Document:

<PAGE>   1
                                                                     EXHIBIT 4.1

                                                                  EXECUTION COPY

                                 US$125,000,000

                      AMENDED AND RESTATED CREDIT AGREEMENT

                            Dated as of April 6, 2000

                                      Among

                       SOVEREIGN SPECIALTY CHEMICALS, INC.

                              as Domestic Borrower

                                       and

               THE SUBSIDIARIES OF THE DOMESTIC BORROWER NAMED AS
                            OFFSHORE BORROWERS HEREIN

                              as Offshore Borrowers

                                       and

                    THE INITIAL LENDERS, INITIAL ISSUING BANK
                       AND SWING LINE LENDERS NAMED HEREIN

         as Initial Lenders, Initial Issuing Bank and Swing Line Lenders

                                       and

               MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

    as Joint Lead Arranger, Joint Book-Running Manager and Syndication Agent

                                       and

                           J.P. MORGAN SECURITIES INC.

   as Joint Lead Arranger, Joint Book-Running Manager and Documentation Agent

                                       and

                            THE CHASE MANHATTAN BANK

               as Administrative Agent and Offshore Currency Agent

                                Credit Agreement

<PAGE>   2

                          T A B L E  O F  C O N T E N T S

<TABLE>
<CAPTION>
SECTION                                                                                                        PAGE

<S>                                                                                                            <C>
                                               ARTICLE I DEFINITIONS, ACCOUNTING TERMS
       1.01.  Certain Defined Terms.............................................................................3
       1.02.  Computation of Time Periods; Other Definitional Provisions........................................3
       1.03.  Accounting Terms..................................................................................3

                                ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT
       2.01.  Advances and Letters of Credit....................................................................4
       2.02.  Making the Advances...............................................................................7
       2.03.  Issuance of and Drawings and Reimbursement Under Letters of Credit...............................10
       2.04.  Repayment of Advances............................................................................12
       2.05.  Termination, Reduction, Conversion and Restoration of the Commitments............................15
       2.06.  Prepayments......................................................................................18
       2.07.  Interest.........................................................................................23
       2.08.  Fees.............................................................................................24
       2.09.  Conversion of Advances...........................................................................25
       2.10.  Increased Costs, Etc.............................................................................26
       2.11.  Payments and Computations........................................................................28
       2.12.  Taxes............................................................................................31
       2.13.  Sharing of Payments, Etc.........................................................................35
       2.14.  Use of Proceeds..................................................................................35
       2.15.  Defaulting Lenders...............................................................................35
       2.16.  Evidence of Debt.................................................................................38

                                     ARTICLE III CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF
                                                               CREDIT
       3.01.  Conditions Precedent to Initial Extension of Credit to Domestic Borrower.........................39
       3.02.  Conditions Precedent to Swing Line Advances to any Offshore Borrower.............................41
       3.03.  Conditions Precedent to each Offshore Acquisition Advances.......................................43
       3.04.  Conditions Precedent to Each Borrowing and Issuance and Renewal..................................45
       3.05.  Determinations Under Section 3.01, 3.02 or 3.03..................................................46

                                              ARTICLE IV REPRESENTATIONS AND WARRANTIES
       4.01.  Representations and Warranties of the Domestic Borrower..........................................47

                                             ARTICLE V COVENANTS OF THE DOMESTIC BORROWER
       5.01.  Affirmative Covenants............................................................................56
       5.02.  Negative Covenants...............................................................................63

</TABLE>

                                Credit Agreement

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                                       ii

<TABLE>
<S>                                                                                                            <C>
       5.03.  Reporting Requirements...........................................................................76
       5.04.  Financial Covenants..............................................................................80

                                                     ARTICLE VI EVENTS OF DEFAULT
       6.01.  Events of Default................................................................................82
       6.02.  Actions in Respect of the Letters of Credit upon Default.........................................86

                                                        ARTICLE VII THE AGENTS
       7.01.  Authorization and Action.........................................................................86
       7.02.  Agents' Reliance, Etc............................................................................87
       7.03.  Chase, J.P. Morgan, ML&Co. and Affiliates........................................................87
       7.04.  Lender Party Credit Decision.....................................................................88
       7.05.  Indemnification..................................................................................88
       7.06.  Successor Agents.................................................................................89

                                                      ARTICLE VIII MISCELLANEOUS
       8.01.  Amendments, Etc..................................................................................90
       8.02.  Notices, Etc.....................................................................................93
       8.03.  No Waiver; Remedies..............................................................................94
       8.04.  Costs and Expenses...............................................................................94
       8.05.  Right of Set-off.................................................................................96
       8.06.  Binding Effect...................................................................................96
       8.07.  Assignments and Participations...................................................................96
       8.08.  Execution in Counterparts.......................................................................100
       8.09.  No Liability of the Issuing Bank................................................................100
       8.10.  Confidentiality.................................................................................101
       8.11.  Release of Collateral; Release of Subsidiary Guarantor..........................................101
       8.12.  Jurisdiction, Etc...............................................................................101
       8.13.  Judgment........................................................................................102
       8.14.  Substitution of Currency........................................................................102
       8.15.  Governing Law...................................................................................103
       8.16.  Waiver of Jury Trial............................................................................103
</TABLE>

                                Credit Agreement

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                                       iii

SECTION                                                                     PAGE

SCHEDULES

Schedule I        -    Commitments and Applicable Lending Offices
Schedule II       -    Certain Defined Terms
Schedule III      -    Other Approved Countries
Schedule 4.01(a)  -    Holders of Domestic Borrower Equity Interests
Schedule 4.01(b)  -    Subsidiaries
Schedule 4.01(c)  -    Consents
Schedule 4.01(d)  -    Authorizations, Approvals, Actions, Notices and Filings
Schedule 4.01(f)  -    Disclosed Litigation
Schedule 4.01(p)  -    Plans, Multiemployer Plans and Welfare Plans
Schedule 4.01(q)  -    Environmental Compliance
Schedule 4.01(r)  -    Open Years; Unpaid Tax Liabilities; Adjusted Tax Bases
Schedule 4.01(t)  -    Existing Debt
Schedule 4.01(u)  -    Surviving Debt
Schedule 4.01(v)  -    Liens
Schedule 4.01(w)  -    Owned Real Property
Schedule 4.01(x)  -    Leased Real Property
Schedule 4.01(y)  -    Investments
Schedule 4.01(z)  -    Intellectual Property
Schedule 4.01(aa) -    Material Contracts

EXHIBITS

Exhibit A-1       -    Form of Amended and Restated Revolving Credit Note
Exhibit A-2       -    Form of Amended and Restated Term A Note
Exhibit A-3       -    Form of Offshore Acquisition Note
Exhibit A-4       -    Form of Offshore Swing Line Note
Exhibit B-1       -    Form of Notice of Borrowing
Exhibit B-2       -    Form of Notice of Swing Line Borrowing
Exhibit C         -    Form of Assignment and Acceptance
Exhibit D         -    Form of Offshore Swing Line Lender Joinder Agreement
Exhibit E         -    Form of Credit Agreement Supplement
Exhibit F         -    Form of Amended and Restated Security Agreement
Exhibit G         -    Form of Amended and Restated Domestic Subsidiary Guaranty
Exhibit H         -    Form of Offshore Guaranty

                            Credit Agreement

<PAGE>   5

                                       iv

Exhibit I         -    Form of Opinion of Counsel to the Loan Parties
Exhibit J         -    Form of Certificate of Non-Bank Status
Exhibit K         -    Form of Intercompany Note
Exhibit L         -    Form of Collateral Sharing Agreement

                                Credit Agreement

<PAGE>   6

                      AMENDED AND RESTATED CREDIT AGREEMENT

                  AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 6,
2000, among SOVEREIGN SPECIALTY CHEMICALS, INC., a Delaware corporation (the
"DOMESTIC BORROWER"), the Offshore Borrowers (as hereinafter defined), the
banks, financial institutions and other institutional lenders listed on the
signature pages hereof as the Initial Lenders (the "INITIAL LENDERS"), the Swing
Line Lenders (as hereinafter defined), MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED ("ML&CO.") and J.P. MORGAN SECURITIES INC. ("J.P. MORGAN"), each as
a joint lead arranger and a joint book-running manager (each a "JOINT LEAD
ARRANGER" and a "JOINT BOOK MANAGER", as the case may be) for the Facilities (as
hereinafter defined), ML&Co., as syndication agent for the Facilities (the
"SYNDICATION AGENT"), J.P. Morgan, as documentation agent for the Facilities
(the "DOCUMENTATION AGENT"), and THE CHASE MANHATTAN BANK ("CHASE"), as
administrative agent (together with any successor administrative agent appointed
pursuant to Article VII, the "ADMINISTRATIVE AGENT") for the Lender Parties (as
hereinafter defined), as offshore currency agent (the "OFFSHORE CURRENCY AGENT")
for the Revolving Credit Lenders (as hereinafter defined), as the Initial
Issuing Bank (the "INITIAL ISSUING BANK" and, together with the Initial Lenders,
the "INITIAL LENDER PARTIES") and as the Domestic Swing Line Lender (as
hereinafter defined).

                             PRELIMINARY STATEMENTS:

                  (1) SSCI Investors LLC, a Delaware limited liability company
("SSCI INVESTORS"), was organized by AEA Investors Inc., a Delaware corporation
(the "SPONSOR"), to acquire control of the Domestic Borrower.

                  (2) Pursuant to that certain Stock Purchase Agreement dated as
of November 24, 1999 (as such agreement may be amended from time to time in
accordance with the provisions thereof and of this Agreement, the "ACQUISITION
AGREEMENT"), between SSCI Investors and Sovereign Specialty Chemicals, L.P., a
Delaware limited partnership (the "SELLER"), SSCI Investors purchased
seventy-five percent of the outstanding capital stock of the Domestic Borrower
from the Seller (the "ACQUISITION") on December 30, 1999 (the "INITIAL CLOSING
DATE").

                  (3) Pursuant to that certain Indenture dated as of August 1,
1997 (as such indenture may be amended from time to time in accordance with the
provisions thereof and of this Agreement, the "EXISTING SENIOR SUBORDINATED NOTE
INDENTURE"), among the Domestic Borrower, the Domestic Subsidiary Guarantors (as
hereinafter defined) and The Bank of New York, a New York banking corporation,
as trustee (the "EXISTING SENIOR SUBORDINATED NOTE TRUSTEE"), and that certain
Change of Control Notice and Offer to Purchase dated January 18, 2000, and
delivered to the Existing Senior Subordinated Note Trustee, the Domestic
Borrower made an offer to purchase its 9 1/2% Existing Senior Subordinated Notes
due 2007 issued under

                                Credit Agreement

<PAGE>   7

                                       2

the Existing Senior Subordinated Note Indenture (the "EXISTING SENIOR
SUBORDINATED NOTES"), in accordance with the Existing Senior Subordinated Note
Indenture (the "OFFER TO PURCHASE").

                  (4) Pursuant to that certain Credit Agreement dated as of
December 29, 1999, as amended by that certain letter amendment dated as of
February 16, 2000, and that certain amendment and waiver letter dated as of
February 29, 2000 (as so amended, the "EXISTING CREDIT AGREEMENT"), each among
the Domestic Borrower, the Lender Parties and the Agents (as hereinafter
defined), (a) on the Initial Closing Date the Lender Parties made advances to
the Domestic Borrower to pay fees and expenses incurred in connection with the
Acquisition and to refinance certain Existing Debt (as hereinafter defined) of
the Domestic Borrower and its Subsidiaries, (b) the Lender Parties agreed to
lend to the Domestic Borrower funds to finance the Domestic Borrower's purchase
of the Existing Senior Subordinated Notes tendered pursuant to the Offer to
Purchase, (c) the Lender Parties agreed to lend the Domestic Borrower funds to
finance Domestic Permitted Acquisitions (as hereinafter defined), and (d) the
Lender Parties agreed to lend to the Domestic Borrower and issue Letters of
Credit for the account of the Domestic Borrower to provide working capital for
the Domestic Borrower and its Subsidiaries.

                  (5) On March 7, 2000 (the "NOTE PURCHASE DATE"), the Domestic
Borrower borrowed additional advances under the Existing Credit Agreement and
used the proceeds of such advances to purchase all the outstanding Existing
Senior Subordinated Notes.

                  (6) The Domestic Borrower issued US$150,000,000 of its Senior
Subordinated Notes due 2010 (the "SENIOR SUBORDINATED NOTES") pursuant to an
Indenture dated as of March 29, 2000, with respect to such Senior Subordinated
Notes (as such Indenture may be amended from time to time in accordance with the
provisions thereof and of this Agreement, the "SENIOR SUBORDINATED NOTE
INDENTURE"), among the Domestic Borrower, the Domestic Subsidiary Guarantors and
the trustee thereunder (the "SENIOR SUBORDINATED NOTE TRUSTEE"). The net
proceeds from such issuance of Senior Subordinated Notes was applied by the
Domestic Borrower to prepay all Term Advances outstanding under the Existing
Credit Agreement. Upon such prepayment (a) all the Term B Commitments under the
Existing Credit Agreement were terminated and (b) all the Term A Commitments (as
hereinafter defined) thereunder were restored to their full US$75,000,000 level,
in the aggregate.

                  (7) The Domestic Borrower has requested that the Lender
Parties amend and restate the Existing Credit Agreement in order to also make
Offshore Acquisition Advances (as hereinafter defined) and Offshore Swing Line
Advances (as hereinafter defined) available to the Offshore Borrowers. The
Lender Parties have indicated their willingness to amend and restate the
Existing Credit Agreement on the terms and conditions of this Agreement.

                  NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto hereby
agree to amend and restate

                                Credit Agreement

<PAGE>   8

                                       3

the Existing Credit Agreement in its entirety on the Effective Date (as
hereinafter defined), as follows:

                                    ARTICLE I

                          DEFINITIONS, ACCOUNTING TERMS
                            AND CURRENCY CONVERSIONS

                  SECTION 1.01. Certain Defined Terms. Capitalized terms used
and not otherwise defined herein shall have the respective meanings specified
therefor in Schedule II to this Agreement.

                  SECTION 1.02. Computation of Time Periods; Other Definitional
Provisions. In this Agreement and the other Loan Documents in the computation of
periods of time from a specified date to a later specified date, the word "FROM"
means "from and including" and the words "TO" and "UNTIL" each mean "to but
excluding". References in the Loan Documents to any agreement or contract "AS
AMENDED" shall mean and be a reference to such agreement or contract as amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with its terms.

                  SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(g) ("GAAP").

                  SECTION 1.04. Currency Conversions. (a) For all purposes of
any Swing Line Advance denominated in any Offshore Currency (including pursuant
to Section 8.13), the equivalent in such Offshore Currency of an amount in US
Dollars, and the equivalent in US Dollars of an amount in such Offshore
Currency, shall be determined by the Offshore Currency Agent by reference to the
Equivalent in such Offshore Currency or US Dollars as the case may be. On the
first Business Day of each calendar month (or at such greater frequency as the
Offshore Currency Agent may, in its discretion, elect), the Offshore Currency
Agent shall calculate the US Dollar Equivalent of each Offshore Swing Line
Advance which is outstanding on such date and the corresponding undrawn Offshore
Currency availability under each Applicable Swing Line Sub-Limit and shall
promptly deliver notice of such calculations to the Swing Line Lenders, the
Domestic Borrower and each Revolving Credit Lender. Upon receipt, the Domestic
Borrower shall promptly make such calculations available to each Offshore
Borrower.

                                Credit Agreement

<PAGE>   9

                                       4

                  (b) For all other purposes pursuant to this Agreement (but not
for purposes of the preparation of any financial statements delivered pursuant
hereto or as provided under Section 1.04(a)), (i) the equivalent in Canadian
Dollars of an amount in US Dollars, and the equivalent in US Dollars of an
amount in Canadian Dollars shall also be determined by reference to the
Equivalent in Canadian Dollars or US Dollars, as the case may be, and (ii) the
equivalent in any other Offshore Currency or any other currency of an amount in
US Dollars, and the equivalent in US Dollars of an amount in any other Offshore
Currency or any other currency, shall be determined on any date of determination
by reference to the spot rate of exchange for such date in London that appears
on the display page applicable to such currency on the Telerate System
Incorporated Service (or such other page as may replace such page on such
service for the purpose of displaying such spot rate of exchange in London) or
by reference to another similar rate publishing service designated in writing by
the Domestic Borrower and agreed to by the Administrative Agent (the "SPOT
RATE"). For purposes of determining compliance on any date with any restriction
expressed as a maximum (or a minimum) US Dollar amount in this Agreement (other
than to the extent relating to any Borrowing under this Agreement), the US
Dollar amount of any transactions denominated in another currency which occurred
prior to such date shall be calculated based on such Spot Rate determined as of
such date of determination; provided, however, that if any such maximum US
Dollar amount shall be exceeded (or any such minimum US Dollar amount shall not
be exceeded), then such restriction shall nonetheless be deemed not to be
violated if the US Dollar amount of each such transaction calculated based on
the relevant Spot Rate as in effect on the date of such transaction does not
exceed such maximum amount (or does exceed such minimum amount).

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES
                            AND THE LETTERS OF CREDIT

                  SECTION 2.01.  Advances and Letters of Credit.

                  (a)      Term A Advances; Offshore Acquisition Advances.

                           (i) Each Term A Lender severally agrees, on the terms
         and conditions hereinafter set forth, to make advances (each a "TERM A
         ADVANCE") to the Domestic Borrower in US Dollars on any Business Day
         during the period from the Effective Date until the date that occurs
         eighteen (18) month after the Initial Closing Date, in an amount not to
         exceed such Lender's Term A Commitment at such time. Each Term A
         Borrowing shall consist of Term A Advances made simultaneously by the
         Term A Lenders ratably according to their Term A Commitments. Except as
         otherwise provided in Section 2.05

                                Credit Agreement

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                                        5

         (b)(i)(A)(3), amounts borrowed under this Section 2.01(a)(i) and repaid
         or prepaid may not be reborrowed.

                           (ii) Each Offshore Acquisition Lender severally
         agrees, on the terms and conditions hereinafter set forth, to make
         advances (each a "OFFSHORE ACQUISITION ADVANCE") to any Offshore
         Borrower in US Dollars on any Business Day during the period from the
         Effective Date until the date that occurs eighteen (18) month after the
         Initial Closing Date, in an amount not to exceed such Lender's Offshore
         Acquisition Commitment at such time. Each Offshore Acquisition
         Borrowing shall consist of Offshore Acquisition Advances made
         simultaneously by the Offshore Acquisition Lenders ratably according to
         their Offshore Acquisition Commitments. Amounts borrowed under this
         Section 2.01(a)(ii) and repaid or prepaid may not be reborrowed.

                  (b) Term B Advances. Each Lender's Term B Commitments
terminated upon the repayment of the Term B Advances pursuant to the Existing
Credit Agreement. No further Term B Advances may be reborrowed under this
Agreement.

                  (c) Revolving Credit Advances. Each Revolving Credit Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
advances (each a "REVOLVING CREDIT ADVANCE") to the Domestic Borrower in US
Dollars from time to time on any Business Day during the period from the
Effective Date until the Termination Date in an amount for each such Advance not
to exceed such Lender's Unused Revolving Credit Commitment at such time. Each
Revolving Credit Borrowing shall be in an aggregate amount of $1,000,000 or an
integral multiple of $1,000,000 in excess thereof (other than a Borrowing the
proceeds of which shall be used solely to repay or prepay in full outstanding
Swing Line Advances or outstanding Letter of Credit Advances) and shall consist
of Revolving Credit Advances made simultaneously by the Revolving Credit Lenders
ratably according to their Revolving Credit Commitments. Within the limits of
each Revolving Credit Lender's Unused Revolving Credit Commitment in effect from
time to time, the Domestic Borrower may borrow under this Section 2.01(c),
prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(c).

                  (d) Swing Line Advances. The Domestic Swing Line Lender agrees
to make, or to cause an Appropriate Swing Line Lender to make, on the terms and
conditions hereinafter set forth, Swing Line Advances in US Dollars or any
Offshore Currency to the Domestic Borrower or any Offshore Borrower from time to
time on any Business Day during the period from the Effective Date until the
Termination Date (i) in an aggregate amount (calculated on any date of
determination for purposes of each Offshore Swing Line Advance, as the US Dollar
Equivalent of such Offshore Swing Line Advance on such date) not to exceed at
any time outstanding US$20,000,000 (the "SWING LINE SUB-FACILITY"), (ii) in an
amount for each such Swing Line Borrowing (calculated on any date of
determination for purposes of each Swing Line Borrowing in an Offshore Currency,
as the US Dollar Equivalent of such Swing Line Borrowing

                                Credit Agreement

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                                       6

on such date) not to exceed the aggregate of the Unused Revolving Credit
Commitments of the Revolving Credit Lenders at such time and (iii) in an
aggregate amount for all Swing Line Advances in each Applicable Currency, not to
exceed the Applicable Swing Line Sub-Limit for such Applicable Currency. No
Swing Line Advance shall be used for the purpose of funding the payment of
principal of any other Swing Line Advance. Each Swing Line Borrowing in US
Dollars shall be in an amount of $1,000,000 or an integral multiple of $500,000
in excess thereof and shall be made as a Base Rate Advance. Each Swing Line
Borrowing in an Offshore Currency shall be in an amount of the US Dollar
Equivalent of $250,000 or an integral multiple of $100,000 in excess thereof and
shall be made as a Base Rate Advance. Within the limits of the Swing Line
Sub-Facility and within the limits referred to in clauses (ii) and (iii) above,
so long as the Domestic Swing Line Lender, in its sole discretion, elects to
make Swing Line Advances, or to cause another Appropriate Swing Line Lender to
make Swing Line Advances, the Domestic Borrower or any Offshore Borrower may
borrow under this Section 2.01(d), repay pursuant to Section 2.04(d) or prepay
pursuant to Section 2.06(a) and reborrow under this Section 2.01(d).

                  (e) Letters of Credit. The Domestic Borrower, the Issuing Bank
and each of the Revolving Credit Lenders hereby agree that each of the Existing
Letters of Credit shall, on and after the Effective Date, continue as and be
deemed for all purposes of this Agreement to be a Letter of Credit issued and
outstanding under the terms of this Agreement. The Issuing Bank agrees, on the
terms and conditions hereinafter set forth, to issue (or cause its Affiliate
that is a commercial bank to issue on its behalf) letters of credit (the
"LETTERS OF CREDIT") denominated in US Dollars for the account of the Domestic
Borrower from time to time on any Business Day during the period from the date
hereof until 60 days before the Termination Date in an aggregate Available
Amount (i) for all Letters of Credit not to exceed at any time the lesser of (x)
the Letter of Credit Sub-Facility at such time and (y) the Issuing Bank's Letter
of Credit Commitment at such time and (ii) for each such Letter of Credit not to
exceed an amount equal to the Unused Revolving Credit Commitments of the
Revolving Credit Lenders at such time. No Letter of Credit shall have an
expiration date (including all rights of the Domestic Borrower or the
beneficiary to require renewal) later than the earlier of 20 days before the
Termination Date and (A) in the case of a Standby Letter of Credit, one year
after the date of issuance thereof, but may by its terms be renewable annually
upon notice (a "NOTICE OF RENEWAL") given to the Issuing Bank and the
Administrative Agent on or prior to any date for notice of renewal set forth in
such Letter of Credit but in any event at least three Business Days prior to the
date of the proposed renewal of such Standby Letter of Credit and upon
fulfillment of the applicable conditions set forth in Article III unless the
Issuing Bank has notified the Domestic Borrower (with a copy to the
Administrative Agent) on or prior to the date for notice of termination set
forth in such Letter of Credit but in any event at least 10 Business Days prior
to the date of automatic renewal of its election not to renew such Standby
Letter of Credit (a "NOTICE OF TERMINATION") and (B) in the case of a Trade
Letter of Credit, 180 days after the date of issuance thereof; provided that the
terms of each Standby Letter of Credit that is automatically renewable annually
shall (x) require

                                Credit Agreement

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                                       7

the Issuing Bank to give the beneficiary named in such Standby Letter of Credit
notice of any Notice of Termination, (y) permit such beneficiary, upon receipt
of such notice, to draw under such Standby Letter of Credit prior to the date
such Standby Letter of Credit otherwise would have been automatically renewed
and (z) not permit the expiration date (after giving effect to any renewal) of
such Standby Letter of Credit in any event to be extended to a date later than
20 days before the Termination Date. If either a Notice of Renewal is not given
by the Domestic Borrower or a Notice of Termination is given by the Issuing Bank
pursuant to the immediately preceding sentence, such Standby Letter of Credit
shall expire on the date on which it otherwise would have been automatically
renewed; provided, however, that even in the absence of receipt of a Notice of
Renewal the Issuing Bank may in its discretion, unless instructed to the
contrary by the Administrative Agent or the Domestic Borrower, deem that a
Notice of Renewal had been timely delivered and in such case, a Notice of
Renewal shall be deemed to have been so delivered for all purposes under this
Agreement. Each Standby Letter of Credit shall contain a provision authorizing
the Issuing Bank to deliver to the beneficiary of such Letter of Credit, upon
the occurrence and during the continuance of an Event of Default, a notice (a
"DEFAULT TERMINATION NOTICE") terminating such Letter of Credit and giving such
beneficiary 15 days to draw such Letter of Credit. Within the limits of the
Letter of Credit Sub-Facility, and subject to the limits referred to above, the
Domestic Borrower may request the issuance of Letters of Credit under this
Section 2.01(e), repay any Letter of Credit Advances resulting from drawings
thereunder pursuant to Section 2.03(c) and request the issuance of additional
Letters of Credit under this Section 2.01(e).

                  SECTION 2.02. Making the Advances. (a) Except as otherwise
provided in Section 2.02(b) or 2.03, each Borrowing shall be made on notice,
given not later than 11:00 A.M. (New York City time) on the third Business Day
prior to the date of the proposed Borrowing in the case of a Borrowing
consisting of Eurodollar Rate Advances, or the first Business Day prior to the
date of the proposed Borrowing in the case of a Borrowing consisting of Base
Rate Advances, by the Domestic Borrower or, in the case of an Offshore
Acquisition Borrowing, the applicable Offshore Borrower, to the Administrative
Agent, which shall give to each Appropriate Lender prompt notice thereof by
telex or telecopier. Each such notice of a Borrowing (a "NOTICE OF BORROWING")
shall be by telephone, confirmed immediately in writing, or telex or telecopier,
in substantially the form of Exhibit B-1 hereto, specifying therein the
requested (i) date of such Borrowing, (ii) Facility under which such Borrowing
is to be made, (iii) Type of Advances comprising such Borrowing, (iv) aggregate
amount of such Borrowing, (v) in the case of a Borrowing consisting of
Eurodollar Rate Advances, initial Interest Period for each such Advance, (vi) if
any portion of such Borrowing is proposed to be used to pay the purchase price
of any Permitted Acquisition, the portion of such Borrowing, and the cash and
Cash Equivalent of the Domestic Borrower and its Subsidiaries on the date of
such Notice of Borrowing, proposed to be used to pay such purchase price of such
Permitted Acquisition and (vii) in the case of a requested Offshore Acquisition
Borrowing, the Applicable Borrower's Account to which the proceeds of such
Borrowing should be sent. Each Appropriate Lender shall, before 11:00 A.M.

                                Credit Agreement

<PAGE>   13

                                       8

(New York City time) on the date of such Borrowing, make available for the
account of its Applicable Lending Office to the Administrative Agent at the
Administrative Agent's Account, in same day funds, such Lender's ratable portion
of such Borrowing in accordance with the respective Commitments under the
applicable Facility of such Lender and the other Appropriate Lenders. After the
Administrative Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent will
make such funds available to the Domestic Borrower by crediting the Domestic
Borrower's Account or, in the case of an Offshore Acquisition Borrowing, the
Administrative Agent will make such funds available to the Applicable Borrower's
Account; provided, however, that, in the case of any Revolving Credit Borrowing,
the Administrative Agent shall first make a portion of such funds equal to the
aggregate principal amount of any Swing Line Advances and Letter of Credit
Advances made by the Swing Line Lenders or the Issuing Bank, as the case may be,
and by any other Revolving Credit Lender and outstanding on the date of such
Revolving Credit Borrowing, plus interest accrued and unpaid thereon to and as
of such date, available to the Swing Line Bank or the Issuing Bank, as the case
may be, and such other Revolving Credit Lenders for repayment of such Swing Line
Advances and Letter of Credit Advances.

                  (b) (i) Each Swing Line Borrowing shall be made on notice,
given not later than 11:00 A.M. (Local Time) on the date of the proposed Swing
Line Borrowing, by the Domestic Borrower or the Offshore Borrower requesting
such Swing Line Borrowing to the Appropriate Swing Line Lender and the Offshore
Currency Agent. Each such notice of a Swing Line Borrowing (a "NOTICE OF SWING
LINE BORROWING") shall be by telephone, confirmed immediately in writing, or
telex or telecopier, in substantially the form of Exhibit B-2 hereto, specifying
therein the requested (A) date of such Borrowing, (B) amount of such Borrowing,
(C) maturity of such Borrowing (in the case of any Swing Line Borrowing in US
Dollars, which maturity shall be no later than the seventh day after the
requested date of such Borrowing), (D) the Applicable Borrower's Account to
which the proceeds of such Borrowing should be credited and (E) the Applicable
Currency of such Borrowing. The Domestic Swing Line Lender will make, or will
cause another Applicable Swing Line Lender to make, the amount thereof available
to the Offshore Currency Agent, in same day funds. After the Offshore Currency
Agent's receipt of such funds and upon fulfillment of the applicable conditions
set forth in Article III, the Offshore Currency Agent will make such funds
available to the Domestic Borrower or the Offshore Borrower requesting such
Borrowing by crediting the Applicable Borrower's Account.

                  (ii) Upon written demand by any Swing Line Lender, with a copy
of such demand to the Administrative Agent and the Offshore Currency Agent, each
Revolving Credit Lender shall purchase from such Swing Line Lender, and such
Swing Line Lender shall sell and assign to each Revolving Credit Lender, such
Revolving Credit Lender's Pro Rata Share of each outstanding Swing Line Advance
made by such Swing Line Lender as of the date of such demand, by making
available for the account of its Applicable Lending Office to the Administrative
Agent for the account of such Swing Line Lender, by deposit to the

                                Credit Agreement

<PAGE>   14
                                       9

Administrative Agent's Account, in same day funds, an amount equal to, if such
Swing Line Advance is in US Dollars, the portion of the outstanding principal
amount of such Swing Line Advance to be purchased by such Revolving Credit
Lender, or if such Swing Line Advance is in an Offshore Currency, the US Dollar
Equivalent of the portion of the outstanding principal amount of such Swing Line
Advance to be so purchased; provided, however, that the Swing Line Lenders shall
not deliver any such demand hereunder with respect to any Offshore Swing Line
Advance unless a Default or an Event of Default shall have occurred and be
continuing. The Domestic Borrower and each Offshore Borrower hereby agree to
each such sale and assignment. Each Revolving Credit Lender agrees to purchase
its Pro Rata Share of any outstanding Swing Line Advance on (A) the Business Day
on which demand therefor is made by the Appropriate Swing Line Lender, provided
that notice of such demand is given not later than 11:00 A.M. (New York City
time) on such Business Day or (B) the first Business Day next succeeding such
demand if notice of such demand is given after such time. Upon any such
assignment by a Swing Line Lender to any Revolving Credit Lender of a portion of
a Swing Line Advance, such Swing Line Lender represents and warrants to such
Revolving Credit Lender that such Swing Line Lender is the legal and beneficial
owner of such interest being assigned by it, but makes no other representation
or warranty and assumes no responsibility with respect to such Swing Line
Advance, the Loan Documents or any Loan Party. If and to the extent that any
Revolving Credit Lender shall not have so made an amount equal to its Pro Rata
Share of such Swing Line Advance (or the US Dollar Equivalent of its Pro Rata
Share of any such Swing Line Advance denominated in an Offshore Currency)
available to the Administrative Agent, such Revolving Credit Lender agrees to
pay to the Administrative Agent forthwith on demand such amount together with
interest thereon, for each day from the date of demand by the Appropriate Swing
Line Lender until the date such amount is paid to the Administrative Agent, at
the Federal Funds Rate. If such Lender shall pay to the Administrative Agent
such amount for the account of the Appropriate Swing Line Lender on any Business
Day, such amount so paid in respect of principal shall constitute a Swing Line
Advance made by such Lender on such Business Day for purposes of this Agreement,
and the outstanding principal amount of the Swing Line Advance made by the
Appropriate Swing Line Lender shall be reduced by such amount on such Business
Day.

                  (c) Anything in subsection (a) above to the contrary
notwithstanding, (i) neither the Domestic Borrower nor any Offshore Borrower
which has borrowed any Offshore Acquisition Advances may select Eurodollar Rate
Advances for any Borrowing if the aggregate amount of such Borrowing is less
than $1,000,000 or if the obligation of the Appropriate Lenders to make
Eurodollar Rate Advances shall then be suspended pursuant to Section 2.09 or
2.10 and (ii) the Advances (other than any Offshore Swing Line Advance) may not
be outstanding as part of more than 10 separate Borrowings.

                  (d) Each Notice of Borrowing and Notice of Swing Line
Borrowing shall be irrevocable and binding on the Domestic Borrower or the
applicable Offshore Borrower which

                                Credit Agreement

<PAGE>   15
                                       10

has delivered such Notice of Borrowing. In the case of any Borrowing that the
related Notice of Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Domestic Borrower or the applicable Offshore Borrower shall
indemnify each Appropriate Lender against any loss, cost or expense incurred by
such Lender as a result of any failure to fulfill on or before the date
specified in such Notice of Borrowing for such Borrowing the applicable
conditions set forth in Article III, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Advance to be made by such Lender as part of such Borrowing
when such Advance, as a result of such failure, is not made on such date.

                  (e) Unless the Administrative Agent shall have received notice
from an Appropriate Lender prior to the date of any Borrowing under a Facility
under which such Lender has a Commitment that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (a) of this Section 2.02 and the Administrative Agent
may, in reliance upon such assumption, make available to the Applicable Borrower
on such date a corresponding amount. If and to the extent that such Lender shall
not have so made such ratable portion available to the Administrative Agent,
such Lender and each Applicable Borrower severally agree to repay or pay to the
Administrative Agent forthwith on demand such corresponding amount and to pay
interest thereon, for each day from the date such amount is made available to
the Applicable Borrower until the date such amount is repaid or paid to the
Administrative Agent, at (i) in the case of the Applicable Borrower, the
interest rate applicable at such time under Section 2.07 to Advances comprising
such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If
such Lender shall pay to the Administrative Agent such corresponding amount,
such amount so paid shall constitute such Lender's Advance as part of such
Borrowing for all purposes.

                  (f) The failure of any Lender to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of any Borrowing.

                  SECTION 2.03. Issuance of and Drawings and Reimbursement Under
Letters of Credit. (a) Request for Issuance. Each Letter of Credit shall be
issued upon notice, given not later than 11:00 A.M. (New York City time) on the
fifth Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Domestic Borrower to the Issuing Bank, which shall give to the
Administrative Agent and each Revolving Credit Lender prompt notice thereof by
telex or telecopier. Each such notice of issuance of a Letter of Credit (a
"NOTICE OF ISSUANCE") shall be by telephone, confirmed immediately in writing,
or telex or telecopier, specifying therein the requested (A) date of such
issuance (which shall be a Business Day), (B) Available Amount

                                Credit Agreement
<PAGE>   16

                                       11

of such Letter of Credit, (C) expiration date of such Letter of Credit, (D) name
and address of the beneficiary of such Letter of Credit and (E) form of such
Letter of Credit, and shall be accompanied by such application and agreement for
letter of credit as the Issuing Bank may specify to the Domestic Borrower for
use in connection with such requested Letter of Credit (a "LETTER OF CREDIT
AGREEMENT"). If the requested form of such Letter of Credit is acceptable to the
Issuing Bank in its sole discretion, the Issuing Bank will, upon fulfillment of
the applicable conditions set forth in Article III, make such Letter of Credit
available to the Domestic Borrower at its office referred to in Section 8.02 or
as otherwise agreed with the Domestic Borrower in connection with such issuance.
In the event and to the extent that the provisions of any Letter of Credit
Agreement shall conflict with this Agreement, the provisions of this Agreement
shall govern.

                  (b) Letter of Credit Reports. The Issuing Bank shall furnish
(A) to the Administrative Agent on the first Business Day of each week a written
report summarizing issuance and expiration dates of Letters of Credit issued
during the previous week and drawings during such week under all Letters of
Credit, (B) to each Revolving Credit Lender on the first Business Day of each
month a written report summarizing issuance and expiration dates of Letters of
Credit issued during the preceding month and drawings during such month under
all Letters of Credit and (C) to the Administrative Agent and each Revolving
Credit Lender on the first Business Day of each calendar quarter a written
report setting forth the average daily aggregate Available Amount during the
preceding calendar quarter of all Letters of Credit.

                  (c) Drawing and Reimbursement. The payment by the Issuing Bank
of a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by the Issuing Bank of a Letter of Credit Advance,
which shall be a Base Rate Advance, in the amount of such draft. Upon written
demand by the Issuing Bank, with a copy of such demand to the Administrative
Agent, each Revolving Credit Lender shall purchase from the Issuing Bank, and
the Issuing Bank shall sell and assign to each such Revolving Credit Lender,
such Lender's Pro Rata Share of such outstanding Letter of Credit Advance as of
the date of such purchase, by making available for the account of its Applicable
Lending Office to the Administrative Agent for the account of the Issuing Bank,
by deposit to the Administrative Agent's Account, in same day funds, an amount
equal to the portion of the outstanding principal amount of such Letter of
Credit Advance to be purchased by such Lender. Promptly after receipt thereof,
the Administrative Agent shall transfer such funds to the Issuing Bank. The
Domestic Borrower hereby agrees to each such sale and assignment. Each Revolving
Credit Lender agrees to purchase its Pro Rata Share of an outstanding Letter of
Credit Advance on (i) the Business Day on which demand therefor is made by the
Issuing Bank, provided that notice of such demand is given not later than 11:00
A.M. (New York City time) on such Business Day, or (ii) the first Business Day
next succeeding such demand if notice of such demand is given after such time.
Upon any such assignment by the Issuing Bank to any Revolving Credit Lender of a
portion of a Letter of Credit Advance, the Issuing Bank represents and warrants
to such other Lender that the

                                Credit Agreement

<PAGE>   17

                                       12

Issuing Bank is the legal and beneficial owner of such interest being assigned
by it, free and clear of any liens, but makes no other representation or
warranty and assumes no responsibility with respect to such Letter of Credit
Advance, the Loan Documents or any Loan Party. If and to the extent that any
Revolving Credit Lender shall not have so made the amount of such Letter of
Credit Advance available to the Administrative Agent, such Revolving Credit
Lender agrees to pay to the Administrative Agent forthwith on demand such amount
together with interest thereon, for each day from the date of demand by the
Issuing Bank until the date such amount is paid to the Administrative Agent, at
the Federal Funds Rate for its account or the account of the Issuing Bank, as
applicable. If such Lender shall pay to the Administrative Agent such amount
for the account of the Issuing Bank on any Business Day, such amount so paid in
respect of principal shall constitute a Letter of Credit Advance made by such
Lender on such Business Day for purposes of this Agreement, and the outstanding
principal amount of the Letter of Credit Advance made by the Issuing Bank shall
be reduced by such amount on such Business Day.

                  (d) Failure to Make Letter of Credit Advances. The failure of
any Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.03(c) shall not relieve any other Lender of its
obligation hereunder to make its Letter of Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Letter of Credit Advance to be made by such other Lender on such date.

                  SECTION 2.04.  Repayment of Advances.

                  (a) Term A Advances; Offshore Acquisition Advances.

                  (i) The Domestic Borrower shall repay to the Administrative
         Agent for the ratable account of the Term A Lenders the aggregate
         outstanding principal amount of the Term A Advances in an amount on
         each of the following dates equal to the percentage indicated for such
         date of the aggregate principal amount of Term A Advances which are
         outstanding on the eighteen (18) month anniversary of the Initial
         Closing Date (which installment amounts shall be reduced as a result of
         the application of prepayments in accordance with Section 2.06):

<TABLE>
<CAPTION>

                                   Date                         Percentage
                                   ----                         ----------
<S>                                                             <C>
                           March 31, 2001                           0%

                           June 30, 2001                            0%

                           September 30, 2001                       5%

                           December 31, 2001                        5%

                           March 31, 2002                           5%

                           June 30, 2002                            5%

                           September 30, 2002                       5%
</TABLE>

                                Credit Agreement

<PAGE>   18

                                       13

<TABLE>
<CAPTION>

                                   Date                         Percentage
                                   ----                         ----------
<S>                                                             <C>
                           December 31, 2002                        5%

                           March 31, 2003                           5%

                           June 30, 2003                            5%

                           September 30, 2003                       5%

                           December 31, 2003                        5%

                           March 31, 2004                          6.25%

                           June 30, 2004                           6.25%

                           September 30, 2004                      6.25%

                           December 31, 2004                       6.25%

                           March 31, 2005                          6.25%

                           June 30, 2005                           6.25%

                           September 30, 2005                      6.25%

                           Termination Date                        6.25%
</TABLE>

         provided, however, that the final principal installment shall be repaid
         on the Termination Date and in any event shall be in an amount equal to
         the aggregate principal amount of the Term A Advances outstanding on
         such date.

                  (ii) Each Offshore Borrower which has received any Offshore
         Acquisition Advance shall repay to the Administrative Agent for the
         ratable account of the Offshore Acquisition Lenders the aggregate
         outstanding principal amount of the Offshore Acquisition Advances made
         to such Offshore Borrower in an amount on each of the following dates
         equal to the percentage indicated for such date of the aggregate
         Amortization Amount (which installment amounts shall be reduced as a
         result of the application of prepayments in accordance with Section
         2.06):

<TABLE>
<CAPTION>

                                   Date                        Percentage
                                  -----                        ----------
<S>                                                            <C>
                           March 31, 2001                           0%

                           June 30, 2001                            0%

                           September 30, 2001                       5%

                           December 31, 2001                        5%

                           March 31, 2002                           5%

                           June 30, 2002                            5%

                           September 30, 2002                       5%

                           December 31, 2002                        5%

                           March 31, 2003                           5%

                           June 30, 2003                            5%
</TABLE>

                                Credit Agreement

<PAGE>   19

                                       14

<TABLE>
<CAPTION>

                                   Date                         Percentage
                                   ----                         ----------
<S>                                                            <C>
                           September 30, 2003                       5%

                           December 31, 2003                        5%

                           March 31, 2004                          6.25%

                           June 30, 2004                           6.25%

                           September 30, 2004                      6.25%

                           December 31, 2004                       6.25%

                           March 31, 2005                          6.25%

                           June 30, 2005                           6.25%

                           September 30, 2005                      6.25%

                           Termination Date                        6.25%
</TABLE>

         On the Termination Date, each Offshore Borrower which has received any
         Offshore Acquisition Advances shall also repay to the Administrative
         Agent for the ratable account of the Offshore Acquisition Lenders the
         aggregate principal amount of such Offshore Acquisition Advances
         outstanding on such date.

                  (b) Term B Advances. As of the date hereof, the Domestic
Borrower has repaid all Term B Advances pursuant to the Existing Credit
Agreement.

                  (c) Revolving Credit Advances. The Domestic Borrower shall
repay to the Administrative Agent for the ratable account of the Revolving
Credit Lenders on the Termination Date the aggregate principal amount of the
Revolving Credit Advances then outstanding.

                  (d) Swing Line Advances. The Domestic Borrower shall repay to
the Administrative Agent for the account of the Appropriate Swing Line Lender
and each other Revolving Credit Lender that has made a Swing Line Advance to the
Domestic Borrower the outstanding principal amount of each Swing Line Advance
made by each of them to the Domestic Borrower, and each Offshore Borrower shall
repay to the Offshore Currency Agent for the account of the Appropriate Swing
Line Lender and each other Revolving Credit Lender that has made a Swing Line
Advance to such Offshore Borrower, in each case, the outstanding principal
amount of each Swing Line Advance made by each of them to such Offshore
Borrower, as the case may be, on the earlier of the maturity date specified in
the applicable Notice of Swing Line Borrowing (in the case of any Swing Line
Borrowing in US Dollars, which maturity shall be no later than the seventh day
after the requested date of such Borrowing) and the Termination Date.

                  (e) Letter of Credit Advances. (i) The Domestic Borrower shall
repay to the Administrative Agent for the account of the Issuing Bank and each
other Revolving Credit

                                Credit Agreement

<PAGE>   20

                                       15

Lender that has made a Letter of Credit Advance on the earlier of demand and the
Termination Date the outstanding principal amount of each Letter of Credit
Advance made by each of them.

                  (ii) The Obligations of the Domestic Borrower under this
Agreement, any Letter of Credit Agreement and any other agreement or instrument
relating to any Letter of Credit shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement, such
Letter of Credit Agreement and such other agreement or instrument under all
circumstances, including, without limitation, the following circumstances(it
being understood that any such payment by the Domestic Borrower is without
prejudice to, and does not constitute a waiver of, any rights the Domestic
Borrower might have or might acquire as a result of the payment by the Issuing
Bank of any draft or the reimbursement by the Domestic Borrower thereof):

                  (A) any lack of validity or enforceability of any Loan
         Document, any Letter of Credit Agreement, any Letter of Credit or any
         other agreement or instrument relating thereto (all of the foregoing
         being, collectively, the "L/C RELATED DOCUMENTS");

                  (B) any change in the time, manner or place of payment of, or
         in any other term of, all or any of the Obligations of the Domestic
         Borrower in respect of any L/C Related Document or any other amendment
         or waiver of or any consent to departure from all or any of the L/C
         Related Documents;

                  (C) the existence of any claim, set-off, defense or other
         right that the Domestic Borrower may have at any time against any
         beneficiary or any transferee of a Letter of Credit (or any Persons for
         which any such beneficiary or any such transferee may be acting), the
         Issuing Bank or any other Person, whether in connection with the
         transactions contemplated by the L/C Related Documents or any unrelated
         transaction;

                  (D) any statement or any other document presented under a
         Letter of Credit proving to be forged, fraudulent, invalid or
         insufficient in any respect or any statement therein being untrue or
         inaccurate in any respect;

                  (E) payment by the Issuing Bank under a Letter of Credit
         against presentation of a draft or certificate that does not strictly
         comply with the terms of such Letter of Credit;

                  (F) any exchange, release or non-perfection of any Collateral
         or other collateral, or any release or amendment or waiver of or
         consent to departure from the Guaranties or any other guarantee, for
         all or any of the Obligations of the Domestic Borrower in respect of
         the L/C Related Documents; or

                                Credit Agreement

<PAGE>   21

                                       16

                  (G) any other circumstance or happening whatsoever, whether or
         not similar to any of the foregoing, including, without limitation, any
         other circumstance that might otherwise constitute a defense available
         to, or a discharge of, the Domestic Borrower or a guarantor.

                  SECTION 2.05. Termination, Reduction, Conversion and
Restoration of the Commitments. (a) Optional. The Domestic Borrower may, upon at
least three Business Days' notice to the Administrative Agent, terminate in
whole or reduce in part the unused portions of the Term A Commitments, the
Offshore Acquisition Commitments and the Letter of Credit Sub-Facility and the
Unused Revolving Credit Commitments; provided, however, that each partial
reduction of a Facility (i) shall be in an aggregate amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof and (ii) shall be made ratably
among the Appropriate Lenders in accordance with their Commitments with respect
to such Facility. (As of the date of this Agreement, all the Term B Commitments
have been terminated.)

                  (b) Mandatory.

                  (i) Term A Commitment; Offshore Acquisition Commitments.

                           (A) (1) On each of the following dates the aggregate
                  Term A Commitments of the Term A Lenders shall be
                  automatically and permanently reduced, on a pro rata basis, by
                  the following amounts: (x) on the date that occurs eighteen
                  months after the Initial Closing Date, by an amount equal to
                  the amount by which the aggregate Term A Commitments
                  immediately prior to such reduction exceed the aggregate
                  unpaid principal amount of the Term A Advances then
                  outstanding, after giving effect to any Term A Borrowing on
                  such date and (y) from time to time on the date of each
                  repayment or prepayment of the Term A Advances, by an amount
                  equal to the amount of such repayment or prepayment.

                               (2) On each date prior to the date that occurs
                  eighteen months after the Initial Closing Date that an
                  Offshore Borrower delivers a Notice of Borrowing requesting a
                  Borrowing consisting of Offshore Acquisition Advances, the
                  aggregate Term A Commitments of the Term A Lenders shall also
                  be automatically and permanently reduced, on a pro rata basis,
                  by an amount equal to the lesser of (x) the aggregate amount
                  of such requested Borrowing, or (y) the amount by which the
                  aggregate Term A Commitments immediately prior to such
                  reduction exceed the aggregate unpaid principal amount of the
                  Term A Advances then outstanding. The aggregate amount by
                  which the Term A Commitments of the Term A Lenders are reduced
                  and converted to Offshore Acquisition Commitments pursuant to
                  this Section 2.05(b)(i)(A)(2) during the period prior to the
                  date that occurs eighteen months after the Initial Closing
                  Date is referred to herein as the "AMORTIZATION AMOUNT".

                                Credit Agreement

<PAGE>   22

                                       17

                                    (3) On each date prior to eighteen months
                  after the Initial Closing Date on which outstanding Term A
                  Advances are prepaid pursuant to Section 2.06(a), by written
                  notice from the Domestic Borrower delivered to the
                  Administrative Agent together with the prepayment notice for
                  such prepayment, the aggregate Term A Commitments of the Term
                  A Lenders shall be restored and increased, on a pro rata
                  basis, by an aggregate amount equal to the aggregate amount of
                  the Term A Advances so prepaid on such date; provided however,
                  that (x) each written notice requesting such a restoration
                  shall specify that an Offshore Borrower contemplates
                  requesting an Offshore Acquisition Advance in an amount equal
                  to or greater than the amount of the aggregate Term A
                  Commitments requested to be restored thereby, (y) if such
                  contemplated Offshore Acquisition Advance has not been
                  advanced within 30 days following the date of such written
                  notice, then the aggregate Term A Commitments so restored
                  pursuant to such notice shall nonetheless terminate on such
                  thirtieth day, and (z) not more than an aggregate of
                  $25,000,000 of Term A Commitments of the Term A Lenders may be
                  restored pursuant to this clause (3). Notwithstanding the
                  foregoing, at no time shall the Term A Facility as so restored
                  and increased exceed $75,000,000.

                           (B)      (1) On each date that an Offshore Borrower
                  delivers a Notice of Borrowing requesting a Borrowing
                  consisting of Offshore Acquisition Advances, the aggregate
                  Offshore Acquisition Commitments of the Offshore Acquisition
                  Lenders shall be automatically increased, on a pro rata basis,
                  by an amount equal to the aggregate amount by which the
                  aggregate Term A Commitments and the aggregate Revolving
                  Credit Commitments are reduced on such date pursuant to clause
                  (i)(A)(2) above and clause (iii)(A) below as a result of such
                  Notice of Borrowing; provided, however, the aggregate amount
                  of Term A Commitments and Revolving Credit Commitments which
                  may be so reduced and converted to Offshore Acquisition
                  Commitments during the term of this Agreement shall not exceed
                  US$50,000,000.

                                    (2) From time to time upon each repayment or
                  prepayment of the Offshore Acquisition Advances, the aggregate
                  Offshore Acquisition Commitments of the Offshore Acquisition
                  Lenders shall be automatically and permanently reduced, on a
                  pro rata basis, by an amount equal to the amount of such
                  repayment or prepayment.

                  (ii) Term B Commitments. All the Term B Commitments of the
         Term B Lenders have been terminated pursuant to the Existing Credit
         Agreement.

                                Credit Agreement

<PAGE>   23

                                       18

                  (iii) Revolving Credit Commitments.

                           (A) On each date that an Offshore Borrower delivers a
                  Notice of Borrowing requesting a Borrowing consisting of
                  Offshore Acquisition Advances, the aggregate Revolving Credit
                  Commitments of the Revolving Credit Lenders shall be
                  automatically and (except as provided in clause (iii)(B)
                  below) permanently reduced, on a pro rata basis, by an amount
                  equal to the difference between (x) the aggregate amount of
                  such requested Borrowing, and (y) the amount, if any, by which
                  the aggregate Term A Commitments are reduced on such date
                  pursuant to Section 2.05(b)(i)(A)(2) as a result of such
                  Notice of Borrowing; provided, however, that, during the term
                  of this Agreement, the aggregate amount of Revolving Credit
                  Commitments that may be so terminated and converted to
                  Offshore Acquisition Commitments shall not exceed the
                  difference between (x) US$25,000,000 and (y) the aggregate
                  amount of Revolving Credit Advances drawn at any time to fund
                  Domestic Permitted Acquisitions.
                           (B) From time to time on each date on which the
                  Offshore Acquisition Advances are repaid pursuant to Section
                  2.04(a)(ii) or 2.06(b) in an aggregate amount in excess of the
                  Amortization Amount, or prepaid pursuant to Section 2.06(a) in
                  any amount, the aggregate Revolving Credit Commitments of the
                  Revolving Credit Lenders shall be automatically restored and
                  increased, on a pro rata basis, by an amount equal to the
                  amount by which such Offshore Acquisition Advances are so
                  repaid or prepaid on such date; provided, however, that the
                  aggregate amount of Revolving Credit Commitments that may be
                  restored from time to time pursuant to this clause (iii)(B)
                  shall not exceed the aggregate amount by which the Revolving
                  Credit Commitments have previously been reduced pursuant to
                  clause (iii)(A) above.

                  (iv) Letter of Credit Sub-Facility. The Letter of Credit
Sub-Facility shall be permanently reduced from time to time on the date of each
reduction in the Revolving Credit Facility by the amount, if any, by which the
amount of the Letter of Credit Sub-Facility exceeds the Revolving Credit
Facility after giving effect to such reduction of the Revolving Credit Facility.

                  (v) Swing Line Sub-Facility. The Swing Line Sub-Facility shall
be permanently reduced from time to time on the date of each reduction in the
Revolving Credit Facility by the amount, if any, by which the amount of the
Swing Line Sub-Facility exceeds the Revolving Credit Facility after giving
effect to such reduction of the Revolving Credit Facility.

                  SECTION 2.06. Prepayments. (a) Optional. The Domestic
Borrower, or in the case of any Offshore Acquisition Advance, the applicable
Offshore Borrower, may, upon at least

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<PAGE>   24

                                       19

three Business Day's notice to the Administrative Agent stating the proposed
date and aggregate principal amount of the prepayment, and if such notice is
given, the Domestic Borrower or such Offshore Borrower, as the case may be,
shall, prepay the outstanding aggregate principal amount of the Advances made to
it comprising part of the same Borrowing in whole or ratably in part, together
with accrued interest to the date of such prepayment on the aggregate principal
amount prepaid; provided, however, that (x) each partial prepayment of any
Offshore Swing Line Advance shall be in an aggregate principal amount of the US
Dollar Equivalent of $250,000 or an integral multiple of $100,000 in excess
thereof, (y) each partial prepayment of Revolving Credit Advances shall be in an
aggregate principal amount of $2,000,000, each partial prepayment of Term
Advances shall be in an aggregate principal amount of $5,000,000, or, in each
case, an integral multiple of $1,000,000 in excess thereof and (z) if any
prepayment of a Eurodollar Rate Advance is made on a date other than the last
day of an Interest Period for such Advance, the Domestic Borrower or such
Offshore Borrower, as the case may be, shall also pay any amounts owing pursuant
to Section 8.04(c); and provided further that a notice of prepayment may state
that it is conditioned upon the effectiveness of the closing of a credit
facility, debt financing or disposition of assets, in which case such notice may
be revoked by the Applicable Borrower by notice to the Administrative Agent
prior to the date of the proposed prepayment if such condition is not satisfied.
Each such optional prepayment of Term Advances shall be applied in the same
manner as is provided for mandatory prepayments of Term Advances in Section
2.06(b)(v).

                  (b) Mandatory. (i) Excess Cash Flow. The Domestic Borrower
shall, on the 100th day following the end of each Fiscal Year (commencing
following the Domestic Borrower's Fiscal Year ending on December 31, 2000),
prepay an aggregate principal amount of the Advances comprising part of the same
Borrowings (or cause the applicable Offshore Borrowers to prepay Offshore
Acquisition Advances) in an aggregate amount equal to fifty percent (50%) of the
amount of Excess Cash Flow for such Fiscal Year; provided, however, the
aggregate amount of any prepayment of Advances otherwise required under this
subsection (i) shall not exceed the amount which is $1 greater than the smallest
aggregate prepayment of Advances that would be required in order to reduce the
Total Debt/EBITDA Ratio to 3.0:1 (after giving effect to such prepayment); and
provided further that if the Total Debt/EBITDA Ratio as of such day is less than
3.0:1, then no such prepayment shall be required.

                  (ii) Net Cash Proceeds. The Domestic Borrower shall, on the
date which is three Business Days following the date of receipt of the Net Cash
Proceeds by the Domestic Borrower or any of its Subsidiaries from the following
sources (or at any time that a Default has occurred and is continuing, on such
date of receipt), prepay (or cause the applicable Offshore Borrowers to prepay
Offshore Acquisition Advances) an aggregate principal amount of the Advances as
follows:

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<PAGE>   25

                                       20

                  (A) Asset Dispositions. On the date which is three Business
         Days following the date of receipt of the Net Cash Proceeds by the
         Domestic Borrower or any of its Subsidiaries from any Asset Sale,
         unless a Reinvestment Notice shall have been delivered in respect of
         such Asset Sale on or prior to the date which is three Business Days
         following the date of receipt of such Net Cash Proceeds, the Domestic
         Borrower shall prepay (or cause the applicable Offshore Borrowers to
         prepay Offshore Acquisition Advances) an aggregate principal amount of
         the Advances comprising part of the same Borrowings in an aggregate
         amount equal to 100% of such Net Cash Proceeds; provided, however,
         that, notwithstanding the foregoing (i) the aggregate Net Cash Proceeds
         of Asset Sales that may be excluded from the foregoing requirement
         pursuant to a Reinvestment Notice shall not exceed $5,000,000 in any
         Fiscal Year of the Domestic Borrower, or $10,000,000 in the aggregate
         during the term of this Agreement and (ii) on each Reinvestment
         Prepayment Date the Advances shall be prepaid, by an amount equal to
         the Reinvestment Prepayment Amount with respect to the relevant
         Reinvestment Event, as set forth in Section 2.06(b)(v);

                  (B) Debt. On the date which is three Business Days following
         the date of receipt of the Net Cash Proceeds by the Domestic Borrower
         or any of its Subsidiaries from the incurrence or issuance by the
         Domestic Borrower or any of its Subsidiaries of any Debt (other than
         Debt incurred or issued pursuant to clauses (i ) to (ix) and clause
         (xi) of Section 5.02(b)), the Domestic Borrower shall prepay (or cause
         the applicable Offshore Borrowers to prepay Offshore Acquisition
         Advances) an aggregate principal amount of the Advances comprising part
         of the same Borrowings in an aggregate amount equal to 100% of such Net
         Cash Proceeds; provided, however, that the amount of any prepayment of
         Advances otherwise required under this clause (B) shall not exceed the
         amount which is $1 greater than the smallest aggregate prepayment of
         Advances that would be required on the date of such prepayment to
         reduce the Senior Debt/EBITDA to 2.5:1 (after giving effect to such
         prepayment); and provided further that, if the Senior Debt/EBITDA Ratio
         as of such date is less than 2.5:1, then no amount of such Net Cash
         Proceeds need be prepaid;

                  (C) Equity Interests. On the date which is three Business Days
         following the date of receipt of the Net Cash Proceeds by the Domestic
         Borrower or any of its Subsidiaries from the sale or issuance by the
         Domestic Borrower or any of its Subsidiaries of any Equity Interests
         (including, without limitation, receipt of any capital contribution but
         excluding sales and issuances to employees of the Domestic Borrower and
         its Subsidiaries (x) pursuant to the granting or exercise of stock
         options or (y) to the extent of the Net Cash Proceeds from such
         issuance or sale to employees is applied by the Domestic Borrower to
         purchase the Equity Interests so issued as contemplated by Section
         5.02(h)(i)(D)), the Domestic Borrower shall prepay (or cause the
         applicable Offshore Borrowers to prepay Offshore Acquisition Advances)
         an aggregate principal amount of

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<PAGE>   26

                                       21

         the Advances comprising part of the same Borrowings in an aggregate
         amount equal to 50% of such Net Cash Proceeds; provided, however, that
         if the Total Debt/EBITDA Ratio as of such date is less than 3.0:1, then
         the Domestic Borrower shall repay such Advances in an amount equal to
         25% of such Net Cash Proceeds; and

                  (D) Extraordinary Receipts. On the date which is three
         Business Days following the date of receipt of the Net Cash Proceeds by
         the Domestic Borrower or any of its Subsidiaries from any Extraordinary
         Receipt (x) at any time that any Existing Senior Subordinated Notes are
         outstanding, in any amount and (y) thereafter, in excess of $250,000,
         in each case, received by or paid to or for the account of the Domestic
         Borrower or any of its Subsidiaries and not otherwise included in
         clause (A), (B) or (C) above, the Domestic Borrower shall prepay (or
         cause the applicable Offshore Borrowers to prepay Offshore Acquisition
         Advances) an aggregate principal amount of the Advances comprising part
         of the same Borrowings in an aggregate amount equal to 100% of such Net
         Cash Proceeds.

                  (iii) Revolving Credit Facility; Swing Line Sub-Facility.

                           (A) The Domestic Borrower shall, on each Business
         Day, prepay an aggregate principal amount of the Revolving Credit
         Advances comprising part of the same Borrowings, the Letter of Credit
         Advances and the Swing Line Advances in an amount equal to the amount
         by which (1) the sum of (x) the aggregate principal amount of the
         Revolving Credit Advances, the Letter of Credit Advances and the Swing
         Line Advances in US Dollars then outstanding, plus (y) the aggregate US
         Dollar Equivalent of any Swing Line Advances in an Offshore Currency
         then outstanding plus (z) the aggregate Available Amount of all Letters
         of Credit then outstanding exceeds (2) the Revolving Credit Facility on
         such Business Day.

                           (B) The Applicable Borrower shall on each Business
         Day that the Offshore Currency Agent calculates the US Dollar
         Equivalent of outstanding Swing Line Advances in an Offshore Currency
         pursuant to Section 1.04, prepay an aggregate principal amount of the
         outstanding Swing Line Advances in any Applicable Currency in an amount
         equal to the amount by which the aggregate principal amount of such
         Swing Line Advances outstanding exceeds 105% of the Applicable Swing
         Line Sub-Limit.

                  (iv) Letter of Credit Sub-Facility. The Domestic Borrower
shall, on each Business Day, pay to the Administrative Agent for deposit in the
L/C Cash Collateral Account an amount sufficient to cause the aggregate amount
on deposit in the L/C Cash Collateral Account to equal the amount by which the
aggregate Available Amount of all Letters of Credit then outstanding exceeds the
Letter of Credit Sub-Facility on such Business Day.

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<PAGE>   27

                                       22

                  (v) Application of Prepayments; Application of Prepayments of
Term Advances. (A) Each prepayment of Advances pursuant to subsections (i) and
(ii) of this Section 2.06(b) (and optional prepayments of Term Advances pursuant
to Section 2.06(a)) shall be applied (1) first, pro rata between the scheduled
amortization installments of the Term Facilities until all the Term A Advances
and the Amortization Amount of the Offshore Acquisition Advances are prepaid in
full, (2) second, to any other outstanding Offshore Acquisition Advances until
such Advances are prepaid in full, and (3) third, to the Revolving Credit
Facility as set forth in clause (vi) below.

                  (B) Amounts applied to each Term Facility pursuant to
subsection (A) above, shall be applied (1) first, to any scheduled amortization
installments of such Term Facility which are due within twelve (12) months after
the date of such prepayment in the order of their maturity until such
installments are prepaid in full, and (2) second, pro rata to the remaining
scheduled amortization installments of such Term Facility until such
installments are prepaid in full.

                  (vi) Revolving Credit Facility. Prepayments of the Revolving
Credit Facility made pursuant to clause (i), (ii) or (iii) above shall be first
applied to prepay Letter of Credit Advances then outstanding until such Advances
are paid in full, second applied to prepay Swing Line Advances then outstanding
until such Advances are paid in full, third applied to prepay Revolving Credit
Advances then outstanding comprising part of the same Borrowings until such
Advances are paid in full and fourth deposited in the L/C Cash Collateral
Account to cash collateralize 100% of the Available Amount of the Letters of
Credit then outstanding; and, in the case of prepayments of the Revolving Credit
Facility required pursuant to clause (i) or (ii) above, the amount remaining (if
any) after the prepayment in full of the Advances then outstanding and the 100%
cash collateralization of the aggregate Available Amount of Letters of Credit
then outstanding may be retained by the Domestic Borrower. Upon the drawing of
any Letter of Credit for which funds are on deposit in the L/C Cash Collateral
Account, such funds shall be applied to reimburse the Issuing Bank or Revolving
Credit Lenders, as applicable.

                  (vii) Deferred Prepayments. Notwithstanding anything to the
contrary contained in subsection (b)(ii) of this Section 2.06 or in Section
5.02(f), so long as no Default shall have occurred and be continuing, if, on any
date on which a prepayment of Advances would otherwise be required pursuant to
subsection (b)(ii) of this Section 2.06 and the applicable subsections of
Section 5.02(f), the aggregate amount of Net Cash Proceeds or other amounts
otherwise required by such subsections to be applied to prepay Advances on such
date are less than or equal to $5,000,000, the Applicable Borrowers may defer
such prepayment until (A) the date on which the aggregate amount of Net Cash
Proceeds or other amounts otherwise required by such subsections to be applied
to prepay Advances exceeds $5,000,000 or (B) any earlier date which is one
Business Day before the day on which the Domestic Borrower would be required to
make an offer to purchase Senior Subordinated Notes in an amount calculated by
reference to any such Net Cash Proceeds. During such deferral period the
Domestic Borrower may apply all

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<PAGE>   28

                                       23

or any part of such aggregate amount to prepay Revolving Credit Advances and
may, subject to the fulfillment of the conditions set forth in Section 3.02,
reborrow such amounts (which amounts, to the extent originally constituting Net
Cash Proceeds, shall be deemed to retain their original character as Net Cash
Proceeds when so reborrowed for application as required by this Section 2.06).
Upon the occurrence of a Default, the Applicable Borrowers shall immediately
prepay Advances in the amount of all Net Cash Proceeds received by the Domestic
Borrower and its Subsidiaries and other amounts, as applicable, that are
required to be applied to prepay Advances by this Section 2.06 (without giving
effect to the first and second sentences of this subsection (b)(vii)) and
Section 5.02(f) but which have not previously been so applied.

                  (viii) Repatriation of Net Cash Proceeds. To the extent any or
all of the Net Cash Proceeds subject to Section 2.06(b)(i) or (ii) attributable
to Offshore Subsidiaries are prohibited or delayed by applicable local law from
being repatriated to the United States (after giving effect to any required
prepayment of outstanding Offshore Acquisition Advances), the portion of such
Net Cash Proceeds so affected shall not be required to be applied at the time
provided above, and may be (but shall not be required), at the election of the
Applicable Borrower, deposited in an escrow account maintained with a Lender and
under the sole dominion and control of the Administrative Agent pursuant to the
terms of an escrow agreement satisfactory in form and substance to the
Administrative Agent, until such time as the applicable local law will permit
repatriation to the United States (and the Domestic Borrower hereby agrees that
it will, and will cause the applicable Subsidiary to, promptly take all action
required by the applicable local law to permit such repatriation). If and when
repatriation of any of such affected Net Cash Proceeds is permitted under the
applicable local law, such repatriation shall be immediately effected and such
repatriated Net Cash Proceeds will be applied in the manner set forth in this
Agreement.

                  (ix) Accrued Interest, Etc. All prepayments under this
subsection (b) shall be made together with accrued interest to the date of such
prepayment on the principal amount prepaid. If any payment of Eurodollar Rate
Advances otherwise required to be made under this Section 2.06(b) would be made
on a day other than the last day of the applicable Interest Period therefor, the
Applicable Borrower may direct the Administrative Agent to (and if so directed,
the Administrative Agent shall) deposit such payment in the Collateral Account
until the last day of the applicable Interest Period at which time the
Administrative Agent shall apply the amount of such payment to the prepayment of
such Advances; provided, however, that such Advances shall continue to bear
interest as set forth in Section 2.07 until the last day of the applicable
Interest Period therefor.

                  SECTION 2.07. Interest. (a) Scheduled Interest. Each
Applicable Borrower shall pay interest on the unpaid principal amount of each
Advance owing by such Applicable Borrower to each Lender from the date of such
Advance until such principal amount shall be paid in full, at the following
rates per annum:

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<PAGE>   29

                                       24

                  (i) Base Rate Advances. During such periods as such Advance is
         a Base Rate Advance, a rate per annum equal at all times to the sum of
         (A) the Base Rate in effect from time to time plus (B) the Applicable
         Margin in effect from time to time, payable in arrears quarterly on the
         last Business Day of each March, June, September and December during
         such periods and on the date such Base Rate Advance shall be Converted
         or paid in full.

                  (ii) Eurodollar Rate Advances. During such periods as such
         Advance is a Eurodollar Rate Advance, a rate per annum equal at all
         times during each Interest Period for such Advance to the sum of (A)
         the Eurodollar Rate for such Interest Period for such Advance plus (B)
         the Applicable Margin in effect on the first day of such Interest
         Period, payable in arrears on the last day of such Interest Period and,
         if such Interest Period has a duration of more than three months, on
         each day that occurs during such Interest Period every three months
         from the first day of such Interest Period and on the date such
         Eurodollar Rate Advance shall be Converted or paid in full.

                  (b) Default Interest. Upon the occurrence and during the
continuance of a Default, each Applicable Borrower shall pay interest on (i) the
unpaid principal amount of each Advance owing by such Applicable Borrower to
each Lender, payable in arrears on the dates referred to in clause (a)(i) or
(a)(ii) above and on demand, at a rate per annum equal at all times to 2% per
annum above the rate per annum required to be paid on such Advance pursuant to
clause (a)(i) or (a)(ii) above and (ii) to the fullest extent permitted by law,
the amount of any interest, fee or other amount payable by such Applicable
Borrower under the Loan Documents that is not paid when due, from the date such
amount shall be due until such amount shall be paid in full, payable in arrears
on the date such amount shall be paid in full and on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be paid,
in the case of interest, on the Type of Advance on which such interest has
accrued pursuant to clause (a)(i) or (a)(ii) above and, in all other cases, on
Base Rate Advances pursuant to clause (a)(i) above.

                  (c) Notice of Interest Period and Interest Rate. Promptly
after receipt of a Notice of Borrowing pursuant to Section 2.02(a), a notice of
Conversion pursuant to Section 2.09 or a notice of selection of an Interest
Period pursuant to the terms of the definition of "INTEREST PERIOD", the
Administrative Agent shall give notice to the Domestic Borrower and each
Appropriate Lender of the applicable Interest Period and the applicable interest
rate determined by the Administrative Agent for purposes of clause (a)(i) or
(a)(ii) above.

                  SECTION 2.08. Fees. (a) Commitment Fee. The Domestic Borrower
shall pay to the Administrative Agent for the account of the Lenders a
commitment fee, from the date of this Agreement in the case of each Initial
Lender and from the effective date specified in the

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<PAGE>   30

                                       25

Assignment and Acceptance pursuant to which it became a Lender in the case of
each other Lender until the Termination Date, payable in arrears quarterly on
the last Business Day of each June, September, December and March, commencing
June 30, 2000, and on the Termination Date, at the rate per annum equal to the
Applicable Percentage then in effect on the average daily unused portion of each
Appropriate Lender's Term A Commitment and Offshore Acquisition Commitment and
on the sum of the average daily Unused Revolving Credit Commitment of such
Lender plus its Pro Rata Share of the average daily outstanding Swing Line
Advances in US Dollars during such quarter; provided, however, that no
commitment fee shall accrue on any of the Commitments of a Defaulting Lender so
long as such Lender shall be a Defaulting Lender.

                  (b) Letter of Credit Fees, Etc. (i) The Domestic Borrower
shall pay to the Administrative Agent for the account of each Revolving Credit
Lender a commission, payable in arrears quarterly on the last Business Day of
each June, September, December and March, commencing June 30, 2000, and on the
earliest to occur of the full drawing, expiration, termination or cancellation
of any Letter of Credit and on the Termination Date, on such Lender's Pro Rata
Share of the average daily aggregate Available Amount during such quarter of (A)
all Standby Letters of Credit outstanding from time to time at a rate per annum
equal to the Applicable Margin then in effect for Eurodollar Rate Advances under
the Revolving Credit Facility and (B) all Trade Letters of Credit then
outstanding at a rate per annum equal to the Applicable Margin then in effect
for Eurodollar Rate Advances under the Revolving Credit Facility; provided,
however, that if the aggregate such commission for all Revolving Credit Lenders
for any Standby Letter of Credit or Trade Letter of Credit is less than $500,
then such commission shall instead be calculated for such Letter of Credit as
such Revolving Credit Lender's Pro Rata Share of $500.

                  (ii) The Domestic Borrower shall pay to the Issuing Bank, for
its own account, (A) an issuance fee, payable in arrears quarterly on the last
Business Day of each June, September, December and March, commencing June 30,
2000, and on the Termination Date, on the average daily amount of its Letter of
Credit Commitment during such quarter, from the date hereof until the
Termination Date, at the rate of 0.25% per annum; provided, however, that if
such commission for any Letter of Credit is less than $100, then such issuance
fee for such Letter of Credit shall be $100 and (B) such other commissions,
fronting fees, transfer fees and other fees and charges in connection with the
issuance or administration of each Letter of Credit as the Domestic Borrower and
the Issuing Bank shall agree.

                  (c) Agents' Fees. The Domestic Borrower shall pay to each
Agent for its own account such fees as may from time to time be agreed between
the Domestic Borrower and such Agent.

                  SECTION 2.09. Conversion of Advances. (a) Optional. The
Domestic Borrower (or in respect of any Offshore Acquisition Advance, the
applicable Offshore Borrower) may on any Business Day, upon notice given to the
Administrative Agent not later than

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<PAGE>   31
                                       26

11:00 A.M. (New York City time) on the third Business Day prior to the date of
the proposed Conversion and subject to the provisions of Sections 2.07 and 2.10,
Convert all or any portion of the Advances of one Type comprising the same
Borrowing into Advances of the other Type; provided, however, that any
Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made
only on the last day of an Interest Period for such Eurodollar Rate Advances,
any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in
an amount not less than the minimum amount specified in Section 2.02(c), no
Conversion of any Advances shall result in more separate Borrowings than
permitted under Section 2.02(c), each Conversion of Advances comprising part of
the same Borrowing under any Facility shall be made ratably among the
Appropriate Lenders in accordance with their Commitments under such Facility and
Swing Line Advances may not be so converted and may only be outstanding as Base
Rate Advances. Each such notice of Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the Advances to
be Converted and (iii) if such Conversion is into Eurodollar Rate Advances, the
duration of the initial Interest Period for such Advances. Each notice of
Conversion shall be irrevocable and binding on the Applicable Borrower.

                  (b)   Mandatory. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than $1,000,000, such
Advances shall automatically Convert into Base Rate Advances.

                  (ii)  If an Applicable Borrower shall fail to select the
duration of any Interest Period for any Eurodollar Rate Advances in accordance
with the provisions contained in the definition of "INTEREST PERIOD" in Section
1.01, the Administrative Agent will forthwith so notify the Applicable Borrower
and the Appropriate Lenders, whereupon each such Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance.

                  (iii) Upon the occurrence and during the continuance of any
Default, (x) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(y) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended.

                  SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i)
the introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to any Lender Party of agreeing to make
or of making, funding or maintaining Eurodollar Rate Advances or of agreeing to
issue or of issuing or maintaining or participating in Letters of Credit or of
agreeing to make or of making or maintaining Letter of Credit Advances or of
agreeing to make or maintaining or of agreeing to purchase or participate in any
Swing Line Advances (excluding, for purposes of this

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<PAGE>   32

                                       27

Section 2.10, any such increased costs resulting from Taxes, Other Taxes or
Excluded Taxes, as to which Section 2.12 shall govern), then the Applicable
Borrower shall from time to time, upon demand by such Lender Party (with a copy
of such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender Party additional amounts sufficient to compensate
such Lender Party for such increased cost; provided, however, that a Lender
Party claiming additional amounts under this Section 2.10(a) agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office if the making
of such a designation would avoid the need for, or reduce the amount of, such
increased cost that may thereafter accrue and would not, in the reasonable
judgment of such Lender Party, be otherwise disadvantageous to such Lender
Party; provided further that each Offshore Borrower shall only be liable for
those additional amounts as are specifically related to Advances made to such
Offshore Borrower (and any additional amounts attributable to maintaining any
Facility generally shall be solely the responsibility of the Domestic Borrower).
A certificate as to the amount of such increased cost, submitted to the
Applicable Borrower by such Lender Party, shall be conclusive and binding for
all purposes, absent manifest error.

                  (b) If, due to either (i) the introduction of or any change in
or in the interpretation of any law or regulation or (ii) the compliance with
any guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
amount of capital required or expected to be maintained by any Lender Party or
any corporation controlling such Lender Party as a result of or based upon the
existence of such Lender Party's commitment to lend or to issue or participate
in Letters of Credit or to purchase or participate in Swing Line Advances
hereunder and other commitments of such type or the issuance or maintenance of
or participation in the Letters of Credit or the purchase or participation in
Swing Line Advances (or similar contingent obligations), then, upon demand by
such Lender Party or such corporation (with a copy of such demand to the
Administrative Agent), the Applicable Borrower shall pay to the Administrative
Agent for the account of such Lender Party, from time to time as specified by
such Lender Party, additional amounts sufficient to compensate such Lender Party
in the light of such circumstances, to the extent that such Lender Party
reasonably determines such increase in capital to be allocable to the existence
of such Lender Party's commitment to lend or to issue or participate in Letters
of Credit or to purchase or participate in Swing Line Advances hereunder or to
the issuance or maintenance of or participation in any Letters of Credit or the
purchase or participation in any Swing Line Advance; provided further that each
Offshore Borrower shall only be liable for those additional amounts as are
specifically related to Advances made to such Offshore Borrower or any of its
Subsidiaries (and any additional amounts attributable to maintaining any
Facility generally shall be solely the responsibility of the Domestic Borrower).
A certificate as to such amounts submitted to the Domestic Borrower by such
Lender Party shall be conclusive and binding for all purposes, absent manifest
error.

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<PAGE>   33

                                       28

                  (c) If, with respect to any Eurodollar Rate Advances under any
Facility, Lenders owed at least 50.1% of the then aggregate unpaid principal
amount thereof notify the Administrative Agent that the Eurodollar Rate for any
Interest Period for such Advances will not adequately reflect the cost to such
Lenders of making, funding or maintaining their Eurodollar Rate Advances for
such Interest Period, the Administrative Agent shall forthwith so notify the
Domestic Borrower, the other Applicable Borrowers and the Appropriate Lenders,
whereupon (i) each such Eurodollar Rate Advance under such Facility will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance and (ii) the obligation of the Appropriate
Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be
suspended until the Administrative Agent shall notify the Domestic Borrower and
the other Applicable Borrowers that such Lenders have determined that the
circumstances causing such suspension no longer exist.

                  (d) Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Domestic
Borrower and each other Applicable Borrower through the Administrative Agent,
(i) each Eurodollar Rate Advance under each Facility under which such Lender has
a Commitment will automatically, upon such demand, Convert into a Base Rate
Advance and (ii) the obligation of the Appropriate Lenders to make, or to
Convert Advances into, Eurodollar Rate Advances shall be suspended until the
Administrative Agent shall notify the Domestic Borrower and each other
Applicable Borrower that such Lender has determined that the circumstances
causing such suspension no longer exist; provided, however, that, before making
any such demand, such Lender agrees to use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions) to designate a
different Eurodollar Lending Office if the making of such a designation would
allow such Lender or its Eurodollar Lending Office to continue to perform its
obligations to make Eurodollar Rate Advances or to continue to fund or maintain
Eurodollar Rate Advances and would not, in the judgment of such Lender, be
otherwise disadvantageous to such Lender.

                  SECTION 2.11.  Payments and Computations.

                  (a) (i) US Dollar Payments. Each Applicable Borrower shall
make each payment denominated in US Dollars due from it hereunder and under its
Notes, irrespective of any right of counterclaim or set-off (except as otherwise
provided in Section 2.15), not later than 11:00 A.M. (New York City time) on the
day when due in US Dollars to the Administrative Agent at the Administrative
Agent's Account in same day funds, with payments being received by the
Administrative Agent after such time being deemed to have been received on the
next succeeding Business Day. The Administrative Agent will promptly thereafter
cause like funds to be

                                Credit Agreement
<PAGE>   34

                                       29

distributed as follows: (A) if such payment by the Applicable Borrower is in
respect of principal, interest, commitment fees or any other Obligation then
payable hereunder and under the Notes of the Applicable Borrower to more than
one Lender Party, to such Lender Parties for the account of their respective
Applicable Lending Offices ratably in accordance with the amounts of such
respective Obligations then payable to such Lender Parties and (B) if such
payment by the Applicable Borrower is in respect of any Obligation then payable
hereunder to one Lender Party, to such Lender Party for the account of its
Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement.

                           (ii) Offshore Currency Payments. Each Applicable
         Borrower shall make each payment denominated in an Offshore Currency
         due from it hereunder and under its Notes, irrespective of any right of
         counterclaim or set-off (except as otherwise provided in Section 2.15),
         not later than 11:00 A.M. (Local Time) on the day when due in such
         Offshore Currency to the Offshore Currency Agent at the account
         designated by the Offshore Currency Agent from time to time to the
         Applicable Borrower for payments in such currency, in same day funds,
         with payments being received by the Offshore Currency Agent after such
         time being deemed to have been received on the next succeeding Business
         Day. The Offshore Currency Agent will promptly thereafter cause the
         following actions to be taken and the following distributions to be
         made:

                                (A) if such payment by the Applicable Borrower
                  is in respect of principal of any Offshore Swing Line Advance,
                  the Offshore Currency Agent shall either (1) distribute like
                  funds to the Appropriate Swing Line Lender, or (2) if the
                  Revolving Credit Lenders have purchased their respective Pro
                  Rata Shares of such Swing Line Advance from such Swing Line
                  Lender, the Offshore Currency Agent shall (x) apply such
                  payment to the purchase of US Dollars in an Equivalent amount
                  and (y) distribute the US Dollars so purchased to the
                  Revolving Credit Lenders for the account of their respective
                  Applicable Lending Offices ratably in accordance with their
                  respective Pro Rata Shares of such Swing Line Advance; and

                                (B) if such payment by the Applicable Borrower
                  is in respect of interest accrued on any Offshore Swing Line
                  Advance for any period, (1) the Offshore Currency Agent shall
                  (x) apply a portion of such payment to the purchase of US
                  Dollars in the amount of the US Dollar Equivalent of the
                  product of the Applicable Margin and the then outstanding
                  principal amount of such Swing Line Advance calculated for
                  such period and (y) distribute the US Dollars so purchased to
                  the Revolving Credit Lenders for the account of their
                  respective Applicable Lending Offices ratably in accordance
                  with their respective Pro Rata Shares of the Revolving Credit
                  Facility and (2) distribute the remainder of such interest
                  payment in like funds to the Appropriate Swing Line Lender, or
                  if the

                                Credit Agreement

<PAGE>   35

                                       30

                  Revolving Credit Lenders have purchased their respective Pro
                  Rata Shares of such Swing Line Advance, the Offshore Currency
                  Agent shall (x) apply the remainder of such payment to the
                  purchase of US Dollars in an Equivalent amount and (y)
                  distribute the US Dollars so purchased to the Revolving Credit
                  Lenders for the account of their respective Applicable Lending
                  Offices ratably in accordance with their respective Pro Rata
                  Shares of the Revolving Credit Facility.

                           (iii) Payments on Assigned Obligations. Upon its
         acceptance of an Assignment and Acceptance and recording of the
         information contained therein in the Register pursuant to Section
         8.07(d), from and after the effective date of such Assignment and
         Acceptance, the Administrative Agent shall make all payments hereunder
         and under the Notes in respect of the interest assigned thereby to the
         Lender Party assignee thereunder, and the parties to such Assignment
         and Acceptance shall make all appropriate adjustments in such payments
         for periods prior to such effective date directly between themselves.

                  (b)      Each Applicable Borrower hereby authorizes each
Lender Party and each of its Affiliates, if and to the extent payment owed to
such Lender Party is not made when due hereunder or, in the case of a Lender,
under the Note held by such Lender, to charge from time to time, to the fullest
extent permitted by law, against any or all of such Applicable Borrower's
accounts with such Lender Party or such Affiliate any amount so due.

                  (c)      Except as otherwise provided in any Joinder Agreement
with respect to the calculation of interest on any Offshore Swing Line Advances,
all computations of interest based on the Base Rate shall be made by the
Administrative Agent or the Offshore Currency Agent, as the case may be, on the
basis of a year of 365 or 366 days, as the case may be, and all computations of
interest based on the Eurodollar Rate or the Federal Funds Rate and of fees and
Letter of Credit commissions shall be made by the Administrative Agent on the
basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest, fees or commissions are payable. Each determination by the
Administrative Agent or the Offshore Currency Agent of an interest rate, fee,
commission or exchange rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.

                  (d)      Whenever any payment hereunder or under the Notes
shall be stated to be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest or commitment
fee, as the case may be; provided, however, that, if such extension would cause
payment of interest on or principal of Eurodollar Rate Advances to be made in
the next following calendar month, such payment shall be made on the next
preceding Business Day.

