/or Term Loans then  outstanding  and
     previously  funded by IBJW,  as the case may be. Once made,  the  Refunding
     Loans  shall be deemed to be, for all  purposes of this  Agreement  and the
     other Loan Documents,  Revolving  Loans,  CapEx Loans or Term Loans, as the
     case may be, of the Lender  making each such Loan.  Until a Lender  makes a
     Refunding  Loan that repays in full the Revolving  Loan,  CapEx Loan and/or
     Term  Loan  made by IBJW on its  behalf,  IBJW  shall  be  entitled  to all
     principal  and  interest  payments  with respect to such  Revolving  Loans,
     Equity  Loan and/or Term Loan.  If any Lender  fails to make any  Refunding
     Loan on any  Settlement  Date,  such Lender agrees to pay IBJW such amount,
     together with  interest  thereon  accruing at the Federal  Funds  Effective
     Rate, for the first three Business Days following such Settlement Date, and
     thereafter  at the  applicable  interest  rate  under  this  Agreement.  In
     addition,  if any Lender  fails to make its  Refunding  Loans  within three
     Business Days of any Settlement Date, the relevant Borrower agrees to repay
     such amount on demand. Each Lender's obligation to make the Refunding Loans
     referred to in this clause (ii) shall be  absolute  and  unconditional  and
     shall not be affected by any circumstance,  including,  without limitation,
     (A) any  set-off,  counterclaim,  recoupment,  defense or other right which
     such Lender may have against  IBJW,  the  Borrowers or any other Person for
     any reason whatsoever;  (B) the occurrence or continuance of any Default or
     Event of  Default;  (C) the  acceleration  or  maturity of any Loans or the
     termination  of the  Revolving  Loan  Commitment;  (D) any  breach  of this
     Agreement or any other Loan  Document by the  Borrowers,  any Lender or the
     Agent;  or (E) any  other  circumstance,  happening  or  event  whatsoever,
     whether or not similar to any of the foregoing.

     SECTION  2.5  Continuation  and  Conversion  Elections.   By  delivering  a
Continuation/  Conversion  Notice to the Agent on or before 10:00 a.m. (New York
City time) on a Business Day, the Borrower  Representative may from time to time
irrevocably elect, on one Business Day's notice, in the case of Base Rate Loans,
or three Business  Days' notice,  in the case of LIBO Rate Loans,  notice,  that
all, or any portion in an aggregate  minimum  amount of $500,000 and an integral
multiple of $100,000  be, in the case of Base Rate  Loans,  converted  into LIBO
Rate Loans or be, in the case of LIBO Rate Loans, converted into Base Rate Loans
or   continued   as  LIBO  Rate  Loans  (in  the   absence  of   delivery  of  a
Continuation/Conversion Notice

                                      -35-
<PAGE>

with  respect to any LIBO Rate Loan at least three  Business  Days (but not more
than five Business Days) before the last day of the then current Interest Period
with respect thereto, such LIBO Rate Loan shall, on such last day, automatically
convert to a Base Rate Loan);  provided,  however, that (a) each such conversion
or continuation shall be prorated among the applicable  outstanding Loans of all
Lenders, (b) no portion of the outstanding  principal amount of any Loans may be
continued  as, or be  converted  into,  LIBO Rate  Loans  when any  Default  has
occurred and is  continuing,  unless the  Required  Lenders  otherwise  agree in
writing, (c) no Loans may be continued as, or be converted into, LIBO Rate Loans
after the day that is one month prior to the Stated Maturity Date and (d) if the
aggregate  amount of LIBO Rate Loans in respect of any  Borrowing  is reduced by
payment,  prepayment or conversion to be less than $500,000 such LIBO Rate Loans
shall automatically convert to Base Rate Loans.

     SECTION  2.6  Funding.  Each  Lender  may,  if it so  elects,  fulfill  its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign  branches or Affiliates  (or an  international  banking  facility
created by such  Lender)  to make or  maintain  such LIBO Rate  Loan;  provided,
however,  that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the obligation of each Borrower to repay such
LIBO Rate Loan shall  nevertheless  be to such  Lender  for the  account of such
foreign branch,  Affiliate or international banking facility. In addition,  each
Borrower hereby consents and agrees that, for purposes of any  determination  to
be made for  purposes of  Sections  4.1  through  4.5, it shall be  conclusively
assumed  that each  Lender  elected  to fund all LIBO Rate  Loans by  purchasing
Dollar deposits in its LIBOR Office's interbank eurodollar market.

     SECTION 2.7 Letters of Credit. The Borrower  Representative may request, in
accordance with the terms hereof, the issuance of a Letter of Credit for its own
account, in a form reasonably acceptable to the Agent and the applicable Issuer,
at any time and from time to time while the Revolving Loan Commitment remains in
effect.

     SECTION 2.7.1 Issuance  Procedures.  (a) By delivering to the Agent and the
relevant Issuer an Issuance Request on or before 11:00 a.m. (New York City time)
on  a  Business  Day,  the  Borrower  Representative  may,  from  time  to  time
irrevocably  request,  on not less than three nor more than five Business  Days'
notice that such Issuer issue,  or extend the Stated Expiry Date of, as the case
may be, a Letter  of Credit in such  form as may be  requested  by the  Borrower
Representative  and  approved by such  Issuer,  such Letter of Credit to be used
solely for the purposes  described in Section 4.10.  Each Letter of Credit shall
by its terms be stated to expire on a date (its "Stated  Expiry  Date") no later
than the earlier of (a) one year from the date of issuance and (b) five Business
Days prior to the  Revolving  Loan  Commitment  Termination  Date.  The relevant
Issuer will make  available  to the  beneficiary  thereof  the  original of each
Letter of Credit which it issues  hereunder.  Unless  notified in writing by the
Required  Lenders before it issues a Letter of Credit that a Default or Event of
Default exists,  the relevant Issuer may issue the requested Letter of Credit in
accordance with such Issuer's customary practices.

     (b) No Issuer shall be under any  obligation  to issue any Letter of Credit
if at the time of request of such issuance any order,  judgment or decree of any
governmental  authority  shall by its terms  purport to enjoin or restrain  such
Issuer from issuing such Letter of Credit,  or any requirement of law applicable
to  such  Issuer  or  any  directive  from  any   governmental   authority

                                      -36-
<PAGE>

with jurisdiction  over such Issuer shall prohibit,  or request that such Issuer
refrain  from,  the  issuance of letters of credit  generally  or such Letter of
Credit in  particular,  or shall  impose upon such  Issuer with  respect to such
Letter of Credit any restriction, reserve or capital requirement (for which such
Issuer is not otherwise  compensated  hereunder)  not in effect on the Effective
Date, or shall impose upon such Issuer any  unreimbursed  loss,  cost or expense
which was not  applicable  on the  Effective  Date and which such Issuer in good
faith deems  material to it. Such Issuer shall not be required to amend,  extend
or renew any Letter of Credit if at the time of the  request  therefor  it would
not be required to issue a Letter of Credit as provided in this clause (b).

     SECTION 2.7.2 Other Revolving Lenders' Participation.  Upon the issuance of
each Letter of Credit issued by any Issuer pursuant hereto,  and without further
action,  each Lender (other than the Issuer) shall be deemed to have irrevocably
and unconditionally purchased (without recourse, representation or warranty), to
the extent of its Percentage,  a participation interest in such Letter of Credit
(including  the  Contingent  Liability  and any  Reimbursement  Obligation  with
respect  thereto),  and such Lender shall, to the extent of its  Percentage,  be
responsible for  reimbursing  promptly (and in any event within one Business Day
together with interest at the Federal  Funds  Effective  Rate for each day until
reimbursement is made) such Issuer for Reimbursement  Obligations which have not
been  reimbursed by the Borrowers in accordance with Section 2.7.4 or which have
been  reimbursed  by the  Borrowers  but have been  required  to be  returned or
disgorged by such Issuer. All reimbursements made by any Lender hereunder to the
Agent shall, automatically and without the requirement of notice to or action by
any Person,  constitute  Base Rate Loans  hereunder.  Each Lender shall,  to the
extent  of its  Percentage  and so long  as it  shall  have  complied  with  its
obligations  under this  Sections  2.7.2 and  2.7.4,  be  entitled  to receive a
ratable  portion of the Letter of Credit fees payable  pursuant to Section 3.3.2
with  respect  to each  Letter of Credit and of  interest  payable  pursuant  to
Section 3.2 with respect to any Reimbursement Obligation.

     SECTION  2.7.3  Disbursements.  Each  Issuer will notify USAM and the Agent
promptly of the  presentment  for payment of any Letter of Credit issued by such
Issuer,  together with notice of the date (the "Disbursement Date") such payment
shall be made (each such payment,  a  "Disbursement").  Subject to the terms and
provisions of such Letter of Credit and this  Agreement,  such Issuer shall make
such payment to the beneficiary (or its designee) of such Letter of Credit.  Not
later  than  two  hours  after  any  Issuer  notifies  USAM  that it has  made a
Disbursement  under a Letter of Credit (or, if USAM  receives  such notice after
3:00 p.m.  (New York City time) on any Business  Day,  prior to 10:00 a.m.  (New
York City time) on the first Business Day following the Disbursement  Date), the
relevant  Borrower  will  reimburse  the Agent,  for the account of the relevant
Issuer,  for all amounts  which such Issuer has  disbursed  under such Letter of
Credit,  together with interest thereon at a rate per annum equal to the highest
rate per annum then in effect  pursuant  to Section  3.2 for the period from the
Disbursement Date through the date of such reimbursement.

     SECTION 2.7.4  Reimbursement.  The  obligation  (a relevant  "Reimbursement
Obligation")  of each  Borrower  under  Section  2.7.3 to reimburse the relevant
Issuer with respect to each Disbursement (including interest thereon), and, upon
the  failure  of the  relevant  Borrower  to  reimburse  such  Issuer (or if any
reimbursement  by the  relevant  Borrower  must be returned or  disgorged by the
Issuer  for any  reason),  each  Lender's  obligation  under  Section  2.7.2  to
reimburse

                                      -37-
<PAGE>

such Issuer, shall be absolute and unconditional under any and all circumstances
and  irrespective  of any setoff,  counterclaim  or defense to payment which the
relevant  Borrower  or such  Lender,  as the case  may be,  may have or have had
against such Issuer or any Lender,  including any defense based upon the failure
of any  Disbursement to conform to the terms of the applicable  Letter of Credit
or any  non-application  or misapplication by the beneficiary of the proceeds of
such  Letter  of  Credit;  provided,  however,  that  after  paying  in full its
Reimbursement  Obligation  hereunder,  nothing herein shall adversely affect the
right of the relevant  Borrower or such Lender,  as the case may be, to commence
any proceeding  against such Issuer for any wrongful  Disbursement  made by such
Issuer  under a Letter of Credit as a result of acts or  omissions  constituting
gross negligence or willful misconduct on the part of such Issuer.

     SECTION  2.7.5 Deemed  Disbursements.  Upon the  occurrence  and during the
continuation  of any  Default of the type  described  in Section  8.1.9 or, with
notice from the Agent,  upon the occurrence and during the  continuation  of any
other Event of Default

          (a)  an  amount  equal  to  that  portion  of  all  Letter  of  Credit
     Outstandings attributable to the then aggregate amount which is undrawn and
     available  under all  Letters  of Credit  issued  and  outstanding  for the
     account  of the  Borrowers  shall,  without  demand  upon or  notice to the
     Borrowers,  be deemed to have been paid or disbursed by the relevant Issuer
     under such Letters of Credit  (notwithstanding  that such amount may not in
     fact have been so paid or disbursed); and

          (b) upon  notification by the Agent to USAM of its  obligations  under
     this Section,  the Borrowers  shall be  immediately  obligated to reimburse
     such Issuer for the amount deemed to have been so paid or disbursed by such
     Issuer.

Any  amounts so payable  by the  Borrowers  pursuant  to this  Section  shall be
deposited  in cash  with the  Agent  and  held as  collateral  security  for the
Obligations in connection  with the Letters of Credit issued by the Issuers.  In
the case of any such deemed  disbursement  resulting  from the  occurrence  of a
Default or Event of Default,  if such Default or Event of Default has been cured
or waived,  the Agent shall return to the  Borrowers all amounts then on deposit
with the Agent  pursuant  to this  Section,  which have not been  applied to the
partial satisfaction of such Obligations.

     SECTION 2.7.6 Nature of  Reimbursement  Obligations.  The Borrowers and, to
the extent set forth in Section 2.7.2, each Lender shall assume all risks of the
acts, omissions or misuse of any Letter of Credit by the beneficiary thereof. No
Issuer shall be responsible for:

          (a) the form, validity,  sufficiency,  accuracy,  genuineness or legal
     effect of any Loan Document, any Letter of Credit or any document submitted
     by any party in  connection  with the  application  for and  issuance  of a
     Letter  of  Credit,  even if it  should  in fact  prove to be in any or all
     respects invalid, insufficient, inaccurate, fraudulent or forged;

          (b) the form, validity,  sufficiency,  accuracy,  genuineness or legal
     effect  of any  instrument  transferring  or  assigning  or  purporting  to
     transfer or assign a Letter of Credit or the

                                      -38-
<PAGE>

     rights or benefits  thereunder or the proceeds thereof in whole or in part,
     which may prove to be invalid or ineffective for any reason;

          (c)  failure  of the  beneficiary  to  comply  fully  with  conditions
     required in order to demand payment under a Letter of Credit;

          (d) errors,  omissions,  interruptions  or delays in  transmission  or
     delivery of any messages, by mail, cable, telegraph, telex or otherwise;

          (e) any loss or delay in the transmission or otherwise of any document
     or draft required in order to make a Disbursement under a Letter of Credit;
     or

          (f) any  other  act or  omission  to act or  delay  of any kind of the
     Issuer,  the  Lenders,  the Agent or any other Person or any other event or
     circumstance  whatsoever,  whether or not similar to any of the  foregoing,
     that might,  but for the provisions of this Section,  constitute a legal or
     equitable discharge of the Borrowers' obligations hereunder.

None of the foregoing shall affect,  impair or prevent the vesting of any of the
rights or powers granted to the Issuers,  the Agent or any Lender hereunder.  In
furtherance  and  extension  and not in  limitation  or derogation of any of the
foregoing,  any  action  taken or omitted to be taken by an Issuer in good faith
shall be binding upon the Borrowers and each such Lender, and shall not put such
Issuer under any resulting liability to the Borrowers or any such Lender, as the
case may be.

     SECTION 2.8 Notes.  Each Lender's Loans under the Revolving Loan Commitment
shall be  evidenced  by a Note  payable to the order of such Lender in a maximum
principal  amount equal to such Lender's  Percentage  of the original  Revolving
Loan Commitment Amount. Each Borrower hereby irrevocably  authorizes each Lender
to make (or cause to be made) appropriate notations on the grid attached to such
Lender's Notes (or on any continuation of such grid), which notations,  if made,
shall evidence,  inter alia, the date of, the outstanding  principal of, and the
interest rate applicable to, the Loans evidenced  thereby.  Such notations shall
be conclusive  and binding on each Borrower  absent  manifest  error;  provided,
however,  that the  failure of any Lender to make any such  notations  shall not
limit or otherwise affect any Obligations of any Borrower or any other Obligor.

                                   ARTICLE III

                   REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

     SECTION 3.1 Repayments and  Prepayments.  Each Borrower shall repay in full
the unpaid  principal amount of each Loan upon the Stated Maturity Date therefor
and  pursuant to  Sections  8.2  through  8.4.  Prior  thereto,  repayments  and
prepayments of Loans shall be made as set forth in this Section 3.1.

     SECTION 3.1.1  Voluntary  Prepayments.  Prior to the Stated  Maturity Date,
each  Borrower  may,  from time to time on any  Business  Day,  make a voluntary
prepayment,  in whole or in part,  of the  outstanding  principal  amount of the
Loans; provided, however, that

                                      -39-
<PAGE>

          (a) any such  prepayments  shall be made pro rata  among  Loans of the
     same Type and, if  applicable,  having the same Interest  Period of all the
     Lenders;

          (b) all such  voluntary  prepayments  shall  require  (i) notice on or
     before 10:00 a.m. one  Business  Day in advance of any  prepayment  of Base
     Rate Loans and (ii) notice on or before 10:00 a.m.  three  Business Days in
     advance of any  prepayment  of LIBO Rate Loans,  in each case to the Agent;
     and

          (c) all such voluntary partial prepayments of the Term Loans and CapEx
     Loans shall be in an aggregate  minimum  amount of $250,000 and an integral
     multiple of $100,000.

Each  voluntary  prepayment  of Term Loans and CapEx Loans made pursuant to this
Section shall be applied, to the extent of such prepayment, in the inverse order
of the  scheduled  repayments  of Term  Loans set forth in clause (b) of Section
3.1.2.  Each  prepayment  of any Loans made  pursuant to this  Section  shall be
without premium or penalty but subject to Section 4.4.

     SECTION 3.1.2 Mandatory Repayments and Prepayments.

          (a)  Revolving  Loans.  The  Borrowers  shall,  on each  date when the
     aggregate  outstanding  principal amount of all Revolving  Loans,  together
     with the  aggregate  amount of all  Letter of Credit  Outstandings  and the
     aggregate  outstanding  principal amount of all Term Loans and CapEx Loans,
     exceeds the lesser of (i) the Revolving Loan  Commitment  Amount (as it may
     be  reduced  from time to time) or (ii) the then  existing  Borrowing  Base
     Amount minus the Excess  Availability  Requirement,  first make a mandatory
     prepayment of all  Revolving  Loans and,  second,  cash  collateralize  the
     Letter of Credit  Outstandings on terms in form and substance  satisfactory
     to the Agent, in each case in an amount equal to such excess.

          (b) Term Loans. The Borrowers shall, on the first Business Day of each
     calendar  month  following  the making of each Term Loan,  make a scheduled
     repayment of the aggregate  outstanding principal amount in an amount equal
     to 1/72 of the original principal amount of each such Term Loan.

          (c) CapEx Loans.  The Borrowers  shall,  on the first  Business Day of
     each  calendar  month  following  the  making of each  CapEx  Loan,  make a
     scheduled repayment of the aggregate  outstanding  principal amount thereof
     in an amount  equal to 1/72 of the original  principal  amount of each such
     CapEx Loan.

          (d) Mandatory  Prepayments from Certain Sources.  The Borrowers shall,
     (i) on the date of receipt by any Borrower of any Net Disposition Proceeds,
     Net  Securities  Proceeds  or Net  Debt  Proceeds  and  (ii)  on the  dates
     specified in Section  7.1.4 with respect to Net Insurance  Proceeds,  apply
     (x) 100% of all such Net  Disposition  Proceeds and Net Insurance  Proceeds
     and (y) 50% of all such Net Securities Proceeds and Net Debt Proceeds to

               (A) first,  make a mandatory  prepayment  of the Term Loans to be
          applied to the installments  thereof in the inverse order of maturity;
          and

                                      -40-
<PAGE>

               (B) second,  if all the Term Loans have been paid in full, make a
          mandatory  prepayment  of  the  CapEx  Loans  to  be  applied  to  the
          installments thereof in the inverse order of maturity;

               (C) third,  if all the Term  Loans and the CapEx  Loans have been
          paid in full, make a mandatory prepayment of the Revolving Loans; and

               (D) fourth,  cash collateralize all Letter of Credit Outstandings
          on terms in form and substance satisfactory to the Agent.

USAM shall deliver to the Agent, at the time of each  prepayment  required under
this Section, (i) a certificate signed by its chief executive Authorized Officer
setting  forth in  reasonable  detail  the  calculation  of the  amount  of such
prepayment  and (ii) notice  thereof on or before 10:00 a.m. one Business Day in
advance of such  prepayment.  All  Indebtedness  constituting  Net Debt Proceeds
shall be on terms no less favorable in any respect to the  Borrowers,  the Agent
and the Lenders than those contained in the Subordinated  Debt Documents and the
Intercreditor  Agreement.  The  proceeds  of  the  Net  Debt  Proceeds  and  Net
Securities Proceeds that are not required to prepay the Credit Extensions may be
used to prepay  principal and interest owing pursuant to the  Subordinated  Debt
Documents  or for  other  legitimate  corporate  purposes  consistent  with  the
Borrowers' businesses as set forth in the second recital;  provided, that if any
Default or Event of Default has occurred and is  continuing or would result from
any such payment, 100% of all such Net Debt Proceeds and Net Securities Proceeds
shall be applied to prepay the Credit Extensions as provided above.

          (e) Stated  Maturity Date. On the Stated  Maturity Date, the Borrowers
     shall repay in full the aggregate  outstanding  principal amount of all the
     Loans and Letter of Credit Outstandings.

          (f)   Acceleration.   The  Borrowers   shall,   immediately  upon  any
     acceleration  of the Stated  Maturity Date of any Loans pursuant to Section
     8.2 or  Section  8.3,  repay  all  (or if  only a  portion  is  accelerated
     thereunder,  such portion of) the Loans then outstanding and all Letters of
     Credit Outstandings.

Each prepayment of any Loans made pursuant to this Section shall be made without
premium or penalty,  except as  specified  herein,  and applied,  first,  to the
prepayment of Base Rate Loans and, second, to the prepayment of LIBO Rate Loans.

     SECTION 3.2  Interest  Provisions.  Interest on the  outstanding  principal
amount of Loans shall accrue and be payable in accordance with this Section 3.2.

     SECTION  3.2.1  Rates.  Subject  to  Sections  2.4 and  2.5,  the  Borrower
Representative  may elect,  pursuant  to an  appropriately  delivered  Borrowing
Request or  Continuation/Conversion  Notice,  that Loans  comprising a Borrowing
accrue interest at a rate per annum:

          (a) on that portion  maintained from time to time as a Base Rate Loan,
     equal to the sum of the  Alternate  Base  Rate  from time to time in effect
     plus the Applicable Margin; and

                                      -41-
<PAGE>

          (b) on that  portion  maintained  as a LIBO  Rate  Loan,  during  each
     Interest  Period  applicable  thereto,  equal to the sum of the  LIBO  Rate
     (Reserve Adjusted) for such Interest Period plus the Applicable Margin.

     The "LIBO Rate (Reserve Adjusted)" means,  relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any Interest
Period, a rate per annum (rounded upwards, if necessary,  to the nearest 1/16 of
1%) determined pursuant to the following formula:

            LIBO Rate  =            LIBO Rate
                           ------------------------------
       (Reserve Adjusted)  1.00 - LIBOR Reserve Percentage

     The LIBO Rate  (Reserve  Adjusted)  for any  Interest  Period for LIBO Rate
Loans  will be  determined  by the  Agent  on the  basis  of the  LIBOR  Reserve
Percentage in effect on, and the applicable  rates  furnished to and received by
the Agent from IBJW,  two  Business  Days before the first day of such  Interest
Period.

     "LIBO Rate" means, relative to any Interest Period for LIBO Rate Loans, the
rate of interest equal to the average  (rounded  upwards,  if necessary,  to the
nearest  1/16  of 1%) of the  rates  per  annum  at  which  Dollar  deposits  in
immediately  available  funds are  offered to the  Agent's  LIBOR  Office in the
London,  England interbank market at or about 11:00 a.m. (London,  England time)
two Business Days prior to the beginning of such Interest Period for delivery on
the first day of such Interest Period, and in an amount  approximately  equal to
the amount of the Agent's LIBO Rate Loan and for a period approximately equal to
such Interest Period.

     "LIBOR Reserve Percentage" means,  relative to any Interest Period for LIBO
Rate Loans, the reserve percentage (expressed as a decimal) equal to the maximum
aggregate reserve requirements  (including all basic,  emergency,  supplemental,
marginal and other reserves and taking into account any transitional adjustments
or other scheduled changes in reserve requirements)  specified under regulations
issued from time to time by the F.R.S.  Board and then  applicable  to assets or
liabilities consisting of or including "Eurocurrency Liabilities",  as currently
defined  in  Regulation  D of  the  F.R.S.  Board,  such  rate  to  be  adjusted
automatically  on and as of the effective date of any change in any such reserve
percentage.

     All LIBO Rate Loans shall bear interest from and including the first day of
the  applicable  Interest  Period  to (but not  including)  the last day of such
Interest  Period at the interest rate determined as applicable to such LIBO Rate
Loan.

     SECTION  3.2.2  Post-Default  Rates.  Upon the  occurrence  and  during the
continuation  of any  Default,  or after any other  monetary  Obligation  of the
Borrowers  shall have become due and payable,  the Borrowers shall pay, but only
to the extent  permitted by law,  interest (after as well as before judgment) on
such  amounts at a rate per annum equal to (a),  in the case of Loans,  the rate
per annum  otherwise in effect plus a margin of 2% per annum and (b) in the case
of Letter of  Credit  Outstandings  and  other  Obligations  payable  hereunder,
interest  at a rate per  annum  equal to the rate  applicable  to Base Rate Term
Loans plus 2%, in each case, from the date of such non-payment until such amount
is paid in full (as well after as before judgment).

                                      -42-
<PAGE>

     SECTION  3.2.3  Payment  Dates.  Interest  accrued  on each  Loan  shall be
payable, without duplication:

          (a) on the Stated Maturity Date therefor;

          (b) on the date of any payment or prepayment,  in whole or in part, of
     principal  outstanding  on such  Loan on the  principal  amount  so paid or
     prepaid;

          (c) with respect to Base Rate Loans, on the first Business Day of each
     calendar month occurring after the Effective Date;

          (d)  with  respect  to  LIBO  Rate  Loans,  on the  last  day of  each
     applicable Interest Period;

          (e) with respect to any Base Rate Loans converted into LIBO Rate Loans
     on a day when interest  would not otherwise  have been payable  pursuant to
     clause (c), on the date of such conversion; and

          (f) on that portion of any Loans the Stated  Maturity Date of which is
     accelerated  pursuant to Section 8.2 or Section 8.3,  immediately upon such
     acceleration.

     Interest accrued on Loans or other monetary  Obligations arising under this
Agreement  or any other  Loan  Document  after  the date such  amount is due and
payable  (whether on the Stated Maturity Date,  upon  acceleration or otherwise)
shall be payable upon demand.

     SECTION 3.3 Fees. The Borrowers jointly and severally agree to pay the fees
set forth in this Section 3.3. All such fees shall be non-refundable.

     SECTION 3.3.1 Commitment Fee. The Borrowers  jointly and severally agree to
pay to the  Agent,  for the pro rata  account  of each  Lender,  for the  period
(including any portion  thereof when the Revolving Loan  Commitment is suspended
by reason of the  Borrowers'  inability  to satisfy any  condition of Article V)
commencing  on the Effective  Date and  continuing  through the  Revolving  Loan
Commitment Termination Date, a commitment fee at the rate of 1/2 of 1% per annum
on such Lender's  Percentage  of the sum of the average daily unused  portion of
the Revolving Loan Commitment  Amount (excluding for all purposes of calculating
the  commitment  fee  that  portion  of the  Revolving  Loan  Commitment  Amount
evidenced by the Excess Availability Requirement). Such commitment fees shall be
payable by the  Borrowers in arrears on the first  Business Day of each calendar
month  following  the  Effective  Date,  and on the  Revolving  Loan  Commitment
Termination Date.

     SECTION 3.3.2 Agent's Fees, etc. The Borrowers  jointly and severally agree
to pay to the Agent, for its own account,  fees in the amounts, on the dates and
in the manner set forth in the commitment letter with IBJW.

     SECTION 3.3.3 Early  Termination Fee. If any Borrower reduces or terminates
the Revolving Loan  Commitment,  in whole or in part, the Borrowers  jointly and
severally agree to pay to the Agent, for the ratable benefit of the Lenders,  an
early  termination  fee in an amount

                                      -43-
<PAGE>

     equal to the amount of the  Revolving  Loan  Commitment  so  terminated  or
     reduced multiplied by the applicable percentage set forth below:

                        Period                                  Percentage
                        ------                                  ----------
      On or prior to the first anniversary of                       2%
      the Effective Date

      After the first anniversary of the                            1%
      Effective Date and on or prior to the
      second anniversary of the Effective Date

      After  the   second   anniversary   of  the                   0%
      Effective Date

     SECTION  3.3.4  Letter of Credit  Fee.  The  Borrowers  agree  jointly  and
severally to pay to the Agent,  for the pro rata account of each Issuer and each
Lender,  a Letter of Credit fee in an amount equal to 3.0% per annum  multiplied
by the  average  daily  Letter of  Credit  Outstandings  of each such  Letter of
Credit,  such fees to be paid by the Borrowers in arrears on the first  Business
Day of each calendar  month and on the  Revolving  Loan  Commitment  Termination
Date. The Borrowers  further  jointly and severally  agree to pay to each Issuer
all costs and expenses incurred by such Issuer in connection with each Letter of
Credit.

     SECTION 3.4  Collection of  Receivables  and  Payments,  etc. Each Borrower
shall  establish,  for and on behalf of itself and each of its  Subsidiaries,  a
cash management system on the terms provided for in this Section 3.4.

     SECTION 3.4.1 Establishment of Lock-Box Accounts and Concentration Account;
Collections.  (a) Each Borrower shall,  and shall cause each of its Subsidiaries
to, establish lock-box accounts (collectively, the "Lock-Box Accounts") pursuant
to Lock-Box  Agreements with any Lender or such other financial  institutions as
are acceptable to the Agent  (collectively,  the "Lock-Box  Banks") in which all
obligors shall directly  remit all payments on their  Receivables.  Set forth at
Item 3.4.1(a)  ("Lock-Box  Accounts") of the Disclosure Schedule is a listing as
of  the  Effective  Date  of all  Lock-Box  Accounts,  Lock-Box  Banks  and  the
respective  addresses  and  account  numbers.  All  amounts  on  deposit in each
Lock-Box  Account  shall be  transferred  on a daily basis to the  Concentration
Account.  Unless  otherwise  agreed to by the Agent,  each Lock-Box Bank and the
Concentration  Bank  shall  acknowledge  and  agree,  pursuant  to its  Lock-Box
Agreement  or  Concentration  Account  Agreement,  as the case may be,  that all
payments and deposits made to the Lock-Box Accounts of such Lock-Box Bank or the
Concentration  Account (in the case of the Concentration  Bank) are the sole and
exclusive  property  of Agent,  for the  benefit of itself,  the Issuers and the
Lenders,  that such  Lock-Box  Bank and the  Concentration  Bank has no right to
setoff against its Lock-Box Account or the  Concentration  Account,  as the case
may be, except as expressly provided in its Lock-Box

                                      -44-
<PAGE>

Agreement or the Concentration  Account Agreement,  as the case may be, and that
such Lock-Box Bank will wire transfer  immediately  available  funds in a manner
satisfactory  to  Agent,  funds  deposited  into  its  Lock-Box  Account  to the
Concentration Account on a daily basis as soon as such funds are collected. Each
Borrower agrees that all payments,  whether by cash, check, wire transfer or any
other instrument on deposit in any Lock-Box Account or the Concentration Account
shall be the sole and  exclusive  property  of the  Agent,  for the  benefit  of
itself,  the  Issuers and the  Lenders,  and  neither  the  Borrowers  nor their
Subsidiaries shall have any right, title or interest therein.

     (b) The Borrowers and their  Subsidiaries shall directly remit all payments
constituting  proceeds of  Collateral,  including Net Securities  Proceeds,  Net
Insurance  Proceeds,  Net Debt  Proceeds and Net  Disposition  Proceeds,  to the
Concentration Account in the form received. All such payments,  whether by cash,
check,  wire transfer or other instrument,  made to the  Concentration  Account,
shall be the  exclusive  property of the Agent,  for the benefit of itself,  the
Issuers and the Lenders,  and neither the Borrowers nor their Subsidiaries shall
have any right, title or interest therein.

     (c) None of the  Borrowers  nor any of their  Subsidiaries  shall,  without
obtaining the prior consent of the Agent, establish any accounts, other than the
Lock-Box Accounts and the Concentration  Account,  pursuant to which payments on
account of  Receivables  are made to or on behalf of any of the Borrowers or any
of their  Subsidiaries.  In  addition,  none of the  Borrowers  nor any of their
Subsidiaries  shall not modify in any respect,  without the prior consent of the
Agent,  any  Lock-Box  Agreement,   Concentration  Account  Agreement  or  other
arrangement relating to any Lock-Box Account or the Concentration Account.

     SECTION 3.4.2 Payments Held in Trust.  To the extent that,  notwithstanding
the terms of clause (a) of Section 3.4.1,  Account Debtors remit any payments on
account  of the  Receivables  of the  Borrowers  or  any of  their  Subsidiaries
directly to any of them,  such payments shall be held by the Borrowers and their
Subsidiaries  in trust for the Agent,  on behalf of itself,  the Issuers and the
Lenders, and shall, promptly upon receipt thereof, be deposited in the same form
received into a Lock-Box Account or the Concentration Account.

     SECTION 3.4.3 Application of Amounts in Concentration  Account. (a) Subject
to Section 8.4, all amounts deposited in the Concentration  Account from time to
time  shall  be  applied  (which   application   shall  conditioned  upon  final
collection) one Business Day following the receipt thereof by the Agent,  (i) in
the case of amounts  deposited in the  Concentration  Account pursuant to clause
(a) of Section  3.4.1,  to repay the Revolving  Loans,  cash  collateralize  the
Letter of Credit Outstandings on terms in form and substance satisfactory to the
Agent and pay the other  Obligations  (other than the principal of, and interest
accrued on, the Term Loans and CapEx Loans) hereunder as provided in clause (b),
and (ii) in the case of amounts deposited in the Concentration  Account pursuant
to clause (b) of Section 3.4.1, as provided in clauses (c) of Section 3.1.2. For
purposes of the preceding sentence, the Agent shall be deemed to have received a
payment on a particular day in the Concentration Account if it received the same
prior to 1:00 p.m.  (New York City time) on such day or, if received  after such
time, on the next following Business Day.

                                      -45-
<PAGE>

     (b) Subject to Section 8.3, the Agent shall apply all amounts  deposited in
the Concentration Account pursuant to clause (a) of Section 3.4.1 as follows:

          (i) first, to pay Obligations in respect of any expense reimbursements
     or indemnities then due to the Agent, including,  without limitation,  fees
     and expenses referred to in Sections 3.4.8 and 10.3;

          (ii)   second,   to  pay   Obligations   in  respect  of  any  expense
     reimbursements or indemnities then due to the Lenders and the Issuers;

          (iii)  third,  to pay  Obligations  in  respect of any fees due to the
     Agent, the Lenders and the Issuers;

          (iv) fourth, to pay interest due in respect of the Revolving Loans;

          (v)  fifth,  to pay the  principal  outstanding  with  respect  to the
     Revolving Loans;

          (vi) sixth, to cash collateralize the Letter of Credit Outstandings on
     terms in form and substance satisfactory to the Agent;

          (vii) seventh,  to the payment of all other Obligations other than the
     Term Loans and CapEx Loans; and

          (viii) eighth, as instructed by the Borrower.

Each  prepayment of a Revolving  Loan pursuant to this Section shall be applied,
first, to the payment of Base Rate Loans and second, to the payment of LIBO Rate
Loans. If sufficient  funds are not available to fund all payments to be made in
respect of any of the Obligations  described in any of the foregoing clauses (i)
through  (vi),  the  available  funds  being  applied  with  respect to any such
Obligations  referred to in any one of such  clauses  shall be  allocated to the
payment of such Obligations ratably, based on the proportion of the Agent's each
Lender's  and the Issuers'  interest in the  aggregate  outstanding  Obligations
described in such clauses.

     SECTION 3.4.4 Additional Payments. If at any time the Agent determines that
any funds held in any Lock-Box Account or the Concentration  Account are subject
to the Lien of any  Person,  other  than the Agent as herein  provided,  (a) the
Borrowers  agree that forthwith upon demand by the Agent, to pay to the Agent as
additional  funds to be  deposited  and held in the  Concentration  Account,  an
amount  equal to the amount of funds  subject  to such  Lien,  or (b) if no such
payment is made, the Agent shall establish Eligibility Reserves by the amount of
such funds.

     SECTION 3.4.5 Verification of Receivables.  The Agent shall have the right,
and shall,  upon the  request of the  Required  Lenders,  at any time verify the
validity, amount or any other matter relating to any Receivables.

                                      -46-
<PAGE>

     SECTION  3.4.6 Agent's Loan Account;  Monthly  Statements.  The Agent shall
maintain  an  account  on its  books in the  name of each  Borrower  (the  "Loan
Accounts") in which each Borrower will be charged with all Credit Extensions and
other monetary Obligations.  The Loan Accounts will be credited with all amounts
received by the Agent from or on behalf of the relevant Borrower. All entries in
the Loan  Account  shall be  conclusive  and binding on the  relevant  Borrower,
absent manifest error,  irrespective of whether any Obligation is also evidenced
by a Note or  other  instrument.  The  Agent  will  provide  to  USAM a  monthly
statement  reflecting activity in its Loan Account,  and such statement shall be
conclusive and binding on the Borrowers if they do not object to the same within
30 days after such statement is received by USAM.

     SECTION 3.4.7 Fees and Expenses.  Without  limiting the other terms hereof,
the  Borrowers  jointly  and  severally  agree to pay to the  Agent  any and all
reasonable  fees,  costs and expenses which the Agent  (including the reasonable
fees and  out-of-pocket  expenses of counsel to the Agent)  incurs in connection
with any actions it takes,  including  enforcement actions,  with respect to any
Lock-Box  Account,  the  Concentration  Account or the  Accounts.  The Borrowers
jointly and  severally  agree to reimburse the Agent for any amounts paid to any
Lock-Box Bank or the Concentration  Bank arising out of any  indemnification  by
the  Agent of such  Lock-Box  Bank or the  Concentration  Bank  against  damages
incurred  by the  Lock-Box  Bank  in the  operation  of a  Lock-Box  Account  or
Concentration Account, as the case may be.

     SECTION 3.5 Reduction in Excess Availability, etc. (a) If the balance sheet
and  financial  statements  delivered by USAM  pursuant to clause (b) of Section
7.1.1 with respect to its 1999 Fiscal Year are  satisfactory  to the Agent,  the
Agent may, in the exercise of its sole and absolute  discretion  and without any
obligation  to take (or not to take) any action with  respect to the  following,
reduce or  eliminate  the Excess  Availability  Requirement  by an amount not to
exceed $300,000 or permit excess cash flow of the Borrowers to be applied to pay
the amounts outstanding under the Permitted Borrower Subordinated Debt. Anything
in this clause to the contrary notwithstanding,  the Agent shall not be required
to take any action pursuant to this clause and, if it takes any such action,  it
may do so without  consideration of any facts or  circumstances  relating to any
Obligor or Subordinated Debt Holder.

     (b) If USAM  delivers  to the Agent a landlord  estoppel  certificate  with
respect  to its  leased  premises  with the  Sanford  Airport  Authority,  which
certificate the Agent has confirmed is in form and substance  satisfactory to it
in  it  sole  discretion,   the  Agent  shall  reduce  the  Excess  Availability
Requirement by an amount not to exceed $60,000.

                                   ARTICLE IV

                     CERTAIN LIBO RATE AND OTHER PROVISIONS

     SECTION  4.1 LIBO Rate  Lending  Unlawful.  If any Lender  shall  determine
(which  determination  shall,  upon  notice  thereof to USAM and the  Agent,  be
conclusive and binding on the Borrowers) that the  introduction of or any change
in or in the interpretation of any law makes it unlawful, or any central bank or
other  governmental  authority  asserts that it is unlawful,  for such Lender to
make, continue or maintain any Loan as, or to convert any Loan

                                      -47-
<PAGE>

into,  a LIBO Rate  Loan,  the  obligations  of such  Lender to make,  continue,
maintain  or convert  any such LIBO Rate Loan  shall,  upon such  determination,
forthwith  be  suspended  until  such  Lender  shall  notify  the Agent that the
circumstances  causing such suspension no longer exist, and all outstanding LIBO
Rate Loans shall  automatically  convert  into Base Rate Loans at the end of the
then current  Interest  Periods with respect  thereto or sooner,  if required by
such law or assertion.

     SECTION  4.2  Inability  to  Determine  Rates.  If  the  Agent  shall  have
determined or been instructed by the Required Lenders that

          (a) Dollar certificates of deposit or Dollar deposits, as the case may
     be, in the  relevant  amount and for the relevant  Interest  Period are not
     available to Agent in its relevant market; or

          (b) adequate means do not exist for adequately and fairly  determining
     the cost to the  Lenders  of  making  or  maintaining  LIBO  Rate  Loans or
     calculating the same.

then, upon notice from the Agent to USAM and the Lenders, the obligations of all
Lenders  under  Section 2.3 and Section 2.4 to make or continue any Loans as, or
to convert any Loans into,  LIBO Rate Loans shall  forthwith be suspended  until
the Agent shall notify USAM and the Lenders that the circumstances  causing such
suspension no longer exist.

     SECTION 4.3 Increased Costs,  etc. (a) The Borrowers  jointly and severally
agree to  reimburse  each Lender for any increase in the cost to such Lender of,
or any  reduction in the amount of any sum  receivable by such Lender in respect
of, making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting  (or of its  obligation to convert) any
Loans into,  LIBO Rate Loans  (including  but not limited to any  imposition  or
effectiveness of reserve  requirements) that arise in connection with any change
in,   or   the   introduction,    adoption,    effectiveness,    interpretation,
reinterpretation  or phase-in of, any law or regulation,  directive,  guideline,
decision  or  request  (whether  or not  having  the force of law) of any court,
central  bank,  regulator  or other  governmental  authority.  Such Lender shall
promptly  notify  the Agent and USAM in writing  of the  occurrence  of any such
event, such notice to state, in reasonable  detail, the reasons therefor and the
additional  amount  required fully to compensate  such Lender for such increased
cost or reduced  amount.  Such  additional  amounts  shall be paid  jointly  and
severally by the Borrowers  directly to such Lender promptly (and, in any event,
within three Business Days of receipt of such notice), and such notice shall, in
the absence of manifest error, be conclusive and binding on the Borrowers.

     (b) If at any time the  introduction or  effectiveness  of or any change in
any  applicable  law, rule or regulation  (including  without  limitation  those
announced  or  published  prior  to  the  date  of  this  Agreement),  or in the
interpretation or administration  thereof by any governmental  authority charged
with the interpretation or administration  thereof,  or compliance by any Lender
with any request or directive by any such  authority  (whether or not having the
force of law) shall either (i) impose,  modify or make  applicable  any reserve,
deposit,  capital  adequacy  or similar  requirement  against  Letters of Credit
issued,  or  participated  in, by any  Issuer or Lender,  or (ii)  impose on any
Issuer or Lender any other conditions  affecting this Agreement or any Letter of

                                      -48-
<PAGE>

Credit,  and the result of any of the  foregoing  is to increase the cost to any
Issuer or Lender of  issuing,  maintaining  or  participating  in any  Letter of
Credit,  or reduce the amount of any sum received or receivable by any Issuer or
Lender hereunder with respect to Letters of Credit, then, within ten days of the
receipt of the notice  referred  to below  (which  notice  shall be given by the
respective  Issuer or Lender promptly after it determines such increased cost or
reduction is  applicable to Letters of Credit or its  participation  therein) to
USAM by the respective Issuer or Lender (a copy of which notice shall be sent by
such Issuer or Lender to the Agent),  the Borrowers  shall jointly and severally
pay to  such  Issuer  or  Lender  such  additional  amount  or  amounts  as will
compensate such Issuer or Lender for such increased cost or reduction.  A notice
submitted  to USAM by such  Issuer or  Lender,  setting  forth the basis for the
calculation of such  additional  amount or amounts  necessary to compensate such
Issuer or Lender as aforesaid  shall be conclusive  and binding on the Borrowers
absent manifest error.

     SECTION 4.4 Funding Losses. In the event any Lender shall incur any loss or
expense  (including any loss or expense incurred by reason of the liquidation or
reemployment  of  deposits  or other  funds  acquired  by such  Lender  to make,
continue or maintain any portion of the  principal  amount of any Loan as, or to
convert any portion of the principal  amount of any Loan into, a LIBO Rate Loan)
as a result of

          (a) any conversion or repayment or prepayment of the principal  amount
     of any LIBO Rate Loans on a date other than the  scheduled  last day of the
     Interest  Period  applicable  thereto,  whether  pursuant  to Section  3.1,
     Section 4.1, Article VIII or otherwise;

          (b) any Loans not being made as LIBO Rate Loans in accordance with the
     Borrowing Request therefor; or

          (c) any Loans not being  continued  as, or converted  into,  LIBO Rate
     Loans in accordance with the Continuation/Conversion Notice therefor,

then, upon the written notice of such Lender to USAM (with a copy to the Agent),
the Borrowers  shall promptly (and, in any event,  within three Business Days of
receipt of such  notice) pay directly to such Lender such amount as will (in the
determination  of such Lender)  reimburse  such Lender for such loss or expense.
Such written  notice (which shall  include  calculations  in reasonable  detail)
shall,  in the  absence of  manifest  error,  be  conclusive  and binding on the
Borrowers.  Such  reimbursement  shall include an amount equal to the excess, if
any,  of (i) the amount of interest  which  would have  accrued on the amount so
prepaid,  or not so borrowed,  converted or  continued,  for the period from the
date of such prepayment or of such failure to borrow, convert or continue to the
last day of such  Interest  Period  (or,  in the case of a  failure  to  borrow,
convert,  or  continue to the last day of such  Interest  Period that would have
commenced on the date of such failure),  in each case at the applicable  rate of
interest for such Loans provided for herein over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Lender on
such  amount by placing  such  amount on deposit  for a  comparable  period with
leading banks in the interbank eurodollar market.

     SECTION 4.5 Increased Capital Costs. If any change in, or the introduction,
adoption,  effectiveness,  interpretation,  reinterpretation or phase-in of, any
law or regulation,

                                      -49-
<PAGE>

directive,  guideline,  decision or request  (whether or not having the force of
law) of any court,  central  bank,  regulator  or other  governmental  authority
affects  or would  affect  the  amount of capital  required  or  expected  to be
maintained  by any Lender or Issuer or any  Person  controlling  such  Lender or
Issuer,  and  such  Lender  or  Issuer  determines  (in its  sole  and  absolute
discretion) that the rate of return on its or such controlling  Person's capital
as a  consequence  of its  Revolving  Loan  Commitment or the Loans made by such
Lender or Letters of Credit issued or  participated  in by such Lender or Issuer
is reduced to a level below that which such Lender,  Issuer or such  controlling
Person could have  achieved  but for the  occurrence  of any such  circumstance,
then, in any such case upon notice from time to time by such Lender or Issuer to
USAM, the Borrowers  jointly and severally  agree to immediately pay directly to
such Lender  additional  amounts  sufficient to  compensate  such Lender or such
controlling  Person for such  reduction  in rate of return.  A statement of such
Lender as to any such  additional  amount  or  amounts  (including  calculations
thereof in  reasonable  detail)  shall,  in the  absence of manifest  error,  be
conclusive and binding on the Borrowers. In determining such amount, such Lender
or Issuer may use any method of averaging and  attribution  that it (in its sole
and absolute discretion) shall deem applicable.

     SECTION 4.6 Taxes.  All  payments by the  Borrowers  of  principal  of, and
interest on, the Loans and all other  amounts  payable  hereunder  shall be made
free and clear of and  without  deduction  for any  present  or  future  income,
excise, stamp or franchise taxes and other taxes, fees, duties,  withholdings or
other  charges of any nature  whatsoever  imposed by any taxing  authority,  but
excluding  franchise  taxes and taxes imposed on or measured by any Lender's net
income or receipts by the jurisdiction  under the laws of which each such Lender
is organized or any political subdivision thereof (such non-excluded items being
called "Taxes"). In the event that any withholding or deduction from any payment
to be made by the  Borrowers  hereunder  is  required  in  respect  of any Taxes
pursuant to any applicable law, rule or regulation,  then the Borrowers  jointly
and severally agree to

          (a) pay directly to the relevant authority the full amount required to
     be so withheld or deducted;

          (b)  promptly  forward  to the  Agent  an  official  receipt  or other
     documentation  satisfactory  to the Agent  evidencing  such payment to such
     authority; and

          (c) pay to the Agent for the  account of the Lenders  such  additional
     amount or amounts as is  necessary  to ensure that the net amount  actually
     received by each  Lender will equal the full amount such Lender  would have
     received had no such  withholding  or deduction  been  required  (including
     penalties,  interest,  additional taxes and expenses (including  reasonable
     attorney's fees and expenses) arising therefrom or with respect thereto).

Moreover,  if any Taxes are  directly  asserted  against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder,  the
Agent or such Lender may pay such Taxes and the Borrowers will promptly pay such
additional  amounts  (including  any  penalties,  interest  or  expenses)  as is
necessary in order that the net amount received by such Person after the payment
of such Taxes  (including any Taxes on such  additional  amount) shall equal the
amount such  Person  would have  received  had not such Taxes been  asserted.  A

                                      -50-
<PAGE>

certificate  from any  Lender as to the  amount of such  Taxes  that are  owing,
absent manifest error, shall be final, conclusive and binding for all purposes.