                                Credit Agreement
<PAGE>   36

                                       31

                  (e) Unless the Administrative Agent shall have received notice
from an Applicable Borrower prior to the date on which any payment is due to any
Lender Party hereunder that the Applicable Borrower will not make such payment
in full, the Administrative Agent may assume that the Applicable Borrower has
made such payment in full to the Administrative Agent or the Offshore Currency
Agent, as the case may be, on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each such Lender Party
on such due date an amount equal to the amount then due such Lender Party. If
and to the extent the Applicable Borrower shall not have so made such payment in
full to the Administrative Agent, each such Lender Party shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender
Party together with interest thereon, for each day from the date such amount is
distributed to such Lender Party until the date such Lender Party repays such
amount to the Administrative Agent, at the Federal Funds Rate.

                  (f) If the Administrative Agent receives funds for application
to the Obligations under the Loan Documents under circumstances for which the
Loan Documents do not specify the Advances or the Facility to which, or the
manner in which, such funds are to be applied, the Administrative Agent may, but
shall not be obligated to, elect to distribute such funds to each Lender Party
ratably in accordance with such Lender Party's proportionate share of the
principal amount of all outstanding Advances and the Available Amount of all
Letters of Credit then outstanding, in repayment or prepayment of such of the
outstanding Advances or other Obligations owed to such Lender Party, and for
application to such principal installments, as the Administrative Agent shall
direct.

                  (g) All payments of principal of, interest on, and any other
amount owing with respect to, any Offshore Swing Line Advances shall be made to
the Offshore Currency Agent as directed by it for the account of the Appropriate
Swing Line Lender and the Revolving Credit Lenders as provided pursuant to
Section 2.11(a)(ii). Except as otherwise provided herein, all payments by each
Applicable Borrower with respect to principal of, interest on, and any other
amount owing with respect to, any Offshore Swing Line Advance shall be made in
the Offshore Currency in which such Advance is denominated or payable. Such
payments shall be made in same day or other funds as may be determined by the
Offshore Currency Agent to be customary in the place of disbursement or payment
for the settlement of international banking transactions in such Offshore
Currency and no later than such time on the dates specified herein as may be
determined by the Offshore Currency Agent to be necessary for such payment to be
credited on such date, in each case, as specified in the applicable Joinder
Agreement for the Appropriate Swing Line Lender which has agreed to make Swing
Line Advances in such Offshore Currency available hereunder. Any payment
received by a Swing Line Lender later than the time specified above shall be
deemed to have been received on the following Business Day, and any applicable
interest or fee shall continue to accrue.

                                Credit Agreement
<PAGE>   37
                                       32

                  SECTION 2.12. Taxes. (a) Except as set forth in this Section
2.12, any and all payments by each Applicable Borrower hereunder or under its
Notes shall be made, in accordance with Section 2.11, and free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender Party and each Agent, taxes that are
imposed on overall net income, net profits or capital (and franchise or similar
taxes imposed as a result of doing business in lieu thereof, whether measured by
income, profits, receipts or capital) by the country, state or any political
subdivision thereof (x) under the laws of which such Lender Party or such Agent,
as the case may be, is organized or is a citizen or resident, or (y) in which
such Lender Party or such Agent, as the case may be, is doing business or has a
permanent establishment (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities in respect of payments
hereunder or under the Notes being hereinafter referred to as "TAXES" and all
such excluded taxes being referred to herein as "EXCLUDED TAXES"). If the
Applicable Borrower shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder or under any of its Notes to any Lender
Party or any Agent, (i) subject to Section 2.12(h), the sum payable by the
Applicable Borrower shall be increased as may be necessary so that after the
Applicable Borrower and the Administrative Agent have made all required
deductions (including deductions applicable to additional sums payable under
this Section 2.12) such Lender Party or such Agent, as the case may be, receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Applicable Borrower shall make all such deductions and (iii) the
Applicable Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.

                  (b) In addition, each Applicable Borrower shall pay any
present or future stamp, documentary, excise, property or similar taxes, charges
or levies that arise from any payment made by it hereunder or under its Notes or
from its execution, delivery or registration of, performance under, or otherwise
with respect to, this Agreement or its Notes (hereinafter referred to as "OTHER
TAXES").

                  (c) Subject to Section 2.12(h), each Applicable Borrower shall
indemnify each Lender Party and each Agent for and hold them harmless against
the full amount of Taxes and Other Taxes, imposed on or paid by such Lender
Party or such Agent (as the case may be) and any liability (including penalties,
additions to tax, interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be made within 30 days from the date such
Lender Party or such Agent (as the case may be) makes written demand therefor.

                  (d) Within 30 days after the date of any payment of Taxes,
each Applicable Borrower shall furnish to the Administrative Agent, at its
address referred to in Section 8.02, the original or a certified copy of a
receipt (or other evidence of payment reasonably satisfactory to the
Administrative Agent) evidencing such payment. In the case of any payment
hereunder or under its Notes by or on behalf of the Domestic Borrower through an
account or branch outside

                                Credit Agreement
<PAGE>   38

                                       33

the United States or by or on behalf of the Domestic Borrower by a payor that is
not a United States person, if the Domestic Borrower determines that no Taxes
are payable in respect thereof, the Domestic Borrower shall furnish, or shall
cause such payor to furnish, to the Administrative Agent, at such address, an
opinion of counsel acceptable to the Administrative Agent stating that such
payment is exempt from Taxes. For purposes of this Section 2.12, the terms
"UNITED STATES" and "UNITED STATES PERSON" shall have the meanings specified in
Section 7701 of the Internal Revenue Code.

                  (e) Each Domestic Borrower Lender Party organized under the
laws of a jurisdiction outside the United States shall, on or prior to the date
of its execution and delivery of this Agreement in the case of each Initial
Lender Party and on the date of the Assignment and Acceptance pursuant to which
it becomes a Domestic Borrower Lender Party in the case of each other Lender
Party, provide each of the Administrative Agent and the Domestic Borrower with
(i) two original Internal Revenue Service forms W-8BEN or W-8ECI, as applicable
(or any successor or other applicable form prescribed by the Internal Revenue
Service), or (ii) in the case of a Lender Party claiming exemption from U.S.
federal withholding tax under Section 871(h) or 881(c) of the Internal Revenue
Code with respect to payments of "portfolio interest," a statement substantially
in the form of Exhibit J and two copies of Internal Revenue Service Form W-8BEN
(or any successor or other applicable form prescribed by the Internal Revenue
Service), certifying that such Lender Party is exempt from or entitled to a
reduced rate of United States withholding tax on payments pursuant to this
Agreement or the Notes. Upon request in writing by the Domestic Borrower, each
such Domestic Borrower Lender Party shall deliver to the Domestic Borrower and
Administrative Agent (provided that such Lender Party remains lawfully able to
do so), two further duly executed forms and statements, properly completed in
all material respects, at or before the time any such form or statement expires
or becomes obsolete, or as otherwise reasonably requested in writing by the
Domestic Borrower. Each such Domestic Borrower Lender Party shall promptly
notify the Domestic Borrower at any time it determines that it is no longer in a
position to provide any previously delivered certificate to the Domestic
Borrower (or any other form or certification adopted by the U.S. taxing
authorities for such purpose). If the forms provided by a Domestic Borrower
Lender Party at the time such Lender Party first becomes a party to this
Agreement indicate a United States interest withholding tax rate in excess of
zero, withholding tax at such rate shall be considered excluded from Taxes
unless and until such Lender Party provides the appropriate forms certifying
that a lesser rate applies, whereupon withholding tax at such lesser rate only
shall be considered excluded from Taxes for periods governed by such forms;
provided, however, that if, at the effective date of the Assignment and
Acceptance pursuant to which a Domestic Borrower Lender Party becomes a party to
this Agreement, the Domestic Borrower Lender Party assignor was entitled to
payments under subsection (a) of this Section 2.12 in respect of United States
withholding tax with respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to withholding taxes that may
be imposed in the future or other amounts otherwise includable in Taxes) United
States withholding tax, if any, applicable with respect to the Domestic Borrower

                                Credit Agreement
<PAGE>   39

                                       34

Lender Party assignee on such date. If any form or document referred to in this
subsection (e) requires the disclosure of information, other than information
necessary to compute the tax payable and information required on the date hereof
by Internal Revenue Service forms W-8BEN or W-8ECI (or the related certificate
described above), that the applicable Lender Party reasonably considers to be
confidential, such Lender Party shall give notice thereof to the Domestic
Borrower and shall not be obligated to include in such form or document such
confidential information.

                  (f) Each Domestic Borrower Lender Party which is a United
States person shall, on or prior to the date of its execution and delivery of
this Agreement in the case of each Initial Lender Party and on the date of the
Assignment and Acceptance pursuant to which it becomes a Domestic Borrower
Lender Party in the case of each other Domestic Borrower Lender Party, deliver
to the Domestic Borrower and the Administrative Agent two duly completed copies
of United States Internal Revenue Service Form W-9 (or any successor or other
applicable form prescribed by the Internal Revenue Service) unless it
establishes to the reasonable satisfaction of the Domestic Borrower that it is
otherwise eligible for an exemption from backup withholding tax or other
applicable withholding tax. Upon request in writing by the Domestic Borrower,
each such Domestic Borrower Lender Party shall deliver to the Domestic Borrower
and Administrative Agent (provided that such Lender Party remains lawfully able
to do so), two further duly executed forms and statements, properly completed in
all material respects, at or before the time any such form or statement expires
or becomes obsolete, or otherwise as reasonably requested by the Domestic
Borrower. Each such Lender Party shall promptly notify the Domestic Borrower at
any time it determines that it is no longer in a position to provide any
previously delivered certificate to the Domestic Borrower (or any other form or
certification adopted by the U.S. taxing authorities for such purpose).

                (g) Each Lender Party which has made an Advance to an Offshore
Borrower, or executed an Assignment and Acceptance with respect to such an
Advance shall, on or prior to the date it makes such an Advance or executes such
an Assignment and Acceptance, provide each of the Administrative Agent and
applicable Offshore Borrower with any forms, certifications or other information
as may reasonably be requested by such Offshore Borrower in writing prior to
requesting such Advance, for the purpose of minimizing or eliminating any Taxes
required to be paid with respect to any Offshore Acquisition Advance or Offshore
Swing Line Advance under the laws of the jurisdiction in which such Offshore
Borrower is organized, or is a resident, is doing business or has a fixed base
or permanent establishment and shall also deliver such forms at such other times
as an Offshore Borrower may reasonably request in writing. Each such Lender
Party shall promptly notify the applicable Offshore Borrower at any time it
determines it is no longer in a position to provide any previously delivered
form, certification or other applicable information.

                                Credit Agreement
<PAGE>   40

                                       35

                  (h) For any period with respect to which a Lender Party has
failed to provide any Applicable Borrower with the appropriate form described in
subsection (e), (f) or (g) above (other than if such failure is due to a change
in law occurring after the date on which a form originally was required to be
provided or, in the case of a form requested pursuant to clause (g) above, if
such Lender Party has notified the Applicable Borrower of a reasonable basis for
such failure), such Lender Party shall not be entitled to indemnification under
subsection (a) or (c) of this Section 2.12 with respect to Taxes imposed by
reason of such failure; provided, however, that should a Lender Party become
subject to Taxes because of its failure to deliver a form required hereunder,
the Applicable Borrower shall take such steps as such Lender Party shall
reasonably request to assist such Lender Party to recover such Taxes.

                  (i) Each Lender Party which is not a United States person,
agrees to indemnify and hold harmless the Domestic Borrower from and against any
and all taxes, related penalties and interest, and reasonable out-of-pocket
costs incurred by the Domestic Borrower as a result of a failure by the Domestic
Borrower to comply with its obligations to deduct or withhold any Taxes from any
payment made pursuant to this Agreement, which failure resulted solely from the
Domestic Borrower's reasonable reliance on information provided by such Lender
Party on a form referred to in Section 2.12(e) or (f).

                  (j) If any Lender Party determines, in its sole discretion,
that it has finally and irrevocably received a refund of any Taxes that have
been paid or reimbursed by any Applicable Borrower pursuant to Section 2.12(a)
or (c) in respect of payments hereunder or under the Notes that it would
otherwise not have obtained and that would result in total payments made under
this Section 2.12 exceeding that amount needed to make such Lender Party whole,
such Lender Party shall, to the extent that it determines in its sole discretion
that it can do so without prejudice to the retention of the amount of such
refund, pay to the Applicable Borrower following actual receipt of such refund
and without any interest thereon, the amount of such refund after deducting
therefrom all out-of-pocket expenses incurred by or on behalf of such Lender
Party in securing such refund; provided that the Applicable Borrower agrees,
upon request of such Lender Party, to return the amount of such refund to such
Lender Party, together with the amount of all additional out-of-pocket expenses,
penalties, interest or other charges in respect thereof, if such Lender Party is
required to repay or otherwise loses the benefit of such refund. Nothing in this
Section 2.12 shall be construed to interfere with the right of a Lender Party to
arrange its tax affairs in whatever manner it thinks fit or require any Lender
Party to claim any refund, or to require any Lender Party to make available to
any Applicable Borrower or Administrative Agent any of its tax returns or any
other information relating to Taxes that it deems to be confidential.

                  SECTION 2.13. Sharing of Payments, Etc. Each Initial Lender
hereby acknowledges and agrees to, and by its execution and delivery of its
Assignment and Acceptance, each other Lender acknowledges and agrees to, all the
terms and provisions of the Collateral Sharing Agreement. The Domestic Borrower
and each Offshore Borrower agrees that

                                Credit Agreement

<PAGE>   41

                                       36

any Lender Party purchasing an interest or participating interest from another
Lender Party pursuant to the Collateral Sharing Agreement may, to the fullest
extent permitted by law, exercise all its rights of payment (including the right
of set-off) with respect to such interest or participating interest, as the case
may be, as fully as if such Lender Party were the direct creditor of the
Applicable Borrower in the amount of such interest or participating interest, as
the case may be.

                  SECTION 2.14. Use of Proceeds. The proceeds of the Advances
(other than Term B Advances made pursuant to the Existing Credit Agreement) and
issuances of Letters of Credit shall be available (and the Domestic Borrower and
each Offshore Borrower each agrees that it shall use such proceeds and Letters
of Credit) solely to finance Domestic Permitted Acquisitions by the Domestic
Borrower and its Domestic Subsidiaries, to finance Offshore Permitted
Acquisitions by the Offshore Borrowers and for general corporate purposes of the
Domestic Borrower and its Subsidiaries (including the Offshore Borrowers).

                  SECTION 2.15. Defaulting Lenders. (a) In the event that, at
any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such
Defaulting Lender shall owe a Defaulted Advance to an Applicable Borrower and
(iii) the Applicable Borrower shall be required to make any payment hereunder or
under any other Loan Document to or for the account of such Defaulting Lender,
then the Applicable Borrower may, so long as no Default shall occur or be
continuing at such time and to the fullest extent permitted by applicable law,
set off and otherwise apply the Obligation of the Applicable Borrower to make
such payment to or for the account of such Defaulting Lender against the
obligation of such Defaulting Lender to make such Defaulted Advance. In the
event that, on any date, the Applicable Borrower shall so set off and otherwise
apply its obligation to make any such payment against the obligation of such
Defaulting Lender to make any such Defaulted Advance on or prior to such date,
the amount so set off and otherwise applied by the Applicable Borrower shall
constitute for all purposes of this Agreement and the other Loan Documents an
Advance by such Defaulting Lender made on the date of such setoff under the
Facility pursuant to which such Defaulted Advance was originally required to
have been made pursuant to Section 2.01. Such Advance shall be considered, for
all purposes of this Agreement, to comprise part of the Borrowing in connection
with which such Defaulted Advance was originally required to have been made
pursuant to Section 2.01, even if the other Advances comprising such Borrowing
shall be Eurodollar Rate Advances on the date such Advance is deemed to be made
pursuant to this subsection (a). The Applicable Borrower shall notify the
Administrative Agent at any time the Applicable Borrower exercises its right of
set-off pursuant to this subsection (a) and shall set forth in such notice (A)
the name of the Defaulting Lender and the Defaulted Advance required to be made
by such Defaulting Lender and (B) the amount set off and otherwise applied in
respect of such Defaulted Advance pursuant to this subsection (a). Any portion
of such payment otherwise required to be made by the Applicable Borrower to or
for the account of such Defaulting Lender which is paid by the Applicable
Borrower, after giving effect to the amount

                                Credit Agreement
<PAGE>   42
                                       37

set off and otherwise applied by the Applicable Borrower pursuant to this
subsection (a), shall be applied by the Administrative Agent as specified in
subsection (b) or (c) of this Section 2.15.

                  (b)   In the event that, at any one time, (i) any Lender Party
shall be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted
Amount to any Agent or any of the other Lender Parties and (iii) an Applicable
Borrower shall make any payment hereunder or under any other Loan Document to
the Administrative Agent for the account of such Defaulting Lender, then the
Administrative Agent may, on its behalf or on behalf of such other Agents or
such other Lender Parties and to the fullest extent permitted by applicable law,
apply at such time the amount so paid by the Applicable Borrower to or for the
account of such Defaulting Lender to the payment of each such Defaulted Amount
to the extent required to pay such Defaulted Amount. In the event that the
Administrative Agent shall so apply any such amount to the payment of any such
Defaulted Amount on any date, the amount so applied by the Administrative Agent
shall constitute for all purposes of this Agreement and the other Loan Documents
payment, to such extent, of such Defaulted Amount on such date. Any such amount
so applied by the Administrative Agent shall be retained by the Administrative
Agent or distributed by the Administrative Agent to such other Agents or such
other Lender Parties, ratably in accordance with the respective portions of such
Defaulted Amounts payable at such time to the Administrative Agent, such other
Agents and such other Lender Parties and, if the amount of such payment made by
the Applicable Borrower shall at such time be insufficient to pay all Defaulted
Amounts owing at such time to the Administrative Agent, such other Agents and
such other Lender Parties, in the following order of priority:

                  (i)   first, to the Agents for any Defaulted Amounts then
         owing to them, in their capacities as such, ratably in accordance with
         such respective Defaulted Amounts then owing to the Agents;

                  (ii)  second, to the Issuing Bank and the Swing Line Lenders
         for any Defaulted Amounts then owing to them, in their capacities as
         such, ratably in accordance with such respective Defaulted Amounts then
         owing to the Issuing Bank and the Swing Line Lenders; and

                  (iii) third, to any other Lender Parties for any Defaulted
         Amounts then owing to such other Lender Parties, ratably in accordance
         with such respective Defaulted Amounts then owing to such other Lender
         Parties.

Any portion of such amount paid by the Applicable Borrower for the account of
such Defaulting Lender remaining, after giving effect to the amount applied by
the Administrative Agent pursuant to this subsection (b), shall be applied by
the Administrative Agent as specified in subsection (c) of this Section 2.15.

                                Credit Agreement
<PAGE>   43
                                       38

                  (c)   In the event that, at any one time, (i) any Lender Party
shall be a Defaulting Lender, (ii) such Defaulting Lender shall not owe a
Defaulted Advance or a Defaulted Amount and (iii) an Applicable Borrower, any
Agent or any other Lender Party shall be required to pay or distribute any
amount hereunder or under any other Loan Document to or for the account of such
Defaulting Lender, then the Applicable Borrower or such Agent or such other
Lender Party shall pay such amount to the Administrative Agent to be held by the
Administrative Agent, to the fullest extent permitted by applicable law, in
escrow or the Administrative Agent shall, to the fullest extent permitted by
applicable law, hold in escrow such amount otherwise held by it. Any funds held
by the Administrative Agent in escrow under this subsection (c) shall be
deposited by the Administrative Agent in an account with an institution
designated by the Administrative Agent, in the name and under the control of the
Administrative Agent, but subject to the provisions of this subsection (c). The
terms applicable to such account, including the rate of interest payable with
respect to the credit balance of such account from time to time, shall be such
designated institution's standard terms applicable to escrow accounts maintained
with it. Any interest credited to such account from time to time shall be held
by the Administrative Agent in escrow under, and applied by the Administrative
Agent from time to time in accordance with the provisions of, this subsection
(c). The Administrative Agent shall, to the fullest extent permitted by
applicable law, apply all funds so held in escrow from time to time to the
extent necessary to make any Advances required to be made by such Defaulting
Lender and to pay any amount payable by such Defaulting Lender hereunder and
under the other Loan Documents to the Administrative Agent or any other Lender
Party, as and when such Advances or amounts are required to be made or paid and,
if the amount so held in escrow shall at any time be insufficient to make and
pay all such Advances and amounts required to be made or paid at such time, in
the following order of priority:

                  (i)   first, to the Agents for any amounts then due and
         payable by such Defaulting Lender to them hereunder, in their
         capacities as such, ratably in accordance with such respective amounts
         then due and payable to the Agents;

                  (ii)  second, to the Issuing Bank and the Swing Line Lenders
         for any amounts then due and payable to them hereunder, in their
         capacities as such, by such Defaulting Lender, ratably in accordance
         with such respective amounts then due and payable to the Issuing Bank
         and the Swing Line Lender;

                  (iii) third, to any other Lender Parties for any amount then
         due and payable by such Defaulting Lender to such other Lender Parties
         hereunder, ratably in accordance with such respective amounts then due
         and payable to such other Lender Parties; and

                  (iv)  fourth, to the Applicable Borrower for any Advance then
         required to be made by such Defaulting Lender pursuant to a Commitment
         of such Defaulting Lender.

                                Credit Agreement
<PAGE>   44
                                       39

In the event that any Lender Party that is a Defaulting Lender shall, at any
time, cease to be a Defaulting Lender, any funds held by the Administrative
Agent in escrow at such time with respect to such Lender Party shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender Party to the Obligations owing to such Lender Party at such time under
this Agreement and the other Loan Documents ratably in accordance with the
respective amounts of such Obligations outstanding at such time.

                  (d) The rights and remedies against a Defaulting Lender under
this Section 2.15 are in addition to other rights and remedies that any
Applicable Borrower may have against such Defaulting Lender with respect to any
Defaulted Advance and that any Agent or any Lender Party may have against such
Defaulting Lender with respect to any Defaulted Amount.

                  SECTION 2.16. Evidence of Debt. (a) Each Lender Party shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Domestic Borrower and each Offshore Borrower to such
Lender Party resulting from each Advance owing to such Lender Party from time to
time, including the amounts of principal and interest payable and paid to such
Lender Party from time to time hereunder. The Domestic Borrower and each
Offshore Borrower agrees that upon notice by any Lender Party to the Domestic
Borrower or the applicable Offshore Borrower (with a copy of such notice to the
Administrative Agent) to the effect that a promissory note or other evidence of
indebtedness is required or appropriate in order for such Lender Party to
evidence (whether for purposes of pledge, enforcement or otherwise) the Advances
owing to, or to be made by, such Lender Party, the Domestic Borrower or the
applicable Offshore Borrower, as the case may be, shall promptly execute and
deliver to such Lender Party, with a copy to the Administrative Agent, a
Revolving Credit Note, a Term A Note, an Offshore Acquisition Note and/or an
Offshore Swing Line Note, as applicable, in substantially the form of Exhibits
A-1, A-2, A-3 and A-4 hereto, respectively, payable to the order of such Lender
Party in a principal amount equal to the Revolving Credit Commitment, the Term A
Commitment or the Offshore Acquisition Commitment, respectively, of such Lender
Party or the Applicable Swing Line Sub-Limit, as the case may be. All references
to Notes in the Loan Documents shall mean Notes, if any, to the extent issued
hereunder.

                  (b) The Register maintained by the Administrative Agent
pursuant to Section 8.07(d) shall include a control account, and a subsidiary
account for each Lender Party, in which accounts (taken together) shall be
recorded (i) the date and amount of each Borrowing made hereunder, the Type of
Advances comprising such Borrowing and, if appropriate, the Interest Period
applicable thereto, (ii) the terms of each Assignment and Acceptance delivered
to and accepted by it, (iii) the amount of any principal or interest due and
payable or to become due and payable from the Domestic Borrower and each
Offshore Borrower to each Lender Party hereunder, and (iv) the amount of any sum
received by the Administrative Agent or the Offshore

                                Credit Agreement
<PAGE>   45
                                       40

Currency Agent from the Domestic Borrower and each Offshore Borrower hereunder
and each Lender Party's share thereof.

                  (c) Entries made in good faith by the Administrative Agent in
the Register pursuant to subsection (b) above, and by each Lender Party in its
account or accounts pursuant to subsection (a) above, shall be prima facie
evidence of the amount of principal and interest due and payable or to become
due and payable from the Domestic Borrower and each Offshore Borrower to, in the
case of the Register, each Lender Party and, in the case of such account or
accounts, such Lender Party, under this Agreement, absent manifest error;
provided, however, that the failure of the Administrative Agent or such Lender
Party to make an entry, or any finding that an entry is incorrect, in the
Register or such account or accounts shall not limit or otherwise affect the
obligations of the Domestic Borrower or the applicable Offshore Borrower under
this Agreement.

                                   ARTICLE III

                            CONDITIONS OF LENDING AND
                         ISSUANCES OF LETTERS OF CREDIT

                  SECTION 3.01. Conditions Precedent to Initial Extension of
Credit to Domestic Borrower. The obligation of each Lender to make a Revolving
Credit Advance, a Term A Advance or a Swing Line Advance in US Dollars to the
Domestic Borrower or of the Issuing Bank to issue a Letter of Credit for the
account of the Domestic Borrower on the occasion of the Initial Extension of
Credit hereunder is subject to the satisfaction of the following conditions
precedent before or concurrently with the Initial Extension of Credit:

                  (a) the Administrative Agent shall have received on or before
         the day of the Initial Extension of Credit the following, each dated on
         or prior to such day (unless otherwise specified), in form and
         substance satisfactory to the Joint Lead Arrangers (unless otherwise
         specified) and in sufficient copies for each Lender Party:

                      (i)  this Agreement, duly executed by the Domestic
                  Borrower, the Agents, the Domestic Swing Line Lender, the
                  Initial Issuing Bank and the Initial Lenders;

                      (ii) the Domestic Security Agreement, duly executed by the
                  Domestic Borrower and each Domestic Subsidiary Guarantor,
                  together with evidence satisfactory to the Administrative
                  Agent that all actions that the Administrative Agent may deem
                  necessary or desirable in order to perfect and protect the
                  first

                                Credit Agreement
<PAGE>   46

                                       41

                  priority liens and security interests created under the
                  Domestic Security Agreement have been taken;

                           (iii) the Domestic Subsidiary Guaranty, duly executed
                  by each Domestic Subsidiary Guarantor;

                           (iv) a certificate of the Domestic Borrower and each
                  Domestic Subsidiary Guarantor, signed on behalf of each such
                  Loan Party by a Responsible Officer, dated the date of the
                  Initial Extension of Credit (the statements made in which
                  certificate shall be true on and as of the date of the Initial
                  Extension of Credit), certifying as to

                                    (A) the absence of any amendments to the
                           charter of such Loan Party since the date of the
                           Secretary of State's certificate referred to in
                           Section 3.01(a)(vi) of the Existing Credit Agreement,

                                    (B) the absence of any amendments to the
                           bylaws of such Loan Party delivered to the
                           Administrative Agent on the Initial Closing Date
                           pursuant to Section 3.01(a) of the Existing Credit
                           Agreement,

                                    (C) an attached, true, correct and complete
                           copy of the resolutions of the Board of Directors of
                           such Loan Party authorizing the execution, delivery
                           and performance by such Loan Party of each of the
                           foregoing Loan Documents to which it is a party and
                           of the Offshore Guaranty,

                                    (D) the due incorporation and good standing
                           or valid existence of such Loan Party as a
                           corporation organized under the laws of the
                           jurisdiction of its incorporation, and the absence of
                           any proceeding for the dissolution or liquidation of
                           such Loan Party,

                                    (E) the names and true signatures of the
                           officers of such Loan Party authorized to sign each
                           Loan Document to which it is or is to be a party,

                                    (F) the truth in all material respects of
                           the representations and warranties contained in the
                           Loan Documents as though made on and as of the date
                           of the Initial Extension of Credit, and

                                    (G) the absence of any event occurring and
                           continuing, or resulting from the Initial Extension
                           of Credit, that constitutes a Default;

                           (v) a Notice of Borrowing or Notice of Issuance, as
                  applicable, relating to the Initial Extension of Credit; and

                                Credit Agreement

<PAGE>   47

                                       42

                           (vi) a favorable opinion of Fried, Frank, Harris,
                  Shriver & Jacobson, counsel for the Loan Parties, in
                  substantially the form of Exhibit I hereto and as to such
                  other matters as any Lender Party through the Administrative
                  Agent may reasonably request;

                  (b) there shall exist no action, suit, investigation,
         litigation or proceeding affecting any Loan Party or any of its
         Subsidiaries pending or threatened before any court, governmental
         agency or arbitrator that (i) would reasonably be expected to have a
         Material Adverse Effect or (ii) purports to affect the legality,
         validity or enforceability of any Loan Document or the consummation of
         the transactions contemplated thereby; and

                  (c) the Domestic Borrower shall have paid all accrued fees of
         the Agents and the Lender Parties and all accrued expenses of the
         Agents (including the accrued fees and expenses of counsel to the
         Syndication Agent).

                  SECTION 3.02. Conditions Precedent to Swing Line Advances to
any Offshore Borrower. The obligation of each Swing Line Lender to make a Swing
Line Advance to any Offshore Borrower on the occasion of the initial extension
of credit hereunder to such Offshore Borrower is subject to the satisfaction of
the following conditions precedent before or concurrently with such initial
extension of credit:

                  (a) the Administrative Agent shall have received on or before
         the day of such initial extension of credit the following, each dated
         such day (unless otherwise specified), in form and substance
         satisfactory to the Administrative Agent (unless otherwise specified)
         and in sufficient copies for each Lender Party:

                           (i) the Offshore Guaranty, duly executed by the
                  Domestic Borrower and each Domestic Subsidiary Guarantor (if
                  not previously executed and delivered by such Loan Parties)
                  and, to the extent permissible under applicable local law and
                  requested by the Administrative Agent, each Offshore
                  Subsidiary of such Offshore Borrower;

                           (ii) a Credit Agreement Supplement, duly executed by
                  such Offshore Borrower;

                           (iii) to the extent permitted under applicable local
                  law, such Offshore Collateral Documents as the Administrative
                  Agent may reasonably request, duly executed by such Offshore
                  Borrower and each of its Offshore Subsidiaries, if any,
                  together with evidence satisfactory to the Administrative
                  Agent that all actions that the Administrative Agent may deem
                  necessary or desireable in order to

                                Credit Agreement

<PAGE>   48

                                       43

                  perfect and protect the first priority liens and security
                  interests created under such Offshore Collateral Documents
                  have been taken (or that arrangements for the taking of such
                  actions satisfactory to the Administrative Agent have been
                  made);

                           (iv) a certificate of such Offshore Borrower and each
                  of its Offshore Subsidiaries, if any, signed on behalf of each
                  such Loan Party by a Responsible Officer, dated the date of
                  such initial extension of credit (the statements made in which
                  certificate shall be true on and as of the date of such
                  initial extension of credit), certifying as to

                                    (A) attached, true, complete and correct
                           copies of the charter and bylaws (or any similar
                           organizational document) of such Loan Party,

                                    (B) an attached, true, complete and correct
                           copy of the resolutions of the Board of Directors (or
                           similar managerial body) of such Loan Party
                           authorizing the execution, delivery and performance
                           by such Loan Party of each of the foregoing Loan
                           Documents to which it is a party,

                                    (C) the due organization and good standing
                           or valid existence of such Loan Party as a company
                           organized under the laws of the jurisdiction of its
                           organization, and the absence of any proceeding for
                           the dissolution or liquidation of such Loan Party,

                                    (D) the names and true signatures of the
                           officers of such Loan Party authorized to sign each
                           Loan Document to which it is or is to be a party,

                                    (E) the truth in all material respects of
                           the representations and warranties contained in the
                           Loan Documents as though made on and as of the date
                           of such initial extension of credit, and

                                    (F) the absence of any event occurring and
                           continuing, or resulting from such initial extension
                           of credit, that constitutes a Default;

                           (v)      a Notice of Borrowing relating to such
                  initial extension of credit;

                           (vi) evidence that the process agent appointed by
                  such Offshore Borrower and any such Offshore Subsidiary
                  Guarantor as its agent for service of process pursuant to the
                  applicable Loan Document has accepted such appointment; and

                                Credit Agreement

<PAGE>   49

                                       44

                           (vii) at the request of the Administrative Agent, a
                  favorable opinion of counsel for such Loan Parties as to such
                  matters as the Administrative Agent may reasonably request;

                  (b) if the requested Swing Line Advance is to be denominated
         in an Offshore Currency, the Offshore Currency Agent and the Domestic
         Borrower shall have entered into a Joinder Agreement with an
         Appropriate Swing Line Lender setting forth the additional terms on
         which Swing Line Advances in such Offshore Currency will be made
         available hereunder; and

                  (c) the Domestic Borrower shall have paid, or caused such
         Offshore Borrower to pay, all accrued fees of the Agents and the Lender
         Parties and all accrued expenses of the Agents (including the accrued
         fees and expenses of counsel to the Administrative Agent).

                  SECTION 3.03. Conditions Precedent to each Offshore
Acquisition Advances. The obligation of each Offshore Acquisition Lender to make
an Offshore Acquisition Advance to an Offshore Borrower on the occasion of each
such extension of credit hereunder to such Offshore Borrower is subject to the
satisfaction of the following conditions precedent before or concurrently with
such extension of credit:

                  (a) the Administrative Agent shall have received on or before
         the day of such extension of credit the following, each dated such day
         (unless otherwise specified), in form and substance satisfactory to the
         Joint Lead Arrangers (unless otherwise specified) and in sufficient
         copies for each Lender Party:

                           (i) the Offshore Guaranty, duly executed by the
                  Domestic Borrower and each Domestic Subsidiary Guarantor (if
                  not previously executed and delivered by such Loan Parties)
                  and, to the extent permitted under applicable local law and
                  requested by the Administrative Agent, each Offshore
                  Subsidiary of the Domestic Borrower;

                           (ii) a Credit Agreement Supplement, duly executed by
                  such Offshore Borrower (if not previously executed and
                  delivered by such Loan Party);

                           (iii) to the extent permitted under applicable local
                  law such Offshore Collateral Documents as the Administrative
                  Agent may reasonably request, duly executed by such Offshore
                  Borrower and each of its Offshore Subsidiaries, if any (or if
                  such Offshore Borrower proposes to acquire any Offshore
                  Subsidiaries in a proposed Offshore Permitted Acquisition,
                  arrangements satisfactory to the Administrative Agent shall
                  have been made for the prompt execution and delivery

                                Credit Agreement

<PAGE>   50

                                       45

                  of such Offshore Collateral Documents by such Offshore
                  Subsidiaries) and by each such Offshore Subsidiary Guarantor,
                  together with evidence satisfactory to the Administrative
                  Agent that all actions that the Administrative Agent may deem
                  necessary or desirable in order to perfect and protect the
                  first priority liens and security interests created under such
                  Offshore Collateral Documents have been taken (or that
                  arrangements for the taking of such actions satisfactory to
                  the Administrative Agent have been made);

                           (iv) a certificate of each such Loan Party, if any,
                  signed on behalf of such Loan Party by a Responsible Officer,
                  dated the date of such initial extension of credit (the
                  statements made in which certificate shall be true on and as
                  of the date of such initial extension of credit), certifying
                  as to

                                    (A) attached, true, complete and correct
                           copies of the charter and bylaws (or any similar
                           organizational document) of such Loan Party,

                                    (B) an attached, a true, complete and
                           correct copy of the resolutions of the Board of
                           Directors (or similar managerial body) of such Loan
                           Party authorizing the execution, delivery and
                           performance by such Loan Party of each of the
                           foregoing Loan Documents to which it is a party,

                                    (C) the due organization and good standing
                           or valid existence of such Loan Party as a company
                           organized under the laws of the jurisdiction of its
                           organization, and the absence of any proceeding for
                           the dissolution or liquidation of such Loan Party,

                                    (D) the names and true signatures of the
                           officers of such Loan Party authorized to sign each
                           Loan Document to which it is or is to be a party,

                                    (E) the truth in all material respects of
                           the representations and warranties contained in the
                           Loan Documents as though made on and as of the date
                           of such extension of credit, and

                                    (G) the absence of any event occurring and
                           continuing, or resulting from such extension of
                           credit, that constitutes a Default;

                           (v)      a Notice of Borrowing relating to such
                  extension of credit;

                                Credit Agreement

<PAGE>   51

                                       46

                           (vi) evidence that the process agent appointed by
                  such Offshore Borrower and any such Offshore Subsidiary
                  Guarantor as its agent for service of process pursuant to the
                  applicable Loan Document has accepted such appointment; and

                           (vii) a favorable opinion or opinions of counsel for
                  such Loan Parties as to such matters as the Administrative
                  Agent may reasonably request;

                  (b) the Domestic Borrower shall have prepared an Acquisition
         Diligence Report in respect of the business to be acquired in the
         Offshore Permitted Acquisition to be funded by the requested Offshore
         Acquisition Advances;

                  (c) the Applicable Borrower shall have entered into Hedge
         Agreements (or made arrangements satisfactory to the Administrative
         Agent to enter into Hedge Agreements) with respect to the foreign
         currency risks related to such Offshore Permitted Acquisition, in such
         amounts and for such terms as shall be agreed to by the Administrative
         Agent and such Applicable Borrower; and

                  (d) the Domestic Borrower shall have paid, or caused such
         Offshore Borrower to pay, all accrued fees of the Agents and the Lender
         Parties and all accrued expenses of the Agents (including the accrued
         fees and expenses of counsel to the Administrative Agent).

                  SECTION 3.04. Conditions Precedent to Each Borrowing and
Issuance and Renewal. The obligation of each Appropriate Lender to make an
Advance (other than a Letter of Credit Advance made by the Issuing Bank or a
Revolving Credit Lender pursuant to Section 2.03(c) and a Swing Line Advance
made by a Revolving Credit Lender pursuant to Section 2.02(b)) on the occasion
of each Borrowing (including the initial Borrowing), and the obligation of the
Issuing Bank to issue a Letter of Credit (including the initial issuance) or
renew a Letter of Credit and the right of any Applicable Borrower to request a
Swing Line Borrowing, shall be subject to the further conditions precedent that
on the date of such Borrowing or issuance or renewal (a) the following
statements shall be true (and each of the giving of the applicable Notice of
Borrowing, Notice of Swing Line Borrowing, Notice of Issuance or Notice of
Renewal and the acceptance by the Applicable Borrower of the proceeds of such
Borrowing or of such Letter of Credit or the renewal of such Letter of Credit
shall constitute a representation and warranty by the Applicable Borrower that
both on the date of such notice and on the date of such Borrowing or issuance or
renewal such statements are true):

                  (i) the representations and warranties contained in each Loan
         Document are correct on and as of such date, before and after giving
         effect to such Borrowing or issuance or renewal and to the application
         of the proceeds therefrom, as though made on

                                Credit Agreement

<PAGE>   52

                                       47

         and as of such date, other than any such representations or warranties
         that, by their terms, refer to a specific date other than the date of
         such Borrowing or issuance or renewal, in which case as of such
         specific date; and

                  (ii) no Default has occurred and is continuing, or would
         result from such Borrowing or issuance or renewal or from the
         application of the proceeds therefrom;

                  (b) the obligations of each Revolving Credit Lender to make
Revolving Credit Advances shall be subject to the further condition precedent
that on any date on which any Revolving Credit Borrowing has been requested to
fund any portion of the purchase price to be paid by the Domestic Borrower or
any of its Subsidiaries in connection with a Domestic Permitted Acquisition, (i)
no amount of the Term A Commitments shall remain undrawn (after giving effect to
any Term A Advances made on such date); and (ii) after giving effect to such
Revolving Credit Borrowing, the sum of the aggregate amount of all Revolving
Credit Borrowings utilized to fund Domestic Permitted Acquisitions since the
Initial Closing Date plus the aggregate amount of Revolving Credit Commitments
which have been converted to Offshore Acquisition Commitments made since the
Effective Date shall not exceed $25,000,000; and

                  (c) the Administrative Agent shall have received such other
approvals, opinions or documents as are otherwise required to be delivered under
this Agreement and any Appropriate Lender Party through the Administrative Agent
may reasonably request.

                  SECTION 3.05. Determinations Under Section 3.01, 3.02 or 3.03.
For purposes of determining compliance with the conditions specified in Section
3.01, 3.02 or 3.03, each Lender Party shall be deemed to have consented to,
approved or accepted or to be satisfied with each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to the Lender Parties unless an officer of the Administrative Agent
responsible for the transactions contemplated by the Loan Documents (or, in the
case of the Acquisition Diligence Report, a responsible officer of a Joint Lead
Arranger) shall have received notice from such Lender Party prior to the
applicable extension of credit specifying its objection thereto and, if such
extension of credit consists of a Borrowing, such Lender Party shall not have
made available to the Administrative Agent such Lender Party's ratable portion
of such Borrowing. Each Lender Party acknowledges and agrees that absent
direction to the contrary by the Required Lenders, the Administrative Agent, in
its sole discretion, (a) may elect not to require any Offshore Subsidiary (other
than any Offshore Borrower) to execute and deliver the Offshore Guaranty (or to
modify the terms and conditions of the Offshore Guaranty as it relates to such
Offshore Subsidiary) if the Administrative Agent shall be satisfied that such
execution and delivery would result in material adverse legal or tax
consequences to such Offshore Subsidiary, any Loan Party or any of its
affiliates, and (b) may exclude from the Lien of the Collateral Documents those
properties and assets of a Loan Party either (i) as to which the Administrative
Agent has determined that the costs of obtaining or maintaining such Lien are

                                Credit Agreement

<PAGE>   53

                                       48

excessive in relation to the value of the security to be afforded thereby, or
(ii) with respect to which the Administrative Agent shall be satisfied that the
creation or maintenance of such Lien would result in material adverse legal or
tax consequences to any Loan Party or its affiliates.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  SECTION 4.01.  Representations and Warranties of the Domestic
Borrower.  The Domestic Borrower represents and warrants as follows:

                  (a) Each Loan Party and each of its Subsidiaries (i) is duly
         organized, validly existing and in good standing under the laws of the
         jurisdiction of its organization, (ii) is duly qualified and in good
         standing as a foreign Person in each other jurisdiction in which it
         owns or leases property or in which the conduct of its business
         requires it to so qualify or be licensed except where the failure to so
         qualify or be licensed would not be reasonably likely to have a
         Material Adverse Effect and (iii) has all requisite power and authority
         (corporate or otherwise, including, without limitation, all
         governmental licenses, permits and other approvals) to own or lease and
         operate its properties and to carry on its business as now conducted
         and as proposed to be conducted. All of the outstanding Equity
         Interests in the Domestic Borrower have been validly issued, and, as of
         the Initial Closing Date, are fully paid and non-assessable are owned
         by the Equity Investors and the other Persons identified on Schedule
         4.01(a) in the amounts specified on Schedule 4.01(a) hereto free and
         clear of all Liens.

                  (b) Set forth on Schedule 4.01(b) hereto is a complete and
         accurate list of all direct and indirect Subsidiaries of each Loan
         Party as of the Initial Closing Date, showing (as to each such
         Subsidiary) the jurisdiction of its organization as of the Initial
         Closing Date, the number of shares of each class of its Equity
         Interests authorized, and the number outstanding, on the Initial
         Closing Date and the percentage of each such class of its Equity
         Interests owned (directly or indirectly) by such Loan Party (or
         Subsidiary of such Loan Party, as applicable) and the number of shares
         covered by all outstanding options, warrants, rights of conversion or
         purchase and similar rights at the date hereof. All of the outstanding
         Equity Interests in each Loan Party's Subsidiaries have been validly
         issued, are fully paid and non-assessable and are owned by such Loan
         Party or one or more of its Subsidiaries free and clear of all Liens,
         except those created under the Collateral Documents.

                  (c) The execution, delivery and performance by each Loan Party
         of each Transaction Document to which it is or is to be a party, and
         the consummation of the

                                Credit Agreement

<PAGE>   54

                                      49

         Transaction, are within such Loan Party's corporate powers, have been
         duly authorized by all necessary corporate action, and do not (i)
         contravene such Loan Party's charter or bylaws, (ii) violate any law,
         rule, regulation (including, without limitation, Regulation X of the
         Board of Governors of the Federal Reserve System), order, writ,
         judgment, injunction, decree, determination or award, (iii) except as
         set forth on Schedule 4.01(c), conflict with or result in the breach
         of, or constitute a default or, other than the Offer to Purchase,
         require any payment to be made under, any material contract, loan
         agreement, indenture, mortgage, deed of trust, lease or other
         instrument binding on or affecting any Loan Party, any of its
         Subsidiaries or any of their properties or (iv) except for the Liens
         created under the Loan Documents, result in or require the creation or
         imposition of any Lien upon or with respect to any of the properties of
         any Loan Party or any of its Subsidiaries. No Loan Party or any of its
         Subsidiaries is in violation of any such law, rule, regulation, order,
         writ, judgment, injunction, decree, determination or award or in breach
         of any such contract, loan agreement, indenture, mortgage, deed of
         trust, lease or other instrument, the violation or breach of which
         would be reasonably likely to have a Material Adverse Effect.

                  (d) No authorization or approval or other action by, and no
         notice to or filing with, any governmental authority or regulatory body
         or any other third party is required for (i) the due execution,
         delivery, recordation, filing or performance by any Loan Party of any
         Transaction Document to which it is or is to be a party, or for the
         consummation of the Transaction, (ii) the grant by any Loan Party of
         the Liens granted by it pursuant to the Collateral Documents, (iii) the
         perfection or maintenance of the Liens created under the Collateral
         Documents (including the first priority nature thereof) or (iv) the
         exercise by any Agent or any Lender Party of its rights under the Loan
         Documents or the remedies in respect of the Collateral pursuant to the
         Collateral Documents, except for (A) those which have been duly
         obtained, taken, given or made and are in full force and (B) those
         authorizations or approvals or other actions by, or notices to or
         filings with, any governmental authority or regulatory body which may
         be necessary or desireable in order to perfect the Lien of the Offshore
         Collateral Documents or the Lien of the Domestic Security Agreement in
         the Collateral specifically described in Section 4.01(n)(ii) or (iii).
         All applicable waiting periods in connection with the Transaction have
         expired without any action having been taken by any competent authority
         restraining, preventing or imposing materially adverse conditions upon
         the Transaction or the rights of the Loan Parties or their Subsidiaries
         freely to transfer or otherwise dispose of, or to create any Lien on,
         any properties now owned or hereafter acquired by any of them. The
         Acquisition has been consummated in accordance with the Acquisition
         Agreement and applicable law.

                  (e) This Agreement has been, and each other Transaction
         Document when delivered hereunder will have been, duly executed and
         delivered by each Loan Party

                                Credit Agreement

<PAGE>   55

                                       50

         party thereto. This Agreement is, and each other Transaction Document
         when delivered hereunder will be (assuming this Agreement has been duly
         authorized, executed and delivered by the Lenders), the legal, valid
         and binding obligation of each Loan Party party thereto, enforceable
         against such Loan Party in accordance with its terms, except as
         enforceability may be limited by applicable bankruptcy, insolvency,
         reorganization, moratorium, fraudulent transfer or similar laws
         affecting the enforcement of creditors' rights generally and by general
         equitable principles (whether enforcement is sought by proceedings in
         equity or at law).

                  (f) Except as set forth on Schedule 4.01(f) (the "DISCLOSED
         LITIGATION"), there is no action, suit, investigation, litigation or
         proceeding affecting any Loan Party or any of its Subsidiaries,
         including any Environmental Action, pending or, to any Loan Party's
         knowledge, threatened before any court, governmental agency or
         arbitrator that (i) would be reasonably likely to have a Material
         Adverse Effect or (ii) purports to affect the legality, validity or
         enforceability of any Transaction Document or the consummation of the
         Transaction, and there has been no change in the status, or financial
         effect on any Loan Party or any of its Subsidiaries, of the Disclosed
         Litigation from that described on Schedule 4.01(f) hereto except for
         such changes as would not reasonably be expected, either individually
         or in the aggregate, to have a Material Adverse Effect.

                  (g) The audited Consolidated balance sheets of the Domestic
         Borrower and its Subsidiaries as at December 31, 1998, and the related
         audited Consolidated statements of income and Consolidated statement of
         cash flows of the Domestic Borrower and its Subsidiaries for the fiscal
         year then ended, accompanied by an unqualified opinion of Ernst & Young
         LLP, independent public accountants, and the unaudited Consolidated
         balance sheets of the Domestic Borrower and its Subsidiaries as at
         September 30, 1999, and the related unaudited Consolidated statements
         of income and Consolidated statement of cash flows of the Domestic
         Borrower and its Subsidiaries for the nine months then ended, duly
         certified by the Chief Financial Officer of the Domestic Borrower,
         copies of which have been furnished to each Lender Party, fairly
         present, subject, in the case of said balance sheet as at September 30,
         1999, and said statements of income and cash flows for the nine months
         then ended, to year-end audit adjustments, the Consolidated financial
         condition of the Domestic Borrower and its Subsidiaries as at such
         dates and the Consolidated results of operations of the Domestic
         Borrower and its Subsidiaries for the periods ended on such dates, all
         in accordance with generally accepted accounting principles applied on
         a consistent basis, and since December 31, 1998, there has been no
         Material Adverse Change.

                  (h) The Consolidated pro forma balance sheets of the Domestic
         Borrower and its Subsidiaries as at September 30, 1999, certified by
         the Chief Financial Officer of the Domestic Borrower, copies of which
         have been furnished to each Lender Party, fairly

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<PAGE>   56

                                       51

         present the Consolidated pro forma financial condition of the Domestic
         Borrower and its Subsidiaries as at such date giving effect to the
         Acquisition and the Initial Extension of Credit hereunder. The
         financial statements on which such pro forma financial statements were
         based and the adjustments made thereto are in accordance with GAAP.

                  (i) The Consolidated forecasted balance sheets, statements of
         income and statements of cash flows of the Domestic Borrower and its
         Subsidiaries delivered to the Lender Parties pursuant to Section
         3.01(a)(xi) of the Existing Credit Agreement or 5.03 were prepared in
         good faith on the basis of the assumptions stated therein, which
         assumptions were fair in light of the conditions existing at the time
         of delivery of such forecasts, and represented, at the time of
         delivery, the Domestic Borrower's best estimate of its future financial
         performance.

                  (j) Neither the Information Memorandum nor any other
         information, exhibit or report prepared by or on behalf of any Loan
         Party and furnished to any Agent or any Lender Party in connection with
         the negotiation and syndication of the Loan Documents or pursuant to
         the terms of the Loan Documents contained, as of the date such
         Information Memorandum, exhibit or report was prepared or furnished,
         any untrue statement of a material fact or omitted to state a material
         fact necessary to make the statements made therein not misleading. The
         projections and pro forma financial information contained in the
         materials referenced above are based upon good faith estimates and
         assumptions believed by management of the Domestic Borrower to be
         reasonable at the time made, it being recognized by the Lenders that
         such financial information as it relates to future events is not to be
         viewed as fact and that actual results during the period or periods
         covered by such financial information may differ from the projected
         results set forth therein by a material amount.

                  (k) The Domestic Borrower is not engaged in the business of
         extending credit for the purpose of purchasing or carrying Margin
         Stock, and no proceeds of any Advance or drawings under any Letter of
         Credit will be used to purchase or carry any Margin Stock or to extend
         credit to others for the purpose of purchasing or carrying any Margin
         Stock.

                  (l) Neither any Loan Party nor any of its Subsidiaries is an
         "investment company", or an "affiliated person" of, or "promoter" or
         "principal underwriter" for, an "investment company", as such terms are
         defined in the Investment Company Act of 1940, as amended. Neither any
         Loan Party nor any of its Subsidiaries is 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",
         as such terms are defined in the Public Utility Holding Company Act of
         1935, as amended. Neither the making of any Advances, nor the issuance
         of any Letters of Credit, nor the application of

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<PAGE>   57

                                       52

         the proceeds or repayment thereof by the Domestic Borrower, nor the
         consummation of the other transactions contemplated by the Transaction
         Documents, will violate any provision of any such Act or any rule,
         regulation or order of the Securities and Exchange Commission
         thereunder.

                  (m) Neither any Loan Party nor any of its Subsidiaries is a
         party to any indenture, loan or credit agreement or any lease or other
         agreement or instrument or subject to any charter or corporate
         restriction that would be reasonably likely to have a Material Adverse
         Effect.

                  (n) Except for the filings and the other necessary actions (i)
         as may be necessary or desireable in order to perfect or maintain the
         Lien of the Offshore Collateral Documents, (ii) required in connection
         with perfecting the Lien of the Domestic Security Agreement in (A) any
         Intellectual Property which is registered in any jurisdiction outside
         the United States of America, (B) Off-site Goods or (C) any motor
         vehicles, or (iii) related to perfecting the Lien of the Collateral
         Documents in Collateral described in Section 5.01(j)(iv)(B), from and
         after the Effective Date all filings and other actions necessary or
         desirable to perfect and protect the security interest in the
         Collateral created under the Collateral Documents will have been duly
         made or taken and be in full force and effect, and from and after such
         date the Collateral Documents will create in favor of the
         Administrative Agent for the benefit of the Secured Parties a valid
         and, together with such filings and other actions, perfected first
         priority security interest in the Collateral subject only to the prior
         Liens and security interests permitted hereunder and under the other
         Loan Documents, securing the payment of the Secured Obligations. The
         Domestic Borrower will cause each other Loan Party to carry out the
         obligations specifically undertaken by such Loan Party under the
         Offshore Collateral Documents related to perfecting and protecting the
         Lien of such Offshore Collateral Documents. The Loan Parties are the
         legal and beneficial owners of the Collateral free and clear of any
         Lien, except for the liens and security interests created or permitted
         under the Loan Documents.

                  (o) Each Loan Party is, individually and together with its
         Subsidiaries, Solvent.

                  (p) (i) Set forth on Schedule 4.01(p) hereto is a complete and
         accurate list of all Plans, Multiemployer Plans and Welfare Plans of
         the Domestic Borrower as of the Initial Closing Date.

                  (ii) No ERISA Event has occurred or is reasonably expected to
         occur with respect to any Plan that has resulted in or is reasonably
         expected to result in a Material Adverse Effect.

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<PAGE>   58

                                       53

                  (iii) Schedule B (Actuarial Information) to the most recent
         annual report (Form 5500 Series) for each Plan, copies of which have
         been filed with the Internal Revenue Service and furnished to the
         Lender Parties, is complete and accurate and fairly presents the
         funding status of such Plan, and since the date of such Schedule B
         there has been no material adverse change in such funding status.

                  (iv) Neither any Loan Party nor any ERISA Affiliate has
         incurred or is reasonably expected to incur any Withdrawal Liability to
         any Multiemployer Plan that could have a Material Adverse Effect.

                  (v) Neither any Loan Party nor any ERISA Affiliate has been
         notified by the sponsor of a Multiemployer Plan that such Multiemployer
         Plan is in reorganization or has been terminated, within the meaning of
         Title IV of ERISA, and no such Multiemployer Plan is reasonably
         expected to be in reorganization or to be terminated, within the
         meaning of Title IV of ERISA in either case, that has resulted, or is
         reasonably likely to result in a Material Adverse Effect.

                  (vi) With respect to each scheme or arrangement mandated by a
         government other than the United States (a "FOREIGN GOVERNMENT SCHEME
         OR ARRANGEMENT") and with respect to each employee benefit plan
         maintained or contributed to by any Loan Party or any Subsidiary of any
         Loan Party that is not subject to United States law (a "FOREIGN PLAN"),
         except for instances where the failure do so would not be reasonably
         likely to result in a Material Adverse Effect, either individually or
         in the aggregate:

                           (A) Any employer and employee contributions required
                  by law or by the terms of any Foreign Government Scheme or
                  Arrangement or any Foreign Plan have been made, or, if
                  applicable, accrued, in accordance with normal accounting
                  practices.

                           (B) The fair market value of the assets of each
                  funded Foreign Plan, the liability of each insurer for any
                  Foreign Plan funded through insurance or the book reserve
                  established for any Foreign Plan, together with any accrued
                  contributions, is sufficient to procure or provide for the
                  accrued benefit obligations, as of the date hereof, with
                  respect to all current and former participants in such Foreign
                  Plan according to the actuarial assumptions and valuations
                  most recently used to account for such obligations in
                  accordance with applicable generally accepted accounting
                  principles.

                           (C) Each Foreign Plan required to be registered has
                  been registered and has been maintained in good standing with
                  applicable regulatory authorities.

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<PAGE>   59

                                       54

                  (q) Except as set forth in Schedule 4.01(q) or as would not,
         individually or in the aggregate, be reasonably likely to have a
         Material Adverse Effect:

                  (i) the operations and properties of each Loan Party and each
         of its Subsidiaries comply in all respects with all applicable
         Environmental Laws and Environmental Permits, all past non-compliance
         with such Environmental Laws and Environmental Permits has been
         resolved, and, to the knowledge of Domestic Borrower, no circumstances
         exist that would be reasonably likely to (A) form the basis of an
         Environmental Action against any Loan Party or any of its Subsidiaries
         or any of their properties or (B) cause any such property to be subject
         to any restrictions on ownership, occupancy, use or transferability
         under any Environmental Law.

                  (ii) None of the properties currently or, to the knowledge of
         the Domestic Borrower, formerly owned or operated by any Loan Party or
         any of its Subsidiaries is listed or, to the knowledge of Domestic
         Borrower, proposed for listing, on the NPL or on the CERCLIS or any
         analogous foreign, state or local list or, to the knowledge of Domestic
         Borrower, is adjacent to any such property; there is no asbestos or
         asbestos-containing material requiring abatement or any other action
         under applicable Environmental Law on any property currently owned or
         operated by any Loan Party or any of its Subsidiaries; and Hazardous
         Materials have not been released, discharged or disposed of on any
         property currently or, to the knowledge of the Domestic Borrower,
         formerly owned or operated by any Loan Party or any of its
         Subsidiaries.

                  (iii) Neither any Loan Party nor any of its Subsidiaries is
         undertaking either individually or together with other potentially
         responsible parties, any investigation or assessment or remedial or
         response action relating to any actual or threatened release, discharge
         or disposal of Hazardous Materials at any site, location or operation,
         either voluntarily or pursuant to the order of any governmental or
         regulatory authority or the requirements of any Environmental Law; and,
         to the knowledge of Domestic Borrower, all Hazardous Materials
         generated, used, treated, handled or stored at, or transported to or
         from, any property currently or formerly owned or operated by any Loan
         Party or any of its Subsidiaries have been disposed of in a manner not
         reasonably expected to result in material liability to any Loan Party
         or any of its Subsidiaries.

There has been no change in the status or financial effect on any Loan Party of
the matters disclosed on Schedule 4.01(q), including, without limitation, the
estimates referred to therein of amounts for which the Domestic Borrower and its
Subsidiaries are expected to receive indemnification payments, except for such
changes as would not reasonably be expected, either individually or in the
aggregate, to have a Material Adverse Effect.

                                Credit Agreement

<PAGE>   60

                                       55

                  (r) (i) Neither any Loan Party nor any of its Subsidiaries is
         party to any tax sharing agreement, except for tax sharing agreements
         among only the Domestic Borrower and its Subsidiaries, or only among
         Subsidiaries of the Domestic Borrower.

                  (ii) The Domestic Borrower and each of its Subsidiaries has
         filed, has caused to be filed or has been included in all Federal and
         all material state, local and foreign tax returns required to be filed
         and has paid all taxes shown thereon to be due, together with
         applicable interest and penalties.

                  (iii) Set forth on Schedule 4.01(r) hereto is a complete and
         accurate list, as of the Initial Closing Date, of each taxable year of
         the Domestic Borrower and each of its Subsidiaries and Affiliates for
         which Federal income tax returns have been filed and for which the
         expiration of the applicable statute of limitations for assessment or
         collection of Federal income taxes has not occurred by reason of
         extension or otherwise (an "OPEN YEAR").

                  (iv) The aggregate unpaid amount, as of the Initial Closing
         Date, of adjustments to the Federal income tax liability of the
         Domestic Borrower and its Subsidiaries proposed by the Internal Revenue
         Service with respect to Open Years does not exceed $5,000,000. No
         claims have been asserted by the Internal Revenue Service in respect of
         Open Years that, in the aggregate, would be reasonably likely to have a
         Material Adverse Effect.

                  (v) The aggregate unpaid amount, as of the Initial Closing
         Date, of adjustments to the state, local and foreign tax liability of
         the Domestic Borrower and its Subsidiaries proposed by all state, local
         and foreign taxing authorities (other than amounts arising from
         adjustments to Federal income tax returns) does not exceed $5,000,000.
         No claims have been asserted by such taxing authorities that, in the
         aggregate, would be reasonably likely to have a Material Adverse
         Effect.

                  (vi) The Acquisition will not be taxable to the Domestic
         Borrower or any of its Subsidiaries.

                  (s) Neither the business nor the properties of any Loan Party
         or any of its Subsidiaries have been and continue to be affected by any
         fire, explosion, accident, strike, lockout or other labor dispute,
         drought, storm, hail, earthquake, embargo, act of God or of the public
         enemy or other casualty (whether or not covered by insurance) that
         would be reasonably likely to have a Material Adverse Effect.

                                Credit Agreement
<PAGE>   61
                                       56

                  (t) Set forth on Schedule 4.01(t) hereto is a complete and
         accurate list of all Existing Debt (other than Surviving Debt) as of
         the Initial Closing Date, showing the obligor and the principal amount
         outstanding thereunder.

                  (u) Set forth on Schedule 4.01(u) hereto is a complete and
         accurate list of all Surviving Debt as of the Initial Closing Date,
         showing the obligor and the principal amount outstanding thereunder,
         the maturity date thereof and the amortization schedule therefor. As of
         the date of this Agreement all Obligations of the Loan Parties under
         the Existing Senior Subordinated Note Indenture have been paid in full.
         Upon issuance by the Domestic Borrower of any Senior Subordinated
         Notes, the Obligations of each Loan Party under the Loan Documents will
         constitute Senior Indebtedness and Designated Senior Indebtedness as
         such terms are used and defined in the Senior Subordinated Note
         Indenture. The Obligations of each Loan Party under the Loan Documents
         also constitute Senior Indebtedness as such term is used in each other
         note set forth on Schedule 4.01(u).

                  (v) Set forth on Schedule 4.01(v) hereto is a complete and
         accurate list of all Liens on the property or assets of any Loan Party
         or any of its Subsidiaries as of the Initial Closing Date, showing the
         lienholder thereof, the principal amount of the obligations secured
         thereby and the property or assets of such Loan Party or such
         Subsidiary subject thereto.

                  (w) Set forth on Schedule 4.01(w) hereto is a complete and
         accurate list of all real property owned by any Loan Party or any of
         its Subsidiaries as of the Initial Closing Date, showing the street
         address, county or other relevant jurisdiction, state, record owner and
         book and estimated fair value thereof. Each Loan Party or such
         Subsidiary has good, marketable and insurable fee simple title to such
         real property, free and clear of all Liens, other than Liens created or
         permitted by the Loan Documents.

                  (x) Set forth on Schedule 4.01(x) hereto is a complete and
         accurate list of all leases of real property under which any Loan Party
         or any of its Subsidiaries is the lessee as of the Initial Closing
         Date, showing the street address, county or other relevant
         jurisdiction, state, lessor, lessee, expiration date and annual rental
         cost thereof. Each such lease is the legal, valid and binding
         obligation of the lessor thereof, enforceable in accordance with its
         terms.

                  (y) Set forth on Schedule 4.01(y) hereto is a complete and
         accurate list of all Investments held by any Loan Party or any of its
         Subsidiaries on the Initial Closing Date, showing as of the date hereof
         the amount, obligor or issuer and maturity, if any, thereof.

                  (z) Set forth on Schedule 4.01(z) hereto is a complete and
         accurate list of all registered patents, trademarks, trade names,
         service marks and copyrights, and all

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                                       57

         applications therefor and licenses thereof, of each Loan Party or any
         of its Subsidiaries on the Initial Closing Date, showing as of the
         Initial Closing Date the jurisdiction in which registered, the
         registration number, the date of registration and the expiration date.

                  (aa) Set forth on Schedule 4.01(aa) hereto is a complete and
         accurate list of all Material Contracts of each Loan Party and its
         Subsidiaries as of the Initial Closing Date, showing the parties,
         subject matter and term thereof. As of the Initial Closing Date, each
         such Material Contract has been duly authorized, executed and delivered
         by all parties thereto is in full force and effect and is binding upon
         and enforceable against all parties thereto in accordance with its
         terms, and there exists no default under any Material Contract by any
         party thereto.

                  (bb) The Domestic Borrower has (i) initiated a review and
         assessment of all areas within its and each of its Subsidiaries'
         business and operations (including those affected by suppliers, vendors
         and customers) that could be adversely affected by the risk that
         computer applications used by the Domestic Borrower or any of its
         Subsidiaries (or suppliers, vendors and customers) may be unable to
         recognize and perform properly date-sensitive functions involving
         certain dates prior to and any date after December 31, 1999 (the "YEAR
         2000 PROBLEM"), (ii) developed a plan and timetable for addressing the
         Year 2000 Problem on a timely basis and (iii) to date, implemented that
         plan in accordance with such timetable. Based on the foregoing, the
         Domestic Borrower believes that all computer applications that are
         material to its or any of its Subsidiaries' business and operations are
         reasonably expected on a timely basis to be able to perform properly
         date-sensitive functions for all dates before and after January 1, 2000
         ("YEAR 2000 COMPLIANT"), except to the extent that a failure to do so
         could not reasonably be expected to have a Material Adverse Effect.

                                    ARTICLE V

                       COVENANTS OF THE DOMESTIC BORROWER

                  SECTION 5.01. Affirmative Covenants. So long as any Advance or
any other Obligation of any Loan Party under any Loan Document shall remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, the Domestic Borrower will:

                  (a) Compliance with Laws, Etc. Comply, and cause each of its
         Subsidiaries to comply, in all material respects, with all applicable
         laws, rules, regulations and orders, such compliance to include,
         without limitation, compliance with ERISA and the Racketeer Influenced
         and Corrupt Organizations Chapter of the Organized Crime Control

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                                       58

         Act of 1970, unless any such non-compliance would not reasonably be
         expected to have a Material Adverse Effect.

                  (b) Payment of Taxes, Etc. Pay and discharge, and cause each
         of its Subsidiaries to pay and discharge, before the same shall become
         delinquent, (i) all taxes, assessments and governmental charges or
         levies imposed upon it or upon its property and (ii) all lawful claims
         that, if unpaid, might by law become a Lien upon its property;
         provided, however, that neither the Domestic Borrower nor any of its
         Subsidiaries shall be required to pay or discharge any such tax,
         assessment, charge or claim that is being contested in good faith and
         by proper proceedings and as to which appropriate reserves are being
         maintained, unless and until any Lien resulting therefrom attaches to
         its property and becomes enforceable against its other creditors.

                  (c) Compliance with Environmental Laws. Comply, and cause each
         of its Subsidiaries to comply, and use commercially reasonable efforts
         to cause all lessees and other Persons operating or occupying its
         properties to comply, in all material respects, with all applicable
         Environmental Laws and Environmental Permits; obtain and renew and
         cause each of its Subsidiaries to obtain and renew all material
         Environmental Permits necessary for its operations and properties; and
         conduct, and cause each of its Subsidiaries to conduct, any
         investigation, study, sampling and testing (collectively referred to as
         "INVESTIGATION"), and undertake any cleanup, removal, remedial or other
         action necessary to remove and clean up all Hazardous Materials
         (collectively referred to as "REMEDIAL ACTION") from any of its
         properties, to the extent required by Environmental Laws unless the
         failure to conduct such Investigation or undertake such Remedial Action
         would not, individually or in the aggregate, be reasonably likely to
         have a Material Adverse Effect ; provided, however, that neither the
         Domestic Borrower nor any of its Subsidiaries shall be required to
         undertake any such Remedial Action to the extent that its obligation to
         do so is being contested in good faith and by proper proceedings and
         appropriate reserves are being maintained with respect to such
         circumstances.

                  (d) Maintenance of Insurance. Maintain, and cause each of its
         Subsidiaries to maintain, insurance with responsible and reputable
         insurance companies or associations in such amounts and covering such
         risks as is usually carried by companies engaged in similar businesses
         and owning similar properties in the same general areas in which the
         Domestic Borrower or such Subsidiary operates.

                  (e) Preservation of Corporate Existence, Etc. Preserve and
         maintain, and cause each of its Subsidiaries to preserve and maintain,
         its existence, legal structure, legal name, rights (charter and
         statutory), permits, licenses, approvals, privileges and franchises,
         except to the extent any failure to preserve and maintain any of the
         foregoing could not reasonably be expected to have a Material Adverse
         Effect; provided, however,

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                                       59

         that the Domestic Borrower and its Subsidiaries may consummate any
         merger or consolidation permitted under Section 5.02(e); and provided,
         further, that neither the Domestic Borrower nor any of its Subsidiaries
         shall be required to preserve any right, permit, license, approval,
         privilege or franchise if the Board of Directors of the Domestic
         Borrower or such Subsidiary shall determine that the preservation
         thereof is no longer desirable in the conduct of the business of the
         Domestic Borrower or such Subsidiary, as the case may be, and that the
         loss thereof is not disadvantageous in any material respect to the
         Domestic Borrower, such Subsidiary or the Lender Parties.

                  (f) Visitation Rights. At any reasonable time and from time to
         time upon reasonable notice, permit the Administrative Agent or any of
         the Lender Parties, or any agents or representatives thereof, to
         examine and make copies of and abstracts from the records and books of
         account of, and visit the properties of, the Domestic Borrower and any
         of its Subsidiaries, and to discuss the affairs, finances and accounts
         of the Domestic Borrower and any of its Subsidiaries with any of their
         officers or directors and with their independent certified public
         accountants.

                  (g) Keeping of Books. Keep, and cause each of its Subsidiaries
         to keep, proper books of record and account, in which full and correct
         entries shall be made of all financial transactions and the assets and
         business of the Domestic Borrower and each such Subsidiary in
         accordance with generally accepted accounting principles in effect from
         time to time.

                  (h) Maintenance of Properties, Etc. Maintain and preserve, and
         cause each of its Subsidiaries to maintain and preserve, all of its
         properties that are used or useful in the conduct of its business in
         good working order and condition, ordinary wear and tear excepted.

                  (i) Transactions with Affiliates. Conduct, and cause each of
         its Subsidiaries to conduct, all transactions otherwise permitted under
         the Loan Documents with any of their Affiliates on terms that are fair
         and reasonable and no less favorable to the Domestic Borrower or such
         Subsidiary than it would obtain in a comparable arm's-length
         transaction with a Person not an Affiliate. The following transactions
         shall in any event be deemed to comply with this Section 5.01(i): (i)
         the Domestic Borrower's execution and delivery of the Management
         Agreement and the payment of management fees to the Sponsor in an
         aggregate amount of up to $1.6 million per year pursuant to the
         Management Agreement, (ii) reimbursements of Sponsor for reasonable
         out-of-pocket expenses incurred by it in connection with performing
         management services for the Domestic Borrower and payments to Sponsor
         in respect of indemnification obligations under the Management
         Agreement; (iii) any transaction between the Domestic Borrower or any
         Subsidiary and an officer or member of the board of directors of, the
         Domestic

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                                       60

         Borrower or any Subsidiary in the ordinary course involving
         compensation, indemnity or employee benefit arrangements; (iv) the
         Transactions and (v) the Domestic Borrower's execution, delivery and
         performance of the Shareholder Agreements and a registration rights
         agreement with SSCI Investors containing customary terms and provisions
         for such agreements.

                  (j) Covenant to Guarantee Obligations and Give Security. Upon
         (x) the request of the Administrative Agent following the occurrence
         and during the continuance of a Default, (y) the formation or
         acquisition of any new direct or indirect Subsidiaries by any Loan
         Party or (z) the acquisition of any property by the Domestic Borrower
         or any of its Subsidiaries, and such property, in the judgment of the
         Collateral Agent, shall not already be subject to a perfected first
         priority security interest in favor of the Administrative Agent for the
         benefit of the Secured Parties, then the Domestic Borrower shall, in
         each case at the Domestic Borrower's expense:

                           (i) in connection with the formation or acquisition
                  of a Subsidiary, within 20 days after such formation or
                  acquisition, cause each such Subsidiary, and cause each direct
                  and indirect parent of such Subsidiary (if it has not already
                  done so), to duly execute and deliver to the Administrative
                  Agent a guaranty or guaranty supplement, in form and substance
                  satisfactory to the Administrative Agent, guaranteeing the
                  other Loan Parties' obligations under the Loan Documents, in
                  the case of each Domestic Subsidiary, in form and substance
                  similar to the Domestic Subsidiary Guaranty and the Offshore
                  Guaranty, and in the case of each Offshore Subsidiary, in form
                  and substance similar to the Offshore Guaranty,

                           (ii) within 20 days after such request, formation or
                  acquisition, furnish to the Administrative Agent a description
                  of the real and personal properties of the Loan Parties and
                  their respective Subsidiaries in detail satisfactory to the
                  Administrative Agent,

                           (iii) within 45 days after such request, formation or
                  acquisition, duly execute and deliver, and cause each such
                  Subsidiary and each direct and indirect parent of such
                  Subsidiary (if it has not already done so) to duly execute and
                  deliver, to the Administrative Agent mortgages, pledges,
                  assignments, security agreement supplements and other security
                  agreements, similar to the Mortgages and the Domestic Security
                  Agreement and otherwise in form and substance satisfactory to
                  the Administrative Agent, securing payment of all the
                  Obligations of the applicable Loan Party, such Subsidiary or
                  such parent, as the case may be, under the Loan Documents and
                  constituting Liens on all such properties,

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                                       61

                           (iv) within 30 days after such request, formation or
                  acquisition, take, and cause such Subsidiary or such parent to
                  take, whatever action (including, without limitation, the
                  filing of Uniform Commercial Code financing statements, the
                  giving of notices and the endorsement of notices on title
                  documents) may be necessary or advisable in the opinion of the
                  Administrative Agent to vest in the Administrative Agent (or
                  in any representative of the Administrative Agent designated
                  by it) valid and subsisting Liens on the properties purported
                  to be subject to the pledges, assignments, security agreement
                  supplements and security agreements delivered pursuant to this
                  Section 5.01(j), enforceable against all third parties in
                  accordance with their terms; provided, however, that the
                  Domestic Borrower and its Subsidiaries shall not be required
                  to comply with the requirements of this Section 5.01(j)(iv)
                  with respect to (A) any actions relating to Intellectual
                  Property under the Domestic Security Agreement that would
                  otherwise be required to be taken outside of the United
                  States, (B) Collateral for which the Administrative Agent, in
                  its reasonable discretion determines that the cost of
                  perfecting the lien of the Security Agreement therein is
                  excessive in relation to the security afforded thereby or (C)
                  except as otherwise provided under any Offshore Collateral
                  Documents, any actions in respect of any Equity Interests in
                  any Foreign Corporation (as defined in the Domestic Security
                  Agreement) other than as provided in Sections 1(d)(iv) and
                  18(8) of the Domestic Security Agreement,

                           (v) within 60 days after the request of the
                  Administrative Agent, deliver to the Administrative Agent, a
                  signed copy of a favorable opinion, addressed to the
                  Administrative Agent and the other Secured Parties, of counsel
                  for the Loan Parties acceptable to the Administrative Agent as
                  to the matters contained in clauses (i), (iii) and (iv) above,
                  as to such guaranties, guaranty supplements, mortgages,
                  pledges, assignments, security agreement supplements and
                  security agreements being legal, valid and binding obligations
                  of each Loan Party party thereto enforceable in accordance
                  with their terms, as to the matters contained in clause (iv)
                  above, as to such recordings, filings, notices, endorsements
                  and other actions being sufficient to create valid perfected
                  Liens on such personal property, and as to such other matters
                  as the Administrative Agent may reasonably request,

                           (vi) as promptly as reasonably practicable and in any
                  case not later than 60 days after the request of the
                  Administrative Agent in its sole discretion, deliver to the
                  Administrative Agent with respect to each parcel of real
                  property owned or held by the entity that is the subject of
                  such request, formation or acquisition title reports, surveys
                  and engineering, soils and other reports, and Phase I
                  environmental assessment reports, each in scope, form and
                  substance satisfactory

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                                       62

                  to the Administrative Agent, provided, however, that to the
                  extent that any Loan Party or any of its Subsidiaries shall
                  have otherwise received any of the foregoing items with
                  respect to such real property, such items shall, promptly
                  after the receipt thereof, be delivered to the Administrative
                  Agent, and take whatsoever action, including the recording of
                  mortgages, may be necessary or advisable in the opinion of the
                  Administrative Agent to vest in the Administrative Agent valid
                  and subsisting Liens on such real estate, enforceable against
                  all third parties in accordance with their terms,

                           (vii) upon the occurrence and during the continuance
                  of a Default, at the request of the Administrative Agent,
                  promptly cause to be deposited any and all cash dividends paid
                  or payable to it or any of its Subsidiaries from any of its
                  Subsidiaries from time to time into the Collateral Account,
                  and with respect to all other dividends paid or payable to it
                  or any of its Subsidiaries from time to time, promptly execute
                  and deliver, or cause such Subsidiary to promptly execute and
                  deliver, as the case may be, any and all further instruments
                  and take or cause such Subsidiary to take, as the case may be,
                  all such other action as the Administrative Agent may deem
                  necessary or desirable in order to obtain and maintain from
                  and after the time such dividend is paid or payable a
                  perfected, first priority lien on and security interest in
                  such dividends, and
                           (viii) at any time and from time to time, promptly
                  execute and deliver any and all further instruments and
                  documents and take all such other action as the Administrative
                  Agent may reasonably deem necessary or desirable in obtaining
                  the full benefits of, or in perfecting and preserving the
                  Liens of, such guaranties, mortgages, pledges, assignments,
                  security agreement supplements and security agreements.

                  (k) Further Assurances. (i) Promptly upon request by any
         Agent, or any Lender Party through the Administrative Agent, correct,
         and cause each of its Subsidiaries promptly to correct, any material
         defect or error that may be discovered in any Loan Document or in the
         execution, acknowledgment, filing or recordation thereof, and

                  (ii) Promptly upon request by any Agent, or any Lender Party
         through the Administrative Agent, do, execute, acknowledge, deliver,
         record, re-record, file, re-file, register and re-register any and all
         such further acts, deeds, conveyances, pledge agreements, mortgages,
         deeds of trust, trust deeds, assignments, financing statements and
         continuations thereof, termination statements, notices of assignment,
         transfers, certificates, assurances and other instruments as any Agent,
         or any Lender Party through the Administrative Agent, may reasonably
         require from time to time in order to (A) carry out more effectively
         the purposes of the Loan Documents, (B) to the fullest extent

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                                       63

         permitted by applicable law, subject any Loan Party's or any of its
         Subsidiaries' properties, assets, rights or interests to the Liens now
         or hereafter intended to be covered by any of the Collateral Documents,
         (C) perfect and maintain the validity, effectiveness and priority of
         any of the Collateral Documents and any of the Liens intended to be
         created thereunder and (D) assure, convey, grant, assign, transfer,
         preserve, protect and confirm more effectively unto the Secured Parties
         the rights granted or now or hereafter intended to be granted to the
         Secured Parties under any Loan Document or under any other instrument
         executed in connection with any Loan Document to which any Loan Party
         or any of its Subsidiaries is or is to be a party, and cause each of
         its Subsidiaries to do so.

                  (l) [Intentionally Omitted.]

                  (m) Preparation of Environmental Reports. At the reasonable
         request of the Required Lenders from time to time upon a violation by
         any Loan Party or any of its Subsidiaries of Environmental Law, or the
         occurrence or discovery (including, without limitation, from a report
         delivered pursuant to Section 5.01(j)(vi)) of any other fact,
         circumstance, event, act or condition that could result in the
         liability of any Loan Party or any of its Subsidiaries under
         Environmental Law, that, individually or in the aggregate, would be
         reasonably likely to have a Material Adverse Effect, provide to the
         Lender Parties within 90 days after such request, at the expense of the
         Domestic Borrower, an environmental site assessment report for any of
         its or its Subsidiaries' properties described in such request, prepared
         by an environmental consulting firm reasonably acceptable to the
         Required Lenders, indicating the presence or absence of Hazardous
         Materials and the estimated cost of any compliance or Remedial Action
         in connection with any Hazardous Materials on such properties; without
         limiting the generality of the foregoing, if any such report is not be
         provided within the time referred to above, the Required Lenders may
         retain an environmental consulting firm reasonably acceptable to
         Domestic Borrower to prepare such report at the expense of the Domestic
         Borrower, and the Domestic Borrower hereby grants and agrees to cause
         any Subsidiary that owns any property described in such request to
         grant at the time of such request to the Agents, the Lender Parties,
         such firm and any agents or representatives thereof an irrevocable
         non-exclusive license, subject to the rights of tenants, to enter onto
         their respective properties to undertake such an assessment during
         reasonable business hours (after giving reasonable prior notice to
         Domestic Borrower).

                  (n) Compliance with Terms of Leaseholds. Make all payments and
         otherwise perform all obligations in respect of each leases of real
         property to which the Domestic Borrower or any of its Subsidiaries is a
         party which provides for annual base lease rent thereunder of $250,000
         or more, keep such leases in full force and effect and not allow such
         leases to lapse or be terminated or any rights to renew such leases to
         be forfeited or

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                                       64

         cancelled, notify the Administrative Agent of any default by any party
         with respect to such leases and cooperate with the Administrative Agent
         in all respects to cure any such default, and cause each of its
         Subsidiaries to do so, except, in any case, where the failure to do so,
         either individually or in the aggregate, would not be reasonably likely
         to have a Material Adverse Effect.

                  (o) Interest Rate Hedging. After the completion of the Offer
         to Purchase and prior to the 6 month anniversary of the Initial
         Borrowing, enter into interest rate hedge agreements to the extent
         necessary to ensure that, after giving effect to such Hedge Agreements,
         at least 45% of the Domestic Borrower's Funded Debt (including any
         outstanding Senior Subordinated Notes) either by its terms accrues
         interest at a fixed rate until maturity or is subject to an interest
         rate Hedge Agreement. While the Domestic Borrower will have no
         obligation to exceed such 45% level, Domestic Borrower agrees to a
         target level of 50% of its Funded Debt being subject to interest rate
         Hedge Agreements.

                  (p) Performance of Material Contracts. Perform and observe all
         the terms and provisions of each Material Contract to be performed or
         observed by it, maintain each such Material Contract in full force and
         effect, enforce each such Material Contract in accordance with its
         terms, take all such action to such end as may be from time to time
         requested by the Administrative Agent and, upon request of the
         Administrative Agent, make to each other party to each such Material
         Contract such demands and requests for information and reports or for
         action as any Loan Party or any of its Subsidiaries is entitled to make
         under such Material Contract, and cause each of its Subsidiaries to do
         so, except, in any case, where the failure to do so, either
         individually or in the aggregate, would not be reasonably likely to
         have a Material Adverse Effect.

                  SECTION 5.02. Negative Covenants. So long as any Advance or
any other Obligation of any Loan Party under any Loan Document shall remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, the Domestic Borrower will not, at any time:

                  (a) Liens, Etc. Create, incur, assume or suffer to exist, or
         permit any of its Subsidiaries to create, incur, assume or suffer to
         exist, any Lien on or with respect to any of its properties of any
         character (including, without limitation, accounts) whether now owned
         or hereafter acquired, or sign or file or suffer to exist, or permit
         any of its Subsidiaries to sign or file or suffer to exist, under the
         Uniform Commercial Code of any jurisdiction, a financing statement that
         names the Domestic Borrower or any of its Subsidiaries as debtor, or
         sign or suffer to exist, or permit any of its Subsidiaries to sign or
         suffer to exist, any security agreement authorizing any secured party
         thereunder to file such financing statement, or assign, or permit any
         of its Subsidiaries to assign, any accounts or other right to receive
         income, except:

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                                       65

                           (i)      Liens created under the Loan Documents;

                           (ii)     Permitted Liens;

                           (iii)    Liens existing on the Initial Closing Date
                  and described on Schedule 4.01(v) hereto;

                           (iv) purchase money Liens upon or in real property or
                  equipment acquired or held by the Domestic Borrower or any of
                  its Subsidiaries in the ordinary course of business to secure
                  the purchase price of such property or equipment or to secure
                  Debt incurred solely for the purpose of financing the
                  acquisition of any such property or equipment to be subject to
                  such Liens, or Liens existing on any such property or
                  equipment at the time of acquisition (other than any such
                  Liens created in contemplation of such acquisition that do not
                  secure the purchase price), or extensions, renewals or
                  replacements of any of the foregoing for the same or a lesser
                  amount; provided, however, that no such Lien shall extend to
                  or cover any property other than the property or equipment
                  being acquired, and no such extension, renewal or replacement
                  shall extend to or cover any property not theretofore subject
                  to the Lien being extended, renewed or replaced; and provided
                  further that the aggregate principal amount of the Debt
                  secured by Liens permitted by this clause (iv) shall not
                  exceed the amount permitted under Section 5.02(b)(ii) at any
                  time outstanding;

                           (v) Liens arising in connection with Capitalized
                  Leases permitted under Section 5.02(b)(ii); provided that no
                  such Lien shall extend to or cover any Collateral or assets
                  other than the assets subject to such Capitalized Leases;

                           (vi) Liens on property of a Person existing at the
                  time such Person is merged into or consolidated with the
                  Domestic Borrower or any Subsidiary of the Domestic Borrower
                  or becomes a Subsidiary of the Domestic Borrower after the
                  Effective Date securing Debt permitted by Section 5.02(b)(v);
                  provided that such Liens were not created in contemplation of
                  such merger, consolidation or investment and do not extend to
                  any assets other than those of the Person merged into or
                  consolidated with the Domestic Borrower or such Subsidiary or
                  acquired by the Domestic Borrower or such Subsidiary;

                           (vii) other Liens securing Debt and Contingent
                  Obligations outstanding in an aggregate principal amount not
                  to exceed $10,000,000, provided that no such Lien shall extend
                  to or cover any Collateral;

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                                       66

                           (viii) Liens arising solely by virtue of any
                  statutory or common law provision relating to banker's liens,
                  rights of set-off or similar rights and remedies as to deposit
                  amounts or other funds maintained with a credit or depository
                  institution; provided that (A) such deposit account is not a
                  dedicated cash collateral account and is not subject to
                  restrictions against access by Domestic Borrower or any
                  Subsidiary in excess of those set forth by regulations
                  promulgated by the Federal Reserve Board, and (B) such deposit
                  account is not intended by Domestic Borrower or any Subsidiary
                  to provide collateral to the depository institution;

                           (ix) Liens evidenced by UCC financing statements
                  regarding operating leases permitted by this Agreement or in
                  respect of consigned goods;

                           (x) Liens consisting of judgment or judicial
                  attachment liens (including prejudgment attachment); provided
                  that the enforcement of such Liens is effectively stayed or
                  payment of which is covered in full (subject to customary
                  deductibles) by insurance or which do not otherwise result in
                  an Event of Default;

                           (xi) Liens securing debt of Offshore and non-wholly
                  owned Subsidiaries to the extent such Debt is permitted
                  pursuant to Section 5.02(b);

                           (xii) Liens on documents of title and the property
                  covered thereby securing Debt in respect of letters of credit
                  which are commercial letters of credit;

                           (xiii) Liens solely in favor of the Domestic Borrower
                  or a Subsidiary of the Domestic Borrower; provided that such
                  Liens shall have been assigned as collateral under the
                  Security Agreement;

                           (xiv) any encumbrances or restriction (including any
                  put and call arrangements) with respect to the Equity
                  Interests of any joint venture agreement to which the Domestic
                  Borrower or any of its Subsidiaries is a party; and

                           (xv) the replacement, extension or renewal of any
                  Lien permitted by clause (iii) above upon or in the same
                  property theretofore subject thereto or the replacement,
                  extension or renewal (without increase in the amount or change
                  in any direct or contingent obligor) of the Debt secured
                  thereby.

                  (b) Debt. Create, incur, assume or suffer to exist, or permit
                      any of its Subsidiaries to create, incur, assume or suffer
                      to exist, any Debt, except:

                           (i)      Debt under the Loan Documents,

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                                       67

                           (ii) Capitalized Leases (including any Capitalized
                                Leases included as Surviving Debt) and Debt
                                secured by Liens permitted by Section 5.02(a)
                                (iv) and 5.02(a)(vi) not to exceed in the
                                aggregate $15,000,000 at any time outstanding,

                          (iii) the Surviving Debt,

                           (iv) unsecured Debt of the Domestic Borrower and its
                  Subsidiaries incurred in the ordinary course of business for
                  the deferred purchase price of property or services and
                  aggregating, on a Consolidated basis, not more than
                  $20,000,000 at any one time outstanding,

                            (v) Debt of any Person that becomes a Subsidiary of
                  the Domestic Borrower after the date hereof in accordance with
                  the terms of Section 5.02(g) which Debt is existing at the
                  time such Person becomes a Subsidiary of the Domestic Borrower
                  (other than Debt incurred solely in contemplation of such
                  Person becoming a Subsidiary of the Domestic Borrower),

                           (vi) Debt in respect of (A) Hedge Agreements as may
                  be required from time to time pursuant to Section 3.03(c), and
                  (B) other Hedge Agreements (including those required pursuant
                  to Section 5.01(o)) designed to hedge against fluctuations in
                  interest rates or foreign exchange rates incurred in the
                  ordinary course of business and consistent with prudent
                  business practice with the aggregate Agreement Value thereof
                  not to exceed $5,000,000 at any time outstanding,

                          (vii) Debt owed to the Domestic Borrower by a
                  Subsidiary of the Domestic Borrower and Debt owed by the
                  Domestic Borrower to a wholly-owned Subsidiary of the Domestic
                  Borrower, which Debt (x) shall constitute Pledged Debt, and
                  (y) shall be evidenced by promissory notes in substantially
                  the form attached as Exhibit I or such other form satisfactory
                  to the Administrative Agent;

                         (viii) Debt arising from honoring a check, draft or
                  similar instrument against insufficient funds; provided that
                  such Debt is extinguished within five Business days of its
                  incurrence;

                           (ix) unsecured Debt incurred by Domestic Borrower to
                  former employees in connection with the purchase or redemption
                  of stock of Domestic Borrower not to exceed in the aggregate
                  $2,000,000;

                            (x) the Senior Subordinated Notes; provided that,
                  after giving effect to the issuance of such Debt (A) no
                  Default shall have occurred and be continuing

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                                       68

                  and (B) the Domestic Borrower shall be in pro forma compliance
                  with the covenants contained in Section 5.04; and

                           (xi) any renewals, extensions, substitutions,
                  refinancings or replacements (each a "refinancing") of any
                  Debt permitted by this Section 5.02(b), including any
                  successive refinancings, so long as any such refinancing Debt
                  shall (A) not be on financial or other terms, in the
                  reasonable judgment of Domestic Borrower, that are more
                  onerous that the Debt being refinanced, (B) not have a stated
                  maturity or average life that is shorter than the Debt being
                  refinanced, (C) be at least as subordinate to the Obligations
                  under the Loan Documents as the Debt being refinanced (and
                  unsecured if the refinanced Debt is unsecured) and (D) be in a
                  principal amount that does not exceed the principal amount so
                  refinanced, plus the lesser of (1) the stated amount of any
                  premium or other payment required to be paid in connection
                  with such refinancing pursuant to the terms of the Debt being
                  refinanced and (2) the amount of premium or other payment
                  actually paid at such time to refinance the Debt, plus, in
                  either case, the amount of reasonable expenses of Domestic
                  Borrower or any Subsidiary incurred in connection with such
                  refinancing. If any Debt permitted hereunder is incurred to
                  refinance Debt denominated in a currency other than US Dollars
                  and such refinancing would cause a US Dollar Equivalent
                  restriction to be exceeded if calculated at the relevant
                  currency exchange rate in effect on the date of such
                  refinancing, such US Dollar Equivalent restriction shall not
                  be deemed to have been exceeded so long as the principal
                  amount of such refinancing Debt does not exceed the principal
                  amount of such Debt being refinanced, but the ability to make
                  subsequent incurrences of Debt subject to the applicable US
                  Dollar Equivalent restriction shall be determined as if the
                  relevant currency exchange rate applied to any such previous
                  refinancing was the rate in effect on the date of such
                  refinancing.

                  (c) Contingent Obligations. Create, incur, assume or suffer to
         exist, or permit any of its Subsidiaries to create, incur or suffer to
         exist any Contingent Obligations, except (i) Contingent Obligations
         under guaranties of Debt permitted under Section 5.02(b) (other than,
         with respect to Debt of any Person that becomes a Subsidiary of the
         Domestic Borrower on any date after the date hereof permitted pursuant
         to Section 5.02(b)(v), any guaranty of such Debt by the Domestic
         Borrower or any other Person which was a Subsidiary of the Domestic
         Borrower prior to such date) and (ii) other Contingent Obligations
         (including any guaranty by the Domestic Borrower or any of its existing
         Subsidiaries of any Debt of any Person that becomes a Subsidiary of the
         Domestic Borrower which is permitted pursuant to Section 5.02(b)(v))
         not to exceed $15,000,000 at any time outstanding.

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                                       69

                  (d) Change in Nature of Business. Make, or permit any of its
         Subsidiaries to make, any material change in the nature of its business
         as carried on at the date hereof.

                  (e) Mergers, Etc. Merge into or consolidate with any Person or
         permit any Person to merge into it, or permit any of its Subsidiaries
         to do so, except that:

                      (i) any Subsidiary of the Domestic Borrower may merge into
                  or consolidate with any other Subsidiary of the Domestic
                  Borrower, provided that, in the case of any such merger or
                  consolidation, the Person formed by such merger or
                  consolidation shall be a wholly-owned Domestic Subsidiary of
                  the Domestic Borrower, provided further that, in the case of
                  any such merger or consolidation to which a Subsidiary
                  Guarantor is a party, the Person formed by such merger or
                  consolidation shall be a Subsidiary Guarantor;

                      (ii) in connection with any Permitted Acquisition under
                  Section 5.02(g)(xiii), any Subsidiary of the Domestic Borrower
                  may merge into or consolidate with any other Person or permit
                  any other Person to merge into or consolidate with it;
                  provided that the Person surviving such merger shall be a
                  wholly-owned Subsidiary of the Domestic Borrower; and

                      (iii) in connection with any sale or other disposition
                  permitted under Section 5.02(f) (other than clause (ii)
                  thereof), any Subsidiary of the Domestic Borrower may merge
                  into or consolidate with any other Person or permit any other
                  Person to merge into or consolidate with it;

         provided, however, that in each case, immediately after giving effect
         thereto, no event shall occur and be continuing that constitutes a
         Default.

                  (f) Sales, Etc., of Assets. Sell, lease, transfer or otherwise
         dispose of, or permit any of its Subsidiaries to sell, lease, transfer
         or otherwise dispose of, any assets, or grant any option or other right
         to purchase, lease or otherwise acquire any assets other than Inventory
         to be sold in the ordinary course of its business, except:

                      (i) sales of Inventory in the ordinary course of its
                  business;

                      (ii) in a transaction authorized by Section 5.02(e)
                  (other than subsection (iii) thereof);

                      (iii) the sale of equipment to the extent that such
                  equipment is exchanged for credit against the purchase price
                  of similar replacement equipment, or the proceeds of such sale
                  are reasonably promptly applied to the purchase price of
                  similar replacement equipment;

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                                       70

                           (iv) the limited recourse sale of Receivables in
                  connection with the securitization thereof, which sale is
                  non-recourse to the extent customary in securitizations and
                  consistent with past practice;

                           (v) in the ordinary course of business, the license
                  of patents, trademarks, copyrights and know-how to third
                  Persons, so long as each such license of a Domestic Subsidiary
                  is subject to the Lien of the Domestic Security Agreement and
                  does not otherwise prohibit the granting of a Lien therein by
                  Domestic Borrower or any Subsidiary pursuant to the Domestic
                  Security Agreement;

                           (vi) the sale of worn out or obsolete equipment not
                  utilized in the business of Domestic Borrower or any
                  Subsidiary;

                           (vii) the abandonment or other disposition for no
                  consideration of patents, trademarks or other intellectual
                  property that is, in the reasonable judgment of Domestic
                  Borrower, no longer economically practicable to maintain or
                  useful in the conduct of the business of Domestic Borrower and
                  its Subsidiaries taken as a whole;

                           (viii) the sale of any asset by the Domestic Borrower
                  or any Subsidiary (other than a bulk sale of Inventory and a
                  sale of Receivables other than delinquent accounts for
                  collection purposes only) so long as (A) the purchase price
                  paid to the Domestic Borrower or such Subsidiary for such
                  asset shall be no less than the fair market value of such
                  asset at the time of such sale; (B) the purchase price for
                  such asset shall be paid to the Domestic Borrower or such
                  Subsidiary solely in cash; (C) the aggregate purchase price
                  paid to the Domestic Borrower and all of its Subsidiaries for
                  such asset and all other assets sold by the Domestic Borrower
                  and its Subsidiaries during the same Fiscal Year pursuant to
                  this clause (viii) shall not exceed $25,000,000 ; provided,
                  however, that the Domestic Borrower and it Subsidiaries may
                  sell Equity Interests in, or the properties and assets of, any
                  Person, for an aggregate amount in any Fiscal Year of the
                  Domestic Borrower which is greater than $25,000,000 on the
                  condition that the Domestic Borrower shall have delivered to
                  the Administrative Agent not later than five days prior to
                  such sale a report prepared in good faith and certified by the
                  Chief Financial Officer of the Domestic Borrower and approved
                  by the Joint Lead Arrangers, which report shall include an
                  analysis demonstrating in reasonable detail that the pro forma
                  EBITDA of such Person (or such properties and assets) for the
                  most recently completed four consecutive fiscal quarters,
                  together with the pro forma EBITDA of each other Person, the
                  Equity Interests in,

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                                       71

                 or the properties or assets of which, were previously sold by
                 the Domestic Borrower and its Subsidiaries pursuant to this
                 subsection (viii) during such Fiscal Year, for the most
                 recently completed four fiscal quarters as of the date such
                 Person (or such properties or assets) were sold, and does not,
                 in the aggregate, exceed 7.5% of the EBITDA of the Domestic
                 Borrower and its Subsidiaries for the most recently completed
                 four fiscal quarters of the Domestic Borrower; and (D) the
                 aggregate purchase price paid to the Domestic Borrower and its
                 Subsidiaries for all assets sold pursuant to this clause (viii)
                 during the term of this Agreement shall not exceed $50,000,000;
                 and

                           (ix) so long as no Default shall occur and be
                  continuing, the grant of any option or other right to purchase
                  any asset in a transaction that would be permitted under the
                  provisions of clause (viii) above.

                  (g)      Investments in Other Persons. Make or hold, or permit
         any of its Subsidiaries to make or hold, any Investment in any Person,
         except:

                            (i)     (A)   equity Investments by the Domestic
                 Borrower and its Subsidiaries in their Subsidiaries outstanding
                 on the date hereof; or

                                    (B)   additional equity Investments in
                           wholly-owned Domestic Subsidiaries of the Domestic
                           Borrower existing on the date hereof or the Equity
                           Interest of which are acquired by the Domestic
                           Borrower or one of its Domestic Subsidiaries pursuant
                           to clause (xiii) below, including, without
                           limitation, Investments in newly formed, wholly-owned
                           Domestic Subsidiaries of the Domestic Borrower or one
                           of its Domestic Subsidiaries which are to fund the
                           purchase by such newly formed Domestic Subsidiary of
                           the assets comprising a division or business unit or
                           a substantial part of the business of any other
                           Person if such Investment by such new Subsidiary is
                           made in accordance with clause (xiii) below; or

                                    (C)   additional Investments by the Domestic
                           Borrower and its Domestic Subsidiaries in
                           wholly-owned (other than with respect to any de
                           minimis director's qualifying shares) Offshore
                           Subsidiaries of the Domestic Borrower or any of its
                           wholly-owned Subsidiaries (other than with respect to
                           any de minimis director's qualifying shares) in an
                           aggregate amount for the Domestic Borrower and all
                           its Domestic Subsidiaries not to exceed $10,000,000
                           in any Fiscal Year (in addition to any Investments in
                           such Offshore Subsidiaries in the form of the
                           Offshore Guaranty); or

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                                       72

                                    (D)   additional Investments by Offshore
                           Subsidiaries of the Domestic Borrower and its
                           Subsidiaries in other Offshore Subsidiaries which are
                           wholly-owned by the Domestic Borrower or any of its
                           wholly-owned Subsidiaries; or

                                    (E)   additional Investments by the Domestic
                           Borrower and any of its wholly-owned Subsidiaries in
                           Subsidiaries and other Persons (including
                           joint-ventures) which are not wholly-owned by the
                           Domestic Borrower or its wholly-owned Subsidiaries,
                           but are controlled by the Domestic Borrower or one of
                           its wholly-owned Subsidiaries, (including, without
                           limitation, Contingent Obligations incurred by the
                           Domestic Borrower or any of its wholly-owned
                           Subsidiaries in respect of the Debt of any such
                           Subsidiary or other Person which are not
                           wholly-owned) not at any time exceeding in the
                           aggregate $5,000,000; or additional Investments by
                           such Subsidiaries of the Domestic Borrower (which are
                           not wholly-owned Subsidiaries of the Domestic
                           Borrower or any of its wholly-owned Subsidiaries) in
                           other such non-wholly-owned Subsidiaries or other
                           Persons which are controlled by the Domestic Borrower
                           or one of its wholly-owned Subsidiaries; or

                                    (F)   Investments in the form of the
                           Offshore Guaranty;

                           (ii)     loans and advances to employees in the
                  ordinary course of the business of the Domestic Borrower and
                  its Subsidiaries as presently conducted (A) to the extent such
                  loans and advances are used to purchase capital stock, or
                  options or warrants to purchase capital stock of the Domestic
                  Borrower, in an aggregate amount not to exceed $5,000,000 and
                  (B) other such loans and advances in an aggregate principal
                  amount not to exceed $3,000,000 at any time outstanding;

                           (iii)    Investments by the Domestic Borrower and its
                  Subsidiaries in Cash Equivalents;

                           (iv)     Investments existing on the Initial Closing
                  Date and described on Schedule 4.01(y) hereto;

                           (v)      Investments in Hedge Agreements permitted
                  under Section 5.02(b);

                           (vi)     Investments consisting of intercompany Debt
                  permitted under Section 5.02(b);

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                           (vii)    Investments consisting of non-cash
                  consideration received in the form of securities, notes or
                  similar obligations in connection with dispositions of
                  obsolete or worn out assets permitted pursuant to Section
                  5.02(e)(vi) not at any time exceeding, in the case of all such
                  notes and similar obligations, the amount of $5,000,000;

                           (viii)   pledges or deposits required in the ordinary
                  course of business in connection with workmen's compensation,
                  unemployment insurance and other social security or similar
                  legislation;

                           (ix)     pledges or deposits in connection with (A)
                  non-delinquent performance of bids, trade contracts (other
                  than for borrowed money), leases or statutory obligations, (B)
                  contingent obligations on surety or appeal bonds and (C) other
                  non-delinquent obligations of a like nature, in each case
                  incurred in the ordinary course of business;

                           (x)      advances, loans or extensions of credit to
                  suppliers in the ordinary course of business by Domestic
                  Borrower or any Subsidiary consistent with past practice as of
                  the Effective Date not at any time exceeding in the aggregate
                  $2,000,000;

                           (xi)     other advances, loans or extensions of
                  credit in the ordinary course of business by Domestic Borrower
                  or any Subsidiary not at any time exceeding in the aggregate
                  $3,000,000;

                           (xii)    Investments (including debt obligations)
                  received in connection with the bankruptcy or reorganization
                  of suppliers and customers and in settlement of delinquent
                  obligations of, and other disputes with, customers and
                  suppliers arising in the ordinary course of business; and

                           (xiii)   other Investments in the equity interests or
                  assets of a newly acquired business or in the equity interests
                  of a new Subsidiary of the Domestic Borrower or any of its
                  Subsidiaries which new Subsidiary is organized to purchase any
                  such equity interests or assets; provided that with respect to
                  Investments made under this clause (xiii): (1) any such newly
                  acquired or organized Subsidiary of the Domestic Borrower or
                  any of its Subsidiaries shall be a wholly-owned Subsidiary of
                  the Domestic Borrower or one of its wholly-owned Subsidiaries
                  (other than in respect of any de minimis director's qualifying
                  shares) and shall be organized under the laws of an Approved
                  Country; (2) immediately before and after giving effect
                  thereto, no Default shall have occurred and be

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                                       74

                  continuing or would result therefrom; (3) any company or
                  business acquired or invested in pursuant to this clause
                  (xiii) shall be in the specialty chemicals business or in a
                  substantially similar line of business, and the material
                  assets of such company or business shall be principally
                  located in one or more Approved Countries (and a material
                  portion of the assets of such company or business, taken as a
                  whole, shall not be located in a country which is not an
                  Approved Country); (4) immediately after giving effect to the
                  acquisition of a company or business pursuant to this clause
                  (xiii), the Domestic Borrower shall be in pro forma compliance
                  with the covenants contained in Section 5.04, calculated based
                  on the financial statements most recently delivered to the
                  Lender Parties pursuant to Section 5.03 and as though such
                  acquisition had occurred at the beginning of the four-quarter
                  period covered thereby, as evidenced by a certificate of the
                  Chief Financial Officer of the Domestic Borrower delivered to
                  the Lender Parties demonstrating such compliance; (5) the
                  Domestic Borrower shall have delivered to the Administrative
                  Agent and the Lender Parties an Acquisition Diligence Report
                  for such company or business; and (6) any such newly formed
                  Subsidiary shall be in compliance with Section 5.01(j).

                  (h)   Restricted Payments. Declare or pay any dividends,
         purchase, redeem, retire, defease or otherwise acquire for value any of
         its Equity Interests now or hereafter outstanding, return any capital
         to its stockholders, partners or members (or the equivalent Persons
         thereof) as such, make any distribution of assets, Equity Interests,
         obligations or securities to its stockholders, partners or members (or
         the equivalent Persons thereof) as such or issue or sell any Equity
         Interests or accept any capital contributions, or permit any of its
         Subsidiaries to do any of the foregoing, or permit any of its
         Subsidiaries to purchase, redeem, retire, defease or otherwise acquire
         for value any Equity Interests in the Domestic Borrower or to issue or
         sell any Equity Interests therein, except that, so long as no Default
         shall have occurred and be continuing at the time of any action
         described in clause (i) or (ii) below or would result therefrom:

                           (i)      the Domestic Borrower may (A) declare and
                  pay dividends and distributions payable only in common stock
                  of the Domestic Borrower, (B) issue and sell shares of its
                  capital stock in a transaction which will not result in a
                  Change of Control, (C) except to the extent the Net Cash
                  Proceeds thereof are required to be applied to the prepayment
                  of the Advances pursuant to Section 2.06(b), purchase, redeem,
                  retire, defease or otherwise acquire shares of its capital
                  stock with the proceeds received contemporaneously from the
                  issue of new shares of its capital stock with equal or
                  inferior voting powers, designations, preferences and rights,
                  (D) redeem or purchase Equity Interests from the Sponsor or
                  other shareholders of the Domestic Borrower who are not
                  officers, directors or employees of the Domestic Borrower,
                  substantially concurrently with the issuance

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                                       75

                  and sale of such Equity Interests to employees of the Domestic
                  Borrower and its Subsidiaries; provided, however, that the
                  redemption or purchase price paid to the Sponsor for such
                  Equity Interests shall not exceed either (1) the Net Cash
                  Proceeds received by the Domestic Borrower from the issuance
                  of such Equity Interests to such employees, or (2) $5,000,000
                  in the aggregate for all such redemptions and purchases during
                  the term of this agreement, (E) accept capital contributions
                  from the Equity Investors, (F) make payments in accordance
                  with the Management Agreement and pay fees and indemnification
                  payments to directors and officers of the Domestic Borrower in
                  the ordinary course of business; provided, however, that the
                  aggregate amount of all such payments shall not exceed the sum
                  of $1,600,000 plus the actual out-of-pocket expenses of the
                  Sponsor in connection with providing management services to
                  Domestic Borrower plus such actual fees, expenses and
                  indemnity payments incurred by such officers and directors in
                  any Fiscal Year of the Domestic Borrower (beginning with the
                  Fiscal Year ending December 31, 2000), (G) the Domestic
                  Borrower may repurchase, redeem or otherwise acquire or retire
                  for value any Equity Interests of the Domestic Borrower held
                  by current or former employees of the Domestic Borrower or any
                  of its Subsidiaries pursuant to any employee equity
                  subscription agreement, stock option agreement or stock
                  ownership arrangement; provided, however, that the aggregate
                  price paid (including the principal amount of Debt issued
                  pursuant to Section 5.02(b)(ix)) for all such repurchased,
                  redeemed, acquired or retired Equity Interests shall not
                  exceed an aggregate of $2,000,000 over the term of this
                  Agreement, and (H) issue new shares of its capital stock to
                  the seller (or its affiliates) of any Equity Interests or
                  assets purchased by the Domestic Borrower or any of its
                  Subsidiaries, as all or a portion of the purchase price for
                  such Equity Interests or assets issue in connection with a
                  Permitted Acquisition; and

                           (ii)     any Subsidiary of the Domestic Borrower may
                  (A) declare and pay cash dividends to the Domestic Borrower,
                  (B) declare and pay cash dividends to any other wholly-owned
                  Subsidiary of the Domestic Borrower of which it is a
                  Subsidiary and (C) accept capital contributions from its
                  parent to the extent permitted under Section 5.02(g)(i).

                  (i) Lease Obligations. Create, incur, assume or suffer to
         exist, or permit any of its Subsidiaries to create, incur, assume or
         suffer to exist, any obligations as lessee under any operating leases
         (i) for the rental or hire of real or personal property in connection
         with any sale and leaseback transaction, or (ii) for the rental or hire
         of other real or personal property of any kind under leases or
         agreements to lease having an original term of one year or more that
         would cause the direct and contingent liabilities of the Domestic
         Borrower and its Subsidiaries, on a Consolidated basis, in respect of
         all such obligations to exceed $4,000,000 payable in the period of 12
         consecutive months

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                                       76

         ending on December 31, 2000 and increasing by $250,000 for each 12
         month period thereafter.

                  (j)    Amendments of Constitutive Documents. Amend, or permit
         any of its Subsidiaries to amend, its certificate of incorporation or
         bylaws or other constitutive documents in any manner which would have a
         material adverse effect on any rights of the Secured Parties under the
         Loan Documents.

                  (k)    Accounting Changes. Make or permit, or permit any of
         its Subsidiaries to make or permit, any change in any material respect
         in accounting policies or reporting practices, except as required by
         generally accepted accounting principles, or any change in Fiscal Year.

                  (l)    Prepayments, Etc., of Debt. Prepay, redeem, purchase,
         defease or otherwise satisfy prior to the scheduled maturity thereof in
         any manner, or make any payment in violation of any subordination terms
         of, any Debt, except (i) the prepayment of the Advances in accordance
         with the terms of this Agreement, (ii) the prepayment of Debt permitted
         pursuant to Section 5.02(b)(vii), (iii) the prepayment of Debt
         permitted pursuant to 5.02(b)(ix) to the extent also permitted pursuant
         to Section 5.02(h)(i)(G), (iv) regularly scheduled or required
         repayments or redemptions of Debt permitted pursuant to Section
         5.02(b), and refinancings of such Debt permitted pursuant to Section
         5.02(b)(xi), or amend, modify or change in any manner any term or
         condition of any Surviving Debt or Subordinated Debt, or permit any of
         its Subsidiaries to do any of the foregoing other than to prepay any
         Debt payable to the Domestic Borrower or any of its wholly-owned
         Subsidiaries.

                  (m)    Amendment, Etc., of Related Documents. Cancel or
         terminate any Related Document or consent to or accept any cancellation
         or termination thereof, amend, modify or change in any material manner
         any term or condition of any Related Document or give any consent,
         waiver or approval thereunder, waive any default under or any breach of
         any material term or condition of any Related Document, agree in any
         manner to any other amendment, modification or change of any term or
         condition of any Related Document or take any other action in
         connection with any Related Document that would impair the value of the
         interest or rights of any Loan Party thereunder or that would impair
         the rights or interests of any Agent or any Lender Party, or permit any
         of its Subsidiaries to do any of the foregoing.

                  (n)    Negative Pledge. Enter into or suffer to exist, or
         permit any of its Subsidiaries to enter into or suffer to exist, any
         agreement prohibiting or conditioning the creation or assumption of any
         Lien upon any of its property or assets except (i) in favor of the
         Secured Parties or (ii) in connection with (A) any Surviving Debt, (B)
         any purchase

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                                       77

         money Debt permitted by Section 5.02(b) solely to the extent that the
         agreement or instrument governing such Debt prohibits a Lien on the
         property acquired with the proceeds of such Debt, (C) any Capitalized
         Lease permitted by Section 5.02(b) solely to the extent that such
         Capitalized Lease prohibits a Lien on the property subject thereto or
         (D) any Debt outstanding on the date any Subsidiary of the Domestic
         Borrower becomes such a Subsidiary (so long as such agreement was not
         entered into solely in contemplation of such Subsidiary becoming a
         Subsidiary of the Domestic Borrower).

                  (o)    Partnerships, Etc. Become a general partner in any
         general or limited partnership or joint venture, or permit any of its
         Subsidiaries to do so, other than a Domestic, wholly-owned Subsidiary
         of the Domestic Borrower the sole assets of which consist of such
         Subsidiary's interest in one or more of such partnerships or joint
         ventures.

                  (p)    Speculative Transactions. Engage, or permit any of its
         Subsidiaries to engage, in any transaction involving commodity options
         or futures contracts or any similar speculative transactions other than
         Hedge Agreements entered into in the ordinary course of business and
         permitted by Section 5.02(b).

                  (q)    Capital Expenditures. Make, or permit any of its
         Subsidiaries to make, any Capital Expenditures that would cause the
         aggregate of all such Capital Expenditures made by the Domestic
         Borrower and its Subsidiaries in any Fiscal Year of the Domestic
         Borrower to exceed an amount equal to the greatest of (i) $13,000,000,
         (ii) 5% of the Consolidated net sales of the Domestic Borrower and its
         Subsidiaries for the immediately preceding Fiscal Year of the Domestic
         Borrower, calculated in accordance with GAAP or (iii) at any time after
         the Chief Financial Officer of the Domestic Borrower shall have
         delivered a certificate to the Lender Parties identifying the Permitted
         Acquisitions and permitted sales of assets of the Domestic Borrower and
         its Subsidiaries for any Fiscal Year of the Domestic Borrower, together
         with a calculation of the pro forma Consolidated net sales of the
         Domestic Borrower and its Subsidiaries for the preceding Fiscal Year
         and as though all such Permitted Acquisitions and dispositions had
         occurred at the beginning of such preceding Fiscal Year, 5% of such pro
         forma Consolidated net sales.

                  (r)    Formation of Subsidiaries. Organize or invest, or
         permit any Subsidiary to organize or invest, in any new Subsidiary,
         except as permitted under Section 5.02(g)(i) or (xiii).

                  (s)    Payment Restrictions Affecting Subsidiaries. Directly
         or indirectly, enter into or suffer to exist, or permit any of its
         Subsidiaries to enter into or suffer to exist, any agreement or
         arrangement limiting the ability of any of its Subsidiaries to declare
         or pay dividends or other distributions in respect of its Equity
         Interests or repay or prepay any

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                                       78

         Debt owed to, make loans or advances to, or otherwise transfer assets
         to or invest in, the Domestic Borrower or any Subsidiary of the
         Domestic Borrower (whether through a covenant restricting dividends,
         loans, asset transfers or investments, a financial covenant or
         otherwise), except (i) the Loan Documents , (ii) any agreement or
         instrument evidencing Surviving Debt and (iii) any agreement in effect
         at the time such Subsidiary becomes a Subsidiary of the Domestic
         Borrower, so long as such agreement was not entered into solely in
         contemplation of such Person becoming a Subsidiary of the Domestic
         Borrower.

                  (t)    Amendment, Etc., of Material Contracts. Cancel or
         terminate any Material Contract or consent to or accept any
         cancellation or termination thereof, amend or otherwise modify any
         Material Contract or give any consent, waiver or approval thereunder,
         waive any default under or breach of any Material Contract, agree in
         any manner to any other amendment, modification or change of any term
         or condition of any Material Contract or take any other action in
         connection with any Material Contract except for any such action as
         would not be reasonably likely to result in a Material Adverse Effect.
         The Domestic Borrower will use all reasonable efforts, and will cause
         its Subsidiaries to use all reasonable efforts to cause any Material
         Contract of the type referred to in clauses (iv) of the definition of
         such term entered into by the Domestic Borrower or such Subsidiary
         after the Effective Date not to contain a provision which would, by its
         terms, prohibit the assignment by the Domestic Borrower or such
         Subsidiary of its rights thereunder as security pursuant to the
         Security Agreement.

                  SECTION 5.03.  Reporting Requirements. So long as any Advance
or any other Obligation of any Loan Party under any Loan Document shall remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, the Domestic Borrower will furnish to the Agents and
the Lender Parties:

                  (a)    Default Notice. As soon as possible and in any event
         within two days after the Domestic Borrower or any of its Subsidiaries
         becomes aware of the occurrence of each Default or any event,
         development or occurrence reasonably likely to have a Material Adverse
         Effect continuing on the date of such statement, a statement of the
         chief financial officer of the Domestic Borrower setting forth details
         of such Default and the action that the Domestic Borrower has taken and
         proposes to take with respect thereto.

                  (b)    Annual Financials. As soon as available and in any
         event within 100 days after the end of each Fiscal Year, a copy of the
         annual audit report for such year for the Domestic Borrower and its
         Subsidiaries, including therein Consolidated balance sheets of the
         Domestic Borrower and its Subsidiaries as of the end of such Fiscal
         Year and Consolidated statements of income and a Consolidated statement
         of cash flows of the Domestic Borrower and its Subsidiaries for such
         Fiscal Year, in each case accompanied by an opinion without a "going
         concern" or similar qualification or exception or a

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         qualification arising out of the scope of the audit and otherwise
         acceptable to the Administrative Agent of Ernst & Young LLP or other
         independent public accountants of recognized standing acceptable to the
         Required Lenders, together with (i) a certificate of such accounting
         firm to the Lender Parties stating that in the course of the regular
         audit of the business of the Domestic Borrower and its Subsidiaries,
         which audit was conducted by such accounting firm in accordance with
         generally accepted auditing standards, such accounting firm has
         obtained no knowledge that a Default has occurred and is continuing, or
         if, in the opinion of such accounting firm, a Default has occurred and
         is continuing, a statement as to the nature thereof, (ii) a schedule in
         form satisfactory to the Administrative Agent of the computations used
         by such accountants in determining, as of the end of such Fiscal Year,
         compliance with the covenants contained in Section 5.04, provided that
         in the event of any change in GAAP used in the preparation of such
         financial statements, the Domestic Borrower shall also provide, if
         necessary for the determination of compliance with Section 5.04, a
         statement of reconciliation conforming such financial statements to
         GAAP as in effect on the date hereof and (iii) a certificate of the
         Chief Financial Officer of the Domestic Borrower stating either that
         such Chief Financial Officer has, after due inquiry, no knowledge that
         any Default has occurred and is continuing or, if the Chief Financial
         Officer has knowledge that a Default has occurred and is continuing, a
         statement as to the nature thereof and the action that the Domestic
         Borrower has taken and proposes to take with respect thereto.

                  (c)    Quarterly Financials. As soon as available and in any
         event within 45 days after the end of each of the first three quarters
         of each Fiscal Year, Consolidated balance sheets of the Domestic
         Borrower and its Subsidiaries as of the end of such quarter and
         Consolidated statements of income and a Consolidated statement of cash
         flows of the Domestic Borrower and its Subsidiaries for the period
         commencing at the end of the previous fiscal quarter and ending with
         the end of such fiscal quarter and Consolidated statements of income
         and a Consolidated statement of cash flows of the Domestic Borrower and
         its Subsidiaries for the period commencing at the end of the previous
         Fiscal Year and ending with the end of such quarter, setting forth in
         each case in comparative form the corresponding figures for the
         corresponding date or period of the preceding Fiscal Year, all in
         reasonable detail and duly certified (subject to normal year-end audit
         adjustments and the absence of footnotes) by the Chief Financial
         Officer of the Domestic Borrower as having been prepared in accordance
         with GAAP, together with (i) a certificate of said officer stating
         either that such Chief Financial Officer has, after due inquiry, no
         knowledge that any Default has occurred and is continuing or, if the
         Chief Financial Officer has knowledge that a Default has occurred and
         is continuing, a statement as to the nature thereof and the action that
         the Domestic Borrower has taken and proposes to take with respect
         thereto and (ii) a schedule in form satisfactory to the Administrative
         Agent of the computations used by the Domestic Borrower in determining
         compliance with the covenants contained in Section 5.04, provided that
         in the event of

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         any change in GAAP used in the preparation of such financial
         statements, the Domestic Borrower shall also provide, if necessary for
         the determination of compliance with Section 5.04, a statement of
         reconciliation conforming such financial statements to GAAP in effect
         on the date hereof.

                  (d)    Annual Forecasts. As soon as available and in any event
         no later than 45 days after the end of each Fiscal Year, an annual
         budget prepared by management of the Domestic Borrower, of balance
         sheets, income statements and cash flow statements on a quarterly basis
         for the Fiscal Year following such Fiscal Year.

                  (e)    Litigation. Promptly after the commencement thereof,
         notice of all actions, suits, investigations, litigation and
         proceedings before any court or governmental department, commission,
         board, bureau, agency or instrumentality, domestic or foreign,
         affecting any Loan Party or any of its Subsidiaries of the type
         described in Section 4.01(f) (except proceedings that, if adversely
         determined, would not reasonably be expected, either individually or in
         the aggregate, to have a Material Adverse Effect), and promptly after
         the occurrence thereof, notice of any material adverse change in the
         status or the financial effect on any Loan Party or any of its
         Subsidiaries of the Disclosed Litigation from that described on
         Schedule 4.01(f) hereto.

                  (f)    Securities Reports. Promptly after the sending or
         filing thereof, copies of all proxy statements, financial statements
         and reports that any Loan Party or any of its Subsidiaries sends to its
         stockholders, and copies of all regular, periodic and special reports,
         and all registration statements, that any Loan Party or any of its
         Subsidiaries files with the Securities and Exchange Commission or any
         governmental authority that may be substituted therefor, or with any
         national securities exchange.

                  (g)    Creditor Reports. Promptly after the furnishing
         thereof, copies of any statement or report furnished to any holder of
         Debt securities of any Loan Party or of any of its Subsidiaries
         pursuant to the terms of any indenture, loan or credit or similar
         agreement and not otherwise required to be furnished to the Lender
         Parties pursuant to any other clause of this Section 5.03.

                  (h)    Agreement Notices. Promptly upon receipt thereof,
         copies of all notices, requests and other documents received by any
         Loan Party or any of its Subsidiaries under or pursuant to any Related
         Document or Material Contract or instrument, indenture, loan or credit
         or similar agreement regarding or related to any breach or default by
         any party thereto or any other event that could have a Material Adverse
         Effect, copies of each proposed Subordinated Debt Document, and copies
         of any proposed amendment, modification or waiver of any provision of
         any Related Document or Material Contract or instrument, indenture,
         loan or credit or similar agreement and, from time to time upon

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         request by the Administrative Agent, such information and reports
         regarding the Related Documents, the Material Contracts and such
         instruments, indentures and loan and credit and similar agreements as
         the Administrative Agent may reasonably request.

                  (i)    ERISA. (i) ERISA Events and ERISA Reports. (A) Promptly
         and in any event within 10 Business Days after any Loan Party or any
         ERISA Affiliate knows or has reason to know that any ERISA Event has
         occurred, a statement of the Chief Financial Officer of the Domestic
         Borrower describing such ERISA Event and the action, if any, that such
         Loan Party or such ERISA Affiliate has taken and proposes to take with
         respect thereto and (B) on the date any records, documents or other
         information must be furnished to the PBGC with respect to any Plan
         pursuant to Section 4010 of ERISA, a copy of such records, documents
         and information.

                  (ii)   Plan Terminations. Promptly and in any event within two
         Business Days after receipt thereof by any Loan Party or any ERISA
         Affiliate, copies of each notice from the PBGC stating its intention to
         terminate any Plan or to have a trustee appointed to administer any
         Plan.

                  (iii)  Plan Annual Reports. Promptly and in any event within
         30 days after a request from the Administrative Agent, copies of each
         Schedule B (Actuarial Information) to the annual report (Form 5500
         Series) with respect to each Plan.

                  (iv)   Multiemployer Plan Notices. Promptly and in any event
         within ten Business Days after receipt thereof by any Loan Party or any
         ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of
         each notice concerning (A) the imposition of Withdrawal Liability by
         any such Multiemployer Plan, (B) the reorganization or termination,
         within the meaning of Title IV of ERISA, of any such Multiemployer Plan
         or (C) the amount of liability incurred, or that may be incurred, by
         such Loan Party or any ERISA Affiliate in connection with any event
         described in clause (A) or (B).

                  (j)    Environmental Conditions. Promptly after the assertion
         or occurrence thereof, notice of any Environmental Action against or of
         any noncompliance by any Loan Party or any of its Subsidiaries with any
         Environmental Law or Environmental Permit that could (i) reasonably be
         expected to have a Material Adverse Effect or (ii) cause any property
         described in the Mortgages to be subject to any material restrictions
         on ownership, occupancy, use or transferability under any Environmental
         Law.
                  (k)    Real Property. As soon as available and in any event
         within 100 days after the end of each Fiscal Year beginning with the
         Fiscal Year ended December 31, 2000, a report supplementing Schedules
         4.01(w) and 4.01(x) hereto, including an identification of all owned
         and leased real property disposed of by the Domestic Borrower or any of
         its

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         Subsidiaries during such Fiscal Year, a list and description (including
         the street address, county or other relevant jurisdiction, state,
         record owner, book value thereof and, in the case of leases of
         property, lessor, lessee, expiration date and annual rental cost
         thereof) of all real property acquired or leased during such Fiscal
         Year and a description of such other changes in the information
         included in such Schedules as may be necessary for such Schedules to be
         accurate and complete.

                  (l)    Insurance. As soon as available and in any event within
         30 days after the end of each Fiscal Year, a report summarizing the
         insurance coverage (specifying type, amount and carrier) in effect for
         the Domestic Borrower and its Subsidiaries and containing such
         additional information as any Agent, or any Lender Party through the
         Administrative Agent, may reasonably specify.

                  (m)    Year 2000 Compliance. Promptly after the Domestic
         Borrower's discovery or determination thereof, notice (in reasonable
         detail) that any computer application (including those of its
         suppliers, vendors and customers) that is material to its or any of its
         Subsidiaries' business and operations will not be Year 2000 Compliant
         (as defined in Section 4.01(bb)), except to the extent that such
         failure could not reasonably be expected to have a Material Adverse
         Effect.

                  (n)    Other Information. Such other information respecting
         the business, condition (financial or otherwise), operations,
         performance, properties or prospects of any Loan Party or any of its
         Subsidiaries as any Agent, or any Lender Party through the
         Administrative Agent, may from time to time reasonably request.

                  SECTION 5.04. Financial Covenants. So long as any Advance or
any other Obligation of any Loan Party under any Loan Document shall remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, the Domestic Borrower will:

                  (a)    Total Debt/EBITDA Ratio. Maintain at the end of each
         fiscal quarter of the Domestic Borrower a Total Debt/EBITDA Ratio of
         not more than the amount set forth below for each period set forth
         below:

<TABLE>
<CAPTION>

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

                     DURING FISCAL YEAR ENDING            RATIO
                                                 ================

                   <S>                           <C>
                      December 31, 2000           5.50:1
                      December 31, 2001           5.50:1
                      December 31, 2002           5.25:1
                      December 31, 2003           5.00:1
                   ==============================================
</TABLE>

                                Credit Agreement

<PAGE>   88

                                       83

<TABLE>

                   <S>                            <C>
                      December 31, 2004           5.00:1
                      December 31, 2005           4.75:1
                       and thereafter
                     ============================================
</TABLE>
                  (b)    Senior Debt/EBITDA Ratio. Maintain at the end of each
         fiscal quarter of the Domestic Borrower a Senior Debt/EBITDA Ratio of
         not more than the amount set forth below for each period set forth
         below:

<TABLE>
<CAPTION>

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

                     DURING FISCAL YEAR ENDING            RATIO
                                                 ================

                   <S>                           <C>
                      December 31, 2000           4.25:1
                      December 31, 2001           4.25:1
                      December 31, 2002           4.00:1
                      December 31, 2003           3.75:1
                      December 31, 2004           3.50:1
                         and thereafter
                   ==============================================
</TABLE>
                  (c)    Fixed Charge Coverage Ratio. Maintain at the end of
         each fiscal quarter of the Domestic Borrower a Fixed Charge Coverage
         Ratio of not less than the amount set forth below for each period set
         forth below:

<TABLE>
<CAPTION>

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

                     DURING FISCAL YEAR ENDING            RATIO
                                                 ================
                  <S>                            <C>
                      December 31, 2000           1.10:1
                      December 31, 2001           1.10:1
                      December 31, 2002           1.10:1
                      December 31, 2003           1.15:1
                      December 31, 2004           1.20:1
                         and thereafter
                   ==============================================
</TABLE>

                  (d)    Interest Coverage Ratio. Maintain at the end of each
         fiscal quarter of the Domestic Borrower an Interest Coverage Ratio of
         not less than the amount set forth below for each period set forth
         below:

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

                     DURING FISCAL YEAR ENDING            RATIO
                                                 ================

                                Credit Agreement

<PAGE>   89

                                       84

<TABLE>

                   <S>                            <C>
                      December 31, 2000           1.75:1
                      December 31, 2001           2.00:1
                      December 31, 2002           2.00:1
                      December 31, 2003           2.25:1
                      December 31, 2004           2.50:1
                         and thereafter
                   ==============================================
</TABLE>

                                   ARTICLE VI

                                EVENTS OF DEFAULT

                 SECTION 6.01. Events of Default. If any of the following events
("EVENTS OF DEFAULT") shall occur and be continuing:

                 (a)   (i) the Domestic Borrower shall fail to pay any principal
         of any Advance when the same shall become due and payable or (ii) the
         Domestic Borrower shall fail to pay any interest on any Advance, or any
         Loan Party shall fail to make any other payment under any Loan
         Document, in each case under this clause (ii) within five Business Days
         after the same becomes due and payable; or

                 (b)   any representation or warranty made by any Loan Party (or
         any of its officers) under or in connection with any Loan Document
         shall prove to have been incorrect in any material respect when made;
         or

                 (c)   the Domestic Borrower shall fail to perform or observe
         any term, covenant or agreement contained in Section 2.14, 5.01(e),
         (f), or (m), 5.02, 5.03 or 5.04; or

                 (d)   any Loan Party shall fail to perform or observe any other
         term, covenant or agreement contained in any Loan Document on its part
         to be performed or observed if such failure shall remain unremedied for
         20 days after the earlier of the date on which (i) a Responsible
         Officer becomes aware of such failure or (ii) written notice thereof
         shall have been given to the Domestic Borrower by the Administrative
         Agent or any Lender Party; or

                 (e)   any Loan Party or any of its Subsidiaries shall fail to
         pay any principal of, premium or interest on or any other amount
         payable in respect of any Debt of such Loan Party or such Subsidiary
         (as the case may be) that is outstanding in a principal amount (or, in
         the case of any Hedge Agreement, an Agreement Value) of at least
         $5,000,000 either individually or in the aggregate (but excluding Debt
         outstanding hereunder), when

                                Credit Agreement

<PAGE>   90

                                       85

         the same becomes due and payable (whether by scheduled maturity,
         required prepayment, acceleration, demand or otherwise), and such
         failure shall continue after the applicable grace period, if any,
         specified in the agreement or instrument relating to such Debt; or any
         other event shall occur or condition shall exist under any agreement or
         instrument relating to any such Debt and shall continue after the
         applicable grace period, if any, specified in such agreement or
         instrument, if the effect of such event or condition is to accelerate,
         or to permit the acceleration of, the maturity of such Debt or
         otherwise to cause, or to permit the holder thereof to cause, such Debt
         to mature; or any such Debt shall be declared to be due and payable or
         required to be prepaid or redeemed (other than by a regularly scheduled
         required prepayment or redemption), purchased or defeased, or an offer
         to prepay, redeem, purchase or defease such Debt shall be required to
         be made, in each case prior to the stated maturity thereof; provided,
         however, that this subsection (e) shall not apply to any secured Debt,
         that becomes due as a result of a voluntary sale or transfer of the
         assets securing such Debt; or

                 (f)   any Loan Party or any of its Subsidiaries or SSCI
         Investors shall generally not pay its debts as such debts become due,
         or shall admit in writing its inability to pay its debts generally, or
         shall make a general assignment for the benefit of creditors; or any
         proceeding shall be instituted by or against any Loan Party or any of
         its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
         seeking liquidation, winding up, reorganization, arrangement,
         adjustment, protection, relief, or composition of it or its debts under
         any law relating to bankruptcy, insolvency or reorganization or relief
         of debtors, or seeking the entry of an order for relief or the
         appointment of a receiver, trustee or other similar official for it or
         for any substantial part of its property and, in the case of any such
         proceeding instituted against it (but not instituted by it) that is
         being diligently contested by it in good faith, either such proceeding
         shall remain undismissed or unstayed for a period of 60 days or any of
         the actions sought in such proceeding (including, without limitation,
         the entry of an order for relief against, or the appointment of a
         receiver, trustee, custodian or other similar official for, it or any
         substantial part of its property) shall occur; or any Loan Party or any
         of its Subsidiaries shall take any corporate action to authorize any of
         the actions set forth above in this subsection (f); or

                 (g)   any judgments or orders, either individually or in the
         aggregate, for the payment of money in excess of $5,000,000 (exclusive
         of any amounts fully covered by insurance (less any applicable
         deductible) or indemnification and as to which the insurer or the
         indemnifying party, as the case may be, has acknowledged its obligation
         to cover such judgment or order) shall be rendered against any Loan
         Party or any of its Subsidiaries and either (i) enforcement proceedings
         shall have been commenced by any creditor upon such judgment or order
         or (ii) there shall be any period of 25 consecutive days during which a
         stay of enforcement of such judgment or order, by reason of a pending
         appeal or otherwise, shall not be in effect; or

                                Credit Agreement
<PAGE>   91
                                       86

                  (h) any non-monetary judgment or order shall be rendered
         against any Loan Party or any of its Subsidiaries that would reasonably
         be expected to have a Material Adverse Effect, and there shall be any
         period of 25 consecutive days during which a stay of enforcement of
         such judgment or order, by reason of a pending appeal or otherwise,
         shall not be in effect; or

                  (i) any provision of any Loan Document after delivery thereof
         pursuant to Section 3.01, 3.02, 3.03, 3.04 or 5.01(j) of this Agreement
         or Section 5.01(q) of the Existing Credit Agreement shall for any
         reason cease to be valid and binding on or enforceable against any Loan
         Party party to it, or any such Loan Party shall so state in writing; or

                  (j) any Collateral Document after delivery thereof pursuant to
         Section 3.01, 3.02, 3.03, 3.04 or 5.01(j) of this Agreement or Section
         or 5.01(q) of the Existing Credit Agreement shall for any reason (other
         than pursuant to the terms thereof) cease to create a valid and
         perfected first priority lien on and security interest in the
         Collateral purported to be covered thereby; or

                  (k) a Change of Control shall occur; or

                  (l) any ERISA Event shall have occurred with respect to a Plan
         and the sum (determined as of the date of occurrence of such ERISA
         Event) of the Insufficiency of such Plan and the Insufficiency of any
         and all other Plans with respect to which an ERISA Event shall have
         occurred and then exist (or the liability of the Loan Parties and the
         ERISA Affiliates related to such ERISA Event) exceeds $1,000,000; or

                  (m) any Loan Party or any ERISA Affiliate shall have been
         notified by the sponsor of a Multiemployer Plan that it has incurred
         Withdrawal Liability to such Multiemployer Plan in an amount that, when
         aggregated with all other amounts required to be paid to Multiemployer
         Plans by the Loan Parties and the ERISA Affiliates as Withdrawal
         Liability (determined as of the date of such notification), exceeds
         $2,000,000 or requires payments exceeding $1,000,000 per annum; or

                  (n) any Loan Party or any ERISA Affiliate shall have been
         notified by the sponsor of a Multiemployer Plan that such Multiemployer
         Plan is in reorganization or is being terminated, within the meaning of
         Title IV of ERISA, and as a result of such reorganization or
         termination the aggregate annual contributions of the Loan Parties and
         the ERISA Affiliates to all Multiemployer Plans that are then in
         reorganization or being terminated have been or will be increased over
         the amounts contributed to such Multiemployer Plans for the plan years
         of such Multiemployer Plans immediately

                                Credit Agreement
<PAGE>   92

                                       87

          preceding the plan year in which such reorganization or termination
          occurs by an amount exceeding $1,000,000; or

                  (o) an "Event of Default" (as defined in any Mortgage) shall
          have occurred and be continuing;

then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Domestic
Borrower and each Offshore Borrower, declare the Commitments of each Lender
Party and the obligation of each Lender Party to make Advances (other than
Letter of Credit Advances by the Issuing Bank or a Revolving Credit Lender
pursuant to Section 2.03(c) and Swing Line Advances by a Revolving Credit Lender
pursuant to Section 2.02(b)) and of the Issuing Bank to issue Letters of Credit
to be terminated, whereupon the same shall forthwith terminate, and (ii) shall
at the request, or may with the consent, of the Required Lenders, (A) by notice
to the Domestic Borrower and each Offshore Borrower, declare the Notes, all
interest thereon and all other amounts payable under this Agreement and the
other Loan Documents to be forthwith due and payable, whereupon the Notes, all
such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Domestic Borrower and each Offshore
Borrower, (B) by notice to each party required under the terms of any agreement
in support of which a Standby Letter of Credit is issued, request that all
Obligations under such agreement be declared to be due and payable and (C) by
notice to the Issuing Bank, direct the Issuing Bank to deliver a Default
Termination Notice to the beneficiary of each Standby Letter of Credit issued by
it, and the Issuing Bank shall deliver such Default Termination Notices;
provided, however, that in the event of an actual or deemed entry of an order
for relief with respect to the Domestic Borrower under the Federal Bankruptcy
Code, (x) the Commitments of each Lender Party and the obligation of each Lender
Party to make Advances (other than Letter of Credit Advances by the Issuing Bank
or a Revolving Credit Lender pursuant to Section 2.03(c) and Swing Line Advances
by a Revolving Credit Lender pursuant to Section 2.02(b)) and of the Issuing
Bank to issue Letters of Credit shall automatically be terminated and (y) the
Notes, all such interest and all such amounts shall automatically become and be
due and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Domestic Borrower and each
Offshore Borrower.

                  SECTION 6.02. Actions in Respect of the Letters of Credit upon
Default. If any Event of Default shall have occurred and be continuing, the
Administrative Agent may, or shall at the request of the Required Lenders,
irrespective of whether it is taking any of the actions described in Section
6.01 or otherwise, make demand upon the Domestic Borrower to, and forthwith upon
such demand the Domestic Borrower will, pay to the Administrative Agent on
behalf of the Lender Parties in same day funds at the Administrative Agent's
office designated in such demand, for deposit in the L/C Cash Collateral
Account, an amount equal to the aggregate

                                Credit Agreement
<PAGE>   93

                                       88

Available Amount of all Letters of Credit then outstanding. If at any time the
Administrative Agent or the Administrative Agent determines that any funds held
in the L/C Cash Collateral Account are subject to any right or claim of any
Person other than the Agents and the Lender Parties or that the total amount of
such funds is less than the aggregate Available Amount of all Letters of Credit,
the Domestic Borrower will, forthwith upon demand by the Administrative Agent or
the Administrative Agent, pay to the Administrative Agent, as additional funds
to be deposited and held in the L/C Cash Collateral Account, an amount equal to
the excess of (a) such aggregate Available Amount over (b) the total amount of
funds, if any, then held in the L/C Cash Collateral Account that the
Administrative Agent or the Administrative Agent, as the case may be, determines
to be free and clear of any such right and claim. Upon the drawing of any Letter
of Credit for which funds are on deposit in the L/C Cash Collateral Account,
such funds shall be applied to reimburse the Issuing Bank or Lenders, as
applicable, to the extent permitted by applicable law.

                                   ARTICLE VII

                                   THE AGENTS

                  SECTION 7.01. Authorization and Action. Each Lender Party (in
its capacities as a Lender, Swing Line Lender (if applicable), Issuing Bank (if
applicable) and on behalf of itself and its Affiliates as potential Hedge Banks)
hereby appoints and authorizes each Agent to take such action as agent on its
behalf and to exercise such powers and discretion under this Agreement and the
other Loan Documents as are delegated to such Agent by the terms hereof and
thereof, together with such powers and discretion as are reasonably incidental
thereto. As to any matters not expressly provided for by the Loan Documents
(including, without limitation, enforcement or collection of the Notes), no
Agent shall be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required Lenders,
and such instructions shall be binding upon all Lender Parties and all holders
of Notes; provided, however, that no Agent shall be required to take any action
that exposes such Agent to personal liability or that is contrary to this
Agreement or applicable law. Each Agent agrees to give to each Lender Party
prompt notice of each notice given to it by the Domestic Borrower pursuant to
the terms of this Agreement.

                  SECTION 7.02. Agents' Reliance, Etc. Neither any Agent nor any
of their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with the Loan Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, each Agent:
(a) may treat the payee of any Note as the holder thereof until, in the case of
the Administrative Agent, the Administrative Agent receives and accepts an
Assignment and

                                Credit Agreement
<PAGE>   94
                                       89

Acceptance entered into by the Lender that is the payee of such Note, as
assignor, and an Eligible Assignee, as assignee, or, in the case of any other
Agent, such Agent has received notice from the Administrative Agent that it has
received and accepted such Assignment and Acceptance, in each case as provided
in Section 8.07; (b) may consult with legal counsel (including counsel for any
Loan Party), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (c)
makes no warranty or representation to any Lender Party and shall not be
responsible to any Lender Party for any statements, warranties or
representations (whether written or oral) made in or in connection with the Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of any
Loan Document on the part of any Loan Party or to inspect the property
(including the books and records) of any Loan Party; (e) shall not be
responsible to any Lender Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; and (f) shall incur no liability under or
in respect of any Loan Document by acting upon any notice, consent, certificate
or other instrument or writing (which may be by telegram, telecopy or telex)
believed by it to be genuine and signed or sent by the proper party or parties.

                  SECTION 7.03. Chase, J.P. Morgan, ML&Co. and Affiliates. With
respect to its Commitments or the Commitments of its Affiliates, the Advances
made by it or the Advances made by its Affiliates and the Notes issued to it or
to its Affiliates, Chase, J.P. Morgan and ML&Co. and their Affiliates shall have
the same rights and powers under the Loan Documents as any other Lender Party
and may exercise the same as though it or its Affiliate were not an Agent; and
the term "Lender Party" or "Lender Parties" shall, unless otherwise expressly
indicated, include Chase, Morgan Guaranty Trust Company of New York and Merrill
Lynch Capital Corporation in their respective individual capacities. Chase,
Morgan Guaranty Trust Company of New York and Merrill Lynch Capital Corporation
and their respective Affiliates may accept deposits from, lend money to, act as
trustee under indentures of, accept investment banking engagements from and
generally engage in any kind of business with, any Loan Party, any of its
Subsidiaries and any Person that may do business with or own securities of any
Loan Party or any such Subsidiary, all as if Chase, J.P. Morgan and ML&Co. were
not Agents and without any duty to account therefor to the Lender Parties.

                  SECTION 7.04. Lender Party Credit Decision. Each Lender Party
acknowledges that it has, independently and without reliance upon any Agent or
any other Lender Party and based on the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender Party also acknowledges that it will, independently and
without reliance upon any Agent or any other Lender Party and based on such
documents and

                                Credit Agreement
<PAGE>   95
                                       90

information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.

                  SECTION 7.05. Indemnification. (a) Each Lender Party severally
agrees to indemnify each Agent (to the extent not promptly reimbursed by the
Domestic Borrower) from and against such Lender Party's ratable share
(determined as provided below) of any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by, or
asserted against such Agent in any way relating to or arising out of the Loan
Documents or any action taken or omitted by such Agent under the Loan Documents;
provided, however, that no Lender Party shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct as found in a final, non-appealable judgment by a court of
competent jurisdiction. Without limitation of the foregoing, each Lender Party
agrees to reimburse each Agent promptly upon demand for its ratable share of any
costs and expenses (including, without limitation, fees and expenses of counsel)
payable by the Domestic Borrower under Section 8.04, to the extent that such
Agent is not promptly reimbursed for such costs and expenses by the Domestic
Borrower.

                  (b) Each Lender Party severally agrees to indemnify the
Issuing Bank (to the extent not promptly reimbursed by the Domestic Borrower)
from and against such Lender Party's ratable share (determined as provided
below) of any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against the
Issuing Bank in any way relating to or arising out of the Loan Documents or any
action taken or omitted by the Issuing Bank under the Loan Documents; provided,
however, that no Lender Party shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Issuing Bank's gross
negligence or willful misconduct as found in a final, non-appealable judgment by
a court of competent jurisdiction. Without limitation of the foregoing, each
Lender Party agrees to reimburse the Issuing Bank promptly upon demand for its
ratable share of any costs and expenses (including, without limitation, fees and
expenses of counsel) payable by the Domestic Borrower under Section 8.04, to the
extent that the Issuing Bank is not promptly reimbursed for such costs and
expenses by the Domestic Borrower.

                  (c) For purposes of this Section 7.05, the Lender Parties'
respective ratable shares of any amount shall be determined, at any time,
according to the sum of (i) the aggregate principal amount of the Advances
outstanding at such time and owing to the respective Lender Parties, (ii) their
respective Pro Rata Shares of the aggregate Available Amount of all Letters of
Credit outstanding at such time, (iii) the aggregate unused portions of their
respective Term Commitments at such time and (iv) their respective Unused
Revolving Credit Commitments at

                                Credit Agreement
<PAGE>   96
                                       91

such time; provided that the aggregate principal amount of Swing Line Advances
owing to the Swing Line Bank and of Letter of Credit Advances owing to the
Issuing Bank shall be considered to be owed to the Revolving Credit Lenders
ratably in accordance with their respective Revolving Credit Commitments. The
failure of any Lender Party to reimburse any Agent or the Issuing Bank, as the
case may be, promptly upon demand for its ratable share of any amount required
to be paid by the Lender Parties to such Agent or the Issuing Bank, as the case
may be, as provided herein shall not relieve any other Lender Party of its
obligation hereunder to reimburse such Agent or the Issuing Bank, as the case
may be, for its ratable share of such amount, but no Lender Party shall be
responsible for the failure of any other Lender Party to reimburse such Agent or
the Issuing Bank, as the case may be, for such other Lender Party's ratable
share of such amount. Without prejudice to the survival of any other agreement
of any Lender Party hereunder, the agreement and obligations of each Lender
Party contained in this Section 7.05 shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under the other
Loan Documents.

                  SECTION 7.06. Successor Agents. Any Agent may resign at any
time by giving written notice thereof to the Lender Parties and the Domestic
Borrower and may be removed at any time with or without cause by the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint a successor Agent which, so long as no Default has occurred
and is continuing, shall be approved by the Domestic Borrower (such approval not
to be unreasonably withheld or delayed), and, which shall be a commercial bank
organized under the laws of the United States or of any State thereof and having
a combined capital and surplus of at least $1,000,000,000. If no successor Agent
shall have been so appointed by the Required Lenders, and shall have accepted
such appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Required Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lender Parties, appoint a successor Agent.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent
and, in the case of a successor Administrative Agent, upon the execution and
filing or recording of such financing statements, or amendments thereto, and
such amendments or supplements to the Mortgages, and such other instruments or
notices, as may be necessary or desirable, or as the Required Lenders may
request, in order to continue the perfection of the Liens granted or purported
to be granted by the Collateral Documents, such successor Agent shall succeed to
and become vested with all the rights, powers, discretion, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under the Loan Documents. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent as to less than all of the
Facilities and, in the case of a successor Administrative Agent, upon the
execution and filing or recording of such financing statements, or amendments
thereto, and such amendments or supplements to the Mortgages, and such other
instruments or notices, as may be necessary or desirable, or as the Required
Lenders may request, in order to continue the perfection of the Liens granted or
purported to be granted by the Collateral Documents, such successor Agent shall
succeed to and become vested with all the rights, powers, discretion,

                                Credit Agreement
<PAGE>   97

                                       92

privileges and duties of the retiring Agent as to such Facilities, other than
with respect to funds transfers and other similar aspects of the administration
of Borrowings under such Facilities, issuances of Letters of Credit
(notwithstanding any resignation as Agent with respect to the Letter of Credit
Sub-Facility) and payments by the Domestic Borrower in respect of such
Facilities, and the retiring Administrative Agent shall be discharged from its
duties and obligations under this Agreement as to such Facilities, other than as
aforesaid. If within 45 days after written notice is given of the retiring
Agent's resignation or removal under this Section 7.06 no successor Agent shall
have been appointed and shall have accepted such appointment, then on such 45th
day (a) the retiring Agent's resignation or removal shall become effective, (b)
the retiring Agent shall thereupon be discharged from its duties and obligations
under the Loan Documents and (c) the Required Lenders shall thereafter perform
all duties of the retiring Agent under the Loan Documents until such time, if
any, as the Required Lenders appoint a successor Agent as provided above. After
any retiring Agent's resignation or removal hereunder as Agent shall have become
effective, the provisions of this Article VII shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under this
Agreement.

                                  ARTICLE VIII

                                  MISCELLANEOUS

                  SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes or any other Loan Document, nor consent
to any departure by any Loan Party therefrom, shall in any event be effective
unless the same shall be in writing and signed (or, in the case of the
Collateral Documents, consented to) by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that

                (a) no amendment, waiver or consent shall, unless in writing
         and signed by the Domestic Borrower, the Offshore Borrowers and all of
         the Lenders (other than any Lender Party that is, at such time, a
         Defaulting Lender), do any of the following at any time:

                    (i) waive any of the conditions specified in Section 3.01,
               3.02, 3.03 or, in the case of the Initial Extension of Credit,
               Section 3.04,

                    (ii) change the number of Lenders or the percentage of (x)
               the Commitments, (y) the aggregate unpaid principal amount of the
               Advances or (z) the aggregate Available Amount of outstanding
               Letters of Credit that, in each case, shall be required for the
               Lenders or any of them to take any action hereunder,

                                Credit Agreement
<PAGE>   98
                                       93

                    (iii) reduce or limit the obligations of any Guarantor under
               Section 1 of the Guaranty issued by it or release such Guarantor
               or otherwise limit such Guarantor's liability with respect to the
               Obligations owing to the Agents and the Lender Parties (other
               than, (x) to the extent permitted under the Guaranty, (y)
               pursuant to a merger permitted pursuant to Section 5.02(e) or (z)
               in connection with a sale of such Guarantor permitted pursuant to
               Section 5.02(f) or a waiver of such Section effected with the
               consent of the Required Lenders),

                    (iv) release all or substantially all of the Collateral in
               any transaction or series of related transactions or permit the
               creation, incurrence, assumption or existence of any Lien on all
               or substantially all of the Collateral in any transaction or
               series of related transactions to secure any Obligations other
               than Obligations owing to the Secured Parties under the Loan
               Documents, or

                    (v) amend Section 2.13, the Collateral Sharing Agreement or
               this Section 8.01;

               (b) no amendment, waiver or consent shall, unless in writing
          and signed by the Domestic Borrower, each Offshore Borrower and the
          Required Lenders and each Lender (other than any Lender that is, at
          such time, a Defaulting Lender) that has a Commitment under the Term A
          Facility, the Offshore Acquisition Facility or the Revolving Credit
          Facility if such Lender is directly affected by such amendment, waiver
          or consent,

                    (i) increase the Commitments of such Lender (it being
               understood that waivers or modification of conditions precedent,
               covenants, Defaults or Events of Default or a mandatory reduction
               in the Revolving Credit Facility shall not constitute an increase
               of the Commitment of any Lender, and that an increase in the
               available portion of any Commitment of any Lender shall not
               constitute an increase in the Commitment of such Lender for these
               purposes),
                    (ii) reduce the principal of, or interest on, the Notes held
               by such Lender or any fees or other amounts payable hereunder to
               such Lender (other than as a result of any waiver of the
               applicability of any post default increase in interest rates; it
               being understood that any amendment or modification to the
               financial definitions in this Agreement shall not constitute a
               reduction in any rate of interest or fees for these purposes,
               notwithstanding the fact that such amendment or modification
               actually results in such a reduction, so long as the primary
               purpose (as determined in good faith by the Joint Lead Arrangers)
               of the respective amendment or modification was not to decrease
               the pricing pursuant to this Agreement), or

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<PAGE>   99

                                       94

                           (iii) postpone any date fixed for any payment of
                  principal of, or interest on, the Notes held by such Lender
                  pursuant to Section 2.04 or 2.07 or any fees or other amounts
                  payable hereunder to such Lender pursuant to Section 2.08;

                  (c) no amendment, waiver or consent shall, unless in writing
          and signed by the Domestic Borrower, the Offshore Borrowers and the
          Required Lenders and, if the Lenders that have Commitments under, or
          are owed any amounts under or in respect of, any Facility are directly
          affected by such amendment, waiver or consent, Lenders holding more
          than 50% of the aggregate Commitments under the Term A Facility, the
          Offshore Acquisition Facility or the Revolving Credit Facility, change
          the order of application of any reduction in the Commitments or any
          prepayment of Advances between the Term A Facility or the Offshore
          Acquisition Facility from the application thereof set forth in the
          applicable provisions of Section 2.06(b)(v) in any manner that
          materially affects the Lenders under such Facility or require the
          permanent reduction of the Revolving Credit Facility at any time when
          all or a portion of any Term Facility remains in effect;

                  (d) no amendment, waiver or consent shall, unless in writing
          and signed by the Appropriate Swing Line Lender or the Issuing Bank,
          as the case may be, in addition to the Lenders required above to take
          such action, affect the rights or obligations of the Appropriate Swing
          Line Lender or of the Issuing Bank, as the case may be, under this
          Agreement; and

                  (e) no amendment, waiver or consent shall, unless in writing
          and signed by an Agent in addition to the Lenders required above to
          take such action, affect the rights or duties of such Agent under this
          Agreement or the other Loan Documents.

At any time that no Default shall have occurred and be continuing, if, in
connection with any proposed change, waiver, discharge or termination to any of
the provisions of this Agreement as contemplated by subsection (c) of this
Section 8.01, the consent of the Required Lenders is obtained but the consent of
one or more of such other Lenders whose consent is required is not obtained,
then the Domestic Borrower shall have the right, so long as all non-consenting
Lenders whose individual consent is required are treated as described below, to
replace each such non-consenting Lender or Lenders with one or more Eligible
Assignees so long as at the time of such replacement, each such Eligible
Assignee consents to the proposed change, waiver, discharge or termination. At
the time any such non-consenting Lender (a "DEPARTING LENDER") is replaced by an
Eligible Assignee (a "REPLACEMENT LENDER") designated by the Domestic Borrower
hereunder, the Replacement Lender and the Departing Lender shall enter into an
Assignment and Acceptance pursuant to Section 8.07 pursuant to which all of the
Commitments, Advances and Notes owed to, or held by, the Departing Lender are
assigned to the Replacement Lender, against payment by the Replacement Lender to
the Departing Lender of an amount equal to the principal

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                                       95

amount of such outstanding Advances, together with accrued and unpaid interest
on such Advances to the date of assignment and all accrued and unpaid fees and
other amounts due to the Departing Lender hereunder on such date. The Domestic
Borrower or the Replacement Lender shall pay the Administrative Agent's fees in
connection with any such assignment.

                  SECTION 8.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telecopy or telex communication) and mailed, telegraphed,
telecopied, telexed or delivered, if to the Domestic Borrower, at its address at
225 West Washington Street, Suite 2200, Chicago, IL 60606, Telecopy Number:
(312) 419-4034, Attention: John R. Mellet; if to an Offshore Borrower or any
other Loan Party, to it c/o the Domestic Borrower with a copy to the address
provided on Schedule I to the Credit Agreement Supplement executed and delivered
by such Offshore Borrower; if to any Initial Lender Party, at its Domestic
Lending Office specified opposite its name on Schedule I hereto; if to any other
Lender Party (other than any Offshore Swing Line Lender), at its Domestic
Lending Office specified in the Assignment and Acceptance pursuant to which it
became a Lender Party; if to any Offshore Swing Line Lender, to the Offshore
Currency Agent, with a copy to the notice address specified in the Joinder
Agreement pursuant to which it became an Offshore Swing Line Lender; if to
Chase, in its capacity as the Administrative Agent or Offshore Currency Agent,
at its address at The Loan and Agency Services Group, One Chase Manhattan Plaza,
8th Floor, New York, New York 10081, Telecopy Number: (212) 552-5777, Attention:
Michael Cerniglia, with a copy, in the case of all notices other than Notices of
Borrowing, Notices of Issuance, Notices of Renewal and Notices of Swing Line
Borrowings, to The Chase Manhattan Bank, 270 Park Avenue, 38th Floor, New York,
New York 10017, Telecopy Number: (212) 270-7939, Attention: Lawrence Palumbo; if
to ML&Co. in its capacity as a Joint Lead Arranger, Joint Book Manager or
Syndication Agent, at its address at World Financial Center, North Tower, 250
Vesey Street, New York, New York 10281, Telecopy Number: (212) 449-8635,
Attention: David Manzano; if to J.P. Morgan in its capacity as a Joint Lead
Arranger, Joint Book Manager or Documentation Agent, at its address at 60 Wall
Street, New York, New York 10260-0060, Telecopy Number: (212) 648-5348,
Attention: Jose Briones; or, as to the Domestic Borrower or the Administrative
Agent, at such other address as shall be designated by such party in a written
notice to the other parties and, as to each other party, at such other address
as shall be designated by such party in a written notice to the Domestic
Borrower and the Administrative Agent. All such notices and other communications
shall, when mailed, telegraphed, telecopied or telexed, be effective when
deposited in the mails, delivered to the telegraph company, transmitted by
telecopier or confirmed by telex answerback, respectively, except that notices
and communications to any Agent pursuant to Article II, III or VII shall not be
effective until received by such Agent. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or the
Notes or of any Exhibit hereto to be executed and delivered hereunder shall be
effective as delivery of an original executed counterpart thereof.

                                Credit Agreement
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                                       96

                SECTION 8.03. No Waiver; Remedies. No failure on the part of any
Lender Party or any Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

                SECTION 8.04. Costs and Expenses. (a) The Domestic Borrower
agrees to pay on demand (i) all reasonable costs and expenses of each Agent in
connection with the preparation, execution, delivery, administration,
modification and amendment of the Loan Documents (including, without limitation,
(A) all due diligence, collateral review, syndication, transportation, computer,
duplication, appraisal, audit, insurance, consultant, search, filing and
recording fees and expenses and (B) the reasonable fees and expenses of counsel
for the Syndication Agent and the reasonable fees and expenses of counsel to the
Administrative Agent with respect thereto, with respect to advising such Agent
as to its rights and responsibilities, or the perfection, protection or
preservation of rights or interests, under the Loan Documents (including,
without limitation, pursuant to Section 3.02, 3.03, 5.01(j), (k) and (m)), with
respect to negotiations with any Loan Party or with other creditors of any Loan
Party or any of its Subsidiaries arising out of any Default or any events or
circumstances that may give rise to a Default and with respect to presenting
claims in or otherwise participating in or monitoring any bankruptcy, insolvency
or other similar proceeding involving creditors' rights generally and any
proceeding ancillary thereto) and (ii) all costs and expenses of each Agent and
each Lender Party in connection with the enforcement of the Loan Documents,
whether in any action, suit or litigation, or any bankruptcy, insolvency or
other similar proceeding affecting creditors' rights generally (including,
without limitation, the reasonable fees and expenses of counsel for the
Administrative Agent and each Lender Party with respect thereto).

                (b) The Domestic Borrower agrees to indemnify, defend and save
and hold harmless each Agent, each Lender Party and each of their Affiliates and
their respective officers, directors, employees, agents and advisors (each, an
"INDEMNIFIED PARTY") from and against, and shall pay on demand, any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of (including, without limitation, in
connection with any investigation, litigation or proceeding or preparation of a
defense in connection therewith) (i) the Facilities, the actual or proposed use
of the proceeds of the Advances or the Letters of Credit, the Transaction
Documents or any of the transactions contemplated thereby, including, without
limitation, the Offer to Purchase and any Permitted Acquisition or other
proposed acquisition (including, without limitation, the Acquisition) by the
Domestic Borrower or any of its Subsidiaries or (ii) the actual or alleged
presence of Hazardous Materials on any property of any Loan Party or any of its
Subsidiaries or any Environmental Action relating in any way to any Loan Party
or any of its Subsidiaries, except to the extent such claim, damage, loss,
liability or expense is found in

                                Credit Agreement
<PAGE>   102

                                       97

a final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's bad faith, gross negligence or willful
misconduct. In the case of an investigation, litigation or other proceeding to
which the indemnity in this Section 8.04(b) applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought
by any Loan Party, its directors, shareholders or creditors or an Indemnified
Party, whether or not any Indemnified Party is otherwise a party thereto and
whether or not the Transaction is consummated. The Domestic Borrower also agrees
that no Indemnified Party shall have any liability (whether direct or indirect,
in contract or tort or otherwise) for any Losses to any Loan Party or any Loan
Party's security holders or creditors resulting from, arising out of or in any
way related to or by reason of, the Facilities, the actual or proposed use of
the proceeds of the Advances or the Letters of Credit, the Transaction Documents
or any of the transactions contemplated by the Transaction Documents except to
the extent that any Loss resulted from the gross negligence or bad faith of such
Indemnified Person.

                  (c) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made by an Applicable Borrower to or for the account
of a Lender Party other than on the last day of the Interest Period for such
Advance, as a result of a payment or Conversion pursuant to Section 2.06,
2.09(b)(i) or 2.10(d), acceleration of the maturity of the Notes pursuant to
Section 6.01 or for any other reason, or by an Eligible Assignee to a Lender
Party other than on the last day of the Interest Period for such Advance upon an
assignment of rights and obligations under this Agreement pursuant to Section
8.07 as a result of a demand by the Domestic Borrower pursuant to Section
8.07(a), or if the Applicable Borrower fails to make any payment or prepayment
of an Advance for which a notice of prepayment has been given or that is
otherwise required to be made, whether pursuant to Section 2.04, 2.06 or 6.01 or
otherwise, the Applicable Borrower shall, upon demand by such Lender Party (with
a copy of such demand to the Administrative Agent), pay to the Administrative
Agent for the account of such Lender Party any amounts required to compensate
such Lender Party for any additional losses, costs or expenses that it may
reasonably incur as a result of such payment or Conversion or such failure to
pay or prepay, as the case may be, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by any
Lender Party to fund or maintain such Advance.

                  (d) If any Loan Party fails to pay when due any costs,
expenses or other amounts payable by it under any Loan Document, including,
without limitation, fees and expenses of counsel and indemnities, such amount
may be paid on behalf of such Loan Party by the Administrative Agent or any
Lender Party, in its sole discretion.

                  (e) Without prejudice to the survival of any other agreement
of any Loan Party hereunder or under any other Loan Document, the agreements and
obligations of each Applicable Borrower contained in Sections 2.10 and 2.12 and
this Section 8.04 shall survive the payment in full of principal, interest and
all other amounts payable hereunder and under any of the other Loan Documents.

                                Credit Agreement
<PAGE>   103

                                       98

                  SECTION 8.05. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the request
or the granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Agent and each Lender Party and each of their
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and otherwise 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 such Agent, such Lender Party
or such Affiliate to or for the credit or the account of (i) the Domestic
Borrower against any and all of the Obligations of the Domestic Borrower now or
hereafter existing under the Loan Documents, or (ii) any Offshore Borrower,
against any and all of the obligations of such Offshore Borrower now or
hereafter existing under the Loan Documents, in either case, irrespective of
whether such Agent or such Lender Party shall have made any demand under this
Agreement or such Note or Notes and although such Obligations may be unmatured.
Each Agent and each Lender Party agrees promptly to notify the Domestic Borrower
or such Offshore Borrower, as the case may be, after any such set-off and
application; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Agent
and each Lender Party and their respective Affiliates under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Agent, such Lender Party and their respective
Affiliates may have.

                  SECTION 8.06. Binding Effect. This Agreement shall become
effective on the Effective Date and thereafter shall be binding upon and inure
to the benefit of the Domestic Borrower, each Offshore Borrower, each Agent and
each Lender Party and their respective successors and assigns, except that
neither the Domestic Borrower nor any Offshore Borrower shall have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender Parties.

                  SECTION 8.07. Assignments and Participations. (a) Each Lender
may assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment or Commitments, the Advances owing to it and the Note
or Notes held by it); provided, however, that (i) each such assignment shall be
of a uniform, and not a varying, percentage of all rights and obligations under
and in respect of one or more Facilities, (ii) except in the case of an
assignment to a Person that, immediately prior to such assignment, was a Lender,
an Affiliate of any Lender or an Approved Fund of any Lender or an assignment of
all of a Lender's rights and obligations under this Agreement, the aggregate
amount of the Commitments being assigned to such Eligible Assignee pursuant to
such assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $1,000,000 (or such
lesser amount as shall be approved by the Administrative Agent and, so long as
no Default shall have occurred

                                Credit Agreement
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                                       99

and be continuing at the time of effectiveness of such assignment, the Domestic
Borrower, acting on behalf of itself and any other Applicable Borrower) under
each Facility for which a Commitment is being assigned, (iii) except in the case
of an assignment to a Person that, immediately prior to such assignment was a
Lender, an Affiliate of any Lender or an Approved Fund of any Lender, each such
assignment shall be to an Eligible Assignee approved by the Administrative Agent
and, so long as no Default shall have occurred, the Domestic Borrower (acting on
behalf of itself and any other Applicable Borrower), such consent not to be
unreasonably withheld or delayed, (iv) no such assignments shall be permitted
without the consent of the Joint Lead Arrangers until the Joint Lead Arrangers
shall have notified the Lender Parties that syndication of the Commitments
hereunder has been completed and (v) the parties to each such assignment shall
execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any Note
or Notes subject to such assignment and a processing and recordation fee of
$3,500.

                  (b) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in such Assignment and Acceptance,
(i) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender or
Issuing Bank, as the case may be, hereunder and (ii) the Lender or Issuing Bank
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (other than its rights under Sections 2.10, 2.12 and 8.04 to the
extent any claim thereunder relates to an event arising prior to such
assignment) and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all of the remaining portion
of an assigning Lender's or Issuing Bank's rights and obligations under this
Agreement, such Lender or Issuing Bank shall cease to be a party hereto).

                  (c) By executing and delivering an Assignment and Acceptance,
each Lender Party assignor thereunder and each assignee thereunder confirm to
and agree with each other and the other parties thereto and hereto as follows:
(i) other than as provided in such Assignment and Acceptance, such assigning
Lender Party makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with any Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; (ii) such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Loan Party or the performance or observance by any
Loan Party of any of its obligations under any Loan Document or any other
instrument or document furnished pursuant thereto; (iii) such assignee confirms
that it has received a copy of this Agreement and the Collateral Sharing
Agreement, together with copies of the financial statements referred to in
Section 4.01

                                Credit Agreement
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                                      100

and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance upon any
Agent, such assigning Lender Party or any other Lender Party and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such
assignee appoints and authorizes each Agent to take such action as agent on its
behalf and to exercise such powers and discretion under the Loan Documents as
are delegated to such Agent by the terms hereof and thereof, together with such
powers and discretion as are reasonably incidental thereto; and (vii) such
assignee agrees that it will be bound by the provisions of this Agreement and
the Collateral Sharing Agreement and will perform in accordance with their terms
all of the obligations that by the terms of this Agreement and the Collateral
Sharing Agreement are required to be performed by it as a Lender or Issuing
Bank, as the case may be.

                  (d) The Administrative Agent, acting for this purpose (but
only for this purpose) as the agent of the Applicable Borrowers, shall maintain
at its address referred to in Section 8.02 a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the recordation of
the names and addresses of the Lender Parties and the Commitment under each
Facility of, and principal amount of the Advances owing under each Facility to,
each Lender Party from time to time (the "REGISTER"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Applicable Borrowers, the Agents and the Lender Parties shall
treat each Person whose name is recorded in the Register as a Lender Party
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Applicable Borrowers or any Agent or any Lender Party at
any reasonable time and from time to time upon reasonable prior notice.

                  (e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender Party and an assignee, together with any Note or Notes
subject to such assignment, the Administrative Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of Exhibit C
hereto (and is accompanied by any required U.S. Internal Revenue Service Forms
referred to in Section 3(vii) thereof), (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Domestic Borrower, any other Applicable
Borrower and each other Agent. In the case of any assignment by a Lender, within
five Business Days after its receipt of such notice, each Applicable Borrower,
at its own expense, shall (if so requested) execute and deliver to the
Administrative Agent in exchange for the surrendered Note or Notes a new Note to
the order of such Eligible Assignee in an amount equal to the Commitment assumed
by it under each Facility pursuant to such Assignment and Acceptance and, if any
assigning Lender has retained a Commitment hereunder under such Facility, a new
Note to the order of such assigning Lender in an amount equal to the Commitment
retained by it hereunder. Such new Note or Notes shall be in an aggregate
principal amount equal to the

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                                      101

aggregate principal amount of such surrendered Note or Notes, shall be dated the
Effective Date and shall otherwise be in substantially the form of Exhibit A-1,
A-2, A-3 or A-4 hereto, as the case may be.

                  (f) The Issuing Bank may assign to an Eligible Assignee all of
its rights and obligations under the undrawn portion of its Letter of Credit
Commitment at any time; provided, however, that the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with a processing and recordation fee of $3,500.

                  (g) Each Lender Party may sell participations to one or more
Persons (other than any Loan Party or any of its Affiliates) in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Advances owing to it and
the Note or Notes (if any) held by it); provided, however, that (i) such Lender
Party's obligations under this Agreement (including, without limitation, its
Commitments) shall remain unchanged, (ii) such Lender Party shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender Party shall remain the holder of any such Note for all
purposes of this Agreement, (iv) the Domestic Borrower, the Offshore Borrowers,
the Agents and the other Lender Parties shall continue to deal solely and
directly with such Lender Party in connection with such Lender Party's rights
and obligations under this Agreement and (v) no participant under any such
participation shall have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by any Loan
Party therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation, postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation, or release all or
substantially all of the Collateral.

                  (h) Any Lender Party that sells a participating interest under
Section 8.07(g) shall indemnify and hold harmless each Applicable Borrower and
the Administrative Agent from and against any taxes, related penalties and
interest, and reasonable out-of-pocket costs (including reasonable attorneys'
fees and expenses) incurred or payable by the Applicable Borrower or such Agent
as a result of the failure of Applicable Borrower or such Agent to comply with
its obligations to deduct or withhold any Taxes from any payments made pursuant
to this Agreement to such Lender Party (or such participant) or such Agent, as
the case may be, which taxes would not have been incurred or payable but for
such participation.