     If the Borrowers fail to pay any Taxes when due to the  appropriate  taxing
authority  or fails to remit to the  Agent  for the  account  of the  respective
Lenders  the  required  receipts or other  required  documentary  evidence,  the
Borrowers  jointly  and  severally  agree  to  indemnify  the  Lenders  for  any
incremental  Taxes,  interest or penalties that may become payable by any Lender
as a  result  of  any  such  failure.  For  purposes  of  this  Section  4.6,  a
distribution  hereunder  by the Agent or any Lender to or for the account of any
Lender shall be deemed a payment by the Borrowers.

     Each  Lender  that is not a citizen or  resident  of the United  States,  a
corporation,  partnership  or other entity  created or organized in or under the
laws of the United States (or any jurisdiction  thereof), or any estate or trust
that is subject  to  federal  income  taxation  regardless  of the source of its
income (a "Non-U.S. Lender") shall deliver to USAM and the Agent:

          (a) two copies of Internal Revenue Service Form 1001 or Form 4224, or,
     in the case of a  Non-U.S.  Lender  claiming  exemption  from U.S.  Federal
     withholding  tax under Section 871(h) or 881(c) of the Code with respect to
     payments of "portfolio  interest",  a Form W-8, or any subsequent  versions
     thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form
     W-8, a certificate representing that such Non-U.S. Lender is not a bank for
     purposes  of Section  881(c)(3)(A)  of the Code,  is not a 10%  shareholder
     (within the meaning of Section  881(c)(3)(B)  of the Code) of any  Borrower
     and is not a controlled foreign corporation related to any Borrower (within
     the meaning of Section  881(c)(3)(C) of the Code)),  properly completed and
     duly executed by such Non-U.S.  Lender claiming a complete  exemption from,
     or  reduced  rate of,  U.S.  Federal  withholding  tax on  payments  by the
     Borrowers or the Agent under this Agreement and the other Loan Documents;

          (b)  an  Internal  Revenue  Service  Form  W-8  or  W-9  or  successor
     applicable  forms unless otherwise  delivered  pursuant to preceding clause
     (a); and

          (c) any other  documentation  as may be required under applicable U.S.
     tax law and regulations to evidence  complete  exemption from U.S.  Federal
     withholding  tax on all  payments by the  Borrowers or the Agent under this
     Agreement and the other Loan Documents.

     Such forms shall be delivered by each Non-U.S. Lender on or before the date
it becomes a party to this Agreement.  In addition,  each Non-U.S.  Lender shall
deliver such forms  promptly  upon the  obsolescence  or  invalidity of any form
previously  delivered  by such  Non-U.S.  Lender.  Each  Non-U.S.  Lender  shall
promptly  notify the Borrowers at any time it determines that it is no longer in
a position to provide any  previously  delivered  form to the  Borrowers (or any
other form of  certification  adopted by the U.S.  taxing  authorities  for such
purpose).  Notwithstanding  any other  provision of this Section 4.6, a Non-U.S.
Lender  shall not be required to deliver any form  pursuant to this Section that
such  Non-U.S.  Lender is not legally  able to  deliver.  In  addition,  nothing
contained in this Section 4.6 shall require any Lender to make  available any of
its tax returns (or any other  information  that it deems to be  confidential or
proprietary).

                                      -51-
<PAGE>

     SECTION  4.7  Payments,   Computations,  etc.  Unless  otherwise  expressly
provided,  all  payments  by the  Borrowers  pursuant  to or in  respect of this
Agreement,  the Notes, each Letter of Credit or any other Loan Document shall be
made by the  Borrowers  to the Agent  for the pro rata  account  of the  Lenders
entitled to receive such payment.  All such payments  required to be made to the
Agent shall be made, without setoff,  deduction or counterclaim,  not later than
11:00 a.m.  (New York City time),  on the date due,  in same day or  immediately
available funds, to such account as the Agent shall specify from time to time by
notice to USAM.  Funds  received  after  that time  shall be deemed to have been
received  by the Agent on the next  succeeding  Business  Day.  The Agent  shall
promptly  remit in same day funds to each  Lender  its  share,  if any,  of such
payments received by the Agent for the account of such Lender.  All interest and
fees shall be computed on the basis of the actual number of days  (including the
first day but excluding the last day) occurring during the period for which such
interest  or fee is payable  over a year  comprised  of 360 days.  Whenever  any
payment to be made shall  otherwise be due on a day which is not a Business Day,
such payment shall (except as otherwise required by clause (c) of the definition
of the term  "Interest  Period"  with respect to LIBO Rate Loans) be made on the
next  succeeding  Business  Day and such  extension of time shall be included in
computing interest and fees, if any, in connection with such payment.  The Agent
is authorized to charge any account  maintained by the Borrowers with it for any
Obligations owing to it or any of the Lenders.

     SECTION 4.8 Sharing of Payments.  If any Lender shall obtain any payment or
other  recovery  (whether  voluntary,  involuntary,  by application of setoff or
otherwise)  on account of any Loan (other than pursuant to the terms of Sections
4.3,  4.4, 4.5 and 4.6) in excess of its pro rata share of payments  pursuant to
Section  4.7,  then or  therewith  obtained by all  Lenders,  such Lender  shall
purchase from the other Lenders such participations in Credit Extensions made by
them  (without  recourse,  representation  or warranty) as shall be necessary to
cause  such  purchasing  Lender to share the excess  payment  or other  recovery
ratably with each of them; provided,  however, that if all or any portion of the
excess  payment or other recovery is thereafter  recovered from such  purchasing
Lender,  the  purchase  shall be  rescinded  and each  Lender  which  has sold a
participation to the purchasing  Lender shall repay to the purchasing  Lender to
the  purchase  price to the ratable  extent of such  recovery  together  with an
amount equal to such selling Lender's ratable share (according to the proportion
of (a) the amount of such selling Lender's required  repayment to the purchasing
Lender to (b) the total amount so recovered from the  purchasing  Lender) of any
interest or other amount paid or payable by the purchasing  Lender in respect of
the total amount so recovered. The Borrowers agree that any Lender so purchasing
a participation from another Lender pursuant to this Section may, to the fullest
extent permitted by law, exercise all its rights of payment (including  pursuant
to Section  4.9) with respect to such  participation  as fully as if such Lender
were the direct  creditor of the Borrowers in the amount of such  participation.
If under any applicable bankruptcy,  insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section applies, such
Lender shall, to the extent practicable,  exercise its rights in respect of such
secured  claim in a manner  consistent  with the rights of the Lenders  entitled
under this  Section to share in the  benefits of any  recovery  on such  secured
claim.

     SECTION 4.9 Setoff.  Each Lender shall, upon the occurrence of any Event of
Default  and  with the  consent  of the  Required  Lenders,  have  the  right to
appropriate and apply to the payment of the Obligations  owing to it (whether or
not then due), and (as security for such

                                      -52-
<PAGE>

Obligations)  the  Borrowers  hereby grant to each Lender a continuing  security
interest in, any and all balances,  credits, deposits, accounts or moneys of the
Borrowers then or thereafter  maintained  with such Lender;  provided,  however,
that any such  appropriation  and application shall be subject to the provisions
of Section 4.8 (each Lender agreeing promptly to notify USAM and the Agent after
any such setoff and application made by such Lender but the failure to give such
notice shall not affect the validity of such setoff and application). The rights
of each Lender  under this  Section are in addition to other rights and remedies
(including  other rights of setoff under applicable law or otherwise) which such
Lender may have.

     SECTION 4.10 Use of Proceeds. The Borrowers shall apply all the proceeds of
(a) the  CapEx  Loans to  finance  Permitted  Capital  Expenditures  and (b) the
Revolving  Loans  for the  purposes  described  in  clause  (a),  to  repay  the
Indebtedness  identified  in Item  7.2.2(b)  ("Indebtedness  to be Paid") of the
Disclosure Schedule, to repay past due accounts payable of the Borrowers and for
working capital corporate purposes of the Borrowers, provided that the Revolving
Loans shall not be applied for the  purpose  described  in clause (a) unless the
CapEx  Loans  have  been  fully  drawn,  and (c) the Term  Loans  to  repay  the
Indebtedness  identified  in Item  7.2.2(b)  ("Indebtedness  to be Paid") of the
Disclosure  Schedule and refinance  the Revolving  Loans that were used to repay
the Indebtedness identified in Item 7.2.2 (b) ("Indebtedness to be Paid") of the
Disclosure  Schedule.  In addition,  each Letter of Credit shall be used for the
working capital corporate purposes of the Borrowers.

                                    ARTICLE V

                         CONDITIONS TO CREDIT EXTENSIONS

     SECTION 5.1 Initial Credit  Extension.  The obligations of the Lenders and,
if applicable,  the Issuer to fund the initial Credit Extension shall be subject
to the prior or concurrent  fulfillment of each of the conditions  precedent set
forth in this Section 5.1 to the satisfaction of the Agent.

     SECTION  5.1.1  Resolutions,  Good  Standing,  etc.  The Agent  shall  have
received  from each Obligor a  certificate,  dated as of the date of the initial
Credit Extension, of its Secretary or Assistant Secretary as to

          (a)  resolutions  of its  Board of  Directors  then in full  force and
     effect  authorizing  the  execution,   delivery  and  performance  of  this
     Agreement, the Notes and each other Loan Document to be executed by it;

          (b) each Organic Document of each Obligor; and

          (c) the  incumbency  and  signatures  of each  officer of each Obligor
     authorized to act with respect to this Agreement,  the Notes and each other
     Loan Document executed by it,

upon which  certificate  each Lender may  conclusively  rely until it shall have
received a further  certificate  of the Secretary or Assistant  Secretary of the
relevant Obligor canceling or amending such prior certificate.  In addition, the
Agent shall have  received  satisfactory  good  standing

                                      -53-
<PAGE>

certificates for each Obligor from its  jurisdiction of  incorporation  and each
jurisdiction in which it is qualified to do business as a foreign corporation.

     SECTION 5.1.2 Agreement.  The Agent shall have received,  with counterparts
for each Lender,  this Agreement duly executed by each Lender,  the Agent and an
Authorized Officer of each Borrower.

     SECTION 5.1.3  Delivery of Notes.  The Agent shall have  received,  for the
account of each Lender entitled thereto, its Term Note, Revolving Note and CapEx
Note  dated the date of the  initial  Credit  Extension  and duly  executed  and
delivered by an Authorized Officer of each Borrower.

     SECTION 5.1.4 Required  Consents and Approvals.  All required  consents and
approvals  shall have been obtained and be in full force and effect with respect
to the  transactions  contemplated  hereby  from (a) all  relevant  governmental
authorities  and  regulatory  bodies and (b) any other Person  whose  consent or
approval the Agent deems  necessary or  appropriate  to effect the  transactions
contemplated hereby.

     SECTION 5.1.5 Documentation Questionnaire.  The Agent shall have received a
completed  Documentation  Questionnaire,  dated  as of  the  date  hereof,  duly
executed and delivered by an Authorized Officer of USAM.

     SECTION  5.1.6  Account  Agreements.  The Agent shall have  received  (a) a
Lock-Box  Agreement  from  each  Lock-Box  Bank  with  respect  to its  Lock-Box
Accounts,  (b) a satisfactory  forwarding order letter from NationsBank in which
it agrees to forward  all checks and other  amounts of the  Borrowers  deposited
with it to a Lock-Box Account designated by the Agent, (c) a satisfactory letter
from the Borrowers to all of their customers  directing them to make payments to
a  Lock-Box  Account  specified  by the  Agent and (d) a  Concentration  Account
Agreement from the Concentration Bank with respect to the Concentration Account.

     SECTION 5.1.7  Borrowing Base  Certificate.  The Agent shall have received,
with  counterparts for each Lender,  an initial  Borrowing Base Certificate from
USAM,  dated the date of the initial  Credit  Extension  and  calculated as of a
recent  date  satisfactory  to the Agent  (but in no event  later than five days
prior to the date of the initial Credit Extension),  duly executed and delivered
by  the  chief  executive   Authorized  Officer  of  USAM.  The  Borrowing  Base
Certificate  shall evidence that the Excess  Availability  Requirement  has been
satisfied.

     SECTION 5.1.8  Financial  Information,  etc. The Agent shall have received,
with counterparts for each Lender,  each of the following (all of which shall be
satisfactory to the Agent and each Lender):

          (a) audited  financial  statements for USAM and its  Subsidiaries  for
     each of its last three fiscal  years,  in each case  prepared in accordance
     with GAAP consistently applied;

          (b) quarterly unaudited consolidated financial statements for USAM and
     its Subsidiaries for the six month period ending June 30, 1999 certified by
     the chief executive

                                      -54-
<PAGE>

     Authorized  Officer of USAM,  prepared in accordance with GAAP consistently
     applied and subject to year-end audit adjustments;

          (c) a pro forma balance sheet for USAM and its Subsidiaries, certified
     by the chief executive  Authorized  Officer of USAM, after giving effect to
     the consummation of the transactions contemplated by this Agreement and the
     other Loan Documents; and

          (d) pro forma financial  statements for USAM and its  Subsidiaries for
     the period  from the  Effective  Date  through  the Stated  Maturity  Date,
     certified by the chief executive  Authorized  Officer of USAM, after giving
     effect to the  transactions  contemplated  by this  Agreement and the other
     Loan  Documents,  which  financial  statements  (i) shall be  prepared on a
     monthly  basis and (ii)  shall  establish,  on a pro forma  basis  from the
     Effective  Date  through  the Stated  Maturity  Date,  compliance  with the
     financial  covenants  contained  in  Section  7.2.4 and the  ability of the
     Borrowers  to repay  the  Obligations  hereunder  and  satisfy  the  Excess
     Availability Requirement.

     SECTION 5.1.9 Compliance  Certificate.  The Agent shall have received, with
counterparts for each Lender, an initial  Compliance  Certificate on a pro forma
basis after giving effect to the  transactions  contemplated  by this Agreement,
the other Loan Documents,  such  Compliance  Certificate to be dated the date of
the initial  Credit  Extension  and to be duly  executed (and with all schedules
thereto duly completed and establishing  compliance with the covenants contained
herein) and delivered by the chief executive Authorized Officer of USAM.

     SECTION  5.1.10  Corporate  Guaranty.  The Agent  shall have  received  the
Corporate  Guaranty,  dated as of the date  hereof  and  duly  executed  by each
Subsidiary of each Borrower (other than any Excluded Foreign Subsidiary).

     SECTION 5.1.11 Pledged Property. The Agent shall have received:

          (a) the Pledge Agreement,  dated as of the date hereof,  duly executed
     by each of the  Borrowers  and each of their  Subsidiaries  (other than any
     Excluded Foreign Subsidiary);

          (b)  the  original  certificates  evidencing  all  of the  issued  and
     outstanding  shares of capital stock required to be pledged pursuant to the
     terms of the Pledge Agreement,  which  certificates shall be accompanied by
     undated stock powers duly executed in blank by each relevant pledgor; and

          (c) the original  promissory  notes, if any,  evidencing  intercompany
     Indebtedness  required  to be pledged  pursuant  to the terms of the Pledge
     Agreement,  duly endorsed in blank by each relevant pledgor in favor of the
     Agent.

     SECTION 5.1.12 UCC Search Results.  The Agent shall have received certified
copies of Uniform  Commercial  Code  Requests  for  Information  or Copies (Form
UCC-11),  or a similar  search  report  certified by a party  acceptable  to the
Agent,  dated a date  reasonably  near (but  prior  to) the date of the  initial
Credit Extension,  listing all effective U.C.C. financing statements,  tax liens
and judgment liens which name the Borrowers or any of their Subsidiaries, as the
debtor, and which are filed in the jurisdictions in which filings are to be made
pursuant  to

                                      -55-
<PAGE>

this Agreement and the other Loan Documents,  and in such other jurisdictions as
the  Agent may  reasonably  request,  together  with  copies  of such  financing
statements (none of which (other than financing statements filed pursuant to the
terms hereof in favor of the Agent, if such Form UCC-11 or search report, as the
case may be, is current  enough to list such financing  statements)  shall cover
any of the Collateral).

     SECTION 5.1.13 Control Agreements.  If any of the Borrowers or any of their
Subsidiaries has any monies,  deposits or investments in any account (other than
with respect to its Receivables as provided in clause (a) of Section 3.4.1),  it
shall  provide  satisfactory  evidence  of the  termination  of the  same or the
Agent's first  priority  security  interest  therein,  including,  if necessary,
providing satisfactory control agreements.

     SECTION  5.1.14  Security  Agreement,  Filings,  etc.  The Agent shall have
received executed  counterparts of the Security Agreement,  dated as of the date
hereof,  duly executed by each of the Borrowers and each of their  Subsidiaries,
together with acknowledgment  copies of U.C.C.  financing  statements naming the
relevant  Borrower  and each of its  Subsidiaries,  as the  case may be,  as the
debtor and the Agent as the secured party, such U.C.C.  financing  statements to
have been filed under the U.C.C. of all jurisdictions as may be necessary or, in
the  opinion of the Agent,  desirable  to perfect  the first  priority  security
interest of the Agent pursuant to the Security Agreement, together with evidence
satisfactory  to the Agent of the filing (or delivery for filing) of appropriate
trademark, copyright and patent security supplements.

     SECTION 5.1.15 Solvency  Certificate.  The Agent shall have received,  with
copies for each Lender,  a solvency  certificate  in  substantially  the form of
Exhibit L attached  hereto,  duly  executed  by the chief  executive  Authorized
Officer of USAM,  dated the date of the initial  Credit  Extension and expressly
permitting the Agent and the Lenders to rely thereon.

     SECTION  5.1.16  Closing Date  Certificate.  The Agent shall have received,
with copies for each Lender,  a Closing Date  Certificate in  substantially  the
form of  Exhibit  K  attached  hereto,  duly  executed  by the  chief  executive
Authorized  Officer of USAM and dated the date of the initial Credit  Extension,
in which  certificate  USAM shall agree and acknowledge that the statements made
therein  shall  be  true  and  correct  representations  and  warranties  of the
Borrowers as of such date. All documents and agreements appended to such Closing
Date  Certificate   (including  the  Convertible  Debenture  Documents  and  the
Subordinated Debt Documents) shall be in form and substance  satisfactory to the
Agent and the Lenders.

     SECTION  5.1.17  Funds Flow  Memorandum.  The Agent  shall have  received a
satisfactory funds flow memorandum with respect to all payments made on the date
of the initial Credit Extension.

     SECTION  5.1.18  Evidence  of  Insurance.  The Agent  shall  have  received
evidence of the insurance coverage required to be maintained pursuant to Section
7.1.4  (including,  without  limitation,  all the endorsements and other matters
referred to in clause (b) thereof),  which insurance shall have been reviewed by
one or more of the  Agent's  risk  managers  and be  satisfactory  to the  same,
together with a satisfactory  insurance brokers letter as to the adequacy of

                                      -56-
<PAGE>

the Borrowers' insurance and the compliance of the same with the requirements of
this Agreement and the other Loan Documents.

     SECTION 5.1.19 Environmental  Matters. The Agent shall have received,  with
copies for each Lender, a certificate  signed by an Authorized Officer and dated
as of the date of the  initial  Credit  Extension,  certifying  true and correct
copies  of  environmental  assessment  reports  with  respect  to  each  of  the
Borrowers,  each of their Subsidiaries and their respective property, all of the
foregoing to be from a  satisfactory  environmental  consultant and otherwise be
satisfactory to the Agent and each of the Lenders. In addition,  the Agent shall
have received  satisfactory letters from GeoSyntech  Consultants as to potential
environmental  liabilities  and the scope for  additional  Phase II analysis and
from the Borrowers as to proposed remedian actions.

     SECTION 5.1.20 Payment of  Outstanding  Indebtedness,  etc. The Agent shall
have received satisfactory evidence that all the Indebtedness identified in Item
7.2.2(b)  ("Indebtedness to be Paid") of the Disclosure Schedule,  together with
all  interest,  all  prepayment  premiums and other amounts due and payable with
respect thereto, have been paid in full and all obligations with respect thereto
have  been  terminated,  and  that  all  Liens  securing  payment  of  any  such
Indebtedness  have been  released.  In addition,  the Agent shall have  received
termination  agreements  and  Uniform  Commercial  Code Form  UCC-3  termination
statements or other  instruments as may be suitable or appropriate in connection
with the foregoing.

     SECTION 5.1.21 Bailee Waivers.  If any Inventory of any of the Borrowers or
any of their  Subsidiaries  is located in a public  warehouse or other  facility
under the  control of a third  Person,  each such Person  shall have  executed a
bailee  waiver  or  entered  into  other   appropriate   arrangements  that  are
satisfactory to the Agent.

     SECTION 5.1.22  Appraisals and  Collateral  Audit Reports.  The Agent shall
have  received,  with  copies for each  Lender,  a  satisfactory  appraisal  and
collateral  audit report with respect to all the real  property,  machinery  and
equipment  of  the  Borrowers  and  their  Subsidiaries,   which  appraisal  and
collateral audit report shall be conducted by an appraiser,  and auditors as the
case may be, that is satisfactory to the Agent.

     SECTION 5.1.23 Copies of Material Agreements. The Agent shall have received
copies of all the  agreements  evidencing the  Indebtedness  referred to at Item
7.2.2(c)  ("Ongoing  Indebtedness")  of the Disclosure  Schedule  (including the
Convertible  Debenture  Documents and the  Subordinated  Debt Documents) and all
other  agreements,   documents  and  instruments  the  breach,   nonperformance,
cancellation   or  failure  to  renew  may  have  a  Material   Adverse   Effect
(collectively,  the "Material  Agreements"),  all of which  agreements  shall be
satisfactory to the Agent.

         SECTION  5.1.24 Opinions  of Counsel.  The Agent shall have received
opinions,  each dated the date of the initial Credit  Extension and addressed to
the Agent and all the Lenders, from New York and local counsel to the Borrowers,
substantially  in the  form of  Exhibits  N-1 and  N-2,  respectively,  attached
hereto.

                                      -57-
<PAGE>

     SECTION 5.1.25 Intercreditor  Agreement.  The Agent shall have received the
Intercreditor  Agreement,  dated as of the date  hereof,  duly  executed by each
Subordinated Debt Holder.

     SECTION 5.1.26 Agent's  Closing Fees,  Expenses,  etc. The Agent shall have
received  for its own account,  and for the account of each Lender,  as the case
may be, all fees,  costs and expenses  due and payable  pursuant to Sections 3.3
and, if then invoiced, 10.3.

     SECTION 5.1.27  Accountant's  Letter.  The Agent shall have received,  with
copies for each Lender,  a letter from the Borrowers'  accountants  that,  after
giving effect to the financing being made available  pursuant to this Agreement,
there would not have been a "going  concern"  qualification  with respect to the
Borrowers' 1998 financial statements.

     SECTION 5.1.28 Cash Collateral Agreement. The Agent shall have received the
Cash Collateral Agreement,  dated as of the date hereof, duly executed by Martin
Chevalier, Malvina B. Chevalier, John Kohut and Linda S. Ram.

     SECTION  5.1.29 IBJ  Authorization  Letter.  The Agent shall have received,
with copies for each Lender,  a letter from the Borrowers  authorizing the Agent
to rely upon,  among other things,  telephone  requests for the making of Credit
Extensions.

     SECTION 5.1.30 Cancellation of Existing Intercompany Notes. The Agent shall
have received  satisfactory  evidence that all the existing  intercompany  notes
among the Borrowers have been cancelled on satisfactory terms.

     SECTION 5.1.31 Satisfactory Due Diligence.  The Agent and each Lender shall
have completed, to their satisfaction,  a due diligence analysis with respect to
the Borrowers and their  Subsidiaries,  including with respect to the ability of
the Borrowers to comply with the  representations  and  warranties and covenants
contained in this Agreement and the other Loan Documents, and their customer and
vendor references.

     SECTION 5.2 All Credit Extensions. The obligation of each Lender and Issuer
to make any Credit Extension  (including the initial Credit  Extension) shall be
subject to the fulfillment of each of the conditions precedent set forth in this
Section 5.2 to the satisfaction of the Agent:

         SECTION  5.2.1 .Compliance  with Warranties,  No Default,  etc. Both
before and after giving effect to any Credit Extension:

          (a) the  representations and warranties set forth in Article VI and in
     the other Loan Documents shall be true and correct in all material respects
     with the same effect as if then made (unless  stated to relate solely to an
     earlier date, in which case such  representations  and warranties  shall be
     true and correct as of such earlier date); and

          (b) no  Default or Event of Default  shall have then  occurred  and be
     continuing.

                                      -58-
<PAGE>

     SECTION  5.2.2  Credit  Extension  Request,  etc.  (a) The  Agent  (and the
relevant  Issuer,  if a Letter of Credit is being requested) shall have received
from  the  Borrower  Representative  a duly  executed  and  completed  Borrowing
Request,  if Loans are being requested,  or an Issuance Request,  if a Letter of
Credit is being  requested or extended.  The delivery of a Borrowing  Request or
Issuance  Request and the  acceptance  by any  Borrower of the  proceeds of such
Credit Extension shall constitute a representation and warranty by such Borrower
that on the date of such Credit  Extension  (both  immediately  before and after
giving  effect to such Credit  Extension  and the  application  of the  proceeds
thereof) the statements made in Section 5.2.1 are true and correct.

          (b)  Prior to the  making  of any  CapEx  Loan or  Revolving  Loan the
     proceeds of which are to be used to fund any Permitted Capital  Expenditure
     the Agent shall have  received  satisfactory  evidence  that the  aggregate
     principal  amount of each such Loan  shall not exceed 80% of the Hard Costs
     of the relevant equipment being purchased by the relevant Borrower.

          (c) Prior to the making of any Term Loan after the date of the initial
     Credit  Extension  the  following  additional  conditions  shall  have been
     satisfied:

               (i) Environmental  Matters.  The Agent shall have received,  with
          copies for each Lender, a certificate  signed by an Authorized Officer
          and dated as of a date  reasonably  near (but  prior to) the date that
          the initial Term Loan is made,  certifying  true and correct copies of
          the Phase I and II  environmental  assessment  reports  as of a recent
          date with respect to each of the Borrowers, each of their Subsidiaries
          and  their  respective  property,  all of the  foregoing  to be from a
          satisfactory environmental consultant and otherwise be satisfactory to
          the Agent and each of the Lenders  (including that such reports do not
          disclose a liability exceeding a Material Environmental Amount).

               (ii) Real Estate Mortgages.  The Agent and each Lender shall have
          received  counterparts  of real  estate  mortgages  or deeds of trust,
          substantially in the form of Exhibit O hereto (collectively, the "Real
          Estate Mortgages"), duly executed by each Borrower and each applicable
          Subsidiary, together with

               (A) evidence of the completion (or satisfactory  arrangements for
          the  completion)  of all  recordings  and  filings of the Real  Estate
          Mortgages (and related fixture filings) as may be necessary or, in the
          opinion of the Agent or any Lender,  desirable to effectively create a
          valid first priority mortgage Lien against all of the Realty,  subject
          only to the Permitted Encumbrances;

               (B) such other  approvals,  opinions or documents  in  connection
          therewith  as  the  Agent  or  any  Lender  may  reasonably   request,
          including,  without limitation,  consents and estoppel agreements from
          landlords; and

               (C) a duly executed Real Estate  Mortgage Note in the name of the
          Agent for each Real Estate Mortgage.

                                      -59-
<PAGE>

               (iii)  Title  Insurance.  The Agent and each  Lender  shall  have
          received in its favor a mortgagee's title insurance policy or policies
          satisfactory  to each of them and from an  independent  title  insurer
          satisfactory  to it (the  "Title  Insurer"),  with  respect to all the
          Realty,  insuring that title to the Realty is marketable  and that the
          security  interests  created by the Real Estate  Mortgages  constitute
          valid Liens  thereon  free and clear of all defects and  encumbrances,
          other  than  the  Permitted  Encumbrances,   and  such  other  matters
          reasonably  approved  by the Agent and each  Lender,  and such  policy
          shall  also  include a  revolving  credit  endorsement,  comprehensive
          endorsement,   variable   rate   endorsement,   access  and  utilities
          endorsements (to the extent available),  a mechanic's lien endorsement
          endorsements (to the extent available) and such other  endorsements as
          the Agent or any Lender shall reasonably request. All premiums,  title
          examination,  survey,  departmental  violations,  judgment  and U.C.C.
          search  charges,  mortgage  recording taxes and fees, and other taxes,
          charges  and fees  shall have been paid in full or  provided  for in a
          manner  satisfactory to the Title Insurer,  the Agent and each Lender,
          and the  Agent  and  each  Lender  shall  have  received  satisfactory
          evidence of such payment or provision.

               (iv) Realty Survey. The Agent and each Lender shall have received
          a current survey of the Realty, and the improvements thereon, prepared
          in accordance  with the current Minimum  Standard Detail  Requirements
          for  Land  Title  Surveys  as  adopted  by  the  American  Land  Title
          Association  and the  American  Congress  on  Surveying  and  Mapping,
          prepared  and  certified  to each  Lender  and the Title  Insurer by a
          licensed  surveyor or  engineer,  which  surveyor  and survey shall be
          reasonably  satisfactory in all respects to the Agent, each Lender and
          to the Title  Insurer and which  certification  shall  include,  among
          other  things,  a  statement  to the effect  that all  portions of the
          Realty that lie within any flood areas designated on any maps entitled
          "Flood  Insurance  Rate Map",  "Flood Hazard  Floodway  Boundary Map",
          "Flood  Hazard  Boundary  Map",  or "Flood  Boundary and Floodway Map"
          published by the Federal  Emergency  Management Agency or on any Flood
          Hazard  Boundary Map  published by the U.S.  Department of Housing and
          Urban Development have been outlined and labeled on the survey.

               (v) Realty  Permits and Contracts The Agent and each Lender shall
          have  received  a  certificate  from  an  Authorized  Officer  of each
          Borrower certifying to such Authorized  Officer's knowledge (after due
          inquiry) true and correct copies of all Realty  Permits  required for,
          or useful in  connection  with,  the current use and  operation of the
          Realty of the Disclosure Schedule held by such Borrower, together with
          evidence  in form and  substance  satisfactory  to the  Agent and each
          Lender  to the  effect  that such  Realty  benefits  from such  zoning
          classifications  and entitlements as may be necessary or desirable for
          its intended uses.

               (D) The Agent and each Lender shall have  received a  certificate
          signed by an Authorized  Officer of each Borrower  certifying true and
          correct  copies  of all  material  contracts  relating  to the  use or
          operation of the Realty held by such Borrower.

               (vi)  Legal  Opinions.  The  Agent  and each  Lender  shall  have
          received  satisfactory  legal opinions covering those relevant matters
          addressed  in the opinion  letters  attached at Exhibits  N-1 and N-2,
          respectively, attached hereto.

                                      -60-
<PAGE>

     SECTION 5.2.3 .Satisfactory Legal Form. All documents executed or submitted
pursuant  hereto by or on behalf of the  Borrowers or any other Obligor shall be
satisfactory in form and substance to the Agent,  the Lenders and their counsel.
In addition,  the Agent,  the Lenders and their  counsel shall have received all
information,  approvals,  opinions,  documents or instruments as the Agent,  the
Lenders or their counsel may reasonably request.

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

     In order to induce  the  Lenders,  each  Issuer and the Agent to enter into
this Agreement and to make Credit  Extensions  hereunder,  each  Borrower,  with
respect to itself,  represents  and warrants to the Agent,  each Issuer and each
Lender as set forth in this Article VI.

     SECTION 6.1  Organization,  etc.  Each of the  Borrowers  and each of their
Subsidiaries  is a  corporation  validly  organized  and  existing  and in  good
standing  under  the  laws of the  jurisdiction  of its  incorporation,  is duly
qualified to do business  and is in good  standing as a foreign  corporation  in
each jurisdiction where the nature of its business requires such  qualification,
and has full power and authority and holds all requisite  governmental licenses,
permits and other approvals to enter into and perform its Obligations under this
Agreement,  the Notes and each other Loan Document to which it is a party and to
own and hold under lease its property and to conduct its business  substantially
as currently conducted by it.

     SECTION  6.2 Due  Authorization,  Non-Contravention,  etc.  The  execution,
delivery and performance by each Borrower of this Agreement,  the Notes and each
other  Loan  Document  executed  or to be  executed  by it,  and the  execution,
delivery and performance by each other Obligor of each Loan Document executed or
to be  executed  by it,  are  within  the  Borrowers'  and each  such  Obligor's
corporate powers,  have been duly authorized by all necessary  corporate action,
and do not

          (a)  contravene  or result in a default  under any such  Borrower's or
     other Obligor's Organic Documents;

          (b)  contravene or result in a default  under any law or  governmental
     regulation  or court decree or order  binding on any such Borrower or other
     Obligor;

          (c) contravene (i) any material provision of any indenture,  agreement
     or other  instrument to which any such Borrower or other Obligor is a party
     or by which any of them or any of their property is or may be bound or (ii)
     be in conflict  with,  result in a breach of or  constitute  (along or with
     notice or lapse of time or both) a default under, or give rise to any right
     to accelerate or to require the prepayment, repurchase or redemption of any
     obligation under any such indenture, agreement or other instrument; or

          (d) result in, or require the creation or  imposition  of, any Lien on
     any such Borrower's or other Obligor's  properties  (other than in favor of
     the Agent).

                                      -61-
<PAGE>

     SECTION 6.3  Government  Approval,  Regulation,  etc. No  authorization  or
approval or other action by, and no notice to or filing with,  any  governmental
authority or regulatory body or other Person is required for

          (a) the due execution, delivery or performance by each Borrower or any
     other  Obligor of this  Agreement,  the Notes or any other Loan Document to
     which it is a party;

          (b) the grant by the Borrowers of the security interests,  pledges and
     Liens granted by the Loan Documents; or

          (c) for the  perfection  of or the exercise by the Agent of its rights
     and remedies under this Agreement or any other Loan Document.

     SECTION 6.4 Validity,  etc. This Agreement  constitutes,  and the Notes and
each other Loan Document  executed by the  Borrowers  will, on the due execution
and delivery thereof,  constitute,  the legal, valid and binding  obligations of
the Borrowers  enforceable in accordance with their  respective  terms; and each
Loan Document  executed  pursuant  hereto by each other Obligor will, on the due
execution and delivery thereof by such Obligor,  be the legal, valid and binding
obligation of such Obligor enforceable in accordance with its terms,  subject in
each   case  to  the   effect   of  any   applicable   bankruptcy,   insolvency,
reorganization, moratorium or similar law affecting creditors' rights generally,
and subject to the effect of general principles of equity (regardless of whether
considered  in a  proceeding  in equity or at law).  Each of the Loan  Documents
which  purports to create a security  interest  creates a valid  first  priority
registered or possessory security interest in the Collateral subject thereto (in
the  case of  non-possessory  security  interests)  only to Liens  permitted  by
Section  7.2.3,  securing  the payment of the  Obligations,  and all filings and
other  actions  necessary  or  desirable  to perfect and protect  such  security
interest have been duly taken.

     SECTION 6.5  Financial  Information.  (a) The balance  sheets and financial
statements  of the  Borrowers  delivered  pursuant to Section  5.1.8 and Section
7.1.1 have each been or will be, as the case may be, prepared in accordance with
GAAP consistently applied and do or will, as the case may be, present fairly the
financial condition of the corporations  covered thereby as at the dates thereof
and the results of their  operations  for the periods then ended.  The pro forma
balance sheet and financial  statements  delivered pursuant to Section 5.1.8 (i)
have been prepared in good faith based on reasonable assumptions, (ii) are based
on the best  information  available to the  Borrowers  after due inquiry,  (iii)
accurately  reflect  all  adjustments  necessary  to  give  effect  to the  Loan
Documents  and (iv)  present  fairly,  in all material  respects,  the pro forma
financial  position of the Borrowers and their  Subsidiaries as of each relevant
date.

     (b) Except as disclosed in the  financial  statements  referred to above or
the notes thereto and for the items disclosed in the Disclosure  Schedule,  none
of the Borrowers or any of their Subsidiaries has, as of the date of the initial
Credit  Extension,  any  material  contingent  liabilities,   unusual  long-term
commitments or unrealized losses.

     SECTION  6.6. No Material  Adverse  Change.  (a) There has been no material
adverse change in the condition  (financial or otherwise),  operations,  assets,
business,  properties

                                      -62-
<PAGE>

or  prospects  of the  businesses  or  companies  of  the  Borrowers  and  their
Subsidiaries,  taken  as a  whole,  as  reflected  in the  financial  statements
delivered pursuant to clause (a) of Section 5.1.8.

     (b) From and after the date of the initial Credit Extension, there has been
no  material   adverse  change  in  the  condition   (financial  or  otherwise),
operations, assets, business, properties or prospects of the Borrowers and their
Subsidiaries,  taken as a whole,  as  reflected in the pro forma  balance  sheet
delivered pursuant to clause (c) of Section 5.1.8.

         SECTION 6.7 Litigation,  Labor Controversies,  etc. Except as set
forth on Item  6.7(a) of the  Disclosure  Schedule  ("Litigation"),  there is no
pending or, to the knowledge of the Borrowers,  threatened  litigation,  action,
proceeding,  or  labor  controversy  affecting  the  Borrowers  or any of  their
Subsidiaries,  or any of their  respective  properties,  businesses,  assets  or
revenues,  (a) with  respect  to this  Agreement,  the Notes or any  other  Loan
Document or (b) which could  reasonably  be expected to have a Material  Adverse
Effect.  The hours worked by and payments made to employees of the Borrowers and
their Subsidiaries have not been in violation of the Fair Labor Standards Act or
any  other  applicable  Federal,  state,  local or other law  dealing  with such
matters. Set forth on Item 6.7(b) of the Disclosure Schedule ("Labor Contracts")
is a listing of all labor  contracts  to which any of the  Borrowers  and any of
their Subsidiaries is a party.

     SECTION 6.8 Capitalization. As of the date of the initial Credit Extension,
the  authorized  capital  stock or the other  equity  interests  in USAM and its
Subsidiaries and their Affiliates,  including the holders thereof,  is set forth
in Item 6.8 ("Initial Capitalization") of the Disclosure Schedule. The Borrowers
will not establish  after the  Effective  Date (a) any  additional  Subsidiaries
without (i)  obtaining the prior  consent of the Agent and (ii)  complying  with
Section 7.1.9 or (b) make any Investments in any other Person without  complying
with the  applicable  terms of this  Agreement.  The shares of capital  stock or
other ownership interests so indicated on the Disclosure Schedule are fully paid
and non-assessable and are owned by the Borrowers,  directly or indirectly, free
and clear of all Liens  (other than Liens in favor of the Agent  pursuant to the
Loan Documents).

     SECTION 6.9  Ownership of  Properties.  Each of the  Borrowers  and each of
their  Subsidiaries  has good and marketable  title to all of its properties and
assets,  real and personal,  tangible and intangible,  of any nature  whatsoever
(including patents, trademarks, trade names, service marks and copyrights), free
and clear of all Liens,  charges or claims (including  infringement  claims with
respect to patents,  trademarks,  copyrights and the like),  except as permitted
pursuant to Section 7.2.3. Each of the Borrowers and each of their  Subsidiaries
has complied in all material  respect  with all  obligations  under all material
leases to which it is a party and all such  leases are in full force and effect.
Each of the  Borrowers  and  each of  their  Subsidiaries  enjoys  peaceful  and
undisturbed  possession under all such material  leases.  Item 6.9 ("Realty") of
the  Disclosure  Schedule  sets forth the address of each real  property that is
owned or leased by the  Borrowers and their  Subsidiaries  as of the date of the
initial Credit Extension.

     SECTION 6.10 Taxes. The Borrowers and their Subsidiaries have filed all tax
returns and reports required by law to have been filed by them and have paid all
taxes and governmental  charges thereby shown to be owing, except any such taxes
or charges  which are

                                      -63-
<PAGE>

being  diligently  contested in good faith by  appropriate  proceedings  and for
which  adequate  reserves in  accordance  with GAAP shall have been set aside on
their books.

     SECTION  6.11  Pension  and  Benefit  Plans.  Item  6.11  ("Plans")  of the
Disclosure  Schedule  lists  all  Plans  as of the  date of the  initial  Credit
Extension.  Neither a Reportable Event nor an "accumulated  funding  deficiency"
(within  the  meaning  of Section  412 of the Code or Section  302 of ERISA) has
occurred  during  the  five-year   period  prior  to  the  date  on  which  this
representation  is made with respect to any Pension Plan,  and each Pension Plan
has complied in all material  respects with the applicable  provisions of ERISA,
the Code and all other applicable laws. No termination of a Single Employer Plan
has  occurred,  and no Lien in favor of the PBGC or a  Pension  Plan has  arisen
during such five-year  period.  The present value of all accrued  benefits under
each Single Employer Plan (based on those  assumptions used to fund such Pension
Plans) did not, as of the last annual  valuation date prior to the date on which
this representation is made, exceed the value of the assets of such Pension Plan
allocable to such  accrued  benefits by a material  amount.  No Borrower nor any
Commonly  Controlled  Entity has had a complete or partial  withdrawal  from any
Multiemployer  Plan which has resulted or could reasonably be expected to result
in a material liability under ERISA, and no Borrower nor any Commonly Controlled
Entity  would  become  subject  to any  material  liability  under  ERISA if any
Borrower or any such Commonly Controlled Entity were to withdraw completely from
all Multiemployer Plans as of the valuation date most closely preceding the date
on which this representation is made.

     SECTION  6.12  Environmental  Warranties.  Except as set forth in Item 6.12
("Environmental Matters") of the Disclosure Schedule:

          (a) all facilities  and property  (including  underlying  groundwater)
     owned,  operated or leased by the  Borrowers  and their  Subsidiaries  have
     been,  and continue to be,  owned,  operated or leased by the Borrowers and
     their  Subsidiaries in compliance with all  Environmental  Laws, except for
     such violations that,  singly or in the aggregate,  would not reasonably be
     expected  to result  in a  liability  exceeding  a  Material  Environmental
     Amount;

          (b) there have been no past, and there are no pending or threatened

               (i)  claims,  complaints,  notices or  requests  for  information
          received by the Borrowers or any of their Subsidiaries with respect to
          any alleged  violation of any Environmental Law that, singly or in the
          aggregate,  may  reasonably  be  expected  to  result  in a  liability
          exceeding a Material Environmental Amount; or

               (ii) complaints,  notices or inquiries to the Borrowers or any of
          their   Subsidiaries   regarding   potential   liability   under   any
          Environmental Law that, singly or in the aggregate,  may reasonably be
          expected to result in a liability  exceeding a Material  Environmental
          Amount;

          (c) there have been no Releases of Hazardous Materials at, on or under
     any property now or previously  owned,  operated or leased by the Borrowers
     or any of their

                                      -64-
<PAGE>

     Subsidiaries  that,  singly or in the aggregate,  has, or may reasonably be
     expected   to  result  in  having,   a   liability   exceeding  a  Material
     Environmental Amount;

          (d) the Borrowers and their  Subsidiaries  have been issued and are in
     material compliance with all permits, certificates, approvals, licenses and
     other  authorizations  relating to  environmental  matters and necessary or
     desirable for their businesses;

          (e) no property  now or  previously  owned,  operated or leased by the
     Borrowers or any of their  Subsidiaries  is listed or (to the best of their
     knowledge) proposed for listing on the National Priorities List pursuant to
     CERCLA,  on the  CERCLIS or on any  similar  state list of sites  requiring
     investigation or clean-up;

          (f) there  are no  underground  storage  tanks,  active or  abandoned,
     including  petroleum  storage  tanks,  on or  under  any  property  now  or
     previously owned or leased by the Borrowers or any of their Subsidiaries;

          (g) neither any of the  Borrowers nor any of their  Subsidiaries  have
     transported or arranged for the transportation of any Hazardous Material to
     any location which is listed or (to the best of their  knowledge)  proposed
     for listing on the  National  Priorities  List  pursuant to CERCLA,  on the
     CERCLIS or on any  similar  state list or which is the  subject of federal,
     state or local enforcement actions or other  investigations  which may lead
     to claims against any Borrower or such Subsidiary  thereof for any remedial
     work,  damage to natural  resources or personal  injury  (including  claims
     under CERCLA) which, singly or in the aggregate, may reasonably be expected
     to result in a liability exceeding a Material Environmental Amount;

          (h) there are no polychlorinated biphenyls or friable asbestos present
     at  any  property  now or  previously  owned,  operated  or  leased  by the
     Borrowers or any of their  Subsidiaries  that,  singly or in the aggregate,
     may  reasonably  be expected to result in a liability  exceeding a Material
     Environmental Amount; and

          (i) no conditions exist at, on or under any property now or previously
     owned,  operated or leased by the  Borrowers  or any of their  Subsidiaries
     which,  with the  passage of time,  or the giving of notice or both,  would
     give rise to liability under any  Environmental  Law which would reasonably
     be  expected to result in a  liability  exceeding a Material  Environmental
     Amount.

     SECTION 6.13 Inventory. (a) All Inventory of the Borrowers is located on or
is in  transit  to the  premises  described  in  Section  3.1.1 of the  Security
Agreement,  as the same may  hereafter be  supplemented  from time to time.  All
Inventory  located on any property leased to the Borrowers or in or with, as the
case may be, a public warehouse or other third party is subject to a landlord or
bailee  waiver,  as  applicable,  and  appropriately  completed  and filed UCC-1
financing  statements,  in each case to which the Agent has confirmed to USAM is
in form and substance acceptable to it.

     (b) The Borrowers  shall at all times  hereafter  keep correct and accurate
records  itemizing  and  describing  generally  the kind,  type and  quantity of
Inventory, the

                                      -65-
<PAGE>

Borrowers' cost therefor and daily withdrawals  therefrom and additions thereto,
all of which records shall be available  during the  Borrowers'  usual  business
hours at the request of the Agent.

     (c) All  Receivables  of the  Borrowers  and  their  Subsidiaries  shall be
subject,  without  limitation,  to the terms of Section  4.1.2.  of the Security
Agreement.

     SECTION  6.14  Accuracy  of  Information.   (a)  All  factual   information
heretofore or contemporaneously  furnished by or on behalf of the Borrowers, any
of their Subsidiaries and any of their Affiliates in writing to the Agent or any
Lender for purposes of or in connection  with this Agreement or any  transaction
contemplated  hereby  is,  and all  other  such  factual  information  hereafter
furnished by or on behalf of the Borrowers, any of their Subsidiaries and any of
their  Affiliates to the Agent or any Lender will be, true and accurate in every
material  respect on the date as of which such information is dated or certified
and,  as to  information  heretofore  delivered,  as of the date of the  initial
Credit Extension,  and such information is not, or shall not be, as the case may
be,  incomplete  by omitting to state any material  fact  necessary to make such
information not misleading.

     (b) All written  information  prepared by any  consultant  or  professional
advisor  on  behalf  of the  Borrowers  or any of their  Subsidiaries  which was
furnished  to the  Agent or any  Lender  in  connection  with  the  preparation,
execution and delivery of this Agreement has been reviewed by the Borrowers, and
nothing has come to the attention of the Borrowers in the context of such review
which would lead them to believe that such  information  (or the  assumptions on
which  such  information  is  based)  is not true and  correct  in all  material
respects or that such information  omits to state any material fact necessary to
make such information not misleading in any material respect.

     (c) Insofar as any of the information described above includes assumptions,
estimates, projections or opinions, the Borrowers have reviewed such matters and
nothing has come to the attention of the Borrowers in the context of such review
which would lead them to believe  that such matters were not or are not true and
correct  in  all  material  respects  or  that  such   assumptions,   estimates,
projections  or opinions omit to state any material fact  necessary to make such
assumptions, estimates, projections or opinions not reasonable or not misleading
in any material  respect.  All  projections  and estimates have been prepared in
good  faith on the  basis  of  reasonable  assumptions  and  represent  the best
estimate of future performance by the party supplying the same.

     SECTION  6.15  Documentation  Questionnaire.  As of the date of the initial
Credit  Extension all of the information  provided by USAM to the Agent pursuant
to the documentation  questionnaire (the "Documentation  Questionnaire") is true
and correct in all material respects.

     SECTION  6.16  Absence of Default.  Except as set forth on Item 6.16 of the
Disclosure  Schedule  ("Defaults"),  none  of the  Borrowers  nor  any of  their
Subsidiaries  is in default  in the  payment  of (or in the  performance  of any
obligation  applicable  to)  any  Indebtedness,  or in  violation  of any law or
governmental regulation or court decree or order in any material respect.