                  (i) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.07, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Domestic Borrower and the other
Applicable Borrowers furnished to such Lender Party by or on behalf of the
Domestic

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                                  102

Borrower and the other Applicable Borrowers; provided, however, that, prior to
any such disclosure, the assignee or participant or proposed assignee or
participant shall agree to preserve the confidentiality of any Confidential
Information received by it from such Lender Party.

                  (j) Notwithstanding any other provision set forth in this
Agreement, any Lender Party may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without limitation,
the Advances owing to it and the Note or Notes held by it) in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System.

                  SECTION 8.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.

                  SECTION 8.09. No Liability of the Issuing Bank. The Domestic
Borrower assumes all risks of the acts or omissions of any beneficiary or
transferee of any Letter of Credit with respect to its use of such Letter of
Credit. Neither the Issuing Bank nor any of its officers or directors shall be
liable or responsible for: (a) the use that may be made of any Letter of Credit
or any acts or omissions of any beneficiary or transferee in connection
therewith; (b) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing
Bank against presentation of documents that do not comply with the terms of a
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to the Letter of Credit; or (d) any other circumstances
whatsoever in making or failing to make payment under any Letter of Credit,
except that the Domestic Borrower shall have a claim against the Issuing Bank,
and Issuing Bank shall be liable to the Domestic Borrower, to the extent of any
direct, but not consequential, damages suffered by the Domestic Borrower that
the Domestic Borrower proves were caused by (i) Issuing Bank's willful
misconduct or gross negligence as determined in a final, non-appealable judgment
by a court of competent jurisdiction in determining whether documents presented
under any Letter of Credit comply with the terms of the Letter of Credit or (ii)
Issuing Bank's willful failure to make lawful payment under a Letter of Credit
after the presentation to it of a draft and certificates strictly complying with
the terms and conditions of the Letter of Credit. In furtherance and not in
limitation of the foregoing, Issuing Bank may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.

                                Credit Agreement
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                                      103

                  SECTION 8.10. Confidentiality. Neither any Agent nor any
Lender Party shall disclose any Confidential Information to any Person without
the consent of the Domestic Borrower, other than (a) to such Agent's or such
Lender Party's Affiliates and their officers, directors, employees, agents and
advisors and to actual or prospective Eligible Assignees and participants, and
then only on a confidential basis, (b) as required by any law, rule or
regulation or judicial process, (c) as requested or required by any state,
Federal or foreign authority or examiner regulating such Lender Party and (d) to
any rating agency when required by it, provided that, prior to any such
disclosure, such rating agency shall undertake to preserve the confidentiality
of any Confidential Information relating to the Loan Parties received by it from
such Lender Party.

                  SECTION 8.11. Release of Collateral; Release of Subsidiary
Guarantor. Upon the sale, lease, transfer or other disposition of any item of
Collateral of any Loan Party (including, without limitation, as a result of the
sale, in accordance with the terms of the Loan Documents, of the Loan Party that
owns such Collateral) in accordance with the terms of the Loan Documents, the
Administrative Agent will (without the necessity of any notice to, or consent
of, any Lender), at the Domestic Borrower's expense, execute and deliver to such
Loan Party such documents as such Loan Party may reasonably request to evidence
the release of such item of Collateral from the assignment and security interest
granted under the Collateral Documents in accordance with the terms of the Loan
Documents. Upon the consummation of the sale, transfer or other disposition by
the Domestic Borrower and any of its Subsidiaries of all of the Equity Interests
of the Domestic Borrower and its Subsidiaries in any other Subsidiary which is a
Guarantor as permitted by, and in accordance with the terms of, the Loan
Documents, such Guarantor shall be automatically released from the applicable
Guaranty and shall have no further obligations thereunder. Upon the written
request of the Domestic Borrower, together with a certificate detailing the
manner of any such sale of a Guarantor and the absence of any Default hereunder
both before and after giving effect thereto, the Administrative Agent or the
Required Lenders shall execute and deliver to the Domestic Borrower such
documents as the Domestic Borrower may reasonably request to evidence the
release of such Guarantor from the applicable Guaranty.

                  SECTION 8.12. Jurisdiction, Etc. (a) Each of the parties
hereto hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any of the other Loan Documents to which it is a
party, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
New York State court or, to the fullest extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the

                                Credit Agreement
<PAGE>   109
                                      104

judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any party may otherwise have to bring any action or
proceeding relating to this Agreement or any of the other Loan Documents in the
courts of any jurisdiction.

                  (b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any of the
other Loan Documents to which it is a party in any New York State or Federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.

                  SECTION 8.13. Judgment. (a) If for the purposes of obtaining
judgment in any court it is necessary to convert either (i) a sum due hereunder
in US Dollars into another currency or (ii) a sum due hereunder in any currency
other than US Dollars into US Dollars, the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used shall be
determined in accordance with Section 1.04 on the Business Day preceding that on
which final judgment is given.

                  (b) The obligation of each Loan Party in respect of any sum
due from it in any currency (the "PRIMARY CURRENCY") to any Lender Party or any
Agent under the Loan Documents shall, notwithstanding any judgment in any other
currency, be discharged only to the extent that on the Business Day following
receipt by such Lender Party or such Agent (as the case may be), of any sum
adjudged to be so due in such other currency, such Lender Party or such Agent
(as the case may be) may in accordance with normal banking procedures purchase
the applicable Primary Currency with such other currency; if the amount of the
applicable Primary Currency so purchased is less than such sum due to such
Lender Party or such Agent (as the case may be) in the applicable Primary
Currency, such Loan Party agrees, as a separate obligation and notwithstanding
any such judgment, to indemnify such Lender Party or such Agent (as the case may
be) against such loss, and if the amount of the applicable Primary Currency so
purchased exceeds such sum due to any Lender Party or such Agent (as the case
may be) in the applicable Primary Currency, such Lender Party or such Agent (as
the case may be) agrees to remit to such Loan Party such excess.

                  SECTION 8.14. Substitution of Currency. If a change in any
Offshore Currency occurs pursuant to any applicable law, rule or regulation of
any governmental, monetary or multi-national authority, this Agreement will be
amended to the extent determined by the Offshore Currency Agent, acting
reasonably and in consultation with the Domestic Borrower, to be necessary to
reflect the change in currency and to put the Swing Line Lenders and the
Applicable Borrowers in the same position, so far as possible, that they would
have been in if no change in such Offshore Currency had occurred.

                                Credit Agreement
<PAGE>   110

                                      105

                  SECTION 8.15. Governing Law. This Agreement and the Notes
shall be governed by, and construed in accordance with, the laws of the State of
New York.

                  SECTION 8.16. Waiver of Jury Trial. Each of the Domestic
Borrower, the Agents and the Lender Parties irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to any of the Loan
Documents, the Advances, the Letters of Credit or the actions of any Agent or
any Lender Party in the negotiation, administration, performance or enforcement
thereof.

             [The remainder of this page intentionally left blank.]

                                Credit Agreement
<PAGE>   111

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

                                    SOVEREIGN SPECIALTY CHEMICALS, INC.

                                    By /s/ Brian Hoesterey
                                      ------------------------------------------
                                      Title: Vice President

                                    MERRILL LYNCH, PIERCE, FENNER &
                                    SMITH INCORPORATED, as Joint Lead
                                    Arranger, Joint Book Manager and Syndication
                                    Agent

                                    By /s/ Christopher Birosak
                                      ------------------------------------------
                                      Title: Managing Director

                                    J.P. MORGAN SECURITIES INC., as Joint
                                    Lead Arranger, Joint Book Manager and
                                    Documentation Agent

                                    By /s/  Jose Briones
                                      ------------------------------------------
                                      Title: Vice President

                                    THE CHASE MANHATTAN BANK,
                                    as Administrative Agent, Offshore Currency
                                    Agent, Initial Issuing Bank and Domestic
                                    Swing Line Lender

                                    By /s/ Lawrence Palumbo, Jr.
                                      ------------------------------------------
                                      Title: Vice President

                                Credit Agreement
<PAGE>   112
Initial Lenders

CORPORATION
                                    MERRILL LYNCH CAPITAL CORPORATION

                                    By /s/ Christopher Birosak
                                      ------------------------------------------
                                      Title: Managing Director

                                    MORGAN GUARANTY TRUST COMPANY
                                    OF NEW YORK

                                    By /s/ Francoise Berthelot
                                      ------------------------------------------
                                      Title: Francoise Berthelot

                                    THE CHASE MANHATTAN BANK

                                    By /s/ Lawrence Palumbo, Jr.
                                      ------------------------------------------
                                      Title: Vice President

                                    NATIONAL CITY BANK

                                    By /s/ Matthew R. Klinger
                                      ------------------------------------------
                                      Title: Vice President

                                    THE BANK OF NOVA SCOTIA

                                    By /s/ F.C.H. Ashby
                                      ------------------------------------------
                                       Title: Senior Manager Loan Operations

                                Credit Agreement
<PAGE>   113

                                    BANK ONE, NA (Main Chicago Office)

                                    By /s/ Erik Back
                                      ------------------------------------------
                                      Title: Erik Back

                                    ABN AMRO BANK N.V.

                                    By /s/ Scott J. Albert
                                      ------------------------------------------
                                      Title: Group Vice President

                                    By /s/ Steven M. Buehler
                                      ------------------------------------------
                                      Title: Vice President

                                    CREDIT AGRICOLE INDOSUEZ

                                    By /s/ Sarah U. Johnson
                                      ------------------------------------------
                                      Title: Vice President

                                    By /s/ Susan Knight
                                      ------------------------------------------
                                      Title: Vice President

                                Credit Agreement
<PAGE>   114

                                   SCHEDULE I

                   COMMITMENTS AND APPLICABLE LENDING OFFICES

<TABLE>
<CAPTION>

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

                               TERM A      REVOLVING CREDIT  LETTER OF CREDIT
  NAME OF INITIAL LENDER     COMMITMENT*      COMMITMENT*       COMMITMENT
------------------------------------------------------------------------------
<S>                       <C>              <C>                <C>
Merrill Lynch Capital     $10,800,000.00   $ 7,200,000.00     $         0.00
Corporation

------------------------------------------------------------------------------
Morgan Guaranty Trust     $10,800,000.00   $ 7,200,000.00     $         0.00
Company of New York

------------------------------------------------------------------------------
The Chase Manhattan Bank  $10,200,000.00   $ 6,800,000.00     $20,000,000.00

------------------------------------------------------------------------------
National City Bank        $ 9,600,000.00   $ 6,400,000.00     $         0.00
</TABLE>

<TABLE>
<CAPTION>

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

                                           DOMESTIC LENDING OFFICE                   EURODOLLAR
  NAME OF INITIAL LENDER                                                           LENDING OFFICE
----------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                                     <C>
Merrill Lynch Capital                  Merrill Lynch & Co.                     Merrill Lynch & Co.
Corporation                            WFC North - 16th Floor                  WFC North - 16th Floor
                                       250 Vesey Street                        250 Vesey Street
                                       New York, NY 10281                      New York, NY 10281
                                       Attn: Margaret Sellinger/               Attn: Margaret Sellinger/
                                             Mack Campbell                           Mack Campbell
                                       Tel: 212-449-6187/6996                  Tel: 212-449-6187/6996
                                       Fax: 212-738-1719                       Fax: 212-738-1719
----------------------------------------------------------------------------------------------------------------------
Morgan Guaranty Trust                  Morgan Guaranty Trust                   Morgan Guaranty Trust
Company of New York                    Company of New York                     Company of New York
                                       c/o J.P. Morgan Services, Inc.          c/o J.P. Morgan Services, Inc.
                                       500 Stanton Christiana Road             500 Stanton Christiana Road
                                       Newark, DE 19713                        Newark, DE 19713
                                       Attn: Michelle Stigliano                Attn: Michelle Stigliano
                                       Tel: 302-634-1867                       Tel: 302-634-1867
                                       Fax: 302-634-4061                       Fax: 302-634-4061
----------------------------------------------------------------------------------------------------------------------
The Chase Manhattan Bank               1 Chase Manhattan Plaza                 1 Chase Manhattan Plaza
                                       8th Floor                               8th Floor
                                       New York, NY 10081                      New York, NY 10081
                                       Attn: Tonya Mitchell                    Attn: Tonya Mitchell
                                       Tel: 212-552-7206                       Tel: 212-552-7206
                                       Fax: 212-552-5777                       Fax: 212-552-5777
----------------------------------------------------------------------------------------------------------------------

National City Bank                     National City Bank                      National City Bank
                                       1900 East Ninth Street                  1900 East Ninth Street
                                       Cleveland, OH 44114                     Cleveland, OH 44114
                                       Attn: Bevette Vickerstaff               Attn: Bevette Vickerstaff
                                       Tel: 216-488-7080                       Tel: 216-488-7080
                                       Fax: 216-488-7110                       Fax: 216-488-7110
----------------------------------------------------------------------------------------------------------------------
</TABLE>

                  Credit Agreement - Schedule I - Commitments
<PAGE>   115

<TABLE>

------------------------------------------------------------------------------
<S>                       <C>              <C>                <C>
The Bank of Nova Scotia   $ 9,000,000.00   $ 6,000,000.00     $         0.00

------------------------------------------------------------------------------
Bank One, NA (Main        $ 6,600,000.00   $ 4,400,000.00     $         0.00
Chicago Office)

------------------------------------------------------------------------------
ABN AMRO Bank N.V.        $ 9,000,000.00   $ 6,000,000.00     $         0.00

------------------------------------------------------------------------------
Credit Agricole Indosuez  $ 9,000,000.00   $ 6,000,000.00     $         0.00

------------------------------------------------------------------------------
TOTAL                     $75,000,000.00   $50,000,000.00     $20,000,000.00
==============================================================================
</TABLE>

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                                     <C>
The Bank of Nova Scotia                The Bank of Nova Scotia                 Bank of Nova Scotia
                                       Atlanta Agency                          Atlanta Agency
                                       600 Peachtree St. N.E., Suite 2700      600 Peachtree St. N.E., Suite 2700
                                       Atlanta, GA 30308                       Atlanta, GA 30308
                                       Attn: Cleve Bushey                      Attn: Cleve Bushey
                                       Tel: 404-877-1500                       Tel: 404-877-1500
                                       Fax: 404-888-8998                       Fax: 404-888-8998
----------------------------------------------------------------------------------------------------------------------
Bank One, NA (Main Chicago             Bank One, N.A.                          Bank One, N.A.
Office)                                1 Bank One Plaza                        1 Bank One Plaza
                                       Chicago, IL 60670                       Chicago, IL 60670
                                       Attn: Torin Johnson                     Attn: Torin Johnson
                                       Tel: 312-732-8573                       Tel: 312-732-8573
                                       Fax: 312-732-4840                       Fax: 312-732-4840
----------------------------------------------------------------------------------------------------------------------
ABN AMRO Bank N.V.                     ABN AMRO Bank N.V.                      ABN AMRO Bank N.V.
                                       U.S. Branch Credit Administration       U.S. Branch Credit Administration
                                       208 S. La Salle, Suite 1500             208 S. La Salle, Suite 1500
                                       Chicago, IL 60604                       Chicago, IL 60604
                                       Attn: Brendan Korb                      Attn: Brendan Korb
                                       Tel: 312-992-5127                       Tel: 312-992-5127
                                       Fax: 312-992-5111                       Fax: 312-992-5111
----------------------------------------------------------------------------------------------------------------------
Credit Agricole Indosuez               Credit Agricole Indosuez                Credit Agricole Indosuez
                                       55 East Monroe Street, Suite 4700       55 East Monroe Street, Suite 4700
                                       Chicago, IL 60603                       Chicago, IL 60603
                                       Attn: Phillip Salter/Jennifer Davis     Attn: Phillip Salter/Jennifer Davis
                                       Tel: 312-917-7417/7563                  Tel: 312-917-7417/7563
                                       Fax: 312-372-9329                       Fax: 312-372-9329
======================================================================================================================
</TABLE>

          Offshore Acquisition Commitment:   The Offshore Acquisition Commitment
          of each Term A Lender and each Revolving Credit Lender shall initially
          be zero (0) on the Effective Date. After the Effective Date, the Term
          A Commitment of each Term A Lender and/or the Revolving Credit
          Commitment of each Revolving Credit Lender shall be reduced, and the
          Offshore Acquisition Commitment of each such Lender shall be
          correspondingly and concurrently increased, at the time of delivery of
          each Notice of Borrowing requesting that an Offshore Acquisition
          Advances be made available to an Offshore Borrower,

                  Credit Agreement - Schedule I - Commitments
<PAGE>   116

          in each case, in the amounts provided in Section 2.05. As provided in
          Section 2.05(b)(i)(B)(1), and subject to the limitation on conversion
          of Revolving Credit Commitments set forth in Section 2.05(b)(iii)(A),
          the aggregate amount of Term A Commitments and Revolving Credit
          Commitments which may be converted to Offshore Acquisition Commitments
          during the Term of this Agreement shall not exceed US$50,000,000.

                  Credit Agreement - Schedule I - Commitments
<PAGE>   117

                                   SCHEDULE II

                              CERTAIN DEFINED TERMS

                  As used in the Amended and Restated Credit Agreement dated as
of April 6, 2000 (as amended, amended and restated, supplemented or otherwise
modified from time to time, this "AGREEMENT"), to which this Schedule is
attached, and the other Loan Documents referred to therein, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):

                  "ACCOUNT COLLATERAL" means the Collateral referred to in
          Section 1(e) of the Domestic Security Agreement.

                  "ACQUISITION" has the meaning specified in the Preliminary
          Statements.

                  "ACQUISITION AGREEMENT" has the meaning specified in the
          Preliminary Statements.

                  "ACQUISITION DILIGENCE REPORT" means, with respect to the
         Equity Interests in, or the properties and assets of, any Person that
         have been or are to be purchased or otherwise acquired by the Domestic
         Borrower or any of its Subsidiaries, a due diligence report on such
         Person and its Subsidiaries (or the properties and assets thereof),
         prepared in good faith and certified by the Chief Financial Officer of
         the Domestic Borrower and approved by the Joint Lead Arrangers, which
         report shall include, (i) a Consolidated pro forma closing balance
         sheet of such Person and its Subsidiaries as of the date of
         consummation of the related purchase or acquisition, (ii) a
         Consolidated pro forma income statement of such Person and its
         Subsidiaries for the most recently completed four consecutive fiscal
         quarters of such Person prior to the date of consummation of the
         related purchase or acquisition, (iii) an itemized schedule of the add
         back adjustments (reflecting cost saving realized by such Person (or
         the Domestic Borrower and its Subsidiaries) upon the date of
         consummation of such transaction or which management intends to
         implement within six months of such date made to the consolidated pro
         forma income statement of such Person and its Subsidiaries referred to
         in clause (ii) of this definition, (iv) a calculation of the Pro Forma
         Consolidated EBITDA of such Person and its Subsidiaries for the most
         recently completed four consecutive fiscal quarters of such Person
         prior to the date of consummation of the related purchase or
         acquisition, (v) a schedule of the computations used by the Domestic
         Borrower in determining pro forma compliance with the covenants
         contained in Section 5.04 calculated based on the financial statements
         most recently delivered to the Lender Parties pursuant to Section 5.03
         and as though such acquisition had occurred at the beginning of the
         four quarter period covered thereby and (vi) in the case of an
         Acquisition Diligence Report which relates to an acquisition or
         purchase which is proposed to be financed with an Offshore Acquisition
         Advance, a schedule detailing

                  Credit Agreement - Schedule II - Definitions
<PAGE>   118
                                       2

         the rate of withholding tax that is expected to be imposed on any
         interest paid with respect to such Offshore Acquisition Advance, which
         schedule shall be prepared based on (a) the internal laws of the
         country in which the Offshore Borrower that proposes to make such
         acquisition or purchase is resident for relevant tax purposes and (b)
         the maximum withholding tax rate applicable to payments of interest to
         a resident of the United States entitled to the benefits of the income
         tax treaty, if any, between such country and the United States (in the
         case of each of clauses (a) and (b), as in effect at the time of the
         preparation of such Acquisition Diligence Report).

                  "ADDITIONAL GRANTOR" has the meaning specified in Section
         22(b) of the Domestic Security Agreement.

                  "ADMINISTRATIVE AGENT" has the meaning specified in the
         recital of parties to this Agreement.

                  "ADMINISTRATIVE AGENT'S ACCOUNT" means the account of the
         Administrative Agent maintained by the Administrative Agent with Chase
         at its office at One Chase Manhattan Plaza, New York, New York 10081,
         Account No. 323-142-362, Attention: Michael Cerniglia (fax number:
         212-552-5777), or such other account as the Administrative Agent shall
         specify in writing to the Lender Parties.

                  "ADVANCE" means a Term Advance, a Revolving Credit Advance, a
         Swing Line Advance or a Letter of Credit Advance.

                  "AFFILIATE" means, as to any Person, any other Person that,
         directly or indirectly, controls, is controlled by or is under common
         control with such Person or is a director or officer of such Person.
         For purposes of this definition, the term "control" (including the
         terms "controlling", "controlled by" and "under common control with")
         of a Person means the possession, direct or indirect, of the power to
         direct or cause the direction of the management and policies of such
         Person, whether through the ownership of Voting Interests, by contract
         or otherwise.

                  "AFTER-ACQUIRED INTELLECTUAL PROPERTY" has the meaning
         specified in Section 14(g) of the Domestic Security Agreement.

                  "AGENTS" means, collectively, the Administrative Agent, the
         Offshore Currency Agent, the Joint Lead Arrangers, the Joint Book
         Managers, the Documentation Agent and the Syndication Agent.

                  "AGREEMENT VALUE" means, for each Hedge Agreement, on any date
         of determination, an amount determined by the Administrative Agent
         equal to: (a) in the

                  Credit Agreement - Schedule II - Definitions
<PAGE>   119

                                       3

         case of a Hedge Agreement documented pursuant to the Master Agreement
         (Multicurrency-Cross Border) published by the International Swap and
         Derivatives Association, Inc. (the "MASTER AGREEMENT"), the amount, if
         any, that would be payable by any Loan Party or any of its Subsidiaries
         to its counterparty to such Hedge Agreement, as if (i) such Hedge
         Agreement was being terminated early on such date of determination,
         (ii) such Loan Party or Subsidiary was the sole "Affected Party", and
         (iii) the Administrative Agent was the sole party determining such
         payment amount (with the Administrative Agent making such determination
         pursuant to the provisions of the form of Master Agreement); or (b) in
         the case of a Hedge Agreement traded on an exchange, the mark-to-market
         value of such Hedge Agreement, which will be the unrealized loss on
         such Hedge Agreement to the Loan Party or Subsidiary of a Loan Party
         party to such Hedge Agreement determined by the Administrative Agent
         based on the settlement price of such Hedge Agreement on such date of
         determination, or (c) in all other cases, the mark-to-market value of
         such Hedge Agreement, which will be the unrealized loss on such Hedge
         Agreement to the Loan Party or Subsidiary of a Loan Party party to such
         Hedge Agreement determined by the Administrative Agent as the amount,
         if any, by which (i) the present value of the future cash flows to be
         paid by such Loan Party or Subsidiary exceeds (ii) the present value of
         the future cash flows to be received by such Loan Party or Subsidiary
         pursuant to such Hedge Agreement; capitalized terms used and not
         otherwise defined in this definition shall have the respective meanings
         set forth in the above described Master Agreement.

                  "AMORTIZATION AMOUNT" has the meaning specified in Section
         2.05(b)(i)(A)(2).

                  "APPLICABLE BORROWER" means, with respect to any Advance, the
         Domestic Borrower or the applicable Offshore Borrower which has
         borrowed or requested such Advance hereunder.

                  "APPLICABLE BORROWER'S ACCOUNT" means, for the Domestic
         Borrower, the Domestic Borrower's Account, and for each Offshore
         Borrower, the account of such Offshore Borrower maintained by such
         Offshore Borrower with Chase and more specifically described in the
         Credit Agreement Supplement executed and delivered by such Offshore
         Borrower.

                  "APPLICABLE CURRENCY" means, as to any particular payment or
         Borrowing, US Dollars or the Offshore Currency in which such payment or
         Borrowing is denominated or is payable.

                  "APPLICABLE LENDING OFFICE" means, with respect to each Lender
         Party, such Lender Party's Domestic Lending Office in the case of a
         Base Rate Advance and such Lender Party's Eurodollar Lending Office in
         the case of a Eurodollar Rate Advance.

                  Credit Agreement - Schedule II - Definitions
<PAGE>   120
                                       4

                  "APPLICABLE MARGIN" means (i) during the period from the
         Effective Date until the six-month anniversary of the Effective Date,
         in respect of the Term A Facility, the Offshore Acquisition Facility or
         the Revolving Credit Facility, 1.50% per annum for Base Rate Advances
         and 2.50% per annum for Eurodollar Rate Advances, and (ii) after the
         six month anniversary of the Effective Date, a percentage per annum
         determined by reference to both the Total Debt/EBITDA Ratio and the
         Senior Debt/EBITDA Ratio to be the higher per annum percentage
         indicated by either such ratio as set forth below:

<TABLE>
<CAPTION>

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

                                                                  TERM A, OFFSHORE ACQUISITION AND REVOLVING CREDIT
                                                                                       FACILITIES
         -----------------------------------------------------------------------------------------------------------
         <S>                          <C>                           <C>                       <C>
         TOTAL DEBT/EBITDA RATIO      SENIOR DEBT/EBITDA RATIO      EURODOLLAR MARGIN         BASE RATE MARGIN
         -----------------------------------------------------------------------------------------------------------
         GREATER THAN OR EQUAL TO     GREATER THAN OR EQUAL TO             2.50%                    1.50%
         4.50:1                       3.50:1
         -----------------------------------------------------------------------------------------------------------
         GREATER THAN OR EQUAL TO     GREATER THAN OR EQUAL TO             2.25%                    1.25%
         4.25:1, BUT LESS THAN        3.00:1, BUT LESS THAN
         4.50:1                       3.50:1
         -----------------------------------------------------------------------------------------------------------
         GREATER THAN OR EQUAL TO     GREATER THAN OR EQUAL TO             2.00%                    1.00%
         3.75:1, BUT LESS THAN        2.50:1, BUT LESS THAN
         4.25:1                       3.00:1
         -----------------------------------------------------------------------------------------------------------
         LESS THAN 3.75:1             LESS THAN 2.50:1                     1.75%                    0.75%
         -----------------------------------------------------------------------------------------------------------
</TABLE>

         The Applicable Margin for each Base Rate Advance shall be determined by
         reference to the Total Debt/EBITDA Ratio and the Senior Debt/EBITDA
         Ratio in effect from time to time and the Applicable Margin for each
         Eurodollar Rate Advance shall be determined by reference to the Total
         Debt/EBITDA Ratio and the Senior Debt/EBITDA Ratio in effect on the
         first day of each Interest Period for such Advance; provided, however,
         that (A) no change in the Applicable Margin shall be effective until
         one Business Day after the date on which the Administrative Agent
         receives the financial statements required to be delivered pursuant to
         Section 5.03(b) or (c) or an Acquisition Diligence Report, as the case
         may be, and a certificate of the Chief Financial Officer of the
         Domestic Borrower demonstrating such ratios, and (B) the Applicable
         Margin shall be at the percentage in effect when the Total Debt/EBITDA
         Ratio is greater than or equal to 4.50:1 for so long as the Domestic
         Borrower has not submitted to the Administrative Agent the information
         described in Clause (A) of this proviso as and when required under
         Section 5.03(b) or (c), as the case may be. For purposes of this
         definition, the Swing Line Advances are extended pursuant to
         subfacilities of the Revolving Credit Facility.

                  "APPLICABLE PERCENTAGE" means (i) during the period from the
         Effective Date until the six-month anniversary of the Effective Date,
         0.50% and (ii) thereafter, a percentage

                  Credit Agreement - Schedule II - Definitions
<PAGE>   121

                                       5

         per annum determined by reference to both the Total Debt/EBITDA Ratio
         and the Senior Debt/EBITDA Ratio to be the higher per annum percentage
         indicated by either such ratio as set forth below:

<TABLE>
<CAPTION>
         ------------------------------------- ------------------------------------ --------------------------------
         TOTAL DEBT/EBITDA RATIO               SENIOR DEBT/EBITDA RATIO                     COMMITMENT FEE
         ------------------------------------- ------------------------------------ --------------------------------
        <S>                                   <C>                                    <C>
         GREATER THAN OR EQUAL TO 4.25:1       GREATER THAN OR EQUAL TO 3.00:1                   0.50%
         ------------------------------------- ------------------------------------ --------------------------------
         LESS THAN 4.25:1                      LESS THAN 3.00:1                                  0.375%
         ------------------------------------- ------------------------------------ --------------------------------
</TABLE>

         The Applicable Percentage shall be determined by reference to the Total
         Debt/EBITDA Ratio and the Senior Debt/EBITDA Ratio in effect from time
         to time; provided, however, that (A) no change in the Applicable
         Percentage shall be effective until one Business Day after the date on
         which the Administrative Agent receives the financial statements
         required to be delivered pursuant to Section 5.03(b) or (c) or an
         Acquisition Diligence Report, as the case may be, and a certificate of
         the Chief Financial Officer of the Domestic Borrower demonstrating such
         ratios, and (B) the Applicable Percentage shall be at the percentage in
         effect when the Total Debt/EBITDA Ratio is greater than or equal to
         4.25:1 for so long as the Domestic Borrower has not submitted to the
         Administrative Agent the information described in Clause (A) of this
         proviso as and when required under Section 5.03(b) or (c), as the case
         may be.

                  "APPLICABLE SWING LINE SUB-LIMIT" means, (a) with respect to
         Swing Line Advances in US Dollars, $10,000,000; and (b) with respect to
         Swing Line Advances in any other Applicable Currency, the following US
         Dollar Equivalent for such Applicable Currency:

                           (i) for Swing Line Advances in Euros, the $5,000,000
                  US Dollar Equivalent less the US Dollar Equivalent of
                  outstanding Swing Line Advances in Pounds Sterling less the US
                  Dollar Equivalent of outstanding Swing Line Advances in any
                  Offshore Alternative Currency;

                           (ii) for Swing Line Advances in Pounds Sterling, the
                  $5,000,000 US Dollar Equivalent less the US Dollar Equivalent
                  of outstanding Swing Line Advances in Euros less the US Dollar
                  Equivalent of outstanding Swing Line Advances in any Offshore
                  Alternative Currency;

                           (iii) for Swing Line Advances in any Offshore
                  Alternative Currency, the $5,000,000 US Dollar Equivalent less
                  the US Dollar Equivalent of outstanding Swing Line Advances in
                  Euros less the US Dollar Equivalent of outstanding Swing Line
                  Advances in Pounds Sterling;

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                                       6

                           (iv) for Swing Line Advances in Canadian Dollars, the
                  $2,000,000 US Dollar Equivalent; and

                           (v)      for Swing Line Advances in Singapore
                  Dollars, the $3,000,000 US Dollar Equivalent.

                  "APPROPRIATE LENDER" means, at any time, with respect to:

                           (a) any of the Term or Revolving Credit Facilities, a
                  Lender that has a Commitment with respect to such Facility at
                  such time,

                           (b) the Letter of Credit Sub-Facility, (i) the
                  Issuing Bank and (ii) if the other Revolving Credit Lenders
                  have made Letter of Credit Advances pursuant to Section
                  2.03(c) that are outstanding at such time, each such Revolving
                  Credit Lender, and

                           (c) the Swing Line Facility, (i) the Appropriate
                  Swing Line Lender and (ii) if the Revolving Credit Lenders
                  have made Swing Line Advances pursuant to Section 2.02(b) that
                  are outstanding at such time, each such Revolving Credit
                  Lender.

                  "APPROPRIATE SWING LINE LENDER" means, at any time, with
         respect to any Swing Line Advance, the Swing Line Lender to which a
         request for such Swing Line Advance has been made hereunder or which
         has made such Swing Line Advance.

                  "APPROVED COUNTRY" means the United States of America
         (including the District of Columbia and any state thereof), Canada, the
         United Kingdom, the European countries identified in Schedule III, and
         each other Western European country (excluding any former Soviet-bloc
         country or client state) which has been designated by the Domestic
         Borrower and approved in writing by the Joint Lead Arrangers and the
         Administrative Agent.

                  "APPROVED FUND" means, with respect to any Lender that is a
         fund that invests in bank loans, any other fund that invests in bank
         loans and is advised or managed by the same investment advisor as such
         Lender or by an Affiliate of such investment advisor.

                  "ASSET SALE" means the sale, lease, transfer or other
         disposition of any assets of the Domestic Borrower or any of its
         Subsidiaries (other than any sale, lease, transfer or other disposition
         of assets pursuant to clause (i), (ii), (iii), (v) and (ix) of Section
         5.02(f)) which yields to the Domestic Borrower or any of its
         Subsidiaries gross proceeds in excess of $250,000. Any sale, lease,
         transfer or other disposition of assets pursuant to clause (ix)

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                                       7

         of Section 5.02(f) shall only be treated as an Asset Sales at the time
         and to the extent such sale or other transaction closes and yields
         gross proceeds to the Domestic Borrower as provided in clause (viii) of
         Section 5.02(f).

                  "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
         entered into by a Lender Party and an Eligible Assignee, and accepted
         by the Administrative Agent, in accordance with Section 8.07 and in
         substantially the form of Exhibit C hereto.

                  "AVAILABLE AMOUNT" of any Letter of Credit means, at any time,
         the maximum amount available to be drawn under such Letter of Credit at
         such time (assuming compliance at such time with all conditions to
         drawing).

                  "BASE RATE" means a fluctuating interest rate per annum in
         effect from time to time, which rate per annum shall at all times be
         equal to:

                  (a)      in the case of Advances denominated in US Dollars,
         the higher of:

                           (i) the rate of interest announced publicly by Chase
                  in New York, New York, from time to time, as such bank's base
                  rate, with the understanding that such base rate is not
                  necessarily the lowest rate charge by such bank to its
                  customers; and

                           (ii)     1/2 of 1% per annum above the Federal Funds
                  Rate; and

                  (b) in the case of Swing Line Advances denominated in an
         Offshore Currency, a rate of interest determined in the manner agreed
         to between the Offshore Currency Agent and the Domestic Borrower and
         set forth in the Joinder Agreement executed and delivered by the
         Appropriate Swing Line Lender which has been designated to make Swing
         Line Advances in such Offshore Currency available hereunder.

                  "BASE RATE ADVANCE" means an Advance that bears interest as
provided in Section 2.07(a)(i).

                  "BORROWING" means a Term Borrowing, a Revolving Credit
Borrowing or a Swing Line Borrowing.

                  "BUSINESS DAY" means a day of the year (a) on which banks are
not required or authorized by law to close in New York City or Illinois and,
(b)(i) if the applicable Business Day relates to any Eurodollar Rate Advances,
on which dealings are carried on in the London interbank market or (ii) if the
applicable Business Day relates to any Swing Line Advance denominated in an
Offshore Currency, on which dealings are carried on in the London interbank
market and on which dealings are carried on in the applicable

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                                       8

         offshore foreign exchange interbank market in which disbursements of or
         payments in such Offshore Currency will be made or received hereunder.

                  "CANADIAN DOLLARS" and "CN$" each means the freely
         transferable lawful money of Canada (expressed in dollars).

                  "CAPITAL EXPENDITURES" means, for any Person for any period,
         the sum of, without duplication, (a) all expenditures made, directly or
         indirectly, by such Person or any of its Subsidiaries during such
         period (net of any credit granted by the seller of such assets for any
         assets being traded-in at the same time) for equipment, fixed assets,
         real property or improvements, or for replacements or substitutions
         therefor or additions thereto, that have been or should be, in
         accordance with GAAP, capitalized and reflected as additions to
         property, plant or equipment on a Consolidated balance sheet of such
         Person or have a useful life of more than one year plus (b), without
         duplication, the aggregate principal amount of all Debt (including
         Obligations under Capitalized Leases) assumed or incurred in connection
         with any such expenditures, but excluding, to the extent included under
         clause (a) or (b) above, the following, without duplication, (i)
         expenditures made in connection with the replacement, substitution or
         restoration of assets to the extent financed (x) from insurance
         proceeds, indemnification payments (or similar recoveries) paid on
         account of the loss of or damage to the assets being replaced or
         restored or (y) with awards or compensation arising from the taking by
         eminent domain, expropriation or condemnation of the assets being
         replaced, (ii) any Permitted Acquisition and (iii) any other Investment
         permitted under Section 5.02(g).

                  "CAPITALIZED LEASES" means all leases that have been or should
         be capitalized in accordance with GAAP.

                  "CASH EQUIVALENTS" means any of the following, to the extent
         owned by the Domestic Borrower or any of its Subsidiaries free and
         clear of all Liens other than Liens created under the Collateral
         Documents and having a maturity of not greater than one year from the
         date of acquisition thereof: (a) readily marketable direct obligations
         of the Government of the United States or any agency or instrumentality
         thereof or obligations unconditionally guaranteed by the full faith and
         credit of the Government of the United States, (b) insured certificates
         of deposit of or time deposits with any commercial bank that is a
         Lender Party or a member of the Federal Reserve System or a commercial
         banking institution organized in a country recognized by the United
         States of America, in each case, that issues (or the parent of which
         issues) commercial paper rated as described in clause (c) below, and
         has combined capital and surplus of at least $500 million (or the
         foreign currency equivalent thereof), (c) commercial paper issued by
         any corporation organized under the laws of any State of the United
         States and rated at least "Prime-1" (or the then equivalent grade) by
         Moody's Investors Service, Inc. or "A-1" (or the then

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                                       9

         equivalent grade) by Standard & Poor's, a division of The McGraw-Hill
         Companies, Inc., (d) any money market deposit accounts issued or
         offered by any Lender Party or a commercial banking institution
         described under clause (b) above and (e) other short-term investments
         utilized by Offshore Subsidiaries in accordance with normal investment
         practices for cash management not exceeding a dollar equivalent amount
         of $1,000,000 in the aggregate principal amount outstanding at any
         time.

                  "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 maintained by the U.S.
         Environmental Protection Agency.

                  "CHANGE OF CONTROL" means the occurrence of any of the
         following: (a) prior to an initial public offering of Equity Interests
         in SSCI Investors or the Domestic Borrower, (i) the Equity Investors
         shall cease to own on a fully diluted basis in the aggregate at least a
         majority of the Equity Interests and Voting Interests in SSCI Investors
         or (ii) SSCI Investors shall cease to own on a fully diluted basis in
         the aggregate at least a majority of the Equity Interests and Voting
         Interests in the Domestic Borrower; or (b) after such an initial public
         offering, any Person or two or more Persons acting in concert other
         than the Equity Investors shall have acquired beneficial ownership
         (within the meaning of Rule 13d-3 of the Securities and Exchange
         Commission under the Securities Exchange Act of 1934), directly or
         indirectly, on a fully diluted basis of Voting Interests of SSCI
         Investors or the Domestic Borrower, as the case may be, (or other
         securities convertible into such Voting Interests) representing 30% or
         more of the combined voting power of all Voting Interests of SSCI
         Investors or the Domestic Borrower; or (c) after such an initial public
         offering, during any period of up to 24 consecutive months, commencing
         after the date of this Agreement, individuals who at the beginning of
         such 24-month period were directors of the Domestic Borrower (together
         with any new directors whose election or nomination for election was
         approved by a vote of b or more of the directors still in office who
         were either directors at the beginning of such period or whose election
         or nomination for election was previously so approved) shall cease for
         any reason to constitute a majority of the board of directors of the
         Domestic Borrower; or (d) unless the Domestic Borrower's obligation
         under the Senior Subordinated Note Indenture to make an Offer to
         Purchase (as defined under the Senior Subordinated Note Indenture) any
         outstanding Senior Subordinated Notes has been waived or will not
         otherwise be triggered by such event, a Change of Control (as defined
         under the Senior Subordinated Note Indenture) shall have occurred.

                  "CHASE" has the meaning specified in the recitals of parties
         to this Agreement.

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                                       10

                  "COLLATERAL" means all "Collateral" referred to in Section 1
         of the Domestic Security Agreement and in the other Collateral
         Documents and all other property that is or is intended to be subject
         to any Lien in favor of the Administrative Agent for the benefit of the
         Secured Parties.

                  "COLLATERAL ACCOUNT" has the meaning specified in the recital
         to the Domestic Security Agreement.

                  "COLLATERAL BANK" has the meaning specified in Section 6 of
         the Domestic Security Agreement.

                  "COLLATERAL DOCUMENTS" means the Domestic Security Agreement,
         the Mortgages, the Offshore Collateral Documents and any other
         agreement that creates or purports to create a Lien in favor of the
         Administrative Agent for the benefit of the Secured Parties.

                  "COLLATERAL SHARING AGREEMENT" means a Collateral Sharing
         Agreement in the form of Exhibit L to be dated as of the date hereof
         among the Administrative Agent and the Lender Parties, as amended, and
         as supplemented from time to time by each Assignment and Acceptance
         delivered pursuant to Section 8.07.

                  "COMMITMENT" means a Term Commitment, a Revolving Credit
         Commitment or a Letter of Credit Commitment.

                  "COMPUTER SOFTWARE" has the meaning specified in Section 1(f)
         (v) of the Domestic Security Agreement.

                  "CONFIDENTIAL INFORMATION" means information that any Loan
         Party furnishes to any Agent or any Lender Party on a confidential
         basis, including such information furnished pursuant to Section
         5.01(f), but does not include any such information that is or becomes
         generally available to the public or that is or becomes available to
         such Agent or such Lender Party from a source other than the Loan
         Parties and not in breach of Section 8.10 of this Agreement.

                  "CONSOLIDATED" refers to the consolidation of accounts in
         accordance with GAAP.

                  "CONSOLIDATED NET INCOME" means, for any period, the net
         income (or net loss) of any Person and its Subsidiaries for such
         period, determined on a Consolidated basis but excluding for each such
         period (without duplication):

                           (a) the income (or loss) of any other Person accrued
                  prior to the date on which it became a Subsidiary of such
                  Person or was merged into or consolidated with such Person or
                  any of its Subsidiaries or all or substantially all

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                                       11

                  of the property and assets of such other Person were acquired
                  by such Person or any of its Subsidiaries;

                           (b) the income (or loss) of any other Person in which
                  a Person other than such Person or any of its Subsidiaries
                  owns or otherwise holds an Equity Interest, except to the
                  extent such income (or loss) shall have been received in the
                  form of Cash Distributions actually paid to such Person or any
                  of its Subsidiaries by such other Person during such period;

                           (c) the income of any Subsidiary of such Person to
                  the extent that the declaration or payment of any dividends or
                  other distributions of such income by such Subsidiary is not
                  permitted to be made or paid (whether by contract or
                  otherwise) on the last day of such period;

                           (d) any gains or losses on Hedge Agreements; and

                           (e) any gains or losses on foreign currency
                  translation adjustments.

                  "CONTINGENT OBLIGATION" means, with respect to any Person, any
         Obligation or arrangement of such Person to guarantee or intended to
         guarantee any Debt, leases, dividends or other payment Obligations
         ("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in
         any manner, whether directly or indirectly, including, without
         limitation, (a) the direct or indirect guarantee, endorsement (other
         than for collection or deposit in the ordinary course of business),
         co-making, discounting with recourse or sale with recourse by such
         Person of the Obligation of a primary obligor, (b) the Obligation to
         make take-or-pay or similar payments, if required, regardless of
         nonperformance by any other party or parties to an agreement or (c) any
         Obligation of such Person, whether or not contingent, (i) to purchase
         any such primary obligation or any property constituting direct or
         indirect security therefor, (ii) to advance or supply funds (A) for the
         purchase or payment of any such primary obligation or (B) to maintain
         working capital or equity capital of the primary obligor or otherwise
         to maintain the net worth or solvency of the primary obligor, (iii) to
         purchase property, assets, securities or services primarily for the
         purpose of assuring the owner of any such primary obligation of the
         ability of the primary obligor to make payment of such primary
         obligation or (iv) otherwise to assure or hold harmless the holder of
         such primary obligation against loss in respect thereof. The amount of
         any Contingent Obligation shall be deemed to be an amount equal to the
         stated or determinable amount of the primary obligation in respect of
         which such Contingent Obligation is made (or, if less, the maximum
         amount of such primary obligation for which such Person may be liable
         pursuant to the terms of the instrument evidencing such Contingent
         Obligation) or, if not stated or determinable, the maximum reasonably

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<PAGE>   128

                                       12

         anticipated liability in respect thereof (assuming such Person is
         required to perform thereunder), as determined by such Person in good
         faith.

                  "CONVERSION", "CONVERT" and "CONVERTED" each refer to a
         conversion of Advances of one Type into Advances of the other Type
         pursuant to Section 2.09 or 2.10.

                  "COPYRIGHTS" has the meaning specified in Section 1(f)(iii) of
         the Domestic Security Agreement.

                  "CREDIT AGREEMENT SUPPLEMENT" means a supplement to this
         Agreement in the form of Exhibit E executed and delivered by each
         Offshore Borrower.

                  "CURRENT ASSETS" of any Person means all assets of such Person
         that would, in accordance with GAAP, be classified as current assets of
         a company conducting a business the same as or similar to that of such
         Person, after deducting adequate reserves in each case in which a
         reserve is proper in accordance with GAAP.

                  "CURRENT LIABILITIES" of any Person means (a) all Debt of such
         Person except Funded Debt, (b) all amounts of Funded Debt of such
         Person required to be paid or prepaid within one year after such date
         and (c) all other items (including taxes accrued as estimated) that in
         accordance with GAAP would be classified as current liabilities of such
         Person.

                  "DEBT" of any Person means, without duplication for purposes
         of calculating financial ratios, (a) all indebtedness of such Person
         for borrowed money, (b) all Obligations of such Person for the deferred
         purchase price of property or services (other than trade payables not
         overdue by more than 60 days incurred in the ordinary course of such
         Person's business), (c) all Obligations of such Person evidenced by
         notes, bonds, debentures or other similar instruments, (d) all
         Obligations of such Person created or arising under any conditional
         sale or other title retention agreement with respect to property
         acquired by such Person (even though the rights and remedies of the
         seller or lender under such agreement in the event of default are
         limited to repossession or sale of such property), (e) all Obligations
         of such Person as lessee under Capitalized Leases, (f) all Obligations
         of such Person under acceptance, letter of credit or similar
         facilities, (g) all Obligations of such Person to purchase, redeem,
         retire, defease or otherwise make any payment in respect of any Equity
         Interests in such Person or any other Person or any warrants, rights or
         options to acquire such capital stock, valued, in the case of
         Redeemable Preferred Interests, at the greater of its voluntary or
         involuntary liquidation preference plus accrued and unpaid dividends
         (excluding any such Obligations arising after the eighth anniversary of
         the Effective Date or conditioned on compliance with this Agreement),
         (h) all Obligations of such Person in respect of Hedge Agreements,
         valued at

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                                       13

         the Agreement Value thereof, and (i) all indebtedness and other payment
         Obligations referred to in clauses (a) through (h) above and all
         Contingent Obligations of another Person secured by (or for which the
         holder of such Debt has an existing right, contingent or otherwise, to
         be secured by) any Lien on property (including, without limitation,
         accounts and contract rights) owned by such Person, even though such
         Person has not assumed or become liable for the payment of such
         indebtedness or other payment Obligations. Debt shall not include (x)
         accounts extended by suppliers in the ordinary course of business on
         normal trade terms not overdue by more than 60 days in connection with
         the purchase of goods and services and (y) notes payable with stated
         maturities of no more than one year from the date of issuance in
         respect of the deferred payment of insurance policy premiums in an
         amount not in excess of $3 million at any time outstanding.

                  "DEBT FOR BORROWED MONEY" of any Person means all items that,
         in accordance with GAAP, would be classified as indebtedness on a
         Consolidated balance sheet of such Person.

                  "DECLINING LENDER" has the meaning specified in Section
         2.06(b)(v).

                  "DEFAULT" means any Event of Default or any event that would
         constitute an Event of Default but for the requirement that notice be
         given or time elapse or both.

                  "DEFAULT TERMINATION NOTICE" has the meaning specified in
         Section 2.01(e).

                  "DEFAULTED ADVANCE" means, with respect to any Lender Party at
         any time, the portion of any Advance required to be made by such Lender
         Party to the Domestic Borrower or the applicable Offshore Borrower
         pursuant to Section 2.01 or 2.02 at or prior to such time that has not
         been made by such Lender Party or by the Administrative Agent for the
         account of such Lender Party pursuant to Section 2.02(e) as of such
         time. In the event that a portion of a Defaulted Advance shall be
         deemed made pursuant to Section 2.15(a), the remaining portion of such
         Defaulted Advance shall be considered a Defaulted Advance originally
         required to be made pursuant to Section 2.01 on the same date as the
         Defaulted Advance so deemed made in part.

                  "DEFAULTED AMOUNT" means, with respect to any Lender Party at
         any time, any amount required to be paid by such Lender Party to any
         Agent or any other Lender Party hereunder or under any other Loan
         Document at or prior to such time that has not been so paid as of such
         time, including, without limitation, any amount required to be paid by
         such Lender Party to (a) a Swing Line Lender pursuant to Section
         2.02(b) to purchase a portion of a Swing Line Advance made by such
         Swing Line Lender, (b) the Issuing Bank pursuant to Section 2.03(c) to
         purchase a portion of a Letter of Credit Advance made by

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                                       14

         the Issuing Bank, (c) the Administrative Agent pursuant to Section
         2.02(e) to reimburse the Administrative Agent for the amount of any
         Advance made by the Administrative Agent for the account of such Lender
         Party, (d) any other Lender Party pursuant to Section 2.13 or the
         Collateral Sharing Agreement to purchase any participation in Advances
         owing to such other Lender Party and (e) any Agent or the Issuing Bank
         pursuant to Section 7.05 to reimburse such Agent or the Issuing Bank
         for such Lender Party's ratable share of any amount required to be paid
         by the Lender Parties to such Agent or the Issuing Bank as provided
         therein. In the event that a portion of a Defaulted Amount shall be
         deemed paid pursuant to Section 2.15(b), the remaining portion of such
         Defaulted Amount shall be considered a Defaulted Amount originally
         required to be paid hereunder or under any other Loan Document on the
         same date as the Defaulted Amount so deemed paid in part.

                  "DEFAULTING LENDER" means, at any time, any Lender Party that,
         at such time, (a) owes a Defaulted Advance or a Defaulted Amount or (b)
         shall take any action or be the subject of any action or proceeding of
         a type described in Section 6.01(f).

                  "DESIGNATED MATERIAL CONTRACTS" means the following
         agreements: (i) Patent License Agreement, dated as of July 1, 1991, by
         and between Pierce and Stevens Corporation and Matsumoto Yushi Seiyaku
         Co., Ltd.; (ii) Agreement of Intent, dated as of September 1, 1997, by
         and between the Company and Matsumoto Yushi-Seiyaku Co.; (iii)
         Distributorship Agreement dated as of October 23, 1996 between Kohler
         Co. and Darworth; (iv) Exclusive Distributor Agreement dated as of July
         29, 1998 (but effective as of the close of business on July 31, 1998)
         by and between ChemRex, Inc. and OSI Sealants, Inc.; (v) License
         Agreement, dated July 29, 1998, between OSI, as Licensor, and ChemRex,
         Inc., as Licensee; (vi) License Agreement, dated April 20, 1999,
         between Pierce & Stevens, as Licensor, and Valspar Corporation, as
         Licensee.

                  "DISCLOSED LITIGATION" has the meaning provided in Section
         4.01(f).

                  "DOCUMENTATION AGENT" has the meaning specified in the
         recitals of parties to this Agreement.

                  "DOMESTIC BORROWER" has the meaning specified in the recital
         of parties to this Agreement.

                  "DOMESTIC BORROWER LENDER PARTY" means any Lender Party which
         has (i) made an Advance to the Domestic Borrower or (ii) executed an
         Assignment and Acceptance with a Lender Party that is a Domestic
         Borrower Lender Party with respect to an Advance other than an Offshore
         Acquisition Advance.

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                                       15

                  "DOMESTIC BORROWER'S ACCOUNT" means the account of the
         Domestic Borrower maintained by the Domestic Borrower with Chase at its
         office at One Chase Manhattan Plaza, New York, New York 10081, Account
         No. 9102788529, or such other account as the Domestic Borrower shall
         specify in writing to the Administrative Agent).

                  "DOMESTIC LENDING OFFICE" means, with respect to any Lender
         Party, the office of such Lender Party specified as its "Domestic
         Lending Office" opposite its name on Schedule I hereto or in the
         Assignment and Acceptance pursuant to which it became a Lender Party,
         as the case may be, or such other office of such Lender Party as such
         Lender Party may from time to time specify to the Domestic Borrower and
         the Administrative Agent.

                  "DOMESTIC OBLIGOR" means the Domestic Borrower and each
         Domestic Subsidiary Guarantor.

                  "DOMESTIC PERMITTED ACQUISITION" means (a) any purchase or
         other acquisition by the Domestic Borrower or any of its Domestic
         Subsidiaries of all the Equity Interests in any other Person in a
         transaction effected pursuant to, and satisfying the requirements of,
         Section 5.02(g)(xiii), or (b) the purchase or acquisition by an
         existing Domestic Subsidiary of the Domestic Borrower, or the
         organization of a new Domestic Subsidiary by the Domestic Borrower or
         any of its existing Domestic Subsidiaries for the purpose of purchasing
         or acquiring, substantially all the assets of any Person or division or
         line of business of any Person in a transaction effected pursuant to,
         and satisfying the requirements of, Section 5.02(g)(xiii).

                  "DOMESTIC SECURED OBLIGATIONS" means, for each Domestic
         Obligor, the Obligations of such Domestic Obligor under the Loan
         Documents existing on the date such Domestic Obligor becomes a party to
         the Loan Documents and thereafter existing, whether direct or indirect,
         absolute or contingent, and whether for principal, reimbursement
         obligations, interest, fees, premiums, penalties, indemnifications,
         contract causes of action, costs, expenses or otherwise .

                  "DOMESTIC SECURITY AGREEMENT" means an amended and restated
         security agreement to be dated as of the date hereof in the form of
         Exhibit F hereto and to be duly executed by the Domestic Borrower and
         each Domestic Subsidiary Guarantor, together with each other security
         agreement and security agreement supplement delivered pursuant to
         Section 5.01(j), in each case, as amended.

                  "DOMESTIC SUBSIDIARY" means any Subsidiary other than an
         Offshore Subsidiary.

                  "DOMESTIC SUBSIDIARY GUARANTOR" means each of (i) SIA
         Adhesives, Inc., a Delaware corporation, (ii) Pierce & Stevens Corp., a
         New York corporation, (iii) OSI

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                                       16

         Sealants, Inc., an Illinois corporation, (iv) Tanner Chemicals, Inc., a
         New Hampshire corporation. and (v) each other Domestic Subsidiary of
         the Domestic Borrower that shall be required to execute and deliver a
         guaranty or a guaranty supplement pursuant to Section 5.01(j).

                  "DOMESTIC SUBSIDIARY GUARANTY" means an amended and restated
         guaranty to be dated as of the date hereof in substantially the form of
         Exhibit G hereto and to be duly executed by each Domestic Subsidiary
         Guarantor, together with each other guaranty and guaranty supplement
         delivered pursuant to Section 5.01(j), in each case, as amended.

                  "DOMESTIC SWING LINE LENDER" means Chase.

                  "EBITDA" means, for any period, the sum, determined on a
         Consolidated basis without duplication, of (a) Consolidated Net Income
         (but excluding, to the extent reflected in determining such
         Consolidated Net Income (i) extraordinary gains and losses for such
         period, (ii) any gain or loss associated with the sale or write-down of
         assets not in the ordinary course of business, (iii) any deferred
         financing costs for such period written off in connection with the
         early extinguishment of Debt hereunder or under the Existing Senior
         Subordinated Notes, and (iv) any other non-cash or non-recurring items
         of income or expense (other than any non-cash item of expense requiring
         an accrual or reserve for future cash expense (other than non-cash,
         non-recurring items related to restructuring operations (including
         severance payments) of the Domestic Borrower and its Subsidiaries
         ("restructuring charges"); provided that any cash disbursements
         relating to any such restructuring charges shall (notwithstanding GAAP
         or any other provision of this Agreement), without duplication, reduce
         EBITDA when made))), (b) interest expense, (c) income tax expense, (d)
         depreciation expense, (e) amortization expense, (f) expenses for which
         Domestic Borrower receives payments under indemnification agreements,
         (g) prepayment penalties on early retirement of Debt, (h) consent
         payments with respect to Debt (other than any payment or prepayment of
         any principal or interest in respect of such Debt), (i) management
         compensation expenses associated with the Transactions to the extent
         paid for by Seller, (j) non-cash expenses for the granting of stock
         options, (k) all management and consulting fees (including
         reimbursement of expenses) paid or payable by Domestic Borrower and its
         Subsidiaries to Sponsor and (l) any non-recurring charges related to
         the Acquisition, any non-recurring, cash charges related to any
         Permitted Acquisition in an aggregate amount during the term of this
         Agreement not to exceed $5,000,000 and any non-recurring non-cash
         charges related to any Permitted Acquisition by Domestic Borrower or
         any Subsidiary occurring after the Closing Date in each case of the
         Domestic Borrower and its Subsidiaries, determined in accordance with
         GAAP for such period.

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                                       17

                  "EFFECTIVE DATE" means the first date on which the conditions
         set forth in Section 3.01 shall have been satisfied.

                  "ELIGIBLE ASSIGNEE" means (a) with respect to any Facility
         (other than the Letter of Credit Sub-Facility), (i) a Lender; (ii) an
         Affiliate of a Lender; (iii) a commercial bank organized under the laws
         of the United States, or any State thereof, and having total assets in
         excess of $250,000,000; (iv) a savings and loan association or savings
         bank organized under the laws of the United States, or any State
         thereof, and having total assets in excess of $250,000,000; (v) a
         commercial bank organized under the laws of any other country that is a
         member of the OECD, or a political subdivision of any such country, and
         having total assets in excess of $250,000,000, so long as such bank is
         acting through a branch or agency located in the United States; (vi) a
         finance company, insurance company or other financial institution or
         fund (whether a corporation, partnership, trust or other entity)
         organized under the laws of the United States, any state thereof or any
         other country that is a member of the OECD that is engaged in making,
         purchasing or otherwise investing in commercial loans in the ordinary
         course of its business and having total assets in excess of
         $250,000,000; and (vii) any other Person approved by the Administrative
         Agent and, unless a Default has occurred and is continuing at the time
         any assignment is effected pursuant to Section 8.07, the Domestic
         Borrower, such approval not to be unreasonably withheld or delayed, and
         (b) with respect to the Letter of Credit Sub-Facility, a Person that is
         an Eligible Assignee under subclause (iii) or (v) of clause (a) of this
         definition and is approved by the Administrative Agent and, unless a
         Default has occurred and is continuing at the time any assignment is
         effected pursuant to Section 8.07, the Domestic Borrower, such approval
         not to be unreasonably withheld or delayed; provided, however, that
         neither any Loan Party nor any Affiliate of a Loan Party shall qualify
         as an Eligible Assignee under this definition.

                  "ENVIRONMENTAL ACTION" means any action, suit, demand, demand
         letter, claim, notice of non-compliance or violation, notice of
         liability or potential liability, investigation, proceeding, consent
         order or consent agreement relating to any Environmental Law, any
         Environmental Permit or Hazardous Material or arising from alleged
         injury or threat to health, safety or the environment, including,
         without limitation, (a) by any governmental or regulatory authority for
         enforcement, cleanup, removal, response, remedial or other actions or
         damages and (b) by any governmental or regulatory authority or third
         party for damages, contribution, indemnification, cost recovery,
         compensation or injunctive relief.

                  "ENVIRONMENTAL LAW" means any Federal, state, local or foreign
         statute, law, ordinance, rule, regulation, code, order, writ, judgment,
         injunction or decree, or judicial or agency interpretation, policy or
         guidance having the force or effect of law, relating to pollution or
         protection of the environment, health, safety or natural resources,
         including,

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                                       18

         without limitation, those relating to the use, handling,
         transportation, treatment, storage, disposal, release or discharge of
         Hazardous Materials.

                  "ENVIRONMENTAL PERMIT" means any permit, approval,
         identification number, license or other authorization required under
         any Environmental Law.

                  "EQUIPMENT" means all Equipment referred to in Section 1(a) of
         the Domestic Security Agreement.

                  "EQUITY INTERESTS" means, with respect to any Person, shares
         of capital stock of (or other ownership or profit interests in) such
         Person, warrants, options or other rights for the purchase or other
         acquisition from such Person of shares of capital stock of (or other
         ownership or profit interests in) such Person, securities convertible
         into or exchangeable for shares of capital stock of (or other ownership
         or profit interests in) such Person or warrants, rights or options for
         the purchase or other acquisition from such Person of such shares (or
         such other interests), and other ownership or profit interests in such
         Person (including, without limitation, partnership, member or trust
         interests therein), whether voting or nonvoting, and whether or not
         such shares, warrants, options, rights or other interests are
         authorized or otherwise existing on any date of determination.

                  "EQUITY INVESTOR" means the Sponsor and its current, former
         and future employees, stockholders, directors and officers and the
         employees and officers of SSCI Investors and the Domestic Borrower and
         its Subsidiaries, and (i) trusts for the benefit of such Persons or the
         spouses, issue (including adopted issue), parents and grandparents of
         such Person, (ii) entities controlled by such Persons and (iii) in the
         event of the death of any such individual Person, heirs or testamentary
         legatees of such Person.

                  "EQUIVALENT" (a) in US Dollars of any Offshore Currency (other
         than Canadian Dollars) on any date, means the equivalent in US Dollars
         of such Offshore Currency determined by using the quoted spot rate at
         which the Offshore Currency Agent's principal office in London offers
         to exchange US Dollars for such Offshore Currency in London prior to
         4:00 P.M. (London time) (unless otherwise indicated by the terms of
         this Agreement) on such date as is required pursuant to the terms of
         this Agreement, (b) in any Offshore Currency (other than Canadian
         Dollars) of US Dollars, means the equivalent in such Offshore Currency
         of US Dollars determined by using the quoted spot rate at which the
         Offshore Currency Agent's principal office in London offers to exchange
         such Offshore Currency for Dollars in London prior to 4:00 P.M. (London
         time) (unless otherwise indicated by the terms of this Agreement) on
         such date as is required pursuant to the terms of this Agreement, (c)
         in US Dollars of Canadian Dollars on any date, means the equivalent
         thereof determined by using the quoted spot rate at which the Offshore
         Currency Agent's principal office in Toronto, Ontario offers to
         exchange US Dollars for

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                                       19

         Canadian Dollars in Toronto, Ontario at 11:00 A.M. (New York City time)
         on such date and (d) in Canadian Dollars of US Dollars on any date,
         means the equivalent thereof determined by using the quoted spot rate
         at which the Offshore Currency Agent's principal office in New York
         City, New York offers to exchange Canadian Dollars for US Dollars in
         New York City, New York at 11:00 A.M. (New York City time) on such
         date.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended from time to time, and the regulations promulgated and
         rulings issued thereunder.

                  "ERISA AFFILIATE" means any Person that for purposes of Title
         IV of ERISA is a member of the controlled group of any Loan Party, or
         under common control with any Loan Party, within the meaning of Section
         414 of the Internal Revenue Code.

                  "ERISA EVENT" means (a)(i) the occurrence of a reportable
         event, within the meaning of Section 4043 of ERISA, with respect to any
         Plan unless the 30-day notice requirement with respect to such event
         has been waived by the PBGC or (ii) the requirements of Section 4043(b)
         of ERISA apply with respect to a contributing sponsor, as defined in
         Section 4001(a)(13) of ERISA, of a Plan, and an event described in
         paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is
         reasonably expected to occur with respect to such Plan within the
         following 30 days; (b) the application for a minimum funding waiver
         with respect to a Plan; (c) the provision by the administrator of any
         Plan of a notice of intent to terminate such Plan, pursuant to Section
         4041(a)(2) of ERISA (including any such notice with respect to a plan
         amendment referred to in Section 4041(e) of ERISA); (d) the cessation
         of operations at a facility of any Loan Party or any ERISA Affiliate in
         the circumstances described in Section 4062(e) of ERISA; (e) the
         withdrawal by any Loan Party or any ERISA Affiliate from a Multiple
         Employer Plan during a plan year for which it was a substantial
         employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions
         for imposition of a lien under Section 302(f) of ERISA shall have been
         met with respect to any Plan; (g) the adoption of an amendment to a
         Plan requiring the provision of security to such Plan pursuant to
         Section 307 of ERISA; or (h) the institution by the PBGC of proceedings
         to terminate a Plan pursuant to Section 4042 of ERISA, or the
         occurrence of any event or condition described in Section 4042 of ERISA
         that constitutes grounds for the termination of, or the appointment of
         a trustee to administer, such Plan.

                  "EURO" means the single currency introduced on January 1,
         1999, as contemplated by the Treaty Establishing the European Community
         (being the Treaty of Rome dated March 25, 1957, as amended by the
         Single European Act 1986 and the Maastricht Treaty signed February 7,
         1992, and effective as of November 1, 1993, as further amended from
         time to time).

                  Credit Agreement - Schedule II - Definitions
<PAGE>   136
                                       20

                  "EUROCURRENCY LIABILITIES" has the meaning specified in
         Regulation D of the Board of Governors of the Federal Reserve System,
         as in effect from time to time.

                  "EURODOLLAR LENDING OFFICE" means, with respect to any Lender
         Party, the office of such Lender Party specified as its "Eurodollar
         Lending Office" opposite its name on Schedule I hereto or in the
         Assignment and Acceptance pursuant to which it became a Lender Party
         (or, if no such office is specified, its Domestic Lending Office), or
         such other office of such Lender Party as such Lender Party may from
         time to time specify to the Domestic Borrower and the Administrative
         Agent.

                  "EURODOLLAR RATE" means, for any Interest Period for all
         Eurodollar Rate Advances comprising part of the same Borrowing, an
         interest rate per annum equal to the rate per annum obtained by
         dividing (a) the rate per annum (rounded upwards, if necessary, to the
         nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor
         page) as the London interbank offered rate for deposits in U.S. dollars
         at 11:00 A.M. (London time) two Business Days before the first day of
         such Interest Period for a period equal to such Interest Period
         (provided that, if for any reason such rate is not available, the term
         "Eurodollar Rate" shall mean, for any Interest Period for all
         Eurodollar Rate Advances comprising part of the same Borrowing, the
         rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
         1%) appearing on Reuters Screen LIBO Page as the London interbank
         offered rate for deposits in Dollars at approximately 11:00 A.M.
         (London time) two Business Days prior to the first day of such Interest
         Period for a term comparable to such Interest Period; provided,
         however, if more than one rate is specified on Reuters Screen LIBO
         Page, the applicable rate shall be the arithmetic mean of all such
         rates) by (b) a percentage equal to 100% minus the Eurodollar Rate
         Reserve Percentage for such Interest Period.

                  "EURODOLLAR RATE ADVANCE" means an Advance that bears interest
         as provided in Section 2.07(a)(ii).

                  "EURODOLLAR RATE RESERVE PERCENTAGE" for any Interest Period
         for all Eurodollar Rate Advances comprising part of the same Borrowing
         means the reserve percentage applicable two Business Days before the
         first day of such Interest Period under regulations issued from time to
         time by the Board of Governors of the Federal Reserve System (or any
         successor) for determining the maximum reserve requirement (including,
         without limitation, any emergency, supplemental or other marginal
         reserve requirement) for a member bank of the Federal Reserve System in
         New York City with respect to liabilities or assets consisting of or
         including Eurocurrency Liabilities (or with respect to any other
         category of liabilities that includes deposits by reference to which
         the interest

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                                       21

         rate on Eurodollar Rate Advances is determined) having a term equal to
         such Interest Period.

                  "EVENTS OF DEFAULT" has the meaning specified in Section 6.01.

                  "EXCESS CASH FLOW" means, for any period,

                           (a) Consolidated Net Income of the Domestic Borrower
                  and its Subsidiaries for such period, but excluding, to the
                  extent reflected in determining such Consolidated Net Income
                  (x) depreciation expense and amortization expense, (y) all
                  non-cash credits and charges which are extraordinary or
                  non-recurring and (z) gains or losses on the sale or other
                  disposition of assets (other than sales of Inventory and
                  licenses of patents, trademarks, copyrights of know-how, in
                  each case, in the ordinary course of business), to the extent
                  added or deducted in arriving at such Consolidated Net Income;
                  less

                           (b) the sum of:

                                    (i) scheduled payment and permanent
                           prepayments of the principal amount of Term Advances,
                           to the extent actually made, during such period
                           pursuant to Section 2.04(a) or (b) or Section 2.06(a)
                           plus
                                    (ii) prepayments of Revolving Credit
                           Borrowings to the extent of any concurrent permanent
                           reduction in the Revolving Credit Commitments plus

                                    (iii) the portion of any regularly scheduled
                           payments with respect to Capitalized Leases allocable
                           to principal plus

                                    (iv)    Capital Expenditures plus

                                    (v) cash paid in connection with any
                           Permitted Acquisition during such period (other than
                           the proceeds of any Debt incurred to finance any
                           Permitted Acquisition) plus

                                    (vi) the net increase, if greater than zero,
                           of Current Assets over Current Liabilities of the
                           Domestic Borrower and its Subsidiaries from the last
                           day of the immediately preceding fiscal year.

                  "EXCLUDED AGREEMENTS" means the agreements and other documents
         defined in Section 1(c) of the Domestic Security Agreement.

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                                       22

                  "EXCLUDED LICENSES" has the meaning specified in Section
         1(f)(vi) of the Domestic Security Agreement.

                  "EXCLUDED TAXES" has the meaning specified in Section 2.12(a).

                  "EXISTING CREDIT AGREEMENT" has the meaning specified in the
         Preliminary Statements.

                  "EXISTING DEBT" means Debt of each Loan Party and its
         Subsidiaries outstanding immediately before giving effect to the
         consummation of the Transaction on the Initial Closing Date.

                  "EXISTING LETTERS OF CREDIT" means the standby letters of
         credit (i) issued by Chase or one or more of its affiliates under the
         terms of the Refinanced Credit Agreement and outstanding on the Initial
         Closing Date, in each case, as more fully described on Schedule III to
         the Existing Credit Agreement or (ii) issued under the Existing Credit
         Agreement on or after the Initial Closing Date.

                  "EXISTING SENIOR SUBORDINATED NOTE INDENTURE" has the meaning
         specified in the Preliminary Statements.

                  "EXISTING SENIOR SUBORDINATED NOTE TRUSTEE" has the meaning
         specified in the Preliminary Statements.

                  "EXISTING SENIOR SUBORDINATED NOTES" has the meaning specified
         in the Preliminary Statements.

                  "EXTRAORDINARY RECEIPT" means any cash received by or paid to
         or for the account of any Person not in the ordinary course of
         business, including, without limitation, tax refunds, pension plan
         reversions, proceeds of insurance (including, without limitation, any
         key man life insurance but excluding proceeds of business interruption
         insurance to the extent such proceeds constitute compensation for lost
         earnings), condemnation awards (and payments in lieu thereof),
         indemnity payments and any purchase price adjustment received in
         connection with any purchase agreement; provided, however, that an
         Extraordinary Receipt shall not include cash receipts received from
         proceeds of insurance, condemnation awards (or payments in lieu
         thereof) or indemnity payments to the extent that such proceeds, awards
         or payments (A) in respect of loss or damage to equipment, fixed assets
         or real property are applied (or in respect of which expenditures were
         previously incurred) to replace or repair the equipment, fixed assets
         or real property in respect of which such proceeds were received in
         accordance with the terms of the Loan Documents, so long as such
         application is made within one year, in each case, after the

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                                       23

         occurrence of such damage or loss or (B) are received by any Person in
         respect of any third party claim against such Person and applied to pay
         (or to reimburse such Person for its prior payment of) such claim and
         the costs and expenses of such Person with respect thereto.

                  "FACILITY" means the Term A Facility, the Offshore Acquisition
         Facility, the Revolving Credit Facility, the Swing Line Sub-Facility or
         the Letter of Credit Sub-Facility.

                  "FEDERAL FUNDS RATE" means, for any period, a fluctuating
         interest rate per annum equal for each day during such period to the
         weighted average of the rates on overnight Federal funds transactions
         with members of the Federal Reserve System arranged by Federal funds
         brokers, as published for such day (or, if such day is not a Business
         Day, for the next preceding Business Day) by the Federal Reserve Bank
         of New York, or, if such rate is not so published for any day that is a
         Business Day, the average of the quotations for such day for such
         transactions received by the Administrative Agent from three Federal
         funds brokers of recognized standing selected by it.

                  "FEE LETTER" means the fee letter dated as of December 29,
         1999, between the Domestic Borrower and the Administrative Agent, as
         amended.

                  "FISCAL YEAR" means a fiscal year of the Domestic Borrower and
         its Consolidated Subsidiaries ending on December 31 in any calendar
         year.

                  "FIXED CHARGE COVERAGE RATIO" means, at any date of
         determination, the ratio of (a) Pro Forma Consolidated EBITDA to (b)
         the sum of (i) Pro Forma Interest Expense plus (ii) principal amounts
         of all Debt for Borrowed Money payable plus (iii) the aggregate amount
         of all Capital Expenditures made in cash of or by the Domestic Borrower
         and its Subsidiaries during the four consecutive fiscal quarters most
         recently ended for which financial statements are required to be
         delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as
         the case may be.

                  "FOREIGN CORPORATION" has the meaning specified in Section
         1(d)(iii) of the Domestic Security Agreement.

                  "FUNDED DEBT" of any Person means Debt in respect of the
         Advances, in the case of the Domestic Borrower, and all other Debt of
         such Person that by its terms matures more than one year after the date
         of determination or matures within one year from such date but is
         renewable or extendible, at the option of such Person, to a date more
         than one year after such date or arises under a revolving credit or
         similar agreement that obligates the lender or lenders to extend credit
         during a period of more than one year after such

                  Credit Agreement - Schedule II - Definitions

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                                       24

         date, including, without limitation, all amounts of Funded Debt of such
         Person required to be paid or prepaid within one year after the date of
         determination.

                  "GAAP" has the meaning specified in Section 1.03.

                  "GUARANTIES" means the Domestic Subsidiary Guaranty and the
         Offshore Guaranty.

                  "GUARANTORS" means the Domestic Subsidiary Guarantors, the
         Domestic Borrower and the Offshore Subsidiary Guarantors.

                  "HAZARDOUS MATERIALS" means (a) petroleum or petroleum
         products, by-products or breakdown products, radioactive materials,
         asbestos-containing materials, polychlorinated biphenyls and radon gas
         and (b) any other chemicals, materials or substances designated,
         classified or regulated as hazardous or toxic or as a pollutant or
         contaminant under any Environmental Law.

                  "HEDGE AGREEMENTS" means interest rate swap, cap or collar
         agreements, interest rate future or option contracts, currency swap
         agreements, currency future or commodity or option contracts and other
         hedging agreements.

                  "HEDGE BANK" means any Lender Party or an Affiliate of a
         Lender Party in its capacity as a party to a Secured Hedge Agreement.

                  "INDEMNIFIED PARTY" has the meaning specified in Section
         8.04(b) and in Section 21 of the Domestic Security Agreement.

                  "INFORMATION MEMORANDUM" means, collectively, the information
         memorandum dated December 1999 used by the Joint Lead Arrangers in
         connection with the initial syndication of the Commitments under the
         Existing Credit Agreement and the information memorandum dated February
         2000 used by the Joint Lead Arrangers in connection with the subsequent
         syndication of the Commitments under this Agreement.

                  "INITIAL CLOSING DATE" means December 30, 1999.

                  "INITIAL EXTENSION OF CREDIT" means the earlier to occur of
         the initial Borrowing and the initial issuance of a Letter of Credit
         hereunder.

                  "INITIAL ISSUING BANK", "INITIAL LENDER PARTIES" and "INITIAL
         LENDERS" each has the meaning specified in the recital of parties to
         this Agreement.

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                                       25

                  "INITIAL PLEDGED DEBT" has the meaning specified in the
         recital to the Domestic Security Agreement.

                  "INITIAL PLEDGED SHARES" has the meaning specified in the
         recital to the Domestic Security Agreement.

                  "INSUFFICIENCY" means, with respect to any Plan, the amount,
         if any, of its unfunded benefit liabilities, as defined in Section
         4001(a)(18) of ERISA.

                  "INTELLECTUAL PROPERTY" has the meaning specified in the
         Domestic Security Agreement.

                  "INTELLECTUAL PROPERTY COLLATERAL" has the meaning specified
         in Section 1(f) of the Domestic Security Agreement.

                  "INTELLECTUAL PROPERTY SECURITY AGREEMENT" has the meaning
         specified in Section 14(f) of the Domestic Security Agreement.

                  "INTEREST COVERAGE RATIO" means, at any date of determination,
         the ratio of (a) Pro Forma Consolidated EBITDA to (b) Pro Forma
         Interest Expense during the four consecutive fiscal quarters most
         recently ended for which financial statements are required to be
         delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as
         the case may be.

                  "INTEREST EXPENSE" means for any period the Consolidated
         interest expense (net of interest income) of Domestic Borrower and its
         Subsidiaries for such period (including all imputed interest on
         Capitalized Leases, but excluding (i) amortization of fees and expenses
         in connection with the Acquisition, (ii) amortization in connection
         with Hedge Agreements, (iii) interest expense on deferred compensation
         or customer deposits and (iv) for purposes of calculating the Fixed
         Charge Coverage Ratio and the Interest Coverage Ratio, amortization of
         deferred financing costs, discounts and other non-cash interest
         expense).

                  "INTEREST PERIOD" means, for each Eurodollar Rate Advance
         comprising part of the same Borrowing, the period commencing on the
         date of such Eurodollar Rate Advance or the date of the Conversion of
         any Base Rate Advance into such Eurodollar Rate Advance, and ending on
         the last day of the period selected by the Domestic Borrower pursuant
         to the provisions below and, thereafter, each subsequent period
         commencing on the last day of the immediately preceding Interest Period
         and ending on the last day of the period selected by the Domestic
         Borrower pursuant to the provisions below. The duration of each such
         Interest Period shall be, in the case of the period until 90 days
         following the

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                                       26

         Effective Date, one month, and thereafter, one, two, three or six
         months, as the Domestic Borrower may, upon notice received by the
         Administrative Agent not later than 11:00 A.M. (New York City time) on
         the third Business Day prior to the first day of such Interest Period,
         select; provided, however, that:

                           (a) the Domestic Borrower may not select any Interest
                  Period with respect to any Eurodollar Rate Advance under a
                  Facility that ends after any principal repayment installment
                  date for such Facility unless, after giving effect to such
                  selection, the aggregate principal amount of Base Rate
                  Advances and of Eurodollar Rate Advances having Interest
                  Periods that end on or prior to such principal repayment
                  installment date for such Facility shall be at least equal to
                  the aggregate principal amount of Advances under such Facility
                  due and payable on or prior to such date;

                           (b) Interest Periods commencing on the same date for
                  Eurodollar Rate Advances comprising part of the same Borrowing
                  shall be of the same duration;

                           (c) whenever the last day of any Interest Period
                  would otherwise occur on a day other than a Business Day, the
                  last day of such Interest Period shall be extended to occur on
                  the next succeeding Business Day, provided, however, that, if
                  such extension would cause the last day of such Interest
                  Period to occur in the next following calendar month, the last
                  day of such Interest Period shall occur on the next preceding
                  Business Day; and

                           (d) whenever the first day of any Interest Period
                  occurs on a day of an initial calendar month for which there
                  is no numerically corresponding day in the calendar month that
                  succeeds such initial calendar month by the number of months
                  equal to the number of months in such Interest Period, such
                  Interest Period shall end on the last Business Day of such
                  succeeding calendar month.

                  "INTERNAL REVENUE CODE" means the Internal Revenue Code of
         1986, as amended from time to time, and the regulations promulgated and
         rulings issued thereunder.

                  "INVENTORY" means all Inventory referred to in Section 1(b) of
         the Domestic Security Agreement.

                  "INVESTMENT" in any Person means any loan or advance to such
         Person, any purchase or other acquisition of any Equity Interests or
         Debt or the assets comprising a division or business unit or a
         substantial part or all of the business of such Person, any capital
         contribution to such Person or any other direct or indirect investment
         in such Person, including, without limitation, any acquisition by way
         of a merger or

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                                       27

         consolidation and any Contingent Obligation or any arrangement pursuant
         to which the investor incurs Debt of the types referred to in clause
         (i) of the definition of "DEBT" in respect of such Person.

                  "IP SECURITY AGREEMENT SUPPLEMENT" has the meaning specified
         in Section 14(g) of the Domestic Security Agreement.

                  "ISSUING BANK" means Chase, in respect of the Existing Letters
         of Credit, the Initial Issuing Bank and any Eligible Assignee to which
         a Letter of Credit Commitment hereunder has been assigned pursuant to
         Section 8.07 so long as each such Eligible Assignee expressly agrees to
         perform in accordance with their terms all of the obligations that by
         the terms of this Agreement are required to be performed by it as an
         Issuing Bank and notifies the Administrative Agent of its Applicable
         Lending Office and the amount of its Letter of Credit Commitment (which
         information shall be recorded by the Administrative Agent in the
         Register), for so long as such Initial Issuing Bank or Eligible
         Assignee, as the case may be, shall have a Letter of Credit Commitment.

                  "JOINDER AGREEMENT" means, for any Offshore Currency, a
         supplement to this Agreement in the form of Exhibit D duly executed by
         the Appropriate Swing Line Lender designated to make Swing Line
         Advances in such Offshore Currency available hereunder, the Offshore
         Currency Agent and the Domestic Borrower.

                  "JOINT BOOK MANAGER" has the meaning specified in the recitals
         of parties to this Agreement.

                  "JOINT LEAD ARRANGER" has the meaning specified in the
         recitals of parties to this Agreement.

                  "L/C CASH COLLATERAL ACCOUNT" has the meaning specified in the
         recital to the Security Agreement.

                  "L/C RELATED DOCUMENTS" has the meaning specified in Section
         2.04(e)(ii).

                  "LENDER PARTY" means any Lender, the Issuing Bank or any Swing
         Line Lender.

                  "LENDERS" means the Initial Lenders and each Person that shall
         become a Lender hereunder pursuant to Section 8.07 for so long as such
         Initial Lender or Person, as the case may be, shall be a party to this
         Agreement.

                  "LETTER OF CREDIT ADVANCE" means an advance made by the
         Issuing Bank or any Revolving Credit Lender pursuant to Section
         2.03(c).

                  Credit Agreement - Schedule II - Definitions

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                                       28

                  "LETTER OF CREDIT AGREEMENT" has the meaning specified in
         Section 2.03(a).

                  "LETTER OF CREDIT COMMITMENT" means, with respect to the
         Issuing Bank at any time, the amount set forth opposite the Issuing
         Bank's name on Schedule I hereto under the caption "Letter of Credit
         Commitment" or, if the Issuing Bank has entered into one or more
         Assignment and Acceptances, set forth for the Issuing Bank in the
         Register maintained by the Administrative Agent pursuant to Section
         8.07(d) as the Issuing Bank's "Letter of Credit Commitment", as such
         amount may be reduced at or prior to such time pursuant to Section
         2.05.

                  "LETTER OF CREDIT SUB-FACILITY" means, at any time, an amount
         equal to the amount of the Issuing Bank's Letter of Credit Commitment
         at such time, as such amount may be reduced at or prior to such time
         pursuant to Section 2.05.

                  "LETTERS OF CREDIT" has the meaning specified in Section
         2.01(e).

                  "LICENSES" has the meaning specified in Section 1(f)(vi) of
         the Domestic Security Agreement.

                  "LIEN" means any lien, security interest or other charge or
         encumbrance of any kind, or any other type of preferential arrangement,
         including, without limitation, the lien or retained security title of a
         conditional vendor and any easement, right of way or other encumbrance
         on title to real property.

                  "LOAN DOCUMENTS" means (a) for purposes of this Agreement and
         the Notes and any amendment, supplement or modification hereof or
         thereof, (i) this Agreement (including each Assignment and Acceptance,
         Offshore Swing Line Lender Joinder Agreement and Credit Agreement
         Supplement), (ii) the Notes, (iii) the Guaranties, (iv) the Collateral
         Documents, (v) the Fee Letter, (vi) the Collateral Sharing Agreement
         and (vii) each Letter of Credit Agreement and (b) for purposes of the
         Guaranties and the Collateral Documents and for all other purposes
         other than for purposes of this Agreement and the Notes, (i) this
         Agreement (including each Assignment and Acceptance, Offshore Swing
         Line Lender Joinder Agreement and Credit Agreement Supplement), (ii)
         the Notes, (iii) the Guaranties, (iv) the Collateral Documents, (v) the
         Fee Letter, (vi) each Letter of Credit Agreement, (vii) the Collateral
         Sharing Agreement and (viii) each Secured Hedge Agreement, in each case
         as amended.

                  "LOAN PARTIES" means the Domestic Borrower, the Offshore
         Borrowers and the Guarantors.

                  Credit Agreement - Schedule II - Definitions

<PAGE>   145

                                       29

                  "LOCAL TIME" means, for any Offshore Currency, the time zone
         specified in the Joinder Agreement of the Appropriate Swing Line Lender
         which has agreed to make Swing Line Advances in such Offshore Currency
         available hereunder.

                  "MANAGEMENT AGREEMENT" means the Amended and Restated
         Management Agreement dated as of March 21, 2000, among the Sponsor and
         the Domestic Borrower, as amended or renewed, to the extent permitted
         under the Loan Documents.

                  "MARGIN STOCK" has the meaning specified in Regulation U.