                                      -66-
<PAGE>

     SECTION 6.17 Regulations G, U and X. None of the Borrowers nor any of their
Subsidiaries is engaged principally,  or as one of its important activities,  in
the  business  of  extending  credit for the purpose of  purchasing  or carrying
"margin  stock".  None of the  proceeds  of any Loan or Letter of Credit will be
used for the purpose of, or be made  available by any of the Borrowers or any of
their  Subsidiaries  in any manner to any other  Person to enable or assist such
Person in, directly or indirectly  purchasing or carrying "margin stock".  Terms
for which  meanings are  provided in F.R.S.  Board  Regulation  G, U or X or any
regulations  substituted  therefor,  as from time to time in effect, are used in
this Section 6.17 with such meanings.

     SECTION 6.18 Government Regulation.  None of the Borrowers nor any of their
Subsidiaries  is  an  "investment  company"  nor  a  "company  controlled  by an
investment company" within the meaning of the Investment Company Act of 1940, as
amended,  or 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, as amended.

     SECTION 6.19 Material Agreements.  Set forth on Item 6.19 of the Disclosure
Schedule  ("Material  Agreements")  is a listing,  as of the date of the initial
Credit  Extension,  of all the  Material  Agreements,  and  each  Obligor  is in
material  compliance  with all the terms contained  therein.  Each Obligor is in
material  compliance with all the terms contained in each Material Agreement and
all consents to duly assign each such Material  Agreement to the Agent have been
obtained and are in full force and effect.

     SECTION 6.20 Solvency. Each of the Borrowers and each of their Subsidiaries
is,  and  after  giving  effect  to  the  incurrence  of  all  Indebtedness  and
obligations  being incurred  pursuant to the Loan Documents or otherwise will be
and will continue to be, Solvent.

     SECTION 6.21 Insurance.  Item 6.21 ("Insurance") of the Disclosure Schedule
sets forth a true, complete and correct description of all insurance  maintained
by the Borrowers  and their  Subsidiaries  as of the date of the initial  Credit
Extension.  As of such date,  such insurance is in full force and effect and all
premiums have been duly paid.

     SECTION 6.22  Compliance with Laws. Each of the Borrowers and each of their
Subsidiaries  is in material  compliance with all laws,  rules,  regulations and
orders of governmental authorities applicable to them and their properties.

     SECTION  6.23 Year 2000.  Any  reprogramming  required to permit the proper
functioning,  in and following the year 2000, of the Borrowers' computer systems
and equipment  containing embedded  microchips  (including systems and equipment
supplied by others or with which Borrowers'  systems  interface) and the testing
of all such  systems and  equipment,  as so  reprogrammed,  has been  completed,
except that the foregoing  which relates to the Borrowers'  financial  reporting
systems in their Florida operations shall be completed no later than October 31,
1999.  The cost to the  Borrowers of such  reprogramming  and testing and of the
reasonably  foreseeable  consequences of year 2000 to the Borrowers  (including,
without limitation,  reprogramming  errors and the failure of others' systems or
equipment) will not result in a Default or a Material Adverse Effect. Except for
such of the reprogramming  referred to in the preceding

                                      -67-
<PAGE>

sentence,  the computer and management  information systems of the Borrowers and
their Subsidiaries are and, with ordinary course upgrading and maintenance, will
continue  for  the  term of this  Agreement  to be,  sufficient  to  permit  the
Borrowers to conduct their business without a Material Adverse Effect.

     SECTION  6.24  Senior  Indebtedness,  etc.  All  principal  of, and accrued
interest  owing on, all the Credit  Extensions and all other  Obligations  owing
hereunder and under the other Loan Documents are "Senior Indebtedness" under the
Intercreditor Agreement.  USAM has duly executed and delivered each Subordinated
Debt Document and each Subordinated Debt Document  constitutes the legal,  valid
and binding obligation of USAM,  enforceable against USAM in accordance with its
terms,   subject,   as  to   enforcement   only,  to   bankruptcy,   insolvency,
reorganization,  moratorium  or similar laws  affecting  the  enforceability  of
creditors' rights generally,  and subject to the effect of general principles of
equity  (regardless of whether  considered in a proceeding in equity or at law).
USAM has delivered true and complete copies of the  Subordinated  Debt Documents
to the Lenders, together with all amendments, waivers and other changes thereto.
Notwithstanding  any  bankruptcy,  insolvency,  reorganization,   moratorium  or
similar  proceeding  in  respect  of USAM,  at all times  (i) the  subordination
provisions  in the  Intercreditor  Agreement  will be  enforceable  against  the
Subordinated  Debt  Holders  thereof  by the  Agent  and the  Lenders,  (ii) all
Obligations,  including the  Obligations to pay principal of and interest on the
Credit  Extensions,   constitute  "Senior  Indebtedness",   as  defined  in  the
Intercreditor  Agreement  and  all  such  Obligations  will be  entitled  to the
benefits of subordination  created by the Intercreditor  Agreement and (iii) all
payments of principal of or interest on each  Subordinated Debt Document made by
USAM from the liquidation of its property will be subject to such  subordination
provisions.  At the time of the execution and delivery of each Subordinated Debt
Document,  the same was duly registered or qualified under all applicable United
States Federal, state and Commonwealth securities laws or exempt therefrom.  The
Borrowers  acknowledge  that the  Agent  and  Lenders  are  entering  into  this
Agreement, and have extended the Loans and other Credit Extensions,  in reliance
upon the subordination  provisions contained in the Intercreditor  Agreement and
the representations and warranties made pursuant to this Section.

                                   ARTICLE VII

                                    COVENANTS

     SECTION 7.1 Affirmative Covenants. The Borrowers agree with the Agent, each
Issuer and each Lender that,  until the Revolving Loan Commitment has terminated
and all Obligations  have been paid in cash and performed in full, the Borrowers
will perform the obligations set forth in this Section 7.1.

     SECTION 7.1.1 Financial Information,  Reports,  Notices, etc. The Borrowers
will furnish, or will cause to be furnished, to each Lender and the Agent copies
of the following financial statements, reports, notices and information:

          (a) as soon as available and in any event within 30 days after the end
     of each of each Fiscal Month of USAM (except for January), consolidated and
     consolidating  balance sheets of USAM and its Subsidiaries as of the end of
     such Fiscal Month and consolidated and

                                      -68-
<PAGE>

     consolidating  statements  of  earnings  and  cash  flow  of  USAM  and its
     consolidated  Subsidiaries  for  such  Fiscal  Month  and  for  the  period
     commencing  at the end of the previous  Fiscal Year and ending with the end
     of such Fiscal Month, together with (i) comparable  information adjusted to
     reflect any changes at the close of and for the corresponding  Fiscal Month
     for the prior Fiscal Year and for the corresponding portion of the previous
     Fiscal Year and (ii) a  comparison  of such  financial  condition  with the
     projections for the applicable  period provided  pursuant to clause (j), in
     each case  certified  as  complete  and correct by the  treasurer  or chief
     executive  Authorized  Officer of USAM as fairly  presenting  the financial
     position of USAM and its  consolidated  Subsidiaries as of the date thereof
     and for the period then ended;

          (b) as soon as available and in any event within 50 days after the end
     of each  Fiscal  Quarter of USAM and 95 days  after the end of each  Fiscal
     Year of USAM,  copies of the Quarterly Report on Form 10-Q of USAM for such
     Fiscal Quarter that is filed with the  Securities  and Exchange  Commission
     and copies of the Annual  Report on Form 10-K of USAM for such  Fiscal Year
     that is filed with the  Securities and Exchange  Commission,  respectively,
     such annual financial statements to be certified (without any Impermissible
     Qualification) in a manner acceptable to the Agent and the Required Lenders
     by Arthur Anderson LLP or other independent public  accountants  acceptable
     to the Agent and the Required  Lenders,  together with a  certificate  from
     such accountants  containing a computation of, and showing compliance with,
     each of the financial  ratios and  restrictions  contained in Section 7.2.4
     and to the effect that, in making the examination necessary for the signing
     of such annual  report by such  accountants,  they have not become aware of
     any Default or Event of Default that has occurred and is continuing, or, if
     they have become aware of such Default or Event of Default, describing such
     Default or Event of Default and the steps,  if any, being taken to cure it,
     together with a comparison of such financial condition with the projections
     for the  applicable  period  provided  pursuant to clause (j), in each case
     certified  as complete  and  correct by the  treasurer  or chief  executive
     Authorized Officer of USAM;

          (c)  concurrently  with  the  delivery  of  the  financial  statements
     pursuant to clauses (a) and (b), a certificate  from the treasurer or chief
     executive  Authorized  Officer of USAM that, to the best of his  knowledge,
     each Obligor  during the period  covered by such  financial  statements has
     observed or performed all of its covenants and other  agreements  contained
     in this  Agreement  and the other Loan  Documents  required to be observed,
     performed or satisfied by it, and that such Authorized Officer has obtained
     no knowledge of any Default or Event of Default except as specified in such
     certificate;

          (d) as soon as available and in any event within 30 days after the end
     of each Fiscal Month, a Compliance  Certificate,  executed by the treasurer
     or chief  executive  Authorized  Officer of USAM,  showing  (in  reasonable
     detail and with  appropriate  calculations and computations in all respects
     satisfactory  to the Agent)  compliance  with the  financial  covenants set
     forth in Section 7.2.4;

          (e) as soon as possible and in any event within  three  Business  Days
     after the  occurrence of each Default,  Event of Default or event which may
     result in a Material Adverse Effect,  a statement of an Authorized  Officer
     setting forth details of such Default,  Event of

                                      -69-
<PAGE>

     Default, or event and the action which the Borrowers have taken and propose
     to take with respect thereto;

          (f) as soon as possible and in any event within  three  Business  Days
     after (i) the  occurrence  of any adverse  development  with respect to any
     litigation,  action,  proceeding, or labor controversy described in Section
     6.7 or (ii) the commencement of any labor controversy,  litigation, action,
     proceeding  of the type  described  in Section  6.7,  notice  thereof by an
     Authorized Officer and copies of all documentation relating thereto;

          (g)  concurrently  after the sending or filing thereof,  copies of (i)
     all reports and documents which the Borrowers or any of their  Subsidiaries
     sends to any of their  security  holders  and (ii) all  reports,  financial
     statements and registration  statements which the Borrowers or any of their
     Subsidiaries  files with the  Securities  and  Exchange  Commission  or any
     securities  exchange,  except that the  Borrowers  shall not be required to
     deliver any of the foregoing which has previously been delivered hereunder;

          (h)  immediately  upon becoming aware of any events which would result
     in a violation of the representations contained in Section 6.12.;

          (i)  within  15 days  after  the end of each  Fiscal  Month  (or  less
     frequently as may be requested by the Agent) a Borrowing  Base  Certificate
     calculated as of the last day of the  immediately  preceding  Fiscal Month,
     all  certified as being true,  accurate  and  complete by the  treasurer or
     chief executive Authorized Officer of USAM;

          (j) promptly when available and, in any event, within 45 days prior to
     the last day of each Fiscal Year a budget in form and scope satisfactory to
     the Agent for the next  succeeding  Fiscal  Year,  (including  a  projected
     consolidated  balance sheet of USAM and its  Subsidiaries  as of the end of
     the  following  Fiscal Year,  and the related  consolidated  statements  of
     projected cash flow,  projected changes in financial position and projected
     income),  which  projections  shall be on a monthly  basis (except that the
     months of January and  February may be combined)  and be  accompanied  by a
     certificate of the chief executive  Authorized Officer of USAM stating that
     such  projections  are  based  on  reasonable  estimates,  information  and
     assumptions and that such Authorized  Officer has no reason to believe that
     such projections are incorrect or misleading in any material respect;

          (k)  concurrently  with  the  delivery  of  the  financial  statements
     pursuant to clause (b), the final management  letter,  if any,  prepared by
     the independent  public  accountants  who prepared the delivered  financial
     statements  with respect to internal  audit and financial  controls of USAM
     and its Subsidiaries;

          (l) all such notices and documents  required to be delivered  pursuant
     to the Security Agreement, including, pursuant to Section 4.1.7 thereof;

          (m)  promptly  after the  receipt  thereof,  copies  of any  notice of
     non-payment or underpayment of taxes or other  governmental  charges by the
     Borrowers or any of their  Subsidiaries  that is received from any relevant
     governmental authority;

                                      -70-
<PAGE>

          (n) (i)  promptly,  and in any event within three  Business Days after
     any  Material  Agreement  is  terminated  or  amended  or any new  Material
     Agreement is entered into, a written  statement  describing  such event and
     copies of any such new contract  and (ii)  promptly  following  the receipt
     (and in any event within three Business Days of receipt),  and concurrently
     with the delivery of, all material notices under any Material Agreement;

          (o) concurrently with the delivery of the annual financial  statements
     pursuant to clause (b), a  certificate  of the chief  executive  Authorized
     Officer of USAM (i) setting forth the information  required pursuant to the
     disclosure  schedule of the Security Agreement or confirming that there has
     been no change in such  information  since the date of the  initial  Credit
     Extension or the date of the most recent certificate  delivered pursuant to
     this clause and (ii) certifying that all Uniform  Commercial Code financing
     statements  (including fixture filings, as applicable) or other appropriate
     filings, recordings or registrations, including all refilings, rerecordings
     and  reregistrations,  containing a description of the Collateral have been
     filed of record in each governmental, municipal or other appropriate office
     in each  jurisdiction that is necessary to protect and perfect the security
     interests under the Security Agreement;

          (p) within 15 days after the end of each Fiscal  Month,  a Schedule of
     Receivables  as of the last Business Day of such Fiscal Month setting forth
     a  detailed  aged  trial  balance  of  all  the  Borrowers'  then  existing
     Receivables,  and  specifying the name of and the balance due from (and any
     rebate due to) each Account Debtor obligated on a Receivable so listed;

          (q) within 20 days after the end of each Fiscal  Month,  a Schedule of
     payables as of the last day of such Fiscal Month  setting  forth a detailed
     aged  trial  balance  of all  of the  Borrowers'  then  existing  payables,
     specifying the name and the balance owing to each Person;

          (r) within 20 days after the end of each Fiscal  Month,  a Schedule of
     Inventory as of the last  Business Day of such Fiscal Month  itemizing  and
     describing the kind, type,  quantity and location of Inventory and the cost
     thereof;

          (s) as soon as possible and in any event within  three  Business  Days
     after the  occurrence  of any of the  following  as it relates to any Plan,
     notice thereof and copies of all relevant material information:

               (i) a Reportable Event;

               (ii) any condition existing with respect to a Plan which presents
          a material risk of the termination of such Plan or the incurrence of a
          material liability by any Borrower or any Commonly Controlled Entity;

               (iii) the filing by any plan  administrator of a Plan of a notice
          of intent to terminate such Plan;

               (iv) a copy  of any  application  by any  Borrower  or any  ERISA
          Affiliate for a waiver of the minimum  funding  standard under Section
          412 of the Code;

                                      -71-
<PAGE>

               (v)  copies of each  annual  report  which is filed on Form 5500,
          together with certified financial  statements (if any) for the Plan as
          of the end of such year and actuarial statements on Schedule B to such
          Form 5500;

               (vi) any event or condition which might constitute  grounds under
          Section 4042 of ERISA for the  termination of, or the appointment of a
          trustee to administer, any Plan;

               (vii) the  receipt by any  Borrower  or any  Commonly  Controlled
          Entity  of  a  notice  received  by  such  Borrower  or  any  Commonly
          Controlled   Entity   concerning  the  imposition  of  any  withdrawal
          liability under Section 4202 of ERISA;

               (viii) if any of the  representations  and  warranties in Section
          6.7 ceases to be true and correct in all material respects; or

               (ix) the adoption of, or material change to, any Plan;

          (t) concurrently with the receipt or delivery  thereof,  copies of all
     notices  with  respect to the  premises  leased  from the  Sanford  Airport
     Authority,  and  evidence of the  payment of each  monthly  rental  payment
     (which shall be provided  not later than the date each such rented  payment
     is due under the lease with the Sanford Airport Authority); and

          (u) such other  information  respecting  the condition or  operations,
     financial or otherwise,  of the Borrowers or any of their  Subsidiaries  as
     any  Lender  through  the Agent may from time to time  reasonably  request,
     including  in  respect  of  establishing  the  eligibility  of those  items
     including in determining the Borrowing Base Amount.

     SECTION 7.1.2 Compliance with Laws;  Payment of Obligations.  Each Borrower
will,  and will  cause  each of its  Subsidiaries  to,  comply  in all  material
respects with all  governmental  rules and  regulations  and all other  material
applicable  laws,  rules,  regulations  and orders,  such  compliance to include
(without limitation):

          (a) the  maintenance and  preservation of its corporate  existence and
     qualification  as a foreign  corporation  in any  jurisdiction  where  such
     Borrower or its Subsidiaries have assets or conduct business,  except where
     failure to maintain and preserve such existence or qualification  would not
     reasonably be expected to have a Material Adverse Effect; and

          (b) the  payment,  before the same become  delinquent,  of (i) all its
     Indebtedness and other  obligations,  including all taxes,  assessments and
     governmental  charges  imposed upon it or upon its  property,  and (ii) all
     lawful  claims for labor,  materials  and  supplies or otherwise  that,  if
     unpaid,  could  reasonably  be  expected to give rise to a Lien upon any of
     their  properties,  except,  in each case,  to the extent being  diligently
     contested in good faith by appropriate proceedings which suspend collection
     of the contested obligation, tax, assessment or charge and enforcement of a
     Lien and for which  adequate  reserves in  accordance  with GAAP shall have
     been set aside on its books.

                                      -72-
<PAGE>

     SECTION 7.1.3 Maintenance of Properties. Each Borrower will, and will cause
each of its Subsidiaries to, maintain, preserve, protect and keep its properties
in good repair,  working  order and  condition,  and make  necessary  and proper
repairs, renewals and replacements so that its business carried on in connection
therewith may be properly conducted at all times.

     SECTION 7.1.4 Insurance.  (a) The Borrowers shall maintain, and shall cause
each of their  Subsidiaries  to maintain,  insurance  policies and coverage with
respect to all their  property  and assets at least as expansive as set forth on
Item 6.21  ("Insurance")  of the Disclosure  Schedule and, in any event, to such
extent and covering such risks as is customary for companies in sound  financial
condition in the same or similar  businesses  and  operations and in the same or
similar locations.  In addition,  the Borrowers shall maintain,  and shall cause
each of their  Subsidiaries  to maintain (i) "key man" life insurance for Martin
Chevalier in an amount not less than $3,000,000,  and (ii) such other additional
insurance  coverage in such  amounts and with respect to such risks as the Agent
or the Lenders may  reasonably  request  from time to time.  All such  insurance
shall be provided (x) by insurers  authorized  by Lloyds of London to underwrite
such risks, (y) by insurers having an A.M. Best policyholders rating of not less
than "A" or (iii) by such other insurers as the Agent may approve in writing.

     (b) All premiums on insurance policies required under this Section shall be
paid by the  Borrowers.  All  insurance  policies  relating  to "key  man"  life
insurance,  business interruption and any loss or damage sustained in respect of
any item  constituting  a part of the  Collateral  shall  contain a loss payable
endorsement,  in form and substance  satisfactory  to the Agent, in favor of the
Agent. All insurance policies relating to general liability, umbrella and excess
insurance coverages shall contain an additional insured endorsement, in form and
substance  satisfactory to the Agent, in favor of the Agent.  All such insurance
policies shall provide that:

          (i)  neither  any of the  Borrowers,  any of their  Subsidiaries,  the
     Agent,  the Issuers or any of the Lenders shall be a coinsurer  thereunder;
     and

          (ii) such insurance shall not be affected by any  unintentional act or
     negligence  or  representation  or warranty on the part of the Borrowers or
     other owner of the policy or the property described in such policy.

All such insurance policies shall provide that the insurer shall, simultaneously
with the delivery to the  Borrowers or any of their  Subsidiaries  of any notice
under  such  policy,  deliver  to the  Agent  a copy of such  notice.  All  such
insurance  policies and loss payable  clauses shall provide that they may not be
cancelled,  amended  or  terminated  unless the Agent is given at least the same
number of days' notice that the insurance  company which issued such policies is
required to give the  Borrowers  or any of their  Subsidiaries,  but in no event
less than 30 days' prior written notice.

     (c) The Borrowers shall provide or cause to be provided to the Agent and to
its insurance  consultant (or any agent,  officer or employee of the Agent) such
other  information  relating to their  insurance  coverage as may be  reasonably
requested  by the Agent.  The  insurance  consultant  (through  its  officers or
employees) shall have the right to visit the Borrowers' offices, upon reasonable
prior notice during usual business hours, to inspect the insurance policies

                                      -73-
<PAGE>

provided for herein.  The reasonable  fees,  costs and expenses of the insurance
consultant shall be paid for by the Borrowers.

     (d) If no Default or Event of Default has occurred and is continuing,  USAM
may, during the 60 day period following  receipt by the Agent of any proceeds of
insurance in an  aggregate  amount of less than  $100,000  that has been paid on
account  of the  loss or  damage  to any  Collateral,  request  that  the  Agent
authorize  it to apply  the same to  repair,  restore  or  replace  the asset or
property on account of which such proceeds of insurance were paid.  Such request
by USAM shall  describe in  reasonable  detail the nature of such loss or damage
and  include  a  statement  that USAM or one or more of its  Subsidiaries  has a
reasonable and good faith  intention to apply such insurance  proceeds within 60
days of its receipt to the repair,  replacement  or  restoration of such lost or
damaged  property.  To the extent that USAM does not send the notice referred to
in the  preceding  sentence or does not repair,  restore or replace the relevant
property  within such 60 day period,  the relevant  proceeds of insurance  shall
constitute Net Insurance Proceeds and shall be applied by the Agent as mandatory
prepayment  of the Loans  pursuant to clause (d) of Section  3.1.2.  All amounts
shall be held by the  Agent  prior to its  application  to  repair,  restore  or
replace  the  relevant  property,  and  while so held  shall  form a part of the
Collateral and be subject to the Agent's first priority security  interest.  All
insurance  proceeds  paid  by  the  Agent  to  the  Borrowers  for  the  repair,
replacement or  restoration  of property shall be promptly  applied (and, in any
event,  not later  than the next  following  Business  Day after  receipt by the
relevant  Borrower)  to complete the same.  All  proceeds of  insurance  paid on
account of the loss or damage to any Collateral in an amount exceeding  $100,000
or during the  continuance  of any Default or Event of Default shall be retained
by the Agent and immediately  constitute Net Insurance Proceeds to be applied as
a mandatory prepayment of the Loans pursuant to clause (d) of Section 3.1.2.

     (e) If any of the Borrowers or any of their  Subsidiaries fails to maintain
any of the  policies of  insurance  required by this  Section the Agent may (but
shall not be required),  at the sole cost and expense of such Borrower to obtain
and maintain such policies of insurance,  pay the related premiums and take such
other  action  as it  deems  reasonably  advisable.  All  costs  related  to the
foregoing shall be charged to the Borrower's loan account as a Revolving Loan.

     SECTION 7.1.5 Books and Records;  Inspections.  (a) The Borrowers will, and
will  cause  each of  their  Subsidiaries  to,  keep  books  and  records  which
accurately reflect all of their business affairs and transactions. The Borrowers
shall  maintain at all times books and records  pertaining to the  Collateral in
such detail,  form, and scope as the Agent shall reasonably  require,  including
without  limitation,  records of: (i) all payments  received and all credits and
extensions  granted with respect to the  Accounts;  (ii) the return,  rejection,
repossession, stoppage in transit, loss, damage or destruction of all Inventory;
and (iii) all other dealings affecting the Collateral.

     (b) The Borrowers  will, and will cause their  Subsidiaries  to, permit the
Agent and each  Lender  or any of their  respective  representatives  (including
outside  auditors),  at reasonable  times and  intervals,  to visit all of their
offices,  to discuss their financial matters with their officers and independent
public  accountant (and the Borrowers hereby  authorize such independent  public
accountant to discuss the Borrowers' financial matters with each Lender or its

                                      -74-
<PAGE>

representatives  whether or not any  representative of the Borrowers is present)
and to examine (and, at the expense of the  Borrowers,  copy extracts  from) and
conduct audits of any of their Inventory, Receivables, other assets and books or
other corporate records (including computer records).

     (c) The  Borrowers  jointly  and  severally  agree  to pay any fees of such
independent  public  accountant  incurred in connection  with the Agent's or any
Lender's exercise of its rights pursuant to this Section. The Agent, in its sole
discretion and at the sole expense of the Borrowers, may conduct such audits and
examinations  of the  Accounts  as  the  Agent  reasonably  deems  necessary  or
advisable.

     SECTION 7.1.6  Environmental  Covenants.  (a) The Borrowers  will, and will
cause each of their  Subsidiaries,  lessees and other  Persons  occupying any of
their properties to,

          (i)  use  and  operate  all of  their  facilities  and  properties  in
     compliance  with  all  Environmental  Laws,  keep all  permits,  approvals,
     certificates,  licenses and other authorizations  relating to environmental
     matters  in effect  and  remain in  compliance  therewith,  and  handle all
     Hazardous  Materials in compliance with all applicable  Environmental Laws,
     except where the failure to do any of the foregoing would not, singly or in
     the aggregate,  reasonably be expected to result in a liability exceeding a
     Material Environmental Amount;

          (ii) take all such actions as are necessary and appropriate so that no
     liability  with  respect to the  Environmental  Laws may arise  which could
     reasonably  be  expected  to result in a  liability  exceeding  a  Material
     Environmental Amount;

          (iii) immediately  notify the Agent and provide copies upon receipt of
     all  written  claims,  complaints,  notices or  inquiries  relating  to the
     condition  of  their   facilities   and   properties  or  compliance   with
     Environmental  Laws,  and  shall  promptly  cure  and have  dismissed  with
     prejudice  to the  satisfaction  of the Agent any actions  and  proceedings
     relating to compliance  with or liability  pursuant to  Environmental  Laws
     which,  singly or in the aggregate,  could reasonably be expected to result
     in a liability exceeding a Material Environmental Amount;

          (iv) provide such information and  certifications  which the Agent may
     reasonably  request  from  time to time to  evidence  compliance  with this
     Section 7.1.6.

     (b)  Prior  to  acquiring  any  ownership  or  leasehold  interest  in real
property,  or other  interest in any real  property  that could give rise to the
Borrowers  or any of their  Subsidiaries  being  found  an  owner,  operator  or
otherwise  subject  to  potential  liability  under  any  Environmental  Law the
Borrowers  shall  (i)  obtain  a  written  report  by  a  reputable  independent
environmental  consultant  reasonably acceptable to the Agent (an "Environmental
Consultant")  of the  Environmental  Consultant's  assessment of the presence or
potential  presence of  significant  levels of any  Hazardous  Material  on, in,
under, or about such property,  or of other conditions that could give rise to a
potentially  significant  liability under  violations of any  Environmental  Law
relating  to  such   acquisition,   and  notify  the  Agent  of  such  potential
acquisition, and (ii) if

                                      -75-
<PAGE>

requested by the Agent after  learning of such  potential  acquisition,  provide
such report to the Agent and afford the Agent a reasonable opportunity to review
and, if  requested  by the Agent,  discuss  such  report with the  Environmental
Consultant who prepared it and a knowledgeable  representative of the Borrowers.
The Agent shall have the right, but shall not have any duty, to obtain,  review,
or discuss any such report.

     (c) Promptly upon the Agent's  request if there has occurred,  or the Agent
reasonably  anticipates  that there may occur,  an Event of  Default,  permit an
environmental consultant whom the Agent in its discretion designates, subject to
the  approval  of the  Borrowers,  which shall not be  unreasonably  withheld or
delayed,  to perform an  environmental  assessment on all real property owned or
leased by the Borrowers and their Subsidiaries  (including,  without limitation:
reviewing  documents;  interviewing  knowledgeable  persons;  and  sampling  and
analyzing soil, air, surface water, groundwater,  and/or other media in or about
property  owned or leased by the Borrowers or any of their  Subsidiaries,  or on
which  operations of the Borrowers or any of their  Subsidiaries  otherwise take
place.) Such  environmental  assessment  shall be in form,  scope, and substance
reasonably  satisfactory to the Agent, subject to the approval of the Borrowers,
which shall not be  unreasonably  withheld or delayed.  The  Borrowers and their
Subsidiaries  shall  cooperate  fully  in  the  conduct  of  such  environmental
assessment,  and shall pay the reasonable costs of such environmental assessment
promptly  following  written demand therefore by the Agent. The Agent shall have
the right, but not the duty to obtain such environmental report.

     SECTION 7.1.7 Rate Protection  Agreements.  All Rate Protection  Agreements
shall be (a) with a  counterparty  that is a Lender or  another  Person  that is
reasonably  satisfactory to the Agent and (b) unsecured  unless the counterparty
is a Lender,  in which  case the  obligations  under  each such Rate  Protection
Agreement shall be secured pro rata with all the other Obligations hereunder.

     SECTION 7.1.8 As to  Intellectual  Property  Collateral.  (a) The Borrowers
shall not, and shall not permit any of their Subsidiaries,  unless the Borrowers
shall  reasonably and in good faith determine (and notice of such  determination
shall have been  delivered to the Agent) that any of the  Intellectual  Property
Collateral  is of  negligible  economic  value  to the  Borrowers  or  any  such
Subsidiary,  do any act, or omit to do any act,  whereby any of the Intellectual
Property  Collateral may lapse or become abandoned or dedicated to the public or
unenforceable.

     (b) Each of the Borrowers  and each of their  Subsidiaries  shall  promptly
notify  the Agent  immediately  if it  knows,  or has  reason to know,  that any
application or  registration  relating to any material item of the  Intellectual
Property Collateral may become abandoned or dedicated to the public or placed in
the public domain or invalid or unenforceable,  or of any adverse  determination
or  development  (including the  institution  of, or any such  determination  or
development in, any proceeding in the United States Patent and Trademark Office,
the United States  Copyright  Office or any foreign  counterpart  thereof or any
court) regarding the Borrowers' or any such Subsidiary's ownership of any of the
Intellectual Property Collateral,  its right to register the same or to keep and
maintain and enforce the same.

                                      -76-
<PAGE>

     (c) In no event shall any of the Borrowers,  any of their  Subsidiaries  or
any of their agents,  employees,  designees or licensees file an application for
the registration of any Intellectual  Property Collateral with the United States
Patent and Trademark  Office,  the United States Copyright Office or any similar
office or agency in any other  country  or any  political  subdivision  thereof,
unless it promptly  informs the Agent,  and upon request of the Agent,  executes
and delivers any and all  agreements,  instruments,  documents and papers as the
Agent may reasonably  request to evidence the Agent's security  interest in such
Intellectual Property Collateral and the goodwill and general intangibles of the
Borrowers and their Subsidiaries relating thereto or represented thereby.

     (d) The Borrowers and their  Subsidiaries  shall take all necessary  steps,
including  in any  proceeding  before the  United  States  Patent and  Trademark
Office,  the United States  Copyright  Office or any similar office or agency in
any other country or any political  subdivision  thereof, to maintain and pursue
any application (and to obtain the relevant registration) filed with respect to,
and to maintain  any  registration  of, the  Intellectual  Property  Collateral,
including the filing of applications for renewal,  affidavits of use, affidavits
of incontestability  and opposition,  interference and cancellation  proceedings
and the  payment  of fees and  taxes  (except  to the  extent  that  dedication,
abandonment or invalidation  is permitted  under the foregoing  clauses (a), (b)
and (c)).

     SECTION  7.1.9 Future  Subsidiaries.  Upon any Person  becoming,  after the
Effective Date, either a direct or indirect Subsidiary of any Borrower,  or upon
any Borrower acquiring  additional  capital stock of any existing  Subsidiary or
any Borrower or any Subsidiary of any Borrower acquiring  additional Realty, the
Borrowers  shall  notify the Agent of such  acquisition  and, on or prior to the
consummation of such acquisition,

          (a) such Person shall, if it is not an Excluded Foreign Subsidiary and
     not  already  a  party  to any of the  following,  become  a  party  to the
     Corporate  Guaranty,  a Real  Estate  Mortgage  (with  appropriate  changes
     reasonably  requested by the Agent) if it owns or leases Realty, the Pledge
     Agreement and the Security Agreement in a manner  satisfactory to the Agent
     and,  if such  Person  maintains  any bank  accounts  or  Investments  at a
     financial   institution  other  than  the  Agent,  such  bank  accounts  or
     Investments shall be subject to a Lock-Box Agreement and control agreement,
     as the case may be;

          (b) the  Borrowers  and each such  Subsidiary  that is not an Excluded
     Foreign Subsidiary shall, pursuant to the Borrower Pledge Agreement, pledge
     to the Agent:

               (i) all of the  outstanding  shares of such capital stock of such
          Subsidiary  owned  directly  by it  (but,  in the  case  of a  Foreign
          Subsidiary,  not more  than 66% of the  voting  capital  stock of such
          Foreign  Subsidiary  shall be so pledged),  along with  undated  stock
          powers  for such  certificates,  executed  in blank  (or,  if any such
          shares of capital stock are uncertificated,  confirmation and evidence
          satisfactory  to  the  Agent  that  the  security   interest  in  such
          uncertificated securities has been transferred to and perfected by the
          Agent in  accordance  with the U.C.C.  or any similar law which may be
          applicable); and

                                      -77-
<PAGE>

               (ii) all notes evidencing  intercompany  Indebtedness in favor of
          the Borrowers and each such Subsidiary  (which shall be in the form of
          Exhibit A to the Pledge Agreement), as the case may be;

          (c) the Agent shall have  received from each such  Subsidiary  that is
     not an Excluded Foreign  Subsidiary  certified copies of Uniform Commercial
     Code Requests for Information or Copies (Form UCC-11),  or a similar search
     report  certified  by a  party  acceptable  to  the  Agent,  dated  a  date
     reasonably  near (but  prior  to) the date of any such  Person  becoming  a
     direct  or  indirect  Subsidiary  of  a  Borrower,  listing  all  effective
     financing  statements,  tax liens and judgment liens which name such Person
     as the debtor and which are filed in the jurisdictions in which filings are
     to be made pursuant to this Agreement and the other Loan Documents,  and in
     such other jurisdictions as the Agent may reasonably request, together with
     copies of such  financing  statements  (none of which (other than financing
     statements  filed  pursuant to the terms  hereof in favor of the Agent,  if
     such Form UCC-11 or search report, as the case may be, is current enough to
     list such financing statements) shall cover any of the Collateral);

          (d) the Agent shall have  received from each such  Subsidiary  that is
     not an Excluded Foreign Subsidiary, acknowledgment copies of properly filed
     U.C.C.  financing  statements or such other  evidence of filing or delivery
     for filing as may be acceptable to the Agent,  naming each such  Subsidiary
     as the debtor and the Agent as the secured party, filed under the U.C.C. of
     all  jurisdictions  as may be  necessary  or, in the  opinion of the Agent,
     desirable to perfect the first priority  security  interest of the Agent of
     the assets of such  Subsidiary  that is subject to the Security  Agreement,
     together,  in each  case,  with  such  opinions  of legal  counsel  for the
     Borrowers  relating  thereto,  which  legal  opinions  shall be in form and
     substance satisfactory to the Agent; and

          (e) the Agent shall have received in  connection  with any Realty that
     that is owned by each such  Subsidiary  that is not an Excluded  Subsidiary
     those  items  referred  to in clause (b) of Section  5.2.2  which  shall be
     satisfactory to the Agent.

Each of the  Borrowers  agree that if (i) any  Excluded  Foreign  Subsidiary  is
permitted to execute and deliver the Corporate Guaranty, the Pledge Agreement, a
Real Estate Mortgage or the Security Agreement or (ii) it is permitted to pledge
more than 66% of the voting capital stock of any Foreign Subsidiary, in any such
case  without  material  adverse tax  consequences  which  would  result in such
Subsidiary being an Excluded Foreign Subsidiary,  then the provisions of clauses
(a),  (c),  (d) and (e) of this  Section  7.1.9 shall  thereafter  apply to such
Foreign  Subsidiary  and/or (as the case may be) the provisions of clause (b) of
this Section 7.1.9 shall  thereafter  apply to 100% of the capital stock of such
Foreign Subsidiary.

     SECTION 7.1.10  Post-Closing  Items,  etc. Not later than 90 days after the
date of the initial  Credit  Extension  USAM shall have  delivered  to the Agent
copies  of  recently  completed  Phase I and Phase II  environmental  assessment
reports  with  respect to all  property  owned by the  Borrowers in the State of
Florida,  the foregoing to be from a satisfactory  environmental  consultant and
otherwise be satisfactory  to the Agent and each of the Lenders  (including that
such  reports do not  disclose a liability  exceeding  a Material  Environmental
Amount).

                                      -78-
<PAGE>

     SECTION 7.2 Negative  Covenants.  The Borrowers agree with the Agent,  each
Issuer and each Lender that,  until the Revolving Loan Commitment has terminated
and all Obligations  have been paid in cash and performed in full, the Borrowers
will perform the obligations set forth in this Section 7.2.

     SECTION 7.2.1  Business  Activities.  The Borrowers  will not, and will not
permit any of their  Subsidiaries  to, engage in any business  activity,  except
those described in the first recital.

     SECTION 7.2.2 Indebtedness. The Borrowers will not, and will not permit any
of their Subsidiaries to, create,  incur, assume or suffer to exist or otherwise
become  or be  liable  in  respect  of any  Indebtedness,  other  than,  without
duplication, the following:

          (a)  Indebtedness  in  respect  of the  Credit  Extensions  and  other
     Obligations;

          (b)  until  the date of the  initial  Credit  Extension,  Indebtedness
     identified in Item 7.2.2(b)  ("Indebtedness  to be Paid") of the Disclosure
     Schedule;

          (c) Indebtedness identified in Item 7.2.2(c) ("Ongoing  Indebtedness")
     of the Disclosure Schedule;

          (d) Indebtedness in respect of any Rate Protection  Agreement  entered
     into pursuant to Section 7.1.10;

          (e)  Indebtedness  (i) of any  Wholly-Owned  Subsidiary  of a Borrower
     owing to such Borrower or any other  Subsidiary of such Borrower or (ii) of
     a Borrower owing to any of its Subsidiaries, which Indebtedness

               (A)  shall be  evidenced  by one or more  promissory  notes  duly
          executed and delivered to the Agent (each such  promissory  note to be
          in substantially  the form of Attachment II to the Pledge  Agreement),
          and

               (B)  shall  not be  forgiven  or  otherwise  discharged  for  any
          consideration other than payment in full in cash, unless the Agent and
          the Required Lenders otherwise consent;

          (f)  Indebtedness  that is incurred to purchase a capital asset and is
     secured  by the Liens  referred  to in clause  (b) of  Section  7.2.3 in an
     aggregate   principal   amount  not  to  exceed   $3,000,000  at  any  time
     outstanding;

          (g) any extensions, renewals or replacements of Indebtedness described
     in clause (c) above to the extent that (i) the aggregate  principal  amount
     of such  Indebtedness is not at any time increased and neither the maturity
     nor the  average  life  of  such  Indebtedness  is  shortened,  (ii) if the
     Indebtedness  being  refinanced is  subordinated  to the  Obligations,  the
     refinancing  Indebtedness  shall be subordinated to the Obligations and the
     Loan Documents in all respects at least to the same extent and shall not be
     less favorable to the Lenders in any respect and (iii) no terms  applicable
     to such Indebtedness shall be less favorable to the Lenders or more

                                      -79-
<PAGE>

     onerous to the Borrowers or their Subsidiaries in any material respect than
     the terms of the Indebtedness being refinanced; and

          (h) other  subordinated  indebtedness,  on terms in form and substance
     satisfactory  to the Agent and the  Lenders in their sole  discretion,  the
     proceeds of which are used  contemporaneously  upon the issuance thereof to
     refinance the Convertible Debenture Debt;

provided,  however, that no Indebtedness otherwise permitted by clause (d), (e),
(f), (g) or (h) may be incurred if, immediately before or after giving effect to
the incurrence thereof,  any Default or Event of Default shall have occurred and
be  continuing.  The  Borrowers  will,  prior to  entering  into  any  agreement
evidencing any extension,  renewal or replacement of Indebtedness as provided in
clause  (c),  deliver to the Agent with  copies for each  Lender  reasonably  in
advance  of the  execution  thereof,  any final or  execution  form copy of such
agreement, and agrees not to enter into any such agreement without obtaining the
prior approval of the Required Lenders as provided in clause (c).

     SECTION  7.2.3 Liens.  The  Borrowers  will not, and will not permit any of
their  Subsidiaries to, create,  incur,  assume or suffer to exist any Lien upon
any of their  property,  revenues  or  assets,  whether  now owned or  hereafter
acquired, except:

          (a) Liens securing payment of the Obligations, granted pursuant to any
     Loan Document;

          (b) purchase money Liens granted to secure payment of the Indebtedness
     permitted  pursuant to clause (f) of Section 7.2.2,  provided that (i) each
     such Lien covers only those  capital  assets  acquired with the proceeds of
     such  Indebtedness,  (ii) each such Lien  attaches to the relevant  capital
     asset  concurrently  with the  acquisition  thereof and (iii) the principal
     amount of such  Indebtedness  does not exceed 85% of the lesser of the cost
     or fair market value of the relevant capital asset;

          (c)  Liens  existing  on the  Effective  Date  and  disclosed  on Item
     7.2.3(c) ("Existing Liens") of the Disclosure Schedule,  provided that such
     Liens do not spread to cover any  additional  property or assets  after the
     Effective Date;

          (d) Liens for  taxes,  assessments  or other  governmental  charges or
     levies not at the time  delinquent  or being  diligently  contested in good
     faith by appropriate  proceedings which suspends  enforcement of such Liens
     and for which adequate reserves in accordance with GAAP shall have been set
     aside on their books;

          (e)  Liens  of  carriers,  warehousemen,  mechanics,  materialmen  and
     landlords  incurred in the ordinary course of business for sums not overdue
     or being  diligently  contested  in good faith by  appropriate  proceedings
     which suspends enforcement of such Liens and for which adequate reserves in
     accordance with GAAP shall have been set aside on their books;

          (f) Liens  incurred in the ordinary  course of business in  connection
     with  worker's  compensation,  unemployment  insurance  or  other  forms of
     governmental  insurance or benefits,  or to secure  performance of tenders,
     statutory obligations, leases and contracts (other

                                      -80-
<PAGE>

     than for borrowed money) entered into in the ordinary course of business or
     to secure obligations on surety or appeal bonds;

          (g)  judgment  Liens in  existence  less than 10 days  after the entry
     thereof or with respect to which  execution  has been stayed or the payment
     of  which  is  covered  in full  (subject  to a  customary  deductible)  by
     insurance  maintained with insurance companies in accordance with the terms
     of Section 7.1.4; and

          (h)  easements,  rights-of-way,  zoning and similar  restrictions  and
     other similar  encumbrances or title defects which,  in the aggregate,  are
     not substantial in amount,  and which do not in any case materially detract
     from the  value of the  property  subject  thereto  or  interfere  with the
     ordinary conduct of the business of the Borrowers or their Subsidiaries.

          (i) Liens in favor of the  Subordinated  Debt  Holders in the  capital
     stock of QAC to the extent permitted in the Intercreditor Agreement.

     SECTION 7.2.4 Financial Condition. The Borrowers will not permit:

          (a) Fixed Charge Coverage Ratio. Their Fixed Charge Coverage Ratio for
     the Rolling  Period ending on the last day of each Fiscal Month  (beginning
     August 31, 1999) to be less than 1.25:1.00:

          (b) Net Worth.  The  Borrowers  will not permit their Net Worth at any
     time to be less than (i) $8,500,000 at any time prior to the receipt by the
     Agent and the Lenders of the annual  financial  statements  for USAM's 1999
     Fiscal  Year,  (ii) at the end of any Fiscal  Quarter  (beginning  with the
     Fiscal Quarter end September 30, 1999),  the sum of (x) Net Worth as of the
     last day of the prior  Fiscal  Quarter  plus (y) 75% of Net Income (with no
     deduction for net losses) for such current  Fiscal Quarter and (iii) at the
     end of any Fiscal  Month  (beginning  with the Fiscal Month end January 31,
     2000),  not less than Net Worth as of (x) June 30,  1999,  until the annual
     financial  statements  referred to in clause (i) are  delivered and (y) the
     last  day  of  the  preceding  Fiscal  Year,  after  the  annual  financial
     statements referred to in clause (i) are delivered.

     SECTION 7.2.5 Investments.  The Borrowers will not, and will not permit any
of their Subsidiaries to, make, incur,  assume or suffer to exist any Investment
in any other Person, except:

          (a) Investments  existing on the Effective Date and identified in Item
     7.2.5(a) ("Ongoing Investments") of the Disclosure Schedule;

          (b) Cash Equivalent Investments;

          (c) without duplication, Investments permitted as Capital Expenditures
     pursuant to Section 7.2.7;

          (d) Investments by the Borrowers in Subsidiaries  permitted by Section
     6.8 comprising the equity ownership and initial approved  capitalization of
     such Subsidiaries; and

                                      -81-
<PAGE>

          (e) intercompany loans permitted by clause (f) of Section 7.2.2;

provided,  however,  that any  Investment  which  when  made  complies  with the
requirements  of the  definition of the term "Cash  Equivalent  Investment"  may
continue to be held  notwithstanding  that such  Investment  if made  thereafter
would not comply  with such All  Investments  referred to in clauses (a) and (b)
shall be subject to a control agreement,  in form and substance  satisfactory to
the Agent, that evidences the Agent's first priority security interest therein.

     SECTION 7.2.6 Restricted Payments,  etc. (a) USAM will not (notwithstanding
the  terms  of any  Organic  Document)  declare,  pay or make  any  dividend  or
distribution  (in cash,  property or  obligations) on any shares of any class of
capital stock (now or hereafter outstanding) of USAM or on any warrants, options
or other rights with respect to any shares of any class of capital  stock now or
hereafter  outstanding of USAM (other than dividends or distributions payable in
its common  stock or warrants  to  purchase  its common  stock or  split-ups  or
reclassifications  of its stock into  additional  or other  shares of its common
stock) or apply, or permit any of its  Subsidiaries to apply,  any of its funds,
property or assets to the purchase, redemption, sinking fund or other retirement
of, or agree or permit any of its Subsidiaries to purchase or redeem, any shares
of any  class of  capital  stock  (now or  hereafter  outstanding)  of USAM,  or
warrants,  options or other  rights  with  respect to any shares of any class of
capital stock (now or hereafter outstanding) of USAM; and

     (b) USAM will not, and will not permit any of its Subsidiaries to, make any
deposit for any of the foregoing purposes; and

     (c) the Borrowers will not  (notwithstanding  the terms of the Subordinated
Debt  Documents  or  Convertible  Debenture  Documents)  make any payment on any
Permitted Borrower  Subordinated Debt or Convertible  Debenture Debt (other than
payment in shares of common  stock of USAM or as provided in the last  paragraph
of clause (d) of Section 3.1.2).

     SECTION 7.2.7 Capital  Expenditures,  etc. The Borrowers will not, and will
not  permit  any of  their  Subsidiaries  to,  make or  commit  to make  Capital
Expenditures  in any  Fiscal  Year,  except  Capital  Expenditures  which do not
aggregate  in any Fiscal  Year in excess of the amount set forth  opposite  each
Fiscal Year below;

          Fiscal Year                               Amount
             1999                                 $1,200,000
             2000                                 $1,300,000
             2001                                 $1,400,000
             2002                                 $817,000;

provided,   however,  that  (a)  the  Borrowers  may  incur  additional  Capital
Expenditures  in an  amount  not to  exceed  $750,000  in  Fiscal  Year 2000 and
$750,000 in Fiscal Year 2001, which Capital Expenditures are used to acquire and
equip a new  distribution  center,  in each case on terms in form and  substance
satisfactory  to the  Agent  in its  sole  discretion,  and (b) no such  Capital
Expenditure shall be made if any Default or Event of Default shall have occurred
and be

                                      -82-
<PAGE>

continuing immediately prior to or after giving effect to the making of any such
Capital Expenditure.

     SECTION 7.2.8 Take or Pay  Contracts.  The Borrowers will not, and will not
permit any of their Subsidiaries to, enter into or be a party to any arrangement
for the  purchase of  materials,  supplies,  other  property or services if such
arrangement  by its express terms requires that payment be made by a Borrower or
its Subsidiary regardless of whether such materials, supplies, other property or
services are delivered or furnished to it.

         SECTION  7.2.9 Consolidation,  Merger, etc. The Borrowers will not,
and will not  permit  any of  their  Subsidiaries  to,  liquidate  or  dissolve,
consolidate or amalgamate with, or merge into or with, any other corporation, or
purchase,  lease or otherwise acquire (in each case in one transaction or series
of  transactions)  all or any  substantial  part of the  assets  or stock of any
Person (or of any division thereof),  except that any Wholly-Owned Subsidiary of
any Borrower may liquidate or dissolve  voluntarily into, and may merge with and
into, any Borrower or any other Wholly-Owned Subsidiary of any Borrower, and the
assets or stock of any Wholly-Owned  Subsidiary of any Borrower may be purchased
or otherwise  acquired by any Borrower or any other  Wholly-Owned  Subsidiary of
any Borrower.

     SECTION  7.2.10 Asset  Dispositions,  etc. The Borrowers will not, and will
not permit any of their Subsidiaries to, sell,  transfer,  lease,  contribute or
otherwise  convey or  dispose of (in each case in one  transaction  or series of
transactions),  or grant  options,  warrants or other rights with respect to (in
each case in one transaction or series of related transactions), all or any part
of  their  assets   (including   accounts   receivable   and  capital  stock  of
Subsidiaries) to any Person, except

          (a) if such sale,  transfer,  lease,  contribution or conveyance is of
     Inventory in the ordinary course of their business;

          (b) if such disposition is a Permitted Disposition; or

          (c) if such  assets  are  worn  out or  obsolete  and are  sold in the
     ordinary course of business.

     SECTION 7.2.11  Modification of Certain  Agreements.  None of the Borrowers
nor any of their Subsidiaries will consent to any amendment, supplement or other
modification  of any of the terms or provisions  contained in, or applicable to,
any Organic Document of the Borrowers or any of their Subsidiaries, any Material
Contract,  any Subordinated Debt Document or any Convertible  Debenture Document
which (a) is contrary to the terms of this Agreement or any other Loan Document,
(b) may be adverse to the rights,  interests or  privileges  of the Agent or the
Lenders or their ability to enforce the same or (c) results in the imposition or
expansion in any material  respect of any restriction or burden on the Borrowers
or any of their  Subsidiaries  (it being  understood  and  agreed  that any such
determination  shall be made in the  discretion  of the  Agent  and (A) any such
amendment,  supplement or modification to the subordination provisions contained
in the Subordinated Debt Documents, or (B) any increase in the amount of, or any
change (other than a deferral) of the date for payment of, or any increased rate
with  respect to,

                                      -83-
<PAGE>

any redemption,  fee,  interest rate,  principal or interest  repayment or other
payment  or  sinking  fund  provisions,  or (C)  any  amendment,  supplement  or
modification to any remedial or default provisions or covenant  restrictions and
related  definitions  that  result in any of the same being more  onerous on the
Borrowers  shall in any event require the consent of the Required  Lenders).  In
addition, neither the Borrowers nor any of their Subsidiaries will terminate any
Material  Agreement.  The Borrowers will,  prior to entering into any amendment,
addition or other modification of any of the foregoing documents, deliver to the
Agent  (with  copies for each  Lender)  reasonably  in advance of the  execution
thereof, any final or execution form copy of amendments,  supplements, additions
or other modifications to such documents, and agrees not to take any such action
with respect to any such documents without the approval of the Required Lenders.

     SECTION 7.2.12  Transactions  with Affiliates.  The Borrowers will not, and
will not permit any of their  Subsidiaries  to, enter into, or cause,  suffer or
permit to exist any arrangement or contract with, any of their other  Affiliates
unless  such  arrangement  or  contract  (a)  is  otherwise  permitted  by  this
Agreement, (b) is in the ordinary course of business of the Borrowers and (c) is
on fair and reasonable terms and is an arrangement or contract of the kind which
would be entered into by a prudent  Person in the  position of the  Borrowers or
such Subsidiary with a Person which is not one of their Affiliates.

     SECTION 7.2.13 Negative Pledges, Restrictive Agreements, etc. The Borrowers
will not,  and will not  permit  any of their  Subsidiaries  to,  enter into any
agreement (excluding this Agreement and any other Loan Document) prohibiting:

          (a) the  creation  or  assumption  of any Lien upon their  properties,
     revenues or assets, whether now owned or hereafter acquired, or the ability
     of the  Borrowers or any other  Obligor to amend or  otherwise  modify this
     Agreement or any other Loan Document; or

          (b) the ability of any  Subsidiary to make any  payments,  directly or
     indirectly, to the Borrowers by way of dividends,  advances,  repayments of
     loans or advances,  reimbursements  of  management  and other  intercompany
     charges,  expenses and  accruals or other  returns on  investments,  or any
     other  agreement or  arrangement  which  restricts  the ability of any such
     Subsidiary to make any payment, directly or indirectly, to the Borrowers.

     SECTION 7.2.14 Management Fees, Expenses,  etc. The Borrowers will not, and
will not permit any of their Subsidiaries to,

          (a)pay management,  advisory,  consulting or other similar fees, other
     than

               (i) fees payable to the Lenders or any of their Affiliates;

               (ii)  fees  payable  to  non-Affiliate   consultants  engaged  on
          arm's-length basis as approved by the Board of Directors of USAM; and

               (iii) fees payable to Ramko Venture Management,  Inc. pursuant to
          the  Management  Agreement  in  existence  on the date  hereof and any
          successor agreement that is reasonably acceptable to the Agent; or

                                      -84-
<PAGE>

          (b) reimburse  employees or any Affiliates for any expenses unless the
     same shall be otherwise  permitted  hereunder and shall be  reasonable  and
     documented in reasonable detail.

     SECTION  7.2.15  Fiscal Year End.  None of the  Borrowers  nor any of their
Subsidiaries shall change its Fiscal Year.

     SECTION 7.2.16 Limitation on Sale and Leaseback Transactions. The Borrowers
will not,  and will not  permit  any of their  Subsidiaries  to,  enter into any
arrangement   with  any  Person  whereby  in  a  substantially   contemporaneous
transaction the Borrowers or any of their Subsidiaries sells or transfers all or
substantially  all of their  right,  title  and  interest  in an asset  and,  in
connection therewith, acquires or leases back the right to use such asset.

     SECTION  7.2.17 No  Speculative  Transactions.  The Borrowers will not, and
will  not  permit  any of  their  Subsidiaries  to,  engage  in any  transaction
involving commodity options,  futures contracts or similar transactions,  except
solely to hedge  against  fluctuations  in the  prices of  commodities  owned or
purchased by them and the values of foreign currencies  receivable or payable by
them and interest swaps, caps or collars.

                                  ARTICLE VIII

                                EVENTS OF DEFAULT

     SECTION 8.1 Listing of Events of Default.  Each of the following  events or
occurrences  described  in this  Section  8.1  shall  constitute  an  "Event  of
Default".

     SECTION 8.1.1  Non-Payment of  Obligations.  The Borrowers shall default in
the payment or prepayment when due of any monetary Obligation hereunder or under
any other Loan Document  (including,  without  limitation,  any principal of, or
interest  on,  any Loan,  any  Reimbursement  Obligation,  any fees or any other
amounts payable hereunder or thereunder).

     SECTION 8.1.2 Breach of Representations and Warranties.  Any representation
or  warranty of the  Borrowers  or any other  Obligor  made or deemed to be made
hereunder  or in any other Loan  Document  executed  by any of them or any other
writing or  certificate  furnished by or on behalf of the Borrowers or any other
Obligor to the Agent or any Lender for the  purposes  of or in  connection  with
this  Agreement  or any such other Loan  Document  (including  any  certificates
delivered  pursuant  to  Article  V) is or shall be  incorrect  when made in any
material respect.

     SECTION 8.1.3  Non-Performance  of Certain  Covenants and Obligations.  The
Borrowers  shall default in the due  performance  and observance of any of their
obligations under clause (e) of Section 7.1.1, or Sections 4.10,  7.1.9,  7.1.10
or 7.2.

     SECTION  8.1.4  Non-Performance  of Other  Covenants and  Obligations.  Any
Obligor  shall  default  in the due  performance  and  observance  of any  other
agreement  contained  herein or in any other  Loan  Document  (other  than items
covered by  Sections  8.1.1 or 8.1.3)  executed  by it, and such  default  shall
continue  unremedied  for a period of 30 days  after  any

                                      -85-
<PAGE>

Borrower has actual knowledge thereof or notice thereof shall have been given to
USAM by the Agent or any Lender.

     SECTION 8.1.5 Default on Other  Indebtedness.  A default shall occur in the
payment when due,  whether by  acceleration  or otherwise,  of (a) the Permitted
Borrower  Subordinated  Debt or the Convertible  Debenture Debt or (b) any other
Indebtedness  (other  than  Indebtedness  described  in  Section  8.1.1)  of any
Borrower or any other Obligor having a principal amount,  individually or in the
aggregate, in excess of $100,000, or a default shall occur in the performance or
observance of any obligation or condition  with respect to (i) the  Subordinated
Debt  Documents  or  Convertible  Debenture  Documents  or (ii) any  such  other
Indebtedness  if the effect of such default is to accelerate the maturity of any
such  Indebtedness or such default shall continue  unremedied for any applicable
period  of time  sufficient  to  permit  the  holder or  holders  of such  other
Indebtedness,  or  any  trustee  or  agent  for  such  holders,  to  cause  such
Indebtedness to become due and payable prior to its expressed maturity.

     SECTION 8.1.6 Judgments.

          (a) Any  judgment or order for the payment of money (not paid or fully
     covered by insurance maintained in accordance with the requirements of this
     Agreement and as to which the relevant  insurance  company has acknowledged
     coverage) in excess of $100,000  shall be rendered  against any Borrower or
     any other Obligor, and either

          (b) enforcement  proceedings shall have been commenced by any creditor
     upon such judgment or order, or

          (c) there shall be any period of 15  consecutive  days during  which a
     stay of  enforcement  of such  judgment  or  order,  by reason of a pending
     appeal, bond or otherwise, shall not be in effect.

     SECTION 8.1.7 Pension Plans.  Any of the following  events shall occur with
respect to any Pension  Plan:  (a) any Person  shall  engage in any  "prohibited
transaction"  (as defined in Section  406 of ERISA or Section  4975 of the Code)
involving any Pension Plan, (b) any "accumulated funding deficiency" (as defined
in Section 302 of ERISA), whether or not waived, shall exist with respect to any
Pension  Plan or any Lien in favor of the PBGC shall  arise on the assets of any
Borrower or any Commonly  Controlled  Entity, (c) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed,  to  administer  or to  terminate,  any Plan,  which
Reportable  Event or commencement of proceedings or appointment of a trustee is,
in the  reasonable  opinion  of the  Required  Lenders,  likely to result in the
termination of such Pension Plan for purposes of Title IV of ERISA, (d) any Plan
shall  terminate  for  purposes  of Title IV of ERISA,  (e) any  Borrower or any
Commonly  Controlled Entity shall, or in the reasonable  opinion of the Required
Lenders is likely to, incur any liability on connection with a withdrawal  from,
or the  insolvency  or  reorganization  of,  a Plan or (f) any  other  event  or
condition  shall  occur or exist with  respect to any Plan;  and in each case in
clauses (a) through (f) above, such event or condition,  together with all other
such events or conditions, if any, could in the aggregate reasonably be expected
to result in a  liability  to the  Borrowers  and their  Subsidiaries  exceeding
$100,000.

                                      -86-
<PAGE>

     SECTION 8.1.8 Control of the Borrowers. Any Change in Control shall occur.

     SECTION  8.1.9  Bankruptcy,  Insolvency,  etc.  Any  Borrower  or any other
Obligor shall

          (a)  generally  fail to pay  debts  as they  become  due,  or admit in
     writing its inability to pay debts as they become due;

          (b) apply for,  consent  to, or  acquiesce  in, the  appointment  of a
     trustee, receiver, sequestrator, or other custodian for any Borrower or any
     other Obligor or any property of any thereof,  or make a general assignment
     for the benefit of creditors;

          (c) in the  absence  of such  application,  consent  or  acquiescence,
     permit  or  suffer  to exist  the  involuntary  appointment  of a  trustee,
     receiver,  sequestrator  or other  custodian  for any Borrower or any other
     Obligor or for a substantial part of the property of any thereof,  and such
     trustee, receiver,  sequestrator or other custodian shall not be discharged
     within 30 days;

          (d)  permit or suffer to exist  the  involuntary  commencement  of, or
     voluntarily commence, any bankruptcy,  reorganization, debt arrangement, or
     other case or proceeding under any bankruptcy or insolvency laws, or permit
     or  suffer  to  exist  the  involuntary  commencement  of,  or  voluntarily
     commence, any dissolution,  winding up or liquidation  proceeding,  in each
     case, by or against any Borrower or any other Obligor, provided that if not
     commenced by any Borrower or any other  Obligor  such  proceeding  shall be
     consented to or  acquiesced  in by any  Borrower or any  Obligor,  or shall
     result  in the entry of an order for  relief  or shall  remain  for 30 days
     undismissed;   or

          (e) take any corporate action  authorizing,  or in furtherance of, any
     of the foregoing.

     SECTION  8.1.10  Impairment  of Loan  Documents,  Security,  etc.  Any Loan
Document,  or any Lien granted thereunder,  shall (except in accordance with its
terms), in whole or in part, terminate, cease to be effective or cease to be the
legally valid,  binding and enforceable  obligation of any Borrower or any other
Obligor party thereto; any Borrower, any other Obligor or any other party shall,
directly  or  indirectly,  contest in any manner such  effectiveness,  validity,
binding nature or enforceability;  or any Lien securing any Obligation shall, in
whole or in part, cease to be a perfected first registered priority Lien.

     SECTION 8.1.11  Non-Payment of Taxes. The Borrowers and their  Subsidiaries
shall  have  failed to pay when due any taxes or other  governmental  charges in
excess  of an  aggregate  amount of  $100,000,  except  any such  taxes or other
governmental  charges which are being diligently contested by them in good faith
by appropriate  proceedings  and for which adequate  reserves in accordance with
GAAP shall have been set aside on their books.

     SECTION  8.1.12  Impairment  of  Material  Agreements,  etc.  Any  Material
Agreement  shall  (except in  accordance  with its terms),  in whole or in part,
terminate,  cease to be effective or cease to be the legally valid,  binding and
enforceable  obligation of any Borrower or

                                      -87-
<PAGE>

any Obligor party thereto; or there shall be any material event of default under
any Material  Agreement;  or there shall be any default under the lease with the
Sanford Airport Authority.

     SECTION 8.1.13  Subordinated Debt Documents.  The subordination  provisions
contained  in the  Intercreditor  Agreement  (collectively,  the  "Subordination
Provisions")  shall fail to be  enforceable by the Agent or any Lender which has
not effectively  waived the benefits  thereof,  or the principal of, and accrued
interest owing on, the Credit  Extensions or any of the other  Obligations shall
fail  to  constitute   "Senior   Indebtedness"   (as  defined  in  Intercreditor
Agreement);  or the Borrowers,  any of their Affiliates or any Subordinated Debt
Holder shall,  directly or indirectly,  disavow or contest in any manner (a) the
effectiveness,   validity  or   enforceability   of  any  of  the  Subordination
Provisions,  (b) that any of such Subordination Provisions exist for the benefit
of the Agent and the Lenders or (c) that all  payments of  principal or interest
with respect to the Permitted  Borrower  Subordinated  Debt or realized from the
liquidation  of any  property of the  Borrowers or their  Subsidiaries  shall be
subject to any of such  Subordination  Provisions;  or any of the  Subordination
Provisions  shall  (except in accordance  with its terms),  in whole or in part,
terminate,  cease to be effective or cease to be the legally valid,  binding and
enforceable  obligations of any  Subordinated  Debt Holder;  or any Subordinated
Debt Holder fails to comply with any term of the Subordination Provisions.

     SECTION 8.1.14 Intercreditor Agreement. Any representation or warranty made
by any Subordinated Debt Holder in the Intercreditor  Agreement is untrue in any
material  respect;  any Subordinated  Debt Holder fails to comply with any term,
agreement,  covenant,  condition or provision in the Intercreditor Agreement; or
the Intercreditor  Agreement,  including the subordination  provisions contained
therein,  shall  (except in  accordance  with its  terms),  in whole or in part,
terminate,  cease to be effective or cease to be the legally valid,  binding and
enforceable  obligation of the any Subordinated Debt Holder, or shall fail to be
enforceable by the Agent or any Lender;  or any Subordinated  Debt Holder or any
other Person shall, directly or indirectly, disavow or contest in any manner (a)
the effectiveness,  validity,  binding nature and enforceability (including with
respect to the subordination  provisions contained therein) of the Intercreditor
Agreement,  (b) that any of the terms contained in the  Intercreditor  Agreement
exist for the benefit of the Agent and the  Lenders or (c) that all  payments of
principal or interest with respect to the Permitted  Borrower  Subordinated Debt
or realized  from the  liquidation  of any  property of the  Borrowers or any of
their  Subsidiaries shall be subject to the terms contained in the Intercreditor
Agreement.

     SECTION 8.1.15 Convertible Debentures.  USAM shall have failed, on or prior
to June 30, 2000, to have either (a) refinanced all of the Convertible Debenture
Debt on terms in form and substance  satisfactory  to the Agent or (b) converted
all of the Convertible Debenture Debt into common stock of USAM.

     SECTION  8.2 Action if  Bankruptcy.  If any Event of Default  described  in
clauses  (a)  through  (d) of Section  8.1.9 shall  occur,  the  Revolving  Loan
Commitment (if not theretofore terminated) shall automatically terminate and the
outstanding  principal amount of all outstanding Loans and all other Obligations
shall automatically be and become immediately due and payable, without notice or
demand.

                                      -88-
<PAGE>

     SECTION  8.3  Action if Other  Event of  Default.  If any Event of  Default
(other than any Event of Default described in clauses (a) through (d) of Section
8.1.9)  shall occur for any reason,  whether  voluntary or  involuntary,  and be
continuing,  the Agent,  may, and upon the  direction  of the Required  Lenders,
shall by notice to USAM declare all or any portion of the outstanding  principal
amount of the  Loans and other  Obligations  to be due and  payable  and/or  the
Revolving  Loan  Commitment  (if not  theretofore  terminated) to be terminated,
whereupon the full unpaid amount of such Loans and other Obligations which shall
be so declared due and payable shall be and become  immediately due and payable,
without further notice,  demand or presentment,  and/or, as the case may be, the
Revolving Loan Commitment shall terminate.

     SECTION 8.4 Foreclosure on Collateral. If any Event of Default shall occur,
the Agent shall have, in addition to all rights and remedies provided for in the
U.C.C., all such rights (including the right of foreclosure) with respect to the
Collateral as provided in the Pledge Agreement,  the Security Agreement and each
Real Estate Mortgage.

     SECTION 8.5 Payments Upon Acceleration. After the occurrence and during the
continuance  of an Event of  Default  and the  acceleration  of the  Obligations
pursuant to Sections  8.2 or 8.3,  the Agent shall apply all payments in respect
of the  Obligations  and all proceeds of  Collateral to the  Obligations  in the
following order:

          (a) first, to pay Obligations in respect of any expense reimbursements
     or indemnities then due to the Agent, including,  without limitation,  fees
     and expenses referred to in Sections 3.4.7, 10.3 and 10.4;

          (b)   second,   to  pay   Obligations   in  respect  of  any   expense
     reimbursements or indemnities then due to the Lenders and the Issuers;

          (c) third,  to pay  Obligations in respect of any fees then due to the
     Agent, the Lenders and the Issuers;

          (d) fourth, to pay interest due in respect of the Loans and Letters of
     Credit;

          (e) fifth, to pay the principal outstanding with respect to the Loans;

          (f) sixth, to cash collateralize the Letter of Credit  Outstandings on
     terms in form and substance satisfactory to the Agent; and

          (g) seventh, to the payment of all other Obligations;

provided,  however,  all available  funds being applied with respect to any such
Obligations  referred to in any one of the above  clauses  shall be allocated to
the payment of such Obligations ratably, based on the proportion of the Agent's,
each Lender's and the Issuer's interest in the aggregate outstanding Obligations
described in such clauses.

                                      -89-
<PAGE>

                                   ARTICLE IX

                                    THE AGENT

     SECTION 9.1 Actions.  Each Lender  hereby  appoints IBJW as Agent under and
for purposes of this  Agreement,  the Notes and each other Loan  Document.  Each
Lender  authorizes  the  Agent  to act on  behalf  of  such  Lender  under  this
Agreement,  the Notes and each other Loan  Document and, in the absence of other
written instructions from the Required Lenders received from time to time by the
Agent (with  respect to which the Agent  agrees that it will  comply,  except as
otherwise  provided in this  Section or as  otherwise  advised by  counsel),  to
exercise such powers hereunder and thereunder as are  specifically  delegated to
or required of the Agent by the terms  hereof and  thereof,  together  with such
powers as may be reasonably  incidental thereto.  Each Lender hereby indemnifies
(which indemnity shall survive any termination of this Agreement) the Agent, pro
rata  according to such Lender's  Percentage of the  Revolving  Loan  Commitment
hereunder,  from  and  against  any and all  liabilities,  obligations,  losses,
damages, claims, costs or expenses of any kind or nature whatsoever which may at
any time be imposed on, incurred by, or asserted  against,  the Agent in any way
relating  to or  arising  out of this  Agreement,  the Notes and any other  Loan
Document, including reasonable attorneys' fees, and as to which the Agent is not
reimbursed by the Borrowers;  provided,  however, that no Lender shall be liable
for the  payment  of any  portion  of  such  liabilities,  obligations,  losses,
damages,  claims, costs or expenses which are determined by a court of competent
jurisdiction  in a final  proceeding  to have  resulted  solely  from the  gross
negligence or willful  misconduct of the Agent.  The Agent shall not be required
to take any action hereunder,  under the Notes or under any other Loan Document,
or to  prosecute or defend any suit in respect of this  Agreement,  the Notes or
any other Loan Document, unless it is indemnified hereunder to its satisfaction.
If any indemnity in favor of the Agent shall be or become,  in the determination
of the Agent, inadequate, the Agent may call for additional indemnification from
the Lenders and cease to do the acts  indemnified  against  hereunder until such
additional indemnity is given.

     SECTION  9.2  Funding  Reliance,  etc.  Unless  the Agent  shall  have been
notified by  telephone,  confirmed in writing,  by any Lender by 5:00 p.m.  (New
York City time),  on the day prior to a Borrowing that such Lender will not make
available the amount which would  constitute its Percentage of such Borrowing on
the date specified therefor, the Agent may assume that such Lender has made such
amount  available  to the Agent and,  in  reliance  upon such  assumption,  make
available to the  Borrowers a  corresponding  amount.  If and to the extent that
such Lender shall not have made such amount available to the Agent,  such Lender
and the Borrowers  severally  agree to repay the Agent  forthwith on demand such
corresponding  amount together with interest thereon, for each day from the date
the Agent made such amount available to the Borrowers to the date such amount is
repaid  to the  Agent  at the  interest  rate  applicable  at the  time to Loans
comprising such Borrowing.

     SECTION  9.3  Exculpation.  Neither  the  Agent  nor any of its  directors,
officers, employees or agents shall be liable to any Lender for any action taken
or omitted to be taken by it under this Agreement or any other Loan Document, or
in connection  herewith or therewith,  except for its own willful  misconduct or
gross  negligence,  nor be responsible for any recitals or warranties  herein or
therein, nor for the effectiveness, enforceability, validity or due execution of
this Agreement or any other Loan Document,  nor for the creation,  perfection or
priority of any Liens purported to be created by any of the Loan  Documents,  or
the validity,  genuineness,  enforceability,  existence, value or sufficiency of
any collateral  security,  nor to make any inquiry respecting the performance by
the Borrowers of their  obligations  hereunder or under any other

                                      -90-
<PAGE>

Loan  Document.  Any such  inquiry  which  may be made by the  Agent  shall  not
obligate it to make any further  inquiry or to take any action.  The Agent shall
not be deemed to have  knowledge  of the  existence  of any  Default or Event of
Default unless it has received  written notice that refers  specifically  to the
same.  The Agent shall be  entitled  to rely upon  advice of counsel  concerning
legal matters and upon any notice,  consent,  certificate,  statement or writing
which the Agent  believes to be genuine and to have been  presented  by a proper
Person.

     SECTION  9.4  Successor.  The Agent may  resign as such at any time upon at
least 30 days' prior notice to USAM and all the Lenders.  If no successor  Agent
shall have been appointed by the Required Lenders,  and shall have accepted such
appointment,  within  30 days  after  the  retiring  Agent's  giving  notice  of
resignation,  then the retiring Agent may, on behalf of the Lenders, (a) appoint
a successor Agent,  which shall be one of the Lenders or a commercial banking or
finance institution  organized under the laws of the U.S. (or any State thereof)
or a U.S. branch or agency of a commercial banking or finance  institution,  and
having a combined capital and surplus of at least  $250,000,000 or (b) designate
the Lenders to perform the Agent's  responsibilities.  The successor Agent shall
be entitled to receive  from the retiring  Agent such  documents of transfer and
assignment as such successor Agent may reasonably  request,  and shall thereupon
succeed to and become vested with all rights,  powers,  privileges and duties of
the retiring  Agent,  and the retiring Agent shall be discharged from its duties
and obligations  under this Agreement.  After any retiring  Agent's  resignation
hereunder as the Agent, the provisions of

          (a) this Article IX shall inure to its benefit as to any actions taken
     or omitted to be taken by it while it was the Agent  under this  Agreement;
     and

          (b)  Section  10.3 and  Section  10.4 shall  continue  to inure to its
     benefit.

     SECTION 9.5 Loans by IBJW.  IBJW shall have the same rights and powers with
respect to (x) the Loans made by it or any of its Affiliates,  and (y) the Notes
held by it or any of its  Affiliates  as any other  Lender and may  exercise the
same as if it were not, the Agent.  IBJW and each of its  Affiliates  may accept
deposits from, lend money to, and generally  engage in any kind of business with
the Borrowers or any  Subsidiary or Affiliate of the Borrowers as if it were not
the Agent hereunder.

     SECTION  9.6  Credit  Decisions.  Each  Lender  acknowledges  that  it has,
independently  of the Agent and each other  Lender,  and based on such  Lender's
review of the financial information of the Borrowers,  this Agreement, the other
Loan  Documents (the terms and  provisions of which being  satisfactory  to such
Lender) and such other documents,  information and investigations as such Lender
has deemed  appropriate,  made its own credit  decision to extend its  Revolving
Loan Commitment.  Each Lender also acknowledges  that it will,  independently of
the Agent and each other Lender, and based on such other documents,  information
and  investigations  as it shall deem appropriate at any time,  continue to make
its own credit  decisions as to exercising or not  exercising  from time to time
any rights and privileges available to it under this Agreement or any other Loan
Document.

     SECTION 9.7 Copies,  etc. The Agent shall give prompt notice to each Lender
of each notice or request given to the Agent by the Borrowers and required to be
delivered  to the

                                      -91-
<PAGE>

Lenders pursuant to the terms of this Agreement (unless  concurrently  delivered
to the Lenders by the Borrowers).  The Agent will distribute to each Lender each
document  or  instrument  received  for its  account  and  copies  of all  other
communications  received by the Agent from the Borrowers for distribution to the
Lenders by the Agent in accordance with the terms of this Agreement.

     SECTION 9.8 Certain Collateral  Matters.  The Agent is authorized on behalf
of all the Lenders,  without the  necessity of any notice to or further  consent
from the  Lenders,  from time to time to take any  action  with  respect  to any
Collateral or the Loan Documents  which may be necessary to perfect and maintain
perfected  the  security  interest  in and  Liens  upon the  Collateral  granted
pursuant to the Loan Documents.

          (a)  Each  Lender   agrees  that  no  Lender   shall  have  any  right
     individually to seek to realize upon the  Collateral,  it being agreed that
     such  rights  and  remedies  may be  exercised  solely by the Agent for the
     benefit  of the  Lenders  and the Agent  pursuant  to the terms of the Loan
     Documents.

          (b) The Lenders irrevocably  authorize the Agent, at its option and in
     its discretion, to release any security interest or Lien granted to or held
     by the Agent upon any Collateral (i) upon termination of the Revolving Loan
     Commitment  and  payment  in full of all Loans  and all  other  Obligations
     payable  under  this  Agreement  and under any other  Loan  Document;  (ii)
     constituting  property  sold or to be sold or  disposed of as part of or in
     connection with any disposition  permitted  hereunder;  (iii)  constituting
     property in which the Borrowers or any Subsidiary thereof owned no interest
     at the time the  security  interest  and/or Lien was granted or at any time
     thereafter;  (iv)  constituting  property  leased to the  Borrowers  or any
     Subsidiary  thereof under a lease which has expired or been terminated in a
     transaction  permitted under this Agreement or is about to expire and which
     has not been,  and is not intended by the  Borrowers or such  Subsidiary to
     be,  renewed  or  extended;  (v)  consisting  of an  instrument  evidencing
     Indebtedness  or  other  debt  instrument,  if the  Indebtedness  evidenced
     thereby has been paid in full; or (vi) if approved,  authorized or ratified
     in writing by the Required  Lenders or, if required by Section  10.1,  each
     Lender.  Upon request by the Agent at any time, the Lenders will confirm in
     writing  the  Agent's  authority  to release  particular  types or items of
     collateral pursuant to this Section 9.8.

     SECTION  9.9  Application  to Issuers.  Each  Issuer  shall have all of the
benefits  and  immunities  (a)  provided  to the Agent in this  Article  IX with
respect to any acts taken or  omissions  suffered by such  Issuer in  connection
with  Letters  of  Credit  issued by it or  proposed  to be issued by it and the
application  and agreements  for letters of credit  pertaining to the Letters of
Credit as fully as if the term  "Agent",  as used in this  Article IX,  included
such  Issuer with  respect to such acts or  omissions,  and (b) as  additionally
provided in this Agreement with respect to such Issuer.

                                      -92-
<PAGE>

                                    ARTICLE X

                            MISCELLANEOUS PROVISIONS

     SECTION 10.1  .Waivers,  Amendments,  etc. The provisions of this Agreement
and of each other Loan  Document  may from time to time be amended,  modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the  Borrowers  and the  Agent  (acting  only at the  direction  or with  the
authority of the Required Lenders);  provided,  however, that no such amendment,
modification or waiver which would:

          (a) modify any  requirement  hereunder that any  particular  action be
     taken by all the  Lenders or by the  Required  Lenders  shall be  effective
     unless consented to by each Lender;

          (b) modify this Section 10.1,  increase the Revolving Loan  Commitment
     Amount or the  Percentage  of any  Lender,  reduce  any fees  described  in
     Article III,  change the time for payment of fees to the Lenders  described
     in Article  III,  release  all or any  substantial  part of the  Collateral
     except as otherwise specifically provided in any Loan Document,  release or
     limit any Obligor from its guarantee obligations under Loan Document except
     as otherwise  specifically  provided therein or alter in any manner the pro
     rata  sharing of payments  required  hereunder,  shall be made  without the
     consent of any Lender affected thereby;

          (c) change the definition of "Required Lenders" or any other provision
     of  this  Agreement  or  other  Loan  Document  specifying  the  number  or
     percentage  of  Lenders  required  to  waive,  amend or modify  any  rights
     thereunder or make any determination or grant any consent thereunder, shall
     be made without the consent of any Lender;

          (d)  extend the due date for,  or reduce the amount of, any  scheduled
     repayment or  prepayment  under clause (b), (c) or (d) of Section  3.1.2 of
     principal of, or interest on, any Loan (or reduce the  principal  amount of
     or rate of interest on any Loan or  Reimbursement  Obligation),  change the
     schedule of  reductions to the Revolving  Loan  Commitment  provided for in
     Section 2.3(b) or extend the Revolving  Loan  Commitment  Termination  Date
     without the consent of the holder of that Note evidencing such Loan;

          (e)  increase  the  Stated  Amount  of any  Letter  of  Credit  unless
     consented to by each Issuer; or

          (f) affect adversely the interests, rights or obligations of the Agent
     or any Issuer in its capacity as Agent or such Issuer, as the case may be.

No failure  or delay on the part of the  Agent,  any Lender or the holder of any
Note in  exercising  any power or right under this  Agreement  or any other Loan
Document  shall  operate  as a waiver  thereof,  nor shall any single or partial
exercise  of any such  power or right  preclude  any other or  further  exercise
thereof or the  exercise of any other power or right.  No notice to or demand on
any Borrower in any case shall  entitle it to any notice or demand in similar or
other  circumstances.  No waiver or  approval  by the  Agent,  any Lender or the
holder of any Note under this Agreement or any other Loan Document shall, except
as may be  otherwise  stated  in such  waiver  or  approval,  be  applicable  to
subsequent  transactions.  No waiver or  approval  hereunder  shall  require any
similar or dissimilar waiver or approval thereafter to be granted hereunder. The
remedies  provided  in this  Agreement  are  cumulative,  and not  exclusive  of
remedies provided by law.

                                      -93-
<PAGE>

     SECTION 10.2 Notices. All notices and other communications  provided to any
party hereto under this Agreement or any other Loan Document shall be in writing
and addressed, delivered or transmitted to such party at its address or telecopy
number set forth on  Schedule  III  hereto (or set forth in a Lender  Assignment
Agreement) or at such other  address or telecopy  number as may be designated by
such  party in a notice  to the  other  parties  given in  accordance  with this
Section 10.2. Any notice, if mailed and properly addressed with postage prepaid,
shall be deemed given three Business Days after posting;  any notice, if sent by
prepaid  overnight  express shall be deemed  delivered on the next Business Day;
any notice,  if transmitted by telecopy,  shall be deemed given when sent,  with
confirmation  of receipt;  any notice,  if transmitted by hand,  shall be deemed
received when delivered.

     SECTION  10.3  Payment of Costs and  Expenses.  The  Borrowers  jointly and
severally  agree  to  pay  on  demand  all  reasonable  expenses  of  the  Agent
(including,  without limitation,  the reasonable fees and out-of-pocket expenses
of counsel to the Agent,  including the allocated  fees and expenses of in-house
counsel,  and  consultants,  if any, who may be retained in connection  with the
transactions contemplated hereby by the Agent) in connection with

          (a) the  negotiation,  preparation,  execution  and  delivery  of this
     Agreement  and  of  each  other  Loan  Document,  including  schedules  and
     exhibits,  and any  amendments,  waivers,  consents,  supplements  or other
     modifications to this Agreement or any other Loan Document as may from time
     to  time   hereafter  be  required,   and  the  Lenders'  and  the  Agent's
     consideration  of their  rights and  remedies  hereunder  or in  connection
     herewith  from time to time  whether or not the  transactions  contemplated
     hereby or thereby are consummated;

          (b) the  filing,  recording,  refiling  or  rerecording  of the Pledge
     Agreement,  the Real Estate  Mortgages,  the  Security  Agreement  (and any
     supplements  thereto)  and  any  other  security  instruments  executed  in
     connection  with  the  transactions   contemplated   hereby  and/or  U.C.C.
     financing  statements  relating  thereto,  all amendments,  supplements and
     modifications to any thereof and any and all other documents or instruments
     of  further  assurance  required  to be filed or  recorded  or  refiled  or
     rerecorded  by the terms  hereof or the Pledge  Agreement,  the Real Estate
     Mortgages, the Security Agreement or such other documents;

          (c)  the  preparation  and  review  of the  form  of any  document  or
     instrument relevant to this Agreement or any other Loan Document;

          (d)  sums  paid or  incurred  to pay any  amount  or take  any  action
     required by the  Borrowers or any other  Obligor  under the Loan  Documents
     that the Borrowers or any such Obligor fails to pay or take;

          (e) costs of appraisals,  field exams, inspections and verification of
     the Collateral,  including, without limitation,  travel, lodging, meals and
     other  charges,  including  the costs,  fees and  expenses  of  independent
     auditors and appraisers; and

          (f) all  amounts  referred  to in Section  3.4.6  with  respect to the
     Lock-Box Accounts and the Concentration Account.

                                      -94-
<PAGE>

The Borrowers further jointly and severally agree to pay, and to save the Agent,
each Issuer and the Lenders  harmless from all liability for, any stamp or other
taxes which may be payable in connection  with the execution or delivery of this
Agreement,  the Credit Extensions hereunder, or the issuance of the Notes or any
other Loan Documents. The Borrowers jointly and severally agree to reimburse the
Agent,  each  Issuer and each Lender  upon  demand for all  reasonable  expenses
(including,  without limitation,  the fees and out-of-pocket expenses of counsel
to the Agent,  each Issuer and each Lender,  including  the  allocated  fees and
expenses of in-house  counsel and  consultants,  if any,  who may be retained by
such persons)  incurred by the Agent or each such Lender in connection  with (x)
the negotiation of any restructuring or "work-out",  whether or not consummated,
of any  Obligations and (y) the  enforcement of any  Obligations.  The Borrowers
further  jointly and  severally  agree to reimburse  the Agent on demand for all
administration,  audit and  monitoring  expenses  incurred  in  connection  with
determinations  made in respect  of those  items  included  in  determining  the
Borrowing Base Amount.  To the extent the Borrowers fail to pay any such amount,
each  Lender  hereunder  agrees to pay to the  Agent its pro rata  share of such
unpaid amount.

     SECTION  10.4  Indemnification.  In  consideration  of  the  execution  and
delivery of this  Agreement by each Lender and the  extension  of the  Revolving
Loan Commitment,  the Borrowers hereby jointly and severally agree to indemnify,
exonerate  and hold the Agent,  each  Issuer  and each  Lender and each of their
respective  officers,  directors,   employees  and  agents  (collectively,   the
"Indemnified  Parties")  free and harmless from and against any and all actions,
causes of action,  suits,  losses,  costs,  liabilities,  damages,  and expenses
incurred in connection  therewith  (irrespective of whether any such Indemnified
Party is a party to the action for which  indemnification  hereunder is sought),
including  reasonable  attorneys'  fees  and  disbursements  (collectively,  the
"Indemnified  Liabilities"),  incurred by the Indemnified Parties or any of them
as a result of, or arising out of, or relating to

          (a) any  transaction  financed  or to be financed in whole or in part,
     directly or indirectly, with the proceeds of any Loan or with any Letter of
     Credit;

          (b) the entering into and  performance of this Agreement and any other
     Loan  Document  by any of the  Indemnified  Parties  (including  any action
     brought by or on behalf of the Borrowers as the result of any determination
     by the Required Lenders pursuant to Article V not to fund any Borrowing);

          (c)  any  investigation,  litigation  or  proceeding  related  to  any
     acquisition  or  proposed  acquisition  by the  Borrowers  or any of  their
     Subsidiaries  of all or any  portion of the stock or assets of any  Person,
     whether or not the Agent or any Lender is party thereto;

          (d)   Environmental   Laws   relating  to  the   Borrowers   or  their
     Subsidiaries, including the assertion of any lien thereunder;

          (e) the presence on or under,  or the  discharge,  emission,  spill or
     disposal from, any real property owned or leased by the Borrowers or any of
     their  Subsidiaries  or into or upon  any  land or the  atmosphere,  of any
     Hazardous  Material  where a source of the Hazardous  Material is such real
     property (including,  without limitation: (i) the costs of defending and or

                                      -95-
<PAGE>

     counterclaiming  or claiming  over against  third parties in respect of any
     related  action or matter;  and (ii) any cost,  liability or damage arising
     out of a settlement of any action entered into by the Lender);

          (f) complying with or otherwise in connection with any order, consent,
     decree, settlement, judgement or verdict arising from the deposit, storage,
     disposal, burial, dumping, injection, spilling, leaking, or other placement
     or release in, on or from any real  property  owned or leased by any of the
     Borrowers or any of their Subsidiaries of any Hazardous Material (including
     without  limitation any order under the  Environmental  Laws to clean-up or
     decommission),  whether or not such  deposit,  storage,  disposal,  burial,
     dumping, injecting,  spillage, leaking or other placement or release in, on
     or from any such real property of any Hazardous Material:

               (i) results by,  through or under property owned or leased by the
          Borrowers or any of their Subsidiaries; or

               (ii) occurred with the Borrowers' knowledge and consent; or

               (iii) occurred before or after the Effective  Date,  whether with
          or without the Borrower's knowledge;

except  for any  such  Indemnified  Liabilities  arising  for the  account  of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction.  If and to the extent that the foregoing undertaking may
be  unenforceable  for any reason,  the Borrowers  hereby  jointly and severally
agree to make the maximum  contribution to the payment and  satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.

     SECTION 10.5 Survival. The obligations of the Borrowers under Sections 4.3,
4.4, 4.5, 4.6, 10.3 and 10.4,  and the  obligations of the Lenders under Section
9.1, shall in each case survive any termination of this  Agreement,  the payment
in  full of all  the  Obligations  and the  termination  of the  Revolving  Loan
Commitment.  All covenants,  agreements,  representations and warranties made by
the Obligors in the Loan Documents and in the certificates or other  instruments
delivered  in  connection  with or pursuant to this  Agreement or any other Loan
Document  shall be  considered  to have been  relied  upon by the other  parties
hereto and shall survive the  execution  and delivery of the Loan  Documents and
the making of any Credit Extension,  regardless of any investigation made by any
such  other  party or on its behalf  and  notwithstanding  that the Agent or any
Lender  may  have  had  notice  or   knowledge   of  any  Default  or  incorrect
representation or warranty at the time any credit is extended hereunder.

     SECTION 10.6  Severability.  Any  provision of this  Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such  provision and such  jurisdiction,  be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.

                                      -96-
<PAGE>

     SECTION 10.7 Headings.  The various  headings of this Agreement and of each
other Loan Document are inserted for  convenience  only and shall not affect the
meaning or  interpretation  of this Agreement or such other Loan Document or any
provisions hereof or thereof.

     SECTION 10.8 Execution in Counterparts,  Effectiveness, etc. This Agreement
may be  executed by the parties  hereto in several  counterparts,  each of which
shall be deemed to be an original and all of which shall constitute together but
one  and  the  same  agreement.  This  Agreement  shall  become  effective  when
counterparts  hereof executed on behalf of each Borrower and each initial Lender
(or notice  thereof  satisfactory  to the Agent) shall have been received by the
Agent and  notice  thereof  shall  have been given by the Agent to USAM and each
Lender.

     SECTION 10.9 Governing Law; Entire Agreement.  THIS AGREEMENT AND THE NOTES
SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.  This  Agreement,  the Notes  and the  other  Loan  Documents
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof and supersede any prior agreements,  written or oral, with
respect thereto.

         SECTION  10.10 Successors  and  Assigns.  This  Agreement  shall be
binding  upon and shall  inure to the  benefit of the  parties  hereto and their
respective successors and assigns; provided, however, that:

          (a)  the  Borrowers  may  not  assign  or  transfer  their  rights  or
     obligations  hereunder  without the prior written  consent of the Agent and
     all Lenders; and

          (b) the rights of sale,  assignment  and  transfer  of the Lenders are
     subject to Section 10.11.

     SECTION 10.11 Sale and Transfer of Loans and Notes; Participations in Loans
and Notes. Each Lender may assign, or sell  participations in, its Loans and the
Revolving Loan  Commitment to one or more other Persons in accordance  with this
Section 10.11.

     SECTION 10.11.1 Assignments.  Any Lender (the "Assignor Lender"),  with the
written  consent of the Borrowers and the Agent (which  consent,  in the case of
the Borrowers,  shall not to be unreasonably  withheld or delayed and shall not,
in any event, be required if any Default or Event of Default shall have occurred
and be  continuing),  may at any time assign and delegate all or any fraction of
such Lender's  Loans,  Letter of Credit  participations  and the Revolving  Loan
Commitment  to  one or  more  commercial  banks,  finance  companies,  insurance
companies  or other  financial  institutions  or funds,  and with  notice to the
Borrowers and the Agent,  but without the consent of the Borrowers or the Agent,
may assign and  delegate to any of its  Affiliates  or to any other Lender (each
Person  described in either of the foregoing  clauses as the Person to whom such
assignment  and  delegation  is to be made being  hereinafter  referred to as an
"Assignee Lender"),  all or any fraction of such Lender's total Loans, Letter of
Credit  participations  and the Revolving Loan Commitment in a minimum aggregate
amount of

                                      -97-
<PAGE>

$5,000,000  (or, if less, the total of such Lender's  Revolving Loan  Commitment
Amount and aggregate principal amount of Loans outstanding);  provided, however,
that the  Borrowers,  each other  Obligor  and the Agent  shall be  entitled  to
continue to deal solely and directly  with such  Assignor  Lender in  connection
with the interests so assigned and delegated to an Assignee Lender until

          (i) written notice of such  assignment and  delegation,  together with
     payment  instructions,  addresses and related  information  with respect to
     such Assignee Lender,  shall have been given to the Borrowers and the Agent
     by the Assignor Lender and the Assignee Lender;

          (ii) the Assignee  Lender and the Assignor  Lender shall have executed
     and delivered to the Borrowers and the Agent a Lender Assignment Agreement,
     accepted by the Agent; and

          (iii) the processing fees described below shall have been paid.

From and after the date that the Agent accepts such Lender Assignment Agreement,
(x) the Assignee Lender thereunder shall be deemed  automatically to have become
a party hereto and to the extent that rights and obligations hereunder have been
assigned and  delegated to such Assignee  Lender in connection  with such Lender
Assignment  Agreement,  shall  have  the  rights  and  obligations  of a  Lender
hereunder and under the other Loan Documents,  and (y) the Assignor  Lender,  to
the  extent  that  rights  and  obligations  hereunder  have been  assigned  and
delegated by it in connection with such Lender  Assignment  Agreement,  shall be
released  from its  obligations  hereunder  and under the other Loan  Documents.
Within  five  Business  Days  after its  receipt  of  notice  that the Agent has
received an executed Lender  Assignment  Agreement,  the Borrowers shall execute
and deliver to the Agent (for  delivery  to the  relevant  Assignee  Lender) new
Notes  evidencing  such Assignee  Lender's  assigned  Loans and  Revolving  Loan
Commitment and, if the Assignor Lender has retained Loans and the Revolving Loan
Commitment hereunder, replacement Notes in the principal amount of the Loans and
the Revolving Loan Commitment  retained by the Assignor  Lender  hereunder (such
Notes to be in exchange  for,  but not in payment  of,  those Notes then held by
such Assignor Lender). Each such Note shall be dated the date of the predecessor
Notes.  The Assignor  Lender shall mark the  predecessor  Notes  "exchanged" and
deliver them to the Borrowers.  Accrued interest on that part of the predecessor
Notes evidenced by the new Notes, and accrued fees, shall be paid as provided in
the  Lender  Assignment  Agreement.   Accrued  interest  on  that  part  of  the
predecessor  Notes  evidenced  by the  replacement  Notes  shall  be paid to the
Assignor  Lender.  Accrued  interest  and accrued fees shall be paid at the same
time or times  provided  in the  predecessor  Notes and in this  Agreement.  The
Assignor  Lender or the Assignee  Lender must also pay a  processing  fee to the
Agent upon delivery of any Lender Assignment  Agreement in the amount of $4,000.
Any attempted assignment and delegation not made in accordance with this Section
10.11.1 shall be null and void.

     (a) Notwithstanding clause (a), any Lender may assign and pledge all or any
portion  of its Loans and Notes and other  rights to a Federal  Reserve  Bank as
collateral  security;  provided,  however,  that no such  assignment  under this
clause  (b)  shall  release  the  Assignor  Lender  from any of its  obligations
hereunder.

                                      -98-
<PAGE>

     SECTION  10.11.2  Participations.  (a) Any  Lender may at any time with the
consent of the Agent sell to one or more commercial banks or other Persons (each
of such commercial  banks and other Persons being herein called a "Participant")
participating  interests in any of the Loans, the Revolving Loan Commitment,  or
other interests of such Lender hereunder; provided, however, that

          (i) no  participation  contemplated  in  this  Section  10.11.2  shall
     relieve  such  Lender  from its  Revolving  Loan  Commitment  or its  other
     obligations hereunder or under any other Loan Document;

          (ii) such Lender shall remain solely  responsible  for the performance
     of its Revolving Loan Commitment and such other obligations;

          (iii)  the  Borrowers  and each  other  Obligor  and the  Agent  shall
     continue to deal solely and directly  with such Lender in  connection  with
     such Lender's rights and  obligations  under this Agreement and each of the
     other Loan Documents; and

          (iv) no Participant,  unless such  Participant is an Affiliate of such
     Lender, or is itself a Lender,  shall be entitled to require such Lender to
     take or refrain  from taking any action  hereunder  or under any other Loan
     Document,  except that such Lender may agree with any Participant that such
     Lender will not, without such  Participant's  consent,  take any actions of
     the type described in clause (b), (c) or (d) of Section 10.1.

     (b) The Borrowers acknowledge and agree that each Participant, for purposes
of Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, shall be considered a Lender.

     SECTION 10.12 Other  Transactions.  Nothing contained herein shall preclude
either  the Agent or any other  Lender  from  engaging  in any  transaction,  in
addition to those  contemplated  by this  Agreement or any other Loan  Document,
with the  Borrowers or any of their  Affiliates  in which the  Borrowers or such
Affiliate is not restricted hereby from engaging with any other Person.

     SECTION 10.13 Guaranty of Borrowers.