                  "MATERIAL ADVERSE CHANGE" means any material adverse change in
         the business, assets, operations, properties, financial condition or
         liabilities (contingent or otherwise) of the Domestic Borrower and its
         Subsidiaries taken as a whole since September 30, 1999; provided,
         however, that in no event shall the Transactions, individually or in
         the aggregate, be deemed a Material Adverse Change.

                  "MATERIAL ADVERSE EFFECT" means a material adverse effect on
         (a) the business, assets, operations, properties, financial condition
         or liabilities (contingent or otherwise) of the Domestic Borrower and
         its Subsidiaries taken as a whole, or (b) the rights and remedies of
         any Agent or any Lender Party under any Transaction Document; provided,
         however, that in no event shall the Transactions, individually or in
         the aggregate, be deemed a Material Adverse Effect.

                  "MATERIAL CONTRACT" means, with respect to any Person, each
         contract (or group of related contracts with the same party) to which
         such Person is a party involving (i) the lease under which such Person
         is lessee of, or holds or operates any personal property owned by any
         other party, for which the annual rental exceeds $1,000,000, (ii) the
         lease under which such Person is lessor of or permits any third party
         to hold or operate any property, real or personal, for which the annual
         rental exceeds $1,000,000, (iii) any joint venture or partnership
         agreement, (iv) the acquisition of or disposition of stock, assets or
         business with a value in excess of $1,000,000, other than in the
         ordinary course of business, (v) the license, as licensee or licensor,
         of any patent, trademark, copyright or know-how for which the annual
         license fees and other payments thereunder exceed $1,000,000, or (vi)
         the Designated Material Contracts.

                  "MEASUREMENT PERIOD" means, at any date of determination, the
         most recently completed four consecutive quarterly fiscal accounting
         periods of the Domestic Borrower on or immediately prior to such date.

                  "MORTGAGE POLICIES" has the meaning specified in Section
         5.01(q) to the Existing Credit Agreement.

                  Credit Agreement - Schedule II - Definitions

<PAGE>   146

                                       30

                  "MORTGAGES" has the meaning specified in Section 5.01(q) to
         the Existing Credit Agreement.

                  "MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in
         Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA
         Affiliate is making or accruing an obligation to make contributions, or
         has within any of the preceding five plan years made or accrued an
         obligation to make contributions.

                  "MULTIPLE EMPLOYER PLAN" means a single employer plan, as
         defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
         employees of any Loan Party or any ERISA Affiliate and at least one
         Person other than the Loan Parties and the ERISA Affiliates or (b) was
         so maintained and in respect of which any Loan Party or any ERISA
         Affiliate could have liability under Section 4064 or 4069 of ERISA in
         the event such plan has been or were to be terminated.

                  "NET CASH PROCEEDS" means, with respect to any sale, lease,
         transfer or other disposition of any asset or the incurrence or
         issuance of any Debt or the sale or issuance of any Equity Interests
         (including, without limitation, any capital contribution) by any
         Person, or any Extraordinary Receipt received by or paid to or for the
         account of any Person, the aggregate amount of cash received from time
         to time (whether as initial consideration or through payment or
         disposition of deferred consideration) by or on behalf of such Person
         in connection with such transaction after deducting therefrom only
         (without duplication), the following: (a) with respect to any asset
         sale, (i) the direct and indirect costs relating to such asset sale
         (including sales commissions and legal, accounting and investment
         banking fees) which are incurred by the Domestic Borrower or any of its
         Subsidiaries, (ii) amounts applied to the repayment of any Debt secured
         by a Lien on the asset subject to such asset sale, (iii) amounts
         required to be paid to any Person (other than Domestic Borrower or any
         Subsidiary) owning a beneficial interest in the assets subject to the
         asset sale; (iv) liabilities of the entity, or relating to the business
         or assets, sold, transferred or otherwise disposed of which are
         retained by Domestic Borrower or the applicable Subsidiary, (v)
         appropriate amounts to be provided by Domestic Borrower or any
         Subsidiary, as the case may be, as a reserve in accordance with GAAP
         against any liabilities specifically associated with such asset sale
         and retained by Domestic Borrower or any Subsidiary, as the case may
         be, after such asset sale (but upon reversal of such reserve, any
         amount so reversed shall thereupon become Net Cash Proceeds); and (vi)
         the amount of taxes payable in connection with or as a result of such
         transaction, in each case to the extent, but only to the extent, that
         the amounts so deducted are, at the time of receipt of such cash,
         actually paid to a Person that is not an Affiliate of such Person or
         any Loan Party or any Affiliate of any Loan Party and are properly
         attributable to such transaction or to the asset that is the subject
         thereof; provided,

                  Credit Agreement - Schedule II - Definitions

<PAGE>   147

                                       31

         however, that in the case of taxes that are deductible under clause
         (vi) above but for the fact that, at the time of receipt of such cash,
         such taxes have not been actually paid or are not then payable, such
         Loan Party or such Subsidiary may deduct an amount (the "RESERVED
         AMOUNT") equal to the amount reserved in accordance with GAAP for such
         Loan Party's or such Subsidiary's reasonable estimate of such taxes,
         other than taxes for which such Loan Party or such Subsidiary is
         indemnified, provided further, however, that, at the time such taxes
         are paid, an amount equal to the amount, if any, by which the Reserved
         Amount for such taxes exceeds the amount of such taxes actually paid
         shall constitute "Net Cash Proceeds" of the type for which such taxes
         were reserved for all purposes hereunder; (b) with respect to any
         issuance of Equity Interests or Debt, the direct costs relating to such
         issuance (including sale and underwriter's commissions and legal,
         accounting and investment banking fees) incurred by the Domestic
         Borrower or any of its Subsidiaries; and (c) with respect to any
         Extraordinary Receipt, the reasonable costs incurred by the Domestic
         Borrower or any of its Subsidiaries to adjust and/or recover such
         Extraordinary Receipt. Cash received and cost and expenses incurred by
         the Domestic Borrower and any of its Subsidiaries in any currency other
         than US Dollars will be deemed to have been received or incurred in the
         equivalent amount of US Dollars calculated as provided pursuant to
         Section 1.04(b) hereof.

                  "NONRATABLE ASSIGNMENT" means an assignment by a Lender Party
         pursuant to Section 8.07(a) of a portion of its rights and obligations
         under this Agreement, other than an assignment of a uniform, and not a
         varying, percentage of all of the rights and obligations of such Lender
         Party under and in respect of all of the Facilities (other than the
         Letter of Credit Sub-Facility and the Swing Line Sub-Facility).

                  "NON-VOTING EQUITY INTERESTS" has the meaning specified in
         Section 1(d)(iii) of the Domestic Security Agreement.

                  "NOTE" means a Term Note, a Revolving Credit Note or an
         Offshore Swing Line Note.

                  "NOTE PURCHASE DATE" has the meaning specified in the
         Preliminary Statements.

                  "NOTICE OF BORROWING" has the meaning specified in Section
         2.02(a).

                  "NOTICE OF ISSUANCE" has the meaning specified in Section
         2.03(a).

                  "NOTICE OF RENEWAL" has the meaning specified in Section
         2.01(e).

                  "NOTICE OF SWING LINE BORROWING" has the meaning specified in
         Section 2.02(b).

                  Credit Agreement - Schedule II - Definitions

<PAGE>   148

                                       32

                  "NOTICE OF TERMINATION" has the meaning specified in Section
         2.01(e).

                  "NPL" means the National Priorities List under CERCLA.

                  "OBLIGATION" means, with respect to any Person, any payment,
         performance or other obligation of such Person of any kind, including,
         without limitation, any liability of such Person on any claim, whether
         or not the right of any creditor to payment in respect of such claim is
         reduced to judgment, liquidated, unliquidated, fixed, contingent,
         matured, disputed, undisputed, legal, equitable, secured or unsecured,
         and whether or not such claim is discharged, stayed or otherwise
         affected by any proceeding referred to in Section 6.01(f). Without
         limiting the generality of the foregoing, the Obligations of any Loan
         Party under the Loan Documents include (a) the obligation to pay
         principal, interest, Letter of Credit commissions, charges, expenses,
         fees, attorneys' fees and disbursements, indemnities and other amounts
         payable by such Loan Party under any Loan Document and (b) the
         obligation of such Loan Party to reimburse any amount in respect of any
         of the foregoing that any Lender Party, in its sole discretion, may
         elect to pay or advance on behalf of such Loan Party.

                  "OBLIGOR" has the meaning in Section 5(b) of the Domestic
         Security Agreement.

                  "OECD" means the Organization for Economic Cooperation and
         Development.

                  "OFFER TO PURCHASE" has the meaning specified in the
         Preliminary Statements.

                  "OFFSHORE ACQUISITION ADVANCE" has the meaning specified in
         Section 2.01(a)(ii).

                  "OFFSHORE ACQUISITION BORROWINGS" means a borrowing of
         simultaneous Offshore Acquisition Advances of the same Type made by the
         Offshore Acquisition Lenders.

                  "OFFSHORE ACQUISITION COMMITMENT" means, at any time, (i) with
         respect to any Term A Lender, an amount equal to the aggregate amount
         of such Lender's Term A Commitment which has been converted to an
         Offshore Acquisition Commitment pursuant to Section 2.05(b)(i)(A)(2)
         and 2.05 (b)(i)(B)(1) at such time, (ii) with respect to any Revolving
         Credit Lender, an amount equal to the aggregate amount of such Lender's
         Revolving Credit Commitment which has been converted to an Offshore
         Acquisition Commitment pursuant to Section 2.05(b)(iii)(A) and
         2.05(b)(i)(B)(1) at such time, or (iii) with respect to a Lender which
         has entered into one or more Assignment and Acceptances, the amount set
         forth for such Lender in the Register maintained by the Administrative
         Agent pursuant to Section 8.07(d) as such Lender's "Offshore
         Acquisition Commitment", in each case, as such amount may be reduced at
         or prior to such time pursuant to Section 2.05.

                  Credit Agreement - Schedule II - Definitions

<PAGE>   149
                                       33

                  "OFFSHORE ACQUISITION FACILITY" means at any time the
         aggregate amount of the Offshore Acquisition Commitments of the
         Offshore Acquisition Lenders.

                  "OFFSHORE ACQUISITION LENDERS" means any Lender with an
         Offshore Acquisition Commitment.

                  "OFFSHORE ACQUISITION NOTE" means, with respect to an Offshore
         Acquisition Advance, a promissory note of the Offshore Borrower to
         which such Advance was made, payable to the order of any Offshore
         Acquisition Lender, in substantially the form of Exhibit A-3 hereto,
         evidencing the indebtedness of such Offshore Borrower to such Lender
         resulting from the Offshore Acquisition Advances made to such Offshore
         Borrower by such Lender, as amended.

                  "OFFSHORE ALTERNATE CURRENCY" means any lawful currency
         constituting a eurocurrency (other than Pounds Sterling or Euros) which
         has been designated by the Domestic Borrower to the Offshore Currency
         Agent and which the Offshore Currency Agent has confirmed by written
         notice to the Domestic Borrower, the Appropriate Swing Line Lender and
         the Revolving Credit Lenders, is, at the time of such designation,
         freely traded in the offshore interbank foreign exchange markets and is
         freely transferable and freely convertible into US Dollars.

                  "OFFSHORE BORROWER" means each wholly-owned (other than in
         respect of any de minimis director's qualifying shares) Offshore
         Subsidiary of the Domestic Borrower which shall have entered into a
         Credit Agreement Supplement pursuant to Section 3.02 or 3.03 for so
         long as such Offshore Subsidiary shall be a party to this Agreement.

                  "OFFSHORE BORROWING" means any Swing Line Advance borrowed by
         an Offshore Borrower and any Offshore Acquisition Borrowing.

                  "OFFSHORE COLLATERAL DOCUMENTS" means the security agreements,
         pledge agreements, mortgages, deeds and other agreement delivered by an
         Offshore Obligor to the Administrative Agent that creates or purports
         to create a first priority Lien in favor of the Administrative Agent
         for the benefit of the Secured Parties to secure the Offshore
         Obligations in substantially all the assets of such Offshore Obligor,
         whether delivered from time to time pursuant to Section 3.02, 3.03 or
         5.01(j) or otherwise.

                  "OFFSHORE CURRENCY" means Canadian Dollars, Euros, Pounds
         Sterling, Singapore Dollars and any Offshore Alternative Currency.

                  Credit Agreement - Schedule II - Definitions
<PAGE>   150

                                       34

                  "OFFSHORE CURRENCY AGENT" has the meaning specified in the
         recitals of parties to this Agreement.

                  "OFFSHORE GUARANTY" means a guaranty in substantially the form
         of Exhibit H hereto, together with each other guaranty and guaranty
         supplement delivered pursuant to Section 3.02, 3.03 and 5.01(j), duly
         executed by the Domestic Borrower, each Domestic Subsidiary Guarantor
         and each Offshore Obligor, as amended.

                  "OFFSHORE OBLIGOR" means each Offshore Borrower and each
         Offshore Subsidiary Guarantor.

                  "OFFSHORE PERMITTED ACQUISITION" means (a) any purchase or
         other acquisition by any Offshore Borrower of all the Equity Interests
         in any other Person in a transaction effected pursuant to, and
         satisfying the requirements of, Section 5.02(g)(xiii), or (b) the
         purchase or acquisition by an existing Offshore Borrower, or the
         organization of a new Offshore Subsidiary by an Offshore Borrower for
         the purpose of purchasing or acquiring, substantially all the assets of
         any Person or division or line of business of any Person in a
         transaction effected pursuant to, and satisfying the requirements of,
         Section 5.02(g)(xiii).

                  "OFFSHORE SECURED OBLIGATIONS" means, for each Offshore
         Obligor, the Obligations of such Offshore Obligor under the Loan
         Documents existing on the date such Offshore Obligor becomes a party to
         the Loan Documents and thereafter existing, whether direct or indirect,
         absolute or contingent, and whether for principal, reimbursement
         obligations, interest, fees, premiums, penalties, indemnifications,
         contract causes of action, costs, expenses or otherwise.

                  "OFFSHORE SUBSIDIARY" means a Subsidiary organized under the
         laws of a jurisdiction other than the United States or any State
         thereof or the District of Columbia.

                  "OFFSHORE SUBSIDIARY GUARANTOR" means each Offshore Subsidiary
         of the Domestic Borrower which shall execute and deliver a counterpart
         of the Offshore Guaranty pursuant to Section 3.03 or 5.01(j) for so
         long as such Offshore Subsidiary shall be a party to the Offshore
         Guaranty.

                  "OFFSHORE SWING LINE ADVANCE" means a Swing Line Advance made
         by the Appropriate Swing Line Lender to the Domestic Borrower or an
         Offshore Borrower in an Offshore Currency.

                  "OFFSHORE SWING LINE LENDER" means, with respect to each
         Offshore Currency, Chase or the affiliate of Chase which Chase may
         designate from time to time to the

                  Credit Agreement - Schedule II - Definitions
<PAGE>   151

                                       34

         Offshore Currency Agent and the Domestic Borrower as the lender which
         will make Offshore Currency Advances in such Offshore Currency
         available under this Agreement.

                  "OFFSHORE SWING LINE NOTE" means a promissory note of an
         Offshore Borrower payable to the order of any Offshore Swing Line
         Lender, in substantially the form of Exhibit A-4 hereto, evidencing the
         aggregate indebtedness of such Offshore Borrower to such Lender
         resulting from the Offshore Swing Line Advances made by such Lender, as
         amended.

                  "OFF-SITE GOODS" has the meaning specified in Section 9(a) of
         the Domestic Security Agreement.

                  "OPEN YEAR" has the meaning specified in Section 4.01(r)(ii).

                  "OTHER TAXES" has the meaning specified in Section 2.12(b).

                  "PATENTS" has the meaning specified in Section 1(f)(i) of the
         Domestic Security Agreement.

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

                  "PERMITTED ABANDONED IP" has the meaning specified in the
         Section 14 of the Domestic Security Agreement.

                  "PERMITTED ACQUISITION" means a Domestic Permitted Acquisition
         or an Offshore Permitted Acquisition.

                  "PERMITTED ENCUMBRANCES" means with respect to any real
         property of the Domestic Borrower or any of its Subsidiaries,
         easements, rights-of-way, servitudes, covenants, restrictive covenants,
         encumbrances, minor defects or irregularities in title and other
         similar restrictions which (a) individually or in the aggregate, do not
         materially interfere with the ordinary conduct of the businesses of
         Domestic Borrower or its Subsidiary at the real estate to which they
         relate, (b) do not materially impair for its intended purpose the real
         property to which they relate, (c) in the case of any real property
         subject to a Mortgage or an Offshore Collateral Document, shall be as
         set forth on a schedule to such Mortgage or Offshore Collateral
         Document and (d) shall encumber only the real property to which they
         relate and no other material Collateral.

                  "PERMITTED LIENS" means such of the following as to which no
         enforcement, collection, execution, levy or foreclosure proceeding
         shall have been commenced: (a) Liens for taxes, assessments and
         governmental charges or levies to the extent not

                  Credit Agreement - Schedule II - Definitions

<PAGE>   152

                                       36

         required to be paid under Section 5.01(b); (b) Liens imposed by law,
         such as landlord's, materialmen's, mechanics', carriers', workmen's and
         repairmen's Liens and other similar Liens arising in the ordinary
         course of business securing obligations that (i) either are not overdue
         for a period of more than 60 days or are being contested in good faith
         by appropriate proceedings and (ii) individually or together with all
         other Permitted Liens outstanding on any date of determination do not
         materially adversely affect the use of the property to which they
         relate; (c) pledges or deposits to secure obligations under workers'
         compensation laws or similar legislation or to secure public or
         statutory obligations; and (d) Permitted Encumbrances.

                  "PERSON" means an individual, partnership, corporation
         (including a business trust), limited liability company, joint stock
         company, trust, unincorporated association, joint venture or other
         entity, or a government or any political subdivision or agency thereof.

                  "PLAN" means a Single Employer Plan or a Multiple Employer
         Plan.

                  "PLEDGED ACCOUNTS" has the meaning specified in Section 5(a)
         of the Domestic Security Agreement.

                  "PLEDGED ACCOUNT BANKS" has the meaning specified in Section
         5(a) of the Domestic Security Agreement.

                  "PLEDGED ACCOUNT LETTERS" has the meaning specified in Section
         5(a) of the Domestic Security Agreement.

                  "PLEDGED DEBT" has the meaning specified in Section 1(d)(iv)
         of the Domestic Security Agreement.

                  "PLEDGED SHARES" has the meaning specified in Section
         1(d)(iii) of the Domestic Security Agreement.

                  "POUNDS STERLING" means the freely transferable lawful money
         of the United Kingdom (expressed in Pounds Sterling).

                  "PREFERRED INTERESTS" means, with respect to any Person,
         Equity Interests issued by such Person that are entitled to a
         preference or priority over any other Equity Interests issued by such
         Person upon any distribution of such Person's property and assets,
         whether by dividend or upon liquidation.

                  Credit Agreement - Schedule II - Definitions
<PAGE>   153
                                       37

                  "PRO FORMA CONSOLIDATED EBITDA" means (a) with respect to the
         Domestic Borrower at any date of determination, an amount equal to the
         Consolidated EBITDA of the Domestic Borrower and its Subsidiaries for
         the most recently completed Measurement Period for which the Domestic
         Borrower has delivered financial statements pursuant to Section 5.03
         and (b) with respect to any other Person at any date of determination,
         an amount equal to the Consolidated EBITDA of such Person and its
         Subsidiaries for the most recently completed Measurement Period of such
         Person prior to such date for which such Person has delivered
         Consolidated financial statements for itself and its Subsidiaries in
         form and scope reasonably satisfactory to the Joint Lead Arrangers;
         provided that, with respect to any Permitted Acquisition or any
         purchase or other acquisition of any property or assets of any Person
         by the Domestic Borrower or any of its Subsidiaries pursuant to Section
         5.02(g) or any sale, lease, transfer or other disposition of property
         or assets by the Domestic Borrower or any of its Subsidiaries pursuant
         to Section 5.02(f) or otherwise, if the Domestic Borrower or any of its
         Subsidiaries shall have purchased or otherwise acquired or shall have
         sold, leased, transferred or otherwise disposed of any property or
         assets at any time on or after the first day of any Measurement Period,
         the Consolidated EBITDA of the Domestic Borrower and its Subsidiaries
         for such Measurement Period shall be increased (in the case of each
         such purchase or other acquisition) or reduced (in the case of each
         such sale, lease, transfer or other disposition) by the Consolidated
         EBITDA thereof that would have been contributed thereto by such
         property or assets during such Measurement Period, as determined in
         good faith by the Chief Financial Officer of the Domestic Borrower on a
         pro forma basis as though the Domestic Borrower or the Subsidiary of
         the Domestic Borrower that is effecting such transaction had purchased
         or otherwise acquired or had sold, transferred or otherwise disposed of
         such property or assets on the first day of such Measurement Period and
         after giving effect to all of the pro forma cost savings to the
         Domestic Borrower and its Subsidiaries that are to be recognized as a
         result of such transaction during such Measurement Period (which, in
         the case of any Permitted Acquisition, shall be those pro forma cost
         savings to such Person (or the Domestic Borrower and its Subsidiaries)
         realized upon the date of consummation of such transaction or which
         management intends to implement within six months of the consummation
         of such transaction, and which are reflected on the itemized schedule
         of add-back adjustments to the Consolidated pro forma income statement
         of the acquired Person and its Subsidiaries comprising part of the
         Acquisition Diligence Report on such Person and its Subsidiaries).

                  "PRO FORMA INCREMENTAL INTEREST EXPENSE" means, with respect
         to each Permitted Acquisition, for the first three Measurement Periods
         ending after the date on which such Permitted Acquisition is
         consummated, the product of (A)(B)(C) where:

                  (A) = total cash paid plus assumed Debt in such Permitted
                        Acquisition;

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<PAGE>   154

                                       38

                  (B) = the per annum cost of Debt used for such Permitted
                        Acquisition; and

                  (C) = a fraction, the numerator of which is 360 minus the
                        number of days since the date of the consummation of
                        such Permitted Acquisition and the denominator of
                        which is equal to 360.

                  "PRO FORMA INTEREST EXPENSE" means with respect to the
         Domestic Borrower and its Subsidiaries for any Measurement Period the
         sum of (a) Interest Expense for such Measurement Period plus (b) Pro
         Forma Incremental Interest Expense for each Permitted Acquisition which
         was consummated by the Domestic Borrower or one of its Subsidiaries
         during such Measurement Period.

                  "PRO RATA SHARE" of any amount means, with respect to any
         Lender under any Facility at any time, the product of any applicable
         amount times a fraction the numerator of which is the amount of such
         Lender's Commitment under such Facility at such time (or, if the
         Commitments under such Facility shall have been terminated pursuant to
         Section 2.05 or 6.01, such Lender's Commitment under such Facility as
         in effect immediately prior to such termination) and the denominator of
         which is the aggregate Commitments under such Facility at such time
         (or, if the Commitments under such Facility shall have been terminated
         pursuant to Section 2.05 or 6.01, the aggregate Commitments under such
         Facility as in effect immediately prior to such termination).

                  "RECEIVABLES" means all Receivables referred to in Section
         1(c) of the Domestic Security Agreement.

                  "REDEEMABLE" means, with respect to any Equity Interest, any
         Debt or any other right or Obligation, any such Equity Interest, Debt,
         right or Obligation that (a) the issuer has undertaken to redeem at a
         fixed or determinable date or dates, whether by operation of a sinking
         fund or otherwise, or upon the occurrence of a condition not solely
         within the control of the issuer or (b) is redeemable at the option of
         the holder.

                  "REDEMPTION" means the Redemption as such term is defined and
         used in Section 1.04 of the Acquisition Agreement.

                  "REFINANCED CREDIT AGREEMENT" means that certain Amended and
         Restated Credit Agreement dated as of August 15, 1997, among the
         Domestic Borrower and certain of the other Loan Parties, as borrowers,
         the lenders party thereto and Chase, as administrative agent for such
         lenders, as amended and in effect on the Initial Closing Date.

                  "REGISTER" has the meaning specified in Section 8.07(d).

                  Credit Agreement - Schedule II - Definitions
<PAGE>   155

                                       39

                  "REGULATION U" means Regulation U of the Board of Governors of
         the Federal Reserve System, as in effect from time to time.

                  "REINVESTMENT DEFERRED AMOUNT" with respect to any
         Reinvestment Event, the aggregate Net Cash Proceeds received by the
         Domestic Borrower or any of its Subsidiaries in connection therewith
         that are not applied to prepay the Term Advances or the Revolving
         Credit Advances pursuant to Section 2.06(b)(ii)(A) as a result of the
         delivery of a Reinvestment Notice.

                  "REINVESTMENT EVENT" any Asset Sale in respect of which the
         Domestic Borrower has delivered a Reinvestment Notice.

                  "REINVESTMENT NOTICE" a written notice executed by an officer
         of the Domestic Borrower stating that no Default or Event of Default
         has occurred and is continuing and that the Domestic Borrower (directly
         or indirectly through a Subsidiary) intends and expects to use all or a
         specified portion of the Net Cash Proceeds of an Asset Sale to acquire
         assets useful in its business.

                  "REINVESTMENT PREPAYMENT AMOUNT" with respect to any
         Reinvestment Event, the Reinvestment Deferred Amount relating thereto
         less any amount expended prior to the relevant Reinvestment Prepayment
         Date to acquire asset useful in the Domestic Borrower's business.

                  "REINVESTMENT PREPAYMENT DATE" with respect to any
         Reinvestment Event, the earlier of (a) the date occurring 365 days
         after such Reinvestment Event and (b) the date on which the Domestic
         Borrower shall have determined not to, or shall have otherwise ceased
         to, acquire assets useful in the Domestic Borrower's business with all
         or any portion of the relevant Reinvestment Deferred Amount.

                  "RELATED CONTRACTS" means the agreements, leases and contracts
         defined in Section 1(c) of the Domestic Security Agreement.

                  "RELATED DOCUMENTS" means the Acquisition Agreement, the
         Shareholders Agreements, the Management Agreement, the Subordinated
         Debt Documents, the documents setting forth the terms of, and
         effecting, the Offer to Purchase, and any intercompany notes issued
         pursuant to Section 5.02(b)(vii)(y).

                  "REMEDIAL ACTION" has the meaning specified in Section 5.01(c)

                  "REQUIRED LENDERS" means, at any time, Lenders owed or holding
         at least a majority in interest of the sum of (a) the aggregate
         principal amount of the Advances

                  Credit Agreement - Schedule II - Definitions
<PAGE>   156

                                       40

         outstanding at such time (outstanding Offshore Swing Line Advances
         being deemed to be outstanding for these purposes in their US Dollar
         Equivalent as of any date of determination), (b) the aggregate
         Available Amount of all Letters of Credit outstanding at such time, (c)
         the aggregate unused Commitments under the Term Facilities at such time
         and (d) the aggregate Unused Revolving Credit Commitments at such time;
         provided, however, that if any Lender shall be a Defaulting Lender at
         such time, there shall be excluded from the determination of Required
         Lenders at such time (A) the aggregate principal amount of the Advances
         owing to such Lender (in its capacity as a Lender) and outstanding at
         such time, (B) such Lender's Pro Rata Share of the aggregate Available
         Amount of all Letters of Credit outstanding at such time, (C) the
         aggregate unused Term Commitments of such Lender at such time and (D)
         the Unused Revolving Credit Commitment of such Lender at such time. For
         purposes of this definition, the aggregate principal amount of Swing
         Line Advances owing to the Swing Line Bank and of Letter of Credit
         Advances owing to the Issuing Bank and the Available Amount of each
         Letter of Credit shall be considered to be owed to the Revolving Credit
         Lenders ratably in accordance with their respective Revolving Credit
         Commitments.

                  "RESPONSIBLE OFFICER" means the Chairman or any officer of any
         Loan Party or any of its Subsidiaries.

                  "REVOLVING CREDIT ADVANCE" has the meaning specified in
         Section 2.01(c).

                  "REVOLVING CREDIT BORROWING" means a borrowing consisting of
         simultaneous Revolving Credit Advances of the same Type made by the
         Revolving Credit Lenders.

                  "REVOLVING CREDIT COMMITMENT" means, with respect to any
         Revolving Credit Lender at any time, the amount set forth opposite such
         Lender's name on Schedule I hereto under the caption "Revolving Credit
         Commitment" or, if such Lender has entered into one or more Assignment
         and Acceptances, set forth for such Lender in the Register maintained
         by the Administrative Agent pursuant to Section 8.07(d) as such
         Lender's "Revolving Credit Commitment", as such amount may be reduced
         at or prior to such time pursuant to Section 2.05.

                  "REVOLVING CREDIT FACILITY" means, at any time, the aggregate
         amount of the Revolving Credit Lenders' Revolving Credit Commitments at
         such time.

                  "REVOLVING CREDIT LENDER" means any Lender that has a
         Revolving Credit Commitment.

                  "REVOLVING CREDIT NOTE" means a promissory note of the
         Domestic Borrower payable to the order of any Revolving Credit Lender,
         in substantially the form of Exhibit A-1 hereto, evidencing the
         aggregate indebtedness of the Domestic Borrower to

                  Credit Agreement - Schedule II - Definitions
<PAGE>   157

                                       41

         such Lender resulting from the Revolving Credit Advances, Letter of
         Credit Advances and Swing Line Advances made by such Lender, as
         amended.

                  "SECURED HEDGE AGREEMENT" means any Hedge Agreement required
         or permitted under Article V that is entered into by and between the
         Domestic Borrower or an Offshore Borrower and any Hedge Bank.

                  "SECURED OBLIGATIONS" means the Domestic Secured Obligations
         or the Offshore Secured Obligations, as the case may be.

                  "SECURED PARTIES" means the Agents, the Lender Parties and the
         Hedge Banks.

                  "SECURITY AGREEMENT SUPPLEMENT" has the meaning specified in
         Section 22(b) of the Domestic Security Agreement.

                  "SECURITY COLLATERAL" means all the Collateral defined in
         Section 1(d) of the Domestic Security Agreement.

                  "SELLER" has the meaning specified in the Preliminary
         Statements.

                  "SENIOR DEBT/EBITDA RATIO" means, at any date of
         determination, the ratio of (a) the sum of (i) Consolidated total Debt
         for Borrowed Money of the Domestic Borrower and its Subsidiaries less
         (ii) Subordinated Debt, in each case, as at the end of the most
         recently ended fiscal quarter of the Domestic Borrower for which
         financial statements are required to be delivered to the Lender Parties
         pursuant to Section 5.03(b) or (c), as the case may be, to (b) Pro
         Forma Consolidated EBITDA of the Domestic Borrower and its Subsidiaries
         for such fiscal quarter and the immediately preceding three fiscal
         quarters.

                  "SENIOR SUBORDINATED NOTE INDENTURE" has the meaning specified
         in the Preliminary Statements.

                  "SENIOR SUBORDINATED NOTE TRUSTEE" has the meaning specified
         in the Preliminary Statements.

                  "SENIOR SUBORDINATED NOTES" has the meaning specified in the
         Preliminary Statements.

                  "SHAREHOLDERS AGREEMENTS" means (a) the Amended and Restated
         Shareholders Agreement dated as of December 14, 1999, as amended
         through the Effective Date, among SSCI Investors, the Seller, the
         Domestic Borrower and the other shareholders of the Domestic Borrower
         immediately prior to the Acquisition and (b) the Shareholders

                  Credit Agreement - Schedule II - Definitions
<PAGE>   158

                                       42

         Agreement dated as of December 29, 1999, among the SSCI Investors,
         certain members of the management of the Domestic Borrower and its
         Subsidiaries and the Domestic Borrower, in each case, as amended, to
         the extent permitted under the Loan Documents.

                  "SINGAPORE DOLLARS" or "SP$" mean the freely transferable
         lawful money of Singapore (expressed in dollars).

                  "SINGLE EMPLOYER PLAN" means a single employer plan, as
         defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
         employees of any Loan Party or any ERISA Affiliate and no Person other
         than the Loan Parties and the ERISA Affiliates or (b) was so maintained
         and in respect of which any Loan Party or any ERISA Affiliate could
         have liability under Section 4069 of ERISA in the event such plan has
         been or were to be terminated.

                  "SOLVENT" and "SOLVENCY" mean, with respect to any Person on a
         particular date, that on such date (a) the fair value of the property
         of such Person is greater than the total amount of liabilities,
         including, without limitation, contingent liabilities, of such Person,
         (b) the present fair salable value of the assets of such Person is not
         less than the amount that will be required to pay the probable
         liability of such Person on its debts as they become absolute and
         matured, (c) such Person does not intend to, and does not believe that
         it will, incur debts or liabilities beyond such Person's ability to pay
         such debts and liabilities as they mature and (d) such Person is not
         engaged in business or a transaction, and is not about to engage in
         business or a transaction, for which such Person's property would
         constitute an unreasonably small capital. The amount of contingent
         liabilities at any time shall be computed as the amount that, in the
         light of all the facts and circumstances existing at such time,
         represents the amount that can reasonably be expected to become an
         actual or matured liability.

                  "SPONSOR" has the meaning specified in the Preliminary
         Statements.

                  "SPOT RATE" has the meaning specified in Section 1.04.

                  "SSCI INVESTORS" has the meaning specified in the Preliminary
         Statements.

                  "STANDBY LETTER OF CREDIT" means any Letter of Credit issued
         under the Letter of Credit Sub-Facility, other than a Trade Letter of
         Credit.

                  "SUBAGENT" has the meaning specified in Section 19(b) of the
         Domestic Security Agreement.

                  Credit Agreement - Schedule II - Definitions
<PAGE>   159

                                       43

                  "SUBORDINATED DEBT" means any Senior Subordinated Notes and
         any other Debt of any Loan Party that is subordinated to the
         Obligations of such Loan Party under the Loan Documents on, and that
         otherwise contains, terms and conditions satisfactory to the Required
         Lenders.

                  "SUBORDINATED DEBT DOCUMENTS" means the Senior Subordinated
         Note Indenture, the Senior Subordinated Notes and all other agreements,
         indentures and instruments pursuant to which Subordinated Debt is
         issued, in each case as amended, to the extent permitted under the Loan
         Documents.

                  "SUBSIDIARY" of any Person means any corporation, partnership,
         joint venture, limited liability company, trust or estate of which (or
         in which) more than 50% of the issued and outstanding capital stock or
         other ownership interests having ordinary voting power to elect a
         majority of the Board of Directors or other managers of such
         corporation or other entity (irrespective of whether at the time
         interests of any other class or classes of such entity shall or might
         have voting power upon the occurrence of any contingency) is at the
         time directly or indirectly owned or controlled by such Person, by such
         Person and one or more of its other Subsidiaries or by one or more of
         such Person's other Subsidiaries.

                  "SUBSIDIARY GUARANTORS" means each Domestic Subsidiary
         Guarantor and Offshore Subsidiary Guarantor.

                  "SURVIVING DEBT" means Debt of each Loan Party and its
         Subsidiaries outstanding immediately before and after giving effect to
         the Transaction on the Initial Closing Date.

                  "SWING LINE ADVANCE" means an advance made by (a) a Swing Line
         Lender pursuant to Section 2.01(d) or (b) any Revolving Credit Lender
         pursuant to Section 2.02(b).

                  "SWING LINE LENDER" means the Domestic Swing Line Lender and
         each Offshore Swing Line Lender.

                  "SWING LINE BORROWING" means a borrowing consisting of a Swing
         Line Advance made by a Swing Line Lender pursuant to Section 2.01(d) or
         the Revolving Credit Lenders pursuant to Section 2.02(b).

                  "SWING LINE SUB-FACILITY" has the meaning specified in Section
         2.01(d).

                  "SYNDICATION AGENT" has the meaning specified in the recitals
         of parties to this Agreement

                  Credit Agreement - Schedule II - Definitions
<PAGE>   160

                                       44

                  "TAXES" has the meaning specified in Section 2.12(a).

                  "TERM A ADVANCE" has the meaning specified in Section
         2.01(a)(i).

                  "TERM A BORROWING" means a borrowing consisting of
         simultaneous Term A Advances of the same Type made by the Term A
         Lenders.

                  "TERM A COMMITMENT" means, with respect to any Term A Lender
         at any time, the amount set forth opposite such Lender's name on
         Schedule I hereto under the caption "Term A Commitment" or, if such
         Lender has entered into one or more Assignment and Acceptances, set
         forth for such Lender in the Register maintained by the Administrative
         Agent pursuant to Section 8.07(d) as such Lender's "Term A Commitment",
         as such amount may be reduced at or prior to such time pursuant to
         Section 2.05.

                  "TERM A FACILITY" means, at any time, the aggregate amount of
         the Term A Lenders' Term A Commitments at such time. Pursuant to the
         Existing Credit Agreement, the Term A Facility was restored in full
         upon repayment of outstanding Term A Advances with the proceeds of the
         Senior Subordinated Notes. As of the date hereof, the Term A Facility
         is equal to $75,000,000.

                  "TERM A LENDER" means any Lender that has a Term A Commitment.

                  "TERM A NOTE" means a promissory note of the Domestic Borrower
         payable to the order of any Term A Lender, in substantially the form of
         Exhibit A-2 hereto, evidencing the indebtedness of the Domestic
         Borrower to such Lender resulting from the Term A Advances made by such
         Lender, as amended.

                  "TERM ADVANCE" means a Term A Advance or an Offshore
         Acquisition Advance.

                  "TERM B ADVANCE" has the meaning specified in Section 2.01(b)
         of the Existing Credit Agreement.

                  "TERM B BORROWING" means a borrowing consisting of
         simultaneous Term B Advances of the same Type made by the Term B
         Lenders.

                  "TERM B COMMITMENT" has the meaning specified in the Existing
         Credit Agreement.

                  "TERM B FACILITY" has the meaning specified in the Existing
         Credit Agreement.

                  Credit Agreement - Schedule II - Definitions
<PAGE>   161
                                       45

                  "TERM B LENDER" has the meaning specified in the Existing
         Credit Agreement.

                  "TERM B NOTE" has the meaning specified in the Existing Credit
         Agreement.

                  "TERM BORROWING" means any Term A Borrowing or Offshore
         Acquisition Borrowing.

                  "TERM COMMITMENT" means any Term A Commitment or Offshore
         Acquisition Commitment.

                  "TERM FACILITY" means the Term A Facility or Offshore
         Acquisition Facility.

                  "TERM LENDER" means any Term A Lender or Offshore Acquisition
         Lender.

                  "TERM NOTE" means any Term A Note or Offshore Acquisition
         Note.

                  "TERMINATION DATE" means the earlier of (a) the date of
         termination in whole of the Revolving Credit Commitments, the Letter of
         Credit Commitment and the Term Commitments pursuant to Section 2.05 or
         6.01 and (b) (i) for purposes of the Revolving Credit Facility and the
         Letter of Credit Sub-Facility, the sixth anniversary of the Initial
         Closing Date, (ii) for purposes of the Term A Facility, the sixth
         anniversary of the Initial Closing Date and (iii) for purposes of the
         Offshore Acquisition Facility, the sixth anniversary of the Initial
         Closing Date.

                  "TOTAL DEBT/EBITDA RATIO" means, at any date of determination,
         the ratio of (a) Consolidated total Debt for Borrowed Money of the
         Domestic Borrower and its Subsidiaries as at the end of the most
         recently ended fiscal quarter of the Domestic Borrower for which
         financial statements are required to be delivered to the Lender Parties
         pursuant to Section 5.03(b) or (c), as the case may be, to (b) Pro
         Forma Consolidated EBITDA of the Domestic Borrower and its Subsidiaries
         for such fiscal quarter and the immediately preceding three fiscal
         quarters.

                  "TRADE LETTER OF CREDIT" means any Letter of Credit that is
         issued under the Letter of Credit Sub-Facility for the benefit of a
         supplier of Inventory to the Domestic Borrower or any of its
         Subsidiaries to effect payment for such Inventory, the conditions to
         drawing under which include the presentation to the Issuing Bank of
         negotiable bills of lading, invoices and related documents sufficient,
         in the judgment of the Issuing Bank, to create a valid and perfected
         lien on or security interest in such Inventory, bills of lading,
         invoices and related documents in favor of the Issuing Bank.

                  Credit Agreement - Schedule II - Definitions
<PAGE>   162

                                       46

                  "TRADEMARKS" has the meaning specified in Section 1(f)(ii) of
         the Domestic Security Agreement.

                  "TRADE SECRETS" has the meaning specified in Section 1(f)(iv)
         of the Domestic Security Agreement.

                  "TRANSACTION" means the Redemption, the Acquisition, the Offer
         to Purchase and the other transactions contemplated by the Transaction
         Documents.

                  "TRANSACTION DOCUMENTS" means, collectively, the Loan
         Documents and the Related Documents.

                  "TYPE" refers to the distinction between Advances bearing
         interest at the Base Rate and Advances bearing interest at the
         Eurodollar Rate.

                  "UNUSED REVOLVING CREDIT COMMITMENT" means, with respect to
         any Revolving Credit Lender at any time, (a) such Lender's Revolving
         Credit Commitment at such time minus (b) the sum of (i) the aggregate
         principal amount of all Revolving Credit Advances, Swing Line Advances
         (outstanding Offshore Swing Line Advances being deemed to be
         outstanding for these purposes in their US Dollar Equivalent as of any
         date of determination) and Letter of Credit Advances made by such
         Lender (in its capacity as a Lender) and outstanding at such time plus
         (ii) such Lender's Pro Rata Share of (A) the aggregate Available Amount
         of all Letters of Credit outstanding at such time, (B) the aggregate
         principal amount of all Letter of Credit Advances made by the Issuing
         Bank pursuant to Section 2.03(c) and outstanding at such time and (C)
         without duplication of amounts under clause (i) above, the aggregate
         principal amount of all Swing Line Advances made by the Swing Line
         Lenders pursuant to Section 2.01(d) and outstanding at such time
         (outstanding Offshore Swing Line Advances being deemed to be
         outstanding for these purposes in their US Dollar Equivalent as of any
         date of determination).

                  "US DOLLARS" or "US$" or "DOLLARS" or "$" mean the freely
         transferable lawful money of the United States of America (expressed in
         dollars).

                  "VOTING EQUITY INTERESTS" has the meaning specified in Section
         1(d)(iii) of the Domestic Security Agreement.

                  "VOTING INTERESTS" means shares of capital stock issued by a
         corporation, or equivalent Equity Interests in any other Person, the
         holders of which are ordinarily, in the absence of contingencies,
         entitled to vote for the election of directors (or persons performing
         similar functions) of such Person, even if the right so to vote has
         been suspended by the happening of such a contingency.

                  Credit Agreement - Schedule II - Definitions
<PAGE>   163

                                       47

                  "WELFARE PLAN" means a welfare plan, as defined in Section
         3(1) of ERISA, that is maintained for employees of any Loan Party or in
         respect of which any Loan Party could have liability.

                  "WITHDRAWAL LIABILITY" has the meaning specified in Part I of
         Subtitle E of Title IV of ERISA.

                  Credit Agreement - Schedule II - Definitions

<PAGE>   164

                                  SCHEDULE III

                            OTHER APPROVED COUNTRIES

1.       Andorra
2.       Austria
3.       Belgium
4.       Denmark
5.       Finland
6.       France
7.       Germany
8.       Greece
9.       Greenland
10.      Iceland
11.      Ireland
12.      Italy
13.      Liechtenstein
14.      Luxembourg
15.      Monaco
16.      Netherlands
17.      Norway
18.      Portugal
19.      San Marino
20.      Spain
21.      Sweden
22.      Switzerland
23.      United Kingdom of Great Britain and Northern Ireland
24.      Vatican City

              Credit Agreement - Schedule III - Approved Countries
<PAGE>   165

                                 OTHER SCHEDULES

                  (From Existing Credit Agreement, as amended)

<TABLE>
<S>                       <C>
Schedule 4.01(a)  -        Holders of Domestic Borrower Equity Interests
Schedule 4.01(b)  -        Subsidiaries
Schedule 4.01(c)  -        Consents
Schedule 4.01(d)  -        Authorizations, Approvals, Actions, Notices and Filings
Schedule 4.01(f)  -        Disclosed Litigation
Schedule 4.01(p)  -        Plans, Multiemployer Plans and Welfare Plans
Schedule 4.01(q)  -        Environmental Compliance
Schedule 4.01(r)  -        Open Years; Unpaid Tax Liabilities; Adjusted Tax Bases
Schedule 4.01(t)  -        Existing Debt
Schedule 4.01(u)  -        Surviving Debt
Schedule 4.01(v)  -        Liens
Schedule 4.01(w)  -        Owned Real Property
Schedule 4.01(x)  -        Leased Real Property
Schedule 4.01(y)  -        Investments
Schedule 4.01(z)  -        Intellectual Property
Schedule 4.01(aa) -        Material Contracts
</TABLE>

                       Credit Agreement - Other Schedules
<PAGE>   166

                                                                     EXHIBIT A-1
                                                         TO THE CREDIT AGREEMENT

               FORM OF AMENDED AND RESTATED REVOLVING CREDIT NOTE

US$_______________                                      Dated: December 30, 1999

                  FOR VALUE RECEIVED, the undersigned, SOVEREIGN SPECIALTY
CHEMICALS, INC., a Delaware corporation (the "DOMESTIC BORROWER"), HEREBY
PROMISES TO PAY _________________________ or its registered assigns (the
"LENDER") for the account of its Applicable Lending Office (as defined in the
Credit Agreement referred to below) the aggregate principal amount of the
Revolving Credit Advances, the Letter of Credit Advances and the Swing Line
Advances (each as defined below) owing to the Lender by the Domestic Borrower
pursuant to the Credit Agreement dated as of December 29, 1999, as amended by a
Letter Amendment dated as of February 16, 2000, and an Amendment and Waiver
Letter dated as of February 29, 2000, and as amended and restated by the Amended
and Restated Credit Agreement dated as of April 6, 2000 (as further amended,
amended and restated, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"; terms defined therein, unless otherwise defined herein,
being used herein as therein defined), each among the Domestic Borrower, the
Lender and certain other lender parties party thereto, and The Chase Manhattan
Bank, as Administrative Agent for the Lender and such other lender parties on
the Termination Date.

                  The Domestic Borrower promises to pay to the Lender interest
on the unpaid principal amount of each Revolving Credit Advance, Letter of
Credit Advance and Swing Line Advance from the date of such Revolving Credit
Advance, Letter of Credit Advance or Swing Line Advance, as the case may be,
until such principal amount is paid in full, at such interest rates, and payable
at such times, as are specified in the Credit Agreement.

                  Both principal and interest are payable in lawful money of the
United States of America to the Administrative Agent at the Administrative
Agent's Account in same day funds. Each Revolving Credit Advance, Letter of
Credit Advance and Swing Line Advance owing to the Lender by the Domestic
Borrower and the maturity thereof, and all payments made on account of principal
thereof, shall be recorded by the Lender and, prior to any transfer hereof,
endorsed on the grid attached hereto, which is part of this Promissory Note;
provided, however, that the failure of the Lender to make any such recordation
or endorsement shall not affect the Obligations of the Domestic Borrower under
this Promissory Note.

                         Credit Agreement - Exhibit A-1

<PAGE>   167

                                        2

                  This Promissory Note is one of the Revolving Credit Notes
referred to in, and is entitled to the benefits of, the Credit Agreement. The
Credit Agreement, among other things, (i) provides for the making of advances
(variously, the "REVOLVING CREDIT ADVANCES", the "LETTER OF CREDIT ADVANCES" or
the "SWING LINE Advances") by the Lender to or for the benefit of the Domestic
Borrower from time to time in an aggregate amount not to exceed at any time
outstanding the U.S. dollar amount first above mentioned, the indebtedness of
the Domestic Borrower resulting from each such Revolving Credit Advance, Letter
of Credit Advance and Swing Line Advance being evidenced by this Promissory
Note, and (ii) contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified. The obligations of the Domestic Borrower under this
Promissory Note and the other Loan Documents, and the obligations of the other
Loan Parties under the Loan Documents, are secured by the Collateral as provided
in the Loan Documents.

                  This Promissory Note and the obligations evidenced hereby may
not be transferred or assigned in whole or in part, except pursuant to and in
accordance with the provisions of Section 8.07 of the Credit Agreement,
including, without limitation, the requirement that the Administrative Agent
shall have accepted and recorded each such transfer or assignment in the
Register.

                                    SOVEREIGN SPECIALTY CHEMICALS, INC.

                                    By__________________________________________
                                      Title:

                         Credit Agreement - Exhibit A-1

<PAGE>   168

                       ADVANCES AND PAYMENTS OF PRINCIPAL

<TABLE>
<CAPTION>

====================================================================================================================
                                                  AMOUNT OF                 UNPAID
                          AMOUNT OF             PRINCIPAL PAID            PRINCIPAL                NOTATION
       DATE                ADVANCE                OR PREPAID               BALANCE                  MADE BY
====================================================================================================================
<S>                      <C>                    <C>                      <C>                     <C>

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</TABLE>

                         Credit Agreement - Exhibit A-1

<PAGE>   169

                                                                     EXHIBIT A-2
                                                         TO THE CREDIT AGREEMENT

                    FORM OF AMENDED AND RESTATED TERM A NOTE

US$_______________                                      Dated: December 30, 1999

                  FOR VALUE RECEIVED, the undersigned, SOVEREIGN SPECIALTY
CHEMICALS, INC., a Delaware corporation (the "DOMESTIC BORROWER"), HEREBY
PROMISES TO PAY _________________________ or its registered assigns (the
"LENDER") for the account of its Applicable Lending Office (as defined in the
Credit Agreement referred to below) the aggregate principal amount of the Term A
Advances (as defined below) owing to the Lender by the Domestic Borrower
pursuant to the Credit Agreement dated as of December 29, 1999, as amended by a
Letter Amendment dated as of February 16, 2000, and an Amendment and Waiver
Letter dated as of February 29, 2000, and as amended and restated by the Amended
and Restated Credit Agreement dated as of April 6, 2000 (as further amended,
amended and restated, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"; terms defined therein, unless otherwise defined herein,
being used herein as therein defined), each among the Domestic Borrower, the
Lender and certain other lender parties party thereto, and The Chase Manhattan
Bank, as Administrative Agent for the Lender and such other lender parties on
the dates and in the amounts specified in the Credit Agreement.

                  The Domestic Borrower promises to pay to the Lender interest
on the unpaid principal amount of each Term A Advance from the date of such Term
A Advance until such principal amount is paid in full, at such interest rates,
and payable at such times, as are specified in the Credit Agreement.

                  Both principal and interest are payable in lawful money of the
United States of America to the Administrative Agent, at the Administrative
Agent's Account in same day funds. The Term A Advances owing to the Lender by
the Domestic Borrower and the maturity thereof, and all payments made on account
of principal thereof, shall be recorded by the Lender and, prior to any transfer
hereof, endorsed on the grid attached hereto, which is part of this Promissory
Note; provided, however, that the failure of the Lender to make any such
recordation or endorsement shall not affect the Obligations of the Domestic
Borrower under this Promissory Note.

                  This Promissory Note is one of the Term A Notes referred to
in, and is entitled to the benefits of, the Credit Agreement. The Credit
Agreement, among other things, (i) provides for the making of Term A Advances by
the Lender to the Domestic Borrower in an aggregate

                         Credit Agreement - Exhibit A-2
<PAGE>   170

                                        2

amount not to exceed the U.S. dollar amount first above mentioned, the
indebtedness of the Domestic Borrower resulting from such Term A Advances being
evidenced by this Promissory Note, and (ii) contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified. The obligations of the Domestic Borrower
under this Promissory Note and the other Loan Documents, and the obligations of
the other Loan Parties under the Loan Documents, are secured by the Collateral
as provided in the Loan Documents.

                  This Promissory Note and the obligations evidenced hereby may
not be transferred or assigned in whole or in part, except pursuant to and in
accordance with the provisions of Section 8.07 of the Credit Agreement,
including, without limitation, the requirement that the Administrative Agent
shall have accepted and recorded each such transfer or assignment in the
Register.

                                   SOVEREIGN SPECIALTY CHEMICALS, INC.

                                   By___________________________________________
                                     Title:

                         Credit Agreement - Exhibit A-2
<PAGE>   171

                       ADVANCES AND PAYMENTS OF PRINCIPAL

<TABLE>
<CAPTION>

====================================================================================================================
                                                  AMOUNT OF                 UNPAID
                          AMOUNT OF             PRINCIPAL PAID            PRINCIPAL                NOTATION
       DATE                ADVANCE                OR PREPAID               BALANCE                  MADE BY
====================================================================================================================
<S>                      <C>                    <C>                      <C>                     <C>

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

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</TABLE>

                        Credit Agreement - Exhibit A-2
<PAGE>   172

                                                                     EXHIBIT A-3
                                                         TO THE CREDIT AGREEMENT

                        FORM OF OFFSHORE ACQUISITION NOTE

US$_______________                                      Dated: ________, ____

                  FOR VALUE RECEIVED, the undersigned, [NAME OF OFFSHORE
BORROWER], a company organized under the laws of [Name of country of
organization] (the "OFFSHORE BORROWER"), HEREBY PROMISES TO PAY
_________________________ or its registered assigns (the "LENDER") for the
account of its Applicable Lending Office (as defined in the Credit Agreement
referred to below) the aggregate principal amount of the Offshore Acquisition
Advances (as defined below) owing to the Lender by the Offshore Borrower
pursuant to the Amended and Restated Credit Agreement dated as of April 6, 2000
(as amended, amended and restated, supplemented or otherwise modified from time
to time, the "CREDIT AGREEMENT"; terms defined therein, unless otherwise defined
herein, being used herein as therein defined) among the Domestic Borrower, the
Offshore Borrower, the Lender and certain other lender parties party thereto,
and The Chase Manhattan Bank, as Administrative Agent for the Lender and such
other lender parties on the dates and in the amounts specified in the Credit
Agreement.

                  The Offshore Borrower promises to pay to the Lender interest
on the unpaid principal amount of each Offshore Acquisition Advance from the
date of such Offshore Acquisition Advance until such principal amount is paid in
full, at such interest rates, and payable at such times, as are specified in the
Credit Agreement.

                  Both principal and interest are payable in lawful money of the
United States of America to the Administrative Agent, at the Administrative
Agent's Account in same day funds. The Offshore Acquisition Advances owing to
the Lender by the Offshore Borrower and the maturity thereof, and all payments
made on account of principal thereof, shall be recorded by the Lender and, prior
to any transfer hereof, endorsed on the grid attached hereto, which is part of
this Promissory Note; provided, however, that the failure of the Lender to make
any such recordation or endorsement shall not affect the Obligations of the
Offshore Borrower under this Promissory Note.

                  This Promissory Note is one of the Offshore Acquisition Notes
referred to in, and is entitled to the benefits of, the Credit Agreement. The
Credit Agreement, among other things, (i) provides for the making Offshore
Acquisition Advances by the Lender to the Offshore Borrower in an aggregate
amount not to exceed the U.S. dollar amount first above mentioned, the

                         Credit Agreement - Exhibit A-3

<PAGE>   173

                                        2

indebtedness of the Offshore Borrower resulting from such Offshore Acquisition
Advances being evidenced by this Promissory Note, and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events and also for prepayments on account of principal hereof prior to the
maturity hereof upon the terms and conditions therein specified. The obligations
of the Offshore Borrower under this Promissory Note and the other Loan
Documents, and the obligations of the other Loan Parties under the Loan
Documents, are secured by the Collateral as provided in the Loan Documents.

                  This Promissory Note and the obligations evidenced hereby may
not be transferred or assigned in whole or in part, except pursuant to and in
accordance with the provisions of Section 8.07 of the Credit Agreement,
including, without limitation, the requirement that the Administrative Agent
shall have accepted and recorded each such transfer or assignment in the
Register.

                                     [NAME OF OFFSHORE BORROWER]

                                     By_________________________________________
                                       Title:

                         Credit Agreement - Exhibit A-3

<PAGE>   174

                       ADVANCES AND PAYMENTS OF PRINCIPAL

<TABLE>
<CAPTION>

====================================================================================================================
                                                  AMOUNT OF                 UNPAID
                          AMOUNT OF             PRINCIPAL PAID            PRINCIPAL                NOTATION
       DATE                ADVANCE                OR PREPAID               BALANCE                  MADE BY
====================================================================================================================
<S>                      <C>                    <C>                      <C>                     <C>

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</TABLE>

                         Credit Agreement - Exhibit A-3
<PAGE>   175

                                                                     EXHIBIT A-4
                                                         TO THE CREDIT AGREEMENT

                        FORM OF OFFSHORE SWING LINE NOTE

[Applicable Currency]                                   Dated: ________ __, ____

                  FOR VALUE RECEIVED, the undersigned, [NAME OF OFFSHORE
BORROWER], a company organized under the laws of [name of country of
organization] ___________ (the "OFFSHORE BORROWER"), HEREBY PROMISES TO PAY
_________________________ or its registered assigns (the "LENDER") for the
account of its Applicable Lending Office (as defined in the Credit Agreement
referred to below) the aggregate principal amount of the Offshore Swing Line
Advances (as defined below) owing to the Lender by the Offshore Borrower
pursuant to the Amended and Restated Credit Agreement dated as of April 6, 2000
(as further amended, amended and restated, supplemented or otherwise modified
from time to time, the "CREDIT AGREEMENT"; terms defined therein, unless
otherwise defined herein, being used herein as therein defined), among Sovereign
Specialty Chemicals, Inc., the Lender and certain other lender parties party
thereto, and The Chase Manhattan Bank, as Administrative Agent and Offshore
Currency Agent for the Lender and such other lender parties on the Termination
Date.

                  The Offshore Borrower promises to pay to the Lender interest
on the unpaid principal amount of each Offshore Swing Line Advance from the date
of such Offshore Swing Line Advance, until such principal amount is paid in
full, at such interest rates, and payable at such times, as are specified in the
Credit Agreement and the Joinder Agreement entered into by the Lender.

                  Both principal and interest are payable in lawful money of the
[jurisdiction of the Applicable Currency] to the Offshore Currency Agent at the
Offshore Currency Agent's Account, designated by the Offshore Currency Agent
pursuant to the Credit Agreement, in same day funds. Each Offshore Swing Line
Advance owing to the Lender by the Offshore Borrower and the maturity thereof,
and all payments made on account of principal thereof, shall be recorded by the
Lender and, prior to any transfer hereof, endorsed on the grid attached hereto,
which is part of this Promissory Note; provided, however, that the failure of
the Lender to make any such recordation or endorsement shall not affect the
Obligations of the Offshore Borrower under this Promissory Note.

                  This Promissory Note is one of the Offshore Swing Line Notes
referred to in, and is entitled to the benefits of, the Credit Agreement. The
Credit Agreement, among other things,

                         Credit Agreement - Exhibit A-4
<PAGE>   176

                                        2

(i) provides for the making of advances (the "OFFSHORE SWING LINE ADVANCES") by
the Lender to or for the benefit of the Offshore Borrower from time to time in
an aggregate amount not to exceed at any time outstanding the Applicable Swing
Line Sub-Limit, the indebtedness of the Offshore Borrower resulting from each
such Offshore Swing Line Advance being evidenced by this Promissory Note, and
(ii) contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified. The obligations of the Offshore Borrower under this
Promissory Note and the other Loan Documents, and the obligations of the other
Loan Parties under the Loan Documents, are secured by the Collateral as provided
in the Loan Documents.

                  This Promissory Note and the obligations evidenced hereby may
not be transferred or assigned in whole or in part, except pursuant to and in
accordance with the provisions of Section 8.07 of the Credit Agreement,
including, without limitation, the requirement that the Administrative Agent
shall have accepted and recorded each such transfer or assignment in the
Register.

                                   [NAME OF OFFSHORE BORROWER]

                                   By___________________________________________
                                     Title:

                         Credit Agreement - Exhibit A-4

<PAGE>   177

                       ADVANCES AND PAYMENTS OF PRINCIPAL

<TABLE>
<CAPTION>

====================================================================================================================
                                                  AMOUNT OF                 UNPAID
                          AMOUNT OF             PRINCIPAL PAID            PRINCIPAL                NOTATION
       DATE                ADVANCE                OR PREPAID               BALANCE                  MADE BY
====================================================================================================================
<S>                      <C>                    <C>                      <C>                     <C>

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</TABLE>

                         Credit Agreement - Exhibit A-4

<PAGE>   178

                                                                     EXHIBIT B-1
                                                         TO THE CREDIT AGREEMENT

                           FORM OF NOTICE OF BORROWING

                                     [Date]

The Chase Manhattan Bank,
  as Administrative Agent
  under the Credit Agreement
  referred to below
The Loan and Agency Services Group
1 Chase Manhattan Plaza
New York, NY 10081

                  Attention:  _______________

Ladies and Gentlemen:

                  The undersigned, [Sovereign Specialty Chemicals, Inc.][Name of
applicable Offshore Borrower], refers to the Amended and Restated Credit
Agreement dated as of April 6, 2000 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT";
the terms defined therein being used herein as therein defined), among the
undersigned, [Sovereign Specialty Chemicals, Inc.,] the Lender Parties party
thereto, and The Chase Manhattan Bank, as Administrative Agent for the Lender
Parties, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of
the Credit Agreement that the undersigned hereby requests a Borrowing under the
Credit Agreement, and in that connection sets forth below the information
relating to such Borrowing (the "PROPOSED BORROWING") as required by Section
2.02(a) of the Credit Agreement:

                   (i) The Business Day of the Proposed Borrowing is _________
               __, ____.

                   (ii) The Facility under which the Proposed Borrowing is
         requested is the _______________ Facility.

                   (iii) The Type of Advances comprising the Proposed Borrowing
         is [Base Rate Advances] [Eurodollar Rate Advances].

                   (iv) The aggregate amount of the Proposed Borrowing is
         $__________.

                         Credit Agreement - Exhibit B-1
<PAGE>   179

                                       2

                   [(v) The initial Interest Period for each Eurodollar Rate
         Advance made as part of the Proposed Borrowing is __________ month[s].]

                   (vi) [No portion of the Proposed Borrowing shall be used to
         pay the purchase price of a Domestic Permitted Acquisition or Offshore
         Permitted Acquisition.] [Set forth on Annex I hereto is a detail of the
         consideration proposed to be paid for a [Domestic][Offshore] Permitted
         Acquisition (a portion of which consideration is constituted by a
         portion of the Proposed Borrowing).]

                   [(vii) the Applicable Borrower's Account to which the
         proceeds of the Proposed Borrowing should be sent is:________________.]

                   The undersigned hereby certifies that the following
         statements are true on the date hereof, and will be true on the date of
         the Proposed Borrowing:

                   (A) The representations and warranties contained in each Loan
         Document are correct on and as of the date of the Proposed Borrowing,
         before and after giving effect to the Proposed Borrowing and to the
         application of the proceeds therefrom, as though made on and as of such
         date, other than any such representations or warranties that, by their
         terms, refer to a specific date other than the date of the Proposed
         Borrowing, in which case, as of such specific date.

                   (B) No Default has occurred and is continuing, or would
         result from such Proposed Borrowing or from the application of the
         proceeds therefrom.

                   Delivery of an executed counterpart of this Notice of
         Borrowing by telecopier shall be effective as delivery of an original
         executed counterpart of this Notice of Borrowing.

                                            Very truly yours,

                                            SOVEREIGN SPECIALTY CHEMICALS, INC.
                                            [NAME OF OFFSHORE BORROWER]

                                            By__________________________________
                                              Title:

                         Credit Agreement - Exhibit B-1
<PAGE>   180

                                                                         ANNEX I
                                                      TO THE NOTICE OF BORROWING

                         [NAME OF PERMITTED ACQUISITION]

1.       Purchase Price:       $_________

         which shall be constituted by:

                  Cash from the Proposed Borrowing    $___________
                  Cash from other Sources                $___________
                  Cash Equivalents totaling:             $___________

1.       Cash Equivalents referred to above:

                         Credit Agreement - Exhibit B-1
<PAGE>   181

                                                                     EXHIBIT B-2
                                                         TO THE CREDIT AGREEMENT

                     FORM OF NOTICE OF SWING LINE BORROWING

                                     [Date]

The Chase Manhattan Bank,
  as Administrative Agent and
  as Offshore Currency Agent
  under the Credit Agreement
  referred to below

The Loan and Agency Services Group
1 Chase Manhattan Plaza
New York, NY 10081

                  Attention:

Ladies and Gentlemen:

                  The undersigned, [Sovereign Specialty Chemicals, Inc.][Name of
applicable Offshore Borrower], refers to the Amended and Restated Credit
Agreement dated as of April 6, 2000 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT";
the terms defined therein being used herein as therein defined), among the
undersigned, [Sovereign Specialty Chemicals, Inc.,] the Lender Parties party
thereto, and The Chase Manhattan Bank, as Administrative Agent for the Lender
Parties, and hereby gives you notice, irrevocably, pursuant to Section 2.02(b)
of the Credit Agreement that the undersigned hereby requests a Swing Line
Borrowing under the Credit Agreement, and in that connection sets forth below
the information relating to such Borrowing (the "PROPOSED BORROWING") as
required by Section 2.02(b) of the Credit Agreement:

                (i) The Business Day of the Proposed Borrowing is       ,      .

               (ii) The Applicable Currency of the Proposed Borrowing is       .
                    The aggregate amount of the Proposed Borrowing is          .

              (iii) The maturity of the Proposed Borrowing is      ,
                    (in the case of any Swing Line Borrowing in U.S. Dollars,
                    this Maturity Date shall not be later than seven days after
                    the date set forth in clause (i) above).

                         Credit Agreement - Exhibit B-2

<PAGE>   182

                  (iv) the Applicable Borrower's Account to which the proceeds
         of the Proposed Borrowing should be sent is:                          .

                  The undersigned hereby certifies that the following statements
         are true on the date hereof, and will be true on the date of the
         Proposed Borrowing:

                  (A) The representations and warranties contained in each Loan
         Document are correct on and as of the date of the Proposed Borrowing,
         before and after giving effect to the Proposed Borrowing and to the
         application of the proceeds therefrom, as though made on and as of such
         date, other than any such representations or warranties that, by their
         terms, refer to a specific date other than the date of the Proposed
         Borrowing, in which case, as of such specific date.

                  (B) No Default has occurred and is continuing, or would result
         from such Proposed Borrowing or from the application of the proceeds
         therefrom.

                  Delivery of an executed counterpart of this Notice of Swing
Line Borrowing by telecopier shall be effective as delivery of an original
executed counterpart of this Notice of Swing Line Borrowing.

                                       Very truly yours,

                                       SOVEREIGN SPECIALTY CHEMICALS, INC.
                                       [NAME OF OFFSHORE BORROWER]

                                       By
                                         ---------------------------------------
                                       Title:

                         Credit Agreement - Exhibit B-2

<PAGE>   183

                                                                       EXHIBIT C
                                                         TO THE CREDIT AGREEMENT

                        FORM OF ASSIGNMENT AND ACCEPTANCE

                  Reference is made to the Amended and Restated Credit Agreement
dated as of April 6, 2000 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT"; the terms defined
therein, unless otherwise defined herein, being used herein as therein defined),
among Sovereign Specialty Chemicals, Inc., a Delaware corporation (the "DOMESTIC
BORROWER"), the Offshore Borrowers party thereto, the Lender Parties party
thereto, and The Chase Manhattan Bank, as Administrative Agent for the Lender
Parties.

                  Each "Assignor" referred to on Schedule 1 hereto (each, an
"ASSIGNOR") and each "Assignee" referred to on Schedule 1 hereto (each, an
"ASSIGNEE") agrees severally with respect to all information relating to it and
its assignment hereunder and on Schedule 1 hereto as follows:

                  1. Such Assignor hereby sells and assigns, without recourse
except as to the representations and warranties made by it herein, to such
Assignee, and such Assignee hereby purchases and assumes from such Assignor, an
interest in and to such Assignor's rights and obligations under the Credit
Agreement as of the date hereof equal to the percentage interest specified on
Schedule 1 hereto of all outstanding rights and obligations under the Facility
or Facilities specified on Schedule 1 hereto. After giving effect to such sale
and assignment, such Assignee's Commitments and the amount of the Advances owing
to such Assignee will be as set forth on Schedule 1 hereto.

                  2. Such Assignor (i) represents and warrants that its name set
forth on Schedule 1 hereto is its legal name, that it is the legal and
beneficial owner of the interest or interests being assigned by it hereunder and
that such interest or interests are free and clear of any adverse claim; (ii)
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
any Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any lien
or security interest created or purported to be created under or in connection
with, any Loan Document or any other instrument or document furnished pursuant
thereto; (iii) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of any Loan Party or the performance or
observance by any Loan Party of any of its obligations under any Loan Document
or any other instrument or document furnished pursuant thereto; and (iv)
attaches the Note or Notes held by such Assignor and requests that the
Administrative Agent exchange such Note or Notes for a new Note or Notes payable
to the order of such Assignee in an amount equal

                          Credit Agreement - Exhibit C
<PAGE>   184

                                       2

to the Commitments assumed by such Assignee pursuant hereto or new Notes payable
to the order of such Assignee in an amount equal to the Commitments assumed by
such Assignee pursuant hereto and such Assignor in an amount equal to the
Commitments retained by such Assignor under the Credit Agreement, respectively,
as specified on Schedule 1 hereto.

                  3. Such Assignee (i) confirms that it has received a copy of
the Credit Agreement and the Collateral Sharing Agreement, together with copies
of the financial statements referred to in Section 4.01 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (ii) agrees
that it will, independently and without reliance upon any Agent, any Assignor or
any other Lender Party and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iii) represents and
warrants that its name set forth on Schedule 1 hereto is its legal name; (iv)
confirms that it is an Eligible Assignee; (v) appoints and authorizes each Agent
to take such action as agent on its behalf and to exercise such powers and
discretion under the Loan Documents as are delegated to such Agent by the terms
thereof, together with such powers and discretion as are reasonably incidental
thereto; (vi) agrees that it will be bound by the provisions of the Credit
Agreement and the Collateral Sharing Agreement and will perform in accordance
with their terms all of the obligations that by the terms of the Credit
Agreement and the Collateral Sharing Agreement are required to be performed by
it as a Lender Party; and (vii) attaches any U.S. Internal Revenue Service or
other forms required under Section 2.12 of the Credit Agreement.

                  4. Following the execution of this Assignment and Acceptance,
it will be delivered to the Administrative Agent for acceptance and recording by
the Administrative Agent. The effective date for this Assignment and Acceptance
(the "EFFECTIVE DATE") shall be the date of acceptance hereof by the
Administrative Agent, unless otherwise specified on Schedule 1 hereto.

                  5. Upon such acceptance and recording by the Administrative
Agent, as of the Effective Date, (i) such Assignee shall be a party to the
Credit Agreement and the Collateral Sharing Agreement and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a
Lender Party thereunder and (ii) such Assignor shall, to the extent provided in
this Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement and the Collateral Sharing Agreement
(other than its rights and obligations under the Loan Documents that are
specified under the terms of such Loan Documents to survive the payment in full
of the Obligations of the Loan Parties under the Loan Documents to the extent
any claim thereunder relates to an event arising prior to the Effective Date of
this Assignment and Acceptance) and, if this Assignment and Acceptance covers
all of the remaining portion of the rights and obligations of such Assignor
under the Credit Agreement, such Assignor shall cease to be a party thereto.

                          Credit Agreement - Exhibit C

<PAGE>   185
                                       3

                  6. Upon such acceptance and recording by the Administrative
Agent, from and after the Effective Date, the Administrative Agent shall make
all payments under the Credit Agreement and the Notes in respect of the interest
assigned hereby (including, without limitation, all payments of principal,
interest and commitment fees with respect thereto) to such Assignee. Such
Assignor and such Assignee shall make all appropriate adjustments in payments
under the Credit Agreement and the Notes for periods prior to the Effective Date
directly between themselves.

                  7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.

                  8. This Assignment and Acceptance may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of Schedule 1 to this Assignment and Acceptance by
telecopier shall be effective as delivery of an original executed counterpart of
this Assignment and Acceptance.

                  IN WITNESS WHEREOF, each Assignor and each Assignee have
caused Schedule 1 to this Assignment and Acceptance to be executed by their
officers thereunto duly authorized as of the date specified thereon.

                          Credit Agreement - Exhibit C

<PAGE>   186

                                   SCHEDULE 1
                                       TO
                            ASSIGNMENT AND ACCEPTANCE
<TABLE>
<S>                                                        <C>         <C>       <C>         <C>         <C>
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
ASSIGNORS:
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
REVOLVING CREDIT FACILITY
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Percentage interest assigned                                   %         %           %           %           %
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Revolving Credit Commitment assigned                  $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Aggregate outstanding principal amount of
         Revolving Credit Advances assigned                $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Principal amount of Revolving Credit Note
         payable to ASSIGNOR (after assignment)            $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
TERM A FACILITY
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Percentage interest assigned                                   %         %           %           %           %
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Term A Commitment assigned                            $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Outstanding principal amount of
         Term A Advance assigned                           $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Principal amount of Term A Note
         payable to ASSIGNOR (after assignment)            $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
OFFSHORE ACQUISITION FACILITY
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Percentage interest assigned                                   %         %           %           %           %
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Offshore Acquisition Commitment assigned              $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Outstanding principal amount of
         Offshore Acquisition Advance assigned             $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Principal amount of Offshore Acquisition Note
         payable to ASSIGNOR (after assignment)            $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
LETTER OF CREDIT SUB-FACILITY
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Letter of Credit Commitment assigned                  $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Letter of Credit Commitment retained                  $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
</TABLE>

                          Credit Agreement - Exhibit C

<PAGE>   187

                                       2

<TABLE>
<S>                                                        <C>          <C>      <C>         <C>         <C>
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
ASSIGNEES:
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
REVOLVING CREDIT FACILITY
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Percentage interest assumed                                    %         %           %           %           %
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Revolving Credit Commitment assumed                   $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Aggregate outstanding principal amount of
         Revolving Credit Advances assumed                 $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Principal amount of Revolving Credit Note
         payable to ASSIGNEE (after assignment)            $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
TERM A FACILITY
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Percentage interest assumed                                    %         %           %           %           %
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Term A Commitment assumed                             $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Outstanding principal amount of
         Term A Advance assumed                            $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Principal amount of Term A Note
         payable to ASSIGNEE (after assignment)            $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
OFFSHORE ACQUISITION FACILITY
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Percentage interest assumed                                    %         %           %           %           %
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Offshore Acquisition Commitment assumed               $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Outstanding principal amount of
         Offshore Acquisition Advance assumed              $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Principal amount of Offshore Acquisition Note
         payable to ASSIGNEE (after assignment)            $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
LETTER OF CREDIT SUB-FACILITY
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
     Letter of Credit Commitment assumed                   $           $         $           $           $
---------------------------------------------------------- ----------- --------- ----------- ----------- -----------
</TABLE>

                          Credit Agreement - Exhibit C

<PAGE>   188

                                       3

Effective Date (if other than date of acceptance by Administrative Agent):
(1)                  ,

                             ASSIGNORS

                                                                   , as Assignor
                                          [Type or print legal name of Assignor]

                                          By
                                             -----------------------------------
                                          Title:

                                          Dated:                ,
                                                ---------------- ---------------

                                                                   , as Assignor
                                          [Type or print legal name of Assignor]

                                          By
                                             -----------------------------------
                                          Title:

                                          Dated:                ,
                                                ---------------- ---------------

                                                                   , as Assignor
                                          [Type or print legal name of Assignor]

                                          By
                                             -----------------------------------
                                          Title:

----------------------------------
(1) This date should be earlier than five Business Days after the delivery of
    this Assignment and Acceptance to the Administrative Agent.

                          Credit Agreement - Exhibit C

<PAGE>   189

                                     4

                                          Dated:
                                                -----------------,--------------
                                                                   , as Assignor
                                          [Type or print legal name of Assignor]

                                          By
                                             -----------------------------------
                                          Title:

                                          Dated:                ,
                                                ---------------- ---------------

                                                                   , as Assignor
                                          [Type or print legal name of Assignor]

                                          By
                                             -----------------------------------
                                          Title:

                                          Dated:                ,
                                                ---------------- ---------------

                         ASSIGNEES

                                                                   , as Assignee
                                          [Type or print legal name of Assignor]

                                          By
                                             -----------------------------------
                                          Title:

                                          Dated:                ,
                                                ---------------- ---------------

                                          Domestic Lending Office:

                                          Eurodollar Lending Office:

                                                                   , as Assignee

                          Credit Agreement - Exhibit C

<PAGE>   190

                                       5

                                          [Type or print legal name of Assignor]

                                          By
                                             -----------------------------------
                                          Title:

                                          Dated:                ,
                                                ---------------- ---------------

                                          Domestic Lending Office:

                                          Eurodollar Lending Office:

                                                                   , as Assignee
                                          [Type or print legal name of Assignor]

                                          By
                                             -----------------------------------
                                          Title:

                                          Dated:                ,
                                                ---------------- ---------------

                                          Domestic Lending Office:

                                          Eurodollar Lending Office:

                                                                   , as Assignee
                                          [Type or print legal name of Assignor]

                                          By
                                             -----------------------------------
                                          Title:

                                          Dated:                ,
                                                ---------------- ---------------

                                          Domestic Lending Office:

                                          Eurodollar Lending Office:

                          Credit Agreement - Exhibit C

<PAGE>   191

                                       6

                                                                   , as Assignee
                                          [Type or print legal name of Assignor]

                                          By
                                             -----------------------------------
                                          Title:

                                          Dated:                ,
                                                ---------------- ---------------

                                          Domestic Lending Office:

                                          Eurodollar Lending Office:

Accepted (2)[and Approved] this
day of              ,

[NAME OF Administrative Agent],
     as Administrative Agent

By
   --------------------------------
Title:

(3)[Approved this ____ day
of ___________ , _____

SOVEREIGN SPECIALTY CHEMICALS, INC.

-------------------------
(2)  Required if the Assignee is an Eligible Assignee solely by reason of
     clause (a)(viii) or (b) of the definition of "ELIGIBLE ASSIGNEE".

(3)  See footnote 2 above.

                          Credit Agreement - Exhibit C

<PAGE>   192

                                       7

By
   ----------------------------------
                 Title:

                          Credit Agreement - Exhibit C

<PAGE>   193

                                                                       EXHIBIT D
                                                         TO THE CREDIT AGREEMENT

              FORM OF OFFSHORE SWING LINE LENDER JOINDER AGREEMENT

                  OFFSHORE SWING LINE LENDER JOINDER AGREEMENT, dated as of the
date set forth on Schedule I hereto, made by the Offshore Swing Line Lender
designated on Schedule I hereto (the "OFFSHORE LENDER") pursuant to the Amended
and Restated Credit Agreement, dated as of April 6, 2000 (as amended,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"),
among Sovereign Specialty Chemicals Inc., a Delaware corporation (the "DOMESTIC
BORROWER"), the Offshore Borrowers from time to time party thereto, the other
Lender Parties from time to time party thereto, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as joint lead arranger, joint book-running manager and
syndication agent, J.P. Morgan Securities Inc., as joint lead arranger, joint
book-running manager and documentation agent, and The Chase Manhattan Bank, as
administrative agent (in such capacity, the "ADMINISTRATIVE AGENT") and offshore
currency agent (the "OFFSHORE CURRENCY AGENT"). Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.

                  For good and valid consideration, the sufficiency of which
hereby is acknowledged, the Offshore Swing Line Lender hereby agrees that it
shall serve as an "Offshore Swing Line Lender" under the Credit Agreement upon
the terms and subject to the conditions set forth therein.

                  The undersigned hereby:

(a)      represents and warrants that it is a legally authorized to enter into
         this Offshore Swing Line Lender Joinder Agreement;

(b)      confirms that it has received a copy of the Credit Agreement, the
         Collateral Sharing Agreement and the other Loan Documents relevant to
         it; and

(c)      agrees that it will (i) be bound by the provisions of the Credit
         Agreement, the Collateral Sharing Agreement and each other Loan
         Document, in each case, applicable to it as an Offshore Swing Line
         Lender and as a Lender Party and (ii) perform all obligations which are
         required to be performed by it as an Offshore Swing Line Lender and as
         a Lender Party pursuant to the Credit Agreement, the Collateral Sharing
         Agreement and each other Loan Document.

                  From and after the Effective Date set forth on Schedule I
hereto, the Offshore Swing Line Lender shall (a) be an "Offshore Swing Line
Lender" with respect to the Offshore

                          Credit Agreement - Exhibit D

<PAGE>   194

                                        3

Currency set forth on Schedule I hereto for all purposes under the Loan
Documents and (b) have the rights and obligations of an Offshore Lender and as a
Lender Party under the Credit Agreement and under the other Loan Documents and
(c) be bound by the provisions of the Loan Documents.

                  THIS OFFSHORE SWING LINE LENDER JOINDER AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.

                  IN WITNESS WHEREOF, the Offshore Swing Line Lender has caused
this Offshore Swing Line Lender Joinder Agreement to be executed on Schedule I
hereto by its duly authorized officer as of the date set forth on Schedule I
hereto.

                          Credit Agreement - Exhibit D

<PAGE>   195

                                   SCHEDULE I
                                       TO
                  OFFSHORE SWING LINE LENDER JOINDER AGREEMENT
            TO THE AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF
                                  APRIL 6, 2000
              (AS AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM
               TIME TO TIME), AMONG SOVEREIGN SPECIALTY CHEMICALS,
                          INC., A DELAWARE CORPORATION,
                THE OFFSHORE BORROWERS FROM TIME TO TIME PARTIES
              THERETO, THE FINANCIAL INSTITUTIONS FROM TIME TO TIME
                                PARTIES THERETO,
    THE AGENTS NAMED THEREIN, AND THE CHASE MANHATTAN BANK, AS ADMINISTRATIVE
                       AGENT AND OFFSHORE CURRENCY AGENT

EFFECTIVE DATE:

NAME OF OFFSHORE SWING LINE LENDER:

OFFSHORE CURRENCY:

TIME ZONE/LOCAL TIME:        :00  .M. (          TIME)

BASE RATE: The Base Rate for outstanding Swing Line Advances in the Offshore
Currency designated above shall be determined by the Offshore Currency Agent as
provided on Annex 1 attached to this Offshore Swing Line Lender Joinder
Agreement

MISCELLANEOUS: The account of the Offshore Currency Agent to which payments in
respect of Swing Line Advances in such Offshore Currency, the time of day (Local
Time) on which such payments must be credited to such account in order to be
deemed received on any Business Day, other terms and provisions applicable to
Swing Line Advances to be made by the Offshore Swing Line Lender in the Offshore
Currency designated above and any notice address of the Offshore Swing Line
Lender are set forth on Annex 1 attached to this Offshore Swing Line Lender
Joinder Agreement

THE CHASE MANHATTAN BANK,                   [NAME OF OFFSHORE SWING LINE LENDER]
 as Offshore Currency Agent

By:                                         By:
   ------------------------------------        ---------------------------------
   Title:                                      Title:

ACKNOWLEDGED AND AGREED:

SOVEREIGN SPECIALTY CHEMICALS, INC.

By:
   ------------------------------------
   Title:

                          Credit Agreement - Exhibit D

<PAGE>   196

                                                                       EXHIBIT E
                                                         TO THE CREDIT AGREEMENT

                       FORM OF CREDIT AGREEMENT SUPPLEMENT

                  CREDIT AGREEMENT SUPPLEMENT, dated as of the date set forth on
Schedule I hereto, made by the Offshore Borrower designated on Schedule I hereto
(the "OFFSHORE BORROWER") pursuant to the Amended and Restated Credit Agreement,
dated as of April 6, 2000 (as amended, supplemented or otherwise modified from
time to time, the "CREDIT AGREEMENT"), among Sovereign Specialty Chemicals Inc.,
a Delaware corporation (the "DOMESTIC Borrower"), the other Offshore Borrowers
from time to time party thereto, the Lender Parties from time to time party
thereto, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint lead
arranger, joint book-running manager and syndication agent, J.P. Morgan
Securities Inc., as joint lead arranger, joint book-running manager and
documentation agent, and The Chase Manhattan Bank, as administrative agent and
offshore currency agent. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.

                  In consideration of the agreement of each Lender Party to
extend credit to it from time to time under, and on the terms and conditions set
forth in the Credit Agreement, and for other good and valid consideration, the
sufficiency of which hereby is acknowledged, the Offshore Borrower hereby
assumes each of the obligations imposed upon an "Offshore Borrower" under the
Credit Agreement and agrees to be bound by all the terms and conditions of the
Credit Agreement.

                  The undersigned hereby:

(a)     represents and warrants that it is a legally authorized to enter into
        this Credit Agreement Supplement;

(b)     confirms that it has received a copy of the Credit Agreement, the
        Collateral Sharing Agreement and the other Loan Documents relevant to
        it;

(c)     confirms that it has caused its duly authorized officer to execute and
        deliver each other Loan Document which is contemplated to be executed
        and delivered by such Offshore Borrower on or before the date set forth
        on Schedule I hereto pursuant to Article III of the Credit Agreement;
        and

(d)     agrees that it will (i) be bound by the provisions of the Credit
        Agreement and each other Loan Document, in each case, applicable to it
        as an Offshore Borrower (including, without limitation, Section 1(b) of
        the Collateral Sharing Agreement) and (ii) perform all obligations which
        are required to be performed by it as an Offshore Borrower pursuant to
        the Credit Agreement and each other Loan Document.

                          Credit Agreement - Exhibit E

<PAGE>   197

                                       2

                  From and after the Effective Date set forth on Schedule I
hereto, the undersigned shall (a) be an "Offshore Borrower", "Applicable
Borrower" and a "Loan Party" for all purposes under the Loan Documents and (b)
have the rights and obligations of an Offshore Borrower, "Applicable Borrower"
and a "Loan Party" under the Credit Agreement and under the other Loan Documents
and (c) be bound by the provisions of the Loan Documents.