          (a) Guaranty. Each Borrower unconditionally and irrevocably guarantees
     the full and  prompt  payment  when due,  whether  at stated  maturity,  by
     acceleration or otherwise (including, without limitation, all amounts which
     would have become due but for the  operation  of the  automatic  stay under
     Section 362(a) of the Federal  Bankruptcy Code, 11 U.S.C.  362(a)),  of all
     Obligations of the other Borrower,  whether for principal,  interest, fees,
     expenses  or  otherwise,  and  including  any and all  costs  and  expenses
     (including  reasonable  attorney costs) incurred by the Agent or any Lender
     in  enforcing  any of their  respective  rights with respect  thereto.  The
     foregoing  guaranty  constitutes  a guaranty  of  payment  when due and not
     merely of collection,  and each Borrower  specifically agrees that it shall
     not be  necessary  or required  that the Agent or any Lender  exercise  any
     right,  assert any claim or demand or enforce any remedy whatsoever against
     any Obligor  before or as a condition to the  obligations  of such Borrower
     hereunder.

                                      -99-
<PAGE>

          (b)  Acceleration  of Guaranty.  Each Borrower  agrees that (i) in the
     event that any Obligor is subject to any proceeding of the nature  referred
     to in Section 8.1.9, or (ii) upon notice of acceleration of the Obligations
     from the Agent  pursuant to Section  8.3, and if any such event shall occur
     at a time when any of the Obligations may not then be due and payable, such
     Borrower  will pay to the Lenders  forthwith the full amount which would be
     payable hereunder by such Borrower if all the Obligations were then due and
     payable.

          (c) Guaranty Absolute.  The guaranty pursuant to this Section 10.13 is
     a continuing,  absolute, unconditional and irrevocable guarantee of payment
     and shall  remain in full force and effect until all the  Obligations  have
     been  indefeasibly  paid in full in cash and the Revolving Loan  Commitment
     shall  have  permanently  terminated.   The  Borrowers  guaranty  that  the
     Obligations  will be paid  strictly  in  accordance  with the terms of each
     agreement  under which they arise,  regardless  of any law,  regulation  or
     order now or hereafter in effect in any jurisdiction  affecting any of such
     terms  or the  rights  of the  Agent  or any of the  Lenders  with  respect
     thereto.  The liability of each of the Guarantors  under this Section 10.13
     shall be absolute and unconditional irrespective of:

               (i) any lack of  validity,  legality  or  enforceability  of this
          Agreement,  the Notes,  any other Loan Document or any other agreement
          or instrument relating to any thereof;

               (ii) any change in the time, manner or place of payment of, or in
          any other term of, all or any of the  Obligations,  or any compromise,
          renewal,  extension,  acceleration or release with respect thereto, or
          any other amendment or waiver of or any consent to departure from this
          Agreement, the Notes or any other Loan Document;

               (iii) any addition,  exchange,  release or  non-perfection of any
          Collateral,  or any  release or  amendment  or waiver of or consent to
          departure from any other guaranty, for all or any of the Obligations;

               (iv) the failure of the Agent or any Lender

               (A) to assert  any claim or  demand  or to  enforce  any right or
          remedy  against any Obligor or any other Person  (including  any other
          guarantor) under the provisions of this Agreement, any Note, any other
          Loan Document or otherwise, or

               (B) to exercise any right or remedy  against any other  guarantor
          of, or Collateral securing, any of the Obligations;

               (v) any amendment to,  rescission,  waiver, or other modification
          of,  or any  consent  to  departure  from,  any of the  terms  of this
          Agreement, any Note or any other Loan Document;

               (vi) any defense,  set-off or counterclaim  which may at any time
          be  available  to or be asserted  by Obligor  against the Agent or any
          Lender;

                                     -100-
<PAGE>

               (vii) any reduction, limitation, impairment or termination of the
          Obligations  for any reason,  including any claim of waiver,  release,
          surrender,  alteration or compromise, and shall not be subject to (and
          each  Borrower  hereby waives any right to or claim of) any defense or
          setoff,  counterclaim,  recoupment or termination whatsoever by reason
          of   the   invalidity,   illegality,   nongenuineness,   irregularity,
          compromise,  unenforceability  of,  or any other  event or  occurrence
          affecting, the Obligations or otherwise; or

               (viii) any other circumstance which might otherwise  constitute a
          defense  available  to,  or a legal or  equitable  discharge  of,  any
          Obligor.

          (d)  Reinstatement,  etc.  Each  Borrower  agrees  that  its  guaranty
     hereunder shall continue to be effective or be reinstated,  as the case may
     be,  if at any  time  any  payment  (in  whole  or in  part)  of any of the
     Obligations  is rescinded or must otherwise be restored by the Agent or any
     Lender,  upon any Obligor  being  subject to any  proceeding  of the nature
     referred to in Section 8.1.9 or  otherwise,  all as though such payment had
     not been made.

          (e) Waiver. Each Borrower hereby waives promptness,  diligence, notice
     of acceptance  and any other notice with respect to any of the  Obligations
     and  this  guaranty,  and any  requirement  that the  Agent  or any  Lender
     protect,  secure,  perfect or insure any Lien on any of the  Collateral  or
     other  property or exhaust  any right or take any action  against any other
     Obligor  or  any  other  Person  (including  any  other  guarantor)  or any
     Collateral securing the Obligations.

          (f) Waiver of Subrogation. Each Borrower hereby irrevocably waives any
     claim or other  rights which it may now or  hereafter  acquire  against any
     Obligor that arise from the existence,  payment, performance or enforcement
     of its  obligations  under its guaranty  hereunder,  including any right of
     subrogation,  reimbursement,  exoneration or indemnification,  any right to
     participate  in any claim or remedy of the Agent or any Lender  against any
     Obligor  or any  Collateral  which  the  Agent  or any  Lender  now  has or
     hereafter  acquires,  whether or not such claim,  remedy or right arises in
     equity,  or under contract,  statute or common law,  including the right to
     take or receive from any Obligor,  directly or indirectly, in cash or other
     property or by set-off or in any manner,  payment or security on account of
     such claim or other rights.  If any amount shall be paid to any Borrower in
     violation of the preceding sentence and the Obligations shall not have been
     paid in  cash  in  full  and the  Commitments  have  not  been  permanently
     terminated,  such amount shall be deemed to have been paid to such Borrower
     for the benefit of, and held in trust for, the Lenders, and shall forthwith
     be paid to the Agent on behalf of the  Lenders to be  credited  and applied
     against  the  Obligations,  whether  matured or  unmatured.  Each  Borrower
     acknowledges  that it will receive  direct and indirect  benefits  from the
     financing  arrangements  contemplated by this Agreement and that the waiver
     set  forth in this  Section  is  knowingly  made in  contemplation  of such
     benefits.

     SECTION 10.14 Forum Selection and Consent to  Jurisdiction.  ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT,  THE LENDERS

                                     -101-
<PAGE>

OR THE BORROWERS  SHALL BE BROUGHT AND MAINTAINED  EXCLUSIVELY IN THE FEDERAL OR
STATE COURTS OF NEW YORK LOCATED IN THE BOROUGH OF MANHATTAN; PROVIDED, HOWEVER,
THAT ANY SUIT SEEKING  ENFORCEMENT  AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY
BE BROUGHT,  AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  EACH BORROWER  HEREBY  EXPRESSLY AND
IRREVOCABLY  SUBMITS TO THE  JURISDICTION  OF SUCH COURTS FOR THE PURPOSE OF ANY
SUCH  LITIGATION  AS SET FORTH ABOVE AND  IRREVOCABLY  AGREES TO BE BOUND BY ANY
JUDGMENT  RENDERED  THEREBY IN CONNECTION  WITH SUCH  LITIGATION.  EACH BORROWER
FURTHER  IRREVOCABLY  CONSENTS  TO THE  SERVICE OF PROCESS BY  REGISTERED  MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.
EACH BORROWER  HEREBY  EXPRESSLY AND IRREVOCABLY  WAIVES,  TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY  OBJECTION  WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE
LAYING OF VENUE OF ANY SUCH  LITIGATION  BROUGHT IN ANY SUCH COURT  REFERRED  TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.  TO THE EXTENT  THAT SUCH  BORROWER  HAS OR  HEREAFTER  MAY  ACQUIRE  ANY
IMMUNITY  FROM  JURISDICTION  OF ANY  COURT OF FROM ANY LEGAL  PROCESS  (WHETHER
THROUGH SERVICE OR NOTICE,  ATTACHMENT  PRIOR TO JUDGMENT,  ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE)  WITH RESPECT TO ITSELF OR ITS  PROPERTY,  EACH BORROWER
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.

     SECTION  10.15 Waiver of Jury Trial,  etc.  THE AGENT,  THE LENDERS AND THE
BORROWERS HEREBY KNOWINGLY,  VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY  HAVE TO A TRIAL BY JURY IN  RESPECT  OF ANY  LITIGATION  BASED  HEREON,  OR
ARISING OUT OF, UNDER,  OR IN CONNECTION  WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,  STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWERS. EACH BORROWER
ACKNOWLEDGES  AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT  CONSIDERATION
FOR THIS  PROVISION  (AND EACH OTHER  PROVISION  OF EACH OTHER LOAN  DOCUMENT TO
WHICH IT IS A PARTY) AND THAT THIS  PROVISION IS A MATERIAL  INDUCEMENT  FOR THE
AGENT AND THE  LENDERS  ENTERING  INTO THIS  AGREEMENT  AND EACH SUCH OTHER LOAN
DOCUMENT.

     SECTION  10.16  Waiver  of  Certain  Claims.  TO THE  EXTENT  PERMITTED  BY
APPLICABLE LAW, EACH BORROWER AND EACH OF ITS SUBSIDIARIES SHALL NOT ASSERT, AND
HEREBY  WAIVES,  ANY CLAIM  AGAINST  THE AGENT AND EACH  LENDER ON ANY THEORY OF
LIABILITY FOR SPECIAL,  INDIRECT,

                                     -102-
<PAGE>

CONSEQUENTIAL  OR  PUNITIVE  DAMAGES  (AS  OPPOSED TO DIRECT OR ACTUAL  DAMAGES)
ARISING OUT OF, IN CONNECTION  WITH, OR AS A RESULT OF, ANY LOAN DOCUMENT OR ANY
AGREEMENT OR INSTRUMENT  CONTEMPLATED HEREBY, ANY CREDIT EXTENSION OR THE USE OF
THE PROCEEDS THEREOF.

     SECTION  10.17  Borrower  Consents,  Notices,  etc.  By  execution  of this
Agreement each of the Borrowers appoint the Borrower Representative as its agent
to make all requests for Credit Extensions hereunder. In addition, each Borrower
agrees that (a) any notice received from the Agent or any Lender by any Borrower
shall be deemed  received  contemporaneously  by all the  Borrowers and (b) each
item  delivered  by or consented  or  otherwise  approved by any Borrower  shall
irrevocably bind all the Borrowers.

     SECTION 10.18 Sanford Leased Premises.  If there is at any time any default
by a  Borrower  under the  lease  with the  Sanford  Airport  Authority,  or any
Borrower is not performing  thereunder,  the Agent may, in its sole  discretion,
cure the same by using amounts deposited in the Concentration  Account from time
to time. The Borrowers hereby appoint the Agent their attorney-in-fact in taking
all such  actions and agree that the Agent shall not incur any  liability  in so
acting.

                                     -103-
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their  respective  officers  thereunto duly authorized as of the day and year
first above written.

                              U.S. AUTOMOTIVE MANUFACTURING, INC.

                              By: ________________________________
                                  Name:
                                  Title:

                              QUALITY AUTOMOTIVE COMPANY

                              By: ________________________________
                                  Name:
                                  Title:

                              US AUTOMOTIVE FRICTION, INC.

                              By: ________________________________
                                  Name:
                                  Title:

                              IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
                                as the Agent

                              By: ________________________________
                                  Name:
                                  Title:

                              LENDERS

                              IBJ WHITEHALL BUSINESS CREDIT CORPORATION

                              By: ________________________________
                                  Name:
                                  Title:

                                     -104-
<PAGE>

                                                                      SCHEDULE I

                               DISCLOSURE SCHEDULE

ITEM 3.4.1(a)         Lock-Box Accounts.

ITEM 5.1.4            Required Consents and Approvals.

ITEM 6.7(a)           Litigation

ITEM 6.7(b)           Labor Contracts.

ITEM 6.8              Initial Capitalization.

ITEM 6.9              Real Property.

ITEM 6.11             Plans.

ITEM 6.12             Environmental Matters.

ITEM 6.15             Governmental Approvals.

ITEM 6.16             Defaults

ITEM 6.19             Material Agreements.

ITEM 6.21             Insurance.

ITEM 7.2.2(b)         Indebtedness to be Paid.

ITEM 7.2.2(c)         Ongoing Indebtedness.

ITEM 7.2.3(c)         Existing Liens.

ITEM 7.2.5(a)         Ongoing Investments.

<PAGE>

                                                                     SCHEDULE II

                                   PERCENTAGES

================================================================================
                                                      Revolving Loan Commitment
                            Lender
--------------------------------------------------------------------------------
IBJ Whitehall Business Credit Corporation                       100%
--------------------------------------------------------------------------------

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

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

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

<PAGE>

                                                                    SCHEDULE III

                           ADMINISTRATIVE INFORMATION

Borrowers
US Automotive Manufacturing, Inc.
Quality Automotive Company
US Automotive Friction, Inc.
Route 627, Airport Drive
Tappahannock, VA 22560
Attention: Martin Chevalier
Telecopier No.: (804) 443-5611
Telephone No.: (804) 443-3032

Agent

IBJ Whitehall Business Credit Corporation
One State Street
New York, New York  10004
Attention:  Adam Moskowitz
Telecopier No.:  (212) 858-2151
Telephone No.:  (212) 858-2668

Lenders

IBJ Whitehall Business Credit Corporation

Domestic Office
One State Street
New York, New York  10004
Attention:  Joesph Ciciolo
Telecopier No.:  (212) 858-2936
Telephone No.:  (212) 858-2764

LIBOR Office
One State Street
New York, New York  10004
Attention:  Joesph Ciciolo
Telecopier No.:  (212) 858-2936
Telephone No.:  (212) 858-2764

<PAGE>

Administrative Office
One State Street
New York, New York  10004
Attention:  Adam Moskowitz
Telecopier No.: (212) 858-2151
Telephone No.: (212) 858-2668

<PAGE>

                                                                       EXHIBIT G

                                PLEDGE AGREEMENT

     PLEDGE  AGREEMENT,  dated as of July 30,  1999 (as  amended,  supplemented,
restated or otherwise  modified from time to time,  this  "Agreement"),  made by
U.S. AUTOMOTIVE MANUFACTURING,  INC., a Delaware corporation, QUALITY AUTOMOTIVE
COMPANY,  a Delaware  corporation and US AUTOMOTIVE  FRICTION,  INC., a Delaware
corporation (collectively, the "Borrowers"), and each of the other Persons (such
capitalized term and all other capitalized terms not otherwise defined herein to
have the  meanings  provided  for in  Article I) listed on the  signature  pages
hereof (such other Persons, together with the Additional Pledgors (as defined in
Section  7.2(b)),  and  the  Borrowers,  are  collectively  referred  to as  the
"Pledgors" and individually as a "Pledgor"),  in favor of IBJ WHITEHALL BUSINESS
CREDIT  CORPORATION,  as agent (in such  capacity,  the "Agent") for each of the
Lender Parties.

                              W I T N E S S E T H:

     WHEREAS,  pursuant  to a Credit  Agreement,  dated  as of the  date  hereof
(together   with   all   amendments,   supplements,   restatements   and   other
modifications,  if any, from time to time thereafter  made thereto,  the "Credit
Agreement"), among the Borrowers, the various lending institutions (individually
a "Lender"  and  collectively  the  "Lenders")  as are, or may from time to time
become,  parties thereto and the Agent, the Lenders have extended Commitments to
make Credit Extensions to the Borrowers;

     WHEREAS,  as a  condition  precedent  to the making of the  initial  Credit
Extension under the Credit  Agreement,  the Pledgors are required to execute and
deliver this Agreement; and

     WHEREAS,  each  Pledgor has duly  authorized  the  execution,  delivery and
performance of this Agreement;

     NOW THEREFORE,  for good and valuable consideration the receipt of which is
hereby  acknowledged,  and in  order  to  induce  the  Lenders  to  make  Credit
Extensions (including the initial Credit Extension) to the Borrowers pursuant to
the Credit Agreement, each Pledgor agrees, for the benefit of each Lender Party,
as follows:

                                    ARTICLE I
                                   DEFINITIONS

     SECTION 1.1 Certain Terms. The following terms (whether or not underscored)
when used in this Agreement, including its preamble and recitals, shall have the
following  meanings (such  definitions to be equally  applicable to the singular
and plural forms thereof):

<PAGE>

     "Additional Pledgors" is defined in clause (b) of Section 7.2.

     "Agent" is defined in the preamble.

     "Agreement" is defined in the preamble.

     "Borrower" and "Borrowers" are defined in the preamble.

     "Collateral" is defined in Section 2.1.

     "Credit Agreement" is defined in the first recital.

     "Distributions" means all stock dividends, liquidating dividends, shares of
stock  resulting  from (or in  connection  with the exercise  of) stock  splits,
reclassifications,   warrants,   options,   non-cash  dividends  and  all  other
distributions  (whether  similar  or  dissimilar  to the  foregoing)  on or with
respect to any  Pledged  Shares or other  shares of capital  stock  constituting
Collateral, but shall not include Dividends.

     "Dividends" means cash dividends and cash distributions with respect to any
Pledged Shares or other Pledged Property made in the ordinary course of business
and not as a liquidating dividend.

     "Lender" and "Lenders" are defined in the first recital.

     "Lender Party" means, as the context may require, any Lender, any Issuer or
the Agent and each of its respective successors, transferees and assigns.

     "Pledge Agreement Supplement" is defined in clause (b) of Section 7.2.

     "Pledged Note Issuer" means each Person  identified in Item A of Attachment
1 hereto as the issuer of the Pledged Note identified  opposite the name of such
Person.

     "Pledged Notes" means all promissory  notes of any Pledged Note Issuer that
are  delivered by each Pledgor to the Agent as Pledged  Property  hereunder,  as
such promissory  notes,  in accordance with Section 4.4, are amended,  modified,
supplemented, restated or otherwise modified from time to time and together with
any  promissory  note of any Pledged  Note Issuer  taken in extension or renewal
thereof  or  substitution  therefor.  The  form of the  original  Pledged  Notes
hereunder is attached at Attachment 2 hereto.

     "Pledged  Property" means all Pledged Shares,  Pledged Notes, and all other
pledged shares of capital stock or promissory notes, all other  securities,  all
assignments of any amounts due or to become due with respect thereto,  all other
instruments  that are now being  delivered  by each  Pledgor to the Agent or may
from time to time hereafter be delivered by each Pledgor to the

                                      -2-
<PAGE>

Agent for the purpose of pledge under this Agreement or any other Loan Document,
and all proceeds of any of the foregoing.

     "Pledged Share Issuer" means each Person identified in Item B of Attachment
1 hereto as the issuer of the Pledged  Shares  identified  opposite  the name of
such Person.

     "Pledged  Shares"  means the shares of capital  stock of any Pledged  Share
Issuer in the amounts and percentages listed on Attachment 1 hereto.

     "Pledgor" and "Pledgors" is defined in the preamble.

     "Secured Obligations" is defined in Section 2.2.

     "Securities Act" is defined in Section 6.2.

     "U.C.C." means the Uniform  Commercial  Code as from time to time in effect
in the State of New York or, with respect to any Collateral located in any state
other than the State of New York,  the Uniform  Commercial  Code as from time to
time in effect in such state.

     SECTION 1.2 Credit Agreement  Definitions.  Unless otherwise defined herein
or the context otherwise requires,  terms used in this Agreement,  including its
preamble and recitals, have the meanings provided in the Credit Agreement.

     SECTION 1.3 U.C.C.  Definitions.  Unless  otherwise  defined  herein or the
context otherwise requires,  terms for which meanings are provided in the U.C.C.
are used in this  Agreement,  including  its  preamble and  recitals,  with such
meanings.

                                   ARTICLE II
                                     PLEDGE

     SECTION  2.1 Grant of  Security  Interest.  Each  Pledgor  hereby  pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the Agent,
for its  benefit  and the  ratable  benefit of each of the Lender  Parties,  and
hereby  grants to the Agent,  for its  benefit  and the  ratable  benefit of the
Lender Parties, a continuing security interest in, all of the following property
(collectively, the "Collateral"):

          (a) all  promissory  notes of each Pledged Note Issuer  identified  in
     Item A of Attachment 1 hereto;

          (b) all other  promissory notes of any Pledged Note Issuer issued from
     time  to  time  to any  Obligor,  as such  promissory  notes  are  amended,
     modified,  supplemented,  restated or otherwise  modified from time to time
     and together with any  promissory  note of any Pledged Note Issuer taken in
     extension or renewal thereof or substitution therefor;

                                      -3-
<PAGE>

          (c) all issued and outstanding shares of capital stock of each Pledged
     Share Issuer identified in Item B of Attachment 1 hereto and all additional
     shares of capital stock of  Subsidiaries of the Borrowers from time to time
     acquired by such Pledgor in any manner (other than shares of voting capital
     stock in any Foreign  Subsidiary,  in which case only 66% of the issued and
     outstanding  shares of capital stock or other  ownership  interests of such
     Pledgor in such Foreign Subsidiary), and the certificates representing such
     shares;

          (d) all other  securities,  all  assignments  of any amounts due or to
     become due with respect  thereto,  and all other  instruments  from time to
     time  received,  receivable  or otherwise  distributed  in respect of or in
     exchange  for any or all of the items  listed in clauses  (a),  (b) and (c)
     above;

          (e) all  Dividends,  Distributions,  interest,  and other payments and
     rights with respect to any of the items listed in clauses (a), (b), (c) and
     (d) above; and

          (f) all proceeds of any of the foregoing.

     SECTION 2.2 Security for Obligations. This Agreement secures the payment in
full of all Obligations, including all amounts payable by each Borrower and each
other Obligor under or in connection  with the Credit  Agreement,  the Notes and
each  other  Loan  Document,  whether  for  principal,  interest,  costs,  fees,
expenses, indemnities or otherwise and whether now or hereafter existing (all of
such obligations being the "Secured Obligations").

     SECTION 2.3 Delivery of Pledged  Property.  All certificates or instruments
representing or evidencing any Collateral,  including all Pledged Shares and all
Pledged  Notes,  shall be delivered to and held by or on behalf of (and,  in the
case of the Pledged Notes,  endorsed to the order of) the Agent pursuant hereto,
shall be in suitable form for transfer by delivery,  and shall be accompanied by
all necessary instruments of transfer or assignment, duly executed in blank.

     SECTION 2.4 Dividends on Pledged Shares and Payments on Pledged  Notes.  In
the event that any Dividend is to be paid on any Pledged Share or any payment of
principal  or interest  is to be made on any Pledged  Note at a time when (a) no
Default of the nature  referred to in Section 8.1.9 of the Credit  Agreement has
occurred  and is  continuing,  and (b) no Event of Default has  occurred  and is
continuing,  such Dividend or payment may be paid  directly to each Pledgor.  If
any such Default or Event of Default has occurred  and is  continuing,  then any
such Dividend or payment shall be paid directly to the Agent.

     SECTION 2.5 Continuing Security Interest; Transfer of Notes. This Agreement
shall create a continuing security interest in the Collateral and shall

          (a) remain in full force and effect  until  payment in full in cash of
     all  Secured   Obligations  and  the  termination  of  the  Revolving  Loan
     Commitment,

                                      -4-
<PAGE>

          (g) be binding upon each Pledgor and its  successors,  transferees and
     assigns, and

          (h)  inure,  together  with  the  rights  and  remedies  of the  Agent
     hereunder, to the benefit of the Agent and each other Lender Party.

Without  limiting the  foregoing  clause (c), any Lender may assign or otherwise
transfer  (in whole or in part) any Note or Credit  Extension  held by it to any
other Person,  and such other Person shall thereupon  become vested with all the
rights and  benefits in respect  thereof  granted to such Lender  under any Loan
Document  (including  this  Agreement) or otherwise,  subject,  however,  to any
contrary  provisions in such  assignment or transfer,  and to the  provisions of
Section  10.11 and  Article IX of the Credit  Agreement.  Upon the  indefeasible
payment in full in cash of all Secured  Obligations  and the  termination of the
Revolving Loan Commitment,  the security interest granted herein shall terminate
and all rights to the  Collateral  shall revert to each  Pledgor.  Upon any such
termination,  the Agent will, at each  Pledgor's  sole expense,  deliver to such
Pledgor,  without  any  representations,  warranties  or  recourse  of any  kind
whatsoever,  all  certificates  and  instruments  representing or evidencing all
Pledged Shares and all Pledged Notes, together with all other Collateral held by
the Agent  hereunder,  and execute and deliver to such Pledgor such documents as
such Pledgor shall reasonably request to evidence such termination or release.

     SECTION 2.6  Security  Interest  Absolute.  All rights of the Agent and the
security  interests granted to the Agent hereunder,  and all obligations of each
Pledgor hereunder, shall be, to the extent permitted by applicable law, absolute
and unconditional, irrespective of

          (a) any lack of validity or  enforceability  of the Credit  Agreement,
     any Note or any other Loan Document,

          (b) the failure of any Lender Party or any holder of any Note

               (i) to assert  any claim or  demand  or to  enforce  any right or
          remedy  against any  Pledgor,  any other  Obligor or any other  Person
          under the provisions of the Credit Agreement, any Note, any other Loan
          Document, or otherwise, or

               (ii) to exercise any right or remedy against any other  guarantor
          of, or collateral  securing,  any Secured Obligation of any Pledgor or
          any other Obligor,

          (c) any change in the time,  manner or place of payment  of, or in any
     other  term  of,  all  or  any  of the  Secured  Obligations  or any  other
     extension,  compromise  or renewal of any  Obligation of any Pledgor or any
     other Obligor,  including any increase in the Secured Obligations resulting
     from the extension of additional credit to any Pledgor or any other Obligor
     or otherwise,

                                      -5-
<PAGE>

          (d)  any  reduction,  limitation,  impairment  or  termination  of any
     Secured  Obligation  of any  Pledgor or any other  Obligor  for any reason,
     including  any  claim  of  waiver,   release,   surrender,   alteration  or
     compromise, and shall not be subject to (and each Pledgor hereby waives any
     right to or claim of) any defense or setoff,  counterclaim,  recoupment  or
     termination   whatsoever   by   reason  of  the   invalidity,   illegality,
     nongenuineness, irregularity, compromise, unenforceability of, or any other
     event or occurrence  affecting,  any Secured Obligation of any Pledgor, any
     other Obligor or otherwise,

          (e) any amendment to, rescission, waiver, or other modification of, or
     any consent to departure  from,  any of the terms of the Credit  Agreement,
     any Note or any other Loan Document,

          (f) any addition,  exchange,  release,  surrender or non-perfection of
     any collateral (including the Collateral), or any amendment to or waiver or
     release of or addition to or consent to departure  from any  guaranty,  for
     any of the Secured Obligations, or

          (g) any other circumstances which might otherwise constitute a defense
     available to, or a legal or equitable discharge of, any Pledgor,  any other
     Obligor, any surety or any guarantor.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

     SECTION 3.1 Warranties, etc. Each Pledgor represents and warrants unto each
Lender Party,  as at the date of each pledge and delivery  hereunder  (including
each  pledge and  delivery of Pledged  Shares and each pledge and  delivery of a
Pledged  Note) by such Pledgor to the Agent of any  Collateral,  as set forth in
this Article.

     SECTION  3.1.1  Ownership,  No Liens,  etc.  Such  Pledgor is the legal and
beneficial  owner of, and has good and  marketable  title to (and has full right
and  authority  to pledge and  assign)  such  Collateral,  free and clear of all
Liens, except for this security interest granted pursuant hereto in favor of the
Agent and as provided in the Intercreditor Agreement.

     SECTION 3.1.2 Valid Security  Interest.  The delivery of such Collateral to
the Agent is effective to create a valid,  perfected,  first  priority  security
interest in such  Collateral  and all  proceeds  thereof,  securing  the Secured
Obligations.  No filing or other  action will be necessary to perfect or protect
such security interest.

     SECTION 3.1.3 As to Pledged Notes. In the case of each Pledged Note, all of
such Pledged Notes have been duly  authorized,  executed,  endorsed,  issued and
delivered,  and are the  legal,  valid and  binding  obligation  of the  issuers
thereof, and are not in default.

                                      -6-
<PAGE>

     SECTION  3.1.4 As to  Pledged  Shares.  In the case of any  Pledged  Shares
constituting such Collateral, all of such Pledged Shares are duly authorized and
validly issued,  fully paid, and non-assessable,  and constitute all (or, in the
case of a Pledged  Share  Issuer that is an  Excluded  Foreign  Subsidiary,  66%
(subject  to  Section  7.1.9  of  the  Credit  Agreement))  of  the  issued  and
outstanding  shares of voting capital stock and 100% of the  non-voting  capital
stock of each  Pledged  Share  Issuer  (or,  if  less,  100% of the  issued  and
outstanding  shares of capital  stock of such Pledged Share Issuer owned by such
Pledgor).  The Pledgors  have no  Subsidiaries  other than (a) the Pledged Share
Issuers and (b) Subsidiaries of Excluded Foreign Subsidiaries.

     SECTION 3.1.5 Authorization,  Approval, etc. No authorization, approval, or
other action by, and no notice to or filing with,  any  governmental  authority,
regulatory body or any other Person is required either

          (a) for the pledge by such Pledgor of any Collateral  pursuant to this
     Agreement or for the execution, delivery, and performance of this Agreement
     by such Pledgor, or

          (b) for the  exercise  by the  Agent of the  voting  or  other  rights
     provided for in this Agreement or the remedies in respect of the Collateral
     pursuant to this Agreement,  except, with respect to the Pledged Shares, as
     may be required in connection  with a disposition of such Pledged Shares by
     laws affecting the offering and sale of securities generally.

     SECTION 3.1.6 Due Execution, Validity, Etc. Such Pledgor has full power and
authority,  and holds all  requisite  governmental  licenses,  permits and other
approvals,  to enter into and perform its obligations under this Agreement.  The
execution,  delivery and  performance by such Pledgor of this Agreement does not
contravene  or result in a default  under such  Pledgor's  Organic  Documents or
contravene  or result in a default under any material  contractual  restriction,
Lien or  governmental  regulation  or  court  decree  or order  binding  on such
Pledgor.  This Agreement has been duly authorized by such Pledgor, has been duly
executed  and  delivered on behalf of such  Pledgor and  constitutes  the legal,
valid and binding obligation of such Pledgor  enforceable in accordance with its
terms,  subject  to  the  effect  of  any  applicable  bankruptcy,   insolvency,
reorganization,  moratorium or similar law affecting creditor's right generally,
and subject to the effect of general principles of equity (regardless of whether
considered in a proceeding in equity or at law).

     SECTION 3.1.7 Other Loan  Documents.  Each  representation  and warranty of
such Pledgor  contained in each Loan Document to which it is a party is true and
correct in all material respects as of such date (unless such representation and
warranty  is stated to relate  solely to an  earlier  date,  in which  case such
representation  and warranty is true and correct in all material  respects as of
such earlier date).

                                      -7-
<PAGE>

                                   ARTICLE IV
                                    COVENANTS

     SECTION 4.1 Protect Collateral;  Further  Assurances,  etc. No Pledgor will
sell, assign,  transfer,  pledge, or encumber in any other manner the Collateral
(except in favor of the Agent).  Each  Pledgor will warrant and defend the right
and title herein granted unto the Agent in and to the Collateral (and all right,
title,  and  interest  represented  by the  Collateral)  against  the claims and
demands of all Persons  whomsoever.  Each Pledgor  agrees that at any time,  and
from time to time,  at the expense of such  Pledgor,  such Pledgor will promptly
execute and deliver all further  instruments,  and take all further action, that
may be necessary,  or that the Agent may reasonably request, in order to perfect
and protect any security  interest  granted or purported to be granted hereby or
to enable the Agent to exercise  and enforce its rights and  remedies  hereunder
with respect to any  Collateral.  The Pledgor will not permit any Pledged  Share
Issuer to issue any capital  stock unless the same (or, in the case of a Pledged
Share  Issuer that is an Excluded  Foreign  Subsidiary,  66% of the same that is
voting  capital  stock  (subject to Section 7.1.9 of the Credit  Agreement))  is
immediately delivered in pledge to the Agent hereunder.

     SECTION 4.2 Stock Powers,  etc. Each Pledgor agrees that all Pledged Shares
(and all other shares of capital  stock  constituting  Collateral)  delivered by
such Pledgor  pursuant to this  Agreement  will be  accompanied by duly executed
undated  blank  stock  powers,  or  other  equivalent  instruments  of  transfer
acceptable to the Agent.  Each Pledgor will,  from time to time upon the request
of the Agent, promptly deliver to the Agent such stock powers, instruments,  and
similar documents, satisfactory in form and substance to the Agent, with respect
to the  Collateral as the Agent may  reasonably  request and will,  from time to
time upon the  request of the Agent after the  occurrence  of any Default of the
nature  referred  to in Section  8.1.9 of the Credit  Agreement  or any Event of
Default,  promptly  transfer any Pledged  Shares or other shares of common stock
constituting Collateral into the name of any nominee designated by the Agent.

     SECTION 4.3 Continuous  Pledge.  Subject to Section 2.4, each Pledgor will,
at all times,  keep pledged to the Agent pursuant  hereto all Pledged Shares and
all other shares of capital  stock  constituting  Collateral,  all Dividends and
Distributions with respect thereto,  all Pledged Notes, all interest,  principal
and other proceeds  received by the Agent with respect to the Pledged Notes, and
all other Collateral and other  securities,  instruments,  proceeds,  and rights
from time to time received by or distributable to such Pledgor in respect of any
Collateral.

     SECTION 4.4 Voting Rights; Dividends, etc. Each Pledgor agrees:

          (a) after any Default of the nature  referred  to in Section  8.1.9 of
     the Credit  Agreement  or any Event of Default  shall have  occurred and be
     continuing,  promptly upon receipt  thereof by such Pledgor and without any
     request therefor by the Agent, to deliver (properly endorsed where required
     hereby  or   requested   by  the   Agent)  to  the  Agent  all   Dividends,
     Distributions,  interest,  principal,  other cash payments, and proceeds of
     the  Collateral,  all of  which  shall be held by the  Agent as  additional
     Collateral for use in accordance with Section 6.3; and

                                      -8-
<PAGE>

          (b) after  Default of the nature  referred to in Section  8.1.9 of the
     Credit  Agreement  or any  Event of  Default  shall  have  occurred  and be
     continuing and the Agent has notified such Pledgor of the Agent's intention
     to exercise its voting power under this clause (b):

               (i) the Agent may exercise (to the exclusion of such Pledgor) the
          voting power and all other incidental rights of ownership with respect
          to any Pledged  Shares or other shares of capital  stock  constituting
          Collateral  and such Pledgor  hereby  grants the Agent an  irrevocable
          proxy,  exercisable  under  such  circumstances,  to vote the  Pledged
          Shares and such other Collateral; and

               (ii) such  Pledgor  shall  promptly  deliver  to the  Agent  such
          additional  proxies and other  documents  as may be necessary to allow
          the Agent to exercise such voting power.

All Dividends,  Distributions,  interest, principal, cash payments, and proceeds
which  may at any time and from  time to time be held by any  Pledgor  but which
such Pledgor is then obligated to deliver to the Agent, shall, until delivery to
the Agent, be held by each Pledgor separate and apart from its other property in
trust for the  Agent.  The Agent  agrees  that  unless a Default  of the  nature
referred  to in  Section  8.1.9 of the Credit  Agreement  or an Event of Default
shall have occurred and be continuing  and the Agent shall have given the notice
referred to in clause (b), each Pledgor  shall have the  exclusive  voting power
with  respect to any  shares of  capital  stock  (including  any of the  Pledged
Shares) constituting Collateral and the Agent shall, upon the written request of
each  Pledgor,  promptly  deliver such proxies and other  documents,  if any, as
shall be reasonably  requested by each Pledgor which are necessary to allow such
Pledgor to exercise voting power with respect to any such share of capital stock
(including  any  of  the  Pledged  Shares)  constituting  Collateral;  provided,
however, that no vote shall be cast, or consent,  waiver, or ratification given,
or  action  taken  by  the  Pledgor  that  would  impair  any  Collateral  or be
inconsistent  with or violate any provision of the Credit Agreement or any other
Loan Document (including this Agreement).

     SECTION 4.5  Additional  Undertakings.  Each Pledgor will not,  without the
prior written consent of the Agent:

          (a) enter into any agreement amending,  supplementing,  or waiving any
     provision of any Pledged Note (including any underlying instrument pursuant
     to which such  Pledged  Note is issued) or  compromising  or  releasing  or
     extending the time for payment of any obligation of the maker thereof; or

          (b) take or omit to take any  action  the  taking or the  omission  of
     which could result in any impairment or alteration of any obligation of the
     maker of any Pledged Note or other instrument constituting Collateral.

                                      -9-
<PAGE>

                                    ARTICLE V
                                    THE AGENT

     SECTION  5.1  Agent   Appointed   Attorney-in-Fact.   Each  Pledgor  hereby
irrevocably constitutes and appoints the Agent and any officer or agent thereof,
with full power of substitution,  as its true and lawful  attorney-in-fact  with
full irrevocable  power and authority in the place and stead of such Pledgor and
in the name of such Pledgor or in its own name,  for the purpose of carrying out
the  terms of this  Agreement,  to take,  upon the  occurrence  and  during  the
continuance  of any Default of the nature  referred  to in Section  8.1.9 of the
Credit Agreement or any Event of Default,  any and all appropriate action and to
execute any and all documents and instruments that may be necessary or desirable
to  accomplish  the  purposes  of this  Agreement,  and,  without  limiting  the
generality of the  foregoing,  each Pledgor hereby gives the Agent the power and
right,  on behalf of such Pledgor,  without notice to or assent by such Pledgor,
to do any or all of the following:

          (a) in the name of such Pledgor or its own name,  or  otherwise,  take
     possession  of  and  indorse  and  collect  any  checks,   drafts,   notes,
     acceptances or other  instruments for the payment of moneys due under or in
     respect of any  Collateral  and file any claim or take any other  action or
     proceeding in any court of law or equity or otherwise deemed appropriate by
     the Agent for the purpose of  collecting  any and all such moneys due under
     or in respect of any Collateral whenever payable; and

          (b) (i)  direct  any party  liable  for any  payment  under any of the
     Collateral  to make  payment  of any and all  moneys  due or to become  due
     thereunder  directly to the Agent or as the Agent shall direct; (ii) ask or
     demand for,  collect,  and receive payment of and give receipt for, any and
     all  moneys,  claims and other  amounts due or to become due at any time in
     respect of or arising out of any Collateral;  (iii) receive,  collect, sign
     and indorse any drafts or other instruments, documents and chattel paper in
     connection  in  connection  with any of the  Collateral;  (iv) commence and
     prosecute  any  suits,  actions or  proceedings  at law or in equity in any
     court of competent  jurisdiction  to collect the  Collateral or any portion
     thereof and to enforce any other  right in respect of any  Collateral;  (v)
     defend any suit,  action or  proceeding  brought  against such Pledgor with
     respect to any Collateral; (vi) settle, compromise or adjust any such suit,
     action or proceeding and, in connection therewith,  give such discharges or
     releases  as the Agent may deem  appropriate;  and (vii)  generally,  sell,
     transfer,  pledge and make any agreement  with respect to or otherwise deal
     with any of the Collateral as fully and completely as though the Agent were
     the absolute owner thereof for all purposes,  and do, at the Agent's option
     and such Pledgor's expense, at any time, or from time to time, all acts and
     things that the Agent deems necessary to protect,  preserve or realize upon
     the Collateral and the Lender Parties'  security  interests  therein and to
     effect the intent of this  Agreement,  all as fully and effectively as such
     Pledgor might do.

Each Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.

                                      -10-
<PAGE>

     SECTION  5.2  Agent  May  Perform.  If any  Pledgor  fails to  perform  any
agreement contained herein, upon prior notice to the relevant Pledgor, the Agent
may itself perform,  or cause  performance of, such agreement and the reasonable
expenses of the Agent incurred in connection  therewith shall be payable by such
Pledgor pursuant to Section 6.4; provided, however, if any Default of the nature
referred  to in Section  8.1.9 of the Credit  Agreement  or Event of Default has
occurred and is continuing, no such notice shall be required.

     SECTION 5.3 Agent Has No Duty. The powers  conferred on the Agent hereunder
are solely to protect  its  interest  (on behalf of the Lender  Parties)  in the
Collateral and shall not impose any duty on it to exercise any such powers.  The
Agent's  sole  duty  with  respect  to the  custody,  safekeeping  and  physical
preservation  of the  Collateral in its  possession,  under Section 9-207 of the
U.C.C.  or  otherwise,  shall be to deal with it in the same manner as the Agent
deals with similar  property  for its own account.  Neither the Agent nor any of
its  officers,  directors,  employees  or agents  shall be liable for failure to
demand,  collect or realize upon any of the Collateral or for any delay in doing
so or  shall  be  under  any  obligation  to sell or  otherwise  dispose  of any
Collateral  upon the request of any  Pledgor or any other  Person or to take any
other  action  whatsoever  with  regard to the  Collateral  or any part  thereof
(including (a) ascertaining or taking action with respect to calls, conversions,
exchanges,  maturities,  tenders  or  other  matters  relative  to  any  Pledged
Property,  whether or not the Agent has or is deemed to have  knowledge  of such
matters,  and (b) the taking of any necessary  steps to preserve  rights against
prior  parties or any other rights  pertaining  to any  Collateral).  The powers
conferred  on the Agent  hereunder  are  solely to protect  the Lender  Parties'
interests  in the  Collateral  and shall not  impose  any duty upon the Agent to
exercise any such powers.  The Agent shall be accountable  only for amounts that
it actually receives as a result of the exercise of such powers, and neither the
Agent  nor  any of  its  officers,  directors,  employees  or  agents  shall  be
responsible to any Pledgor for any act or failure to act  hereunder,  except for
their own gross negligence or willful misconduct.

                                   ARTICLE VI
                                    REMEDIES

     SECTION 6.1 Certain  Remedies.  If any Event of Default shall have occurred
and be continuing:

          (a) The Agent may exercise in respect of the  Collateral,  in addition
     to other rights and remedies provided for herein or otherwise  available to
     it, all the rights and  remedies  of a secured  party on default  under the
     U.C.C.  (whether or not the U.C.C.  applies to the affected Collateral) and
     also may,  without  demand of  performance  or other  demand,  presentment,
     protest, advertisement or notice of any kind (except any notice required by
     law  referred to below) to or upon any Pledgor or any other Person (all and
     each of which  demands,  defenses,  advertisements  and  notices are hereby
     waived),  sell,  assign,  give option or options to purchase,  or otherwise
     dispose of and deliver the  Collateral  or any part thereof (or contract to
     do any of the  foregoing) in one or more parcels at public or private sale,
     at any of the  Agent's  offices or  elsewhere,  for cash,  on

                                      -11-
<PAGE>

     credit or for future  delivery,  and upon such other terms as the Agent may
     deem  commercially  reasonable.  Each Pledgor  agrees  that,  to the extent
     notice of sale shall be required by law, at least ten days' prior notice to
     such  Pledgor  of the time and place of any  public  sale or the time after
     which  any  private  sale  is  to  be  made  shall  constitute   reasonable
     notification.  The  Agent  shall  not be  obligated  to  make  any  sale of
     Collateral  regardless  of notice of sale having been given.  The Agent may
     adjourn any public or private sale from time to time by announcement at the
     time and place fixed therefor,  and such sale may,  without further notice,
     be made at the time and place to which it was so adjourned.

          (b) The Agent may

               (i) transfer all or any part of the  Collateral  into the name of
          the  Agent  or its  nominee,  with or  without  disclosing  that  such
          Collateral is subject to the lien and security interest hereunder,

               (ii) notify the parties  obligated  on any of the  Collateral  to
          make  payment  to  the  Agent  of any  amount  due  or to  become  due
          thereunder,

               (iii)  enforce  collection  of any of the  Collateral  by suit or
          otherwise, and surrender, release or exchange all or any part thereof,
          or compromise or extend or renew for any period (whether or not longer
          than the original  period) any  obligations of any nature of any party
          with respect thereto,

               (iv)  endorse  any  checks,  drafts,  or other  writings  in each
          Pledgor's name to allow collection of the Collateral,

               (v) take control of any proceeds of the Collateral, and

               (vi)  execute  (in the name,  place  and  stead of each  Pledgor)
          endorsements,  assignments,  stock  powers  and other  instruments  of
          conveyance or transfer with respect to all or any of the Collateral.

Each such  purchaser of the Collateral  shall hold the property sold  absolutely
free  from any  claim or right  on the part of any  Pledgor,  and to the  extent
permitted by applicable law, the Pledgors hereby waive all rights of redemption,
stay,  valuation  and  appraisal  any  Pledgor now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.

The Agent shall give the Pledgors 10 days'  written  notice  (which each Pledgor
agrees is  reasonable  notice  within the  meaning of  Section  9-504(3)  of the
U.C.C.) of the Agent's intention to make any sale of Collateral. Such notice, in
the case of a public sale,  shall state the time and place for such sale and, in
the case of a sale at a broker's board or on a securities exchange,  shall state
the board or  exchange at which such sale is to be made and the day on which the
Collateral,  or portion thereof, will first be offered for sale at such board or
exchange.  Any  such  public  sale

                                      -12-
<PAGE>

shall be held at such time or time within  ordinary  business  hours and at such
place or places as the  Agent may fix and state in the  notice  (if any) of such
sale. At any such sale, the Collateral,  or portion  thereof,  to be sold may be
sold in one lot as an entirety or in separate parcels,  as the Agent may (in its
sole and  absolute  discretion)  determine.  The Agent shall not be obligated to
make any sale of any Collateral if it shall  determine not to do so,  regardless
of the fact that notice of sale of such  Collateral  shall have been given.  The
Agent may,  without notice or publication  adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice,  be made at the
time and  place to which the same was so  adjourned.  In case any sale of all or
any  part of the  Collateral  is made on  credit  or for  future  delivery,  the
Collateral  so sold may be retained by the Agent until the sale price is paid by
the purchase or purchasers thereof,  but the Agent shall not incur any liability
in case any such  purchaser or purchasers  shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may be sold
again upon like  notice.  At any public  (or,  to the extent  permitted  by law,
private)  sale made  pursuant to this  Section,  any Lender Party may bid for or
purchase,  free (to the extent  permitted by law) from any right of  redemption,
stay,  valuation  or appraisal on the part of any Pledgor (all said rights being
also hereby waived and released to the extent  permitted by law), the Collateral
or any part thereof  offered for sale and may make payment on account thereof by
using any claim then due and payable to such Lender  Party from any Pledgor as a
credit  against the purchase  price,  and such Lender Party may upon  compliance
with the terms of sale,  hold,  retain  and  dispose  of such  property  without
further accountability to any Pledgor therefor.

     SECTION 6.2 Securities  Laws. If the Agent shall  determine to exercise its
right to sell all or any of the Collateral pursuant to Section 6.1, each Pledgor
agrees that, upon request of the Agent, such Pledgor will, at its own expense:

          (a)  execute  and  deliver,  and cause each  issuer of the  Collateral
     contemplated  to be sold and the directors and officers  thereof to execute
     and deliver, all such instruments and documents, and do or cause to be done
     all such other acts and things,  as may be necessary  or, in the opinion of
     the Agent,  advisable to register such  Collateral  under the provisions of
     the Securities  Act of 1933, as from time to time amended (the  "Securities
     Act"), and to cause the registration  statement  relating thereto to become
     effective  and to remain  effective  for such  period as  prospectuses  are
     required by law to be furnished, and to make all amendments and supplements
     thereto and to the related  prospectus  which, in the opinion of the Agent,
     are necessary or advisable,  all in conformity with the requirements of the
     Securities Act and the rules and regulations of the Securities and Exchange
     Commission applicable thereto;

          (b) use its best  efforts to qualify  the  Collateral  under the state
     securities  or "Blue  Sky" laws and to obtain  all  necessary  governmental
     approvals for the sale of the Collateral, as requested by the Agent;

                                      -13-
<PAGE>

                  (c) cause each such issuer to make  available  to its security
         holders,  as soon as  practicable,  an  earnings  statement  that  will
         satisfy the provisions of Section 11(a) of the Securities Act; and

                  (d) do or cause to be done all such  other  acts and things as
         may be  necessary  to make  such  sale of the  Collateral  or any  part
         thereof valid and binding and in compliance with applicable law.