                  THIS CREDIT AGREEMENT SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                  Any legal action or proceeding with respect to this Credit
Agreement Supplement or any other Loan Document may be brought in the courts of
the State of New York or of the United States for the Southern District of New
York, and, by execution and delivery of this Credit Agreement Supplement, the
Offshore Borrower hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The Offshore Borrower hereby further irrevocably waives any claim that
any such courts lack jurisdiction over such Offshore Borrower, and agrees not to
plead or claim, in any legal action or proceeding with respect to this Credit
Agreement Supplement or any other Loan Document brought in any of the aforesaid
courts, that any such court lacks jurisdiction over the Offshore Borrower. The
Offshore Borrower agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. The Offshore Borrower hereby
irrevocably appoints CT Corporation System with an office on the date hereof at
1633 Broadway, New York, New York 10019 (the "PROCESS AGENT"), as its agent to
receive on behalf of the Offshore Borrower and its property service of copies of
the summons and complaint and any other process which may be served in any such
action or proceeding. The Offshore Borrower irrevocably consents to the service
of process in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to the Offshore Borrower at its
address set forth on Schedule I hereto, such service to become effective 10 days
after such mailing. The Offshore Borrower hereby irrevocably waives any
objection to such service of process and further irrevocably waives and agrees
not to plead or claim in any action or proceeding commenced hereunder or under
any other Loan Document that service of process was in any way invalid or
ineffective. Nothing herein shall affect the right of any agent, any Lender
Party or the holder of any Note to serve process in any other manner permitted
by law or to commence legal proceedings or otherwise proceed against the
Offshore Borrower in any other jurisdiction.

                  The Offshore Borrower hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Credit Agreement Supplement or any other Loan Document brought in the courts
referred to above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.

                          Credit Agreement - Exhibit E

<PAGE>   198

                                       3

                  To the extent that the Offshore Borrower 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, execution or otherwise) with respect to itself or its
property, the Offshore Borrower to the extent permitted by law hereby
irrevocably waives such immunity in respect of its obligations under this Credit
Agreement Supplement or any other Loan Document and, without limiting the
generality of the foregoing, agrees that the waivers set forth in this paragraph
shall have the fullest scope permitted under the United States Foreign Sovereign
Immunities Act of 1976, as amended, or any other similarly applicable foreign
law and are intended to be irrevocable for purposes of such Act or any other
similarly applicable foreign law.

                  The Offshore Borrower hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to this Credit Agreement
Supplement or any of the other Loan Documents to which it is a party, or the
actions of any agent or any Lender Party in the negotiation, administration,
performance or enforcement thereof.

                  IN WITNESS WHEREOF, the Offshore Borrower has caused this
Offshore Credit Agreement Supplement to be executed on Schedule I hereto by its
duly authorized officer as of the date set forth on Schedule I hereto.

                          Credit Agreement - Exhibit E

<PAGE>   199

                                   SCHEDULE I
                                       TO
                           CREDIT AGREEMENT SUPPLEMENT
            TO THE AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF
              APRIL 6, 2000 (AS AMENDED, SUPPLEMENTED OR OTHERWISE
             MODIFIED FROM TIME TO TIME), AMONG SOVEREIGN SPECIALTY
                    CHEMICALS, INC., A DELAWARE CORPORATION,
                THE OFFSHORE BORROWERS FROM TIME TO TIME PARTIES
              THERETO, THE FINANCIAL INSTITUTIONS FROM TIME TO TIME
                                PARTIES THERETO,
 THE AGENTS NAMED THEREIN, AND THE CHASE MANHATTAN BANK, AS ADMINISTRATIVE AGENT
                                      AND
                            OFFSHORE CURRENCY AGENT
--------------------------------------------------------------------------------

EFFECTIVE DATE:

NAME OF OFFSHORE BORROWER:

JURISDICTION OF ORGANIZATION OF OFFSHORE BORROWER:

TYPE OF ORGANIZATION OF OFFSHORE BORROWER:

NOTICE ADDRESS OF OFFSHORE BORROWER:

                  IN WITNESS WHEREOF, the Offshore Borrower has caused this
Credit Agreement Supplement to be executed by its duly authorized officer
effective as of the above Effective Date.

                                             [NAME OF OFFSHORE BORROWER]

                                             By:
                                                --------------------------------
                                                Title:

ACKNOWLEDGED AND AGREED:

THE CHASE MANHATTAN BANK,
 as Administrative Agent

By:
   -----------------------------
   Title:

                          Credit Agreement - Exhibit E

<PAGE>   200

                     AMENDED AND RESTATED SECURITY AGREEMENT

                  AMENDED AND RESTATED SECURITY AGREEMENT dated as of April 6,
2000 (this "AGREEMENT"), made by SOVEREIGN SPECIALTY CHEMICALS, INC., a Delaware
corporation (the "DOMESTIC BORROWER"), the other Persons listed on the signature
pages hereof and the Additional Grantors (as defined in Section 24) (the
Domestic Borrower, the Persons so listed and the Additional Grantors being,
collectively, the "GRANTORS"), to The Chase Manhattan Bank, as administrative
agent (together with any successor administrative agent appointed pursuant to
Article VII of the Credit Agreement (as hereinafter defined), the
"ADMINISTRATIVE AGENT") for the Secured Parties (as defined in the Credit
Agreement).

                  PRELIMINARY STATEMENTS.

                  (1)    The Domestic Borrower entered into a Credit Agreement
dated as of December 29, 1999 (said agreement, as amended and in effect prior to
the date hereof, the "EXISTING CREDIT AGREEMENT"), with the Lender Parties and
the Agents (each as defined therein). Pursuant to the Existing Credit Agreement,
each of the Grantors entered into a Security Agreement dated December 29, 1999
(said agreement, as amended and in effect prior to the date hereof, the
"EXISTING SECURITY AGREEMENT"), in favor of the Administrative Agent in order to
grant to the Administrative Agent for the ratable benefit of the Secured Parties
a security interest in all of its personal property and fixtures then owned or
thereafter acquired, subject only to the exclusions set forth in Section 1
hereof.

                  (2)    The Domestic Borrower has amended and restated the
Existing Credit Agreement pursuant to the Amended and Restated Credit Agreement
dated as of the date hereof (as said Agreement may hereafter be further amended
and restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), with the Lender Parties and the Agents. Pursuant to the Credit
Agreement, each of the Grantors is entering into this Agreement in order to
amend and restate the Existing Security Agreement in its entirety as provided
herein.

                  (3)    Each Grantor is the owner of the shares (the "INITIAL
PLEDGED SHARES") of stock set forth opposite such Grantor=s name on and as
otherwise described in Part I of Schedule I hereto and issued by the
corporations named therein and of the indebtedness (the "INITIAL PLEDGED DEBT")
set forth opposite such Grantor=s name on and as otherwise described in Part II
of Schedule I hereto and issued by the obligors named therein.

                  (4)    The Domestic Borrower has opened a collateral
securities account, Account No.323142397 (the "COLLATERAL ACCOUNT"), with The
Chase Manhattan Bank at its office at 270 Park Avenue, New York, New York 10017,
in the name of the Administrative Agent and under the sole control and dominion
of the Administrative Agent and subject to the terms of this Agreement.

                  (5)    The Domestic Borrower has opened a collateral
securities account, Account No.323142389 (the "L/C COLLATERAL ACCOUNT"), with
The Chase Manhattan Bank at its

                          Credit Agreement - Exhibit F

<PAGE>   201

                                       2

office at 270 Park Avenue, New York, New York 10017, in the name of the
Administrative Agent and under the sole control and dominion of the
Administrative Agent and subject to the terms of this Agreement.

                  (6)    It is a condition precedent to the making of Advances
and the issuance of Letters of Credit by the Lender Parties under the Credit
Agreement and the entry into Secured Hedge Agreements by the Hedge Banks from
time to time that the Grantors shall have granted the assignment and security
interest and made the pledge and assignment contemplated by this Agreement.

                  (7)    Each Grantor will derive substantial direct and
indirect benefit from the transactions contemplated by the Loan Documents.

                  (8)    Terms defined in the Credit Agreement and not otherwise
defined in this Agreement are used in this Agreement as defined in the Credit
Agreement. Further, unless otherwise defined in this Agreement or in the Credit
Agreement, terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. UNIFORM COMMERCIAL CODE") and/or in the
Federal Book Entry Regulations (as defined below) are used in this Agreement as
such terms are defined in such Article 8 or 9 and/or the Federal Book Entry
Regulations. The term "FEDERAL BOOK ENTRY REGULATIONS" means (a) the federal
regulations contained in Subpart B ("Treasury/Reserve Automated Debt Entry
System (TRADES)") governing book-entry securities consisting of U.S. Treasury
bonds, notes and bills and Subpart D ("Additional Provisions") of 31 C.F.R. Part
357, 31 C.F.R. Section 357.2, Section 357.10 through Section 357.14 and Section
357.41 through Section 357.44 and (b) to the extent substantially identical to
the federal regulations referred to in clause (a) above (as in effect from time
to time), the federal regulations governing other book-entry securities.

                  NOW, THEREFORE, in consideration of the premises and in order
to induce the Lender Parties to make Advances and issue Letters of Credit under
the Credit Agreement and to induce the Hedge Banks to enter into Secured Hedge
Agreements from time to time, the Existing Security Agreement is hereby amended
and restated in its entirety, and each Grantor hereby agrees with the
Administrative Agent for the ratable benefit of the Secured Parties, as follows:

                  Section 1. Grant of Security. Each Grantor hereby assigns and
pledges to the Administrative Agent for the ratable benefit of the Secured
Parties, and hereby grants to the Administrative Agent for the ratable benefit
of the Secured Parties a security interest in, such Grantor's right, title and
interest in and to the following, in each case, as to each type of property
described below, whether now owned or hereafter acquired by such Grantor,
wherever located, and whether now or hereafter existing or arising
(collectively, the "Collateral"):

                  (a)    all equipment in all of its forms (including, without
         limitation, all motor vehicles), all fixtures and all parts thereof and
         all accessions thereto (any and all such equipment, fixtures, parts and
         accessions being the "EQUIPMENT");

                               Security Agreement

<PAGE>   202

                                       3

                  (b)    all inventory in all of its forms, (including, without
         limitation, (i) all adhesives, sealants and coatings and raw materials
         and work in process therefor, finished goods thereof and materials used
         or consumed in the manufacture, production, preparation or shipping
         thereof, (ii) goods in which such Grantor has an interest in mass or a
         joint or other interest or right of any kind (including, without
         limitation, goods in which such Grantor has an interest or right as
         consignee) and (iii) goods that are returned to or repossessed or
         stopped in transit by such Grantor), and all accessions thereto and
         products thereof and documents therefor (any and all such inventory,
         accessions, products and documents being the "INVENTORY");

                  (c)    all accounts, chattel paper, instruments, deposit
         accounts, general intangibles and other obligations of any kind,
         whether or not arising out of or in connection with the sale or lease
         of goods or the rendering of services and whether or not earned by
         performance, and all rights now or hereafter existing in and to all
         security agreements, leases and other contracts securing or otherwise
         relating to any such accounts, chattel paper, instruments, deposit
         accounts, general intangibles or obligations (any and all such
         accounts, chattel paper, instruments, deposit accounts, general
         intangibles and obligations, to the extent not referred to in clause
         (d), (e) or (f) below, being the "RECEIVABLES", and any and all such
         security agreements, leases and other contracts being the "RELATED
         CONTRACTS"); provided, however, that any contract rights arising under
         any agreement or other document to which any of the Grantors is a party
         shall be excluded from the lien and security interest granted by such
         Grantor under this subsection (c) and under subsection (f) of this
         Section 1 to the extent that the assignment thereof or the creation of
         a lien and security interest therein would constitute a breach of the
         terms of the agreement or other document in which such contract rights
         are set forth, or would permit any party to such agreement or other
         document to terminate such contract rights or agreement (all of the
         agreements and other documents referred to in this proviso clause being
         the AEXCLUDED Agreements@); provided further, however, that (i) the
         exclusion of any contract rights of any of the Grantors under one or
         more of the Excluded Agreements pursuant to the immediately preceding
         proviso clause shall not limit, restrict or impair the grant by such
         Grantor of the lien and security interest in any accounts or
         receivables arising under any such Excluded Agreement or any payments
         due or to become due thereunder and (ii) any of the Excluded Agreements
         shall cease to be excluded from this subsection (c) and from subsection
         (f) of this Section 1, as the case may be, if, at any time, (A) the
         prohibition of assignment or of the creation of a lien and security
         interest in such agreement is no longer in effect or (B) the applicable
         Grantor has obtained the consent of the other parties to such agreement
         to the assignment of, or creation of a lien and security interest in,
         the contract rights of such Grantor thereunder;

                  (d)    the following (the "SECURITY COLLATERAL"):

                         (i)   the Initial Pledged Shares and the certificates,
                  if any, representing the Initial Pledged Shares, and all
                  dividends, cash, instruments and other property

                               Security Agreement

<PAGE>   203

                                       4

                  from time to time received, receivable or otherwise
                  distributed in respect of or in exchange for any or all of the
                  Initial Pledged Shares;

                         (ii)   the Initial Pledged Debt and the instruments, if
                  any, evidencing the Initial Pledged Debt, and all interest,
                  cash, instruments and other property from time to time
                  received, receivable or otherwise distributed in respect of or
                  in exchange for any or all of the Initial Pledged Debt;

                         (iii)  all additional shares of stock and other Equity
                  Interests from time to time acquired by such Grantor in any
                  manner (such shares, together with the Initial Pledged Shares,
                  being the "PLEDGED SHARES"), and the certificates, if any,
                  representing such additional shares, and all dividends, cash,
                  instruments and other property from time to time received,
                  receivable or otherwise distributed in respect of or in
                  exchange for any or all of such shares, provided, however,
                  that none of the Grantors shall be required to pledge any
                  Equity Interest in any Foreign Subsidiary that constitutes a
                  "controlled foreign corporation" under Section 957 of the
                  Internal Revenue Code (a "FOREIGN CORPORATION") owned or
                  otherwise held thereby which, when aggregated with all of the
                  other Equity Interests in such Foreign Corporation pledged by
                  such Grantor and the other Grantors, would result in more than
                  66% of the Equity Interests in such Foreign Corporation
                  entitled to vote (within the meaning of Treasury Regulation
                  Section 1.956-2(c)(2) promulgated under the Internal Revenue
                  Code (or any successor provision or interpretation thereof))
                  (the "VOTING EQUITY INTERESTS") being pledged to the
                  Administrative Agent, on behalf of the Secured Parties, under
                  this Agreement and the other Collateral Documents (although
                  all of the Equity Interests in such Foreign Corporation not
                  entitled to vote (within the meaning of Treasury Regulation
                  Section 1.956-2(c)(2) promulgated under the Internal Revenue
                  Code (or any successor provision or interpretation thereof))
                  (the "NON-VOTING EQUITY INTERESTS") shall be pledged by each
                  of the Grantors that owns or otherwise holds any such
                  Non-Voting Equity Interest therein); provided that, if, as a
                  result of any change in the tax laws of the United States of
                  America after the date of this Agreement, the pledge by such
                  Grantor of any additional Equity Interests in any such Foreign
                  Corporation to the Administrative Agent, on behalf of the
                  Secured Parties, under this Agreement or any of the other
                  Collateral Documents would not result in an increase in the
                  current or future aggregate net consolidated tax liabilities
                  of the Domestic Borrower and its Subsidiaries, then, promptly
                  after the change in such laws, all such additional Equity
                  Interests shall be so pledged under this Agreement or such
                  other Collateral Document, as applicable;

                         (iv)   all additional indebtedness from time to time
                  owed to such Grantor (such indebtedness, together with the
                  Initial Pledged Debt, being the "PLEDGED DEBT") and the
                  instruments, if any, evidencing such indebtedness, and all
                  interest, cash, instruments and other property from time to
                  time received, receivable or

                               Security Agreement

<PAGE>   204

                                       5

                  otherwise distributed in respect of or in exchange for any or
                  all of such indebtedness; and

                         (v)   all additional investment property (including,
                  without limitation, all securities, security entitlements,
                  security accounts, commodity contracts and commodity
                  accounts), whether or not evidenced by certificates or
                  instruments, and all of the certificates and instruments, if
                  any, representing or evidencing such additional investment
                  property, all security therefor and all dividends, interest,
                  distributions, value, cash, instruments and other property and
                  assets from time to time received, receivable or otherwise
                  distributed in respect of or in exchange for any or all of
                  such additional investment property;

                  (e)    the following (collectively, the "ACCOUNT COLLATERAL"):

                         (i)   the Collateral Account, all financial assets from
                  time to time credited to the Collateral Account (including,
                  without limitation, all Cash Equivalents from time to time
                  credited to the Collateral Account), and all dividends,
                  interest, cash, instruments and other property from time to
                  time received, receivable or otherwise distributed in respect
                  of or in exchange for any or all of such financial assets;

                         (ii)  the L/C Collateral Account, all financial assets
                  from time to time credited to the L/C Collateral Account
                  (including, without limitation, all Cash Equivalents from time
                  to time credited to the L/C Collateral Account), and all
                  dividends, interest, cash, instruments and other property from
                  time to time received, receivable or otherwise distributed in
                  respect of or in exchange for any or all of such financial
                  assets;

                         (iii) all Pledged Accounts (as hereinafter defined)
                  from time to time, all funds held therein and all certificates
                  and instruments, if any, from time to time representing or
                  evidencing the Pledged Accounts;

                         (iv)  all other deposit accounts of such Grantor from
                  time to time, all funds held therein and all certificates and
                  instruments, if any, from time to time representing or
                  evidencing such deposit accounts;

                         (v)   all notes, certificates of deposit, deposit
                  accounts, checks and other instruments from time to time
                  delivered to or otherwise possessed by the Administrative
                  Agent for or on behalf of such Grantor, including, without
                  limitation, those delivered or possessed in substitution for
                  or in addition to any or all of the then existing Account
                  Collateral; and

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                                       6

                         (vi)  all interest, dividends, cash, instruments and
                  other property from time to time received, receivable or
                  otherwise distributed in respect of or in exchange for any or
                  all of the then existing Account Collateral; and

                  (f) the following (collectively, the "INTELLECTUAL PROPERTY
                  COLLATERAL"):

                         (i)   all United States, international and foreign
                  patents, patent applications and statutory invention
                  registrations, including, without limitation, the patents and
                  patent applications set forth in Schedule IV hereto (as such
                  Schedule IV may be supplemented from time to time), together
                  with all reissues, divisions, continuations,
                  continuations-in-part, extensions and reexaminations thereof,
                  all inventions therein, all rights therein provided by
                  international treaties or conventions and all improvements
                  thereto, and all other rights of any kind whatsoever of such
                  Grantor accruing thereunder or pertaining thereto (the
                  "PATENTS");

                         (ii)  all trademarks (including, without limitation,
                  service marks), certification marks, collective marks, trade
                  dress, logos, domain names, product configurations, trade
                  names, business names, corporate names and other source
                  identifiers, whether or not registered, whether currently in
                  use or not, including, without limitation, all common law
                  rights and registrations and applications for registration
                  thereof, including, without limitation, the trademark
                  registrations and trademark applications set forth in Schedule
                  IV hereto (as such Schedule IV may be supplemented from time
                  to time), and all other marks registered in the U.S. Patent
                  and Trademark Office or in any office or agency of any State
                  or Territory of the United States or any foreign country (but
                  excluding any United States intent-to-use trademark
                  application prior to the filing and acceptance of a Statement
                  of Use or an Amendment to Allege Use in connection therewith
                  to the extent that a valid security interest may not be taken
                  in such an intent-to-use trademark application under
                  applicable law), and all rights therein provided by
                  international treaties or conventions, all reissues,
                  extensions and renewals of any of the foregoing, together in
                  each case with the goodwill of the business connected
                  therewith and symbolized thereby, and all rights corresponding
                  thereto throughout the world and all other rights of any kind
                  whatsoever of such Grantor accruing thereunder or pertaining
                  thereto (the "TRADEMARKS"); excluding however the twelve
                  Trademarks listed on Schedule IV under the heading "OSI",
                  commencing with the Trademark "BUILDING A SAFER TOMORROW" and
                  ending with the Trademark "PL 500" and the Unlicensed
                  Trademarks (as defined in the license agreement referred to in
                  this sentence) (all such trademarks are collectively, the
                  "ENCUMBERED TRADEMARKS"), which, as of the Effective Date, are
                  subject to a right of first refusal in favor of ChemRex Inc.
                  pursuant to that certain License Agreement dated July 29,
                  1998, between OSI Sealants, Inc. and ChemRex Inc., until such
                  time as that license agreement has expired or otherwise
                  terminated with such right of first refusal unexercised;

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                                       7

                         (iii) all copyrights, copyright applications, copyright
                  registrations and like protections in each work of authorship,
                  whether statutory or common law, whether published or
                  unpublished, any renewals or extensions thereof, all
                  copyrights of works based on, incorporated in, derived from,
                  or relating to works covered by such copyrights, including,
                  without limitation, the copyright registrations and copyright
                  applications set forth in Schedule IV hereto (as such Schedule
                  IV may be supplemented from time to time), together with all
                  rights corresponding thereto throughout the world and all
                  other rights of any kind whatsoever of such Grantor accruing
                  thereunder or pertaining thereto (the "COPYRIGHTS");

                         (iv)  all confidential and proprietary information,
                  including, without limitation, know-how, trade secrets,
                  manufacturing and production processes and techniques,
                  inventions, research and development information, technical
                  data, financial, marketing and business data, pricing and cost
                  information, business and marketing plans and customer and
                  supplier lists and information (the "TRADE SECRETS");

                         (v)   all computer software programs and databases
                  (including, without limitation, source code, object code and
                  all related applications and data files), firmware, and
                  documentation and materials relating thereto, and all rights
                  with respect to the foregoing, together with any and all
                  options, warranties, service contracts, program services, test
                  rights, maintenance rights, improvement rights, renewal rights
                  and indemnifications and any substitutions, replacements,
                  additions or model conversions of any of the foregoing (the
                  "COMPUTER SOFTWARE");

                         (vi)  all license agreements, permits, authorizations
                  and franchises, whether with respect to the Patents,
                  Trademarks, Copyrights, Trade Secrets or Computer Software, or
                  with respect to the patents, trademarks, copyrights, trade
                  secrets, computer software or other proprietary right of any
                  other Person, including, without limitation, the license
                  agreements set forth in Schedule IV hereto (as such Schedule
                  IV may be supplemented from time to time), and all income,
                  royalties and other payments now or hereafter due and/or
                  payable with respect thereto, subject, in each case, to the
                  terms of such license agreements, permits, authorizations and
                  franchises, (the "LICENSES"); provided further, however, that
                  any such license agreements to which any of the Grantors is a
                  party shall be excluded from the lien and security interest
                  granted by such Grantor under this subsection (f) to the
                  extent that the assignment thereof or the creation of a lien
                  and security interest therein would constitute a breach of the
                  terms of such license agreement, or would permit any party to
                  such license agreement to terminate such rights thereunder
                  (all of the license agreements referred to in this proviso
                  clause being the "EXCLUDED LICENSES"); provided further,
                  however, that any of the Excluded Licenses shall cease to be
                  excluded from this subsection (f)

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                                       8

                  if, at any time, (A) the prohibition of assignment or of the
                  creation of a lien and security interest in such license
                  agreement is no longer in effect or (B) the applicable Grantor
                  has obtained the consent of the other parties to such license
                  agreement to the assignment of, or creation of a lien and
                  security interest in, the rights of such Grantor thereunder;
                  and

                         (vii)   any and all claims for damages for past,
                  present and future infringement, misappropriation or breach
                  with respect to the Patents, Trademarks, Copyrights, Trade
                  Secrets, Computer Software or Licenses, with the right, but
                  not the obligation, to sue for and collect, or otherwise
                  recover, such damages; and

                  (g)  all proceeds of any and all of the Collateral (including,
         without limitation, proceeds that constitute property of the types
         described in clauses (a) through (f) of this Section 1 and this clause
         (g)) and, to the extent not otherwise included, all (i) payments under
         insurance (whether or not the Administrative 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 and (ii) cash.

                  Section 2. Security for Obligations. This Agreement secures,
in the case of each Grantor, the payment of all Obligations of such Grantor now
or hereafter existing under the Loan Documents, whether direct or indirect,
absolute or contingent, and whether for principal, reimbursement obligations,
interest, fees, premiums, penalties, indemnifications, contract causes of
action, costs, expenses or otherwise (all such Obligations being the "SECURED
OBLIGATIONS").

                  Section 3. Grantors Remain Liable. Anything herein to the
contrary notwithstanding, (a) each Grantor shall remain liable under the
contracts and agreements included in such Grantor's Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise by the
Administrative Agent of any of the rights hereunder shall not release any
Grantor from any of its duties or obligations under the contracts and agreements
included in the Collateral and (c) no Secured Party shall have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Agreement or any other Loan Document, nor shall any Secured Party
be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.

                  Section 4. Delivery and Control of Security Collateral. (a)
All certificates or instruments representing or evidencing Security Collateral
shall be delivered to and held by or on behalf of the Administrative Agent
pursuant hereto and shall be in suitable form for transfer by delivery, or shall
be accompanied by duly executed instruments of transfer or assignment in blank,
all in form and substance satisfactory to the Administrative Agent; provided
however, that each Grantor shall not be required to so deliver any such
certificate issued by any issuer of Pledged Shares which is organized under the
laws of Mexico until June 30, 2000. The Administrative Agent shall have the
right, during the continuation of a Default under Section 6.01(a) or (f) of the
Credit Agreement or an Event of Default and without notice to any Grantor,

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                                       9

to transfer to or to register in the name of the Administrative Agent or any of
its nominees any or all of the Security Collateral, subject only to the
revocable rights specified in Section 15(a). In addition, the Administrative
Agent shall have the right at any time to exchange certificates or instruments
representing or evidencing Security Collateral for certificates or instruments
of smaller or larger denominations.

                  (b)    With respect to any Security Collateral in which any
Grantor has any right, title or interest and that constitutes an uncertificated
security, such Grantor will cause the issuer thereof either (i) to register the
Administrative Agent as the registered owner of such security or (ii) to comply
with instructions with respect to such security originated by the Administrative
Agent without further consent of such Grantor, such agreement to be in form and
substance satisfactory to the Administrative Agent.

                  (c)    With respect to any Security Collateral in which any
Grantor has any right, title or interest and that constitutes a security
entitlement, such Grantor will cause the securities intermediary with respect to
such security entitlement either (i) to identify in its records the
Administrative Agent as the entitlement holder of such security entitlement
against such securities intermediary or (ii) to comply with entitlement orders
(that is, notifications communicated to such securities intermediary directing
transfer or redemption of the financial asset to which such Grantor has a
security entitlement) originated by the Administrative Agent without further
consent of such Grantor, such agreement to be in form and substance satisfactory
to the Administrative Agent.

                  (d)    With respect to any Security Collateral in which any
Grantor has any right, title or interest and that constitutes a commodity
contract, such Grantor shall cause the commodity intermediary with respect to
such commodity contract to agree in writing with such Grantor and the
Administrative Agent that such commodity intermediary will apply any value
distributed on account of such commodity contract as directed by the
Administrative Agent without further consent of such Grantor, such agreement to
be in form and substance satisfactory to the Administrative Agent.

                  (e)    No Grantor will change or add any securities
intermediary or commodity intermediary that maintains any securities account or
commodity account in which any of the Collateral is credited or carried, or
change or add any such securities account or commodity account, in each case
without first complying with the above provisions of this Section 4 in order to
perfect the security interest granted hereunder in such Collateral.

                  Section 5. Maintaining the Pledged Accounts. At any time on
and after the Effective Date so long as any Advance or any other Obligation of
any Loan Party under any Loan Document shall remain unpaid, any Letter of Credit
shall be outstanding, any Secured Hedge Agreement shall be in effect or any
Lender Party shall have any Commitment under the Credit Agreement:

                  (a)   Except for those deposit accounts set forth in Part B of
         Schedule V hereto, as such Schedule V may be amended from time to time
         pursuant to Section 5(e) of this

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                                       10

         Agreement, each Grantor will maintain lockbox accounts and deposit
         accounts (collectively, the "PLEDGED ACCOUNTS") only with banks (the
         "PLEDGED ACCOUNT BANKS") that have entered into letter agreements in
         substantially the form of Exhibit B hereto or otherwise in form and
         substance satisfactory to the Administrative Agent with such Grantor
         and the Administrative Agent (the "PLEDGED ACCOUNT LETTERS"); provided
         however, that the Grantors will have until June 30, 2000, to enter into
         Pledged Account Letters with Bital Bank in respect of their accounts at
         such bank.

                  (b)   Each Grantor will (i) immediately instruct each Person
         obligated at any time to make any payment to such Grantor for any
         reason (an "OBLIGOR") to make such payment to a Pledged Account of such
         Grantor and (ii) deposit in a Pledged Account, at the end of each
         Business Day, all proceeds of Collateral and all other cash of such
         Grantor which, when aggregated with all proceeds of Collateral and
         other cash of the other Grantors, are in excess of $3,000,000.

                  (c)   Each Grantor agrees that it will not add any bank as a
         Pledged Account Bank or add any account as a Pledged Account to those
         listed in Part A of Schedule V hereto, unless the Administrative Agent
         shall have received at least 10 days' prior written notice of such
         addition and shall have received a Pledged Account Letter executed by
         such new Pledged Account Bank and such Grantor or a supplement to an
         existing Pledged Account Letter covering such new Pledged Account, as
         the case may be (and, upon the receipt by the Administrative Agent of
         such Pledged Account Letter or supplement, Part A of Schedule V hereto
         shall be automatically amended to include such Pledged Account Bank or
         Pledged Account). Each Grantor agrees that it will not terminate any
         bank as a Pledged Account Bank or terminate any account as a Pledged
         Account, unless the Administrative Agent shall have received at least
         10 days= prior written notice of such termination (and, upon such
         termination, Schedule V hereto shall be automatically amended to delete
         such Pledged Account Bank or Pledged Account); provided, however, that
         Administrative Agent will be deemed to have consented to the
         termination of any Pledged Account that is a lockbox account so long as
         (i) the Administrative Agent shall have received prompt notice of such
         termination, together with a certificate of the Chief Financial Officer
         of the applicable Grantor certifying that (A) before and after the
         termination of such Pledged Account, no Default has occurred and is
         continuing, (B) all cash and other items credited to such Pledged
         Account have been credited to another Pledged Account of such Grantor
         and (C) that all Obligors making payments to the Pledged Account to be
         terminated have been instructed by such Grantor to make all future
         payments to another Pledged Account of such Grantor.

                  (d)   Upon any termination of any Pledged Account Letter or
         other agreement with respect to the maintenance of a Pledged Account by
         any Grantor or any Pledged Account Bank, such Grantor will immediately
         notify all Obligors that were making payments to such Pledged Account
         to make all future payments to another Pledged Account. Each Grantor
         agrees to terminate any or all Pledged Accounts and Pledged Account
         Letters upon request by the Administrative Agent.

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                                       11

                  (e)   Each Grantor agrees that it will not add any account as
         an unblocked account to those listed in Part B of Schedule V hereto,
         unless the Administrative Agent shall have received at least 10 days'
         prior written notice of such addition or termination (and, upon such
         addition or termination, Schedule V shall be automatically amended to
         add or delete such account, as applicable).

                  Section 6. Maintaining the Collateral Account and the L/C
Collateral Account. So long as any Advance or any other Obligation of any Loan
Party under any Loan Document shall remain unpaid, any Letter of Credit shall be
outstanding, any Secured Hedge Agreement shall be in effect or any Lender shall
have any Commitment under the Credit Agreement:

                  (a)   The Domestic Borrower will maintain the Collateral
         Account and the L/C Collateral Account with the Administrative Agent or
         another commercial bank acceptable to the Administrative Agent and
         that, in the case of the Collateral Account and the L/C Collateral
         Account, and each Grantor, as applicable, has entered into a Securities
         Account Control Agreement (the Administrative Agent or any bank with
         which the Collateral Account or the L/C Collateral Account are
         maintained being a "COLLATERAL BANK").

                  (b)   It shall be a term and condition of each of the
         Collateral Account and the L/C Collateral Account, notwithstanding any
         term or condition to the contrary in any other agreement relating to
         the Collateral Account or the L/C Collateral Account, as the case may
         be, and except as otherwise provided by the provisions of Sections 5, 8
         and 20, that no amount (including interest on Cash Equivalents credited
         thereto) will be paid or released to or for the account of, or
         withdrawn by or for the account of, the Domestic Borrower or any other
         Person from the Collateral Account or the L/C Collateral Account, as
         the case may be.

                  Section 7. Investing of Amounts in the Collateral Account and
the L/C Collateral Account. The Administrative Agent will, subject to the
provisions of Sections 8 and 20, from time to time direct the applicable
Collateral Bank to (a) invest amounts received with respect to the Collateral
Account and the L/C Collateral Account in such Cash Equivalents credited to the
Collateral Account and the L/C Collateral Account, respectively, as the Domestic
Borrower may select and (b) invest interest paid on the Cash Equivalents
referred to in clause (a) above, and reinvest other proceeds of any such Cash
Equivalents that may mature or be sold, in each case in such Cash Equivalents
credited to the Collateral Account and the L/C Collateral Account, respectively,
as the Domestic Borrower may select. Interest and proceeds that are not invested
or reinvested in Cash Equivalents as provided above shall be deposited and held
in a deposit account with the applicable Collateral Bank in the name of the
Administrative Agent and under the sole control and dominion of the
Administrative Agent, such deposit account to be deemed to constitute part of
the Collateral Account or the L/C Collateral Account, as the case may be. In
addition, the Administrative Agent shall have the right at any time to direct
the applicable Collateral Bank to exchange such Cash Equivalents for similar
Cash Equivalents of smaller or

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                                       12

larger determinations, or for other Cash Equivalents, credited to the Collateral
Account or the L/C Collateral Account, as the case may be.

                  Section 8. Release of Amounts. So long as no Default under
Section 6.01(a) or (f) of the Credit Agreement or Event of Default shall have
occurred and be continuing, the Administrative Agent will direct the applicable
Collateral Bank to pay and release to the Domestic Borrower or at its order or,
at the request of the Domestic Borrower, to the Administrative Agent to be
applied to the Obligations of the Domestic Borrower under the Loan Documents, in
the case of the L/C Collateral Account, such amount, if any, as is then on
deposit in the L/C Collateral Account to the extent permitted to be released
under the terms of the Credit Agreement and, in the case of the Collateral
Account, the amount, if any, by which the aggregate principal amount of the Cash
Equivalents credited to the Collateral Account exceeds all amounts then due and
payable under the Loan Documents.

                  Section 9. Representations and Warranties. Each Grantor
represents and warrants as follows:

                  (a)   All of the Equipment and Inventory (other than Inventory
         consisting of consigned and other goods of the Grantors, that, as of
         any date of determination, that have an aggregate value of not more
         than $3,000,000 (such Inventory being, collectively, the "OFF-SITE
         GOODS"); provided however, that, not more than $1,000,000 of any such
         consigned and other goods shall be located in any single location) of
         such Grantor are located at the places specified therefor in Schedule
         II hereto, as such Schedule II may be amended from time to time
         pursuant to Section 11(a). The chief executive office of such Grantor,
         and all originals of all chattel paper that evidence Receivables of
         such Grantor are located at the address specified therefor in Schedule
         III hereto, as such Schedule III may be amended from time to time
         pursuant to Section 13(a). Such Grantor's federal tax identification
         number is set forth opposite such Grantor's name in Schedule III
         hereto. All Security Collateral consisting of certificated securities
         and instruments have been delivered to the Administrative Agent. None
         of the Receivables is evidenced by a promissory note or other
         instrument that has not been delivered to the Administrative Agent.

                  (b)   Such Grantor is the legal and beneficial owner of the
         Collateral of such Grantor free and clear of any Lien, claim, option or
         right of others, except for the Liens created under the Collateral
         Documents or permitted under the Credit Agreement. No effective
         financing statement or other instrument similar in effect covering all
         or any part of such Collateral or listing such Grantor or any trade
         name of such Grantor as debtor is on file in any recording office,
         except such as may have been filed in favor of the Administrative Agent
         relating to the Loan Documents or as otherwise permitted under the
         Credit Agreement. Such Grantor has the trade names listed on Schedule
         IV hereto.

                  (c)   Such Grantor has exclusive possession and control of the
         Equipment and Inventory other than (i) Off-Site Goods and (ii)
         Inventory stored at any leased premises or

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                                       13

         warehouse, (A) for which no landlord's or warehouseman's agreement is
         in place; provided that not more than 15% of the aggregate Inventory
         owned by the Grantors may be located at such locations at any time or
         (B) for which a landlord's or warehouseman's agreement in form and
         substance satisfactory to the Administrative Agent, is in effect and
         which leased premises or warehouse is so indicated by an asterisk on
         Schedule II hereto, as such Schedule II may be amended from time to
         time pursuant to Section 11(a).

                  (d)   The Pledged Shares in any issuer that is a Loan Party or
         a Subsidiary of any of the Loan Parties pledged by such Grantor
         hereunder have been duly authorized and validly issued and are fully
         paid and non-assessable. The Pledged Debt issued by any Loan Party or
         Subsidiary of a Loan Party pledged by such Grantor hereunder has been
         duly authorized, authenticated or issued and delivered, is the legal,
         valid and binding obligation of the issuers thereof, is evidenced by
         one or more promissary notes (which notes have been delivered to the
         Administrative Agent) and is not in default.

                  (e)   The Initial Pledged Shares constitute the percentage of
         the issued and outstanding shares of stock of the issuers thereof
         indicated on Schedule I hereto as of the Effective Date. The Initial
         Pledged Debt constitutes all of the outstanding indebtedness owed to
         such Grantor by the issuers thereof and is outstanding, as of the
         Effective Date, in the principal amount indicated on Schedule I hereto
         as of the Effective Date.

                  (f)   Such Grantor does not own any investment property as of
         the Effective Date other than such Grantor's Initial Pledged Shares,
         the Voting Equity Interests in its Foreign Subsidiaries not required to
         be pledged hereunder pursuant to the terms of Section 1 hereof and
         Initial Pledged Indebtedness.

                  (g)   Such Grantor has no lockbox accounts, deposit accounts
         or other accounts other than those listed on Schedule V hereto, as such
         Schedule V may be amended from time to time pursuant to Sections 5(c)
         and (e). Such Grantor has no Pledged Accounts or other deposit accounts
         other than the Pledged Accounts listed on Schedule V hereto, as such
         Schedule V may be amended from time to time pursuant to Section 5(c),
         and such Grantor has instructed all existing Obligors to make all
         payments to a Pledged Account. The average daily balance of all
         permitted unblocked accounts of such Grantor which, when aggregated
         with the average daily balance of all permitted unblocked accounts of
         the other Grantors, does not exceed $3,000,000.

                  (h)   Except as described in Section 4.01(n) of the Credit
         Agreement and except for those actions with respect to certain Mexican
         Collateral which Sections 4(a) and 5(a) of this Agreement provide may
         be taken on or prior to June 30, 2000, all filings and other actions
         necessary or desirable to perfect and protect the security interest in
         the Collateral of such Grantor created under this Agreement have been
         duly made or taken and are in full force and effect, and this Agreement
         creates in favor of the Administrative Agent for the benefit of the
         Secured Parties a valid and, together with such filings and other
         actions, perfected first priority security interest in the Collateral
         of such Grantor, securing the

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                                       14

         payment of the Secured Obligations, except for (A) the filing of
         continuation statements under the Uniform Commercial Code, (B) the
         actions described in Section 4 with respect to Security Collateral,
         which actions have been taken and are in full force and effect, (C)
         actions necessary or desirable to perfect such security interest in any
         motor vehicles, and (D) as may be required in connection with the
         disposition of any portion of the Security Collateral by laws affecting
         the offering and sale of securities generally; provided however that no
         such recordation need be made with respect to any Encumbered
         Trademarks.

                  (i)   The Inventory that has been produced or distributed by
         such Grantor has been produced in compliance with all requirements of
         applicable law, including, without limitation, the Fair Labor Standards
         Act, except where such non-compliance is not reasonable likely to have
         a Material Adverse Effect.

                  (j)   As to itself and its Intellectual Property Collateral:

                           (i)    The rights of such Grantor in or to the
                  Intellectual Property Collateral do not conflict with,
                  misappropriate or infringe upon the intellectual property
                  rights of any third party, and no claim has been asserted that
                  the use of such Intellectual Property Collateral does or may
                  infringe upon the intellectual property rights of any third
                  party, except for such conflict, misappropriation or
                  infringement, or assertion of any such claim which,
                  individually or in the aggregate, is not reasonably likely to
                  have a Material Adverse Effect.

                           (ii)    Such Grantor is the exclusive owner of the
                  entire and unencumbered right, title and interest in and to
                  the Intellectual Property Collateral and/or is entitled to use
                  all such Intellectual Property Collateral without limitation,
                  subject only to the license terms of the Licenses.

                           (iii)   The Intellectual Property Collateral set
                  forth on Schedule IV hereto includes all of the patents,
                  patent applications, trademark registrations and applications,
                  copyright registrations and applications and Licenses owned by
                  such Grantor.

                           (iv)    Except for those items identified on Schedule
                  II as constituting Permitted Abandoned IP, the Intellectual
                  Property Collateral is subsisting and has not been adjudged
                  invalid or unenforceable in whole or part, and to the best of
                  such Grantor=s knowledge, is valid and enforceable. Such
                  Grantor is not aware of any uses of any item of Intellectual
                  Property Collateral that could be expected to lead to such
                  item becoming invalid or unenforceable except where the
                  invalidity or unenforceability of such item is not reasonably
                  likely to cause a Material Adverse Effect.

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                                       15

                           (v)    Such Grantor has used proper statutory notice
                  in connection with its use of each patent, trademark and
                  copyright of the Intellectual Property Collateral.

                  Section 10. Further Assurances. (a) Each Grantor agrees that
from time to time, at the expense of such Grantor, such Grantor will, subject to
the terms of the Credit Agreement, including, without limitation, Section 5.01,
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable, or that the Administrative
Agent may reasonably request, in order to perfect and protect any pledge,
assignment or security interest granted or purported to be granted by such
Grantor hereunder or to enable the Administrative Agent to exercise and enforce
its rights and remedies hereunder with respect to any Collateral of such
Grantor. Without limiting the generality of the foregoing, each Grantor will
promptly with respect to Collateral of such Grantor: (i) mark conspicuously each
document included in Inventory, each chattel paper included in Receivables, each
Related Contract and, at the request of the Administrative Agent, each of its
records pertaining to such Collateral with a legend, in form and substance
satisfactory to the Administrative Agent, indicating that such document, chattel
paper, Related Contract or Collateral is subject to the security interest
granted hereby; (ii) if any such Collateral shall be evidenced by a promissory
note or other instrument or chattel paper, deliver and pledge to the
Administrative Agent hereunder such note or instrument or chattel paper duly
indorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance satisfactory to the Administrative Agent; (iii)
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Administrative Agent may request, in order to perfect and
preserve the security interest granted or purported to be granted by such
Grantor hereunder; (iv) deliver and pledge to the Administrative Agent for
benefit of the Secured Parties certificates representing Security Collateral
that constitutes certificated securities, accompanied by undated stock or bond
powers executed in blank; and (v) deliver to the Administrative Agent evidence
that all other action that the Administrative Agent may deem reasonably
necessary or desirable in order to perfect and protect the security interest
created by such Grantor under this Agreement has been taken.

                  (b)   Each Grantor hereby authorizes the Administrative Agent
to file one or more financing or continuation statements, and amendments
thereto, relating to all or any part of the Collateral of such Grantor without
the signature of such Grantor where permitted by law. A photocopy 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.

                  (c)   Each Grantor will furnish to the Administrative Agent
from time to time statements and schedules further identifying and describing
the Collateral of such Grantor and such other reports in connection with such
Collateral as the Administrative Agent may reasonably request, all in reasonable
detail.

                  Section 11. As to Equipment and Inventory. (a) Each Grantor
will keep the Equipment and Inventory of such Grantor (other than (i) Off-Site
Goods and (ii) Equipment and

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Inventory sold as specifically allowed under Section 5.02(f) of the Credit
Agreement) at the places therefor specified in Section 9(a) or, upon 30 days'
prior written notice to the Administrative Agent, at such other places in a
jurisdiction where all action required by Section 10 shall have been taken with
respect to such Equipment and Inventory (and, upon the taking of such action in
such jurisdiction, Schedule III hereto shall be automatically amended to include
such other places).

                  (b)   Each Grantor will cause the Equipment of such Grantor to
be maintained and preserved in the same condition, repair and working order as
in effect on the date hereof, ordinary wear and tear and casualty and
condemnation excepted, and in accordance with any manufacturer's manual, and
will forthwith, or in the case of any material loss or damage to any of such
Equipment as soon as practicable after the occurrence thereof, make or cause to
be made all repairs, replacements and other improvements in connection therewith
that are reasonably necessary or desirable to such end.

                  (c)   Each Grantor will pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims (including, without limitation, claims for labor, materials and
supplies) against, the Equipment and Inventory of such Grantor, except to the
extent payment thereof is not required by Section 5.01(b) of the Credit
Agreement. In producing its Inventory, each Grantor will comply with all
requirements of applicable law, including, without limitation, the Fair Labor
Standards Act, except where such non-compliance is not reasonably likely to have
a Material Adverse Effect.

                  Section 12. Insurance. (a) Each Grantor will, at its own
expense, maintain insurance with respect to the Equipment and Inventory of such
Grantor in such amounts, against such risks, in such form and with responsible
and reputable insurance companies or associations as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which such Grantor operates. Each policy of each Grantor
for liability insurance shall provide for all losses to be paid on behalf of the
Administrative Agent and such Grantor as their interests may appear, and each
policy for property damage insurance shall provide for all losses (except for
losses of less than $5,000,000 per occurrence) to be paid directly to the
Administrative Agent. Each such policy shall in addition (i) name such Grantor
and the Administrative Agent as insured parties thereunder (without any
representation or warranty by or obligation upon the Administrative Agent) as
their interests may appear, (ii) contain the agreement by the insurer that any
loss thereunder shall be payable to the Administrative Agent notwithstanding any
action, inaction or breach of representation or warranty by such Grantor, (iii)
provide that there shall be no recourse against the Administrative Agent for
payment of premiums or other amounts with respect thereto and (iv) provide that
at least 10 days' prior written notice of cancellation or of lapse shall be
given to the Administrative Agent by the insurer. Each Grantor will, if so
requested by the Administrative Agent, deliver to the Administrative Agent
original or duplicate policies of such insurance and, as often as the
Administrative Agent may reasonably request, a report of a reputable insurance
broker with respect to such insurance. Further, each Grantor will, at the
request of the Administrative Agent,

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                                       17

duly execute and deliver instruments of assignment of such insurance policies to
comply with the requirements of Section 10 and cause the insurers to acknowledge
notice of such assignment.

                  (b) Reimbursement under any liability insurance maintained by
any Grantor pursuant to this Section 12 may be paid directly to the Person who
shall have incurred liability covered by such insurance. In case of any loss
involving damage to Equipment or Inventory when subsection (c) of this Section
12 is not applicable, the applicable Grantor will make or cause to be made the
necessary repairs to or replacements of such Equipment or Inventory, and any
proceeds of insurance properly received by or released to such Grantor shall be
used by such Grantor, except as otherwise required hereunder or by the Credit
Agreement, to pay or as reimbursement for the costs of such repairs or
replacements.

                  (c) So long as no Default under Section 6.01(a) or (f) of the
Credit Agreement or any Event of Default shall have occurred and be continuing,
all insurance payments received by the Administrative Agent in connection with
any loss, damage or destruction of any Inventory or Equipment will be released
by the Administrative Agent to the applicable Grantor for the repair,
replacement or restoration thereof, subject to such terms and conditions with
respect to the release thereof as the Administrative Agent may reasonably
require. To the extent that (i) the amount of any such insurance payments
exceeds the cost of any such repair, replacement or restoration, or (ii) such
insurance payments are not otherwise required by the applicable Grantor to
complete any such repair, replacement or restoration required hereunder, the
Administrative Agent will not be required to release the amount thereof to such
Grantor and may hold or continue to hold such amount in the Collateral Account
as additional security for the Secured Obligations of such Grantor (except that
the Administrative Agent will release to such Grantor any such amount if and to
the extent that any prepayment of Obligations is required under the Credit
Agreement in connection with the receipt of such amount and such prepayment has
been made). Upon the occurrence and during the continuance of any Default under
Section 6.01(a) or (f) of the Credit Agreement or any Event of Default or the
actual or constructive total loss (in excess of $5,000,0000 per occurrence) of
any Equipment or Inventory, all insurance payments in respect of such Equipment
or Inventory shall be paid to the Administrative Agent and shall, in the
Administrative Agent's sole discretion, (i) be released to the applicable
Grantor to be applied as set forth in the first sentence of this subsection (c)
or (ii) be held as additional Collateral hereunder or applied as specified in
Section 20(b).

                  Section 13. Place of Perfection; Records; Collection of
Receivables. (a) Each Grantor will keep its chief executive office and all
originals of all chattel paper that evidence Receivables of such Grantor, at the
location therefor specified in Section 9(a) or, upon 30 days= prior written
notice to the Administrative Agent, at such other location in a jurisdiction
where all actions required by Section 10 shall have been taken with respect to
the Collateral of such Grantor (and, upon the taking of such action in such
jurisdiction, Schedule IV hereto shall be automatically amended to include such
other location). Each Grantor will hold and preserve, subject to its ordinary
course document retention policy, its records relating to the Collateral, the
Related Contracts and chattel paper and will permit representatives of the
Administrative Agent, at any reasonable time during normal business hours (and
if no Event of Default has occurred

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                                       18

and is continuing, upon reasonable notice), to inspect and make abstracts from
such records and other documents.

                  (b) Except as otherwise provided in this subsection (b), each
Grantor will continue to collect, at its own expense, all amounts due or to
become due such Grantor under the Receivables and the Related Contracts. In
connection with such collections, such Grantor may take (and, at the
Administrative Agent's direction, will take) such action as such Grantor or the
Administrative Agent may deem necessary or advisable to enforce collection of
the Receivables and the Related Contracts; provided, however, that the
Administrative Agent shall have the right at any time, upon the occurrence and
during the continuance of a Default under Section 6.01(a) or (f) of the Credit
Agreement or any Event of Default and upon written notice to such Grantor of its
intention to do so, to notify the Obligors under any Receivables or Related
Contracts of the assignment of such Receivables or Related Contracts to the
Administrative Agent and to direct such Obligors to make payment of all amounts
due or to become due to such Grantor thereunder directly to the Administrative
Agent and, upon such notification and at the expense of such Grantor, to enforce
collection of any such Receivables or Related Contracts, and to adjust, settle
or compromise the amount or payment thereof, in the same manner and to the same
extent as such Grantor might have done. After receipt by any Grantor of the
notice from the Administrative Agent referred to in the proviso to the preceding
sentence, (i) all amounts and proceeds (including instruments) received by such
Grantor in respect of the Receivables and the Related Contracts of such Grantor
shall be received in trust for the benefit of the Administrative Agent
hereunder, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Administrative Agent in the same form as so received
(with any necessary indorsement) to be deposited in the Collateral Account and
either (A) released to such Grantor on the terms set forth in Section 8 so long
as no Default under Section 6.01(a) or (f) of the Credit Agreement or any Event
of Default shall have occurred and be continuing or (B) if any Default under
Section 6.01(a) or (f) of the Credit Agreement or any Event of Default shall
have occurred and be continuing, applied as provided in Section 20(b) and (ii)
such Grantor will not adjust, settle or compromise the amount or payment of any
Receivable, release wholly or partly any Obligor thereof, or allow any credit or
discount thereon. No Grantor will permit or consent to the subordination of its
right to payment under any of the Receivables or the Related Contracts to any
other indebtedness or obligations of the Obligor thereof.

                  SECTION 14. As to Intellectual Property Collateral. (a) With
respect to each item of its Intellectual Property Collateral other than
Permitted Abandoned IP (as defined below), each Grantor agrees to take, at its
expense, all necessary steps, including, without limitation, in the U.S. Patent
and Trademark Office, the U.S. Copyright Office and any other governmental
authority, to (i) maintain the validity and enforceability of each such item of
Intellectual Property Collateral and maintain each such item of Intellectual
Property Collateral in full force and effect, and (ii) pursue the registration
and maintenance of each patent, trademark, or copyright registration or
application, now or hereafter included in the Intellectual Property Collateral
of such Grantor, including, without limitation, the payment of required fees and
taxes, the filing of responses to office actions issued by the U.S. Patent and
Trademark Office, the U.S. Copyright Office or other governmental authorities,
the filing of applications for renewal or extension, the

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                                       19

filing of affidavits under Sections 8 and 15 of the U.S. Trademark Act, the
filing of divisional, continuation, continuation-in-part, reissue and renewal
applications or extensions, the payment of maintenance fees and the
participation in interference, reexamination, opposition, cancellation,
infringement and misappropriation proceedings. No Grantor shall, without the
written consent of the Administrative Agent, discontinue use of or otherwise
abandon any Intellectual Property Collateral, or abandon any right to file an
application for letters patent, trademark, or copyright, unless such Grantor
shall have previously determined that such use or the pursuit or maintenance of
such Intellectual Property Collateral is no longer desirable in the conduct of
such Grantor's business and that the loss thereof would not be reasonably likely
to have a Material Adverse Effect (such Intellectual Property Collateral being
the "PERMITTED ABANDONED IP"), in which case, such Grantor will give prompt
notice of any such abandonment to the Administrative Agent.

                  (b) Each Grantor agrees promptly to notify the Administrative
Agent if such Grantor learns (i) that any item of the Intellectual Property
Collateral (other than Permitted Abandoned IP) may have become abandoned, placed
in the public domain, invalid or unenforceable, or of any adverse determination
or development regarding such Grantor's ownership of any of the Intellectual
Property Collateral (other than Permitted Abandoned IP) or its right to register
the same or to keep and maintain and enforce the same, or (ii) of any adverse
determination or the institution of any proceeding (including, without
limitation, the institution of any proceeding in the U.S. Patent and Trademark
Office or any court) regarding any item of the Intellectual Property Collateral
(other than Permitted Abandoned IP) except if such adverse determination or the
institution of such a proceeding is not reasonably likely to have a Material
Adverse Effect.

                  (c) In the event that any Grantor becomes aware that any item
of the Intellectual Property Collateral, which Intellectual Property Collateral
is of material value to the Domestic Borrower and its Subsidiaries taken as a
whole, is being infringed or misappropriated by a third party, such Grantor
shall promptly notify the Administrative Agent and shall take such actions, at
its expense, as such Grantor or the Administrative Agent deems reasonable and
appropriate under the circumstances to protect such Intellectual Property
Collateral, including, without limitation, suing for infringement or
misappropriation and for an injunction against such infringement or
misappropriation.

                  (d) Each Grantor shall use proper statutory notice in
connection with its use of each item of its Intellectual Property Collateral,
which Intellectual Property Collateral is of material value to the Domestic
Borrower and its Subsidiaries taken as a whole. No Grantor shall do or permit
any act or knowingly omit to do any act whereby any of its Intellectual Property
Collateral, which Intellectual Property Collateral is of material value to the
Domestic Borrower and its Subsidiaries taken as a whole, may lapse or become
invalid or unenforceable or placed in the public domain.

                  (e) Each Grantor shall take all steps which it or the
Administrative Agent deems reasonable and appropriate under the circumstances to
preserve and protect each item of

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                                       20

its Intellectual Property Collateral (other than Permitted Abandoned IP),
including, without limitation, maintaining the quality of any and all products
or services used or provided in connection with any of the Trademarks,
consistent with the quality of the products and services as of the date hereof,
and taking all steps necessary to ensure that all licensed users of any of the
Trademarks use such consistent standards of quality.

                  (f) With respect to its Intellectual Property Collateral, each
of the Grantors listed on the signature pages of this Agreement has executed an
agreement in substantially the form of Exhibit C to the Existing Security
Agreement, and each other Grantor hereby agrees to execute an agreement, in
substantially the form set forth in Exhibit C hereto (each an "INTELLECTUAL
PROPERTY SECURITY AGREEMENT"), for recording the security interest granted
hereunder to the Administrative Agent in such Intellectual Property Collateral
with the U.S. Patent and Trademark Office, the U.S. Copyright Office and any
other governmental authorities necessary to perfect the security interest
hereunder in such Intellectual Property Collateral.

                  (g) Each Grantor agrees that, should it obtain an ownership
interest in any item of the type set forth in Section 1(f) which is not on the
date hereof a part of the Intellectual Property Collateral (the "AFTER-ACQUIRED
INTELLECTUAL PROPERTY"), (i) the provisions of Section 1 shall automatically
apply thereto, (ii) any such After-Acquired Intellectual Property and, in the
case of trademarks, the goodwill of the business connected therewith or
symbolized thereby, shall automatically become part of the Intellectual Property
Collateral subject to the terms and conditions of this Agreement with respect
thereto, (iii) such Grantor shall give prompt written notice thereof to the
Administrative Agent in accordance herewith and (iv) such Grantor shall execute
and deliver to the Administrative Agent a supplement to this Agreement, each
such supplement being in the form of Exhibit D hereto (an "IP SECURITY AGREEMENT
SUPPLEMENT") covering such After-Acquired Intellectual Property as "Additional
Collateral" thereunder and as defined therein, and shall record such IP Security
Agreement Supplement with the U.S. Patent and Trademark Office, the U.S.
Copyright Office and any other governmental authorities necessary to perfect the
security interest hereunder in such After-Acquired Intellectual Property.

                  Section 15. Voting Rights; Dividends; Etc. (a) So long as no
Default under Section 6.01(a) or (f) of the Credit Agreement or Event of Default
shall have occurred and be continuing:

                  (i) Each Grantor shall be entitled to exercise any and all
         voting and other consensual rights pertaining to the Security
         Collateral of such Grantor or any part thereof for any purpose other
         than to originate entitlement orders with respect to the securities
         accounts or the commodity accounts; provided however, that such Grantor
         will not exercise or refrain from exercising any such right if such
         action would have a material adverse effect on the value of the
         Security Collateral.

                  (ii) Each Grantor shall be entitled to receive and retain any
         and all dividends, interest and other distributions paid in respect of
         the Security Collateral of such Grantor if

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                                       21

         and to the extent that the payment thereof is not otherwise prohibited
         by the terms of the Loan Documents; provided, however, that any and all

                           (A) dividends, interest and other distributions paid
                  or payable other than in cash in respect of, and instruments
                  and other property received, receivable or otherwise
                  distributed in respect of, or in exchange for, any Security
                  Collateral,

                           (B) dividends and other distributions paid or payable
                  in cash in respect of any Security Collateral in connection
                  with a partial or total liquidation or dissolution or in
                  connection with a reduction of capital, capital surplus or
                  paid-in-surplus and

                           (C) cash paid, payable or otherwise distributed in
                  respect of principal of, or in redemption of, or in exchange
                  for, any Security Collateral

         shall be, and shall be forthwith delivered to the Administrative Agent
         to hold as, Security Collateral and shall, if received by such Grantor,
         be received in trust for the benefit of the Administrative Agent, be
         segregated from the other property or funds of such Grantor and be
         forthwith delivered to the Administrative Agent as Security Collateral
         in the same form as so received (with any necessary indorsement).

                  (iii) The Administrative Agent will execute and deliver (or
         cause to be executed and delivered) to each Grantor all such proxies
         and other instruments as such Grantor may reasonably request for the
         purpose of enabling such Grantor to exercise the voting and other
         rights that it is entitled to exercise pursuant to paragraph (i) above
         and to receive the dividends or interest payments that it is authorized
         to receive and retain pursuant to paragraph (ii) above.

                  (b) Upon the occurrence and during the continuance of a
Default under Section 6.01(a) or (f) of the Credit Agreement or an Event of
Default:

                  (i) All rights of each Grantor (x) to exercise or refrain from
         exercising the voting and other consensual rights that it would
         otherwise be entitled to exercise pursuant to Section 15(a)(i) shall,
         upon notice to such Grantor by the Administrative Agent, cease and (y)
         to receive the dividends, interest and other distributions that it
         would otherwise be authorized to receive and retain pursuant to Section
         15(a)(ii) shall automatically cease, and all such rights shall
         thereupon become vested in the Administrative Agent, which shall
         thereupon have the sole right to exercise or refrain from exercising
         such voting and other consensual rights and to receive and hold as
         Security Collateral such dividends, interest and other distributions.

                  (ii) All dividends, interest and other distributions that are
         received by any Grantor contrary to the provisions of paragraph (i) of
         this Section 15(b) shall be received in trust for the benefit of the
         Administrative Agent, shall be segregated from other funds

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                                       22

         of such Grantor and shall be forthwith paid over to the Administrative
         Agent as Security Collateral in the same form as so received (with any
         necessary indorsement).

                  (iii) The Administrative Agent shall be authorized to send to
         each Securities Intermediary or Commodity Intermediary as defined in
         and under any Control Agreement a Notice of Exclusive Control as
         defined in and under such Control Agreement.

                  Section 16. Transfers and Other Liens; Additional Shares. (a)
Each Grantor agrees that it will not (i) sell, assign or otherwise dispose of,
or grant any option with respect to, any of the Collateral, other than sales,
assignments and other dispositions of Collateral, and options relating to
Collateral, permitted under the terms of the Credit Agreement, or (ii) create or
suffer to exist any Lien upon or with respect to any of the Collateral of such
Grantor except for the pledge, assignment and security interest created under
this Agreement and Liens permitted under the Credit Agreement.

                  (b) Each Grantor agrees that it (i) shall cause each issuer of
the Pledged Shares that is a Subsidiary of such Grantor not to issue any stock
or other securities in addition to or in substitution for the Pledged Shares
issued by such issuer, except (A) to such Grantor or one or more of the other
Grantors or (B) or the issuance of any such Equity Interests that is expressly
permitted under 5.02(h) of the Credit Agreement, and (ii) shall pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all additional shares of stock or other securities; provided, that none
of the Grantors shall be required to pledge any Equity Interest in any Foreign
Corporation owned or otherwise held thereby which, when aggregated with all of
the other Equity Interests in such Foreign Corporation pledged by such Grantor
and the other Grantors, would result in more than 66% of the Voting Equity
Interests being pledged to the Administrative Agent, on behalf of the Secured
Parties, under this Agreement and the other Collateral Documents (although all
of the Non-Voting Equity Interests shall be pledged by each of the Grantors that
owns or otherwise holds any such Non-Voting Equity Interest therein); provided,
however, that, if, as a result of any change in the tax laws of the United
States of America after the date of this Agreement, the pledge by such Grantor
of any additional Equity Interests in any such Foreign Corporation to the
Administrative Agent, on behalf of the Secured Parties, under this Agreement or
any of the other Collateral Documents would not result in an increase in the
current or future aggregate net consolidated tax liabilities of the Domestic
Borrower and its Subsidiaries, then, promptly after the change in such laws, all
such additional Equity Interests shall be so pledged under this Agreement or
such other Collateral Document, as applicable.

                  Section 17. Administrative Agent Appointed Attorney-in-Fact.
Each Grantor hereby irrevocably appoints the Administrative Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time during the
continuation of a Default under Section 6.01(a) or (f) of the Credit Agreement
or any Event of Default in the Administrative Agent's discretion, to take any
action and to execute any instrument that the Administrative Agent may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation:

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                                       23

                  (a) to obtain and adjust insurance required to be paid to the
         Administrative Agent pursuant to Section 12,

                  (b) to ask for, demand, collect, sue for, recover, compromise,
         receive and give acquittance and receipts for moneys due and to become
         due under or in respect of any of the Collateral,

                  (c) to receive, indorse and collect any drafts or other
         instruments, documents and chattel paper, in connection with clause (a)
         or (b) above, and

                  (d) to file any claims or take any action or institute any
         proceedings that the Administrative Agent may deem necessary or
         desirable for the collection of any of the Collateral or otherwise to
         enforce compliance with the terms and conditions of any Assigned
         Agreement or the rights of the Administrative Agent with respect to any
         of the Collateral.

                  Section 18. Administrative Agent May Perform. If any Grantor
fails to perform any agreement contained herein, the Administrative Agent may,
but without any obligation to do so and without notice, itself perform, or cause
performance of, such agreement, and the expenses of the Administrative Agent
incurred in connection therewith shall be payable by such Grantor under Section
21(b).

                  Section 19. The Administrative Agent's Duties. (a) The powers
conferred on the Administrative Agent hereunder are solely to protect the
Secured Parties= interest in the Collateral and shall not impose any duty upon
it to exercise any such powers. Except for the safe custody of any Collateral in
its possession and the accounting for moneys actually received by it hereunder,
the Administrative Agent shall have no duty as to any Collateral, as to
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
any Secured Party has or is deemed to have knowledge of such matters, or as to
the taking of any necessary steps to preserve rights against any parties or any
other rights pertaining to any Collateral. The Administrative Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which it accords its own property.

                  (b) Anything contained herein to the contrary notwithstanding,
the Administrative Agent may from time to time, when the Administrative Agent
deems it to be necessary, appoint one or more subagents (each a "SUBAGENT") for
the Administrative Agent hereunder with respect to all or any part of the
Collateral. In the event that the Administrative Agent so appoints any Subagent
with respect to any Collateral, (i) the assignment and pledge of such Collateral
and the security interest granted in such Collateral by each Grantor hereunder
shall be deemed for purposes of this Security Agreement to have been made to
such Subagent, in addition to the Administrative Agent, for the ratable benefit
of the Secured Parties, as security for

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                                       24

the Secured Obligations of such Grantor, (ii) such Subagent shall automatically
be vested, in addition to the Administrative Agent, with all rights, powers,
privileges, interests and remedies of the Administrative Agent hereunder with
respect to such Collateral, and (iii) the term "Administrative Agent," when used
herein in relation to any rights, powers, privileges, interests and remedies of
the Administrative Agent with respect to such Collateral, shall include such
Subagent; provided, however, that no such Subagent shall be authorized to take
any action with respect to any such Collateral unless and except to the extent
expressly authorized in writing by the Administrative Agent.

                  Section 20. Remedies. If any Event of Default shall have
         occurred and be continuing:

                  (a) The Administrative 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 upon default under the N.Y. Uniform Commercial Code
         (whether or not the N.Y. Uniform Commercial Code 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 request
         of the Administrative Agent forthwith, assemble all or part of the
         Collateral as directed by the Administrative Agent and make it
         available to the Administrative Agent at a place and time to be
         designated by the Administrative Agent that is reasonably convenient to
         both parties; (ii) without notice except as specified below, sell the
         Collateral or any part thereof in one or more parcels at public or
         private sale, at any of the Administrative Agent's offices or
         elsewhere, for cash, on credit or for future delivery, and upon such
         other terms as the Administrative Agent may deem commercially
         reasonable; (iii) occupy any premises owned or leased by any of the
         Grantors where the Collateral or any part thereof is assembled or
         located for a reasonable period in order to effectuate its rights and
         remedies hereunder or under law, without obligation to such Grantor in
         respect of such occupation; and (iv) exercise any and all rights and
         remedies of any of the Grantors under or in connection with the
         Receivables and the Related Contracts or otherwise in respect of the
         Collateral, including, without limitation, any and all rights of such
         Grantor to demand or otherwise require payment of any amount under, or
         performance of any provision of, the Receivables and the Related
         Contracts. Each Grantor agrees that, to the extent notice of sale shall
         be required by law, at least ten days= 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
         Administrative Agent shall not be obligated to make any sale of
         Collateral regardless of notice of sale having been given. The
         Administrative 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) Any cash held by or on behalf of the Administrative Agent
         and all cash proceeds received by or on behalf of the Administrative
         Agent in respect of any sale of, collection from, or other realization
         upon all or any part of the Collateral may, in the

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                                       25

         discretion of the Administrative Agent, be held by the Administrative
         Agent as collateral for, and/or then or at any time thereafter applied
         (after payment of any amounts payable to the Administrative Agent
         pursuant to Section 21) in whole or in part by the Administrative Agent
         for the ratable benefit of the Secured Parties against, all or any part
         of the Secured Obligations, in the following manner:

                           (i) first, to the Agents for any amounts owing to the
                  Agents pursuant to Section 8.04 of the Credit Agreement or
                  otherwise under the Loan Documents, ratably in accordance with
                  such respective amounts then owing to the Agents;

                           (ii) second, deposited as Collateral in the L/C
                  Collateral Account up to an amount equal to 100% of the
                  aggregate Available Amount of all outstanding Letters of
                  Credit, provided that in the event that any such Letter of
                  Credit is drawn, the Administrative Agent shall pay to the
                  Issuing Bank that issued such Letter of Credit the amount held
                  in the L/C Collateral Account in respect of such Letter of
                  Credit, provided further that, to the extent that any such
                  Letter of Credit shall expire or terminate undrawn and as a
                  result thereof the amount of the Collateral in the L/C
                  Collateral Account shall exceed the aggregate Available Amount
                  of all then outstanding Letters of Credit, such excess amount
                  of such Collateral shall be applied in accordance with the
                  order of priority set out in this Section 20(b);

                           (iii) third, to the Issuing Bank and the Swing Line
                  Lenders for any amounts then owing to them, in their
                  capacities as such, under the Loan Documents ratably in
                  accordance with such respective amounts then owing to the
                  Issuing Bank and the Swing Line Lenders (including, without
                  limitation, the Dollar Equivalent of any amount due to any
                  Offshore Swing Line Lender in an Offshore Currency); and

                           (iv) fourth, to the Lender Parties and the Hedge
                  Banks, respectively, for any amount then owing to them, in
                  their capacities as such, under the Loan Documents ratably in
                  accordance with such respective amounts then owing to the
                  Lender Parties and the Hedge Banks, provided that for purposes
                  of this Section 20, the amount owing to any such Hedge Bank
                  pursuant to any Secured Hedge Agreement to which it is a party
                  (other than any amount theretofore accrued and unpaid) shall
                  be deemed to be equal to the Agreement Value therefor.

         Any surplus of such cash or cash proceeds held by or on the behalf of
         the Administrative Agent and remaining after payment in full of all the
         Secured Obligations shall be paid over to the applicable Grantor or to
         whomsoever may be lawfully entitled to receive such surplus.

                  (c) All payments received by any Grantor in respect of the
         Collateral shall be received in trust for the benefit of the
         Administrative Agent, shall be segregated from

                               Security Agreement

<PAGE>   225

                                       26

         other funds of such Grantor and shall be forthwith paid over to the
         Administrative Agent in the same form as so received (with any
         necessary indorsement).

                  (d) The Administrative Agent may, without notice to any
         Grantor except as required by law and at any time or from time to time,
         charge, set-off and otherwise apply all or any part of the Secured
         Obligations against any funds held in the Collateral Account or the L/C
         Collateral Account or in any deposit account related thereto.

                  (e) In the event of any sale or other disposition of any of
         the Intellectual Property Collateral of any Grantor, the goodwill of
         the business connected with and symbolized by any Trademarks subject to
         such sale or other disposition shall be included therein, and such
         Grantor shall supply to the Administrative Agent or its designee such
         Grantor's know-how and expertise, and documents and things relating to
         any Intellectual Property Collateral subject to such sale or other
         disposition, and such Grantor's customer lists and other records and
         documents relating to such Intellectual Property Collateral and to the
         manufacture, distribution, advertising and sale of products and
         services of such Grantor.

                  (f) If the Administrative Agent shall determine to exercise
         its right to sell all or any of the Security Collateral of any Grantor
         pursuant to this Section 20, each Grantor agrees that, upon request of
         the Administrative Agent, such Grantor will, at its own expense:

                           (i) cause each such issuer of such Security
                  Collateral to make available to its security holders, as soon
                  as practicable, an earnings statement and such other
                  information and projections as may be necessary or, in the
                  opinion of the Administrative Agent, advisable to enable the
                  Administrative Agent to effect the sale of such Security
                  Collateral; and

                           (ii) do or cause to be done all such other acts and
                  things as may be necessary to make such sale of such Security
                  Collateral or any part thereof valid and binding and in
                  compliance with applicable law.

                  (g) The Administrative Agent is authorized, in connection with
         any sale of the Security Collateral pursuant to this Section 20, to
         deliver or otherwise disclose to any prospective purchaser of the
         Security Collateral: (i) any information and projections provided to it
         pursuant to subsection (f)(i) above; and (ii) any other information in
         its possession relating to such Security Collateral.

                  (h) Each Grantor acknowledges the impossibility of
         ascertaining the amount of damages that would be suffered by the
         Secured Parties by reason of the failure by such Grantor to perform any
         of the covenants contained in subsection (f) above and, consequently,
         agrees that, if such Grantor shall fail to perform any of such
         covenants, it will pay, as liquidated damages and not as a penalty, an
         amount equal to the value of the

                               Security Agreement

<PAGE>   226

                                       27

         Security Collateral on the date the Administrative Agent shall demand
         compliance with subsection (f) above.

                  Section 21. Indemnity and Expenses. (a) Each Grantor agrees to
indemnify, defend and save and hold harmless each Secured Party and each of
their Affiliates and their respective officers, directors, employees, agents and
advisors (each, an "INDEMNIFIED PARTY") from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except to the
extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's bad faith, gross negligence or willful misconduct.

                  (b) Each Grantor will upon demand pay to the Administrative
Agent the amount of any and all reasonable expenses, including, without
limitation, the reasonable fees and expenses of its counsel and of any experts
and agents, that the Administrative 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 of such Grantor, (iii) the exercise or enforcement of any of the
rights of the Administrative Agent or the other Secured Parties hereunder or
(iv) the failure by such Grantor to perform or observe any of the provisions
hereof.

                  Section 22. Amendments; Waivers; Additional Grantors; Etc. (a)
No amendment or waiver of any provision of this Agreement, and no 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 Administrative Agent, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No failure on the part of the Administrative
Agent or any other Secured 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 such right preclude any other or further exercise
thereof or the exercise of any other right.

                  (b) Upon the execution and delivery by any Person of a
security agreement supplement in substantially the form of Exhibit A hereto
(each a "SECURITY AGREEMENT SUPPLEMENT"), (i) such Person shall be referred to
as an "ADDITIONAL GRANTOR" and shall be and become a Grantor hereunder and each
reference in this Agreement and the other Loan Documents to "Grantor" shall also
mean and be a reference to such Additional Grantor, and (ii) the supplemental
schedules I, II, III, IV and V attached to each Security Agreement Supplement
shall be incorporated into and become a part of and supplement Schedules I, II,
III, IV and V, respectively, hereto, and the Administrative Agent may attach
such supplemental schedules to such Schedules; and each reference to such
Schedules shall mean and be a reference to such Schedules as supplemented
pursuant to each Security Agreement Supplement.

                               Security Agreement

<PAGE>   227

                                       28

                  Section 23. Notices; Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopier or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered
to, in the case of the Domestic Borrower or the Administrative Agent, addressed
to it at its address specified in the Credit Agreement and, in the case of each
Grantor other than the Domestic Borrower, addressed to it at its address set
forth opposite such Grantor's name on the signature pages hereto or on the
signature page to the Security Agreement Supplement pursuant to which it became
a party hereto; or, as to any party, at such other address as shall be
designated by such party in a written notice to the other parties. All such
notices and other communications shall, when mailed, telegraphed, telecopied or
telexed, be effective when deposited in the mails, delivered to the telegraph
company, telecopied or confirmed by telex answerback, respectively, addressed as
aforesaid; except that notices and other communications to the Administrative
Agent shall not be effective until received by the Administrative Agent.
Delivery by telecopier of an executed counterpart of any amendment or waiver of
any provision of this Agreement or of any Security Agreement Supplement or
Schedule hereto shall be effective as delivery of an original executed
counterpart thereof.

                  Section 24. Continuing Security Interest; Assignments Under
the Credit Agreement. This Agreement shall create a continuing security interest
in the Collateral and shall (a) remain in full force and effect until the latest
of (i) the payment in full in cash of the Secured Obligations, (ii) the
Termination Date and (iii) the termination or expiration of all Letters of
Credit and all Secured Hedge Agreements, (b) be binding upon each Grantor, its
successors and assigns and (c) inure, together with the rights and remedies of
the Administrative Agent hereunder, to the benefit of the Secured Parties and
their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), any Lender Party may assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement (including, without limitation, all or any portion of its Commitments,
the Advances owing to it and the Note or Notes, if any, held by it) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender Party herein or otherwise, in
each case as provided in Section 8.07 of the Credit Agreement.

                  Section 25. Release; Termination. (a) Upon any sale, lease,
transfer or other disposition of any item of Collateral of any Grantor in
accordance with the terms of the Loan Documents (other than sales of Inventory
in the ordinary course of business), including, without limitation, as
contemplated by Section 8.11 of the Credit Agreement, the Administrative Agent
will, at such Grantor's expense, execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence the release of
such item of Collateral from the assignment and security interest granted
hereby; provided, however, that (i) at the time of such request and such release
no Default shall have occurred and be continuing, (ii) such Grantor shall have
delivered to the Administrative Agent, at least ten Business Days prior to the
date of the proposed release, a written request for release describing the item
of Collateral and the terms of the sale, lease, transfer or other disposition in
reasonable detail, including, without limitation, the price thereof and any
expenses in connection therewith, together with a form of release for execution
by the Administrative Agent and a certificate of such Grantor to the effect that
the transaction is in compliance with the Loan Documents and as to such other
matters as the

                               Security Agreement

<PAGE>   228

                                       29

Administrative Agent may request and (iii) the proceeds of any
such sale, lease, transfer or other disposition required to be applied, or any
payment to be made in connection therewith, in accordance with Section 2.06 of
the Credit Agreement shall, to the extent so required, be paid or made to, or in
accordance with the instructions of, the Administrative Agent when and as
required under Section 2.06 of the Credit Agreement.

                  (b) Upon the latest of (i) the payment in full in cash of the
Secured Obligations, (ii) the Termination Date and (iii) the termination or
expiration of all Letters of Credit and all Secured Hedge Agreements, the
pledge, assignment and security interest granted hereby shall terminate and all
rights to the Collateral shall revert to the applicable Grantor. Upon any such
termination, the Administrative Agent will, at the applicable Grantor's expense,
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination.

                  Section 26. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of an original
executed counterpart of this Agreement.

                  Section 27. The Mortgages. In the event that any of the
Collateral hereunder is also subject to a valid and enforceable Lien under the
terms of any Mortgage and the terms of such Mortgage are inconsistent with the
terms of this Agreement, then with respect to such Collateral, the terms of such
Mortgage shall be controlling in the case of fixtures and real estate leases,
letting and licenses of, and contracts and agreements relating to the lease of,
real property, and the terms of this Agreement shall be controlling in the case
of all other Collateral.

                  Section 28. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York.

                               Security Agreement

<PAGE>   229

                                       30

                  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.

                                       SOVEREIGN SPECIALTY CHEMICALS, INC.

                                       By
                                         ------------------------------------
                                         Title:

Address for Notices:                   SIA ADHESIVES, INC,
-------------------
123 West Burtges Street
Akron, OH 44311
                                       By
                                         ------------------------------------
                                         Title:

Address for Notices:                   PIERCE & STEVENS CORP.
-------------------
710 Ohio Street
Buffalo, NY 14203
                                       By
                                         ------------------------------------
                                         Title:

Address for Notices:                   OSI SEALANTS, INC.
-------------------
7405 Production Drive
Mentor, OH 44060
                                       By
                                         ------------------------------------
                                         Title:

Address for Notices:                   TANNER CHEMICALS, INC.
-------------------
9 Furman Hall Court
Greenville, SC 29602
                                       By
                                         ------------------------------------
                                         Title:

                               Security Agreement

<PAGE>   230

                                                                EXHIBIT A TO THE
                                                              SECURITY AGREEMENT

                      FORM OF SECURITY AGREEMENT SUPPLEMENT

                                         [Date of Security Agreement Supplement]

The Chase Manhattan Bank,
  as the Administrative Agent for the
  Secured Parties referred to in the
Credit Agreement referred to below

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

---------------------------------
   Attn:
         ------------------------

                       Sovereign Specialty Chemicals, Inc.

Ladies and Gentlemen:

                  Reference is made to (i) the Amended and Restated Credit
Agreement dated as of April 6, 2000 (as such agreement may be further amended
and restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among Sovereign Specialty Chemicals, Inc., a Delaware corporation,
as the Domestic Borrower, the Lender Parties party thereto, The Chase Manhattan
Bank, as administrative agent for the Lender Parties (together with any
successor administrative agent appointed pursuant to Article VII of the Credit
Agreement, the "ADMINISTRATIVE AGENT"), and (ii) the Amended and Restated
Security Agreement dated as of April 6, 2000 (as such agreement may be further
amended and restated, supplemented or otherwise modified from time to time, the
"SECURITY AGREEMENT"), made by the Grantors from time to time party thereto in
favor of the Administrative Agent for the Secured Parties. Terms defined in the
Credit Agreement or the Security Agreement and not otherwise defined herein are
used herein as defined in the Credit Agreement or the Security Agreement.

                  Section 1. Grant of Security. The undersigned hereby assigns
and pledges to the Administrative Agent for the ratable benefit of the Secured
Parties, and hereby grants to the Administrative Agent for the ratable benefit
of the Secured Parties, a security interest in, all of its right, title and
interest in and to all of the Collateral of the undersigned, whether now owned
or hereafter acquired by the undersigned, wherever located and whether now or
hereafter existing or arising, including, without limitation, the property and
assets of the undersigned set forth on the attached supplemental schedules to
the Schedules to the Security Agreement.

                               Security Agreement
<PAGE>   231
                                      A-2

                  Section 2. Security for Obligations. The pledge and assignment
of, and the grant of a security interest in, the Collateral by the undersigned
under this Security Agreement Supplement and the Security Agreement secures the
payment of all Obligations of the undersigned now or hereafter existing under or
in respect of the Loan Documents, whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations, interest,
premiums, penalties, fees, indemnifications, contract causes of action, costs,
expenses or otherwise.

                  Section 3. Supplements to Security Agreement Schedules. The
undersigned has attached hereto supplemental Schedules I, II, III, IV and V to
Schedules I, II, III, IV and V, respectively, to the Security Agreement, and the
undersigned hereby certifies, as of the date first above written, that such
supplemental schedules have been prepared by the undersigned in substantially
the form of the equivalent Schedules to the Security Agreement and are complete
and correct in all material respects.

                  Section 4. Representations and Warranties. The undersigned
hereby makes each representation and warranty set forth in Section 9 of the
Security Agreement (as supplemented by the attached supplemental schedules) to
the same extent as each other Grantor.

                  Section 5. Obligations Under the Security Agreement. The
undersigned hereby agrees, as of the date first above written, to be bound as a
Grantor by all of the terms and provisions of the Security Agreement to the same
extent as each of the other Grantors. The undersigned further agrees, as of the
date first above written, that each reference in the Security Agreement to an
"Additional Grantor" or a "Grantor" shall also mean and be a reference to the
undersigned.

                  Section 6. Governing Law. This Security Agreement Supplement
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_______________________________
                                           Title:

                                           Address for notices:

                                           __________________________
                                           __________________________
                                           __________________________

                               Security Agreement
<PAGE>   232

                                                                EXHIBIT B TO THE
                                                              SECURITY AGREEMENT

                         FORM OF PLEDGED ACCOUNT LETTER

                                             ---------------, ----

[Name and address
of Pledged Account Bank]

                              [Name of the Grantor]

Gentlemen/women:

                  Reference is made to the [lockbox accounts] [and] deposit
accounts listed on Schedule I hereto (such deposit accounts being, collectively,
the "PLEDGED ACCOUNTS") maintained with you by                            (the
"GRANTOR"). Pursuant to the Amended and Restated Security Agreement dated as of
April 6, 2000 (as such agreement may be further amended and restated,
supplemented or otherwise modified from time to time, the "SECURITY AGREEMENT"),
the Grantor has granted to The Chase Manhattan Bank, as Administrative Agent
(the "ADMINISTRATIVE AGENT") for the Secured Parties referred to in the Amended
and Restated Credit Agreement dated as of April 6, 2000 (as such agreement may
be further amended and restated, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT") with [Sovereign Specialty Chemicals, Inc.] [the
Grantor], a security interest in, and sole dominion and control of, certain
property of the Grantor, including, among other things, the following (the
"ACCOUNT COLLATERAL"): each Pledged Account, all funds held therein and all
certificates and instruments, if any, from time to time representing or
evidencing such Pledged Account, all interest, dividends, distributions, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the then
existing Account Collateral and all proceeds of any and all of the foregoing
Account Collateral. It is a condition to the continued maintenance of the
Pledged Accounts with you that you agree to this letter agreement.

                  By executing this letter agreement, you acknowledge notice of,
and consent to the grant of the security interest in, and the pledge and
assignment of, the Account Collateral to the Administrative Agent for the
benefit of the Secured Parties and you confirm to the Administrative Agent that
the description of the Pledged Accounts set forth on Schedule I hereto is
correct and that you have not received any notice of any other security interest
in, pledge or assignment of, or other claim (other than that of the Grantor) on,
any of the Pledged Accounts. Further, you hereby agree with the Administrative
Agent that:

                              Security Agreement
<PAGE>   233
                                      B-2

                  (a) Notwithstanding anything to the contrary in any other
         agreement relating to any Pledged Account, each Pledged Account is and
         will be subject to the security interest of the Secured Parties in the
         Pledged Accounts, will have the title set forth opposite the account
         number therefor on Schedule I hereto and will be subject to written
         instructions from an officer of the Administrative Agent as provided in
         this letter agreement.

                  (b) Unless and until the Administrative Agent shall deliver
         written notice to you (a "DIRECTION NOTICE") directing you to no longer
         permit the Grantor to withdraw funds from the Pledged Accounts (which
         notice shall be delivered only if an Event of Default has occurred and
         is continuing under the Credit Agreement), the Grantor is authorized by
         the Administrative Agent to withdraw funds credited to the Pledged
         Accounts. Upon delivery of a Direction Notice by the Administrative
         Agent to you and until the Direction of Notice is withdrawn in writing
         by the Administrative Agent, you shall no longer follow instructions
         from the Grantor or any person acting on the behalf of the Grantor with
         respect to the Pledged Accounts and shall instead take directions
         solely from the Administrative Agent (including instructions to
         withdraw and transfer funds from the Pledged Accounts).