Each Pledgor further  acknowledges the  impossibility of ascertaining the amount
of damages  that would be suffered by the Agent or the Lender  Parties by reason
of the failure by such Pledgor to perform any of the covenants contained in this
Section and, consequently,  to the extent permitted under applicable law, agrees
that, if such Pledgor shall fail to perform any of such covenants, it shall pay,
as  liquidated  damages and not as a penalty,  an amount  equal to the value (as
determined  by the Agent) of the  Collateral  on the date the Agent shall demand
compliance with this Section.

     SECTION 6.3 Compliance with  Restrictions.  Each Pledgor agrees that in any
sale of any of the  Collateral  whenever an Event of Default shall have occurred
and be continuing,  the Agent is hereby authorized to comply with any limitation
or restriction  in connection  with such sale as it may be advised by counsel is
necessary  in  order  to  avoid  any  violation  of  applicable  law  (including
compliance  with such  procedures  as may  restrict  the  number of  prospective
bidders and  purchasers,  require that such  prospective  bidders and purchasers
have  certain   qualifications,   and  restrict  such  prospective  bidders  and
purchasers to persons who will  represent and agree that they are purchasing for
their own  account for  investment  and not with a view to the  distribution  or
resale of such  Collateral),  or in order to obtain any required approval of the
sale or of the purchaser by any governmental  regulatory  authority or official,
and each Pledgor  further agrees that such  compliance  shall not result in such
sale  being  considered  or  deemed  not to have  been  made  in a  commercially
reasonable  manner, nor shall the Agent be liable nor accountable to any Pledgor
for any discount  allowed by reason of the fact that such  Collateral is sold in
compliance with any such limitation or restriction.

     SECTION 6.4  Application  of Proceeds.  All cash  proceeds  received by the
Agent in respect of any sale of, collection from, or other realization upon, all
or any part of the  Collateral  shall be applied  (after  payment of any amounts
payable to the Agent  pursuant  to  Section  10.3 of the  Credit  Agreement  and
Section 6.5 below) in whole or in part by the Agent for the  ratable  benefit of
the  Lender  Parties  against  all or any  part of the  Secured  Obligations  in
accordance with Section 8.4 of the Credit Agreement. Any surplus of such cash or
cash proceeds  held by the Agent and remaining  after payment in full in cash of
all the Secured  Obligations,  and the termination of all Commitments,  shall be
paid over to the applicable Pledgor or to whomsoever may be lawfully entitled to
receive such surplus.

     SECTION 6.5 Indemnity and Expenses.  Each Pledgor  hereby agrees to jointly
and severally indemnify and hold harmless the Agent from and against any and all
claims,  losses, and liabilities arising out of or resulting from this Agreement
(including enforcement of this

                                      -14-
<PAGE>

Agreement),  except claims,  losses,  or liabilities  resulting from the Agent's
gross negligence or willful  misconduct as determined by the final judgment of a
court of competent jurisdiction. Upon demand, each Pledgor will pay to the Agent
the amount of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents,  which the Agent may
incur in connection with:

          (a) the  administration  of this Agreement,  the Credit  Agreement and
     each other Loan Document;

          (b) the custody,  preservation,  use, or operation of, or the sale of,
     collection from, or other realization upon, any of the Collateral;

          (c) the  exercise  or  enforcement  of any of the  rights of the Agent
     hereunder; or

          (d) the  failure by such  Pledgor  to  perform  or observe  any of the
     provisions hereof.

                                   ARTICLE VII
                            MISCELLANEOUS PROVISIONS

     SECTION 7.1 Loan  Document.  This  Agreement  is a Loan  Document  executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed,  administered and applied in accordance with the terms and
provisions thereof including Article X thereof.

     SECTION 7.2 Amendments, etc.; Additional Pledgors; Successors and Assigns.

          (a) No amendment to or waiver of any  provision of this  Agreement nor
     consent to any  departure  by any  Pledgor  herefrom  shall in any event be
     effective  unless the same shall be in writing and signed by the Agent and,
     in the case of any such  amendment,  each Pledgor,  and then such waiver or
     consent  shall  be  effective  only in the  specific  instance  and for the
     specific purpose for which it is given.

          (b)  Upon  the  execution  and  delivery  by any  Person  of a  pledge
     agreement supplement in substantially the form of Attachment 3 hereto (each
     a "Pledge Agreement  Supplement"),  (i) such Person shall be referred to as
     an  "Additional  Pledgor"  and  shall  be and  become a  Pledgor,  and each
     reference in this Agreement to "Pledgor" shall also mean and be a reference
     to such Additional Pledgor and (ii) the attachment  supplement  attached to
     each Pledge Agreement  Supplement  shall be incorporated  into and become a
     part of and supplement  Attachment 1 hereto,  and the Agent may attach such
     attachment  supplements to Attachment 1, and each reference to Attachment 1
     shall mean and be a reference to  Attachment  1, as  supplemented  pursuant
     hereto.

                                      -15-
<PAGE>

          (c) Any Pledgor that becomes an Excluded Foreign  Subsidiary after the
     date hereof shall, upon written request of such Pledgor to the Agent and at
     the sole cost of such Pledgor,  be released from the terms hereof  pursuant
     to documentation reasonably satisfactory to the Agent.

          (d)  This  Agreement  shall  be  binding  upon  each  Pledgor  and its
     successors, transferees and assignees and shall inure to the benefit of and
     be  enforceable  by the  Agent  and  each  other  Lender  Party  and  their
     respective successors and assigns;  provided,  however, that no Pledgor may
     assign its obligations  hereunder  without the prior written consent of the
     Agent.

     SECTION 7.3 Protection of  Collateral.  The Agent may from time to time, at
its option and at the expense of the Pledgors, perform any act which any Pledgor
agrees  hereunder to perform and which such Pledgor  shall fail to perform after
being  requested  in  writing so to perform  (it being  understood  that no such
request need be given after the  occurrence  and during the  continuance  of any
Event of  Default)  and the Agent  may from  time to time take any other  action
which the Agent deems necessary or appropriate for the maintenance, preservation
or protection of any of the Collateral or of its security interest therein.

     SECTION 7.4  Addresses  for Notices.  All notices and other  communications
provided for hereunder shall be in writing or by facsimile  transmission and, if
to any Pledgor,  at the address of USAM  provided  for in the Credit  Agreement,
and, if to the Agent, at the address provided for in the Credit Agreement, or as
to any such party at such other  address as shall be designated by such party in
a written notice to each other party  complying as to delivery with the terms of
this Section. All such notices and other communications,  if mailed and properly
addressed with postage prepaid,  shall be deemed given three Business Days after
posting;  any notice  sent by  prepaid  overnight  express  mail shall be deemed
delivered on the next  following  Business  Day; and any notice  transmitted  by
facsimile  shall be deemed  given upon  receipt of  electronic  confirmation  of
transmission by the sender thereof.

     SECTION 7.5 Section  Captions.  Section captions used in this Agreement are
for convenience of reference only, and shall not affect the construction of this
Agreement.

     SECTION  7.6  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 such law, such  provision  shall be  ineffective  to the extent of
such  prohibition  or  invalidity,  without  invalidating  the remainder of such
provision or the remaining provisions of this Agreement.

     SECTION 7.7  Counterparts.  This  Agreement  may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be original and
all of which shall constitute but one and the same agreement.

                                      -16-
<PAGE>

     SECTION 7.8 Governing Law, Entire  Agreement,  etc. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK,  EXCEPT TO THE EXTENT THAT THE VALIDITY OR  PERFECTION OF THE SECURITY
INTEREST  HEREUNDER,  OR  REMEDIES  HEREUNDER,  IN  RESPECT  OF  ANY  PARTICULAR
COLLATERAL  ARE GOVERNED BY THE LAWS OF A  JURISDICTION  OTHER THAN THE STATE OF
NEW YORK.  THIS  AGREEMENT AND THE OTHER LOAN  DOCUMENTS  CONSTITUTE  THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.

     SECTION 7.9 Forum  Selection and Consent to  Jurisdiction.  ANY  LITIGATION
BASED HEREON,  OR ARISING OUT OF, UNDER, OR IN CONNECTION  WITH, THIS AGREEMENT,
OR ANY  COURSE  OF  CONDUCT,  COURSE OF  DEALING,  STATEMENTS  (WHETHER  ORAL OR
WRITTEN) OR ACTIONS OF ANY LENDER PARTY SHALL BE BROUGHT AND  MAINTAINED  IN THE
FEDERAL AND STATE COURTS LOCATED IN THE BOROUGH OF MANHATTAN OF THE STATE OF NEW
YORK PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL
OR OTHER PROPERTY MAY BE BROUGHT,  AT THE AGENT'S  OPTION,  IN THE COURTS OF ANY
JURISDICTION  WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH PLEDGOR
HEREBY EXPRESSLY AND IRREVOCABLY  SUBMITS TO THE EXCLUSIVE  JURISDICTION OF SUCH
COURTS FOR THE  PURPOSE OF ANY  LITIGATION  AS SET FORTH  ABOVE AND  IRREVOCABLY
AGREES TO BE BOUND BY ANY  JUDGMENT  RENDERED  THEREBY IN  CONNECTION  WITH SUCH
LITIGATION.  EACH PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY REGISTERED MAIL,  POSTAGE  PREPAID,  OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE OF NEW YORK. EACH PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY  WAIVES, TO
THE  FULLEST  EXTENT  PERMITTED  BY LAW,  ANY  OBJECTION  WHICH  IT MAY  HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION  BROUGHT IN ANY
SUCH COURT  REFERRED  TO ABOVE AND ANY CLAIM THAT ANY SUCH  LITIGATION  HAS BEEN
BROUGHT  IN AN  INCONVENIENT  FORUM.  TO THE  EXTENT  THAT  ANY  PLEDGOR  HAS OR
HEREAFTER  MAY ACQUIRE ANY IMMUNITY FROM  JURISDICTION  OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,  ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT  IN AID OF  EXECUTION  OR  OTHERWISE)  WITH  RESPECT TO ITSELF OR ITS
PROPERTY,  SUCH PLEDGOR  HEREBY,  TO THE FULLEST EXTENT  PERMITTED BY APPLICABLE
LAW,  IRREVOCABLY  WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT.

                                      -17-
<PAGE>

     SECTION  7.10 Waiver of Jury  Trial,  etc.  EACH  LENDER  PARTY AND PLEDGOR
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY  LITIGATION  BASED HEREON,  OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF
DEALING,  STATEMENTS  (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PLEDGOR.  EACH
PLEDGOR  ACKNOWLEDGES  AND  AGREES  THAT IT HAS  RECEIVED  FULL  AND  SUFFICIENT
CONSIDERATION  FOR  THIS  PROVISION  AND  THAT  THIS  PROVISION  IS  A  MATERIAL
INDUCEMENT FOR THE AGENT ENTERING INTO THIS AGREEMENT.

     SECTION  7.11  Waiver  of  Certain  Claims.  TO  THE  EXTENT  PERMITTED  BY
APPLICABLE  LAW, NO PLEDGOR SHALL ASSERT,  AND HEREBY WAIVES,  ANY CLAIM AGAINST
EACH  LENDER   PARTY  ON  ANY  THEORY  OF  LIABILITY   FOR  SPECIAL,   INDIRECT,
CONSEQUENTIAL  OR  PUNITIVE  DAMAGES  (AS  OPPOSED TO DIRECT OR ACTUAL  DAMAGES)
ARISING OUT OF, IN  CONNECTION  WITH,  OR AS A RESULT OF, THIS  AGREEMENT OR ANY
INSTRUMENT CONTEMPLATED HEREBY.

                                      -18-
<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly  executed  and  delivered  by  their  respective  officers  thereunto  duly
authorized as of the day and year first above written.

                                           U.S. AUTOMOTIVE MANUFACTURING, INC.

                                           By: ________________________________
                                               Name:
                                               Title:

                                           QUALITY AUTOMOTIVE COMPANY

                                           By: ________________________________
                                               Name:
                                               Title:

                                           US AUTOMOTIVE FRICTION, INC.

                                           By: ________________________________
                                               Name:
                                               Title:

                                           VIRECO, INC.

                                           By: ________________________________
                                               Name:
                                               Title:

Acknowledged and Accepted:

IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
  as Agent

By: ____________________________
    Name:
    Title:

                                      -19-
<PAGE>

                                                                 ATTACHMENT 1
                                                                           to
                                                             Pledge Agreement

Item A.  Pledged Notes

                                           Pledged         Original Principal
                                             Note              Amount and
Pledgor                                     Issuer                Date
-------                                     ------                ----

Item B.  Pledged Shares

                                Capital Stock
                                -------------

         Pledged Share    Authorized    Outstanding  % of Shares
Pledgor  Issuer           Shares        Shares       Pledged       Certificate #
-------  ------           ------        ------       -------       -------------

<PAGE>

                                                                    ATTACHMENT 2
                                                                              to
                                                                Pledge Agreement

                                  INTERCOMPANY
                               PROMISSORY NOTE(1)

$_____________,_________

     FOR VALUE  RECEIVED,  the  undersigned,  [NAME OF PLEDGED NOTE  ISSUER],  a
_______________  corporation (the "Maker"),  unconditionally  promises to pay to
the order of [NAME OF PLEDGOR],  a ___________  corporation  (the  "Payee"),  on
demand,   the  principal  sum  of   _________________   UNITED  STATES   DOLLARS
(U.S.$________),  or if less, the aggregate unpaid principal amount set forth on
the  schedule  attached  hereto  and made a part  hereof  (and any  continuation
thereof),  representing the aggregate  principal amount of an intercompany  loan
made by the Payee to the Maker.

     The unpaid principal amount of this promissory note (this "Note") from time
to  time  outstanding  shall  bear  interest  at a rate  of  interest  equal  to
_________, which the Maker represents to be a lawful and commercially reasonable
rate, payable  _________,  and all payments of principal of and interest on this
Note shall be payable in lawful  currency of the United  States of America.  All
such payments shall be made by the Maker to an account  established by the Payee
at such  financial  institution  as is  specified by the Payee to the Maker from
time to time and shall be  recorded  on the grid  attached  hereto by the holder
hereof  (including the Agent (as  hereinafter  defined),  as pledgee).  Upon the
occurrence and during the  continuance of any Default of the nature  referred to
in Section 8.1.9 of the Credit  Agreement (as hereinafter  defined) or any Event
of Default under the Credit  Agreement,  and notice  thereof by the Agent to the
Maker,  the Maker  shall make  every  payment  due under this Note,  in same day
funds, to such other account as the Agent shall direct in such notice.

     The Maker may not prepay the unpaid principal of this Note.

     This  Note  is one of the  Pledged  Notes  referred  to in,  and  evidences
Indebtedness  incurred  pursuant to,  clause (f) of Section  7.2.2 of the Credit
Agreement,  dated as of July 30,  1999 (as

----------
(1)  Each  Intercompany  Promissory  Note in which the Maker is a Borrower shall
     have Annex A hereto attached to it and shall contain the following legend:

     "THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATE AND JUNIOR IN RIGHT
     OF PAYMENT TO ALL SENIOR INDEBTEDNESS (AS DEFINED IN ANNEX A HERETO) TO THE
     EXTENT PROVIDED IN SAID ANNEX A."

<PAGE>

amended,  supplemented,  restated or otherwise  modified from time to time,  the
"Credit  Agreement"),  among U.S.  Automotive  Manufacturing,  Inc.,  a Delaware
corporation,   Quality  Automotive  Company,  a  Delaware  corporation,  and  US
Automotive  Friction,   Inc.,  a  Delaware  corporation,   the  various  lending
institutions  as  are,  or  may  from  time  to  time  become,  parties  thereto
(collectively, the "Lenders"), and IBJ Whitehall Business Credit Corporation, as
agent (in such capacity,  the "Agent") for the Lenders.  Upon the occurrence and
during the continuance of any Event of Default under the Credit  Agreement,  and
notice thereof by the Agent to the Maker, the Agent shall have all rights of the
Payee to collect and  accelerate,  and  enforce all rights with  respect to, the
indebtedness evidenced by this Note.

     Unless otherwise  defined herein or the context otherwise  requires,  terms
used herein have the meanings provided in the Pledge Agreement, dated as of July
30, 1999,  from the Payee and certain  other  Persons in favor of the Agent,  as
amended, supplemented, restated or otherwise modified from time to time.

     This  Note has  been  pledged  to the  Agent as  security  for the  Secured
Obligations.

     In addition to, but not in limitation of, the foregoing,  the Maker further
agrees  to pay all  expenses,  including  reasonable  attorneys'  fees and legal
expenses,  incurred by the holder (including the Agent, as pledgee) of this Note
endeavoring  to collect any amounts  payable  hereunder  which are not paid when
due, whether by acceleration or otherwise.

     THIS  NOTE  SHALL BE  GOVERNED  BY AND  CONSTRUED  IN  ACCORDANCE  WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.

                                      -2-
<PAGE>

     THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION  BASED ON THIS NOTE.
THE MAKER  ACKNOWLEDGES  AND AGREES  THAT IT HAS  RECEIVED  FULL AND  SUFFICIENT
CONSIDERATION  FOR  THIS  PROVISION  AND  THAT  THIS  PROVISION  IS  A  MATERIAL
INDUCEMENT FOR THE PAYEE TO ACCEPT THIS NOTE.

                                                     [NAME OF MAKER]

                                                     By: _______________________
                                                         Name:
                                                         Title:

                                                     Pay to the order of

                                                     By: _______________________
                                                         Name:
                                                         Title:

                                      -3-
<PAGE>

                                      GRID

     Intercompany  Loans  made by  [Name of  Pledged  Note  Issuer]  to [Name of
Pledgor] and payments of principal on such Loans.

<TABLE>
<CAPTION>
===================================================================================================
             Amount of            Amount of Principal    Outstanding
             Intercompany Loan    Payment                Principal           Notation Made By
Date                                                     Balance
---------------------------------------------------------------------------------------------------
<S>          <C>                   <C>                   <C>                 <C>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

===================================================================================================
</TABLE>

                                      -4-
<PAGE>

                                                                         Annex A
                                                                              to
                                                                    Attachment 2
                                                                              to
                                                                Pledge Agreement

                  SUBORDINATION PROVISIONS TO INTERCOMPANY NOTE

     [Each Intercompany Promissory Note in which the maker is the Borrower shall
have the following subordination provisions attached as Annex A thereto.]

     Section  1.01.  Subordination  of  Liabilities.  [Name  of  Borrower]  (the
"Company"),  for itself,  its successors and assigns,  covenants and agrees, and
each  holder  of the  Intercompany  Promissory  Note to  which  this  Annex A is
attached (the "Note") by its acceptance  thereof likewise  covenants and agrees,
that the payment of the principal  of,  interest on, and all other amounts owing
in respect of, the Note (the  "Subordinated  Indebtedness")  is hereby expressly
subordinated,  to the  extent and in the manner  hereinafter  set forth,  to the
prior payment in full in cash of all Senior  Indebtedness (as defined in Section
1.07 of this  Annex  A).  The  provisions  of this  Annex A shall  constitute  a
continuing  offer to all Persons who, in reliance upon such  provisions,  become
holders of, or continue to hold,  Senior  Indebtedness,  and such provisions are
made for the benefit of the holders of Senior Indebtedness, and such holders are
hereby made obligees hereunder the same as if their names were written herein as
such, and they and/or each of them may proceed to enforce such provisions.

     Section 1.02.  Company Not to Make  Payments  with Respect to  Subordinated
Indebtedness in Certain Circumstances.

     (a)  Upon the  maturity  of any  Senior  Indebtedness  (including  interest
thereon  or fees or any other  amounts  owing in  respect  thereof),  whether at
stated  maturity,  by acceleration or otherwise,  all Obligations (as defined in
Section  1.07 of this  Annex A) owing in  respect  thereof,  in each case to the
extent due and owing,  shall  first be paid in full in cash  before any  payment
(whether in cash,  property,  securities or otherwise) is made on account of the
Subordinated Indebtedness.

     (b) If any  Default or Event of  Default  under the  Credit  Agreement  (as
defined in Section  1.07 of this Annex A) is in  existence  the Company may not,
directly or indirectly,  make any payment of any  Subordinated  Indebtedness and
may not acquire any  Subordinated  Indebtedness  for cash or property  until all
Senior  Indebtedness  has been  paid in full in cash.  Each  holder  of the Note
hereby  agrees that,  so long as any such Default or Event of Default in respect
of any issue of Senior  Indebtedness  exists,  it will not sue for, or otherwise
take any action to enforce the Company's  obligations  to pay,  amounts owing in
respect of the Note.

<PAGE>

     (c) In the event  that  notwithstanding  the  provisions  of the  preceding
clauses (a) and (b) of this Section 1.02,  the Company shall make any payment on
account of the Subordinated Indebtedness at a time when payment is not permitted
by said  clauses  (a) or (b),  such  payment  shall be held by the holder of the
Note,  in  trust  for the  benefit  of,  and  shall be paid  forthwith  over and
delivered  to,  the Agent  (as  defined  in  Section  1.07 of this  Annex A) for
application to the payment in full in cash of all the Senior Indebtedness.

     Section 1.03.  Subordination to Prior Payment of all Senior Indebtedness on
Dissolution,  Liquidation or Reorganization of Company. Upon any distribution of
assets  of  the  Company   upon   dissolution,   winding  up,   liquidation   or
reorganization of the Company (whether in bankruptcy,  insolvency,  receivership
proceedings, upon an assignment for the benefit of creditors or otherwise or any
other event described in Section 8.1.9 of the Credit Agreement):

     (a) the  holders of all Senior  Indebtedness  shall  first be  entitled  to
receive payment in full in cash of all Senior Indebtedness  (including,  without
limitation,  post-petition  interest at the rate  provided in the  documentation
with  respect to the  Senior  Indebtedness,  whether  or not such  post-petition
interest is an allowed  claim  against the Company in any  bankruptcy or similar
proceeding)  before the holder of the Note is entitled to receive any payment of
any kind or character on account of the Subordinated Indebtedness;

     (b) any  payment or  distributions  of assets of the Company of any kind or
character,  whether in cash,  property or  securities to which the holder of the
Note would be entitled  except for the provisions of this Annex A, shall be paid
by the  liquidating  trustee or agent or other  person  making  such  payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee
or other trustee or agent,  directly to the Agent for application to the payment
in full in cash of all the Senior Indebtedness; and

     (c) in the event that,  notwithstanding  the  foregoing  provisions of this
Section 1.03, any payment or  distribution  of assets of the Company of any kind
or character,  whether in cash, property or securities, shall be received by the
holder of the Note on account  of  Subordinated  Indebtedness  before all Senior
Indebtedness  is paid in full in cash,  such  payment or  distribution  shall be
received  and  held  in  trust  for and  shall  be paid  over to the  Agent  for
application to the payment in full in cash of all the Senior Indebtedness.

     Section 1.04. Subrogation.  Subject to the prior payment in full in cash of
all  Senior  Indebtedness,  the holder of the Note  shall be  subrogated  to the
rights  of  the  holders  of  Senior   Indebtedness   to  receive   payments  or
distributions  of assets of the Company  applicable  to the Senior  Indebtedness
until all amounts  owing on the Note shall be paid in full,  and for the purpose
of such  subrogation no payments or  distributions  to the holders of the Senior
Indebtedness  by or on behalf of the Company or by or on behalf of the holder of
the Note by virtue of this Annex A which  otherwise  would have been made to the
holder of the Note shall, as between the Company,  its creditors (other than the
holders  of Senior  Indebtedness)  and the  holder of the Note,  be deemed to be
payment by the  Company to or on  account of the Senior  Indebtedness,  it being
understood  that the provisions of this Annex A are and are intended  solely for
the purpose of

                                      -2-
<PAGE>

defining the relative rights of the holder of the Note, on the one hand, and the
holders of the Senior Indebtedness, on the other hand.

     Section 1.05. Obligation of the Company Unconditional. Nothing contained in
this Annex A or in the Note is  intended  to or shall  impair,  as  between  the
Company and the holder of the Note,  the  obligation  of the  Company,  which is
absolute and  unconditional,  to pay to the holder of the Note the  principal of
and  interest  on the Note as and when the same shall  become due and payable in
accordance with their terms.

     Section  1.06.  Subordination  Rights not  Impaired by Acts or Omissions of
Company or Holders of Senior Indebtedness.  No right of the Agent or any present
or future holders of any Senior Indebtedness to enforce  subordination as herein
provided  shall at any time in any way be  prejudiced  or impaired by any act or
failure  to act on the part of the  Company  or by any act or  failure to act in
good  faith by the  Agent or any such  holder,  or by any  noncompliance  by the
Company with the terms and  provisions of the Note,  regardless of any knowledge
thereof  which the Agent or such holder may have or be otherwise  charged  with.
The Agent and the  holders of the Senior  Indebtedness  may,  without in any way
affecting the obligations of the holder of the Note with respect hereto,  at any
time or from time to time and in their absolute  discretion,  change the manner,
place or terms of payment of,  change or extend the time of payment of, or renew
or alter, any Senior Indebtedness (including,  without limitation,  increase the
amount of Senior Indebtedness by extending  additional credit to the Company) or
amend, modify or supplement any agreement or instrument  governing or evidencing
such Senior  Indebtedness or any other document referred to therein, or exercise
or  refrain  from  exercising  any  other  of  their  rights  under  the  Senior
Indebtedness including,  without limitation,  the waiver of any Default or Event
of Default or the release of any  Collateral (as defined in Section 1.07 of this
Annex A) securing such Senior Indebtedness, all without notice to or assent from
the holder of the Note.

     Section 1.07. Senior  Indebtedness.  The term "Senior  Indebtedness"  shall
mean all  Obligations  of the  Company  under,  or in  respect  of,  the  Credit
Agreement (as amended,  supplemented,  restated, or otherwise modified from time
to time,  the "Credit  Agreement"),  dated as of July 30, 1999, by and among the
Company,  the other Borrowers named therein, the various lending institutions as
are,  or may  from  time to  time  become,  parties  thereto  (collectively  the
"Lenders"),  and IBJ Whitehall  Business Credit  Corporation,  as agent (in such
capacity,  the "Agent") for the Lenders,  or any other Loan Document (as defined
in the Credit  Agreement) to which the Company is a party,  and in each case any
renewal,  extension,  restatement,  refinancing  or refunding  thereof.  As used
herein,  the term  "Obligation"  shall mean any  principal,  interest,  premium,
penalties,  fees,  expenses,  indemnities and other  liabilities and obligations
payable under the  documentation  governing any Senior  Indebtedness  (including
interest after the commencement of any bankruptcy,  insolvency,  receivership or
similar proceeding, whether or not such interest is an allowed claim against the
debtor in any such proceeding).  All other capitalized terms used herein without
definition shall have the meanings provided for in the Credit Agreement.

                                      -3-
<PAGE>

                                                                    ATTACHMENT 3
                                                                              to
                                                                Pledge Agreement

                       FORM OF PLEDGE AGREEMENT SUPPLEMENT

                                                             [__________, 19___]

IBJ Whitehall Business Credit Corporation,
  as Agent
One State Street
New York, NY  10004

Attention:  Adam Moskowitz

Ladies and Gentlemen:

     Reference  is made to the Pledge  Agreement,  dated as of July 30, 1999 (as
amended,  supplemented or otherwise modified, the "Pledge Agreement";  the terms
defined  therein  being  used  herein as  therein  defined)  by U.S.  Automotive
Manufacturing,  Inc., a Delaware  corporation,  Quality  Automotive  Company,  a
Delaware  corporation and US Automotive  Friction,  Inc., a Delaware corporation
(collectively,  the  "Borrowers"),  and each of the other Persons  listed on the
signature  pages  thereto  (such other  Persons,  together  with the  Additional
Pledgors and the Borrowers are  collectively  referred to as the  "Pledgors" and
individually  as a  "Pledgor"),  in  favor  of  IBJ  Whitehall  Business  Credit
Corporation,  as agent (together with any successor(s) thereto in such capacity,
the "Agent") for each of the Lender Parties.

     The  undersigned  hereby  agrees,  as of the date first above  written,  to
become a Pledgor  under the Pledge  Agreement  as if it were an  original  party
thereto and agrees that each  reference  in the Pledge  Agreement to a "Pledgor"
shall also mean and be a reference to the undersigned.

     The undersigned hereby assigns and pledges to the Agent for its benefit and
the ratable  benefit of the Lender  Parties,  and hereby grants to the Agent for
its benefit and the ratable benefit of the Lender Parties, as collateral for the
Secured Obligations, a pledge and assignment of, and a security interest in, all
of the right,  title and interest of the  undersigned in and to its  Collateral,
whether  now  owned or  hereafter  acquired,  subject  to all of the  terms  and
provisions of the Pledge Agreement, as if such Collateral of the undersigned had
been subject to the Pledge Agreement on the date of its original execution.

<PAGE>

     The  undersigned  has attached  hereto a supplement  to Attachment 1 to the
Pledge Agreement,  and the undersigned hereby certifies that such supplement has
been prepared by the  undersigned in  substantially  the form of Attachment 1 to
the Pledge  Agreement  and is accurate  and  complete as of the date first above
written.

     The undersigned hereby makes each  representation and warranty set forth in
Article III of the Pledge Agreement as to itself and as to its Collateral to the
same extent as each other  Pledgor and hereby agrees to be bound as a Pledgor by
all of the terms and  provisions  of the Pledge  Agreement to the same extent as
all other Pledgors.

     This letter shall be governed by and construed in accordance  with the laws
of the State of New York.

                                          Very truly yours,

                                          [NAME OF ADDITIONAL PLEDGOR]

                                          By: ________________________________
                                              Name:
                                              Title:

                                          Address:

Acknowledged and Accepted:

IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
   as Agent

By: ______________________
    Name:
    Title:

                                      -2-
<PAGE>

                                                                       EXHIBIT H

                               SECURITY AGREEMENT

     SECURITY  AGREEMENT,  dated as of July 30, 1999 (as amended,  supplemented,
restated or otherwise  modified from time to time,  this  "Agreement"),  made by
U.S. AUTOMOTIVE  MANUFACTURING,  INC. ("USAM"), a Delaware corporation,  QUALITY
AUTOMOTIVE COMPANY ("QAC"), a Delaware corporation, US AUTOMOTIVE FRICTION, INC.
("USAF"),   a  Delaware   corporation  (USAM,  QAC  and  USAF  are  referred  to
individually as a "Borrower" and collectively as the  "Borrowers"),  and each of
the other Persons (such  capitalized  term and all other  capitalized  terms not
otherwise  defined herein to have the meanings provided for in Article I) listed
on the signature pages hereof (such other Persons,  together with the Additional
Collateral  Grantors  and the  Borrowers,  are  collectively  referred to as the
"Grantors" and individually as a "Grantor"),  in favor of IBJ WHITEHALL BUSINESS
CREDIT  CORPORATION,  as agent (in such  capacity,  the "Agent") for each of the
Lender Parties.

                              W I T N E S S E T H:

     WHEREAS,  pursuant  to a Credit  Agreement,  dated  as of the  date  hereof
(together   with   all   amendments,   supplements,   restatements   and   other
modifications,  if any, from time to time thereafter  made thereto,  the "Credit
Agreement"), among the Borrowers, the various lending institutions (individually
a "Lender"  and  collectively  the  "Lenders")  as are, or may from time to time
become,  parties thereto and the Agent,  the Lenders have extended the Revolving
Loan Commitment to make Credit Extensions to the Borrowers;

     WHEREAS,  as a  condition  precedent  to the making of the  initial  Credit
Extension  under the Credit  Agreement,  each Grantor is required to execute and
deliver this Agreement; and

     WHEREAS,  each  Grantor has duly  authorized  the  execution,  delivery and
performance of this Agreement.

     NOW  THEREFORE,  for good  and  valuable  consideration,  the  receipt  and
sufficiency of which are hereby acknowledged, and in order to induce the Lenders
to make Credit  Extensions  (including  the  initial  Credit  Extension)  to the
Borrowers pursuant to the Credit Agreement, each Grantor agrees, for the benefit
of each Lender Party, as follows:

                                    ARTICLE I
                                   DEFINITIONS

     SECTION 1.1 Certain Terms. The following terms (whether or not underscored)
when used in this Agreement, including its preamble and recitals, shall have the
following  meanings (such  definitions to be equally  applicable to the singular
and plural forms thereof):

<PAGE>

     "Additional Collateral Grantors" is defined in clause (b) of Section 7.2.

     "Agent" is defined in the preamble.

     "Agreement" is defined in the preamble.

     "Assigned Agreements" is defined in clause (g) of Section 2.1.

     "Borrower" and "Borrowers" are defined in the preamble.

     "Collateral" is defined in Section 2.1.

     "Commodity Account" means an account maintained by a Commodity Intermediary
in which a Commodity Contract is carried out for a Commodity Customer.

     "Commodity  Contract" means a commodity  futures  contract,  an option on a
commodity  futures  contract,  a commodity option or any other contract that, in
each case, is (a) traded on or subject to the rules of a board of trade that has
been designated as a contract market for such a contract pursuant to the federal
commodities laws or (b) traded on a foreign  commodity board of trade,  exchange
or  market,  and is  carried  on the  books of a  Commodity  Intermediary  for a
Commodity Customer.

     "Commodity  Customer"  means a  person  for whom a  Commodity  Intermediary
carries a Commodity Contract on its books.

     "Commodity  Intermediary" means (a) a Person who is registered as a futures
commission  merchant under the federal  commodities  laws or (b) a Person who in
the ordinary course of its business  provides  clearance or settlement  services
for a board of trade that has been  designated as a contract  market pursuant to
federal commodities laws.

     "Computer Hardware and Software Collateral" means:

          (a) all  computer  and  other  electronic  data  processing  hardware,
     integrated  computer  systems,  central  processing  units,  memory  units,
     display terminals,  printers,  features,  computer elements,  card readers,
     tape drives, hard and soft disk drives, cables, electrical supply hardware,
     generators,  power equalizers,  accessories and all peripheral  devices and
     other related computer hardware;

          (b) all software programs (including both source code, object code and
     all related  applications and data files),  whether now owned,  licensed or
     leased or  hereafter  acquired  by each  Grantor,  designed  for use on the
     computers and electronic data processing  hardware  described in clause (a)
     above;

          (c) all licenses and leases of software programs;

                                       2

<PAGE>

          (d) all firmware associated therewith;

          (e) all documentation (including flow charts, logic diagrams, manuals,
     guides and  specifications)  with  respect to such  hardware,  software and
     firmware described in the preceding clauses (a) through (c); and

          (f) all rights with respect to all of the foregoing, including any and
     all copyrights,  licenses, options, warranties,  service contracts, program
     services,  test rights,  maintenance  rights,  support rights,  improvement
     rights,   renewal  rights  and   indemnifications  and  any  substitutions,
     replacements, additions or model conversions of any of the foregoing.

     "Copyright  Collateral"  means  all  copyrights  of each  Grantor,  whether
statutory or common law,  registered or unregistered,  now or hereafter in force
throughout the world including all of such Grantor's  right,  title and interest
in and to all  copyrights  registered  in the United States  opyright  Office or
anywhere else in the world and also including the copyrights referred to in Item
A of Schedule IV attached hereto, and all applications for registration thereof,
whether  pending or in  preparation,  all  copyright  licenses,  including  each
copyright  license  referred to in Item B of Schedule  IV attached  hereto,  the
right to sue for past,  present and future  infringements  of any  thereof,  all
rights  corresponding  thereto throughout the world, all extensions and renewals
of any thereof and all proceeds of the foregoing, including licenses, royalties,
income, payments, claims, damages and proceeds of suit.

     "Credit Agreement" is defined in the first recital.

     "Entitlement  Holder"  means  a  Person  identified  in  the  records  of a
Securities  Intermediary as the Person having a Security Entitlement against the
Securities  Intermediary.  If a person acquires a Security Entitlement by virtue
of Section  8-501(b)(2)  or (3) of the U.C.C.,  such  person is the  Entitlement
Holder.

     "Equipment"  means all machinery  and equipment in all its forms,  wherever
located, including all computers,  furniture and furnishings, all other property
similar to the foregoing  (including tools, parts, rolling stock and supplies of
every kind and description), components, parts and accessories installed thereon
or affixed thereto and all parts thereof,  and all Fixtures and all accessories,
additions, attachments, improvements, substitutions and replacements thereto and
therefor.

     "Financial Asset" means (a) a Security,  (b) an obligation of a Person or a
share,  participation  or  other  interest  in a  Person  or in  property  or an
enterprise  of a Person,  which is, or is of a type,  dealt with in or traded on
financial  markets,  or which is recognized in any area in which it is issued or
dealt  in as a  medium  for  investment  or (c) any  property  that is held by a
Securities  Intermediary  for  another  person in a  Securities  Account  if the
Securities  Intermediary  has  expressly  agreed with the other  Person that the
property is to be treated as a Financial  Asset under Article 8 of the U.C.C. As
the context  requires,  the term Financial  Asset shall mean either the interest
itself or the means by which a Person's  claim to it is  evidenced,  including a

                                       3

<PAGE>

certificated or uncertificated  Security, a certificate  representing a Security
or a Security Entitlement.

     "Fixtures"  means all items of  Equipment,  whether now owned or  hereafter
acquired,  of any Grantor that become so related to particular  real estate that
an interest in them arises under any real estate law applicable thereto.

     "General  Intangibles" shall mean all choses in action and causes of action
and all other assignable  intangible  personal  property of any Grantor of every
kind and nature (other than Receivables) now owned or hereafter  acquired by any
Grantor,   including   all  rights  and  interests  in   partnerships,   limited
partnerships,  limited liability  companies and other  unincorporated  entities,
corporate or other business  records,  indemnification  claims,  contract rights
(including rights under leases,  whether entered into as lessor or lessee,  Rate
Protection   Agreements   and  other   agreements),   goodwill,   registrations,
franchises,  tax,  refund  claims and any letter of  credit,  guarantee,  claim,
security  interest or other security held by or granted to any Grantor to secure
payment by an Account Debtor of any Receivable.

     "Grantor" and "Grantors" are defined in the preamble.

     "Intellectual  Property  Collateral"  means,  collectively,   the  Computer
Hardware  and  Software  Collateral,   the  Copyright  Collateral,   the  Patent
Collateral, the Trademark Collateral and the Trade Secrets Collateral.

     "Inventory"  means all present and future  inventory  merchandise and goods
intended for sale, lease or other disposition,  including,  without  limitation,
(a) all raw  materials,  work in process,  finished  goods,  returned  goods and
materials and supplies of any kind,  nature or description which are or might be
used in connection with the manufacture, packing, shipping, advertising, selling
or finishing of any of the foregoing;  (b) all goods in which any Grantor has an
interest in mass or a joint or other  interest  or right of any kind  (including
goods in which any Grantor has an interest or right as  consignee);  and (c) all
goods which are returned to or  repossessed  by any Grantor,  and all accessions
thereto,  products  thereof and documents  therefor (any and all such inventory,
materials, goods, accessions, products and documents being the "Inventory").

     "Investment   Property"  means  all  Securities  (whether  certificated  or
uncertificated), Security Entitlements, Securities Accounts, Commodity Contracts
and Commodity Accounts of each Grantor,  whether now owned or hereafter acquired
by any Grantor.

     "Lender" and "Lenders" are defined in the first recital.

     "Lender Party" means, as the context may require, any Lender, any Issuer or
the Agent and each of its respective successors, transferees and assigns.

     "Patent Collateral" means:

                                       4

<PAGE>

          (a) all letters patent and applications for letters patent  throughout
     the world,  including all patent  applications  in  preparation  for filing
     anywhere  in the world and  including  each  patent and patent  application
     referred to in Item A of Schedule II attached hereto;

          (b) all patent licenses,  including each patent license referred to in
     Item B of Schedule II attached hereto;

          (c) all  reissues,  divisions,  continuations,  continuations-in-part,
     extensions,  renewals and  reexaminations  of any of the items described in
     clauses (a) and (b) above; and

          (d) all  proceeds  of,  and  rights  associated  with,  the  foregoing
     (including license royalties and proceeds of infringement suits), the right
     to sue third  parties  for past,  present  or future  infringements  of any
     patent or patent  application,  including any patent or patent  application
     referred to in Item A of Schedule  II  attached  hereto,  and for breach or
     enforcement of any patent license, including any patent license referred to
     in Item B of  Schedule  II attached  hereto,  and all rights  corresponding
     thereto throughout the world.

     "Receivables" means all accounts  (including all bank accounts,  collection
accounts and  concentration  accounts,  together with all funds held therein and
all  certificates  and  instruments,  if any, from time to time  representing or
evidencing such accounts), contracts, contract rights, chattel paper, documents,
instruments,  proceeds of letters of credit and rights to receive payment of any
Grantor (including invoices,  contracts,  rights,  accounts  receivable,  notes,
refunds,  indemnities,  interest, late charges, fees, undertakings and all other
obligations  and amounts  owing to any Grantor from any Person),  whether or not
arising out of or in connection with the sale or lease of goods or the rendering
of services,  and all rights of any Grantor now or hereafter  existing in and to
all security  agreements,  guaranties,  leases and other  contracts  securing or
otherwise  relating to any such accounts,  contracts,  contract rights,  chattel
paper, documents, instruments,  including goods represented by the sale or lease
of delivery  which gave rise to any of the  foregoing,  returned or  repossessed
merchandise and rights of stoppage in transit,  replevin,  reclimation and other
rights and remedies of an unpaid  vendor,  lienor or secured  party (any and all
such  accounts,   contracts,   contract   rights,   chattel  paper,   documents,
instruments,  and general  intangibles being the "Receivables",  and any and all
such  security  agreements,  guaranties,  leases and other  contracts  being the
"Related Contracts").

     "Related Contract" is defined in the definition of "Receivables".

     "Secured Obligations" is defined in Section 2.2.

     "Securities"   means  any   obligations   of  an  issuer  or  any   shares,
participations  or other  interests in an issuer or in property or an enterprise
of an issuer which (a) are represented by a certificate  representing a security
in bearer or registered  form,  or the transfer of which may be registered  upon
books maintained for that purpose by or on behalf of the issuer,  (b) are one of
a class or series or by its terms is divisible into a class or series of shares,
participations, interests or obligations and (c)(i) are, or are of a type, dealt
with or trade on securities exchanges or

                                        5
<PAGE>

securities  markets  or (ii)  are a medium  for  investment  and by their  terms
expressly provide that they are a security governed by Article 8 of the U.C.C.

     "Securities Account" shall mean an account to which a Financial Asset is or
may be  credited  in  accordance  with  an  agreement  under  which  the  person
maintaining  the account  undertakes to treat the person for whom the account is
maintained as entitled to exercise rights that comprise the Financial Asset.

     "Security Agreement Supplement" is defined in clause (b) of Section 7.2.

     "Security  Entitlements" shall mean the rights and property interests of an
Entitlement Holder with respect to a Financial Asset.

     "Security  Intermediary"  shall  mean (a) a clearing  corporation  or (b) a
person,  including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.

     "Trademark Collateral" means:

          (a) all  trademarks,  trade names,  corporate  names,  company  names,
     business names,  fictitious  business names,  trade styles,  service marks,
     certification  marks,  collective  marks,  logos,  other source of business
     identifiers,  prints and labels on which any of the foregoing have appeared
     or appear,  designs  and general  intangibles  of a like nature (all of the
     foregoing   items  in  this   clause  (a)  being   collectively   called  a
     "Trademark"),  now existing  anywhere in the world or hereafter  adopted or
     acquired, whether currently in use or not, all registrations and recordings
     thereof and all applications in connection therewith, whether pending or in
     preparation   for   filing,   including   registrations,   recordings   and
     applications  in the United States  Patent and  Trademark  Office or in any
     office or agency of the United  States of  America or any State  thereof or
     any foreign country,  including those referred to in Item A of Schedule III
     attached hereto;

          (b) all Trademark licenses,  including each Trademark license referred
     to in Item B of Schedule III attached hereto;

          (c) all reissues, extensions or renewals of any of the items described
     in clauses (a) and (b) above;

          (d) all of the goodwill of the business connected with the use of, and
     symbolized by the items described in, clauses (a) and (b) above; and

          (e) all  proceeds  of,  and rights  associated  with,  the  foregoing,
     including any claim by each Grantor against third parties for past, present
     or future infringement or dilution of any Trademark, Trademark registration
     or Trademark license,  including any Trademark,  Trademark  registration or
     Trademark license referred to in Item B of Schedule III attached

                                       6
<PAGE>

     hereto,  or for any injury to the goodwill  associated  with the use of any
     such Trademark or for breach or enforcement of any Trademark license.

     "Trade Secrets Collateral" means common law and statutory trade secrets and
all other  confidential  or proprietary or useful  information  and all know-how
obtained by or used in or  contemplated  at any time for use in the  business of
each Grantor (all of the foregoing being collectively  called a "Trade Secret"),
whether or not such Trade Secret has been reduced to a writing or other tangible
form,  including all documents and things embodying,  incorporating or referring
in any way to such Trade Secret, all Trade Secret licenses, including each Trade
Secret  license  referred to in Schedule V attached  hereto,  and  including the
right  to sue for and to  enjoin  and to  collect  damages  for  the  actual  or
threatened   misappropriation  of  any  Trade  Secret  and  for  the  breach  or
enforcement of any such Trade Secret license.

     "U.C.C." means the Uniform  Commercial Code, as from time to time in effect
in the State of New York or, with respect to any Collateral located in any state
other than the State of New York,  the Uniform  Commercial  Code as from time to
time in effect in such  state.  "Vehicles"  is  defined in clause (h) of Section
2.1.

     SECTION 1.2 Credit Agreement  Definitions.  Unless otherwise defined herein
or the context otherwise requires,  terms used in this Agreement,  including its
preamble and recitals, have the meanings provided in the Credit Agreement.

     SECTION 1.3 U.C.C.  Definitions.  Unless  otherwise  defined  herein or the
context otherwise requires,  terms for which meanings are provided in the U.C.C.
are used in this  Agreement,  including  its  preamble and  recitals,  with such
meanings.

                                   ARTICLE II
                                SECURITY INTEREST

     SECTION 2.1 Grant of Security.  Each Grantor  hereby assigns and pledges to
the Agent for its benefit and the ratable benefit of each of the Lender Parties,
and hereby  grants to the Agent for its benefit and the ratable  benefit of each
of the Lender  Parties a  security  interest  in,  all of its  right,  title and
interest in and to the following,  whether now or hereafter existing or acquired
(collectively, the "Collateral"):

     (a) all Equipment in all of its forms of such Grantor;

     (b) all Inventory in all of its forms of such Grantor;

     (c) all Receivables in all of its forms of such Grantor;

     (d)  all  Intellectual  Property  Collateral  in all of its  forms  of such
Grantor;

     (e) all Investment Property in all of its forms of such Grantor;

                                       7
<PAGE>

     (f) all General Intangibles in all of its forms of such Grantor;

     (g) all of such Grantor's right,  title and interest in and to the Material
Agreements  specified in Schedule VI attached  hereto,  and each Rate Protection
Agreement to which such Grantor is now or may hereafter  become a party, in each
case as such  agreements may be amended or otherwise  modified from time to time
(collectively,  the  "Assigned  Agreements"),  including  (i) all rights of such
Grantor  to  receive  moneys  due and to  become  due under or  pursuant  to the
Assigned Agreements,  (ii) all rights of such Grantor to receive proceeds of any
insurance,  indemnity,  warranty  or  guaranty  with  respect  to  the  Assigned
Agreements,  (iii) all claims of such Grantor for damages  arising out of or for
breach of or default  under the Assigned  Agreements  and (iv) the right of such
Grantor to  terminate  the Assigned  Agreements,  to perform  thereunder  and to
compel performance and otherwise exercise all remedies thereunder;

     (h) all  trucks,  cars and  other  motor  vehicles  owned or leased by such
Grantor,  wherever located, and including all machinery,  components,  parts and
accessories installed thereon or affixed thereto,  together with all accessions,
additions, attachments, improvements, substitutions and replacements thereto and
therefor,  the foregoing to include,  without  limitation,  the trucks, cars and
motor vehicles  identified in Schedule VII attached  hereto  (collectively,  the
"Vehicles");

     (i) all of such Grantor's books, records, writings, data bases, information
and other property  relating to, used or useful in connection with,  evidencing,
embodying,  incorporating  or referring to any of the  foregoing in this Section
2.1;

     (j) all of such  Grantor's  other  property  and  rights of every  kind and
description and interests  therein,  including all moneys,  securities and other
property,  now or hereafter  held or received by, or in transit to, the Agent or
any Lender  Party from or for such  Grantor,  whether for  safekeeping,  pledge,
custody, transmission, collection or otherwise; and

     (k) all products,  offspring,  rents, issues, profits,  returns, income and
proceeds of and from any and all of the foregoing Collateral (including proceeds
which  constitute  property  of the types  described  in clauses (a) through (i)
above,  proceeds  deposited  from  time  to time in any  Lock-Box  Account,  the
Concentration  Account or any other account of such Grantor,  and, to the extent
not otherwise  included,  all claims  against third Persons and the right to sue
for damages and lost profits,  and all payments under insurance  (whether or not
the Agent is the loss payee  thereof),  or any indemnity,  warranty or guaranty,
payable by reason of loss or damage to or  otherwise  with respect to any of the
foregoing Collateral).

     SECTION 2.2 Security for  Obligations.  This  Agreement  secures the prompt
payment  in full of all  Obligations,  including  all  amounts  payable  by each
Borrower  and  each  other  Obligor  under  or in  connection  with  the  Credit
Agreement,  the Notes and each  other  Loan  Document,  whether  for  principal,
interest,  costs,  fees,  expenses,  indemnities or otherwise and whether now or
hereafter existing (all of such obligations being the "Secured Obligations").

                                       8
<PAGE>

     SECTION 2.3 Continuing Security Interest; Transfer of Notes. This Agreement
shall create a continuing security interest in the Collateral and shall

          (a) remain in full force and effect  until  payment in full in cash of
     all Secured  Obligations and the  irrevocable  termination of the Revolving
     Loan Commitment,

          (b) be binding upon each  Grantor,  its  successors,  transferees  and
     assigns, and

          (c)  inure,  together  with  the  rights  and  remedies  of the  Agent
     hereunder, to the benefit of the Agent and each other Lender Party.

Without  limiting the  generality  of the  foregoing  clause (c), any Lender may
assign or otherwise  transfer (in whole or in part) any Credit Extension held by
it to any other Person, and such other Person shall thereupon become vested with
all the rights and benefits in respect  thereof granted to such Lender under any
Loan Document (including this Agreement) or otherwise,  subject, however, to any
contrary  provisions in such  assignment or transfer,  and to the  provisions of
Section  10.11 and  Article IX of the Credit  Agreement.  Upon the  indefeasible
payment in full in cash of all Secured  Obligations  and the  termination of the
Revolving Loan Commitment,  the security interest granted herein shall terminate
and all rights to the  Collateral  shall revert to the  Grantors.  Upon any such
termination or release, the Agent will, at each Grantor's sole expense,  execute
and deliver to such Grantor such  documents  as such  Grantor  shall  reasonably
request to evidence such termination.

     SECTION  2.4  Grantors  Remains  Liable.  Anything  herein to the  contrary
notwithstanding

          (a)  each  Grantor   shall  remain  liable  under  the  contracts  and
     agreements included in the Collateral  (including the Assigned  Agreements)
     to the extent set forth  therein,  and shall  perform all of its duties and
     obligations  under such  contracts and  agreements to the same extent as if
     this Agreement had not been executed;

          (b) each Grantor will comply in all material  respects  with all laws,
     rules and  regulations  relating  to the  ownership  and  operation  of the
     Collateral,  including,  without limitation,  all registration requirements
     under  applicable  laws,  and  shall  pay  when  due all  taxes,  fees  and
     assessments  imposed on or with  respect to the  Collateral,  except to the
     extent the validity thereof is being contested in good faith by appropriate
     proceedings  for which adequate  reserves in accordance with GAAP have been
     set aside by such Grantor;

          (c) the exercise by the Agent of any of its rights hereunder shall not
     release any Grantor  from any of its duties or  obligations  under any such
     contracts or agreements included in the Collateral; and

          (d)  neither  the Agent  nor any other  Lender  Party  shall  have any
     obligation or liability under any such contracts or agreements  included in
     the  Collateral  by  reason of this  Agreement,  nor shall the Agent or any
     other Lender Party be obligated to perform any of the

                                       9
<PAGE>

     obligations  or duties of any Grantor  thereunder  or to take any action to
     collect or enforce any claim for payment assigned hereunder.

     SECTION 2.5  Security  Interest  Absolute.  All rights of the Agent and the
security  interests granted to the Agent hereunder,  and all obligations of each
Grantor hereunder, shall be absolute and unconditional, irrespective of

          (a) any lack of validity or  enforceability  of the Credit  Agreement,
     any Note or any other Loan Document;

          (b) the failure of any Lender Party

               (i) to assert  any claim or  demand  or to  enforce  any right or
          remedy against any Borrower, any Obligor or any other Person under the
          provisions of the Credit Agreement,  any Note, any other Loan Document
          or otherwise, or

               (ii) to exercise any right or remedy against any other  guarantor
          of, or collateral securing, any Secured Obligation;

          (c) any change in the time,  manner or place of payment  of, or in any
     other  term  of,  all  or  any  of the  Secured  Obligations  or any  other
     extension,  compromise or renewal of any Secured Obligation,  including any
     increase  in the  Secured  Obligations  resulting  from  the  extension  of
     additional credit to any Grantor or any other Obligor or otherwise;

          (d)  any  reduction,  limitation,  impairment  or  termination  of any
     Secured Obligation for any reason,  including any claim of waiver, release,
     surrender,  alteration or compromise, and shall not be subject to (and each
     Grantor  hereby  waives  any right to or claim of) any  defense  or setoff,
     counterclaim,  recoupment  or  termination  whatsoever  by  reason  of  the
     invalidity,   illegality,    nongenuineness,    irregularity,   compromise,
     unenforceability  of,  or any  other  event or  occurrence  affecting,  any
     Secured Obligation or otherwise;

          (e) any amendment to, rescission, waiver, or other modification of, or
     any consent to departure  from,  any of the terms of the Credit  Agreement,
     any Note or any other Loan Document;

          (f) any addition,  exchange,  release,  surrender or non-perfection of
     any collateral (including the Collateral), or any amendment to or waiver or
     release of or addition to or consent to departure  from any  guaranty,  for
     any of the Secured Obligations;  or

          (g) any other circumstances which might otherwise constitute a defense
     available to, or a legal or equitable discharge of, any Borrower, any other
     Obligor or otherwise.

                                       10
<PAGE>

     SECTION 2.6 Waiver of Subrogation.  Each Grantor hereby  irrevocably waives
to the extent permitted by applicable law any claim or other rights which it may
now or  hereafter  acquire  against  any  other  Obligor  that  arises  from the
existence,  payment,  performance or  enforcement of such Grantor's  obligations
under  this  Agreement,  including  any  right  of  subrogation,  reimbursement,
exoneration, or indemnification, any right to participate in any claim or remedy
against any other Obligor or any collateral which the Agent now has or hereafter
acquires,  whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law, including the right to take or receive from any
other Obligor,  directly or indirectly,  in cash or other property or by set-off
or in any manner,  payment or security on account of such claim or other rights,
until such time as the Secured  Obligations shall have been indefeasibly paid in
full in cash and the Revolving Loan  Commitment has irrevocably  terminated.  If
any amount shall be paid to any Grantor in violation of the  preceding  sentence
and the Secured Obligations shall not have been terminated, such amount shall be
deemed to have been paid to the Lender  Parties,  and shall forthwith be paid to
the Agent to be credited  and  applied  upon the  Secured  Obligations,  whether
matured or unmatured.  Each Grantor acknowledges that it will receive direct and
indirect  benefits for the  financing  arrangements  contemplated  by the Credit
Agreement  and that the waiver set forth in this  Section is  knowingly  made in
contemplation of such benefits.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

     SECTION 3.1  Representations  and Warranties.  Each Grantor  represents and
warrants unto each Lender Party as set forth in this Article.

     SECTION 3.1.1 Location of Collateral, etc.

          (a) All of the  Equipment and Inventory of such Grantor are located at
     the places  specified  in Item A and Item B,  respectively,  of  Schedule I
     hereto. None of the Equipment and Inventory has, within 12 months preceding
     the date of this Agreement, been located at any place other than the places
     specified  in Item A and Item B,  respectively,  of Schedule I hereto.  The
     principal place of business and chief executive  office of such Grantor and
     the office where such Grantor keeps its records concerning the Receivables,
     and the original copies of each Assigned Agreement and all originals of all
     chattel  paper  which  evidence  Receivables  are  located  at  the  places
     specified in Item C of Schedule I hereto.  Except as set forth in Item D of
     Schedule I hereto such  Grantor has no trade names and during the  12-month
     period  preceding  the date hereof  such  Grantor has not been known by any
     legal name  different  from the one set forth on the signature page hereto,
     nor has such  Grantor  been the  subject of any  merger or other  corporate
     reorganization.  All of the Vehicles  identified on Schedule VII hereto are
     duly titled and registered in the places specified therein, and the Grantor
     does not own or lease, directly or indirectly, on the date hereof any other
     Vehicle.

          (b) If the Collateral of such Grantor  includes any Inventory  located
     in the State of California,  such Grantor is not a "retail merchant" within
     the  meaning  of Section  9-102 of the  Uniform  Commercial  Code - Secured
     Transactions of the State of California. Except as

                                       11
<PAGE>

     notified  by such  Grantor to the Agent in writing,  such  Grantor is not a
     party to any one or more Federal, state or local government contracts.

     SECTION 3.1.2  Ownership,  No Liens,  etc. Such Grantor owns its portion of
the  Collateral  free and clear of any Lien,  except for the  security  interest
created by this Agreement and except as otherwise  permitted by Section 7.2.3 of
the Credit  Agreement.  No effective  financing  statement  or other  instrument
similar in effect  covering all or any part of the  Collateral is on file in any
recording  office,  except  such as may have  been  filed in favor of the  Agent
relating to this Agreement.  The Grantor is the duly registered owner or lessee,
as the case may be, of each Vehicle and,  with respect to each Vehicle  owned by
such Grantor, has furnished to the Agent true, genuine original  certificates of
ownership  issued by the relevant  Department of Motor  Vehicles with respect to
each Vehicle,  on which  certificates of ownership the security  interest of the
Agent in each such Vehicle has been duly noted in accordance with all applicable
laws.

     SECTION 3.1.3 Negotiable Documents, Instruments, Chattel Paper and Assigned
Agreements. Such Grantor has, delivered to the Agent possession of all originals
of all negotiable  documents,  instruments  and chattel paper currently owned or
held by such  Grantor  (duly  endorsed in blank,  if requested by the Agent) and
original copies of each Assigned Agreement.

     SECTION  3.1.4  Intellectual  Property  Collateral.  With  respect  to  any
Intellectual Property Collateral of any Grantor:

          (a)  each  patent,   patent  application,   trademark  or  servicemark
     registration,  use-based  trademark or service mark application,  copyright
     registration, copyright application and license of such Grantor included in
     such  Intellectual  Property  Collateral  is  subsisting  and has not  been
     adjudged  invalid or  unenforceable,  in whole or in part, and is valid and
     enforceable;

          (b) such Grantor has made all necessary  filings and  recordations  to
     protect its interest in such Intellectual  Property  Collateral,  including
     recordations of all of its interests in the Patent Collateral and Trademark
     Collateral  in  the  United  States  Patent  and  Trademark  Office  and in
     corresponding  offices throughout the world and its claims to the Copyright
     Collateral  in the United  States  Copyright  Office  and in  corresponding
     offices throughout the world;

          (c) in the case of any such Intellectual  Property  Collateral that is
     owned by such Grantor,  such Grantor is the  exclusive  owner of the entire
     and  unencumbered  right,  title and  interest in and to such  Intellectual
     Property  Collateral  and no  claim  has  been  made  that  the use of such
     Intellectual Property Collateral does or may violate the asserted rights of
     any third party;

          (d) in the case of any such Intellectual  Property  Collateral that is
     licensed  by such  Grantor,  such  Grantor  is in  compliance  with all the
     material terms of such license; and

                                       12
<PAGE>

          (e) the Grantor has  performed  and will  continue to perform all acts
     and has  paid and  will  continue  to pay all  required  fees and  taxes to
     maintain each and every item of  Intellectual  Property  Collateral in full
     force and effect throughout the world, as applicable.

Such Grantor owns  directly or is entitled to use by license or  otherwise,  all
patents, Trademarks, Trade Secrets, copyrights,  licenses, technology, know-how,
processes and rights with respect to any of the  foregoing  used in or necessary
for the conduct of such Grantor's business.

     SECTION 3.1.5 Validity, etc. This Agreement creates a valid, first priority
security  interest  in the  Collateral,  securing  the  payment  of the  Secured
Obligations, and all filings and other actions necessary or desirable to perfect
and protect such security  interest have been duly taken (or, in the case of the
filings referred to in Section 3.1.7,  have been delivered to the Agent pursuant
to the Credit Agreement).

     SECTION 3.1.6 Authorization,  Approval, etc. No authorization,  approval or
other action by, and no notice to or filing with, any governmental  authority or
regulatory  body (other than the filing of  financing  statements  in the U.C.C.
filing  offices of each  jurisdiction  referred  to in Schedule I hereto and, if
there is any Intellectual Property Collateral, the filing of this Agreement with
the United States Patent and  Trademark  Office and the United States  Copyright
Office, as the case may be) is required either

          (a) for the grant by such  Grantor of the  security  interest  granted
     hereby or for the execution,  delivery and performance of this Agreement by
     such Grantor, or

          (b) for the  perfection  of or the exercise by the Agent of its rights
     and remedies hereunder.

     SECTION 3.1.7 Due Execution, Validity, Etc. Such Grantor has full power and
authority,  and holds all  requisite  governmental  licenses,  permits and other
approvals,  to enter into and perform its obligations under this Agreement.  The
execution,  delivery and  performance by such Grantor of this Agreement does not
contravene  or result in a default  under such  Grantor's  Organic  Documents or
contravene  or result in a default under any material  contractual  restriction,
Lien or  governmental  regulation  or  court  decree  or order  binding  on such
Grantor.  This  Agreement has been duly executed and delivered on behalf of each
Grantor and constitutes the legal,  valid and binding obligation of each Grantor
enforceable  in  accordance  with  its  terms,  subject  to  the  effect  of any
applicable  bankruptcy,  insolvency,  reorganization,  moratorium or similar law
affecting  creditor's  right  generally,  and  subject  to the effect of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).  In  addition,  each  representation  and  warranty of each  Grantor
contained  in each Loan  Document  to which it is a party is true and correct in
all  material  respects  (unless such  representation  and warranty is stated to
relate solely to an earlier date, in which case such representation and warranty
is true and correct as of such earlier date).

                                       13
<PAGE>

     SECTION 3.1.8 Farm Products. None of the Collateral constitutes,  or is the
proceeds of, farm products.

     SECTION 3.1.9 Assigned Agreements. The Assigned Agreements of such Grantor,
true and complete copies of which have been furnished to each Lender,  have been
duly  authorized,  executed  and  delivered  by such  Grantor  and (to the  best
knowledge  of such  Grantor)  each other  party  thereto,  are in full force and
effect and are binding  upon and  enforceable  against  such Grantor and (to the
best  knowledge of such Grantor) each other party  thereto,  in accordance  with
their terms. To the knowledge of such Grantor, there exists no default under any
Assigned Agreement by any party thereto. With respect to each Assigned Agreement
for which the Agent has  requested  such Grantor to obtain a written  consent to
assignment,  each party to such Assigned  Agreement  other than such Grantor has
executed and delivered to such Grantor a consent,  in substantially  the form of
Exhibit A, to the assignment of such Assigned Agreement to the Agent pursuant to
this Agreement.

                                   ARTICLE IV
                                    COVENANTS

     SECTION 4.1 Certain  Covenants.  Each Grantor covenants and agrees that, so
long as any portion of the Secured Obligations shall remain unpaid or any Lender
shall have an outstanding  Revolving Loan Commitment,  such Grantor will, unless
the Required Lenders shall otherwise consent in writing, perform the obligations
set forth in this Section.

     SECTION  4.1.1  Accounts.  (a) Each  Account  of such  Grantor is and shall
(i)(A)  result  from a bona  fide sale or lease  and  delivery  of goods by such
Grantor,  or rendition of services by such  Grantor,  in the ordinary  course of
business of such  Grantor,  and (B) be for a  liquidated  amount  payable by the
Account Debtor thereon on the terms set forth in the invoice  therefor or in the
schedule thereof delivered to the Agent, without offset, deduction,  defense, or
counterclaim; (ii) be paid in accordance with its terms and no credit, discount,
agreement  to settle the same  (except  for  payment in full) or  extension,  or
agreement  therefor,  will be granted on any Account,  except as approved by the
Agent; and (iii) be evidenced by a true and correct copy of an invoice delivered
to the Agent by such Grantor.

     (b) Such  Grantor  shall not  re-date any  invoice,  make sales on extended
dating, settle for less than the full amount any Account or extend or modify any
Account,  in each case unless  approved by the Agent.  If such  Grantor  becomes
aware of any  material  matter  affecting  any  Account,  including  information
regarding the Account Debtor's  creditworthiness,  such Grantor will promptly so
advise the Agent.

     (c) Such Grantor  shall not accept any note or other  instrument  (except a
check or other  instrument  for the immediate  payment of money) with respect to
any Account without the Agent's consent. If the Agent consents to the acceptance
of any such note or other instrument,  it shall be considered as evidence of the
Account and not payment  thereof,  and such Grantor shall promptly  deliver such
note or instrument to the Agent appropriately  endorsed.  Regardless of the form
of presentment,  demand, notice of dishonor, protest, and notice of protest

                                       14
<PAGE>

with respect thereto, such Grantor will remain liable thereon until such note or
instrument is paid in full.

     (d) Such Grantor shall notify the Agent promptly of all disputes and claims
with Account  Debtors and settle or adjust them at no expense to the Agent,  but
no discount,  credit or allowance shall be granted to any Account Debtor without
the Agent's consent, except for discounts,  credits and allowances made or given
in the ordinary  course of the such Grantor's  business when no Event of Default
exists  hereunder.  The Agent may settle or adjust  disputes and claims directly
with  customers  or Account  Debtors  for amounts and upon terms which the Agent
considers  advisable and, in all cases, the Agent will credit the such Grantor's
loan account  with only the net amounts  received by the Agent in payment of any
Accounts.

     SECTION 4.1.2 Inventory.

     (a) All of the  Inventory  of such Grantor is held for sale or lease in the
ordinary  course  of such  Grantor's  business,  and is and will be fit for such
purposes. Such Grantor will keep the Inventory in good and marketable condition,
at its own expense.  Such Grantor will not,  without  prior notice to the Agent,
acquire to accept any Inventory on consignment or approval.  Such Grantor agrees
that all Inventory  will be produced in  accordance  with the Federal Fair Labor
Standards  Act of 1938,  as  amended,  and all  rules,  regulations,  and orders
thereunder. Such Grantor will maintain a perpetual inventory reporting system at
all times.  Such Grantor will not,  without the Agent's prior consent,  sell any
Inventory  on a  bill-and-hold,  guaranteed  sale,  sale  and  return,  sale  on
approval, consignment or other repurchase or return basis.

     (b) If an Account  Debtor  returns any  Inventory  to such  Grantor when no
Event of Default  exists,  such Grantor shall promptly  determine the reason for
such return and shall  issue a credit  memorandum  to the Account  Debtor in the
appropriate  amount.  Such  Grantor  shall  immediately  report to the Agent any
return involving an amount in excess of $10,000. In the event any Account Debtor
returns Inventory to such Grantor when an Event of Default exists,  such Grantor
shall:  (i) hold the returned  Inventory in trust for the Agent;  (ii) segregate
all returned  Inventory  from all of its other  Property;  (iii)  dispose of the
returned  Inventory  solely according to the Agent's written  instructions;  and
(iv) not issue any  credits or  allowances  with  respect  thereto  without  the
Agent's prior consent.

     SECTION 4.1.3  Equipment.  All of the Equipment of such Grantor is and will
be used or held for use in such  Grantor's  business  and is and will be fit for
such  purposes.  Such  Grantor  shall keep and  maintain  its  Equipment in good
operating  condition and repair (ordinary wear and tear excepted) and shall make
all necessary replacements thereof. Such Grantor shall promptly inform the Agent
of any material additions to or deletions from its Equipment. Such Grantor shall
maintain  accurate and complete  records  itemizing and describing the location,
kind,  type,  age  and  condition  of  its  Equipment,  the  cost  therefor  and
accumulated  depreciation  thereof and all  dispositions  thereof.  Such Grantor
shall not permit any of its Equipment to become a fixture to real property or an
accession to other personal property,  unless the Agent has a valid,  perfected,
and first priority  security  interest in such real or personal  property.  Such
Grantor  will not,  without  the  Agent's  prior  consent,  alter or remove  any
identifying  symbol or number on its

                                       15
<PAGE>

Equipment.  Such Grantor  shall not,  without the Agent's prior  consent,  sell,
lease or otherwise dispose of any of its Equipment, provided, however, that such
Agent may dispose of Equipment to the extent  permitted in Section 7.2.10 of the
Credit Agreement.

     SECTION 4.1.4 Intellectual Property Collateral.

          (a) No Grantor shall,  unless such Grantor shall either (i) reasonably
     and in good faith  determine (and notice of such  determination  shall have
     been  delivered  to the  Agent)  that any of the  Patent  Collateral  is of
     negligible  economic  value to such Grantor,  or (ii) have a valid business
     purpose (exercised in the ordinary course of its business) to do otherwise,
     do any act, or omit to do any act, whereby any of the Patent Collateral may
     lapse or become abandoned or dedicated to the public or unenforceable.

          (b) No Grantor shall, and no Grantor shall permit any of its licensees
     to,  unless such  Grantor  shall  either (i)  reasonably  and in good faith
     determine  (and notice of such  determination  shall have been delivered to
     the Agent) that any of the Trademark  Collateral is of negligible  economic
     value to such Grantor,  or (ii) have a valid business purpose (exercised in
     the ordinary course of its business) to do otherwise,

               (A) fail to continue to use any of the  Trademark  Collateral  in
          order to maintain all of the  Trademark  Collateral in full force free
          from any claim of abandonment for non-use,

               (B) fail to maintain  as in the past the quality of products  and
          services offered under all of the Trademark Collateral,

               (C) fail to employ  all of the  Trademark  Collateral  registered
          with any  Federal or state or foreign  authority  with an  appropriate
          notice of such registration,

               (D) adopt or use any other Trademark which is confusingly similar
          or a colorable imitation of any of the Trademark Collateral,

               (E) use  any of the  Trademark  Collateral  registered  with  any
          Federal  or state or foreign  authority  except for the uses for which
          registration or application for  registration of all of such Trademark
          Collateral has been made, or

               (F) do or permit any act or knowingly  omit to do any act whereby
          any of the  Trademark  Collateral  may  lapse  or  become  invalid  or
          unenforceable.

          (c) No Grantor shall,  unless such Grantor shall either reasonably and
     in good faith determine (and notice of such  determination  shall have been
     delivered to the Agent) that any of the Copyright  Collateral or any of the
     Trade Secrets  Collateral is of negligible  economic value to such Grantor,
     or have a valid business  purpose  (exercised in the ordinary course of its
     business) to do otherwise, do or permit any act or knowingly omit

                                       16
<PAGE>

     to do any act whereby any of the  Copyright  Collateral or any of the Trade
     Secrets  Collateral may lapse or become invalid or  unenforceable or placed
     in the public  domain except upon  expiration of the end of an  unrenewable
     term of a registration thereof.

          (d) Each Grantor shall notify the Agent  immediately  if it knows that
     any  application  or  registration  relating  to any  material  item of the
     Intellectual  Property  Collateral may become abandoned or dedicated to the
     public or placed in the public  domain or invalid or  unenforceable,  or of
     any adverse determination or development  (including the institution of, or
     any such  determination  or  development  in, any  proceeding in the United
     States Patent and Trademark  Office,  the United States Copyright Office or
     any foreign  counterpart  thereof or any court)  regarding  such  Grantor's
     ownership  of any of the  Intellectual  Property  Collateral,  its right to
     register the same or to keep and maintain and enforce the same.

          (e) In no event  shall any  Grantor or any of its  agents,  employees,
     designees or licensees  file an  application  for the  registration  of any
     Intellectual   Property  Collateral  with  the  United  States  Patent  and
     Trademark Office,  the United States Copyright Office or any similar office
     or agency in any other country or any political subdivision thereof, unless
     it promptly informs the Agent and, upon request of the Agent,  executes and
     delivers any and all agreements,  instruments,  documents and papers as the
     Agent may reasonably  request to evidence the Agent's security  interest in
     such  Intellectual   Property  Collateral  and  the  goodwill  and  general
     intangibles of such Grantor relating thereto or represented thereby.

          (f) Each  Grantor  shall take all  necessary  steps,  including in any
     proceeding before the United States Patent and Trademark Office, the United
     States  Copyright  Office  or any  similar  office  or  agency in any other
     country or any political  subdivision  thereof,  to maintain and pursue any
     application  (and to obtain the relevant  registration)  filed with respect
     to,  and  to  maintain  any  registration  of,  the  Intellectual  Property
     Collateral, including the filing of applications for renewal, affidavits of
     use,  affidavits  of  incontestability  and  opposition,  interference  and
     cancellation  proceedings  and the payment of fees and taxes (except to the
     extent that dedication,  abandonment or invalidation is permitted under the
     foregoing clauses (a), (b) and (c)).

     SECTION 4.1.5 Assigned Agreements.

          (a) Each Grantor shall at its expense:

               (i) perform and observe in all  material  respects  all the terms
          and provisions of the Assigned  Agreements to be performed or observed
          by it,  maintain  the  Assigned  Agreements  in full force and effect,
          enforce the Assigned  Agreements  in  accordance  with their terms and
          take  all  such  action  to  such  end as may be  from  time  to  time
          reasonably requested by the Agent; and

                                       17
<PAGE>

                  (ii)  furnish to the Agent  promptly  upon receipt or delivery
         thereof copies of all material  notices,  requests and other  documents
         received by such Grantor under or pursuant to the Assigned  Agreements,
         and from time to time furnish to the Agent such information and reports
         regarding the Assigned Agreements as the Agent may reasonably request.

          (b) Except to the extent  permitted under Section 7.2.11 of the Credit
     Agreement,  no Grantor  shall,  without  the prior  written  consent of the
     Agent:

               (i) cancel or terminate  any Assigned  Agreement or consent to or
          accept any cancellation or termination thereof;

               (ii) amend or otherwise modify any Assigned Agreement or give any
          consent, waiver or approval thereunder;

               (iii)  waive  any  default   under  or  breach  of  any  Assigned
          Agreement; or

               (iv)  take any  other  action  in  connection  with any  Assigned
          Agreement  that would impair in any material  respect the value of the
          interest or rights of such Grantor  thereunder or that would impair in
          any material respect the interest or rights of any Lender Party.

          (c) Each  Grantor  shall  notify the Agent  promptly  after it becomes
     aware  of any  event or fact  which  could  give  rise to a claim by it for
     indemnification  under any of the Assigned  Agreements and shall diligently
     pursue such right and  promptly  report to the Agent all  further  material
     developments with respect thereto. Each Grantor shall remit directly to the
     Agent,  for application to the  Obligations,  all amounts  received by such
     Grantor  as   indemnification   or  otherwise   pursuant  to  the  Assigned
     Agreements.  If  any  Grantor  shall  fail  after  the  Agent's  demand  to
     diligently pursue any right under the Assigned Agreements,  or if any Event
     of Default  exists,  then the Agent may directly  enforce such right in its
     own or such  Grantor's  name and may enter into such  settlements  or other
     agreements  with  respect  thereto  as the Agent  determines.  All  amounts
     thereby recovered by the Agent,  after deducting Agent's costs and expenses
     in connection therewith, shall be applied to the Obligations.  In any suit,
     proceeding or action brought by the Agent under any Assigned  Agreement for
     any sum owing thereunder or to enforce any provision thereof,  each Grantor
     shall  indemnify and hold the Agent  harmless from and against all expense,
     loss or damage  suffered by reason of any  defense,  setoff,  counterclaim,
     recoupment,  or reduction of liability whatsoever of the obligor thereunder
     arising out of a breach by such  Grantor of any  obligation  thereunder  or
     arising out of any other  agreement,  indebtedness or liability at any time
     owing from such Grantor to or in favor of such obligor or its successors.

         SECTION 4.1.6  Collateral  Reporting.  The Borrowers  will provide,  on
behalf  of  each  Grantor,   to  the  Agent  the  following  documents  in  form
satisfactory to the Agent:  (a) on a daily basis, a schedule of credit memos and
reports,  a schedule of collections

                                       18
<PAGE>

of Accounts,  a schedule of Accounts  created since the last such schedule and a
report of the Inventory  balance (by location) based on the perpetual  Inventory
reports;  (b) on a weekly basis, a schedule of remittance  advices no later than
five Business Days  following the end of the week;  (c) upon request,  copies of
invoices,  credit memos, shipping and delivery documents;  (d) monthly agings of
Accounts to be delivered no later than the 10th day of each month respecting the
immediately  preceding  month; (e) monthly  Inventory  reports by category to be
delivered no later than the 10th day of each month  respecting  the  immediately
preceding month; (f) upon request, monthly perpetual Inventory reports; (g) upon
request,  copies of  purchase  orders,  invoices,  and  delivery  documents  for
Inventory and Equipment acquired by any Grantor; (h) on a weekly basis, a report
as to all Inventory indicating the reasons for the returns and the locations and
condition of the returned Inventory; (i) such other reports as to the Collateral
as the  Agent  shall  request  from  time to time;  and (j)  certificates  of an
Authorized  Officer of USAM certifying as to the foregoing.  In addition,  USAM,
for and on behalf of each Grantor,  shall conduct a physical verification of all
Inventory  of each  Grantor not less than once every 12 months and at such other
times as the Agent may reasonably request.  The annual physical  verification of
Inventory shall (a) be evidenced by a report describing in reasonable detail the
Inventory by category and item and the then appraised value (at lower of cost or
market) and (b) be observed and tested by USAM's  independent public accountants
in  accordance  with  generally  accepted  auditing  standards  and GAAP. If any
Grantor's  records or reports of the  Collateral  are prepared by an  accounting
service or other agent,  such Grantor hereby authorizes such service or agent to
deliver such records, reports, and related documents to the Agent.

     SECTION 4.1.7 Appraisals.  Whenever any Default or Event of Default exists,
and at such other times as the Agent may reasonably request, each Grantor shall,
at its sole  cost  and  expense  and  promptly  following  the  Agent's  request
therefor,  provide the Agent with appraisals or updates thereof of any or all of
the Collateral from an appraiser that is reasonably acceptable to the Agent.

     SECTION 4.1.8 Transfers of Collateral and Other Liens, etc.

          (a) No Grantor  shall sell,  assign (by operation of law or otherwise)
     or  otherwise  dispose of any of the  Collateral,  except as  permitted  by
     Section 7.2.10 of the Credit Agreement.

          (b) No Grantor  shall  create or suffer to exist any Lien upon or with
     respect to any of the Collateral,  except for the security interest created
     by this Agreement and except those permitted by Section 7.2.3 of the Credit
     Agreement.

          (c) Each Grantor shall keep all its Equipment,  Inventory  (other than
     Inventory sold in the ordinary course of business) and other  Collateral at
     the places  therefor  specified  in Section  3.1.1 or,  upon 30 days' prior
     written notice to the Agent,  at such other places in a jurisdiction  where
     all  representations,  warranties and covenants  contained  herein shall be
     true and correct, including all actions required pursuant to Section 4.1.11
     having been taken with respect to such Equipment and Inventory.

                                       19
<PAGE>

          (d) Each Grantor shall keep its principal  place of business and chief
     executive  office and the office where it keeps its records  concerning the
     Receivables,  and  all  originals  of  all  chattel  paper  which  evidence
     Receivables, located at the places specified in clause (a) of Section 3.1.1
     or,  upon 30  days'  prior  written  notice  to the  Agent,  at such  other
     locations in a  jurisdiction  where all actions  required by Section 4.1.11
     shall have been taken with respect to the  Receivables;  and not change its
     name  except  upon 30 days'  prior  written  notice to the Agent and having
     taken all action required pursuant to Section 4.1.11.

     SECTION 4.1.9 As to Vehicles. Each Grantor hereby agrees that

          (a) it shall keep all the Vehicles  identified  on Schedule VII hereto
     in the  locations  specified  therein,  and will keep each  certificate  of
     ownership  (duly  evidencing  the  Agent's  security  interest in each such
     Vehicle) on file with the  relevant  Department  of Motor  Vehicles in each
     such  jurisdiction,  or, upon 30 days' prior  notice to the Agent,  at such
     other places in a jurisdiction where all the representations and warranties
     set  forth  in  Article  III  shall  be true and  correct  in all  material
     respects.

          (b) if it acquires any Vehicles  other than the Vehicles  specified on
     Schedule VII hereto, promptly (and, in any event, within five Business Days
     thereafter)  notify  the  Agent of the  same,  and in the case of any owned
     Vehicles,  duly cause to be noted on the relevant  certificate of ownership
     the  security  interest  of the Agent,  file the  relevant  certificate  of
     ownership with the relevant Department of Motor Vehicles and provide copies
     of the foregoing to the Agent.  In addition to, and not in  limitation  of,
     the  foregoing,  the  Grantor  shall take all steps  necessary  so that the
     representation  and warranties set forth in Article III (including  Section
     3.1.6) shall be true and correct in all material respects,  and all actions
     required  pursuant to the first  sentence of Section  4.1.9 shall have been
     taken with respect to the Vehicles;

          (c) it shall cause the Vehicles to be maintained and preserved in good
     repair  and  working  order,  ordinary  wear  and tear  excepted,  and make
     necessary  and  proper  repairs,  renewals  and  replacements  so that  the
     business of the Grantor carried on in connection  therewith may be properly
     conducted; and

          (d) it shall pay  promptly  when due all  property  and  other  taxes,
     assessments and governmental charges or levies imposed upon or with respect
     to, and all claims (including claims resulting from the use or operation of
     the Vehicles) against or with respect to the Vehicles, except to the extent
     the  validity  thereof  is being  contested  in good  faith by  appropriate
     proceedings  for which adequate  reserves in accordance with GAAP have been
     set aside by the Grantor.

The Agent may, in its sole  discretion,  waive the requirement that its security
interest be noted on the  certificate  of  occupancy of each  Vehicle,  provided
that, if requested by the Agent (in its sole discretion), each Grantor agrees to
take all steps to promptly note the same.

                                       20
<PAGE>

     SECTION  4.1.10  Insurance.  Each  Grantor  will  maintain  or  cause to be
maintained  insurance as provided in Section 7.1.4 of the Credit Agreement.  All
proceeds of insurance  maintained by each Grantor  covering the Collateral shall
be retained by the Agent for  application  to the payment in full of the Secured
Obligations under the circumstances  provided for in Section 7.1.4 of the Credit
Agreement.  Each Grantor  irrevocably makes,  constitutes and appoints the Agent
(and  all  officers,  employees  or  agents  designated  by the  Agent)  as such
Grantor's true and lawful agent (and  attorney-in-fact) for the purpose,  during
the continuance of an Event of Default, of making, settling and adjusting claims
in respect of Collateral under policies of insurance, endorsing the name of such
Grantor  on any  check,  draft,  instrument  or other  item of  payment  for the
proceeds of such  policies of insurance  and for making all  determinations  and
decisions  with  respect  thereto.  In the event that any Grantor at any time or
times shall fail to obtain or maintain any of the policies of insurance required
by Section 7.1.4 of the Credit  Agreement or to pay any premium in whole or part
relating thereto,  the Agent may, without waiving or releasing any obligation or
liability  of the  Grantors  hereunder  or any  Event  of  Default,  in its sole
discretion,  obtain and maintain such policies of insurance and pay such premium
and take any other  actions with respect  thereto as the Agent deems  advisable.
All sums  disbursed  by the  Collateral  Agent in  connection  with this Section
4.1.5,  including  reasonable  attorneys' fees, court costs,  expenses and other
charges relating thereto,  shall be payable, upon demand, by the Grantors to the
Agent and shall be additional Secured Obligations secured hereby.

     SECTION 4.1.11 Further Assurances, etc. Each Grantor agrees that, from time
to time at its own expense,  such Grantor will promptly  execute and deliver all
further  instruments  and documents,  and take all further  action,  that may be
necessary or desirable,  or that the Agent may reasonably  request,  in order to
perfect,  preserve and protect any security  interest granted or purported to be
granted  hereby or to enable the Agent to  exercise  and  enforce its rights and
remedies  hereunder  with  respect  to  any  Collateral.  Without  limiting  the
generality of the foregoing, each Grantor will

          (a) mark  conspicuously  each asset forming a part of the  Collateral,
     including each Related Contract,  its books and records,  with a legend, in
     form and substance  satisfactory  to the Agent,  indicating  that each such
     asset is subject to the security interest granted hereby;

          (b) if any Receivable shall be evidenced by a promissory note or other
     instrument, negotiable document or chattel paper, deliver and pledge to the
     Agent hereunder such promissory note,  instrument,  negotiable  document or
     chattel paper duly endorsed and accompanied by duly executed instruments of
     transfer  or  assignment,  all in form and  substance  satisfactory  to the
     Agent;

          (c) execute and file such  financing or  continuation  statements,  or
     amendments  thereto,  and such other instruments or notices  (including any
     assignment  of claim form under or pursuant to the  federal  assignment  of
     claims  statute,  31 U.S.C.  ss. 3726,  any  successor  or amended  version
     thereof or any  regulation  promulgated  under or  pursuant  to any version
     thereof),  as may be  necessary,  or as the Agent may request,  in order to
     perfect

                                       21
<PAGE>

     and preserve the security  interests and other rights  granted or purported
     to be granted to the Agent hereby;

          (d) furnish to the Agent,  from time to time at the  Agent's  request,
     statements and schedules further  identifying and describing the Collateral
     and such other reports in connection  with the  Collateral as the Agent may
     request, all in reasonable detail; and

          (e) deliver to the Agent the original  certificates of title for motor
     vehicles  with the  security  interest  properly  granted  hereby  endorsed
     thereon;

          (f) deliver to the Agent  warehouse  receipts  covering any portion of
     the Collateral  located in warehouses which show the Agent, for the ratable
     benefit of the Lender Parties, as the beneficiary thereof;

          (g) transfer Inventory to warehouses designated by the Agent;

          (h) if at any time any  Collateral is located on any premises that are
     not owned by the Grantor,  such Grantor shall obtain  written  waivers,  in
     form and  substance  satisfactory  to the Agent,  of all present and future
     Liens to which the owner or lessor or any mortgagee of such premises may be
     entitled to assert against the Collateral;

          (i) take all actions  that the Agent deems  necessary  or advisable to
     enforce collection of the Accounts; and

          (j) from time to time, promptly following the Agent's request, execute
     and  deliver  confirmatory  written  instruments  pledging to the Agent the
     Collateral,  but any such  Grantor's  failure  to do so shall not affect or
     limit the security  interest  granted hereby or the Agent's other rights in
     and to the Collateral.

With respect to the foregoing and the grant of the security interest  hereunder,
each  Grantor  hereby  authorizes  the  Agent to file one or more  financing  or
continuation  statements,  and  amendments  thereto,  and make  filings with the
United States Patent and Trademark  Office or United States Copyright Office (or
any successor  office or any similar  office in any other  country) in each case
for the purpose of perfecting,  confining,  continuing,  enforcing or protecting
the security  interest  granted by each  Grantor,  without the  signature of any
Grantor,  and naming any Grantor or the  Grantors as debtors and the  Collateral
Agent as secured party. A carbon,  photographic  or other  reproduction  of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.

     SECTION  4.1.12  Inspections  and  Verification.  The Agent  shall have the
right,  at the Grantors' own cost and expense,  to inspect the  Collateral,  all
records  related thereto (and to make extracts and copies from such records) and
the  premises  upon which any of the  Collateral  is  located,  to  discuss  the
Grantors'  affairs  with the  officers  of the  Grantors  and their  independent
accountants  and to verify under  reasonable  procedures  the validity,  amount,
quality,  quantity, value, condition and status of, or any other matter relating
to, the  Collateral,  including,  in the

                                       22
<PAGE>

case of  Accounts  or  Collateral  in the  possession  of any third  Person,  by
contacting  Account  Debtors in the event of and during  the  continuance  of an
Event of Default or the third person  possessing such Collateral for the purpose
of making such a verification.

                                    ARTICLE V
                                    THE AGENT

     SECTION  5.1  Agent   Appointed   Attorney-in-Fact.   Each  Grantor  hereby
irrevocably constitutes and appoints the Agent and any officer or agent thereof,
with full power of substitution,  as its true and lawful  attorney-in-fact  with
full irrevocable  power and authority in the place and stead of such Grantor and
in the name of such Grantor or in its own name,  for the purpose of carrying out
the  terms of this  Agreement,  to take any and all  appropriate  action  and to
execute any and all documents and instruments that may be necessary or desirable
to accomplish the purposes of this Agreement. Without limiting the generality of
the  foregoing,  each  Grantor  hereby  gives the Agent the power and right,  on
behalf of such Grantor,  without notice to or assent by such Grantor,  to do any
or all of the following:

          (a) (i) demand payment of its  Receivables;  (ii) enforce  payments of
     its  Receivables by legal  proceedings or otherwise;  (iii) exercise all of
     its rights and remedies with respect to proceedings  brought to collect its
     Receivables;  (iv) sell or assign its Receivables upon such terms, for such
     amount and at such times as the Agent deems advisable;  (v) settle, adjust,
     compromise,  extend or renew any of its  Receivables;  (vi)  discharge  and
     release any of its Receivables; (vii) prepare, file and sign such Grantor's
     name on any proof of claim in bankruptcy or other similar  document against
     any  obligor  of any of its  Receivables;  (viii)  notify  the post  office
     authorities  to change the address for delivery of the such  Grantor's mail
     to an address  designated  by the Agent,  and open and  dispose of all mail
     addressed to the Grantor;  and (ix)  endorse such  Grantor's  name upon any
     chattel  paper,  document,  instrument,  invoice,  or similar  document  or
     agreement relating to any Receivable or any goods pertaining thereto;

          (b) in the case of any Intellectual  Property Collateral,  execute and
     deliver, and have recorded, any and all agreements,  instruments, documents
     and  papers  as the Agent may  request  to  evidence  the  Lender  Parties'
     security interest in such Intellectual Property Collateral and the goodwill
     and general  intangibles  of such Grantor  relating  thereto or represented
     thereby;

          (c) pay or discharge taxes and Liens levied or placed on or threatened
     against the Collateral,  effect any repairs or any insurance  called for by
     the  terms  of  this  Agreement  and pay  all or any  part of the  premiums
     therefor and the costs thereof;

          (d) execute, in connection with any sale or other disposition provided
     for in Section 6.1, any  endorsements,  assignments or other instruments of
     conveyance or transfer with respect to the Collateral; and

                                       23
<PAGE>

          (e) (i)  direct  any party  liable  for any  payment  under any of the
     Collateral  to make  payment  of any and all  moneys  due or to become  due
     thereunder  directly to the Agent or as the Agent shall direct; (ii) ask or
     demand for,  collect,  and receive payment of and give receipt for, any and
     all  moneys,  claims and other  amounts due or to become due at any time in
     respect of or arising  out of any  Collateral;  (iii) sign and  indorse any
     invoices,  freight or express bills, bills of lading,  storage or warehouse
     receipts, drafts against debtors, assignments,  verifications,  notices and
     other documents in connection with any of the Collateral; (iv) commence and
     prosecute  any  suits,  actions or  proceedings  at law or in equity in any
     court of competent  jurisdiction  to collect the  Collateral or any portion
     thereof and to enforce any other  right in respect of any  Collateral;  (v)
     defend any suit,  action or  proceeding  brought  against such Grantor with
     respect to any Collateral; (vi) settle, compromise or adjust any such suit,
     action or proceeding and, in connection therewith,  give such discharges or
     releases as the Agent may deem  appropriate;  (vii) notify,  or require any
     Grantor to notify,  Account Debtors to make payment  directly to the Agent;
     (viii) assign any Intellectual Property Collateral (along with the goodwill
     of  the  business  to  which  any  such  Intellectual  Property  Collateral
     pertains)  throughout the world for such terms, on such conditions,  and in
     such manner, as the Agent shall in its sole discretion determine;  and (ix)
     generally, sell, transfer, pledge and make any agreement with respect to or
     otherwise deal with any of the Collateral as fully and completely as though
     the Agent were the absolute owner thereof for all purposes,  and do, at the
     Agent's  option and such  Grantor's  expense,  at any time, or from time to
     time,  all acts and  things  that the Agent  deems  necessary  to  protect,
     preserve or realize upon the  Collateral and the Lender  Parties'  security
     interests therein and to effect the intent of this Agreement,  all as fully
     and effectively as such Grantor might do.

Each Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.

     SECTION  5.2  Agent  May  Perform.  If any  Grantor  fails to  perform  any
agreement  contained herein, the Agent may itself perform,  or cause performance
of,  such  agreement,  and the  expenses  of the Agent  incurred  in  connection
therewith  shall be payable by such Grantor  pursuant to Section 6.2;  provided,
however, if any Default of the nature referred to in Section 8.1.9 of the Credit
Agreement  or Event of Default has occurred  and is  continuing,  no such notice
shall be required.

     SECTION 5.3 Access and  Examination.  The Agent may at all reasonable times
have access to,  examine,  audit,  make extracts from and inspect each Grantor's
records,  files and books of account and the  Collateral,  and may discuss  each
Grantor's affairs with such Grantor's officers and management. Each Grantor will
deliver to the Agent  promptly  following  its request  therefor any  instrument
necessary for the Agent to obtain  records from any service  bureau  maintaining
records for the such  Grantor.  The Agent may, at expense of the  Grantors,  use
each Grantor's  personnel,  supplies and premises as may be reasonably necessary
for maintaining or enforcing the security interest granted hereunder.  The Agent
shall  have the  right,  at any  time,  in each  Grantor's  name to  verify  the
validity,  amount  or any  other  matter  relating  to the  Accounts,  by  mail,
telephone or otherwise.

                                       24
<PAGE>

     SECTION 5.4 Agent Has No Duty.

          (a) In addition to, and not in limitation  of, Section 2.4, the powers
     conferred  on the Agent  hereunder  are solely to protect its  interest (on
     behalf of the Lender  Parties) in the  Collateral  and shall not impose any
     duty on it to exercise  any such  powers.  Neither the Agent nor any of its
     officers,  directors,  employees  or agents  shall be liable for failure to
     demand,  collect or realize upon any of the  Collateral or for any delay in
     doing so or shall be under any  obligation to sell or otherwise  dispose of
     any  Collateral  upon the request of any Grantor or any other  Person or to
     take any other action  whatsoever with regard to the Collateral or any part
     thereof  (including  the taking of any necessary  steps to preserve  rights
     against  prior parties or any other rights  pertaining to any  Collateral).
     The powers  conferred  on the Agent  hereunder  are  solely to protect  the
     Lender  Parties'  interests in the Collateral and shall not impose any duty
     upon the Agent to exercise any such powers.  The Agent shall be accountable
     only for amounts  that it actually  receives as a result of the exercise of
     such  powers,  and  neither the Agent nor any of its  officers,  directors,
     employees  or agents  shall be  responsible  to any  Grantor for any act or
     failure to act hereunder,  except for their own gross negligence or willful
     misconduct.

          (b) Each Grantor assumes all responsibility and liability arising from
     or relating to the use, sale or other  disposition of the  Collateral.  The
     Obligations  shall not be  affected by any failure of the Agent to take any
     steps to perfect the security  interest granted  hereunder or to collect or
     realize upon the Collateral,  nor shall loss of or damage to the Collateral
     release any Grantor from any of its Obligations.

                                   ARTICLE VI
                                    REMEDIES

     SECTION 6.1 Certain  Remedies.  If any Event of Default shall have occurred
and be continuing:

          (a) The Agent may exercise in respect of the  Collateral,  in addition
     to other rights and remedies provided for herein or otherwise  available to
     it, all the rights and  remedies  of a secured  party on default  under the
     U.C.C.  (whether or not the U.C.C.  applies to the affected Collateral) and
     also may

               (i) require each Grantor to, and each Grantor  hereby agrees that
          it will,  at its expense and upon the request of the Agent  forthwith,
          assemble  all or part of the  Collateral  as directed by the Agent and
          make it  available  to the  Agent at its  premises  or  another  place
          designated by the Agent;

               (ii) without demand of performance or other demand,  presentment,
          protest,  advertisement  or  notice  of any kind  (except  any  notice
          required by law referred to below) to or upon any Grantor or any other
          Person (all and each of which demands,  defenses,  advertisements  and
          notices  are hereby  waived),  sell,

                                       25
<PAGE>

          lease,  assign,  give  option or options  to  purchase,  or  otherwise
          dispose of and deliver the Collateral or any part thereof (or contract
          to do any of the  foregoing),  in one or more  parcels  at  public  or
          private sale, at any of the Agent's offices or elsewhere, for cash, on
          credit or for future delivery,  and upon such other terms as the Agent
          may deem  commercially  reasonable.  Each Grantor  agrees that, to the
          extent  notice of sale shall be  required  by law,  at least ten days'
          prior  notice to such Grantor of the time and place of any public sale
          or  the  time  after  which  any  private  sale  is to be  made  shall
          constitute reasonable  notification.  The Agent shall not be obligated
          to make any sale of  Collateral  regardless  of notice of sale  having
          been given. The Agent may adjourn any public or private sale from time
          to time by announcement at the time and place fixed therefor, and such
          sale may,  without  further  notice,  be made at the time and place to
          which it was so adjourned;

               (iii) with respect to the Intellectual  Property,  on demand,  to
          cause the  security  interest to become an  assignment,  transfer  and
          conveyance of any of or all such Collateral by the applicable Grantors
          to the Agent, or to license or sublicense, whether general, special or
          otherwise,  and whether on an exclusive or  non-exclusive  basis,  any
          such Collateral  throughout the world on such terms and conditions and
          in such manner as the Agent shall  determine  (other than in violation
          of any then existing licensing arrangements to the extent that waivers
          cannot be obtained); and

               (iv) with or without  legal  process  and with or  without  prior
          notice or demand for performance, to take possession of the Collateral
          and without  liability  for trespass to enter any  premises  where the
          Collateral  may be located for the purpose of taking  possession of or
          removing the Collateral.