                  (c) Beginning on the date of your receipt of a Direction
         Notice and notwithstanding anything herein or elsewhere to the
         contrary, the Administrative Agent, and not the Grantor, shall be
         irrevocably exclusively entitled to exercise any and all rights
         (including, without limitation, those specified in paragraph (b) above)
         in respect of or in connection with each Pledged Account, including,
         without limitation, the right to direct dispositions of the funds in
         each Pledged Account.

                  (d) All transfers referred to in paragraph (c) above shall be
         made by you irrespective of, and without deduction for, any
         counterclaim, defense, recoupment or set-off (except that you may set
         off (i) all amounts due to you in respect of your customary fees and
         expenses for the routine maintenance and operation of the applicable
         Pledged Account, and (ii) the face amount of any checks which have been
         credited to such Pledged Account but are subsequently returned unpaid
         because of uncollected or insufficient funds) and shall be final, and
         you will not seek to recover from the Administrative Agent for any
         reason any such payment once made.

                  (e) All service charges and fees with respect to any Pledged
         Account shall be payable by the Grantor, and deposited checks returned
         for any reason shall not be charged to the applicable Pledged Account
         (except to the extent of any credit previously effected with respect to
         such returned check).

                  You hereby represent and warrant that the person executing
this letter agreement on your behalf is duly authorized to do so.

                              Security Agreement

<PAGE>   234
                                      B-3

               You agree to give the Administrative Agent and the Grantor
prompt notice if any Pledged Account becomes subject to any writ, judgment,
warrant of attachment, execution or similar process.

                  No amendment or waiver of any provision of this letter
agreement, nor consent to any departures by you or the Grantor herefrom, shall
be effective unless the same shall be in writing as signed by you, the Grantor
and the Administrative Agent.

                  You shall not assign or transfer your rights or obligations
hereunder (other than to the Administrative Agent) without the prior written
consent of the Administrative Agent and the Grantor. Subject to the preceding
sentence, this Agreement shall be binding upon each of the parties hereto and
their respective successor and assigns, and shall inure to the benefit of the
Secured Parties and their successors, transferees and assigns. You may terminate
this letter agreement upon thirty days= prior written notice to the Grantor and
the Administrative Agent. Upon such termination you shall close the Pledged
Accounts and transfer all funds in the Pledged Accounts to an account as
instructed by the Administrative Agent at such time. After any such termination,
you shall nonetheless remain obligated promptly to transfer to such other
account as instructed by the Administrative Agent at such time all funds and
other property received in respect of the Pledged Accounts.

                  This letter agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which when
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this letter agreement by telecopier
shall be effective as delivery of an original executed counterpart of this
letter agreement.

                  Any notice, demand or other communication required or
permitted to be given hereunder shall be in writing and may be personally served
or sent by telecopier or by courier service or by United States mail and shall
be deemed to have been delivered when delivered in person or by courier service
or by telecopier or three (3) Business Days after deposit in the United States
mail (registered or certified, with postage prepaid and properly addressed). For
the purposes hereof, (i) the addresses of the parties hereto shall be as set
forth below each party's name below, or, as to each party, at such other address
as may be designated by such party in a written notice to the other party and
the Agent and (ii) the address of the Administrative Agent shall be The Chase
Manhattan Bank, as administrative agent, _________________________, Attention:
_________________, or at such other address as may be designated by the
Administrative Agent in a written notice to each of the parties hereto.

                               Security Agreement
<PAGE>   235

                                      B-4

                  Please indicate your acknowledgment of and agreement to the
provisions of this letter agreement by signing in the appropriate space provided
below and returning this letter agreement to ________________, _______________,
__________, ________ ______, Telecopier No.: (212) ___-____, Attention:
________________. If you elect to deliver this letter agreement by telecopier,
please arrange for the executed original to follow by next-day courier.

                  This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York.

                                             Very truly yours,

                                             [NAME OF GRANTOR]

                                             By_________________________________
                                               Title:

                                             THE CHASE MANHATTAN BANK, as
                                             Administrative Agent

                                             By_________________________________
                                               Title:

Acknowledged and agreed to as of
the date first above written:

[NAME OF PLEDGED ACCOUNT BANK]

By_____________________________
  Title:

                               Security Agreement

<PAGE>   236

                                                               SCHEDULE I TO THE
                                                          PLEDGED ACCOUNT LETTER

ACCOUNT NAME              ACCOUNT NUMBER                     LOCKBOX NUMBER****
------------              --------------                     ------------------

----------------------
**** As applicable.

                               Security Agreement
<PAGE>   237

                                                                EXHIBIT C TO THE
                                                              SECURITY AGREEMENT

                FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT

                  This INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"IP SECURITY AGREEMENT") dated as of _________ __, 200_ (this "AGREEMENT"), is
made by the Persons listed on the signature pages hereof (collectively, the
"GRANTORS") in favor of The Chase Manhattan Bank ("CHASE"), as Administrative
Agent (the "ADMINISTRATIVE AGENT") for the Secured Parties (as defined in the
Credit Agreement referred to below).

                  WHEREAS, Sovereign Specialty Chemicals, Inc., a Delaware
corporation, has entered into an Amended and Restated Credit Agreement dated as
of April 6, 2000 (as such agreement may be further amended and restated,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"),
with the Administrative Agent and the Lender Parties party thereto. Terms
defined in the Credit Agreement and not otherwise defined herein are used herein
as defined in the Credit Agreement.

                  WHEREAS, as a condition precedent to the making of Advances
and the issuance of Letters of Credit by the Lender Parties under the Credit
Agreement and the entry into Secured Hedge Agreements by the Hedge Banks from
time to time, each Grantor has become a party to that certain Amended and
Restated Security Agreement dated as of April 6, 2000, made by the Grantors to
the Administrative Agent (as such agreement may be further amended and restated,
supplemented or otherwise modified from time to time, the "SECURITY AGREEMENT").

                  WHEREAS, under the terms of the Security Agreement, the
Grantors have granted a security interest in, among other property, certain
intellectual property of the Grantors to the Administrative Agent for the
ratable benefit of the Secured Parties, and have agreed as a condition thereof
to execute this IP Security Agreement covering such intellectual property for
recording with the U.S. Patent and Trademark Office, the United States Copyright
Office and other governmental authorities.

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each Grantor agrees as
follows:

                  SECTION 1. Grant of Security. Each Grantor hereby grants to
the Administrative Agent for the ratable benefit of the Secured Parties a
security interest in and to all of such Grantor's right, title and interest in
and to the following (the "COLLATERAL"):

                               Security Agreement

<PAGE>   238

                                       C-2

                  (i) the United States, international, and foreign patents,
         patent applications and patent licenses set forth in Schedule A hereto
         (as such Schedule A may be supplemented from time to time by
         supplements to the Security Agreement and this IP Security Agreement,
         each such supplement being in substantially the form of Exhibit G to
         the Security Agreement (an "IP SECURITY AGREEMENT SUPPLEMENT"),
         executed and delivered by such Grantor to the Administrative Agent from
         time to time), together with all reissues, divisions, continuations,
         continuations-in-part, extensions and reexaminations thereof, and all
         rights therein provided by international treaties or conventions (the
         "PATENTS");

                  (ii) the United States and foreign trademark and service mark
         registrations, applications (other than any United States intent-to-use
         trademark application prior to the filing and acceptance of a Statement
         of Use or an Amendment to Allege Use in connection therewith to the
         extent that a valid security interest may not be taken in such
         intent-to-use trademark application under applicable law), and licenses
         set forth in Schedule B hereto (as such Schedule B may be supplemented
         from time to time by IP Security Agreement Supplements executed and
         delivered by such Grantor to the Administrative Agent from time to
         time) together in each case with all goodwill of the business connected
         therewith and symbolized thereby and all rights corresponding thereto
         throughout the world and all other rights of any kind whatsoever
         pertaining thereto (the "TRADEMARKS");

                  (iii) the copyrights, United States and foreign copyright
         registrations and applications and copyright licenses set forth in
         Schedule C hereto (as such Schedule C may be supplemented from time to
         time by IP Security Agreement Supplements executed and delivered by
         such Grantor to the Administrative Agent from time to time) (the
         "COPYRIGHTS");

                  (iv) any and all claims for damages for past, present and
         future infringement, misappropriation or breach with respect to the
         Patents, Trademarks and Copyrights, with the right, but not the
         obligation, to sue for and collect, or otherwise recover, such damages;
         and

                  (v)      any and all proceeds of the foregoing.

                  SECTION 2. Security for Obligations. The pledge and assignment
of, and the grant of a security interest in, the Collateral by each Grantor
under this IP Security Agreement secures the payment of all Obligations of such
Grantor now or hereafter existing under or in respect of the Loan Documents,
whether direct or indirect, absolute or contingent, and whether for principal,
reimbursement obligations, interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or otherwise.

                               Security Agreement

<PAGE>   239

                  SECTION 3. Recordation. Each Grantor authorizes and requests
that the Register of Copyrights, the Commissioner of Patents and Trademarks and
any other applicable government officer record this IP Security Agreement.

                  SECTION 4. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.

                  SECTION 5. Grants, Rights and Remedies. This IP Security
Agreement has been entered into in conjunction with the provisions of the
Security Agreement. Each Grantor does hereby acknowledge and confirm that the
grant of the security interest hereunder to, and the rights and remedies of, the
Administrative Agent with respect to the Collateral are more fully set forth in
the Security Agreement, the terms and provisions of which are incorporated
herein by reference as if fully set forth herein.

                  SECTION 6. Governing Law. This IP Security Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.

                  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.

Address for Notices:                   [NAME OF GRANTOR]
______________________
______________________                 By_______________________________________
______________________                   Name:
                                         Title:

Address for Notices:                   [NAME OF GRANTOR]
______________________
______________________                 By_______________________________________
______________________                   Title:

                               Security Agreement

<PAGE>   240

                                                                EXHIBIT D TO THE
                                                              SECURITY AGREEMENT

           FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT

                  This INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT (this
"IP SECURITY AGREEMENT Supplement") dated _________ __, ____, is made by the
Person listed on the signature page hereof (the "GRANTOR") in favor of The Chase
Manhattan Bank ("CHASE"), as Administrative Agent (the "ADMINISTRATIVE AGENT")
for the Secured Parties (as defined in the Credit Agreement referred to below).

                  WHEREAS, Sovereign Specialty Chemicals, Inc., a Delaware
corporation, has entered into a Credit Agreement dated as of December 29, 1999,
as amended and restated pursuant to an Amended and Restated Credit Agreement
dated as of April 6, 2000 (as such agreement may be further amended and
restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), with the Administrative Agent and the Lender Parties party thereto.
Terms defined in the Credit Agreement and not otherwise defined herein are used
herein as defined in the Credit Agreement.

                  WHEREAS, pursuant to the Credit Agreement, the Grantor and
certain other Persons have executed and delivered that certain Security
Agreement dated December 29, 1999, as amended and restated pursuant to an
Amended and Restated Security Agreement dated as of April 6, 2000, made by the
Grantor and such other Persons to the Administrative Agent (as such agreement
may be further amended and restated, supplemented or otherwise modified from
time to time, the "SECURITY AGREEMENT"). To create a short form version of the
Security Agreement covering certain intellectual property of the Grantor and
such other Persons for recording with the U.S. Patent and Trademark Office, the
United States Copyright Office and other governmental authorities, the Grantor
and such other Persons have executed and delivered that certain Intellectual
Property Security Agreement made by the Grantor and such other Persons to the
Administrative Agent dated _________ __, ____ (as amended and restated,
supplemented or otherwise modified from time to time, the "IP SECURITY
AGREEMENT").

                  WHEREAS, under the terms of the Security Agreement and the IP
Security Agreement, the Grantor has granted a security interest in the
Additional Collateral (as defined in Section 1 below) of the Grantor to the
Administrative Agent for the ratable benefit of the Secured Parties and has
agreed as a condition thereof to execute this IP Security Agreement Supplement
for recording with the U.S. Patent and Trademark Office, the United States
Copyright Office and other governmental authorities.

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Grantor agrees as
follows:

                               Security Agreement

<PAGE>   241

                                       D-2

                  SECTION 1. Confirmation of Grant of Security. The Grantor
hereby acknowledges and confirms the grant of a security interest to the
Administrative Agent for the ratable benefit of the Secured Parties under the
Security Agreement and the IP Security Agreement in and to all of the Grantor's
right, title and interest in and to the following (the "ADDITIONAL COLLATERAL"):

                  (i) The United States, international, and foreign patents,
         patent applications, and patent licenses set forth in Schedule A
         hereto, together with all reissues, divisions, continuations,
         continuations-in-part, extensions and reexaminations thereof, and all
         rights therein provided by international treaties or conventions (the
         "PATENTS");

                  (ii) The United States and foreign trademark and service mark
         registrations, applications (other than any United States intent-to-use
         trademark application prior to the filing and acceptance of a Statement
         of Use or an Amendment to Allege Use in connection therewith to the
         extent that a valid security interest may not be taken in such
         intent-to-use trademark application under applicable law), and licenses
         set forth in Schedule B hereto together with all goodwill of the
         business connected therewith and symbolized thereby and all rights
         corresponding thereto throughout the world and all other rights of any
         kind whatsoever pertaining thereto (the "TRADEMARKS");

                  (iii) The copyrights, United States and foreign copyright
         registrations and applications and copyright licenses set forth in
         Schedule C hereto (the "COPYRIGHTS");

                  (iv) any and all claims for damages for past, present and
         future infringement, misappropriation or breach with respect to the
         Patents, Trademarks and Copyrights, with the right, but not the
         obligation, to sue for and collect, or otherwise recover, such damages;
         and

                  (v)      any and all proceeds of the foregoing.

                  SECTION 2. Supplement to Security Agreement and IP Security
Agreement. Schedule V to the Security Agreement and Schedules A, B and C to the
IP Security Agreement are each, effective as of the date hereof, hereby
supplemented to add to such Schedules the Additional Collateral.

                  SECTION 3. Recordation. The Grantor authorizes and requests
that the Register of Copyrights, the Commissioner of Patents and Trademarks and
any other applicable government officer to record this IP Security Agreement
Supplement.

                  SECTION 4. Governing Law. This IP Security Agreement
Supplement shall be governed by, and construed in accordance with, the laws of
the State of New York.

                               Security Agreement

<PAGE>   242
                                      D-3

                  IN WITNESS WHEREOF, the Grantor has caused this Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.

                                    [NAME OF GRANTOR]

                                    By__________________________________________
                                      Name:
                                      Title:

                                     Address for Notices:

                               Security Agreement
<PAGE>   243

                                                                       EXHIBIT F
                                                         TO THE CREDIT AGREEMENT

                     AMENDED AND RESTATED SECURITY AGREEMENT

                            Dated as of April 6, 2000

                                      from

                         The Grantors referred to herein

                                   as Grantors

                                       to

                            The Chase Manhattan Bank

                             as Administrative Agent

                               Security Agreement
<PAGE>   244

                          T A B L E  O F  C O N T E N T S
<TABLE>
<CAPTION>

SECTION                                                                                                        PAGE
<S>                                                                                                            <C>
1.  Grant of Security.............................................................................................2

2.  Security for Obligations......................................................................................8

3.  Grantors Remain Liable........................................................................................8

4.  Delivery and Control of Security Collateral...................................................................9

5.  Maintaining the Pledged Accounts.............................................................................10

6.  Maintaining the Collateral Account and the L/C Collateral Account............................................11

7.  Investing of Amounts in the Collateral Account and the L/C Collateral Account................................12

8.  Release of Amounts...........................................................................................12

9.  Representations and Warranties...............................................................................12

10.  Further Assurances..........................................................................................15

11.  As to Equipment and Inventory...............................................................................16

12.  Insurance...................................................................................................17

13.  Place of Perfection; Records; Collection of Receivables.....................................................18

14.  As to Intellectual Property Collateral......................................................................19

15.  Voting Rights; Dividends; Etc...............................................................................21

16.  Transfers and Other Liens; Additional Shares................................................................23

17.  Administrative Agent Appointed Attorney-in-Fact.............................................................23

18.  Administrative Agent May Perform............................................................................24

19.  The Administrative Agent's Duties...........................................................................24
</TABLE>

                               Security Agreement

<PAGE>   245

<TABLE>

<S>                                                                                                             <C>
20.  Remedies....................................................................................................25

21.  Indemnity and Expenses......................................................................................28

22.  Amendments; Waivers; Additional Grantors; Etc...............................................................28

23.  Notices; Etc................................................................................................29

24.  Continuing Security Interest; Assignments Under the Credit Agreement........................................29

25.  Release; Termination........................................................................................29

26.  Execution in Counterparts...................................................................................30

27.  The Mortgages...............................................................................................30

28.  Governing Law...............................................................................................30
</TABLE>

                               Security Agreement

<PAGE>   246

                                       iii

Schedules

Schedule I     -    Pledged Shares and Pledged Debt
Schedule II    -    Locations of Equipment and Inventory
Schedule III   -    Chief Executive Office and Federal Tax Identification Number
Schedule IV    -    Patents, Trademarks and Trade Names, Copyrights and Licenses
Schedule V     -    Accounts

Exhibits

Exhibit A      -    Form of Security Agreement Supplement
Exhibit B      -    Form of Pledged Account Letter
Exhibit C      -    Form of Intellectual Property Security Agreement
Exhibit D      -    Form of Intellectual Property Security Agreement Supplement

                               Security Agreement

<PAGE>   247

                AMENDED AND RESTATED DOMESTIC SUBSIDIARY GUARANTY

                  AMENDED AND RESTATED DOMESTIC SUBSIDIARY GUARANTY dated as of
April 6, 2000 (this "GUARANTY"), made by the Persons listed on the signature
pages hereof under the caption "DOMESTIC SUBSIDIARY GUARANTORS" and the
Additional Guarantors (as defined in Section 8(b)) (such Persons so listed and
the Additional Guarantors being, collectively, the "GUARANTORS" and,
individually, each a "GUARANTOR") in favor of the Secured Parties (as defined in
the Credit Agreement referred to below).

                  PRELIMINARY STATEMENT. Sovereign Specialty Chemicals, Inc., a
Delaware corporation (the "DOMESTIC BORROWER"), entered into a Credit Agreement
dated as of December 29, 1999, as amended through the date hereof (the "EXISTING
CREDIT AGREEMENT"). In order to satisfy a condition to the effectiveness to the
Existing Credit Agreement, each Domestic Subsidiary Guarantor entered into a
Subsidiary Guaranty dated December 29, 1999 (the "EXISTING GUARANTY") in favor
of the Secured Parties. In order to amend and restate the Existing Credit
Agreement, the Domestic Borrower has entered into an Amended and Restated Credit
Agreement dated as of the date hereof (as such agreement may hereafter be
further amended and restated, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"; the capitalized terms defined therein and not
otherwise defined herein being used herein as therein defined) with certain
Lender Parties party thereto, Merrill Lynch, Pierce, Fenner & Smith Incorporated
and J.P. Morgan Securities Inc., as Joint Lead Arrangers, and The Chase
Manhattan Bank, as Administrative Agent for such Lender Parties. Each Guarantor
may receive, directly or indirectly, a portion of the proceeds of the Advances
under the Credit Agreement and will derive substantial direct and indirect
benefits from the transactions contemplated by the Credit Agreement. It is a
condition precedent to the making of Advances and the issuance of Letters of
Credit by the Lender Parties under the Credit Agreement and the entry by the
Hedge Banks into Secured Hedge Agreements from time to time that each Guarantor
shall have executed and delivered this Guaranty in order to amend and restate
the Existing Guaranty on the terms and conditions contained herein.

                  NOW, THEREFORE, in consideration of the premises and in order
to induce the Lender Parties to make Advances and to issue Letters of Credit
under the Credit Agreement and the Hedge Banks to enter into Secured Hedge
Agreements from time to time, the Existing Guaranty is hereby amended and
restated in its entirety, and each Guarantor, jointly and severally with each
other Guarantor, hereby agrees as follows:

                  Section 1. Guaranty; Limitation of Liability. (a) Each
Guarantor hereby absolutely, unconditionally and irrevocably guarantees the
punctual payment when due, whether at scheduled maturity or on any date of a
required prepayment or by acceleration, demand or otherwise, of all Obligations
of each other Loan Party now or hereafter existing under or in respect of the
Loan Documents (including, without limitation, any extensions, modifications,
substitutions, amendments or renewals of any or all of the foregoing
Obligations), whether direct or indirect, absolute or contingent, and whether
for principal, interest, premiums, fees, indemnities, contract causes of action,
costs, expenses or otherwise (such Obligations being the "GUARANTEED
OBLIGATIONS"), and agrees to pay any and all expenses (including, without
limitation, fees and expenses of counsel)

                                  Subsidiary Guaranty

<PAGE>   248

                                       2

incurred by the Administrative Agent or any other Secured Party in enforcing any
rights under this Guaranty or any other Loan Document. Without limiting the
generality of the foregoing, each Guarantor's liability shall extend to all
amounts that constitute part of the Guaranteed Obligations and would be owed by
any other Loan Party to any Secured Party under or in respect of the Loan
Documents but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
such other Loan Party.

                  (b) Each Guarantor, and by its acceptance of this Guaranty,
the Administrative Agent and each other Secured Party, hereby confirms that it
is the intention of all such Persons that this Guaranty and the Obligations of
each Guarantor hereunder not constitute a fraudulent transfer or conveyance for
purposes of Bankruptcy Law (as hereinafter defined), the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign,
federal or state law to the extent applicable to this Guaranty and the
Obligations of each Guarantor hereunder. To effectuate the foregoing intention,
the Administrative Agent, the other Secured Parties and the Guarantors hereby
irrevocably agree that the Obligations of each Guarantor under this Guaranty at
any time shall be limited to the maximum amount as will result in the
Obligations of such Guarantor under this Guaranty not constituting a fraudulent
transfer or conveyance. For purposes hereof, "BANKRUPTCY LAW" means any
proceeding of the type referred to in Section 6.01(f) of the Credit Agreement or
Title 11, U.S. Code, or any similar foreign, federal or state law for the relief
of debtors.

                  (c) Each Guarantor hereby unconditionally and irrevocably
agrees that in the event any payment shall be required to be made to any Secured
Party under this Guaranty or any other guaranty, such Guarantor will contribute,
to the maximum extent permitted by law, such amounts to each other Guarantor and
each other guarantor so as to maximize the aggregate amount paid to the Secured
Parties under or in respect of the Loan Documents.

                  Section 2. Guaranty Absolute. Each Guarantor guarantees that
the Guaranteed Obligations will be paid strictly in accordance with the terms of
the Loan Documents, regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of any
Secured Party with respect thereto. The Obligations of each Guarantor under or
in respect of this Guaranty are independent of the Guaranteed Obligations or any
other Obligations of any other Loan Party under or in respect of the Loan
Documents, and a separate action or actions may be brought and prosecuted
against each Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against the Domestic Borrower or any other Loan Party or
whether the Domestic Borrower or any other Loan Party is joined in any such
action or actions. The liability of each Guarantor under this Guaranty shall be
irrevocable, absolute and unconditional irrespective of, and each Guarantor
hereby irrevocably waives any defenses it may now have or hereafter acquire in
any way relating to, any or all of the following:

                  (a)      any lack of validity or enforceability of any Loan
         Document or any agreement or instrument relating thereto;

                                  Subsidiary Guaranty

<PAGE>   249

                                       3

                  (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
         other Obligations of any other Loan Party under or in respect of the
         Loan Documents, or any other amendment or waiver of or any consent to
         departure from any Loan Document, including, without limitation, any
         increase in the Guaranteed Obligations resulting from the extension of
         additional credit to any Loan Party or any of its Subsidiaries or
         otherwise;

                  (c) any taking, exchange, release or non-perfection of any
         Collateral or any other collateral, or any taking, release or amendment
         or waiver of, or consent to departure from, any other guaranty, for all
         or any of the Guaranteed Obligations;

                  (d) any manner of application of Collateral or any other
         collateral, or proceeds thereof, to all or any of the Guaranteed
         Obligations, or any manner of sale or other disposition of any
         Collateral or any other collateral for all or any of the Guaranteed
         Obligations or any other Obligations of any Loan Party under the Loan
         Documents or any other assets of any Loan Party or any of its
         Subsidiaries;

                  (e) any change, restructuring or termination of the corporate
         structure or existence of any Loan Party or any of its Subsidiaries;

                  (f) any failure of any Secured Party to disclose to any Loan
         Party any information relating to the business, condition (financial or
         otherwise), operations, performance, properties or prospects of any
         other Loan Party now or hereafter known to such Secured Party (each
         Guarantor waiving any duty on the part of the Secured Parties to
         disclose such information);

                  (g) the failure of any other Person to execute or deliver this
         Guaranty, any Guaranty Supplement (as hereinafter defined) or any other
         guaranty or agreement or the release or reduction of liability of any
         Guarantor or other guarantor or surety with respect to the Guaranteed
         Obligations; or

                  (h) any other circumstance (including, without limitation, any
         statute of limitations) or any existence of or reliance on any
         representation by any Secured Party that might otherwise constitute a
         defense available to, or a discharge of, any Loan Party or any other
         guarantor or surety.

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Secured Party or any other Person upon the
insolvency, bankruptcy or reorganization of the Domestic Borrower or any other
Loan Party or otherwise, all as though such payment had not been made.

                  Section 3. Waivers and Acknowledgments. (a) Each Guarantor
hereby unconditionally and irrevocably waives promptness, diligence, notice of
acceptance, presentment,

                                  Subsidiary Guaranty

<PAGE>   250

                                       4

demand for performance, notice of nonperformance, default, acceleration, protest
or dishonor and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that any Secured Party
protect, secure, perfect or insure any Lien or any property subject thereto or
exhaust any right or take any action against any Loan Party or any other Person
or any Collateral.

                  (b) Each Guarantor hereby unconditionally and irrevocably
waives any right to revoke this Guaranty and acknowledges that this Guaranty is
continuing in nature and applies to all Guaranteed Obligations, whether existing
now or in the future.

                  (c) Each Guarantor hereby unconditionally and irrevocably
waives (i) any defense arising by reason of any claim or defense based upon an
election of remedies by any Secured Party that in any manner impairs, reduces,
releases or otherwise adversely affects the subrogation, reimbursement,
exoneration, contribution or indemnification rights of such Guarantor or other
rights of such Guarantor to proceed against any of the other Loan Parties, any
other guarantor or any other Person or any Collateral and (ii) any defense based
on any right of set-off or counterclaim against or in respect of the Obligations
of such Guarantor hereunder.

                  (d) Each Guarantor acknowledges that the Administrative Agent
may, without notice to or demand upon such Guarantor and without affecting the
liability of such Guarantor under this Guaranty, foreclose under any mortgage by
nonjudicial sale, and each Guarantor hereby waives any defense to the recovery
by the Administrative Agent and the other Secured Parties against such Guarantor
of any deficiency after such nonjudicial sale and any defense or benefits that
may be afforded by applicable law.

                  (e) Each Guarantor hereby unconditionally and irrevocably
waives any duty on the part of any Secured Party to disclose to such Guarantor
any matter, fact or thing relating to the business, condition (financial or
otherwise), operations, performance, properties or prospects of any other Loan
Party or any of its Subsidiaries now or hereafter known by such Secured Party.

                  (f) Each Guarantor acknowledges that it will receive
substantial direct and indirect benefits from the financing arrangements
contemplated by the Loan Documents and that the waivers set forth in Section 2
and this Section 3 are knowingly made in contemplation of such benefits.

                  Section 4. Subrogation. Each Guarantor hereby unconditionally
and irrevocably agrees not to exercise any rights that it may now have or
hereafter acquire against the Domestic Borrower, any other Loan Party or any
other insider guarantor that arise from the existence, payment, performance or
enforcement of such Guarantor's Obligations under or in respect of this Guaranty
or any other Loan Document, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of any Secured Party against the
Domestic Borrower, any other Loan Party or any other insider guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from the Domestic Borrower, any other Loan Party or any other
insider guarantor, directly or

                                  Subsidiary Guaranty

<PAGE>   251

                                       5

indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
all of the Guaranteed Obligations and all other amounts payable under this
Guaranty shall have been paid in full in cash, all Letters of Credit and all
Secured Hedge Agreements shall have expired or been terminated and the
Commitments shall have expired or been terminated. If any amount shall be paid
to any Guarantor in violation of the immediately preceding sentence at any time
prior to the latest of (a) the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Guaranty, (b) the
Termination Date and (c) the latest date of expiration or termination of all
Letters of Credit and all Secured Hedge Agreements, such amount shall be
received and held in trust for the benefit of the Secured Parties, shall be
segregated from other property and funds of such Guarantor and shall forthwith
be paid or delivered to the Administrative Agent in the same form as so received
(with any necessary endorsement or assignment) to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Guaranty,
whether matured or unmatured, in accordance with the terms of the Loan
Documents, or to be held as Collateral for any Guaranteed Obligations or other
amounts payable under this Guaranty thereafter arising. If (i) any Guarantor
shall make payment to any Secured Party of all or any part of the Guaranteed
Obligations, (ii) all of the Guaranteed Obligations and all other amounts
payable under this Guaranty shall have been paid in full in cash, (iii) the
Termination Date shall have occurred and (iv) all Letters of Credit and all
Secured Hedge Agreements shall have expired or been terminated, the Secured
Parties will, at such Guarantor's request and expense, execute and deliver to
such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Guaranteed Obligations resulting from such
payment made by such Guarantor pursuant to this Guaranty.

                  Section 5. Payments Free and Clear of Taxes, Etc. (a) Except
as set forth in this Section 5, any and all payments made by any Guarantor under
or in respect of this Guaranty or any other Loan Document shall be made, in
accordance with Section 2.11 of the Credit Agreement, and free and clear of and
without deduction for any and all present or future Taxes. If any Guarantor
shall be required by law to deduct any Taxes from or in respect of any sum
payable under or in respect of this Guaranty or any other Loan Document to any
Secured Party, (i) subject to Section 5(h), the sum payable by such Guarantor
shall be increased as may be necessary so that after such Guarantor and the
Administrative Agent have made all required deductions (including deductions
applicable to additional sums payable under this Section 5), such Secured Party
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Guarantor shall make all such deductions and
(iii) such Guarantor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.

                  (b) In addition, each Guarantor agrees to pay any present or
future Other Taxes that arise from any payment made by or on behalf of such
Guarantor under or in respect of this Guaranty or any other Loan Document or
from the execution, delivery or registration of, performance under, or otherwise
with respect to, this Guaranty and the other Loan Documents.

                  (c) Subject to Section 5(h), each Guarantor will indemnify
each Secured Party for and hold it harmless against the full amount of Taxes and
Other Taxes, imposed on or paid by

                                  Subsidiary Guaranty

<PAGE>   252

                                       6

such Secured Party and any liability (including penalties, additions to tax,
interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such Secured Party
makes written demand therefor.

                  (d) Within 30 days after the date of any payment of Taxes by
or on behalf of any Guarantor, such Guarantor shall furnish to the
Administrative Agent, at its address referred to in Section 9, the original or a
certified copy of a receipt (or other evidence reasonably satisfactory to the
Administrative Agent) evidencing such payment. In the case of any payment
hereunder by or on behalf of any Guarantor through an account or branch outside
the United States or by or on behalf of such Guarantor by a payor that is not a
United States person, if such Guarantor determines that no Taxes are payable in
respect thereof, such Guarantor shall furnish, or shall cause such payor to
furnish, to the Administrative Agent, at such address, an opinion of counsel
acceptable to the Administrative Agent stating that such payment is exempt from
Taxes. For purposes of this Section 5, the terms "UNITED STATES" and "UNITED
STATES PERSON" shall have the meanings specified in Section 7701 of the Internal
Revenue Code.

                  (e) Upon the reasonable request in writing of any Guarantor,
each Domestic Borrower Lender Party organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution and
delivery of the Credit Agreement in the case of each Initial Lender or Initial
Issuing Bank, as the case may be, and on or prior to the date of the Assignment
and Acceptance, the Joinder Agreement or Secured Hedge Agreement pursuant to
which it becomes a Domestic Borrower Lender Party in the case of each other
Domestic Borrower Lender Party, and from time to time thereafter upon the
reasonable request in writing by any Guarantor (but only so long thereafter as
such Secured Party remains lawfully able to do so), provide each of the
Administrative Agent and such Guarantor with (i) two original Internal Revenue
Service forms W-8BEN or W-8ECI, as applicable (or any successor or other
applicable form prescribed by the Internal Revenue Service), or (ii) in the case
of a Secured Party 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 statement substantially in the form of Exhibit J to the Credit
Agreement and two copies of Internal Revenue Service Form W-8BEN (or any
successor or other applicable form prescribed by the Internal Revenue Service),
certifying that such Secured Party is exempt from or entitled to a reduced rate
of United States withholding tax on payments pursuant to this Guaranty or any
other Loan Document. Upon request in writing by any Guarantor, each Domestic
Borrower Lender Party shall deliver to such Guarantor and the Administrative
Agent (provided that such Secured Party remains lawfully able to do so), two
further duly executed forms and statements, properly completed in all material
respects, at or before the time any such form or statement expires or becomes
obsolete, or as otherwise reasonably requested in writing by such Guarantor.
Each such Domestic Borrower Lender Party shall promptly notify such Guarantor at
any time it determines that it is no longer in a position to provide any
previously delivered certificate to such Guarantor (or any other form or
certification adopted by the U.S. taxing authorities for such purpose). If the
forms provided by a Domestic Borrower Lender Party at the time such Domestic
Borrower Lender Party first becomes a party to the Credit Agreement or the
applicable Secured Hedge Agreement indicate a United States interest withholding
tax rate in excess of zero, withholding tax at such rate shall be considered
excluded from Taxes unless and until such Domestic Borrower Lender Party
provides the

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                                       7

appropriate forms certifying that a lesser rate applies, whereupon withholding
tax at such lesser rate only shall be considered excluded from Taxes for periods
governed by such forms; provided, however, that if, in the case of a Domestic
Borrower Lender Party becoming a party to the Credit Agreement at the effective
date of the Assignment and Acceptance or Joinder Agreement pursuant to which a
Domestic Borrower Lender Party becomes a party to the Credit Agreement, the
Domestic Borrower Lender Party assignor was entitled to payments under
subsection (a) of this Section 5 in respect of United States withholding tax
with respect to interest paid at such date, then, to such extent, the term Taxes
shall include (in addition to withholding taxes that may be imposed in the
future or other amounts otherwise includable in Taxes) United States withholding
tax, if any, applicable with respect to the Domestic Borrower Lender Party
assignee on such date. If any form or document referred to in this subsection
(e) requires the disclosure of information, other than information necessary to
compute the tax payable and information required on the date hereof by Internal
Revenue Service forms W-8BEN or W-8ECI (or the related certificate described
above), that the applicable Secured Party reasonably considers to be
confidential, such Secured Party shall give notice thereof to the applicable
Guarantor and shall not be obligated to include in such form or document such
confidential information.

                  (f) Upon the reasonable request in writing of any Guarantor,
each Domestic Borrower Lender Party which is a United States person shall, on or
prior to the date of its execution and delivery of the Credit Agreement in the
case of each Initial Lender Party or Initial Issuing Bank, as the case may be,
and on the effective date of the Assignment and Acceptance, the Joinder
Agreement or Secured Hedge Agreement pursuant to which it becomes a Domestic
Borrower Lender Party in the case of each other Domestic Borrower Lender Party,
deliver to such Guarantor and the Administrative Agent two duly completed copies
of United States Internal Revenue Service Form W-9 (or any successor or other
applicable form prescribed by the Internal Revenue Service) unless it
establishes to the reasonable satisfaction of such Guarantor that it is
otherwise eligible for an exemption from backup withholding tax or other
applicable withholding tax. Upon request in writing by such Guarantor, each such
Domestic Borrower Lender Party shall deliver to such Guarantor and the
Administrative Agent (provided that such Secured Party remains lawfully able to
do so), two further duly executed forms and statements, properly completed in
all material respects, at or before the time any such form or statement expires
or becomes obsolete, or otherwise as reasonably requested by such Guarantor.
Each such Secured Party shall promptly notify the applicable Guarantor at any
time it determines that it is no longer in a position to provide any previously
delivered certificate to such Guarantor (or any other form or certification
adopted by the U.S. taxing authorities for such purpose).

                  (g) Upon the reasonable request in writing of any Guarantor
prior to the date on which an Offshore Borrower requests an Advance, each Lender
Party which has made an Advance to an Offshore Borrower or executed an
Assignment and Acceptance with respect to such an Advance shall, on or prior to
the date it makes such an Advance or executes such an Assignment and Acceptance,
provide each of the Administrative Agent and such Guarantor with any forms,
certifications or other information as may reasonably be requested by such
Guarantor for the purpose of minimizing or eliminating any Taxes required to be
paid by such Guarantor with respect to any Offshore Acquisition Advance or
Offshore Swing Line Advance under the laws of the jurisdiction in

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                                       8

which such Guarantor is organized, or is a resident, is doing business or has a
fixed base or permanent establishment, and shall also deliver such forms at such
other times as a Guarantor may reasonably request in writing. Each such Lender
Party shall promptly notify the applicable Guarantor at any time it determines
it is no longer in a position to provide any previously delivered form,
certification or other applicable information.

                  (h) For any period with respect to which a Secured Party has
failed to provide any Guarantor following such Guarantor's request therefor
pursuant to subsection (e), (f) or (g) above with the appropriate form described
in subsection (e), (f) or (g) above (other than if such failure is due to a
change in law occurring after the date on which a form originally was required
to be provided or, in the case of a form requested pursuant to clause (g) above,
if such Secured Party has notified the applicable Guarantor of a reasonable
basis for such failure), such Secured Party shall not be entitled to
indemnification under subsection (a) or (c) of this Section 5 with respect to
Taxes imposed by the United States by reason of such failure; provided, however,
that should a Secured Party become subject to Taxes because of its failure to
deliver a form required hereunder, such Guarantor shall take such steps as such
Secured Party shall reasonably request to assist such Secured Party to recover
such Taxes.

                  (i) Each Secured Party which is not a United States person
agrees to indemnify and hold harmless each Guarantor from and against any and
all taxes, related penalties and interest, and reasonable out-of-pocket costs
incurred by such Guarantor as a result of a failure by such Guarantor to comply
with its obligations to deduct or withhold any Taxes from any payment made under
this Guaranty or any other Loan Document, which failure resulted solely from
such Guarantor=s reasonable reliance on information provided by such Secured
Party on a form referred to in Section 5(e) or (f).

                  (j) If any Secured Party determines, in its sole discretion,
that it has finally and irrevocably received a refund of any Taxes that have
been paid or reimbursed by any Guarantor pursuant to Section 5(a) or (c) in
respect of payments hereunder or under such Guarantor that it would otherwise
not have obtained and that would result in total payments made under this
Section 5 exceeding that amount needed to make such Secured Party whole, such
Secured Party shall, to the extent that it determines in its sole discretion
that it can do so without prejudice to the retention of the amount of such
refund, pay to such Guarantor following actual receipt of such refund and
without any interest thereon, the amount of such refund after deducting
therefrom all out-of-pocket expenses incurred by or on behalf of such Secured
Party in securing such refund; provided that such Guarantor agrees, upon request
of such Secured Party, to return the amount of such refund to such Secured
Party, together with the amount of all additional out-of-pocket expenses,
penalties, interest or other charges in respect thereof, if such Secured Party
is required to repay or otherwise loses the benefit of such refund. Nothing in
this Section 5 shall be construed to interfere with the right of a Secured Party
to arrange its tax affairs in whatever manner it thinks fit or require any
Secured Party to claim any refund, or to require any Secured Party to make
available to such Guarantor or the Administrative Agent any of its tax returns
or any other information relating to Taxes that it deems to be confidential.

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                                     9

                  Section 6. Representations and Warranties. Each Guarantor
hereby makes each representation and warranty made in the Loan Documents by the
Domestic Borrower with respect to such Guarantor (provided that each reference
in each such representation and warranty to the Domestic Borrower's knowledge
shall, for the purposes of this Section 6, be deemed to be a reference to such
Guarantor's knowledge) and each Guarantor hereby further represents and warrants
as follows:

                  (a) There are no conditions precedent to the effectiveness of
         this Guaranty that have not been satisfied or waived.

                  (b) Such Guarantor has, independently and without reliance
         upon any Secured Party and based on such documents and information as
         it has deemed appropriate, made its own credit analysis and decision to
         enter into this Guaranty and each other Loan Document to which it is or
         is to be a party, and such Guarantor has established adequate means of
         obtaining from each other Loan Party on a continuing basis information
         pertaining to, and is now and on a continuing basis will be completely
         familiar with, the business, condition (financial or otherwise),
         operations, performance, properties and prospects of such other Loan
         Party.

                  Section 7. Covenants. Each Guarantor covenants and agrees
that, so long as any part of the Guaranteed Obligations shall remain unpaid, any
Letter of Credit shall be outstanding, any Lender Party shall have any
Commitment or any Secured Hedge Agreement shall be in effect, such Guarantor
will perform and observe, and cause each of its Subsidiaries to perform and
observe, all of the terms, covenants and agreements set forth in the Loan
Documents on its or their part to be performed or observed or that the Domestic
Borrower has agreed to cause such Guarantor or such Subsidiaries to perform or
observe.

                  Section 8. Amendments, Guaranty Supplements, Etc. (a) No
amendment or waiver of any provision of this Guaranty and no 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 Administrative Agent and the Required
Lenders, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no amendment, waiver or consent shall, unless in writing and signed by all of
the Secured Parties (other than any Lender Party that is, at such time, a
Defaulting Lender), (a) reduce or limit the obligations of any Guarantor
hereunder, release any Guarantor hereunder or otherwise limit any Guarantor's
liability with respect to the Obligations owing to the Secured Parties under or
in respect of the Loan Documents except (x) as provided in Section 15 hereof,
(y) pursuant to a merger permitted under Section 5.02(e) of the Credit Agreement
or (z) in connection with the sale of such Guarantor permitted pursuant to
Section 5.02(f) of the Credit Agreement or a waiver of such Section 5.02 of the
Credit Agreement effected with the consent of the Required Lenders, (b) postpone
any date fixed for payment hereunder or (c) change the number of Secured Parties
or the percentage of (x) the Commitments, (y) the aggregate unpaid principal
amount of the Advances or (z) the aggregate Available Amount of outstanding
Letters of Credit that, in each case, shall be required for the Secured Parties
or any of them to take any action hereunder; provided further, however, that no

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                                       10

amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Administrative Agent under this
Guaranty or the other Loan Documents.

                  (b) Upon the execution and delivery by any Person of a
guaranty supplement in substantially the form of Exhibit A hereto (each, a
"GUARANTY SUPPLEMENT"), (i) such Person shall be referred to as an "ADDITIONAL
GUARANTOR" and shall become and be a Guarantor hereunder, and each reference in
this Guaranty to a "GUARANTOR" shall also mean and be a reference to such
Additional Guarantor, and each reference in any other Loan Document to a
"DOMESTIC SUBSIDIARY GUARANTOR" shall also mean and be a reference to such
Additional Guarantor, and (ii) each reference herein to "THIS GUARANTY",
"HEREUNDER", "HEREOF" or words of like import referring to this Guaranty, and
each reference in any other Loan Document to the "DOMESTIC SUBSIDIARY GUARANTY",
"THEREUNDER", "THEREOF" or words of like import referring to this Guaranty,
shall mean and be a reference to this Guaranty as supplemented by such Guaranty
Supplement.

                  Section 9. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered
to it, if to any Guarantor, addressed to it in care of the Domestic Borrower at
the Domestic Borrower's address specified in Section 8.02 of the Credit
Agreement, if to any Agent or any Lender Party, at its address specified in
Section 8.02 of the Credit Agreement, if to any Hedge Bank, at its address
specified in the Secured Hedge Agreement to which it is a party, or, as to any
party, at such other address as shall be designated by such party in a written
notice to each other party. All such notices and other communications shall,
when mailed, telegraphed, telecopied or telexed, be effective when deposited in
the mails, delivered to the telegraph company, transmitted by telecopier or
confirmed by telex answerback, respectively. Delivery by telecopier of an
executed counterpart of a signature page to any amendment or waiver of any
provision of this Guaranty or of any Guaranty Supplement to be executed and
delivered hereunder shall be effective as delivery of an original executed
counterpart thereof.

                  Section 10. No Waiver; Remedies. No failure on the part of any
Secured 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 remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

                  Section 11. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the request
or the granting of the consent specified by Section 6.01 of the Credit Agreement
to authorize the Administrative Agent to declare the Notes due and payable
pursuant to the provisions of said Section 6.01, each Agent and each Lender
Party and each of their respective Affiliates is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off 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 such Agent,
such Lender Party or such Affiliate to or for the credit or the account of any
Guarantor against any and all of the Obligations of such Guarantor now or
hereafter existing under the Loan

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                                       11

Documents, irrespective of whether such Agent or such Lender Party shall have
made any demand under this Guaranty or any other Loan Document and although such
Obligations may be unmatured. Each Agent and each Lender Party agrees promptly
to notify such Guarantor after any such set-off and application; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Agent and each Lender Party and
their respective Affiliates under this Section are in addition to other rights
and remedies (including, without limitation, other rights of set-off) that such
Agent, such Lender Party and their respective Affiliates may have.

                  Section 12. Indemnification. (a) Without limitation on any
other Obligations of any Guarantor or remedies of the Secured Parties under this
Guaranty, each Guarantor shall, to the fullest extent permitted by law,
indemnify, defend and save and hold harmless each Secured Party and each of
their Affiliates and their respective officers, directors, employees, agents and
advisors (each, an "INDEMNIFIED PARTY") from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party in
connection with or as a result of any failure of any Guaranteed Obligations to
be the legal, valid and binding obligations of any Loan Party enforceable
against such Loan Party in accordance with their terms.

                  (b) Each Guarantor also agrees that no Indemnified Party shall
have any liability (whether direct or indirect, in contract or tort or
otherwise) for any Losses to any Loan Party or any Loan Party=s security holders
or creditors resulting from, arising out of or in any way related to or by
reason of, the Facilities, the actual or proposed use of the proceeds of the
Advance or the Letters of Credit, the Transaction Documents or any of the
transactions contemplated by the Transaction Documents except to the extent that
any Loss resulted from the gross negligence or bad faith of such Indemnified
Persons.

                  (c) Without prejudice to the survival of any of the other
agreements of any Guarantor under this Guaranty or any of the other Loan
Documents, the agreements and obligations of each Guarantor contained in Section
1(a) (with respect to enforcement expenses), the last sentence of Section 2,
Section 5 and this Section 12 shall survive the payment in full of the
Guaranteed Obligations and all of the other amounts payable under this Guaranty.

                  Section 13. Subordination. Each Guarantor hereby subordinates
any and all debts, liabilities and other Obligations owed to such Guarantor by
each other Loan Party (the "SUBORDINATED OBLIGATIONS") to the Guaranteed
Obligations to the extent and in the manner hereinafter set forth in this
Section 13:

                  (a) Prohibited Payments, Etc. Except during the continuance of
         a Default under Section 6.01(a) or (f) of the Credit Agreement or an
         Event of Default (including the commencement and continuation of any
         proceeding under any Bankruptcy Law relating to any other Loan Party),
         each Guarantor may receive regularly scheduled payments from any other
         Loan Party on account of the Subordinated Obligations. After the
         occurrence and during the continuance of any Default under Section
         6.01(a) or (f) of the Credit Agreement

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                                       12

         or an Event of Default (including the commencement and continuation of
         any proceeding under any Bankruptcy Law relating to any other Loan
         Party), however, unless the Administrative Agent otherwise agrees, no
         Guarantor shall demand, accept or take any action to collect any
         payment on account of the Subordinated Obligations.

                  (b) Prior Payment of Guaranteed Obligations. In any proceeding
         under any Bankruptcy Law relating to any other Loan Party, each
         Guarantor agrees that the Secured Parties shall be entitled to receive
         payment in full in cash of all Guaranteed Obligations (including all
         interest and expenses accruing after the commencement of a proceeding
         under any Bankruptcy Law, whether or not constituting an allowed claim
         in such proceeding ("POST PETITION INTEREST")) before such Guarantor
         receives payment of any Subordinated Obligations.

                  (c) Turn-Over. After the occurrence and during the continuance
         of any Default under Section 6.01(a) or (f) of the Credit Agreement or
         an Event of Default (including the commencement and continuation of any
         proceeding under any Bankruptcy Law relating to any other Loan Party),
         each Guarantor shall, if the Administrative Agent so requests, collect,
         enforce and receive payments on account of the Subordinated Obligations
         as trustee for the Secured Parties and deliver such payments to the
         Administrative Agent on account of the Guaranteed Obligations
         (including all Post Petition Interest), together with any necessary
         endorsements or other instruments of transfer, but without reducing or
         affecting in any manner the liability of such Guarantor under the other
         provisions of this Guaranty.

                  (d) Administrative Agent Authorization. After the occurrence
         and during the continuance of any Default under Section 6.01(a) or (f)
         of the Credit Agreement or any Event of Default (including the
         commencement and continuation of any proceeding under any Bankruptcy
         Law relating to any other Loan Party), the Administrative Agent is
         authorized and empowered (but without any obligation to so do), in its
         discretion, (i) in the name of each Guarantor, to collect and enforce,
         and to submit claims in respect of, Subordinated Obligations and to
         apply any amounts received thereon to the Guaranteed Obligations
         (including any and all Post Petition Interest), and (ii) to require
         each Guarantor (A) to collect and enforce, and to submit claims in
         respect of, Subordinated Obligations and (B) to pay any amounts
         received on such obligations to the Administrative Agent for
         application to the Guaranteed Obligations (including any and all Post
         Petition Interest).

                  Section 14. Continuing Guaranty; Assignments under the Credit
Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the latest of (i) the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guaranty, (ii)
the Termination Date and (iii) the latest date of expiration or termination of
all Letters of Credit and all Secured Hedge Agreements, (b) be binding upon the
Guarantor, its successors and assigns and (c) inure to the benefit of and be
enforceable by the Secured Parties and their successors, transferees and
assigns. Without limiting the generality of clause (c) of the immediately
preceding sentence, any Secured Party may assign or otherwise transfer all or
any portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or

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                                       13

any portion of its Commitments, the Advances owing to it and the Note or Notes
held by it) to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Secured Party
herein or otherwise, in each case as and to the extent provided in Section 8.07
of the Credit Agreement. No Guarantor shall have the right to assign its rights
hereunder or any interest herein without the prior written consent of the
Secured Parties.

                  Section 15. Release of Guarantors. If any of the Guarantors
shall cease to be a Subsidiary of the Domestic Borrower for any reason in
accordance with the terms of the Credit Agreement and the other Loan Documents
(including, without limitation, in connection with a transaction permitted under
Section 5.02(e) or 5.02(f) of the Credit Agreement), such Guarantor shall,
automatically and without any further action on the part of any of the other
Loan Parties or the Administrative Agent or any of the other Secured Parties,
and upon notice to the Administrative Agent, be fully released and discharged
from all its Obligations under or in respect of the Loan Documents to which such
Guarantor is a party. Upon the written request of the Domestic Borrower and the
satisfaction of any conditions precedent under the terms of the Loan Documents
(including, without limitation, Section 8.11 of the Credit Agreement) the
Administrative Agent or the Required Lenders shall, at the Domestic Borrower's
sole expense, execute such documents as shall be reasonably requested by the
Domestic Borrower to evidence the release of such Guarantor from all such
Obligations.

                  Section 16. Execution in Counterparts. This Guaranty and each
amendment, waiver and consent with respect hereto may be executed in any number
of counterparts and by different parties thereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Guaranty by telecopier shall be
effective as delivery of an original executed counterpart of this Guaranty.

                  Section 17.  Governing Law; Jurisdiction; Waiver of Jury
Trial, Etc.  (a)  This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of New York.

                  (b) Each Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Guaranty or any of the other Loan
Documents to which it is or is to be a party, or for recognition or enforcement
of any judgment, and each Guarantor hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in any such New York State court or, to the extent permitted by
law, in such federal court. Each Guarantor agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Guaranty or any other Loan Document shall affect any right that
any party may otherwise have to bring any action or proceeding relating to this
Guaranty or any other Loan Document in the courts of any jurisdiction.

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                                       14

                  (c) Each Guarantor irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Guaranty or any of the other Loan
Documents to which it is or is to be a party in any New York State or federal
court. Each Guarantor hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such suit,
action or proceeding in any such court.

                  (d) EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS, THE ADVANCES OR THE ACTIONS OF ANY SECURED PARTY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

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<PAGE>   261

                  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.

Domestic Subsidiary Guarantors:        SIA ADHESIVES, INC.

                                       By
                                         ---------------------------------------
                                         Title:

                                       PIERCE & STEVENS CORP.

                                       By
                                         ---------------------------------------
                                         Title:

                                       OSI SEALANTS, INC.

                                       By
                                         ---------------------------------------
                                         Title:

                                       TANNER CHEMICALS, INC.

                                       By
                                          --------------------------------------
                                          Title:

                               Subsidiary Guaranty

<PAGE>   262

                                                                       EXHIBIT A
                                                                          TO THE
                                                    DOMESTIC SUBSIDIARY GUARANTY

                 FORM OF DOMESTIC SUBSIDIARY GUARANTY SUPPLEMENT

                                                          --------- --, ----

The Chase Manhattan Bank, as Administrative Agent
[Address of Administrative Agent]

Attention:

                  Amended and Restated Credit Agreement dated as of April 6,
                  2000 among Sovereign Specialty Chemicals, Inc., a Delaware
                  corporation (the "DOMESTIC BORROWER"), the Lender Parties
                  party to the Credit Agreement, and The Chase Manhattan Bank,
                  as Administrative Agent

Ladies and Gentlemen:

                  Reference is made to the above-captioned Amended and Restated
Credit Agreement and to the Domestic Subsidiary Guaranty referred to therein
(such Domestic Subsidiary Guaranty, as in effect on the date hereof and as it
may hereafter be amended, supplemented or otherwise modified from time to time,
together with this Guaranty Supplement, being the "DOMESTIC SUBSIDIARY
GUARANTY"). The capitalized terms defined in the Domestic Subsidiary Guaranty or
in such Amended and Restated Credit Agreement and not otherwise defined herein
are used herein as therein defined.

                  Section 1. Guaranty; Limitation of Liability. (a) The
undersigned hereby absolutely, unconditionally and irrevocably guarantees the
punctual payment when due, whether at scheduled maturity or on any date of a
required prepayment or by acceleration, demand or otherwise, of all Obligations
of each other Loan Party now or hereafter existing under or in respect of the
Loan Documents (including, without limitation, any extensions, modifications,
substitutions, amendments or renewals of any or all of the foregoing
Obligations), whether direct or indirect, absolute or contingent, and whether
for principal, interest, premium, fees, indemnities, contract causes of action,
costs, expenses or otherwise (such Obligations being the "GUARANTEED
OBLIGATIONS"), and agrees to pay any and all expenses (including, without
limitation, fees and expenses of counsel) incurred by the Administrative Agent
or any other Secured Party in enforcing any rights under this Guaranty
Supplement, the Domestic Subsidiary Guaranty or any other Loan Document. Without
limiting the generality of the foregoing, the undersigned=s liability shall
extend to all amounts that constitute part

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                                       2

of the Guaranteed Obligations and would be owed by any other Loan Party to any
Secured Party under or in respect of the Loan Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such other Loan Party.

                  (b) The undersigned, and by its acceptance of this Guaranty
Supplement, the Administrative Agent and each other Secured Party, hereby
confirms that it is the intention of all such Persons that this Guaranty
Supplement, the Domestic Subsidiary Guaranty and the Obligations of the
undersigned hereunder and thereunder not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or
state law to the extent applicable to this Guaranty Supplement, the Domestic
Subsidiary Guaranty and the Obligations of the undersigned hereunder and
thereunder. To effectuate the foregoing intention, the Administrative Agent, the
other Secured Parties and the undersigned hereby irrevocably agree that the
Obligations of the undersigned under this Guaranty Supplement and the Domestic
Subsidiary Guaranty at any time shall be limited to the maximum amount as will
result in the Obligations of the undersigned under this Guaranty Supplement and
the Domestic Subsidiary Guaranty not constituting a fraudulent transfer or
conveyance.

                  (c) The undersigned hereby unconditionally and irrevocably
agrees that in the event any payment shall be required to be made to any Secured
Party under this Guaranty Supplement, the Domestic Subsidiary Guaranty or any
other guaranty, the undersigned will contribute, to the maximum extent permitted
by applicable law, such amounts to each other Guarantor and each other guarantor
so as to maximize the aggregate amount paid to the Secured Parties under or in
respect of the Loan Documents.

                  Section 2. Obligations Under the Guaranty. The undersigned
hereby agrees, as of the date first above written, to be bound as a Guarantor by
all of the terms and conditions of the Domestic Subsidiary Guaranty to the same
extent as each of the other Guarantors thereunder. The undersigned further
agrees, as of the date first above written, that each reference in the
Subsidiary Guaranty to an "ADDITIONAL GUARANTOR" or a "GUARANTOR" shall also
mean and be a reference to the undersigned, and each reference in any other Loan
Document to a "DOMESTIC SUBSIDIARY GUARANTOR" or a "LOAN PARTY" shall also mean
and be a reference to the undersigned.

                  Section 3. Representations and Warranties. The undersigned
hereby makes each representation and warranty set forth in Section 6 of the
Domestic Subsidiary Guaranty to the same extent as each other Guarantor.

                  Section 4. Delivery by Telecopier. Delivery of an executed
counterpart of a signature page to this Guaranty Supplement by telecopier shall
be effective as delivery of an original executed counterpart of this Guaranty
Supplement.

                               Subsidiary Guaranty

<PAGE>   264

                                       3

                  Section 5.  Governing Law; Jurisdiction; Waiver of Jury Trial,
Etc.  (a)  This Guaranty Supplement shall be governed by, and construed in
accordance with, the laws of the State of New York.

                  (b) The undersigned hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or any federal court of the United States of America
sitting in New York City, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Guaranty Supplement, the
Domestic Subsidiary Guaranty or any of the other Loan Documents to which it is
or is to be a party, or for recognition or enforcement of any judgment, and the
undersigned hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
New York State court or, to the extent permitted by law, in such federal court.
The undersigned agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Guaranty
Supplement or the Domestic Subsidiary Guaranty or any other Loan Document shall
affect any right that any party may otherwise have to bring any action or
proceeding relating to this Guaranty Supplement, the Domestic Subsidiary
Guaranty or any of the other Loan Documents to which it is or is to be a party
in the courts of any other jurisdiction.

                  (c) The undersigned irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Guaranty Supplement, the Domestic
Subsidiary Guaranty or any of the other Loan Documents to which it is or is to
be a party in any New York State or federal court. The undersigned hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such suit, action or proceeding in any
such court.

                  (d) THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS, THE ADVANCES OR THE ACTIONS OF ANY SECURED PARTY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

                                         Very truly yours,

                                         [NAME OF ADDITIONAL GUARANTOR]

                                          By
                                             -----------------------------------
                                             Title:

                               Subsidiary Guaranty
<PAGE>   265

                                                                       EXHIBIT G
                                                         TO THE CREDIT AGREEMENT

                AMENDED AND RESTATED DOMESTIC SUBSIDIARY GUARANTY

                            Dated as of April 6, 2000

                                      From

                           THE GUARANTORS NAMED HEREIN

                                       and

                  THE ADDITIONAL GUARANTORS REFERRED TO HEREIN

                                  as Guarantors

                                   in favor of

                       THE SECURED PARTIES REFERRED TO IN
                     THE CREDIT AGREEMENT REFERRED TO HEREIN

                               Subsidiary Guaranty
<PAGE>   266

                          T A B L E O F C O N T E N T S

<TABLE>
<CAPTION>

SECTION                                                                                                        PAGE
<S>                                                                                                            <C>
1.  Guaranty; Limitation of Liability.............................................................................1

2.  Guaranty Absolute.............................................................................................2

3.  Waivers and Acknowledgments...................................................................................4

4.  Subrogation...................................................................................................4

5.  Payments Free and Clear of Taxes, Etc.........................................................................5

6.  Representations and Warranties................................................................................9

7.  Covenants.....................................................................................................9

8.  Amendments, Guaranty Supplements, Etc........................................................................10

9.  Notices, Etc.................................................................................................10

10.  No Waiver; Remedies.........................................................................................11

11.  Right of Set-off............................................................................................11

12.  Indemnification.............................................................................................11

13.  Subordination...............................................................................................12

14.  Continuing Guaranty; Assignments under the Credit Agreement.................................................13

15.  Release of Guarantors.......................................................................................13

16.  Execution in Counterparts...................................................................................14

17.  Governing Law; Jurisdiction; Waiver of Jury Trial, Etc......................................................14
</TABLE>

Exhibit A  -  Guaranty Supplement

                              Subsidiary Guaranty
<PAGE>   267

                                OFFSHORE GUARANTY

                  OFFSHORE GUARANTY dated as of April 6, 2000 (this "GUARANTY")
made by Sovereign Specialty Chemicals, Inc., a Delaware corporation (the
"DOMESTIC BORROWER"), the Persons listed on the signature pages hereof under the
caption "DOMESTIC SUBSIDIARY GUARANTORS" and the Additional Guarantors (as
defined in Section 8(b)) (the Domestic Borrower, the Domestic Subsidiary
Guarantors so listed and the Additional Guarantors being, collectively, the
"GUARANTORS" and, individually, each a "GUARANTOR") in favor of the Secured
Parties (as defined in the Credit Agreement referred to below).

                  PRELIMINARY STATEMENT. The Domestic Borrower is party to an
Amended and Restated Credit Agreement dated as of the date hereof (as such
agreement may hereafter be amended and restated, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT"; the capitalized terms
defined therein and not otherwise defined herein being used herein as therein
defined) with certain Lender Parties party thereto, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and J.P. Morgan Securities Inc., as Joint Lead
Arrangers, and The Chase Manhattan Bank, as Administrative Agent for such Lender
Parties. Each Guarantor may receive, directly or indirectly, a portion of the
proceeds of the Advances under the Credit Agreement and will derive substantial
direct and indirect benefits from the transactions contemplated by the Credit
Agreement. It is a condition precedent to the making of Offshore Acquisition
Advances and Offshore Swing Line Advances to any Offshore Borrower by the Lender
Parties under the Credit Agreement and the entry by the Hedge Banks into Secured
Hedge Agreements with any Offshore Borrower from time to time that each
Guarantor shall have executed and delivered this Guaranty.

                  NOW, THEREFORE, in consideration of the premises and in order
to induce the Lender Parties to make Offshore Acquisition Advances and Offshore
Swing Line Advances to any Offshore Borrower under the Credit Agreement and the
Hedge Banks to enter into Secured Hedge Agreements from time to time with any
Offshore Borrower, each Guarantor, jointly and severally with each other
Guarantor, hereby agrees as follows:

                  Section 1. Guaranty; Limitation of Liability. (a) Each
Guarantor hereby absolutely, unconditionally and irrevocably guarantees the
punctual payment when due, whether at scheduled maturity or on any date of a
required prepayment or by acceleration, demand or otherwise, of all Offshore
Secured Obligations of each Offshore Obligor now or hereafter existing under or
in respect of the Loan Documents (including, without limitation, any extensions,
modifications, substitutions, amendments or renewals of any or all of the
foregoing Obligations), whether direct or indirect, absolute or contingent, and
whether for principal, interest, premiums, fees, indemnities, contract causes of
action, costs, expenses or otherwise (such Obligations being the "GUARANTEED
OBLIGATIONS"), and agrees to pay any and all expenses (including, without
limitation, fees and expenses of counsel) incurred by the Administrative Agent
or any other Secured Party in enforcing any rights under this Guaranty. Without
limiting the generality of the foregoing, each Guarantor's liability shall
extend to all amounts that constitute part of the Guaranteed Obligations and
would be owed by any other Loan Party to any Secured Party under or in respect
of the Loan Documents but

                               Offshore Guaranty

<PAGE>   268

for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving such other Loan
Party.

                  (b) Each Guarantor (other than the Domestic Borrower), and by
its acceptance of this Guaranty, the Administrative Agent and each other Secured
Party, hereby confirms that it is the intention of all such Persons that this
Guaranty and the Obligations of each such Guarantor hereunder not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law (as hereinafter
defined), the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer
Act or any similar foreign, federal or state law to the extent applicable to
this Guaranty and the Obligations of each such Guarantor hereunder. To
effectuate the foregoing intention, the Administrative Agent, the other Secured
Parties and the Guarantors hereby irrevocably agree that the Obligations of each
Guarantor (other than the Domestic Borrower) under this Guaranty at any time
shall be limited to the maximum amount as will result in the Obligations of such
Guarantor under this Guaranty not constituting a fraudulent transfer or
conveyance. For purposes hereof, "BANKRUPTCY LAW" means any proceeding of the
type referred to in Section 6.01(f) of the Credit Agreement or Title 11, U.S.
Code, or any similar foreign, federal or state law for the relief of debtors.

                  (c) Each Guarantor hereby unconditionally and irrevocably
agrees that in the event any payment shall be required to be made to any Secured
Party under this Guaranty or any other guaranty, such Guarantor will contribute,
to the maximum extent permitted by law, such amounts to each other Guarantor and
each other guarantor so as to maximize the aggregate amount paid to the Secured
Parties under or in respect of the Loan Documents.

                  Section 2. Guaranty Absolute. Each Guarantor guarantees that
the Guaranteed Obligations will be paid strictly in accordance with the terms of
the Loan Documents, regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of any
Secured Party with respect thereto. The Obligations of each Guarantor under or
in respect of this Guaranty are independent of the Guaranteed Obligations or any
other Obligations of any other Loan Party under or in respect of the Loan
Documents, and a separate action or actions may be brought and prosecuted
against each Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against the Domestic Borrower or any other Loan Party or
whether the Domestic Borrower or any other Loan Party is joined in any such
action or actions. The liability of each Guarantor under this Guaranty shall be
irrevocable, absolute and unconditional irrespective of, and each Guarantor
hereby irrevocably waives any defenses it may now have or hereafter acquire in
any way relating to, any or all of the following:

                  (a) any lack of validity or enforceability of any Loan
         Document or any agreement or instrument relating thereto;

                  (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
         other Obligations of any other Loan Party under or in respect of the
         Loan Documents, or any other amendment or waiver of or any consent to
         departure from any Loan Document, including, without limitation, any
         increase in

                               Offshore Guaranty

<PAGE>   269

                                       3

         the Guaranteed Obligations resulting from the extension of
         additional credit to any Loan Party or any of its Subsidiaries or
         otherwise;

                  (c) any taking, exchange, release or non-perfection of any
         Collateral or any other collateral, or any taking, release or amendment
         or waiver of, or consent to departure from, any other guaranty, for all
         or any of the Guaranteed Obligations;

                  (d) any manner of application of Collateral or any other
         collateral, or proceeds thereof, to all or any of the Guaranteed
         Obligations, or any manner of sale or other disposition of any
         Collateral or any other collateral for all or any of the Guaranteed
         Obligations or any other Obligations of any Loan Party under the Loan
         Documents or any other assets of any Loan Party or any of its
         Subsidiaries;

                  (e) any change, restructuring or termination of the corporate
         structure or existence of any Loan Party or any of its Subsidiaries;

                  (f) any failure of any Secured Party to disclose to any Loan
         Party any information relating to the business, condition (financial or
         otherwise), operations, performance, properties or prospects of any
         other Loan Party now or hereafter known to such Secured Party (each
         Guarantor waiving any duty on the part of the Secured Parties to
         disclose such information);

                  (g) the failure of any other Person to execute or deliver this
         Guaranty, any Guaranty Supplement (as hereinafter defined) or any other
         guaranty or agreement or the release or reduction of liability of any
         Guarantor or other guarantor or surety with respect to the Guaranteed
         Obligations; or

                  (h) any other circumstance (including, without limitation, any
         statute of limitations) or any existence of or reliance on any
         representation by any Secured Party that might otherwise constitute a
         defense available to, or a discharge of, any Loan Party or any other
         guarantor or surety.

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Secured Party or any other Person upon the
insolvency, bankruptcy or reorganization of the Domestic Borrower or any other
Loan Party or otherwise, all as though such payment had not been made.

                  Section 3. Waivers and Acknowledgments. (a) Each Guarantor
hereby unconditionally and irrevocably waives promptness, diligence, notice of
acceptance, presentment, demand for performance, notice of nonperformance,
default, acceleration, protest or dishonor and any other notice with respect to
any of the Guaranteed Obligations and this Guaranty and any requirement that any
Secured Party protect, secure, perfect or insure any Lien or any property

                               Offshore Guaranty
<PAGE>   270

                                       4

subject thereto or exhaust any right or take any action against any Loan Party
or any other Person or any Collateral.

                  (b) Each Guarantor hereby unconditionally and irrevocably
waives any right to revoke this Guaranty and acknowledges that this Guaranty is
continuing in nature and applies to all Guaranteed Obligations, whether existing
now or in the future.

                  (c) Each Guarantor hereby unconditionally and irrevocably
waives (i) any defense arising by reason of any claim or defense based upon an
election of remedies by any Secured Party that in any manner impairs, reduces,
releases or otherwise adversely affects the subrogation, reimbursement,
exoneration, contribution or indemnification rights of such Guarantor or other
rights of such Guarantor to proceed against any of the other Loan Parties, any
other guarantor or any other Person or any Collateral and (ii) any defense based
on any right of set-off or counterclaim against or in respect of the Obligations
of such Guarantor hereunder.

                  (d) Each Guarantor acknowledges that the Administrative Agent
may, without notice to or demand upon such Guarantor and without affecting the
liability of such Guarantor under this Guaranty, foreclose under any mortgage by
nonjudicial sale, and each Guarantor hereby waives any defense to the recovery
by the Administrative Agent and the other Secured Parties against such Guarantor
of any deficiency after such nonjudicial sale and any defense or benefits that
may be afforded by applicable law.

                  (e) Each Guarantor hereby unconditionally and irrevocably
waives any duty on the part of any Secured Party to disclose to such Guarantor
any matter, fact or thing relating to the business, condition (financial or
otherwise), operations, performance, properties or prospects of any other Loan
Party or any of its Subsidiaries now or hereafter known by such Secured Party.

                  (f) Each Guarantor acknowledges that it will receive
substantial direct and indirect benefits from the financing arrangements
contemplated by the Loan Documents and that the waivers set forth in Section 2
and this Section 3 are knowingly made in contemplation of such benefits.

                  Section 4. Subrogation. Each Guarantor hereby unconditionally
and irrevocably agrees not to exercise any rights that it may now have or
hereafter acquire against the Domestic Borrower, any other Loan Party or any
other insider guarantor that arise from the existence, payment, performance or
enforcement of such Guarantor's Obligations under or in respect of this Guaranty
or any other Loan Document, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of any Secured Party against the
Domestic Borrower, any other Loan Party or any other insider guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from the Domestic Borrower, any other Loan Party or any other
insider guarantor, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim,
remedy or right, unless and until all of the Guaranteed Obligations and all

                               Offshore Guaranty

<PAGE>   271
                                       5

other amounts payable under this Guaranty shall have been paid in full in cash,
and all Secured Hedge Agreements with any Offshore Borrower shall have expired
or been terminated and the Commitments shall have expired or been terminated. If
any amount shall be paid to any Guarantor in violation of the immediately
preceding sentence at any time prior to the latest of (a) the payment in full in
cash of the Guaranteed Obligations and all other amounts payable under this
Guaranty, (b) the Termination Date and (c) the latest date of expiration or
termination of all Secured Hedge Agreements with any Offshore Borrower, such
amount shall be received and held in trust for the benefit of the Secured
Parties, shall be segregated from other property and funds of such Guarantor and
shall forthwith be paid or delivered to the Administrative Agent in the same
form as so received (with any necessary endorsement or assignment) to be
credited and applied to the Guaranteed Obligations and all other amounts payable
under this Guaranty, whether matured or unmatured, in accordance with the terms
of the Loan Documents, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Guaranty thereafter arising. If
(i) any Guarantor shall make payment to any Secured Party of all or any part of
the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other
amounts payable under this Guaranty shall have been paid in full in cash, (iii)
the Termination Date shall have occurred and (iv) all Secured Hedge Agreements
with any Offshore Borrower shall have expired or been terminated, the Secured
Parties will, at such Guarantor's request and expense, execute and deliver to
such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Guaranteed Obligations resulting from such
payment made by such Guarantor pursuant to this Guaranty.

                  Section 5. Payments Free and Clear of Taxes, Etc. (a) Except
as set forth in this Section 5, any and all payments made by any Guarantor under
or in respect of this Guaranty shall be made, in accordance with Section 2.11 of
the Credit Agreement, and free and clear of and without deduction for any and
all present or future Taxes. If any Guarantor shall be required by law to deduct
any Taxes from or in respect of any sum payable under or in respect of this
Guaranty to any Secured Party, (i) subject to Section 5(h), the sum payable by
such Guarantor shall be increased as may be necessary so that after such
Guarantor and the Administrative Agent have made all required deductions
(including deductions applicable to additional sums payable under this Section
5), such Secured Party receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Guarantor shall make all
such deductions and (iii) such Guarantor shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law.

                  (b) In addition, each Guarantor agrees to pay any present or
future Other Taxes that arise from any payment made by or on behalf of such
Guarantor under or in respect of this Guaranty or from the execution, delivery
or registration of, performance under, or otherwise with respect to, this
Guaranty.

                  (c) Subject to Section 5(h), each Guarantor will indemnify
each Secured Party for and hold it harmless against the full amount of Taxes and
Other Taxes, imposed on or paid by such Secured Party in respect of payments
made by or on behalf of such Guarantor under or in respect of this Guaranty and
any liability (including penalties, additions to tax, interest and expenses)

                               Offshore Guaranty

<PAGE>   272

                                       6

arising therefrom or with respect thereto. This indemnification shall be made
within 30 days from the date such Secured Party makes written demand therefor.

                  (d) Within 30 days after the date of any payment of Taxes by
or on behalf of any Guarantor, such Guarantor shall furnish to the
Administrative Agent, at its address referred to in Section 9, the original or a
certified copy of a receipt (or other evidence reasonably satisfactory to the
Administrative Agent) evidencing such payment. In the case of any payment
hereunder by or on behalf of any Domestic Obligor through an account or branch
outside the United States or by or on behalf of such Domestic Obligor by a payor
that is not a United States person, if such Domestic Obligor determines that no
Taxes are payable in respect thereof, such Domestic Obligor shall furnish, or
shall cause such payor to furnish, to the Administrative Agent, at such address,
an opinion of counsel acceptable to the Administrative Agent stating that such
payment is exempt from Taxes. For purposes of this Section 5, the terms "UNITED
STATES" and "UNITED STATES PERSON" shall have the meanings specified in Section
7701 of the Internal Revenue Code.

                  (e) Upon the reasonable request in writing of any Guarantor,
each Domestic Borrower Lender Party organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution and
delivery of the Credit Agreement in the case of each Initial Lender or Initial
Issuing Bank, as the case may be, and on or prior to the date of the Assignment
and Acceptance, the Joinder Agreement or Secured Hedge Agreement pursuant to
which it becomes a Domestic Borrower Lender Party in the case of each other
Domestic Borrower Lender Party, and from time to time thereafter upon the
reasonable request in writing by any Guarantor (but only so long thereafter as
such Secured Party remains lawfully able to do so), provide each of the
Administrative Agent and such Guarantor with (i) two original Internal Revenue
Service forms W-8BEN or W-8ECI, as applicable (or any successor or other
applicable form prescribed by the Internal Revenue Service), or (ii) in the case
of a Secured Party 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 statement substantially in the form of Exhibit J to the Credit
Agreement and two copies of Internal Revenue Service Form W-8BEN (or any
successor or other applicable form prescribed by the Internal Revenue Service),
certifying that such Secured Party is exempt from or entitled to a reduced rate
of United States withholding tax on payments pursuant to this Guaranty or any
other Loan Document. Upon request in writing by any Guarantor, each Domestic
Borrower Lender Party shall deliver to such Guarantor and the Administrative
Agent (provided that such Secured Party remains lawfully able to do so), two
further duly executed forms and statements, properly completed in all material
respects, at or before the time any such form or statement expires or becomes
obsolete, or as otherwise reasonably requested in writing by such Guarantor.
Each such Domestic Borrower Lender Party shall promptly notify such Guarantor at
any time it determines that it is no longer in a position to provide any
previously delivered certificate to such Guarantor (or any other form or
certification adopted by the U.S. taxing authorities for such purpose). If the
forms provided by a Domestic Borrower Lender Party at the time such Domestic
Borrower Lender Party first becomes a party to the Credit Agreement or the
applicable Secured Hedge Agreement indicate a United States interest withholding
tax rate in excess of zero, withholding tax at such rate shall be considered
excluded from Taxes unless and until such Domestic Borrower Lender Party
provides the appropriate forms certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate

                               Offshore Guaranty

<PAGE>   273
                                       7

only shall be considered excluded from Taxes for periods governed by such forms;
provided, however, that if, in the case of a Domestic Borrower Lender Party
becoming a party to the Credit Agreement at the effective date of the Assignment
and Acceptance or the Joinder Agreement pursuant to which a Domestic Borrower
Lender Party becomes a party to the Credit Agreement, the Domestic Borrower
Lender Party assignor was entitled to payments under subsection (a) of this
Section 5 in respect of United States withholding tax with respect to interest
paid at such date, then, to such extent, the term Taxes shall include (in
addition to withholding taxes that may be imposed in the future or other amounts
otherwise includable in Taxes) United States withholding tax, if any, applicable
with respect to the Domestic Borrower Lender Party assignee on such date. If any
form or document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service forms W-8BEN
or W-8ECI (or the related certificate described above), that the applicable
Secured Party reasonably considers to be confidential, such Secured Party shall
give notice thereof to the applicable Guarantor and shall not be obligated to
include in such form or document such confidential information.

                  (f) Upon the reasonable request in writing of any Guarantor,
each Domestic Borrower Lender Party which is a United States person shall, on or
prior to the date of its execution and delivery of the Credit Agreement in the
case of each Initial Lender Party or Initial Issuing Bank, as the case may be,
and on the effective date of the Assignment and Acceptance, the Joinder
Agreement or Secured Hedge Agreement pursuant to which it becomes a Domestic
Borrower Lender Party in the case of each other Domestic Borrower Lender Party,
deliver to such Guarantor and the Administrative Agent two duly completed copies
of United States Internal Revenue Service Form W-9 (or any successor or other
applicable form prescribed by the Internal Revenue Service) unless it
establishes to the reasonable satisfaction of such Guarantor that it is
otherwise eligible for an exemption from backup withholding tax or other
applicable withholding tax. Upon request in writing by such Guarantor, each such
Secured Party shall deliver to such Guarantor and the Administrative Agent
(provided that such Domestic Borrower Lender Party remains lawfully able to do
so), two further duly executed forms and statements, properly completed in all
material respects, at or before the time any such form or statement expires or
becomes obsolete, or otherwise as reasonably requested by such Guarantor. Each
such Secured Party shall promptly notify the applicable Guarantor at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to such Guarantor (or any other form or certification
adopted by the U.S. taxing authorities for such purpose).

                  (g) Upon the reasonable request in writing of any Guarantor
prior to the date on which an Offshore Borrower requests an Advance, each Lender
Party which has made an Advance to an Offshore Borrower or executed an
Assignment and Acceptance with respect to such an Advance shall, on or prior to
the date it makes such an Advance or executes such an Assignment and Acceptance,
provide each of the Administrative Agent and such Guarantor with any forms,
certifications or other information as may reasonably be requested by such
Guarantor for the purpose of minimizing or eliminating any Taxes required to be
paid by such Guarantor with respect to any Offshore Acquisition Advance or
Offshore Swing Line Advance under the laws of the jurisdiction in which such
Guarantor is organized, or is a resident, is doing business or has a fixed base
or

                               Offshore Guaranty

<PAGE>   274
                                       8

permanent establishment, and shall also deliver such forms at such other times
as a Guarantor may reasonably request in writing. Each such Lender Party shall
promptly notify the applicable Guarantor at any time it determines it is no
longer in a position to provide any previously delivered form, certification or
other applicable information.

                  (h) For any period with respect to which a Secured Party has
failed to provide any Guarantor following such Guarantor's request therefor
pursuant to subsection (e), (f) or (g) above with the appropriate form described
in subsection (e), (f) or (g) above (other than if such failure is due to a
change in law occurring after the date on which a form originally was required
to be provided or, in the case of a form requested pursuant to clause (g) above,
if such Secured Party has notified the applicable Guarantor of a reasonable
basis for such failure), such Secured Party shall not be entitled to
indemnification under subsection (a) or (c) of this Section 5 with respect to
Taxes imposed by the United States by reason of such failure; provided, however,
that should a Secured Party become subject to Taxes because of its failure to
deliver a form required hereunder, such Guarantor shall take such steps as such
Secured Party shall reasonably request to assist such Secured Party to recover
such Taxes.

                  (i) Each Secured Party which is not a United States person
agrees to indemnify and hold harmless each Guarantor from and against any and
all taxes, related penalties and interest, and reasonable out-of-pocket costs
incurred by such Guarantor as a result of a failure by such Guarantor to comply
with its obligations to deduct or withhold any Taxes from any payment made under
this Guaranty, which failure resulted solely from such Guarantor's reasonable
reliance on information provided by such Secured Party on a form referred to in
Section 5(e) or (f).

                  (j) If any Secured Party determines, in its sole discretion,
that it has finally and irrevocably received a refund of any Taxes that have
been paid or reimbursed by any Guarantor pursuant to Section 5(a) or (c) in
respect of payments hereunder or under such Guarantor that it would otherwise
not have obtained and that would result in total payments made under this
Section 5 exceeding that amount needed to make such Secured Party whole, such
Secured Party shall, to the extent that it determines in its sole discretion
that it can do so without prejudice to the retention of the amount of such
refund, pay to such Guarantor following actual receipt of such refund and
without any interest thereon, the amount of such refund after deducting
therefrom all out-of-pocket expenses incurred by or on behalf of such Secured
Party in securing such refund; provided that such Guarantor agrees, upon request
of such Secured Party, to return the amount of such refund to such Secured
Party, together with the amount of all additional out-of-pocket expenses,
penalties, interest or other charges in respect thereof, if such Secured Party
is required to repay or otherwise loses the benefit of such refund. Nothing in
this Section 5 shall be construed to interfere with the right of a Secured Party
to arrange its tax affairs in whatever manner it thinks fit or require any
Secured Party to claim any refund, or to require any Secured Party to make
available to such Guarantor or the Administrative Agent any of its tax returns
or any other information relating to Taxes that it deems to be confidential.

                  Section 6. Representations and Warranties. Each Guarantor
hereby makes each representation and warranty made in the Loan Documents by the
Domestic Borrower with respect to

                               Offshore Guaranty
<PAGE>   275

                                       9

such Guarantor (provided that each reference in each such representation and
warranty to the Domestic Borrower's knowledge shall, for the purposes of this
Section 6, be deemed to be a reference to such Guarantor's knowledge) and each
Guarantor hereby further represents and warrants as follows:

                  (a) There are no conditions precedent to the effectiveness of
         this Guaranty that have not been satisfied or waived.

                  (b) Such Guarantor has, independently and without reliance
         upon any Secured Party and based on such documents and information as
         it has deemed appropriate, made its own credit analysis and decision to
         enter into this Guaranty and each other Loan Document to which it is or
         is to be a party, and such Guarantor has established adequate means of
         obtaining from each other Loan Party on a continuing basis information
         pertaining to, and is now and on a continuing basis will be completely
         familiar with, the business, condition (financial or otherwise),
         operations, performance, properties and prospects of such other Loan
         Party.

                  Section 7. Covenants. Each Guarantor covenants and agrees
that, so long as any part of the Guaranteed Obligations shall remain unpaid, any
Lender Party shall have any Commitment or any Secured Hedge Agreement with any
Offshore Borrower shall be in effect, such Guarantor will perform and observe,
and cause each of its Subsidiaries to perform and observe, all of the terms,
covenants and agreements set forth in the Loan Documents on its or their part to
be performed or observed or that the Domestic Borrower has agreed to cause such
Guarantor or such Subsidiaries to perform or observe.

                  Section 8. Amendments, Guaranty Supplements, Etc. (a) No
amendment or waiver of any provision of this Guaranty and no 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 Administrative Agent and the Required
Lenders, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no amendment, waiver or consent shall, unless in writing and signed by all of
the Secured Parties (other than any Lender Party that is, at such time, a
Defaulting Lender), (a) reduce or limit the obligations of any Guarantor
hereunder, release any Guarantor hereunder or otherwise limit any Guarantor's
liability with respect to the Obligations owing to the Secured Parties under or
in respect of the Loan Documents except (x) as provided in Section 15 hereof,
(y) pursuant to a merger permitted under Section 5.02(e) of the Credit Agreement
or (z) in connection with the sale of such Guarantor permitted pursuant to
Section 5.02(f) of the Credit Agreement or a waiver of such Section 5.02 of the
Credit Agreement effected with the consent of the Required Lenders, (b) postpone
any date fixed for payment hereunder or (c) change the number of Secured Parties
or the percentage of (x) the Commitments, (y) the aggregate unpaid principal
amount of the Advances or (z) the aggregate Available Amount of outstanding
Letters of Credit that, in each case, shall be required for the Secured Parties
or any of them to take any action hereunder; provided further, however, that no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in

                               Offshore Guaranty

<PAGE>   276

                                      10

addition to the Lenders required above to take such action, affect the rights or
duties of the Administrative Agent under this Guaranty or the other Loan
Documents.