          (b) All cash proceeds received by the Agent in respect of any sale of,
     collection  from,  or  other  realization  upon  all  or  any  part  of the
     Collateral  may, in the  discretion  of the Agent,  be held,  to the extent
     permitted  under  applicable  law,  by the Agent as  additional  collateral
     security for all or any part of the Secured Obligations,  and/or then or at
     any time thereafter  shall be applied (after payment of any amounts payable
     to the Agent  pursuant to Section 10.3 of the Credit  Agreement and Section
     6.2 below) in whole or in part by the Agent for the ratable  benefit of the
     Lender  Parties  against  all or any  part of the  Secured  Obligations  in
     accordance  with Section 8.4 of the Credit  Agreement.  Any surplus of such
     cash or cash proceeds held by the Agent and remaining after payment in full
     of all the Secured  Obligations,  and the termination of the Revolving Loan
     Commitment,  shall be paid over to the  Grantors  or to  whomsoever  may be
     lawfully entitled to receive such surplus.

          (c) The Agent may  exercise  any and all rights and  remedies  of each
     Grantor under or in connection with the Equipment, Inventory,  Receivables,
     the Related Contracts,  the Assigned  Agreements or otherwise in respect of
     the  Collateral,  including  the  right to sue upon or  otherwise  collect,
     extend the time for payment of, modify or amend the terms of, compromise or
     settle  for  cash,  credit,  or  otherwise  upon  any  terms,

                                       26
<PAGE>

     grant other indulgences,  extensions,  renewals, compositions, or releases,
     and take or omit to take any other action with  respect to the  Collateral,
     any security  therefor,  any  agreement  relating  thereto,  any  insurance
     applicable  thereto,  or  any  Person  liable  directly  or  indirectly  in
     connection  with any of the  foregoing,  without  discharging  or otherwise
     affecting  the liability of any Grantor for the  Obligations  or under this
     Agreement or any other Loan  Document and Assigned  Agreements or otherwise
     in respect of the Collateral,  including any and all rights of such Grantor
     to demand or otherwise  require payment of any amount under, or performance
     of  any  provision  of,  any  Equipment,  Inventory,  Receivables,  Related
     Contracts, Assigned Agreements or other Collateral.

     The Agent  shall give the  Grantors  10 days'  written  notice  (which each
Grantor  agrees is reasonable  notice within the meaning of Section  9-504(3) of
the  U.C.C.)  of the  Agent's  intention  to make any sale of  Collateral.  Such
notice,  in the case of a public  sale,  shall state the time and place for such
sale and, in the case of a sale at a broker's board or on a securities exchange,
shall  state the board or  exchange at which such sale is to be made and the day
on which the Collateral,  or portion thereof,  will first be offered for sale at
such board or exchange.  Any such public sale shall be held at such time or time
within ordinary  business hours and at such place or places as the Agent may fix
and state in the notice (if any) of such sale. At any such sale, the Collateral,
or  portion  thereof,  to be sold  may be sold in one lot as an  entirety  or in
separate  parcels,  as the  Agent  may (in its  sole  and  absolute  discretion)
determine.  The Agent shall not be obligated to make any sale of any  Collateral
if it shall  determine not to do so,  regardless of the fact that notice of sale
of such  Collateral  shall have been  given.  The Agent may,  without  notice or
publication adjourn any public or private sale or cause the same to be adjourned
from time to time by announcement at the time and place fixed for sale, and such
sale may,  without  further  notice,  be made at the time and place to which the
same was so adjourned.  In case any sale of all or any part of the Collateral is
made on credit or for future delivery, the Collateral so sold may be retained by
the Agent until the sale price is paid by the  purchase or  purchasers  thereof,
but the  Agent  shall  not incur any  liability  in case any such  purchaser  or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure,  such Collateral may be sold again upon like notice. At any
public (or, to the extent permitted by law,  private) sale made pursuant to this
Section, any Lender Party may bid for or purchase, free (to the extent permitted
by law) from any right of redemption,  stay,  valuation or appraisal on the part
of any Grantor  (all said rights  being also hereby  waived and  released to the
extent  permitted by law), the  Collateral or any part thereof  offered for sale
and may make payment on account  thereof by using any claim then due and payable
to such Lender Party from any Grantor as a credit  against the  purchase  price,
and such Lender Party may upon compliance with the terms of sale,  hold,  retain
and  dispose of such  property  without  further  accountability  to any Grantor
therefor.

     SECTION 6.2 Indemnity and Expenses.

          (a) Each Grantor  agrees to jointly and severally  indemnify the Agent
     from and against any and all claims,  losses and liabilities arising out of
     or resulting from this Agreement (including enforcement of this Agreement),
     except  claims,  losses or  liabilities

                                       27
<PAGE>

     resulting  from the  Agent's  gross  negligence  or willful  misconduct  as
     determined by a final judgment of a court of competent jurisdiction.

          (b) Each  Grantor  will upon demand pay to the Agent the amount of any
     and  all   reasonable   expenses,   including  the   reasonable   fees  and
     disbursements of its counsel and of any experts and agents, which the Agent
     may incur in connection with

               (i) the administration of this Agreement,

               (ii) the custody,  preservation, use or operation of, or the sale
          of, collection from, or other realization upon, any of the Collateral,

               (iii) the  exercise  or  enforcement  of any of the rights of the
          Agent or the Lender Parties hereunder, or

               (iv) the  failure by any Grantor to perform or observe any of the
          provisions hereof.

                                   ARTICLE VII
                            MISCELLANEOUS PROVISIONS

     SECTION 7.1 Loan  Document.  This  Agreement  is a Loan  Document  executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed,  administered and applied in accordance with the terms and
provisions thereof, including Article X thereof.

     SECTION 7.2 Amendments, etc.; Additional Grantors; Successors and Assigns.

          (a) No amendment to or waiver of any  provision of this  Agreement nor
     consent to any  departure  by any Grantor  herefrom,  shall in any event be
     effective  unless the same shall be in writing and signed by the Agent and,
     with respect to any such amendment,  by the Grantors,  and then such waiver
     or consent  shall be effective  only in the  specific  instance and for the
     specific purpose for which given.

          (b) Upon the  execution  and  delivery  by any  Person  of a  security
     agreement  supplement in substantially the form of Exhibit B hereto (each a
     "Security Agreement  Supplement"),  (i) such Person shall be referred to as
     an "Additional  Collateral Grantor" and shall be and become a Grantor,  and
     each  reference in this  Agreement  to  "Grantor"  shall also mean and be a
     reference  to such  Additional  Collateral  Grantor  and (ii) the  schedule
     supplements  attached  to  each  Security  Agreement  Supplement  shall  be
     incorporated  into and become a part of and supplement  Schedules I through
     VI  hereto,  as  appropriate,  and  the  Agent  may  attach  such  schedule
     supplements to such  Schedules,  and each reference to such Schedules shall
     mean and be a reference to such Schedules, as supplemented pursuant hereto.

                                       28
<PAGE>

          (c) Any Grantor that becomes an Excluded Foreign  Subsidiary after the
     date hereof shall, upon written request of such Grantor to the Agent and at
     the sole cost of such Grantor,  be released from the terms hereof  pursuant
     to documentation reasonably satisfactory to the Agent.

          (d)  This  Agreement  shall  be  binding  upon  each  Grantor  and its
     successors,  transferees  and assigns and shall inure to the benefit of and
     be  enforceable  by the  Agent  and  each  other  Lender  Party  and  their
     respective successors,  transferees and assigns; provided, however, that no
     Grantor may assign its  obligations  hereunder  without  the prior  written
     consent of the Agent.

     SECTION 7.3  Addresses  for Notices.  All notices and other  communications
provided for hereunder shall be in writing and mailed,  delivered or transmitted
by  facsimile  to either  party  hereto at the  address  set forth in the Credit
Agreement,  or at such other  address as shall be  designated by such party in a
written notice to each other party. Any notice, if mailed and properly addressed
with postage  prepaid,  shall be deemed given three Business Days after posting;
any notice sent by prepaid  overnight  express mail shall be deemed delivered on
the next following  Business Day; and any notice  transmitted by facsimile shall
be deemed  given upon  electronic  confirmation  of  transmission  by the sender
thereof.

     SECTION 7.4 Section  Captions.  Section captions used in this Agreement are
for convenience of reference only, and shall not affect the construction of this
Agreement.

     SECTION  7.5  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 such law, such  provision  shall be  ineffective  to the extent of
such  prohibition  or  invalidity,  without  invalidating  the remainder of such
provision or the remaining provisions of this Agreement.

     SECTION 7.6  Counterparts.  This  Agreement  may be executed by the parties
hereto in several counterparts,  each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.

     SECTION 7.7 Waivers.  Each Grantor  hereby waives any right,  to the extent
permitted by  applicable  law, to receive prior notice of or a judicial or other
hearing with respect to any action or  prejudgment  remedy or  proceeding by the
Agent  to take  possession,  exercise  control  over or  dispose  of any item of
Collateral  where such action is permitted  under the terms of this Agreement or
any other Loan Document or by applicable law or the time, place or terms of sale
in connection  with the exercise of the Agent's rights  hereunder.  Each Grantor
waives,  to the extent  permitted  by  applicable  law,  any bonds,  security or
sureties  required  by the Agent  with  respect to any of the  Collateral.  Each
Grantor also waives any damages (direct,  consequential or otherwise) occasioned
by the  enforcement of the Agent's rights under this Agreement or any other Loan
Document, including, the taking of possession of any Collateral or the giving of
notice to any Account  Debtor or the  collection of any  Receivable,  all to the
extent that such waiver is permitted by law. Each Grantor also consents that the
Agent,  in connection  with the

                                       29
<PAGE>

enforcement of the Agent's rights and remedies under this  Agreement,  may enter
upon any premises  owned by or leased to it without  obligations  to pay rent or
for use and occupancy,  through self-help,  without judicial process and without
having first obtained an order of any court. These waivers and all other waivers
provided for in this Agreement and the other Loan Documents have been negotiated
by the parties and each Borrower  acknowledges  that it has been  represented by
counsel of its own choice and has  consulted  such  counsel  with respect to its
rights hereunder.

     SECTION 7.8 Governing Law, Entire  Agreement,  etc. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK,  EXCEPT TO THE EXTENT THAT THE VALIDITY OR  PERFECTION OF THE SECURITY
INTEREST  HEREUNDER,  OR  REMEDIES  HEREUNDER,  IN  RESPECT  OF  ANY  PARTICULAR
COLLATERAL  ARE GOVERNED BY THE LAWS OF A  JURISDICTION  OTHER THAN THE STATE OF
NEW YORK.  THIS  AGREEMENT AND THE OTHER LOAN  DOCUMENTS  CONSTITUTE  THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.

     SECTION 7.9 Forum  Selection and Consent to  Jurisdiction.  ANY  LITIGATION
BASED HEREON,  OR ARISING OUT OF, UNDER, OR IN CONNECTION  WITH, THIS AGREEMENT,
OR ANY  COURSE  OF  CONDUCT,  COURSE OF  DEALING,  STATEMENTS  (WHETHER  ORAL OR
WRITTEN) OR ACTIONS OF THE LENDER  PARTIES OR ANY  GRANTOR  SHALL BE BROUGHT AND
MAINTAINED  IN THE FEDERAL AND STATE COURTS  LOCATED IN THE BOROUGH OF MANHATTAN
OF THE STATE OF NEW YORK; PROVIDED,  HOWEVER,  THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST  ANY  COLLATERAL  OR OTHER  PROPERTY  SHALL BE  BROUGHT,  AT THE AGENT'S
OPTION,  IN THE  COURTS  OF ANY  JURISDICTION  WHERE  SUCH  COLLATERAL  OR OTHER
PROPERTY MAY BE FOUND. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY  SUBMITS TO
THE EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION
AS SET FORTH ABOVE AND IRREVOCABLY  AGREES TO BE BOUND BY ANY JUDGMENT  RENDERED
THEREBY IN CONNECTION  WITH SUCH  LITIGATION  SUBJECT TO ANY RIGHTS OF APPEAL OF
ANY  JUDGMENT  RENDERED  BY THE  HIGHEST  COURT IN THE  STATE OF NEW YORK OR THE
UNITED STATES DISTRICT COURT FOR THE STATE OF NEW YORK, AS THE CASE MAY BE. EACH
GRANTOR FURTHER  IRREVOCABLY  CONSENTS TO SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.
EACH GRANTOR  HEREBY  EXPRESSLY AND  IRREVOCABLY  WAIVES,  TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY  OBJECTION  WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE
LAYING OF VENUE OF ANY SUCH  LITIGATION  BROUGHT IN ANY SUCH COURT  REFERRED  TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT

                                       30
<PAGE>

IN AN  INCONVENIENT  FORUM.  TO THE EXTENT THAT ANY GRANTOR HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY  FROM  JURISDICTION  OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,  ATTACHMENT IN
AID OF EXECUTION OR  OTHERWISE)  WITH  RESPECT TO ITSELF OR ITS  PROPERTY,  SUCH
GRANTOR,  TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY  IRREVOCABLY
WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.

     SECTION  7.10 Waiver of Jury  Trial.  THE LENDER  PARTIES AND EACH  GRANTOR
HEREBY KNOWINGLY,  VOLUNTARILY AND INTENTIONALLY  WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT,  OR ANY COURSE OF CONDUCT,  COURSE
OF  DEALING,  STATEMENTS  (WHETHER  VERBAL OR  WRITTEN) OR ACTIONS OF THE LENDER
PARTIES  OR ANY  GRANTOR.  EACH  GRANTOR  ACKNOWLEDGES  AND  AGREES  THAT IT HAS
RECEIVED FULL AND  SUFFICIENT  CONSIDERATION  FOR THIS PROVISION (AND EACH OTHER
PROVISION  OF EACH  OTHER  LOAN  DOCUMENT  TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION  IS A MATERIAL  INDUCEMENT  FOR THE LENDERS  ENTERING  INTO THE CREDIT
AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.  IN NO EVENT SHALL ANY LENDER PARTY
BE LIABLE FOR ANY  CONSEQUENTIAL  DAMAGES  WHICH MAY BE  ALLEGED  IN  CONNECTION
HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY.

                                       31
<PAGE>

IN WITNESS  WHEREOF,  each Grantor has caused this Agreement to be duly executed
and  delivered by its officer  thereunto  duly  authorized  as of the date first
above written.

                                            U.S. AUTOMOTIVE MANUFACTURING, INC.

                                            By: _______________________________
                                               Name:
                                               Title:

                                            QUALITY AUTOMOTIVE COMPANY

                                            By: _______________________________
                                               Name:
                                               Title:

                                            US AUTOMOTIVE FRICTION, INC.

                                            By: _______________________________
                                               Name:
                                               Title:

                                            VIRECO, INC.

                                            By: _______________________________
                                               Name:
                                               Title:

Acknowledged and Accepted:

IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
         as Agent

By: ______________________________
    Name:
    Title:

                                       32
<PAGE>

                                                                SCHEDULE I
                                                                    TO
                                                            SECURITY AGREEMENT

Item A.  Location of Equipment

Grantor           Mailing Address           County                     State
-------           ---------------           ------                     -----

Item B.  Location of Inventory

Grantor           Mailing Address           County                     State
-------           ---------------           ------                     -----

Item C.  Principal Place of Business/Chief Executive Office

Grantor           Mailing Address           County                     State
-------           ---------------           ------                     -----

Item D.  Trade Names

Grantor           Trade Names
-------           -----------

<PAGE>

                                                                SCHEDULE II
                                                                    TO
                                                            SECURITY AGREEMENT

Item A.  Patents

                                 Issued Patents

Grantor  Country  Patent No.        Issue Date       Inventor(s)       Title
-------  -------  ----------        ----------       -----------       -----

                           Pending Patent Applications

Grantor  Country  Serial No.        Filing Date      Inventor(s)       Title
-------  -------  ----------        -----------      -----------       -----

                       Patent Applications in Preparation

                                    Expected
Grantor  Country  Docket No.        Filing Date      Inventor(s)       Title
-------  -------  ----------        -----------      -----------       -----

Item B.  Patent Licenses

Country or                                Effective   Expiration    Subject
Territory   Licensor   Licensee     Date     Date        Date        Matter
---------   --------   --------     ----     ----        ----        ------

<PAGE>

                                                                 SCHEDULE III
                                                                      TO
                                                              SECURITY AGREEMENT

Item A.  Trademarks

                              Registered Trademarks

Grantor   Country         Trademark      Registration No.      Registration Date
-------   -------         ---------      ----------------      -----------------

                         Pending Trademark Applications

Grantor      Country       Trademark            Serial No.         Filing Date
-------      -------       ---------            ----------         -----------

                      Trademark Applications in Preparation

                                               Expected          Products/
Grantor  Country  Trademark     Docket No.     Filing Date       Services
-------  -------  ---------     ----------     -----------       --------

Item B.  Trademark Licenses

 Country or                                           Effective      Expiration
 Territory    Trademark    Licensor      Licensee        Date           Date
 ---------    ---------    --------      --------        ----           ----

<PAGE>

                                                           SCHEDULE IV
                                                               TO
                                                       SECURITY AGREEMENT

Item A.  Copyrights

                              Registered Copyrights

Grantor  Country    Registration No.  Registration Date     Author(s)     Title
-------  -------    ----------------  -----------------     ---------     -----

                  Copyrights Pending Registration Applications

Grantor     Country      Serial No.   Filing Date      Author(s)        Title
-------     -------      ----------   -----------      ---------        -----

               Copyright Registration Applications in Preparation

                                          Expected
Grantor    Country     Docket No.         Filing Date        Author(s)    Title
-------    -------     ----------         -----------        ---------    -----

Item B.  Copyright Licenses

          Country or                           Effective    Expiration   Subject
 Grantor  Territory    Licensor    Licensee       Date         Date       Matter
 -------  ---------    --------    --------       ----         ----       ------

<PAGE>

                                                              SCHEDULE V
                                                                  TO
                                                          SECURITY AGREEMENT

                        Trade Secret or Know-How Licenses

          Country or                           Effective    Expiration   Subject
 Grantor  Territory    Licensor    Licensee       Date         Date       Matter
 -------  ---------    --------    --------       ----         ----       ------

<PAGE>

                                                                SCHEDULE VI
                                                                    TO
                                                            SECURITY AGREEMENT

                               Assigned Agreements

<PAGE>

                                                               SCHEDULE VII
                                                                    TO
                                                            SECURITY AGREEMENT

Vehicles

            Title and Registration
            with Department of
Make        Motor Vehicles           License No.          Registration No.
----        --------------           -----------          ----------------

                                      Owned
                                      -----

                                      Leased
                                      ------

<PAGE>

                                                                EXHIBIT A
                                                                   TO
                                                           SECURITY AGREEMENT

                          FORM OF CONSENT AND AGREEMENT

     The undersigned hereby acknowledges notice of, and consents to the granting
of a security interest in favor of IBJ Whitehall Business Credit Corporation, as
agent (together with any successor(s) thereto in such capacity, the "Agent") for
certain financial institutions,  pursuant to the Security Agreement, dated as of
July 30, 1999 (as amended,  supplemented  or otherwise  modified,  the "Security
Agreement"),  by U.S. Automotive  Manufacturing,  Inc., a Delaware  corporation,
Quality Automotive  Company,  a Delaware  corporation,  US Automotive  Friction,
Inc., a Delaware corporation (collectively,  the "Borrowers"), and certain other
persons (the  Borrowers and such other persons are  collectively  referred to as
the  "Grantors"  and  individually  as a "Grantor"),  and hereby agrees with the
Agent  that,  upon the  receipt  of a written  notice  from the Agent that it is
exercising its rights under the  __________  Agreement,  dated  _______________,
19__ (the "Assigned Agreement"):

          (a) The  undersigned  will make all payments to be made by it under or
     in connection with the Assigned Agreement directly to Agent or as otherwise
     specified by the Agent.  All such payments shall be made by the undersigned
     irrespective  of, and without  deduction  for, any  counterclaim,  defense,
     recoupment or set-off and shall be final, and the undersigned will not seek
     to  recover  from the Agent or any person it is acting on behalf of for any
     reason any such payment once made.

          (b) The Agent shall be  entitled  to  exercise  any and all rights and
     remedies of the Grantor under the Assigned Agreement in accordance with the
     terms of the Security  Agreement,  and the undersigned  shall comply in all
     respects with such exercise.

          (c) The undersigned will not, without the prior written consent of the
     Agent,  cancel or terminate the Assigned  Agreement or consent to or accept
     any  cancellation  or  termination  thereof  (whether  as  a  result  of  a
     bankruptcy  or  insolvency   proceeding  in  respect  of  the  Grantor,  or
     otherwise)[, provided that the Grantor (or the Agent or its representatives
     on behalf of the Grantor)  continues to perform its  obligations  under the
     Assigned Agreement].

     This Consent and Agreement  shall be binding upon the  undersigned  and its
successors  and  assigns,  and shall  inure to the  benefit of the Agent and its
successors,  transferees  and  assigns.  This  Consent  and  Agreement  shall be
governed by and construed in accordance with the laws of the State of New York.

<PAGE>

     IN WITNESS  WHEREOF,  the  undersigned  has duly  executed this Consent and
Agreement as of the date set opposite its name below.

Dated:  _______________, 19__               [NAME OF OBLIGEE]

                                                     By: _______________________
                                                         Name:
                                                         Title:

<PAGE>

                                                                   EXHIBIT B
                                                                      TO
                                                              SECURITY AGREEMENT

                      FORM OF SECURITY AGREEMENT SUPPLEMENT

                                                          _______________, 19___

IBJ Whitehall Business Credit Corporation,
  as Agent
One State Street
New York, NY  10004
Attention:  Adam Moskowitz

Ladies and Gentlemen:

     Reference is made to the Security Agreement,  dated as of July 30, 1999 (as
amended, supplemented or otherwise modified, the "Security Agreement"; the terms
defined  therein  being used  herein as  therein  defined),  by U.S.  Automotive
Manufacturing,  Inc., a Delaware  corporation,  Quality  Automotive  Company,  a
Delaware  corporation and US Automotive  Friction,  Inc., a Delaware corporation
(collectively,  the  "Borrowers")  and each of the other  Persons  listed on the
signature  pages  thereto  (such other  Persons,  together  with the  Additional
Collateral  Grantors,  and the Borrowers,  are  collectively  referred to as the
"Grantors" and individually as a "Grantor"),  in favor of IBJ Whitehall Business
Credit  Corporation,  as agent (together with any  successor(s)  thereto in such
capacity, the "Agent") for each of the Lender Parties.

     The  undersigned  hereby  agrees,  as of the date first above  written,  to
become a Grantor  under the Security  Agreement as if it were an original  party
thereto and agrees that each reference in the Security  Agreement to a "Grantor"
shall also mean and be a reference to the undersigned.

     The undersigned hereby assigns and pledges to the Agent for its benefit and
the ratable  benefit of the Lender  Parties,  and hereby grants to the Agent for
its benefit and the ratable benefit of the Lender Parties, as collateral for the
Secured Obligations, a pledge and assignment of, and a security interest in, all
of the right,  title and interest of the  undersigned in and to its  Collateral,
whether  now  owned or  hereafter  acquired,  subject  to all of the  terms  and
provisions of the Security  Agreement,  as if such Collateral of the undersigned
had  been  subject  to the  Security  Agreement  on  the  date  of its  original
execution.

     The undersigned  has attached hereto  supplements to Schedules I through VI
to the  Security  Agreement,  and the  undersigned  hereby  certifies  that such
supplements have been prepared by the undersigned in  substantially  the form of
the Schedules to the Security  Agreement and are accurate and complete as of the
date first above written.

<PAGE>

     The undersigned hereby makes each  representation and warranty set forth in
Article III of the Security  Agreement as to itself and as to its  Collateral to
the same extent as each other Grantor and hereby agrees to be bound as a Grantor
by all of the terms and provisions of the Security  Agreement to the same extent
as all other Grantors.

     This letter shall be governed by and construed in accordance  with the laws
of the State of New York.

                                   Very truly yours,

                                   [NAME OF ADDITIONAL GRANTOR]

                                   By: ___________________________________
                                       Name:
                                       Title:

                                   Address: ______________________________

Acknowledged and Accepted:

IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
         as Agent

By: ______________________________
    Name:
    Title:

<PAGE>

                                                                       EXHIBIT J

                                    GUARANTY
                                   (Corporate)

     GUARANTY, dated as of July 30, 1999 (as amended, supplemented,  restated or
otherwise  modified  from time to time,  this  "Guaranty"),  made by each of the
Persons (such  capitalized  term, and all other  capitalized terms used in these
recitals  without  definition,  to have the  meanings  assigned to such terms in
Article  I) as are or may from  time to time  become  parties  to this  Guaranty
pursuant  to clause (b) of Section  4.8  (herein  individually  referred to as a
"Guarantor"  and  collective  as the  "Guarantors"),  in favor of IBJ  WHITEHALL
BUSINESS CREDIT  CORPORATION,  as agent (in such capacity,  the "Agent") for the
various financial institutions  (collectively,  the "Lenders") which are, or may
from time to time become, parties to the Credit Agreement (as defined below).

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

     WHEREAS, pursuant to the Credit Agreement,  dated as of the date hereof (as
amended,  supplemented,  restated or otherwise  modified from time to time,  the
"Credit  Agreement"),  among U.S.  Automotive  Manufacturing,  Inc.,  a Delaware
corporation,  Quality Automotive Company, a Delaware corporation,  US Automotive
Friction, Inc., a Delaware corporation (each a "Borrower" and collectively,  the
"Borrowers"),  the  Lenders,  and the  Agent,  the  Lenders  have  extended  the
Revolving Loan Commitment to make Credit Extensions to the Borrowers; and

     WHEREAS, each Guarantor is a Subsidiary of a Borrower;

     WHEREAS,  as a  condition  precedent  to the making of the  initial  Credit
Extension under the Credit Agreement,  each Guarantor is required to execute and
deliver this Guaranty; and

     WHEREAS,  each Guarantor has duly  authorized  the execution,  delivery and
performance  of this Guaranty and will receive  direct and indirect  benefits by
reason of the  availability  of the Revolving Loan  Commitment and the making of
Credit Extensions from time to time to the Borrowers by the Lenders;

     NOW,  THEREFORE,  for good and  valuable  consideration,  the  receipt  and
sufficiency of which is hereby acknowledged,  and in order to induce the Lenders
to make Credit  Extensions  (including  the  initial  Credit  Extension)  to the
Borrowers  pursuant to the Credit  Agreement,  each Guarantor hereby agrees with
the Agent, for its benefit and the benefit of each Lender Party, as follows:

<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

     SECTION 1.1 Certain Terms. The following terms (whether or not underscored)
when used in this Guaranty,  including its preamble and recitals, shall have the
following  meanings (such  definitions to be equally  applicable to the singular
and plural forms thereof):

     "Agent" is defined in the preamble.

     "Borrower" and "Borrowers" are defined in the first recital.

     "Credit Agreement" is defined in the first recital.

     "Guaranteed Obligations" is defined in Section 2.1.

     "Guarantor" and "Guarantors" are defined in the preamble.

     "Guaranty" is defined in the preamble.

     "Lender Party" means, as the context may require, any Lender, any Issuer or
the Agent and each of its respective successors, transferees and assigns.

     "Lenders" is defined in the preamble.

     SECTION 1.2 Credit Agreement  Definitions.  Unless otherwise defined herein
or the context otherwise  requires,  terms used in this Guaranty,  including its
preamble and recitals, have the meanings provided in the Credit Agreement.

                                   ARTICLE II

                                    GUARANTY

     SECTION  2.1  Guaranty.   Each  Guarantor   hereby  jointly  and  severally
unconditionally and irrevocably guarantees the full and prompt payment when due,
whether at stated  maturity,  by acceleration or otherwise  (including,  without
limitation, all amounts which would have become due but for the operation of the
automatic  stay under Section 362(a) of the Federal  Bankruptcy  Code, 11 U.S.C.
362(a)), of the following (collectively, the "Guaranteed Obligations"),

          (a) all  Obligations  of each  Borrower and each other Obligor to each
     Lender Party now or hereafter  existing under the Credit Agreement and each
     other Loan  Document  (including  this  Guaranty),  whether for  principal,
     interest, fees, expenses or otherwise; and

          (b) any and all  costs and  expenses  (including  reasonable  fees and
     expenses of legal  counsel)  incurred by each Lender Party in enforcing any
     of its rights under this Guaranty.

     This Guaranty  constitutes a guaranty of payment when due and not merely of
collection,  and  each  Guarantor  specifically  agrees  that  it  shall  not be
necessary or required that any Lender

<PAGE>

Party  exercise  any right,  assert  any claim or demand or  enforce  any remedy
whatsoever  against the Borrower,  any other Obligor or any Collateral before or
as a condition to the obligations of each Guarantor  hereunder.  Notwithstanding
the foregoing, the obligations of each Guarantor hereunder shall be limited to a
maximum aggregate amount equal to the greatest amount that would not render such
Guarantor's  obligations hereunder subject to avoidance as a fraudulent transfer
or  conveyance  under  Section 548 of Title 11 of the United  States Code or any
provisions of applicable state law.

     SECTION 2.2  Acceleration of Guaranty.  Each Guarantor  agrees that, if any
Event of Default under Section  8.1.9 of the Credit  Agreement  shall occur at a
time when any of the Guaranteed  Obligations are not then due and payable,  each
Guarantor will pay to the Lender  Parties  forthwith the full amount which would
be payable  hereunder by such Guarantor if all such Guaranteed  Obligations were
then due and payable.

     SECTION 2.3 Guaranty  Absolute.  This Guaranty is a  continuing,  absolute,
unconditional  and  irrevocable  guarantee  of payment and shall  remain in full
force and effect until all the  Guaranteed  Obligations  have been  indefeasibly
paid in full in cash and the Revolving Loan  Commitment  shall have  permanently
terminated.  Each Guarantor  guarantees that the Guaranteed  Obligations will be
paid  strictly in accordance  with the terms of the  agreement  under which they
arise,  regardless of any law, regulation or order now or hereafter in effect in
any  jurisdiction  affecting any of such terms or the rights of any Lender Party
with respect thereto.  The liability of each Guarantor under this Guaranty shall
be absolute and unconditional irrespective of:

          (a) any lack of  validity,  legality or  enforceability  of the Credit
     Agreement,  the Notes,  any other Loan  Document or any other  agreement or
     instrument relating to any thereof;

          (b) any change in the time,  manner or place of payment  of, or in any
     other term of, all or any of the Guaranteed Obligations, or any compromise,
     renewal,  extension,  acceleration or release with respect thereto,  or any
     other  amendment or waiver of or any consent to  departure  from the Credit
     Agreement, the Notes or any other Loan Document;

          (c) any addition,  exchange,  release, impairment or non-perfection of
     any  collateral,  or any  release or  amendment  or waiver of or consent to
     departure  from  any  other  guaranty,  for  all or  any of the  Guaranteed
     Obligations;

          (d) the failure of any Lender Party

               (i) to assert  any claim or  demand  or to  enforce  any right or
          remedy  against any  Borrower,  any other  Obligor or any other Person
          (including  any other  guarantor)  under the  provisions of the Credit
          Agreement, any Note, any other Loan Document or otherwise, or

               (ii) to exercise any right or remedy against any other  guarantor
          of, or collateral securing, any of the Guaranteed Obligations;

                                       3
<PAGE>

          (e) any amendment to, rescission, waiver, or other modification of, or
     any consent to departure  from,  any of the terms of the Credit  Agreement,
     any Note or any other Loan Document;

          (f) any  defense,  set-off  or  counterclaim  which may at any time be
     available  to or be asserted by any Borrower or any other  Obligor  against
     any Lender Party;

          (g)  any  reduction,  limitation,  impairment  or  termination  of the
     Guaranteed  Obligations  for any  reason,  including  any claim of  waiver,
     release,  surrender,  alteration or compromise, and shall not be subject to
     (and each Guarantor  hereby waives any right to or claim of) any defense or
     setoff, counterclaim, recoupment or termination whatsoever by reason of the
     invalidity,   illegality,    nongenuineness,    irregularity,   compromise,
     unenforceability  of,  or any  other  event or  occurrence  affecting,  the
     Guaranteed Obligations or otherwise; or

          (h) any other circumstance which might otherwise  constitute a defense
     available to, or a legal or equitable  discharge of, any of the  Borrowers,
     any other Obligor or any Guarantor.

     SECTION 2.4  Reinstatement,  etc. Each Guarantor  agrees that this Guaranty
shall continue to be effective or be  reinstated,  as the case may be, if at any
time any payment (in whole or in part) of any of the  Guaranteed  Obligations is
rescinded  or  must  otherwise  be  restored  by  any  Lender  Party,  upon  the
insolvency,  bankruptcy or reorganization of any Borrower,  any other Obligor or
otherwise, all as though such payment had not been made.

     SECTION 2.5 Waiver.  Each Guarantor  hereby waives  promptness,  diligence,
notice of acceptance  and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that any Lender Party protect,
secure,  perfect or insure any Lien or any property  subject  thereto or exhaust
any right or take any action  against  any  Borrower,  any other  Obligor or any
other Person  (including  any other  guarantor) or any  collateral  securing the
Guaranteed Obligations.

     SECTION 2.6 Waiver of Subrogation. Each Guarantor hereby irrevocably waives
any claim or other  rights  which it may now or  hereafter  acquire  against any
Borrower  or  any  other  Obligor  that  arise  from  the  existence,   payment,
performance or enforcement of such Guarantor's  obligations  under this Guaranty
or any other Loan Document,  including any right of subrogation,  reimbursement,
exoneration or indemnification,  any right to participate in any claim or remedy
of any Lender Party  against any of the  Borrowers  or any other  Obligor or any
collateral which any Lender Party now has or hereafter acquires,  whether or not
such claim,  remedy or right  arises in equity,  or under  contract,  statute or
common law,  including the right to take or receive from any of the Borrowers or
any other  Obligor,  directly  or  indirectly,  in cash or other  property or by
set-off or in any manner,  payment or security on account of such claim or other
rights.  If any  amount  shall  be paid to any  Guarantor  in  violation  of the
preceding  sentence,  such  amount  shall be  deemed  to have  been paid to such
Guarantor  for the benefit of, and held in trust for,  the Lender  Parties,  and
shall  forthwith  be paid to the  Agent on behalf of the  Lender  Parties  to be
credited and applied  against the  Guaranteed  Obligations,  whether  matured or
unmatured.  Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing  arrangements  contemplated by the Credit  Agreement
and that the waiver set forth in this Section is knowingly made in contemplation
of such benefits.

                                       4
<PAGE>

     SECTION 2.7 Successors,  Transferees and Assigns;  Transfers of Notes, etc.
This Guaranty shall:

          (a) be binding upon each Guarantor and its successors, transferees and
     assigns; and

          (b) inure to the  benefit of and be  enforceable  by the Agent for the
     benefit of each Lender Party.

     Without  limiting the generality of clause (b), any Lender Party may assign
or  otherwise  transfer  (in  whole or in part) any Note held by it to any other
Person,  and such other Person shall thereupon become vested with all rights and
benefits in respect thereof granted to such Lender Party under any Loan Document
(including this Guaranty) or otherwise,  subject,  however, to the provisions of
Section 10.11 of the Credit Agreement.

                                   ARTICLE III

                          REPRESENTATIONS AND COVENANTS

     SECTION  3.1   Representations   and  Warranties.   Each  Guarantor  hereby
represents and warrants to the Agent and each other Lender Party as follows:

          (a) such Guarantor is a corporation  duly organized,  validly existing
     and in good standing under the laws of its  jurisdiction of  incorporation,
     and has full corporate  power and authority to enter into this Guaranty and
     the  other  Loan  Documents  to  which it is a party  and to carry  out the
     transactions contemplated hereby and thereby;

          (b) the execution and delivery by such  Guarantor of this Guaranty and
     the other Loan  Documents  to which it is a party and the  consummation  by
     such  Guarantor of the  transactions  contemplated  hereby and thereby have
     been duly authorized by all necessary  corporate  action of such Guarantor.
     This  Guaranty and such other Loan  Documents to which such  Guarantor is a
     party have each been duly executed and delivered by such Guarantor and each
     constitutes  the legal,  valid and  binding  obligation  of such  Guarantor
     enforceable against such Guarantor in accordance with its terms, subject to
     the effect of bankruptcy, insolvency, reorganization, moratorium or similar
     laws at the time in effect affecting the rights of creditors  generally and
     subject to the  effects  of general  principles  of equity  (regardless  of
     whether considered in a proceeding in law or equity); and

          (c) the  execution  and  delivery of this  Guaranty and the other Loan
     Documents to which such Guarantor is a party and the  consummation  by such
     Guarantor of the transactions  contemplated hereby do not (i) contravene or
     result  in  a  default  under  such  Guarantor's  Organic  Documents,  (ii)
     contravene  or  result  in  a  default   under  any  material   contractual
     restriction,  law or  governmental  regulation  or  court  decree  or order
     binding  on  such  Guarantor,   (iii)  require  any  filings,  consents  or
     authorizations  which  have not been duly  obtained  or (iv)  result in the
     creation or imposition of any Lien on such  Guarantor's  properties  (other
     than on behalf of the Agent).

                                       5
<PAGE>

         SECTION 3.2  Covenants.  Each  Guarantor  agrees to comply with all the
covenants  contained in the Credit  Agreement and the other Loan  Documents that
are applicable to it.

                                   ARTICLE IV

                                  MISCELLANEOUS

     SECTION  4.1 Loan  Document.  This  Guaranty  is a Loan  Document  executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed,  administered and applied in accordance with the terms and
provisions thereof, including Article X thereof.

     SECTION 4.2 Binding on Successors,  Transferees and Assigns; Assignment. In
addition to, and not in  limitation  of,  Section 2.7,  this  Guaranty  shall be
binding upon each  Guarantor  and its  successors,  transferees  and assigns and
shall  inure to the  benefit of and be  enforceable  by the Agent and each other
Lender Party and their respective successors, transferees and assigns; provided,
however,  that no Guarantor may assign any of its obligations  hereunder without
the prior written consent of the Agent.

     SECTION 4.3  Amendments,  Etc. No amendment  or waiver of any  provision of
this Guaranty nor consent to any departure by any Guarantor  therefrom  shall in
any event be  effective  unless the same  shall be in writing  and signed by the
Agent and,  in the case of any such  amendment,  each  Guarantor,  and then such
waiver or consent shall be effective  only in the specific  instance and for the
specific purpose for which given.

     SECTION 4.4  Addresses  for Notices.  All notices and other  communications
provided for hereunder shall be in writing or by facsimile  transmission and, if
to any Guarantor,  mailed,  given by facsimile  transmission  or delivered to it
care of USAM at the address provided for in the Credit Agreement,  and if to the
Agent,  mailed,  given by  facsimile  transmission  or  delivered  to it, at the
address  provided for in the Credit  Agreement,  or as to any such party at such
other address as shall be  designated by such party in a written  notice to each
other party complying as to delivery with the terms of this Section. Any notice,
if mailed and properly  addressed  with postage  prepaid,  shall be deemed given
three Business Days after posting;  any notice sent by prepaid overnight express
mail shall be deemed  delivered  on the next  following  Business  Day;  and any
notice,  if transmitted by facsimile  transmission or delivery,  shall be deemed
given upon electronic confirmation of transmission by the sender thereof.

     SECTION 4.5 No Waiver; Remedies. No failure on the part of the Agent or any
other Lender Party to exercise, and no delay in exercising,  any right hereunder
shall operate as a waiver thereof;  nor shall any single or partial  exercise of
any right  hereunder  preclude  any other or  further  exercise  thereof  or the
exercise of any other  right.  The Agent and each other  Lender Party shall have
all  remedies  available at law or equity,  including  without  limitation,  the
remedy of  specific  performance  for any breach of any  provision  hereof.  The
remedies  herein  provided  are  cumulative  and not  exclusive  of any remedies
provided by law or equity.

     SECTION  4.6  Right  to  Set-Off.   Upon  the  occurrence  and  during  the
continuance  of any Default of the nature  referred  to in Section  8.1.9 of the
Credit Agreement or any Event of Default,  the Agent and each other Lender Party
are hereby  authorized at any time and from time

                                       6
<PAGE>

to time, to the fullest extent permitted by law, to setoff and apply any and all
deposits (general or special, time or demand,  provisional or final) at any time
held and other  indebtedness  at any time owing by the Agent or any such  Lender
Party,  as the case may be, to or for the credit or the account of any Guarantor
against  any and all of the  Guaranteed  Obligations  of such  Guarantor  now or
hereafter existing under this Guaranty, irrespective of whether the Agent or any
such Lender Party shall have made any demand under this Guaranty.  The Agent and
each  other  Lender  Party  agrees  promptly  to  notify  USAM and the Agent (if
applicable) after any such set-off and application made by the Agent or any such
Lender Party, provided that the failure to give such notice shall not affect the
validity of such  set-off and  application.  The rights of the Agent or and each
other  Lender  Party,  under this  Section are in  addition to other  rights and
remedies  (including,  without  limitation,  other rights of set-off)  which the
Agent or any of the other Lender Parties may have.

     SECTION  4.7  Severability.   Any  provision  of  this  Guaranty  which  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 of this Guaranty or affecting the validity
or enforceability of such provisions in any other jurisdiction.

     SECTION 4.8 Counterparts; Additional Guarantors.

          (a) This  Guaranty  may be executed  by the parties  hereto in several
     counterparts,  each of which shall be deemed to be an  original  and all of
     which shall constitute but one and the same agreement.

          (b) Upon the  execution  and  delivery  by any Person of the  Guaranty
     Supplement in substantially the form of Exhibit A hereto, such Person shall
     become a Guarantor  hereunder and all  references to a Guarantor  hereunder
     shall include such Person.

     SECTION  4.9  Governing  Law;  Entire  Agreement.  THIS  GUARANTY  SHALL BE
GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK. EACH GUARANTOR  ACKNOWLEDGES  AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT  CONSIDERATION  FOR THIS PROVISION (AND EACH OTHER  PROVISION OF EACH
OTHER  LOAN  DOCUMENT  TO WHICH IT IS A PARTY)  AND  THAT  THIS  PROVISION  IS A
MATERIAL  INDUCEMENT FOR THE LENDERS ENTERING INTO THE CREDIT AGREEMENT AND EACH
SUCH OTHER LOAN  DOCUMENT.  IN NO EVENT  SHALL THE AGENT OR ANY LENDER BE LIABLE
FOR ANY CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

     SECTION 4.10 Waiver of Jury Trial.  EACH  GUARANTOR AND LENDER PARTY HEREBY
KNOWINGLY,  VOLUNTARILY,  AND  INTENTIONALLY  WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY  LITIGATION  BASED  HEREON,  OR ARISING  OUT OF,
UNDER, OR IN CONNECTION  WITH THIS GUARANTY OR ANY COURSE OF CONDUCT,  COURSE OF
DEALING,  STATEMENTS  (WHETHER  ORAL OR WRITTEN),  OR ACTIONS OF THE AGENT,  THE
LENDERS, OR ANY GUARANTOR. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE
THE ENTIRE  UNDERSTANDING

                                       7
<PAGE>

AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE
ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.

     SECTION 4.11 Forum  Selection and Consent to  Jurisdiction.  ANY LITIGATION
BASED HEREON,  OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY OR
ANY COURSE OF CONDUCT,  COURSE OF DEALING,  STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS  OF THE  AGENT,  ANY  LENDER OR ANY  GUARANTOR  SHALL BE BROUGHT  AND
MAINTAINED  IN THE FEDERAL AND STATE  COURTS OF THE STATE OF NEW YORK LOCATED IN
THE BOROUGH OF  MANHATTAN.  EACH  GUARANTOR  HEREBY  EXPRESSLY  AND  IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED  THEREBY IN CONNECTION  WITH SUCH  LITIGATION.  EACH GUARANTOR  FURTHER
IRREVOCABLY  CONSENTS TO SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID,
OR BY PERSONAL  SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.  EACH GUARANTOR
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION  WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF
ANY SUCH  LITIGATION  BROUGHT IN ANY SUCH COURT  REFERRED TO ABOVE AND ANY CLAIM
THAT ANY SUCH  LITIGATION  HAS BEEN  BROUGHT IN AN  INCONVENIENT  FORUM.  TO THE
EXTENT  THAT ANY  GUARANTOR  HAS OR  HEREAFTER  MAY ACQUIRE  ANY  IMMUNITY  FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS  (WHETHER THROUGH SERVICE OR
NOTICE,  ATTACHMENT  PRIOR  TO  JUDGMENT,  ATTACHMENT  IN  AID OF  EXECUTION  OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH GUARANTOR HEREBY, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW,  IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY.

     SECTION  4.12  Waiver  of  Certain  Claims.  TO  THE  EXTENT  PERMITTED  BY
APPLICABLE LAW, NO GUARANTOR SHALL ASSERT,  AND HEREBY WAIVES, ANY CLAIM AGAINST
THE AGENT,  EACH LENDER AND EACH ISSUER ON ANY THEORY OF LIABILITY  FOR SPECIAL,
INDIRECT,  CONSEQUENTIAL  OR  PUNITIVE  DAMAGES  (AS OPPOSED TO DIRECT OR ACTUAL
DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS GUARANTY OR
ANY INSTRUMENT CONTEMPLATED HEREBY.

                                       8
<PAGE>

     IN WITNESS  WHEREOF,  each  Guarantor  has caused this  Guaranty to be duly
executed and delivered by its officer  thereunto duly  authorized as of the date
first above written.

                                    VIRECO, INC.

                                    By: ________________________________
                                        Name:
                                        Title:

Acknowledged and Accepted:

IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
   as Agent

By: ________________________________________
    Name:
    Title:

                                       9
<PAGE>

                                                                     EXHIBIT A
                                                                         to
                                                                      GUARANTY
                                                                    (Corporate)

                           FORM OF GUARANTY SUPPLEMENT

                                                            ______________, 19__

IBJ Whitehall Business Credit Corporation,
  as Agent
One State Street
New York, New York 10004
Attention:  Adam Moskowitz

Ladies and Gentlemen:

     Reference  is made to the Guaranty  (Corporate),  dated as of July 30, 1999
(as amended, supplemented, restated or otherwise modified from time to time, the
"Corporate  Guaranty";  the terms  defined  therein being used herein as therein
defined), by each of the Persons listed on the signature pages thereto (together
with such Persons executing an agreement in substantially the form hereof,  each
as "Guarantor" and  collectively  the  "Guarantors"),  in favor of IBJ Whitehall
Business Credit Corporation, as agent (together with any successor(s) thereto in
such capacity, the "Agent") for each of the Lenders.

     The  undersigned  hereby  agrees,  as of the date first above  written,  to
become a Guarantor under the Corporate  Guaranty as if it were an original party
thereto and agrees that each reference in the Corporate  Guaranty to a Guarantor
shall also mean and include the undersigned.

     The  undersigned  hereby  jointly and severally  (together  with each other
Guarantor)  unconditionally  and  irrevocably  guarantees  the full  and  prompt
payment when due, whether at stated maturity, by acceleration or otherwise,  all
the Obligations, subject to all the terms of the Corporate Guaranty.

     The undersigned hereby makes each  representation and warranty set forth in
Article  III of the  Corporate  Guaranty as to itself to the same extent as each
other  Guarantor,  and hereby  agrees to be bound as a  Guarantor  by all of the
terms and  provisions  of the  Corporate  Guaranty to the same extent as all the
other Guarantors.

<PAGE>

     This letter shall be governed by and construed in accordance  with the laws
of the State of New York.

                                                Very truly yours,

                                                [NAME OF ADDITIONAL GUARANTOR]

                                                By: ____________________________
                                                    Name:
                                                    Title:

Acknowledged and Accepted:

IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
  as Agent

By: _____________________________________
   Name:
   Title:

                                       2

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