                  (b) Upon the execution and delivery by any Person of a
guaranty supplement in substantially the form of Exhibit A hereto (each, a
"GUARANTY SUPPLEMENT"), (i) such Person shall be referred to as an "ADDITIONAL
GUARANTOR" and shall become and be a Guarantor hereunder, and each reference in
this Guaranty to a "GUARANTOR" shall also mean and be a reference to such
Additional Guarantor, and each reference in any other Loan Document to a
"OFFSHORE GUARANTOR" shall also mean and be a reference to such Additional
Guarantor, and (ii) each reference herein to "THIS GUARANTY", "HEREUNDER",
"HEREOF" or words of like import referring to this Guaranty, and each reference
in any other Loan Document to the "OFFSHORE GUARANTY", "THEREUNDER", "THEREOF"
or words of like import referring to this Guaranty, shall mean and be a
reference to this Guaranty as supplemented by such Guaranty Supplement.

                  Section 9. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered
to it, if to any Guarantor, addressed to it in care of the Domestic Borrower at
the Domestic Borrower's address specified in Section 8.02 of the Credit
Agreement, if to any Agent or any Lender Party, at its address specified in
Section 8.02 of the Credit Agreement, if to any Hedge Bank, at its address
specified in the Secured Hedge Agreement to which it is a party, or, as to any
party, at such other address as shall be designated by such party in a written
notice to each other party. All such notices and other communications shall,
when mailed, telegraphed, telecopied or telexed, be effective when deposited in
the mails, delivered to the telegraph company, transmitted by telecopier or
confirmed by telex answerback, respectively. Delivery by telecopier of an
executed counterpart of a signature page to any amendment or waiver of any
provision of this Guaranty or of any Guaranty Supplement to be executed and
delivered hereunder shall be effective as delivery of an original executed
counterpart thereof.

                  Section 10. No Waiver; Remedies. No failure on the part of any
Secured 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 remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

                  Section 11. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the request
or the granting of the consent specified by Section 6.01 of the Credit Agreement
to authorize the Administrative Agent to declare the Notes due and payable
pursuant to the provisions of said Section 6.01, each Agent and each Lender
Party and each of their respective Affiliates is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off 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 such Agent,
such Lender Party or such Affiliate to or for the credit or the account of any
Guarantor against any and all of the Obligations of such Guarantor now or
hereafter existing under the Loan Documents, irrespective of whether such Agent
or such Lender Party shall have made any demand

                               Offshore Guaranty

<PAGE>   277

                                       11

under this Guaranty or any other Loan Document and although such Obligations may
be unmatured. Each Agent and each Lender Party agrees promptly to notify such
Guarantor after any such set-off and application; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Agent and each Lender Party and their respective
Affiliates under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that such Agent, such
Lender Party and their respective Affiliates may have.

                  Section 12. Indemnification. (a) Without limitation on any
other Obligations of any Guarantor or remedies of the Secured Parties under this
Guaranty, each Guarantor shall, to the fullest extent permitted by law,
indemnify, defend and save and hold harmless each Secured Party and each of
their Affiliates and their respective officers, directors, employees, agents and
advisors (each, an "INDEMNIFIED PARTY") from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party in
connection with or as a result of any failure of any Guaranteed Obligations to
be the legal, valid and binding obligations of any Loan Party enforceable
against such Loan Party in accordance with their terms.

                  (b) Each Guarantor also agrees that no Indemnified Party shall
have any liability (whether direct or indirect, in contract or tort or
otherwise) for any Losses to any Loan Party or any Loan Party's security holders
or creditors resulting from, arising out of or in any way related to or by
reason of, the Facilities, the actual or proposed use of the proceeds of the
Advance or the Letters of Credit, the Transaction Documents or any of the
transactions contemplated by the Transaction Documents except to the extent that
any Loss resulted from the gross negligence or bad faith of such Indemnified
Persons.

                  (c) Without prejudice to the survival of any of the other
agreements of any Guarantor under this Guaranty or any of the other Loan
Documents, the agreements and obligations of each Guarantor contained in Section
1(a) (with respect to enforcement expenses), the last sentence of Section 2,
Section 5 and this Section 12 shall survive the payment in full of the
Guaranteed Obligations and all of the other amounts payable under this Guaranty.

                  Section 13. Subordination. Each Guarantor hereby subordinates
any and all debts, liabilities and other Obligations owed to such Guarantor by
each other Loan Party (the "SUBORDINATED OBLIGATIONS") to the Guaranteed
Obligations to the extent and in the manner hereinafter set forth in this
Section 13:

                  (a) Prohibited Payments, Etc. Except during the continuance of
         a Default under Section 6.01(a) or (f) of the Credit Agreement or an
         Event of Default (including the commencement and continuation of any
         proceeding under any Bankruptcy Law relating to any other Loan Party),
         each Guarantor may receive regularly scheduled payments from any other
         Loan Party on account of the Subordinated Obligations. After the
         occurrence and during the continuance of any Default under Section
         6.01(a) or (f) of the Credit Agreement or an Event of Default
         (including the commencement and continuation of any proceeding

                               Offshore Guaranty
<PAGE>   278
                                       12

         under any Bankruptcy Law relating to any other Loan Party), however,
         unless the Administrative Agent otherwise agrees, no Guarantor shall
         demand, accept or take any action to collect any payment on account of
         the Subordinated Obligations.

                  (b) Prior Payment of Guaranteed Obligations. In any proceeding
         under any Bankruptcy Law relating to any other Loan Party, each
         Guarantor agrees that the Secured Parties shall be entitled to receive
         payment in full in cash of all Guaranteed Obligations (including all
         interest and expenses accruing after the commencement of a proceeding
         under any Bankruptcy Law, whether or not constituting an allowed claim
         in such proceeding ("POST PETITION INTEREST")) before such Guarantor
         receives payment of any Subordinated Obligations.

                  (c) Turn-Over. After the occurrence and during the continuance
         of any Default under Section 6.01(a) or (f) of the Credit Agreement or
         an Event of Default (including the commencement and continuation of any
         proceeding under any Bankruptcy Law relating to any other Loan Party),
         each Guarantor shall, if the Administrative Agent so requests, collect,
         enforce and receive payments on account of the Subordinated Obligations
         as trustee for the Secured Parties and deliver such payments to the
         Administrative Agent on account of the Guaranteed Obligations
         (including all Post Petition Interest), together with any necessary
         endorsements or other instruments of transfer, but without reducing or
         affecting in any manner the liability of such Guarantor under the other
         provisions of this Guaranty.

                  (d) Administrative Agent Authorization. After the occurrence
         and during the continuance of any Default under Section 6.01(a) or (f)
         of the Credit Agreement or any Event of Default (including the
         commencement and continuation of any proceeding under any Bankruptcy
         Law relating to any other Loan Party), the Administrative Agent is
         authorized and empowered (but without any obligation to so do), in its
         discretion, (i) in the name of each Guarantor, to collect and enforce,
         and to submit claims in respect of, Subordinated Obligations and to
         apply any amounts received thereon to the Guaranteed Obligations
         (including any and all Post Petition Interest), and (ii) to require
         each Guarantor (A) to collect and enforce, and to submit claims in
         respect of, Subordinated Obligations and (B) to pay any amounts
         received on such obligations to the Administrative Agent for
         application to the Guaranteed Obligations (including any and all Post
         Petition Interest).

                  Section 14. Continuing Guaranty; Assignments under the Credit
Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the latest of (i) the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guaranty, (ii)
the Termination Date and (iii) the latest date of expiration or termination of
all Secured Hedge Agreements with any Offshore Borrower, (b) be binding upon
each Guarantor, its successors and assigns and (c) inure to the benefit of and
be enforceable by the Secured Parties and their successors, transferees and
assigns. Without limiting the generality of clause (c) of the immediately
preceding sentence, any Secured Party may assign or otherwise transfer all or
any portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of its Commitments, the Advances owing to
it and the Note or Notes held by it) to any

                               Offshore Guaranty

<PAGE>   279

                                       13

other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party herein or otherwise,
in each case as and to the extent provided in Section 8.07 of the Credit
Agreement. No Guarantor shall have the right to assign its rights hereunder or
any interest herein without the prior written consent of the Secured Parties.

                  Section 15. Release of Guarantors. If any of the Guarantors
shall cease to be a Subsidiary of the Domestic Borrower for any reason in
accordance with the terms of the Credit Agreement and the other Loan Documents
(including, without limitation, in connection with a transaction permitted under
Section 5.02(e) or 5.02(f) of the Credit Agreement), such Guarantor shall,
automatically and without any further action on the part of any of the other
Loan Parties or the Administrative Agent or any of the other Secured Parties,
and upon notice to the Administrative Agent, be fully released and discharged
from all its Obligations under or in respect of the Loan Documents to which such
Guarantor is a party. Upon the written request of the Domestic Borrower and the
satisfaction of any conditions precedent under the terms of the Loan Documents
(including, without limitation, Section 8.11 of the Credit Agreement) the
Administrative Agent or the Required Lenders shall, at the Domestic Borrower's
sole expense, execute such documents as shall be reasonably requested by the
Domestic Borrower to evidence the release of such Guarantor from all such
Obligations.

                  Section 16. Execution in Counterparts. This Guaranty and each
amendment, waiver and consent with respect hereto may be executed in any number
of counterparts and by different parties thereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Guaranty by telecopier shall be
effective as delivery of an original executed counterpart of this Guaranty.

                  Section 17. Governing Law; Jurisdiction; Waiver of Jury Trial,
Etc. (a) This Guaranty shall be governed by, and construed in accordance with,
the laws of the State of New York.

                  (b) Each Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Guaranty or any of the other Loan
Documents to which it is or is to be a party, or for recognition or enforcement
of any judgment, and each Guarantor hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in any such New York State court or, to the extent permitted by
law, in such federal court. Each Guarantor agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Guaranty or any other Loan Document shall affect any right that
any party may otherwise have to bring any action or proceeding relating to this
Guaranty or any other Loan Document in the courts of any jurisdiction.

                               Offshore Guaranty

<PAGE>   280

                                       14
                  (c) Each Guarantor irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Guaranty or any of the other Loan
Documents to which it is or is to be a party in any New York State or federal
court. Each Guarantor hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such suit,
action or proceeding in any such court.

                  (d) EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS, THE ADVANCES OR THE ACTIONS OF ANY SECURED PARTY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

                               Offshore Guaranty
<PAGE>   281

                  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.

Domestic Borrower:                   SOVEREIGN SPECIALTY CHEMICALS, INC.

                                     By_________________________________________
                                       Title:

Domestic Subsidiary Guarantors:      SIA ADHESIVES, INC.

                                     By_________________________________________
                                       Title:

                                     PIERCE & STEVENS CORP.

                                     By_________________________________________
                                       Title:

                                     OSI SEALANTS, INC.

                                     By_________________________________________
                                       Title:

                                     TANNER CHEMICALS, INC.

                                     By_________________________________________
                                       Title:

                               Offshore Guaranty

<PAGE>   282

                                                                       EXHIBIT A
                                                                          TO THE
                                                               OFFSHORE GUARANTY

                                        FORM OF OFFSHORE GUARANTY SUPPLEMENT

                                                              --------- --, ----

The Chase Manhattan Bank, as Administrative Agent
[Address of Administrative Agent]

Attention:

                  Amended and Restated Credit Agreement dated as of April 6,
                  2000 among Sovereign Specialty Chemicals, Inc., a Delaware
                  corporation (the "DOMESTIC BORROWER"), the Lender Parties
                  party to the Credit Agreement, and The Chase Manhattan Bank,
                  as Administrative Agent

Ladies and Gentlemen:

                  Reference is made to the above-captioned Amended and Restated
Credit Agreement and to the Offshore Guaranty referred to therein (such Offshore
Guaranty, as in effect on the date hereof and as it may hereafter be amended,
supplemented or otherwise modified from time to time, together with this
Guaranty Supplement, being the "OFFSHORE GUARANTY"). The capitalized terms
defined in the Offshore Guaranty or in such Amended and Restated Credit
Agreement and not otherwise defined herein are used herein as therein defined.

                  Section 1. Guaranty; Limitation of Liability. (a) The
undersigned hereby absolutely, unconditionally and irrevocably guarantees the
punctual payment when due, whether at scheduled maturity or on any date of a
required prepayment or by acceleration, demand or otherwise, of all Offshore
Secured Obligations of each Offshore Obligor now or hereafter existing under or
in respect of the Loan Documents (including, without limitation, any extensions,
modifications, substitutions, amendments or renewals of any or all of the
foregoing Obligations), whether direct or indirect, absolute or contingent, and
whether for principal, interest, premium, fees, indemnities, contract causes of
action, costs, expenses or otherwise (such Obligations being the "GUARANTEED
OBLIGATIONS"), and agrees to pay any and all expenses (including, without
limitation, fees and expenses of counsel) incurred by the Administrative Agent
or any other Secured Party in enforcing any rights under this Guaranty
Supplement, the Offshore Guaranty or any other Loan Document to which the
undersigned is a party. Without limiting the generality of the foregoing, the
undersigned=s liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by any other Loan Party to any Secured
Party under or in respect of the Loan Documents but

                               Offshore Guaranty

<PAGE>   283

for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving such other Loan
Party.

                  (b) The undersigned, and by its acceptance of this Guaranty
Supplement, the Administrative Agent and each other Secured Party, hereby
confirms that it is the intention of all such Persons that this Guaranty
Supplement, the Offshore Guaranty and the Obligations of the undersigned
hereunder and thereunder not constitute a fraudulent transfer or conveyance for
purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar foreign, federal or state law to the
extent applicable to this Guaranty Supplement, the Offshore Guaranty and the
Obligations of the undersigned hereunder and thereunder. To effectuate the
foregoing intention, the Administrative Agent, the other Secured Parties and the
undersigned hereby irrevocably agree that the Obligations of the undersigned
under this Guaranty Supplement and the Offshore Guaranty at any time shall be
limited to the maximum amount as will result in the Obligations of the
undersigned under this Guaranty Supplement and the Offshore Guaranty not
constituting a fraudulent transfer or conveyance.

                  (c) The undersigned hereby unconditionally and irrevocably
agrees that in the event any payment shall be required to be made to any Secured
Party under this Guaranty Supplement, the Offshore Guaranty or any other
guaranty, the undersigned will contribute, to the maximum extent permitted by
applicable law, such amounts to each other Guarantor under the Offshore Guaranty
and each other guarantor so as to maximize the aggregate amount paid to the
Secured Parties under or in respect of the Loan Documents.

                  Section 2. Obligations Under the Guaranty. The undersigned
hereby agrees, as of the date first above written, to be bound as a Guarantor by
all of the terms and conditions of the Offshore Guaranty to the same extent as
each of the other Guarantors thereunder. The undersigned further agrees, as of
the date first above written, that each reference in the Offshore Guaranty to an
"ADDITIONAL GUARANTOR" or a "GUARANTOR" shall also mean and be a reference to
the undersigned, and each reference in any other Loan Document to an "OFFSHORE
SUBSIDIARY GUARANTOR" or a "LOAN PARTY" shall also mean and be a reference to
the undersigned.

                  Section 3. Representations and Warranties. The undersigned
hereby makes each representation and warranty set forth in Section 6 of the
Offshore Guaranty to the same extent as each other Guarantor.

                  Section 4. Delivery by Telecopier. Delivery of an executed
counterpart of a signature page to this Guaranty Supplement by telecopier shall
be effective as delivery of an original executed counterpart of this Guaranty
Supplement.

                  Section 5.  Governing Law; Jurisdiction; Waiver of Jury Trial,
Etc.  (a)  This Guaranty Supplement shall be governed by, and construed in
accordance with, the laws of the State of New York.

                  (b) The undersigned hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or any federal court of the United States of America
sitting in New York City, and any appellate court from any thereof, in

                               Offshore Guaranty

<PAGE>   284

                                       3

any action or proceeding arising out of or relating to this Guaranty Supplement,
the Offshore Guaranty or any of the other Loan Documents to which it is or is to
be a party, or for recognition or enforcement of any judgment, and the
undersigned hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
New York State court or, to the extent permitted by law, in such federal court.
The undersigned agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. The undersigned hereby
irrevocably appoints CT Corporation System with an office on the date hereof at
1633 Broadway, New York, New York 10019 (the "PROCESS AGENT"), as its agent to
receive on behalf of the undersigned and its property service of copies of the
summons and complaint and any other process which may be served in any such
action or proceeding. The undersigned irrevocably consents to the service of
process in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to the undersigned at its address
set forth below, such service to become effective 10 days after such mailing.
The undersigned hereby irrevocably waives any objection to such service of
process and further irrevocably waives and agrees not to plead or claim in any
action or proceeding commenced hereunder or under any other Loan Document that
service of process was in any way invalid or ineffective. Nothing herein shall
affect the right of any Agent, any Lender Party or the holder of any Note to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the undersigned in any other
jurisdiction.

                  (c) The undersigned irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Guaranty Supplement, the Offshore
Guaranty or any of the other Loan Documents to which it is or is to be a party
in any New York State or federal court. The undersigned hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such suit, action or proceeding in any such court.

                  (d) THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS, THE ADVANCES OR THE ACTIONS OF ANY SECURED PARTY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

                                       Very truly yours,

                                       [NAME OF ADDITIONAL GUARANTOR]

                                       By
                                          --------------------------------------
                                          Title:
                                          Address:

                               Offshore Guaranty

<PAGE>   285

                                                                       EXHIBIT H
                                                         TO THE CREDIT AGREEMENT

                                OFFSHORE GUARANTY

                            Dated as of April 6, 2000

                                      From

                           THE GUARANTORS NAMED HEREIN

                                       and

                  THE ADDITIONAL GUARANTORS REFERRED TO HEREIN

                                  as Guarantors

                                   in favor of

                       THE SECURED PARTIES REFERRED TO IN
                     THE CREDIT AGREEMENT REFERRED TO HEREIN

                               Offshore Guaranty

<PAGE>   286

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                                                        PAGE

<S>                                                                                                           <C>
1.  Guaranty; Limitation of Liability.............................................................................1

2.  Guaranty Absolute.............................................................................................2

3.  Waivers and Acknowledgments...................................................................................4

4.  Subrogation...................................................................................................4

5.  Payments Free and Clear of Taxes, Etc.........................................................................5

6.  Representations and Warranties................................................................................9

7.  Covenants.....................................................................................................9

8.  Amendments, Guaranty Supplements, Etc.........................................................................9

9.  Notices, Etc.................................................................................................10

10.  No Waiver; Remedies.........................................................................................11

11.  Right of Set-off............................................................................................11

12.  Indemnification.............................................................................................11

13.  Subordination...............................................................................................12

14.  Continuing Guaranty; Assignments under the Credit Agreement.................................................13

15.  Release of Guarantors.......................................................................................13

16.  Execution in Counterparts...................................................................................14

17.  Governing Law; Jurisdiction; Waiver of Jury Trial, Etc......................................................14
</TABLE>

Exhibit A  -  Guaranty Supplement

                               Offshore Guaranty

<PAGE>   287

                                                                       EXHIBIT I
                                                         TO THE CREDIT AGREEMENT

                   FORM OF OPINION OF COUNSEL TO LOAN PARTIES

                                   [To follow]

                               Offshore Guaranty

<PAGE>   288

                                                                       EXHIBIT J
                                                         TO THE CREDIT AGREEMENT

                     FORM OF CERTIFICATE OF NON-BANK STATUS

                  The undersigned hereby certifies (i) that it is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code of 1986,
as amended (the "Code"); (ii) that it is not a "10 percent shareholder", within
the meaning of Section 881(c)(3)(B) of the Code, of the Borrower; (iii) that it
is not a "controlled foreign corporation" within the meaning of Section
881(c)(3)(C) of the Code; (iv) that it is a "foreign corporation" as such term
is used in Section 881(c)(1) of the Code; and (v) that it is entitled to receive
payments of interest without deduction or withholding of any United States
federal income tax pursuant to Section 881 of the Code (including applicable
treasury regulations).

                                         Lender:
                                                --------------------------------
                                         By:
                                            ------------------------------------

                                            ------------------------------------
                                         Date:
                                              ----------------------------------

                          Credit Agreement - Exhibit J

<PAGE>   289

                                                                       EXHIBIT K
                                                         TO THE CREDIT AGREEMENT

                           FORM OF INTERCOMPANY NOTE

THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT IS SUBORDINATED TO THE PRIOR
PAYMENT IN FULL OF (1) ALL OF THE GUARANTEED OBLIGATIONS (AS DEFINED IN THE
GUARANTIES REFERRED TO BELOW) OF THE COMPANY (REFERRED TO BELOW) PURSUANT TO,
AND AS PROVIDED IN, SUCH GUARANTIES AND (2) ALL OF THE SUBORDINATED DEBT OF THE
COMPANY UNDER THE SUBORDINATED DEBT DOCUMENTS (EACH AS DEFINED IN THE CREDIT
AGREEMENT REFERRED TO BELOW) ISSUED OR ENTERED IN BY THE COMPANY IN COMPLIANCE
WITH THE CREDIT AGREEMENT.

         Dated:        ,

                  FOR VALUE RECEIVED, the undersigned,
                          , a                     [corporation][limited
partnership][limited liability company] (the "COMPANY"), HEREBY PROMISES TO PAY
TO THE ORDER OF                     , a                   [corporation][limited
partnership][limited liability company](the "SUBORDINATED LENDER"), UPON DEMAND,
the aggregate unpaid principal amount of all loan, advances and other Debt (as
defined in the Credit Agreement referred to below) owing at the time of such
demand from the Company to the Subordinated Lender in accordance with Section
5.02(b)(vii) of the Amended and Restated Credit Agreement dated as of April 6,
2000 (as amended, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"; terms defined therein unless otherwise defined herein being
used herein as therein defined), among [the Company,][the Subordinated
Lender,][Sovereign Specialty Chemicals, Inc.,] the banks, financial institutions
and other institutional lenders from time to time party thereto, The Chase
Manhattan Bank, as administrative agent (together with any successor
administrative agent appointed pursuant to Article VIII thereof, the
"ADMINISTRATIVE AGENT") for the Lender Parties, and the other Agents referred to
therein; provided that any and all amounts of any loan, advance or other Debt as
may, from time to time, be advanced by the Company to the Subordinated Lender at
the time of any such demand hereunder shall be applied to the payment of the
outstanding amounts under this Intercompany Note (including any interest which
constitutes part of such outstanding amounts). Capitalized terms not otherwise
defined in this Intercompany Note shall have the same meanings as specified
therefor in the Credit Agreement.

                  Interest shall be payable under this Intercompany Note on any
and all principal amounts from time to time outstanding hereunder from and
including the date of the initial extension of credit by the Subordinated Lender
to the Company until such principal amounts are paid in full, at a rate per
annum (computed on the basis of                 ) equal to      %. Accrued and
unpaid interest shall be payable upon demand.

                          Credit Agreement - Exhibit K

<PAGE>   290

                  Both principal and interest are payable in lawful money of the
United States of America to the Subordinated Lender at such location as shall be
designated from time to time by the Subordinated Lender in a written notice to
the Company and the Administrative Agent, in same day funds. The Company agrees
that the books, records and accounts of the Subordinated Lender shall be prima
facie evidence of the amounts advanced by the Subordinated Lender to the Company
and the amounts repaid by the Company to the Subordinated Lender. All advances
made by the Subordinated Lender to the Company hereunder, and all payments made
on account of principal hereof, shall be recorded by the Subordinated Lender
and, prior to any transfer hereof, endorsed on the grid attached hereto that is
part of this Intercompany Note; provided that the failure of the Subordinated
Lender to make any such recordation or endorsement shall not affect the
obligations of the Company under this Intercompany Note.

                  The principal amount outstanding under this Intercompany Note
may, at the option of the Company, be prepaid at any time, in whole or in part,
without penalty or premium. If at any time demand is made against the Company
under, and pursuant to the terms of, any Loan Document to which the Company is a
party or any other guarantee executed by the Company in connection with the
Senior INDEBTEDNESS (as hereinafter defined), this Intercompany Note, and the
payment obligations of the Company evidenced hereby, shall be reduced by any
amounts paid by the Company under such Loan Documents, or any such other
guarantee.

                  The aggregate principal amount owing to the Subordinated
Lender from time to time under this Intercompany Note, all accrued and unpaid
interest thereon, and any and all other indebtedness and Obligations evidenced
by or otherwise owing in respect of this Intercompany Note (collectively, the
"SUBORDINATED INDEBTEDNESS") is and shall be subordinate and junior in right of
payment and otherwise (1) to the Obligations of the Company under that certain
Amended and Restated Subsidiary Guaranty dated as of April 6, 2000, from the
Company and the other Guarantors named therein in favor of the Secured Parties,
and that certain Offshore Guaranty dated as of April 6, 2000, from the Company
and the other Guaranties named therein in favor of the Secured Parties, in each
case as amended and in effect from time to time (collectively, the
"GUARANTIES"), to the extent and in the manner set forth in Section 13 of each
such Guaranty, and the terms and provisions of Section 13 of each Guaranty are
incorporated by reference herein for all purposes and shall be effective as
fully as if set forth in this Intercompany Note, and (2) to the prior payment in
full of the outstanding Subordinated Debt of the Company under the Senior
Subordinated Notes or any other Subordinated Debt Document issued or entered
into by the Company in compliance with Section 5.02(b)(x) of the Credit
Agreement.

                  The Company hereby waives promptness, diligence, presentment
for payment, demand, notice of dishonor and protest and any other notice with
respect to this Intercompany Note.

                  No amendment, waiver or modification of this Intercompany Note
(including, without limitation, the subordination provisions incorporated by
reference herein), and no consent to any departure herefrom, that could
adversely affect the rights or interests of the Administrative Agent or any of
the other Secured Parties under or in respect of this Intercompany Note, any of
the

                          Credit Agreement - Exhibit K

<PAGE>   291
                                       3

Loan Documents or any of the Secured Hedge Agreements in any manner shall be
effective unless the same shall be in writing and signed by the Administrative
Agent, and then, in each case, such waiver, modification or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

                  No failure on the part of the Subordinated Lender or the
Administrative Agent to exercise, and no delay in exercising, any right, power
or privilege hereunder shall operate as a waiver thereof or a consent thereto;
nor shall a single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided herein are cumulative and are
not exclusive of any remedies provided by applicable law.

                  This Intercompany Note shall be governed by, and construed in
accordance with, the laws of the State of New York.

                                           [NAME OF COMPANY]

                                           By
                                              ----------------------------------
                                              Name:
                                              Title:

                          Credit Agreement - Exhibit K
<PAGE>   292

                       ADVANCES AND PAYMENTS OF PRINCIPAL

<TABLE>
<CAPTION>

====================================================================================================================
                                                  AMOUNT OF                 UNPAID
                          AMOUNT OF             PRINCIPAL PAID            PRINCIPAL                NOTATION
       DATE                ADVANCE                OR PREPAID               BALANCE                  MADE BY
====================================================================================================================
<S>                      <C>                    <C>                      <C>                     <C>

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</TABLE>

                          Credit Agreement - Exhibit K
<PAGE>   293

                                   ENDORSEMENT

PAY TO THE ORDER OF _______________________________________

Dated: _________, ____                          [COMPANY]

                                                By:_____________________________
                                                Name:
                                                Title:

                          Credit Agreement - Exhibit K

<PAGE>   294

                                                                       EXHIBIT L
                                                         TO THE CREDIT AGREEMENT

                      FORM OF COLLATERAL SHARING AGREEMENT

                  COLLATERAL SHARING AGREEMENT, dated as of April 6, 2000 (this
"AGREEMENT"), among the Lender Parties referred to in the Amended and Restated
Credit Agreement, dated as of the date hereof (as amended, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT"), among Sovereign
Specialty Chemicals Inc., a Delaware corporation (the "DOMESTIC BORROWER"), the
other Offshore Borrowers from time to time party thereto, such Lender Parties,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint lead arranger,
joint book-running manager and syndication agent, J.P. Morgan Securities Inc.,
as joint lead arranger, joint book-running manager and documentation agent, and
The Chase Manhattan Bank, as administrative agent and offshore currency agent.
Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

                  NOW, THEREFORE, in consideration of the agreement of each
other Lender Party, and for other good and valid consideration the sufficiency
of which is acknowledged, each Secured Party, (a) in the case of each Lender
Party identified on the signature page below by its execution and delivery of a
counterpart of this Agreement and (b) in the case of each other Lender Party
which may hereafter become a party to the Credit Agreement, by its execution and
delivery of its Assignment and Acceptance or its Offshore Swing Line Lender
Joinder Agreement, as the case may be, agrees as follows:

                  SECTION 1.  Sharing of Payments, Etc.

                  (a) If any Lender Party shall obtain at any time any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
the liquidation of any collateral or otherwise, other than as a result of an
assignment pursuant to Section 8.07 of the Credit Agreement) (i) on account of
Obligations (whether Offshore Secured Obligations or Domestic Secured
Obligations) due and payable to such Lender Party hereunder, under the Notes or
under the other Loan Documents at such time in excess of its ratable share
(according to the proportion of (A) the amount of such Obligations due and
payable to such Lender Party at such time to (B) the aggregate amount of the
Obligations due and payable to all Lender Parties hereunder, under the Notes and
under the other Loan Documents at such time) of payments on account of the
Obligations due and payable to all Lender Parties hereunder, under the Notes and
under the other Loan Documents at such time obtained by all the Lender Parties
at such time or (ii) on account of Obligations (whether Offshore Secured
Obligations or Domestic Secured Obligations) owing (but not due and payable) to
such Lender Party hereunder, under the Notes or under the other Loan Documents
at such time in excess of its ratable share (according to the proportion of (A)
the amount of such Obligations owing to such Lender Party at such time to (B)
the aggregate amount of the Obligations owing (but not due and payable) to all
Lender Parties hereunder, under the Notes and under the other Loan Documents

                          Collateral Sharing Agreement
<PAGE>   295

                                       2

at such time) of payments on account of the Obligations owing (but not due and
payable) to all Lender Parties hereunder, under the Notes and under the other
Loan Documents at such time obtained by all of the Lender Parties at such time,
such Lender Party shall forthwith purchase from the other Lender Parties such
interests or participating interests in the Obligations (whether Offshore
Secured Obligations and/or Domestic Secured Obligations) due and payable or
owing to them, as the case may be, as shall be necessary to cause such
purchasing Lender Party to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender Party, such purchase from each
other Lender Party shall be rescinded and such other Lender Party shall repay to
the purchasing Lender Party the purchase price to the extent of such Lender
Party's ratable share (according to the proportion of (A) the purchase price
paid to such Lender Party to (B) the aggregate purchase price paid to all Lender
Parties) of such recovery together with an amount equal to such Lender Party's
ratable share (according to the proportion of (A) the amount of such other
Lender Party's required repayment to (B) the total amount so recovered from the
purchasing Lender Party) of any interest or other amount paid or payable by the
purchasing Lender Party in respect of the total amount so recovered; provided,
further that, so long as the Obligations under the Loan Documents shall not have
been accelerated and the Administrative Agent has not exercised any remedies
under the other Loan Documents after an Event of Default has occurred, any
excess payment received by any Appropriate Lender shall be shared on a pro rata
basis only with other Appropriate Lenders.

                  (b) The Domestic Borrower, by its execution of the
acknowledgment of this Agreement as provided below, and each other Applicable
Borrower by its execution of its Credit Agreement Supplement, agrees that any
Lender Party so purchasing an interest or participating interest from another
Lender Party pursuant to Section 1(a) may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off) with
respect to such interest or participating interest, as the case may be, as fully
as if such Lender Party were the direct creditor of such Applicable Borrower in
the amount of such interest or participating interest, as the case may be.

                  (c) The agreements of each Lender Party contained herein are
exclusively for the benefit of each other Lender Party and may not be relied on
by any other Person.

                  SECTION 2.  Miscellaneous.

                  (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                  (b) Any legal action or proceeding with respect to this
Agreement or any other Loan Document may be brought in the courts of the State
of New York or of the United States for the Southern District of New York, and,
by execution and delivery of this Agreement, or its Assignment and Acceptance or
its Offshore Swing Line Lender Joinder Agreement, as the case may be, each
Lender Party hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Lender Party hereby further irrevocably waives any claim that any
such courts lack jurisdiction over such Lender Party, and agrees not to plead or
claim, in any legal action or proceeding with respect to this Agreement or any

                          Collateral Sharing Agreement

<PAGE>   296
                                       3

other Loan Document brought in any of the aforesaid courts, that any such court
lacks jurisdiction over such Lender Party. Each Lender Party agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Each Lender Party irrevocably consents to the service of
process in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to such Lender Party at its
address set forth pursuant to Section 8.02 of the Credit Agreement, such service
to become effective 10 days after such mailing. Each Lender Party hereby
irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any other Loan Document that service of process was
in any way invalid or ineffective. Nothing herein shall affect the right of any
Agent, any Lender Party or the holder of any Note to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against any Lender Party or any Loan Party in any other jurisdiction.

                  (c) Each Lender Party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Loan Document brought in the courts referred to above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.

                  (d) To the extent that any Lender Party 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, execution or otherwise) with respect to itself or its
property, such Lender Party to the extent permitted by law hereby irrevocably
waives such immunity in respect of its obligations under this Agreement or any
other Loan Document and, without limiting the generality of the foregoing,
agrees that the waivers set forth in this paragraph shall have the fullest scope
permitted under the United States Foreign Sovereign Immunities Act of 1976, as
amended, or any other similarly applicable foreign law and are intended to be
irrevocable for purposes of such Act or any other similarly applicable foreign
law.

                  (e) Each Lender Party hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to this Agreement or any
of the other Loan Documents.

                          Collateral Sharing Agreement
<PAGE>   297

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

                                  MERRILL LYNCH, PIERCE, FENNER &
                                  SMITH INCORPORATED, as Joint Lead
                                  Arranger, Joint Book Manager and Syndication
                                  Agent

                                  By___________________________________
                                    Title:

                                  MERRILL LYNCH CAPITAL CORPORATION,
                                  as an Initial Lender

                                  By___________________________________
                                    Title:

                                   J.P. MORGAN SECURITIES INC., as Joint Lead
                                   Arranger, Joint Book Manager and
                                   Documentation Agent

                                   By___________________________________
                                     Title:

                                   MORGAN GUARANTY TRUST COMPANY
                                   OF NEW YORK, as an Initial Lender

                                  By___________________________________
                                    Title:

                          Collateral Sharing Agreement

<PAGE>   298

                                  THE CHASE MANHATTAN BANK,
                                  as Administrative Agent, Offshore Currency
                                  Agent, Initial Issuing Bank, Domestic Swing
                                  Line Lender and an Initial Lender

                                  By___________________________________
                                    Title:

                                  NATIONAL CITY BANK,
                                    as an Initial Lender

                                  By___________________________________
                                    Title:

                                  THE BANK OF NOVA SCOTIA,
                                  as an Initial Lender

                                  By___________________________________
                                    Title:

                                  BANK ONE, NA (Main Chicago Office),
                                  as an Initial Lender

                                  By___________________________________
                                    Title:

                                  ABN AMRO BANK N.V.,
                                  as an Initial Lender

                                  By___________________________________
                                    Title:

                          Collateral Sharing Agreement

<PAGE>   299

                                 By___________________________________
                                    Title:

                                 CREDIT AGRICOLE INDOSUEZ,
                                 as an Initial Lender

                                 By___________________________________
                                   Title:

                                 By___________________________________
                                   Title:

                          Collateral Sharing Agreement

<PAGE>   300

                                  ACKNOWLEDGED AND AGREED TO:

                                  SOVEREIGN SPECIALTY CHEMICALS, INC.

                                  By___________________________________
                                    Title:<PAGE>   1
                                                                     EXHIBIT 4.2

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

                              AMENDED AND RESTATED
                             SHAREHOLDERS AGREEMENT

                                  by and among

                      SOVEREIGN SPECIALTY CHEMICALS, INC.,

                               SSCI INVESTORS LLC

                                       and

                  The Shareholders Listed on Schedule I Hereto

                            Dated as of May 12, 2000

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

<PAGE>   2

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

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

       Section 1.1. Definitions ...............................................................    2

ARTICLE II  REPRESENTATIONS AND WARRANTIES ....................................................   10

       Section 2.1. Representations and Warranties of the Company .............................   10
       Section 2.2. Representations and Warranties of Investors LLC ...........................   11
       Section 2.3. Representations and Warranties of Employee Parties ........................   11

ARTICLE III  CORPORATE GOVERNANCE; CERTAIN CORPORATE ACTIONS ..................................   12

       Section 3.1. Voting of Shares ..........................................................   12
       Section 3.2. Composition of the Board of Directors .....................................   12
       Section 3.3. Certain Transactions ......................................................   13
       Section 3.4.  Books, Records and Reports ...............................................   14

ARTICLE IV  TRANSFER ..........................................................................   14

       Section 4.1. Transfer Restrictions .....................................................   14
       Section 4.2. Take Along Rights .........................................................   17
       Section 4.3. Tag Along Rights ..........................................................   18
       Section 4.4. Permitted Transfers .......................................................   19
       Section 4.5. Certain Consequences of Termination of Employee's Employment or Competition   19
       Section 4.6. Employee Offer Proposal Rights ............................................   21

ARTICLE V  REGISTRATION RIGHTS ................................................................   23

       Section 5.1. Piggyback Registrations ...................................................   23
       Section 5.2. Demand Registration .......................................................   24
       Section 5.3. Holdback ..................................................................   25
       Section 5.4. Registration Procedures ...................................................   25
       Section 5.5. Registration Expenses .....................................................   28
       Section 5.6. Indemnification ...........................................................   29
       Section 5.7. Participation in Underwritten Registrations ...............................   31
       Section 5.8. Pre-Emptive Rights ........................................................   32
</TABLE>

                                      -i-

<PAGE>   3

<TABLE>
<CAPTION>

<S>                                                                                               <C>
ARTICLE VI  GENERAL PROVISIONS ................................................................   33

       Section 6.1. Notices ...................................................................   33
       Section 6.2. Assignment; Binding Effect; Benefit; Additional Signatories ...............   35
       Section 6.3. Entire Agreement ..........................................................   36
       Section 6.4. Amendment .................................................................   36
       Section 6.5. Governing Law .............................................................   36
       Section 6.6. Counterparts ..............................................................   36
       Section 6.7. Headings ..................................................................   36
       Section 6.8. Interpretation ............................................................   37
       Section 6.9. Incorporation of Exhibits and Schedules ...................................   37
       Section 6.10. Third Party Beneficiary ..................................................   37
       Section 6.11. Severability .............................................................   37
       Section 6.12. Enforcement of Agreement .................................................   37
       Section 6.13. Termination ..............................................................   37
</TABLE>

                                      -ii-

<PAGE>   4

                              AMENDED AND RESTATED

        AMENDED AND RESTATED SHAREHOLDERS AGREEMENT, dated as of May 12, 2000
(this "Agreement"), by and among Sovereign Specialty Chemicals, Inc., a Delaware
corporation (the "Company"), SSCI Investors LLC, a Delaware limited liability
company ("Investors LLC"), and the shareholders listed on Schedule I hereto (the
"Employees"). Capitalized terms used in this Agreement are set forth in Article
I hereof.

                                    RECITALS:

        A. Whereas Investors LLC purchased certain Shares pursuant to that
certain Stock Purchase Agreement dated as of November 24, 1999, as amended,
between Investors LLC, Sovereign Specialty Chemicals, L.P. (the "Selling
Partnership"), and the other parties thereto (the "Stock Purchase Agreement");
and

        B. Whereas, in connection with the transactions contemplated by the
Stock Purchase Agreement, the Selling Partnership made a distribution of Shares
to the Employees; and

        C. Whereas each Employee held Shares prior to the Closing or received
options to purchase Shares ("Stock Options") pursuant to an employee stock
option plan (the "Stock Option Plan") and may purchase additional Shares from
time to time ("Additional Shares"); and

        D. Whereas, at the Closing, the parties entered into that certain
Shareholders Agreement dated December 29, 1999 (the "Initial Agreement" and the
"Initial Execution Date," respectively); and

        E. Whereas the parties wish to amend and restate the Initial Agreement
as herein below set forth.

                                   AGREEMENT:

        Now, therefore, in consideration of the foregoing Recitals, and of the
representations, warranties, covenants and agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree to amend and restate the
Initial Agreement as follows:

<PAGE>   5

                                    ARTICLE I
                                   DEFINITIONS

        Section 1.1. Definitions.

        "Additional Shares": as defined in the Preamble to this Agreement.

        "AEA": AEA Investors Inc., a Delaware corporation.

        "Affiliate": of any Person, means any other Person controlling,
controlled by or under common control with such Person.

        "Agreement": as defined in the Preamble to this Agreement.

        "Applicable Valuation Date": the date of a Call Option Notice, or the
date of an Offer Proposal Notice, as the case may be.

        "Bank Credit Agreement": the Credit Agreement dated of as April 6, 2000
among Sovereign Specialty Chemicals, Inc. and the banks, financial institutions
and other institutional lenders listed on the signature pages thereof as amended
or restated from time to time.

        "Board of Directors": the board of directors of the Company or a duly
designated committee thereof.

        "Business Day": a day that is not a Saturday, a Sunday or a day on which
banking institutions in New York, New York are not required to open.

        "Call Option": the rights of the Company set forth under Section 4.5.

        "Call Option Notice": as defined in Section 4.5(d).

        "Call Option Proceeds": as defined in Section 4.5(d).

        "Call Option Shares": shall mean all Additional Shares and all Option
Shares held by an Employee Party.

        "Change of Control": means (i) the approval by members or shareholders
of the liquidation or dissolution of Investors LLC or the Company, (ii) a sale
or other disposition of 51% or more of the outstanding interests or voting
stock, respectively, of Investors LLC or the Company, (iii) the merger or
consolidation of Investors LLC or the Company with or into any entity, or (iv) a
sale or other disposition of substantially all of the assets of Investors LLC or
the Company; provided, however, that the term "Change of

                                      -2-
<PAGE>   6

Control" shall exclude each transaction which is a "Non-Control Transaction."
"Non-Control Transaction" means (i) any transaction following which Investors
LLC Parties own, directly or indirectly, a majority of the outstanding interests
or shares of voting stock of the purchasing or surviving entity, as applicable,
(ii) a merger or consolidation following which those persons who owned directly
or indirectly a majority of the outstanding interests or shares of voting stock
of Investors LLC and/or the Company immediately prior to such merger or
consolidation will own directly or indirectly a majority of the outstanding
interests or shares of voting stock of the surviving corporation, (iii) a sale
or other disposition of interests or capital stock, respectively, of Investors
LLC or the Company following which those persons who owned directly or
indirectly a majority of the outstanding interests or shares of voting stock
immediately prior to such sale will own directly or indirectly a majority of the
outstanding interests or shares of voting stock of the purchasing entity, (iv) a
sale or other disposition of substantially all of the assets of Investors LLC or
the Company to an Affiliate of Investors LLC or the Company, (v) an IPO of the
Company or (vi) any transaction following which Investors LLC Parties constitute
a majority of the directors on the board of directors of the Company or have a
right to elect a majority of the board of directors.

        "Closing": December 30, 1999.

        "Commission": the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.

        "Common Stock": the common stock of the Company (all classes) now or
hereafter authorized to be issued, whether voting or non-voting.

        "Company": as defined in the Preamble to this Agreement.

        "Competition": directly or indirectly own any interest in, invest in,
lend to, borrow from, manage, control, participate in, consult with, render
services to, or in any other manner whatsoever engage in, any business which is
competitive with any business actively being engaged in by the Company, its
Subsidiaries and their Affiliates or actively (and demonstrably) being
considered by the Company, its Subsidiaries and their Affiliates for entry into
on the date of the termination of employment, within any states or geographical
regions in which any such business is being conducted or in which the Company,
its Subsidiaries and their Affiliates is or are actively (and demonstrably)
considering engaging in on the date of the termination of the employment. The
preceding to the contrary notwithstanding shall not include the making of
investments in the publicly traded securities of any corporation, provided
further that such investments do not amount to more than 1% of the outstanding
securities of any class of such corporation, provided that, except as this
definition is used in Sections 3.2 and 3.4, with

                                      -3-
<PAGE>   7

respect to any Employee who has an employment agreement with the Company or any
Subsidiary which defines a non-competition period the activities which are
prohibited during such period shall constitute Competition for purposes of such
Employee.

        "Convertible Security": any security of the Company (other than a Stock
Option) convertible into Shares of Common Stock of the Company.

        "Cost of the Shares": in the case of Roll-Over Shares, an amount equal
to the purchase price paid by the Investors LLC for Shares pursuant to the Stock
Purchase Agreement divided by the number of Shares purchased by the Investors
LLC Parties; in the case of Option Shares, the exercise price thereof paid by
the Employee therefor; and in the case of Additional Shares, the price paid
therefor by the Employee who purchased such Additional Shares.

        "Covalt": Robert Covalt.

        "Covalt Family Group": Covalt, Tregooden Partners, L.P., Nautical
Partners, L.P. and Serendipity Partners, L.P. and any transferee of Covalt or
such other existing holders who would be a Permitted Transferee pursuant to
Section 4.1(e)(i) (except that for clause (3) all partners thereof shall be
Covalt and his spouse or lineal ancestor or descendants).

        "Demand Registration": as defined in Section 5.2.

        "Employee": as defined in the preamble to this Agreement.

        "Employee Offer Proposal": as defined in Section 4.6(a).

        "Employee Offer Proposal Notice": as defined in Section 4.6(b).

        "Employee Offer Proposal Permissibility Notice": as defined in Section
4.6(d).

        "Employee Parties": the original signatories hereto (other than the
Company and Investors LLC), any other employees of the Company or any Subsidiary
that may become a party hereto from time to time and their Permitted
Transferees.

        "Equity Value": the estimated realizable sales price of the Company in
its entirety in a sale to an unrelated third party in an arm's length
transaction at the Applicable Valuation Date, as determined by the Board of
Directors in good faith, by employing the same methodologies as have been
employed by AEA in accordance with its customary practices, in the preparation
of its periodic reports to Participants of the probable disposition value of
Investors LLC's investment in the Company. It is

                                      -4-
<PAGE>   8

understood that the Board of Directors would review, among other things, market
valuations of comparable companies (provided that the equity value of publicly
traded comparables shall be their market capitalizations without any adjustments
for control premiums), other market data and other factors and will take into
consideration outstanding indebtedness, other liabilities and potential
transaction expenses.

        "Exit Sale": as defined in Section 4.2.

        "Fair Market Value": (x) the aggregate sum of (i) the Equity Value of
the Company determined as of Applicable Valuation Date plus (ii) the aggregate
sum of the exercise prices of all issued and outstanding Stock Options on the
Applicable Valuation Date plus (iii) the aggregate sum of the conversion prices
of all issued and outstanding Convertible Securities on the Applicable Valuation
Date, divided by (y) the number of Shares of Common Stock outstanding on a fully
diluted basis (assuming full exercise of all issued and outstanding Stock
Options and the conversion of all issued and outstanding Convertible
Securities). If the Fair Market Value (without giving effect to the exercise of
any Stock Option or the conversion of any Convertible Security) is less than the
exercise price of such Stock Option and\or less than the conversion price of any
Convertible Security, then such Stock Option and\or such Convertible Security,
as the case may be, shall be excluded from the calculation in both clauses (x)
and (y) for purposes of determining Fair Market Value.

        "IPO": an initial underwritten public offering of Shares registered
under the Securities Act, whether for the sale of Shares by the Company or by
shareholders.

        "Indenture": the Indenture dated as of March 29, 2000 among the Company,
certain subsidiaries of the Company and the Bank of New York as Trustee, as
amended from time to time.

        "Investors": AEA SSC Investors Inc.

        "Investors LLC": as defined in the preamble to this Agreement.

        "Investors LLC Parties": Investors LLC, AEA, any Person controlling or
controlled by AEA or any officers, directors, employees, participants,
shareholders of AEA or members of Investors LLC.

        "Non-Transferring Party": as defined in Section 4.3(iv).

        "Notified Shareholders": as defined in Section 5.8.

        "Offered Rollover Shares": as defined in Section 4.6 (a).

                                      -5-
<PAGE>   9

        "Offer Proposal Notice": as defined in Section 4.6 (b).

        "Offer Price Notice": as defined in Section 4.6 (b).

        "Offering Employee": as defined in Section 4.6(a).

        "Option Shares": Shares received upon exercise of Stock Options.

        "Participants": any Investors LLC Party or any Person who is the
beneficial owner of any equity interest in any Investors LLC Party.

        "Permitted Transferees": any Person to whom Shares are transferred by an
Employee or any previous Permitted Transferees, excluding any Shares transferred
under Article V or pursuant to Sections 4.2 and 4.3 and excluding any Shares
sold after the consummation of an IPO pursuant to Rule 144 under the Securities
Act in compliance with Sections 4.1 and 5.3.

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

        "Piggyback Registration": as defined in Section 5.1(a).

        "Pre-emptive Right Notice": as defined in Section 5.8.

        "Private Offering": as defined in Section 5.8.

        "Qualified Request": as defined in Section 5.2(a).

        "Registrable Securities": (i) any shares of Common Stock owned by the
Employee Parties or an Investors LLC Party, as the case may be, and (ii) any
securities issued as a dividend on or other distribution with respect to or in
exchange, replacement or in subdivision of, any such Common Stock. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale of such
securities shall have been declared effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, or (ii) such securities shall have been sold (other than in a
privately negotiated sale) pursuant to Rule 144 (or any successor provision)
under the Securities Act and in compliance with the requirements of paragraphs
(c), (e), (f), (g) and (k) of Rule 144.

        "Related Party": with respect to any Person means, as of the time of any
Transfer, (i) any person or entity that, directly or indirectly, through one or
more

                                      -6-
<PAGE>   10

intermediaries, has voting control of, or is under common voting control with,
or is controlled by such Person, (ii) with respect to individuals, such Person's
spouse, parents, children, siblings and/or grandchildren, and (iii) a trust,
corporation, partnership or other entity, whose beneficiaries, shareholders,
partners, or owners, or other persons or entities holding a controlling interest
in which, consist solely of such Person and/or such other persons or entities
referred to in the immediately preceding clauses (i) or (ii).

        "Registration Expenses": as defined in Section 5.5(a).

        "Resignation": the voluntary termination of employment hereunder by the
Employee which is not a Resignation with Good Grounds (except if made in
contemplation of a Termination by the Company for Cause), provided that if such
action is taken by the Employee without the giving of at least ninety (90) days
prior written notice, such termination of employment shall not be a
"Resignation," but instead shall constitute a Termination by the Company for
Cause; provided, however, that with respect to any Employee who has an
employment agreement with the Company or any Subsidiary this definition shall be
replaced by any corresponding definition in such employment agreement with
respect to such Employee.

        "Resignation with Good Grounds": a voluntary termination of the
Employee's employment hereunder on account of, and within 60 days after, the
occurrence of one or more of the following events:

             (i) the assignment to the Employee of any duties inconsistent in
any material respect with the Employee's position (including status, offices and
titles), authority, duties or responsibilities which results in a diminution of
the Employee's position, excluding for this purpose an isolated, insubstantial
or inadvertent action not taken in bad faith and which is remedied by the
Company or any Subsidiary promptly after receipt of written notice thereof given
by the Employee;

             (ii) the Employee's annual salary and/or target bonus opportunity
is/are decreased below the amount of his then annual salary and/or target bonus
opportunity (provided that so long as the aggregate sum of the Employee's annual
base compensation and potential annual target bonus in respect of any calendar
year are not decreased, the Company or any Subsidiary shall be free to decrease
the potential annual target bonus for that year and commensurately increase the
annual base compensation for that year without any affect in the subsequent
calendar year annual base compensation and potential annual target bonus, it
being expressly acknowledged by the Employee that the operating result
achievement criteria for the payment of any of the potential annual target bonus
by the Company, its Subsidiaries and their Affiliates shall be determined by the
Company or any Subsidiary in its absolute discretion) or the Employee's benefits

                                      -7-
<PAGE>   11

under any material employee benefit plan, program or arrangement of the Company
or any Subsidiary (other than a change that affects all Employees of the Company
or any Subsidiary) are materially reduced from the level in effect upon the
Employee's commencement of participation therein;

             (iii) the Employee is required by the Company or any Subsidiary to
relocate his personal residence outside of a 50 mile radius of the current
principal place of business (other than as agreed to by the Employee prior to
the execution of this Agreement or as provided in another agreement); or

             (iv) the failure of the Company or any Subsidiary to comply with
any of the provisions of this Agreement or any employment agreement, other than
an isolated, insubstantial or inadvertent action not taken in bad faith and
which is remedied by the Company or any Subsidiary promptly after receipt of
written notice thereof given by the Employee;

provided; however that with respect to any Employee who has an employment
agreement with the Company or any Subsidiary this definition shall be replaced
by any corresponding definition in such employment agreement with respect to
such Employee.

     "Restricted Certificate": as defined in Section 4.1(b).

     "Restricted Period": as defined in Section 4.1.

     "Restricted Shares": as defined in Section 4.1.

     "Rollover Shares": any shares of Common Stock owned by Employees on the
Initial Execution Date.

     "Secondary Offering": any underwritten public offering of Shares registered
under the Securities Act following an IPO in which Shares are being sold by any
shareholder.

     "Securities Act": the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder, as the same shall be in effect at the
time.

     "Selling Partnership": as defined in the Preamble to this Agreement.

     "Shares": shares of Common Stock, provided that in the case of an Employee
Party, Shares shall mean all Rollover Shares, all Additional Shares, all Option
Shares and all Shares such Employee Party is entitled to purchase pursuant to
vested but unexercised Stock Options.

                                      -8-
<PAGE>   12

     "Stock Options": as defined in the Preamble to this Agreement.

     "Stock Option Plan": as defined in the Preamble to this Agreement.

     "Stock Purchase Agreement": as defined in the Preamble to this Agreement.

     "Subsidiary": of any Person shall mean any corporation or other legal
entity of which such Person (either alone or through or together with any other
Subsidiary) owns, directly or indirectly, 50% or more of the stock or other
equity interests, the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.

     "Tag Along Notice": as defined in Section 4.3.

     "Termination by the Company for Cause": means termination by the Company or
any of its Subsidiaries or Affiliates of the Employee's employment for: (i)
misappropriation of any significant monies or significant assets or properties
of the Company or any Subsidiary, (ii) conviction of a felony or a crime
involving moral turpitude, (iii) substantial and repeated failure to comply with
directions of the Chief Executive Officer of the Company or other superior of
the Employee or the board of directors of the Company or any of its Subsidiaries
or Affiliates, (iv) gross negligence or willful misconduct, (v) chronic
alcoholism or drug addiction together with the Employee's refusal to cooperate
with or participate in counseling and/or treatment of same or (vi) any willful
action or inaction of the Employee which, in the reasonable opinion of the
Board, constitutes dereliction (willful neglect or willful abandonment of
assigned duties), or a material breach of Company or Subsidiary policy or rules
which, if susceptible to cure, is not cured by the Employee within five (5) days
following the Employee's receipt of written notice from the Company or any
Subsidiary advising the Employee with reasonable specificity as to the action or
inaction viewed by the Company or Subsidiary to be dereliction or a material
breach of Company or Subsidiary policy or rules provided, however, that with
respect to any Employee who has an employment agreement with the Company or any
Subsidiary this definition shall be replaced by any corresponding definition in
such employment Agreement with respect to such Employee.

     "Termination by the Company Without Cause": means a termination of the
Employee's employment by the Company or any Subsidiary which is not a
Termination by the Company for Cause, provided, however, that with respect to
any Employee who has an employment agreement with the Company or any Subsidiary
this definition shall be replaced by any corresponding definition in such
employment agreement with respect to such Employee.

                                      -9-
<PAGE>   13

     "Total Disability": the Employee's inability, because of illness, injury or
other physical or mental incapacity, to perform his duties hereunder (as
determined by the Board of Directors in good faith) for a continuous period of
one hundred eighty (180) consecutive days, or for a total of ninety (90) days
within any three hundred sixty (360) consecutive day period, in which case such
Total Disability shall be deemed to have occurred on the last day of such one
hundred eighty (180) day or three hundred sixty (360) day period, as applicable
provided, however, that with respect to any Employee who has an employment
agreement with the Company or any Subsidiary this definition shall be replaced
by any corresponding definition in such employment agreement with respect to
such Employee.

     "Transfer": any sale, transfer, assignment, exchange, grant of a
participation in, gift, hypothecation, encumbrance, pledge or other disposition
by testamentary bequest, inter vivos transfer or otherwise of any securities or
any interests therein, whether direct or indirect.

     "Transferring Party": as defined in Section 4.3(iv).

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

     Section 2.1. Representations and Warranties of the Company. The Company
hereby represents and warrants to the other parties hereto as follows: The
Company has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery by the Company of this Agreement, and the consummation by the
Company of the transactions contemplated hereby, have been duly authorized by
all necessary corporate action on the part of the Company. This Agreement has
been duly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms. No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, is required by, or with respect to, the Company in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby. The execution and delivery
of this Agreement by the Company and the consummation of the transactions
contemplated hereby by the Company does not conflict with, or result in a breach
of, any law or regulation of any governmental authority applicable to the
Company or any material agreement to which the Company is a party.

                                      -10-
<PAGE>   14

     Section 2.2. Representations and Warranties of Investors LLC. Investors LLC
hereby represents and warrants to the other parties hereto as follows:

     (a) Authority. Investors LLC has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery by Investors LLC of
this Agreement and the consummation by Investors LLC of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of Investors LLC. This Agreement has been duly
executed and delivered by Investors LLC and constitutes a valid and binding
obligation of Investors LLC enforceable against Investors LLC in accordance with
its terms. No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, is
required by, or with respect to, Investors LLC in connection with the execution
and delivery by Investors LLC of this Agreement or the consummation by Investors
LLC of the transactions contemplated by this Agreement. The execution and
delivery by Investors LLC of this Agreement and the consummation by Investors
LLC of the transactions contemplated hereby does not conflict with, or result in
a breach of, any law or regulation of any governmental authority applicable to
Investors LLC or any material agreement to which Investors LLC is a party.

     Section 2.3. Representations and Warranties of Employee Parties. Each
Employee Party for itself severally and not jointly hereby represents and
warrants to the other parties as follows:

     (a) Authority. Such Employee Party has all requisite power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by such Employee
Party and constitutes a valid and binding obligation of such Employee Party
enforceable against such Employee Party in accordance with its terms. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, is required by,
or with respect to, such Employee Party in connection with the execution and
delivery of this Agreement by such Employee Party or the consummation by such
Employee Party of the transactions contemplated hereby. The execution and
delivery by such Employee Party of this Agreement and the consummation by such
Employee Party of the transactions contemplated hereby does not conflict with,
or result in a breach of, any law or regularities of any governmental authority
applicable to such Employee Party or any material agreement to which Employee
Party is a party.

                                      -11-
<PAGE>   15

     (b) Shares. Schedule 2.3 sets forth the ownership of the Shares held by
such Employee Party as of the Initial Execution Date, and which Schedule also
indicates the Shares acquired by the Employee Party pursuant to the exercise of
options or rights which became exercisable (or, vested by reason of the
elimination of restrictions which were cancelled) by reason of the execution or
consummation of the Stock Purchase Agreement.

                                   ARTICLE III
                 CORPORATE GOVERNANCE; certain corporate actions

     Section 3.1. Voting of Shares. (a) From and after the Initial Execution
Date, each Investors LLC Party shall vote all Shares of Common Stock owned or
controlled by it and take all other necessary or desirable actions within its
control (including, without limitation, attendance at meetings in person or by
proxy for purposes of obtaining a quorum and execution of written consents in
lieu of meetings), to effectuate the provisions of this Agreement.

     (b) From and after the Initial Execution Date, each Employee Party shall
vote all of its Shares of Common Stock owned or controlled by it and take all
other necessary or desirable actions within its control (including, without
limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), to
effectuate the provisions of this Agreement.

     (c) From and after the Initial Execution Date, the Company and its
Subsidiaries shall take all necessary or desirable actions within its control
(including, without limitation, calling special board and stockholder meetings)
to effectuate the provisions of this Agreement.

     Section 3.2. Composition of the Board of Directors. (a) Investors LLC
covenants to the Employee Parties that it shall take whatever actions are
required so that from and after the Initial Execution Date, and prior to the
consummation of the IPO at least two members of the board of directors of the
Company shall be individuals that are Investors LLC Parties who are not also
officers or employees of AEA.

     (b) Investors LLC hereby covenants to Covalt (and not to the other Employee
Parties) that: prior to the consummation of the IPO if and so long as the Covalt
Family Group beneficially owns at least 5% of the Shares then outstanding on a
fully diluted basis (excluding stock options) then Covalt (personally and with
no right of substitution) shall be designated to serve on the board of directors
of the Company and the board of directors of any Subsidiary of the Company
(provided that so long as he is employed by the Company he shall be Chairman of
the Board and Chief Executive

                                      -12-
<PAGE>   16

Officer of the Company and Chairman of the Board of each domestic Subsidiary of
the Company) and at each meeting of shareholders at which the election of
directors is on the agenda, the Company shall recommend to the shareholders of
the Company Covalt's election as director and the Investors LLC Parties shall
vote their Shares in favor of such election. Notwithstanding the foregoing, at
such time as Covalt shall no longer be employed by the Company, Covalt will be
removed from the Board of Directors and all boards of any Subsidiary of the
Company and shall no longer have any rights pursuant to this Section 3.2 if
either (X) Covalt is Terminated by the Company for Cause, (Y) Covalt is in
Competition or (Z) all of the directors of the Board of Directors who are
Investors LLC Parties shall unanimously vote for the removal of his right to be
a director.

     Section 3.3. Certain Transactions. Investors LLC agrees with Covalt that so
long as the Covalt Family Group owns at least 5% of the Shares then outstanding
on a fully diluted basis (excluding Stock Options) from time to time and Covalt
agrees with Investors LLC that:

     (a) Transactions (i) except with the written consent of Covalt, between the
Company and the Investors LLC Parties and their Affiliates and (ii) except with
the written consent of Investors, between the Company and Covalt and his
Affiliates, shall, in each case, not be on terms more favorable to such party
(other than the Company) than would be obtained by an unaffiliated third party.
This provision shall only be enforceable by or give any rights to Covalt or
Investors LLC Parties.

     (b) Notwithstanding the foregoing, Section 3.3(a) shall not restrict (i)
the payment of (x) any management fees payable to Investor LLC Parties or their
Affiliates in an annual amount of up to $1.6 million which cap may be increased
from time to time by the Company's Board of Directors to proportionately reflect
the expansion of the Company including the expansion of the equity
capitalization of the Company or (y) any transaction or financing fees to
Investors or its Affiliates, which fees shall be customary, taking into account
any fees paid to third party service providers in any such transaction, as well
as, in the case of clauses (x) and (y) any related out of pocket expenses, (ii)
compensation arrangements with officers, directors and employees of the Company
and its Subsidiaries, (iii) the granting or exercise of stock options to
directors, employees or consultants of the Company and its Subsidiaries in an
aggregate amount not to exceed 15% of the Shares outstanding on a fully diluted
basis (giving effect to stock options) from time to time, (iv) purchase of
Shares by employees under employee stock purchase plans or otherwise, (v)
registration rights granted by the Company to shareholders or Affiliates of
shareholders, (vi) customary director and officer indemnification or matters
relating thereto, and (vii) the redemption or purchase of Shares by the Company
from the Investors LLC Parties and their Affiliates in connection with employee
stock purchases.

                                      -13-
<PAGE>   17

     (c) The parties hereto acknowledge that the Company may from time to time
grant registration rights and other shareholder rights to Persons that are or
become shareholders of the Company, including the payment of expenses of such
shareholders. The parties hereto consent to the payment of expenses by the
Company in connection therewith and the payment of the fees and expenses set
forth under Section 3.3(b) above.

     Section 3.4. Books, Records and Reports. (a) The Company shall cause to be
kept on an appropriate basis, and each shareholder of the Company shall have
access to, appropriate books, records and accounts. The books and records of the
Company shall each be audited as of the end of each calendar year by a firm of
independent public accountants of national standing selected by the Company.

     (b) Within 90 days of the end of each fiscal year, the Company shall mail
to each of its shareholders a report setting forth an audited balance sheet as
at the end of such fiscal year and audited statements of income and source and
use of funds for such fiscal year of the Company, and any other information the
Company deems necessary or desirable;

     (c) Notwithstanding the foregoing, the Company shall not be required to
provide any information to any Person who is in Competition.

                                   ARTICLE IV
                                    TRANSFER

     Section 4.1. Transfer Restrictions. (a) The Investors LLC Parties and the
Employee Parties shall not Transfer all or part of any Shares owned of record by
them in violation of the provisions of this Article IV. Any Transfer in
violation of the provisions of this Article IV shall have no effect and be null
and void. No direct or indirect transaction whose primary purpose is to subvert
the provisions of this Section 4.1 shall be permitted.

     (b) The parties hereby acknowledge and agree that, so long as such
restriction is applicable hereunder or by law, each of the certificates
representing the Shares held by the parties hereto shall be subject to stop
transfer instructions and shall include the following legend, except for Shares
held by Employees on the Initial Execution Date, which shall bear the
restrictive legend fixed by the provisions of Section 4(b) of the Initial
Agreement, unless and until the certificates evidencing such Shares shall be
replaced for any reason, at which time any replacement certificates shall bear
the following restrictive legend:

                  THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE

                                      -14-
<PAGE>   18

                  SECURITIES ACT OF 1933 AND MAY BE OFFERED OR SOLD OR
                  OTHERWISE DISPOSED OF ONLY IF REGISTERED UNDER THE
                  SECURITIES ACT OF 1933 OR IF AN EXEMPTION FROM REGISTRATION
                  IS AVAILABLE. THESE SHARES ARE SUBJECT TO CERTAIN
                  LIMITATIONS ON TRANSFER AND TO CERTAIN VOTING AGREEMENTS AND
                  OBLIGATIONS AS ARE SET FORTH IN A SHAREHOLDERS AGREEMENT,
                  DATED AS OF MAY 11, 2000, BY AND AMONG SOVEREIGN SPECIALTY
                  CHEMICALS, INC., SSCI INVESTORS LLC AND THE OTHER PARTIES
                  THERETO, AS AMENDED FROM TIME TO TIME INCLUDING, BUT NOT
                  LIMITED TO, RESTRICTIONS ON THEIR SALE, TRANSFER, PLEDGE OR
                  OTHER DISPOSITION AND VOTING OBLIGATIONS TO EFFECT CERTAIN
                  TRANSACTIONS. A COPY OF SUCH AGREEMENT IS ON FILE WITH THE
                  SECRETARY OF SOVEREIGN SPECIALTY CHEMICALS, INC. SUCH
                  TRANSFER RESTRICTIONS AND VOTING OBLIGATIONS SHALL BE
                  BINDING ON FUTURE TRANSFEREES AND HOLDERS.

Each stock certificate evidencing any of the Shares described above in this
Section 4.1(b) which bears the legend set forth above is hereinafter referred to
as a "Restricted Certificate."

     (c) Each holder of a Restricted Certificate, by acceptance thereof, agrees,
prior to any offer to sell, sale or other disposition or Transfer of part or all
of the securities evidenced by such Restricted Certificate, to give written
notice to the Company of such holder's intention to effect such sale or other
disposition or Transfer. Each such notice shall describe the manner and
circumstances of the proposed sale or other disposition or Transfer in
sufficient detail and may be accompanied by an opinion of counsel to such
holder. Promptly upon receipt of such notice, the Company shall present a copy
thereof (together with any accompanying opinion of counsel to such holder) to
its counsel, and the following provisions shall apply:

             (i) If, in the opinion of counsel to such holder, satisfactory in
form and substance to the Company and its counsel, or if such notice was not
accompanied by an opinion of counsel to such holder, then, if, in the opinion of
counsel to the Company, the proposed sale or other disposition or Transfer may
be effected without registering the securities involved under the Securities
Act, such holder shall, subject to Section 4.1(d)

                                      -15-
<PAGE>   19

and Section 5.3, be entitled to Transfer such securities in accordance with the
terms of the notice delivered to the Company. The Company will advise such
holder, within 10 Business Days after submission of such notice, whether such
holder is entitled to so Transfer the securities. If such holder is entitled to
so Transfer, he shall submit the Restricted Certificate to the Company in proper
form for Transfer and accompanied by appropriate instruments of Transfer. Such
Restricted Certificate shall also be accompanied by an undertaking in writing by
the transferee to be bound by all the terms of this Agreement. Each Restricted
Certificate thus transferred (and each of the stock certificates evidencing any
untransferred balance of the securities evidenced by such Restricted
Certificate) shall bear the restrictive legend set forth in Section 4.1(b),
unless, in the opinion of both such counsel (or counsel to the Company if such
holder did not present an opinion of his counsel), such legend is not required
by the applicable provisions of the Securities Act.

             (ii) If in the opinion of either of such counsel (or counsel to the
Company if such holder did not present an opinion of his counsel), the proposed
sale or other disposition or Transfer cannot be effected without registering the
securities involved under the Securities Act, such holder shall not offer to
sell, sell or otherwise dispose of or Transfer such securities unless and until
such securities have been registered under the Securities Act for such purpose
or an exemption becomes available.

     (d) Except as permitted by Sections 4.2 through 4.6 or Article V of this
Agreement, each Employee Party shall not, at any time from the Initial Execution
Date until the earlier of (x) the IPO and (y) the fifth anniversary of, in the
case of Employees that executed this Agreement on the Initial Execution Date,
that date, and in the case of Employees that executed this Agreement subsequent
to the Initial Execution Date, the date the Employee executes this Agreement
(the "Restricted Period"), without the consent of the Company and Investors
Transfer any Shares owned by him ("Restricted Shares"), provided that in no
event shall any Employee Party transfer any Shares to J. P. Morgan or its
assignees or affiliates without the prior consent of Investors.

     (e) Notwithstanding any provision to the contrary contained in this
Agreement and upon compliance with Section 4.1(c):

             (i) An Employee Party may Transfer Restricted Shares to: (1) a
spouse or any lineal ancestor or descendant; (2) the trustee or trustees of a
trust or trusts at any time established for the primary benefit of the Employee
or the spouse or any lineal ancestor or descendant of the Employee, provided
that each and every trustee who may vote any Restricted Shares shall be the
Employee or a person referred to in this Section 4.1(e)(i) or a bank or trust
company; and (3) a partnership or partnerships, all of the general and limited
partners of which are the Employee and/or one or more of the

                                      -16-
<PAGE>   20

persons referred to with respect to such Employee in this Section 4.1(e) (other
than a bank or trust company); provided that (x) any such trust or partnership
shall have no terms inconsistent with the obligations of an Employee under this
Agreement, and (y) as a condition of Transfer, any Permissible Transferee shall
execute and deliver to the Company an agreement in form and substance reasonably
satisfactory to the Company pursuant to which the Permissible Transferee agrees
to be bound by all of the provisions of this Agreement. If any Restricted Shares
are transferred to a Permissible Transferee, such Permissible Transferee shall
take and hold such Restricted Shares, and such Restricted Shares shall be,
subject to this Agreement and to the rights, obligations and restrictions
provided herein with respect to the original Employee of such Restricted Shares
as of the date of this Agreement (or, in the case of Employees that executed
this Agreement subsequent to the Initial Execution Date, the date such Employee
executes this Agreement), as if such Permissible Transferee were such original
Employee.

             (ii) Any Transfer of Restricted Shares otherwise permitted by this
Section 4.1(e) shall not be made unless in compliance with all applicable laws,
including, without limitation, the securities laws of the United States and the
states thereof.

     (f) No purported Transfer of any Restricted Shares or the shares
represented by Restricted Certificates in violation of this Agreement shall be
of any force or effect, and no such Transfer shall be made or recorded on the
books of the Company.

     Section 4.2. Take Along Rights. If, prior to an IPO, the Investors LLC
Parties desire to Transfer or exchange directly or indirectly (by merger or
otherwise), at least 50% of the Shares beneficially owned by the Investors LLC
Parties (any such transaction being referred to herein as an "Exit Sale") to any
Person who is not an Affiliate of the transferring Investors LLC Party or an
Affiliate of Investors, Investors may require, pursuant to a written notice
delivered to the Employee Parties at least 20 days prior to the closing of the
proposed Exit Sale, that each Employee Party sell to the prospective purchaser,
concurrently with and on the terms (including price) and subject to the
conditions of the Exit Sale, up to that number of Shares owned by each Employee
Party as shall equal the product of (x) a fraction, the numerator of which is
the number of Shares held by the Investors LLC Parties proposed to be
transferred in the Exit Sale and the denominator of which is the number of
Shares owned by the Investors LLC Parties, and (y) the number of Shares owned by
such Employee Party. If the Investors LLC Parties propose the Transfer of all or
substantially all of the assets or business, (whether by merger, sale or
otherwise) of the Company, then Investors and the Company shall have the right
to require the Employee Parties to take promptly all action necessary or
appropriate (including voting their Shares in favor of such transaction) in
order to effect such transaction. Each of the Employee Parties covenants and
agrees that it shall take such actions as are necessary to consummate the
transactions contemplated by this

                                      -17-
<PAGE>   21

Section 4.2. Any indemnification provided in connection with any Transfer made
pursuant to this Section 4.2 shall be on a several and not joint basis and any
such indemnification shall be pro-rata in accordance with the number of Shares
Transferred or proceeds received and any such indemnification shall be limited
to the proceeds received by such Employee Party in connection with the
transaction.

     Section 4.3. Tag Along Rights. If, prior to an IPO, the Investors LLC
Parties desire to Transfer (other than Transfer to any other Investors LLC Party
or Related Party) directly or indirectly Shares, the Investors LLC Parties shall
provide the Employee Parties with written notice (the "Tag Along Notice") (which
may, but need not be, incorporated into the notice required pursuant to Section
4.2) setting forth:

             (i) the number and class of Shares proposed to be Transferred;

             (ii) the identity of the prospective purchaser;

             (iii) all material terms and conditions of such proposed
transaction; and

             (iv) that the party transferring Shares requiring a tag-along
notice (the "Transferring Party") is offering the Employee Parties (the
"Non-Transferring Party") the right to participate in such Transfer on a pro
rata basis on the same terms and conditions as are applicable to the
Transferring Party, provided that the Investors LLC Parties may Transfer (x) up
to 15% of the Shares beneficially owned by them in the aggregate as of the
Closing without complying with this Section 4.3 and (y) to other Investors LLC
Parties or the Related Parties. This Section shall not apply to any redemption
or Transfer of Shares made in connection with any employee stock purchase plans.
Tag-Along rights shall not apply, and the 15% computation referred to in the
preceding clause (x) shall exclude, Shares sold to Employees of the Company by
any Investors LLC Party or its Affiliates within 365 days after the Initial
Execution Date.

             Within 10 Business Days following the delivery of the Tag Along
Notice, the Non-Transferring Party shall, by notice in writing to the
Transferring Party, have the opportunity to sell to the prospective purchaser
(upon the same terms and conditions as the Transferring Party) up to that number
of Shares of the class or classes specified in the Tag Along Notice owned by
such Non-Transferring Party as shall equal the product of (x) a fraction, the
numerator of which is the number of Shares of the class or classes specified in
the Tag Along Notice owned by the Non-Transferring Party as of the date of such
proposed sale and the denominator of which is the aggregate number of Shares of
the class or classes specified in the Tag Along Notice owned as of the date of
such Tag Along Notice by Investors LLC Parties and the Non-Transferring Party
and any other participating Person, and (y) the number of Shares proposed to be
sold. The

                                      -18-
<PAGE>   22

amount of Shares to be sold by the Transferring Party shall be reduced if and to
the extent necessary to provide for such sale of Shares by the Non-Transferring
Party. If the Non-Transferring Party does not elect to participate in such sale
within the 10 Business Day period referred to above, the Transferring Party
shall be entitled to consummate such sale without the participation of the
Non-Transferring Party.

     Section 4.4. Permitted Transfers. The provisions of Sections 4.1, 4.2 and
4.3 shall not apply to any Transfer of Shares made pursuant to Article V.

     Section 4.5. Certain Consequences of Termination of Employee's Employment
or Competition. (a) If at any time an Employee shall cease to be employed by the
Company or any Subsidiary as a result of a Termination by the Company or any
Subsidiary for Cause, or the Employee violates any non-compete covenant with the
Company or any Subsidiary, subject to the provisions of paragraph (e) and
paragraph (f), the Company shall have the right (a "Call Option") to purchase
all but not less than all of the Call Option Shares owned by such Employee and
such Employee's Permitted Transferees at a price per share equal to the lesser
of (x) the Cost of the Call Option Shares or (y) 80% of the Fair Market Value on
the Applicable Valuation Date. In addition, any unexercised Stock Options will
be cancelled.

     (b) If at any time an Employee shall cease to be employed by the Company or
any Subsidiary other than as a result of a Termination by the Company for Cause
and other than when the Employee violates any non-compete covenant with the
Company or any Subsidiary, subject to the provisions of paragraph (e) and
paragraph (f), the Company shall have the right to purchase all but not less
than all the Call Option Shares not otherwise ineligible for repurchase under
Section 4.5(e) hereof owned by such Employee or such Employee's Permitted
Transferees at a price per Call Option Share equal to the Fair Market Value on
the Applicable Valuation Date.

     (c) If, prior to the IPO, but before the later of (x) the fifth anniversary
of the date of this Agreement in the case of Employees that executed this
Agreement as of the Initial Execution Date, and, in the case of Employees that
executed this Agreement subsequent to the Initial Execution Date, the date the
Employee executes this Agreement or (y) the third anniversary of the Employee's
termination of his employment by the Company, the Employee is in Competition
(other than as provided in paragraph (a) above) subject to the provisions of
paragraph (e) and paragraph (f), the Company shall have the right to purchase
all but not less than all of the Call Option Shares not otherwise ineligible for
repurchase under Section 4.5(e) hereof held by such Employee and such Employee's
Permitted Transferees at a price per Call Option Share equal to the Fair Market
Value at the Applicable Valuation Date, provided further that if the Company is
unable to exercise the Call Option provided by this Section 4.5(c) due to
restrictions

                                      -19-
<PAGE>   23

contained in debt or other agreements or due to limitations imposed by local
law, then the Company shall provide such Employee with reasonably prompt written
notice of such limitation and the time period provided in the first sentence of
this Section 4.5(c) shall be extended until 30 days beyond, as applicable, the
expiration of the relevant provision in the debt or other agreement or the
limitations imposed by local law.

     (d) If the Company desires to exercise a Call Option, it shall give written
notice thereof (which shall disclose the Equity Value of the Company, the
aggregate sum of the exercise prices of all issued and outstanding Stock
Options, the aggregate sum of the conversion prices of all issued and
outstanding Convertible Securities and the number of Shares of Common Stock
outstanding on a fully-diluted basis, all as of the Applicable Valuation Date,
without giving effect to "out-of-the money" Stock Options and "out-of-the money"
Convertible Securities, all as used to determine Fair Market Value) (a "Call
Option Notice") to the Employee and the Permitted Transferees of such Employee
within 60 days of the latest of: (x) in the case of Call Option Shares that are
Option Shares, the six month anniversary of the exercise of the Stock Option
resulting in the issuance of the Option Shares with respect to which the Company
desires to exercise the Call Option; (y) the occurrence of the event giving rise
to such Call Option, unless the Call Option occurs because the Employee is
engaged in Competition; and (z) if the event giving rise to the Call Option is
the Employee's engagement in Competition, the six month anniversary of the date
the Company obtains actual knowledge that such Employee was engaged in
Competition (whether or not by its receipt of written notification from the
Employee of such Competition); such Call Option shall expire if such notice is
not given within such period. The Employee and the Permissible Transferees of
such Employee shall deliver to the Company certificates representing the Call
Option Shares, free and clear of all claims, liens, or encumbrances, together
with blank stock powers, duly executed with all signature guarantees at a
closing at the principal office of the Company on the seventh day after the Call
Option Notice has been given to the Employee, or at such other place and time
and in such manner as may be mutually agreed to by the Employee and the Company.
The proceeds from the purchase of the Call Option Shares pursuant to the Call
Option (the "Call Option Proceeds") shall be paid by a check, which shall be
delivered to the Employee Party at the closing of such purchase.

     (e) Notwithstanding any other provision of this Section 4.5, the Company's
Call Option may not be exercised with respect to any Option Shares prior to the
six month anniversary of the exercise of the Stock Option resulting in the
issuance of the Option Shares subject to the Call Option.

     (f) Notwithstanding any other provision of this Section 4.5, if an
Employee's Option Shares which are subject to a Call Option include Option
Shares acquired by the Employee pursuant to two or more separate Stock Option
exercises, for

                                      -20-
<PAGE>   24

purposes of paragraph (d) hereof all of the Call Option Shares owned by that
Employee shall be deemed to have been purchased by that Employee pursuant to the
last exercise of a Stock Option made by that Employee.

     Section 4.6. Employee Offer Proposal Rights. (a) Prior to an IPO, if an
Employee's employment is terminated on account of his death, Total Disability,
Termination by the Company Without Cause or Resignation with Good Grounds, then
the Employee (or his or her personal representative as the case may be) shall
have the right, subject to the last sentence of paragraph (b), to offer to the
Company the opportunity to purchase up to two-thirds of the Rollover Shares of
such Employee and his Permitted Transferees (an "Employee Offer Proposal"), the
number of Rollover Shares being proposed for purchase by the Company being
herein referred to as the "Offered Rollover Shares". The price which the Company
shall pay the Employee (or his or her personal representative, as the case may
be) and such Employee's Permitted Transferees (collectively, the "Offering
Employee") for such Offered Rollover Shares shall be a price per Share equal to
the lesser of (x) the Cost of the Shares or (y) 80% of the Fair Market Value at
the Applicable Valuation Date.

     (b) If an Offering Employee desires to make an Employee Offer Proposal,
such Offering Employee shall give written notice thereof (an "Offer Proposal
Notice") to the Company within 60 days of the occurrence of the event giving
rise to such Offering Employee's right to make an Employee Offer Proposal;
provided that the right to make an Employee Offer Proposal shall expire if such
Offer Proposal Notice is not furnished to the Company within such 60-day period.
Subject to the first sentence of paragraph (c) and the provisions of paragraph
(d), within fifteen (15) days following receipt of such Offer Proposal Notice,
the Company will furnish written notice to the Offering Employee (the "Offer
Price Notice") advising the Offering Employee of (x) the number of Offered
Rollover Shares, if any, the Company wishes to purchase, (y) the per Share price
to be paid therefore, which price shall be calculated in accordance with the
provisions of Section 4.6(a), and (z) the Equity Value of the Company, the
aggregate sum of the exercise prices of all issued and outstanding Stock
Options, the aggregate sum of the conversion prices of all issued and
outstanding Convertible Securities and the number of Shares of Common Stock
outstanding on a fully-diluted basis, all as of the Applicable Valuation Date,
without giving effect to "out-of-the money" Stock Options and "out-of-the money"
Convertible Securities, all as used to determine Fair Market Value. Within seven
(7) days following the receipt of an Offer Price Notice, the Offering Employee
may confirm his or her offer to sell the Offered Rollover Shares the Company
wishes to purchase to the Company by sending written notice of the Offering
Employee's election to do so. If the Offering Employee does not so elect in
writing to sell such Offered Rollover Shares within the said seven (7) day
period, the Employee Offer Proposal and the Offer Price Notice will expire.

                                      -21-
<PAGE>   25

     (c) If an Offering Employee confirms his or her Employee Offer Proposal,
the Company shall, if it determines that it is commercially reasonable to do so,
use its best efforts to accommodate the Employee Offer Proposal and to agree to
purchase all of the Offered Rollover Shares the Company indicates it desires to
purchase in the Offer Price Notice; if the Company agrees to purchase such
Offered Rollover Shares, the purchase price due therefore shall be paid in five
equal installments. The first installment shall be made 60 days after the
Employee Offer Proposal Notice and shall be paid by check delivered to the
Employee. The other installments shall be paid pursuant to an installment
promissory note containing customary terms, and which shall be pre-payable at
par, providing for the payment of the Employee Offer Proposal price in four
annual installments with one installment to be made on each of the four
subsequent anniversaries of the first installment date. All installments other
than the first installment shall bear interest on the principal balance from
time to time outstanding calculated at the prime rate of J. P. Morgan and its
Affiliates compounded annually (which interest rate shall be fixed each year
with respect to the rate to be paid for the following year, on the date of the
payment of each annual installment).

     (d) Notwithstanding the foregoing, the Company shall not be required to
accept or fulfill any Employee Offer Proposal to the extent the payment of the
full Employee Offer Proposal price or any installment thereof would not be
permissible under (i) clause (2) of the second to last paragraph of Section 4.06
of the Indenture, (ii) Section 5.02(h) of the Bank Credit Agreement, (iii) any
loan or debt agreement the Company and its Subsidiaries may enter into from time
to time or (iv) the provisions of any applicable law. If the acceptance of the
Employee Offer Proposal is not permissible at the time of the Offer Proposal
Notice, the exercise of such Employee Offer Proposal shall be void, provided
that the Company shall promptly provide such Offering Employee who had
previously provided an Offer Proposal Notice which was not fully satisfied due
to the restrictions described in this Section 4.6(d), written notice if the
exercise of the Employee Offer Proposal becomes permissible (the "Employee Offer
Proposal Permissibility Notice") whereupon the Employee Party shall, for a
period of 60 days following the receipt of the Employee Offer Proposal
Permissibility Notice, have the right to re-make the Employee Offer Proposal and
if such Employee Offer Proposal is not re-made it will terminate. If 80% of the
Fair Market Value of the Shares pursuant to the provisions of Section 4.6(a) was
less than the Cost of the Shares which were to have been the subject of the
Employee Offer Proposal, then the Fair Market Value of the Shares shall be
re-determined on the basis of an Applicable Valuation Date which shall be the
last day of the month preceding the date of the Employee Offer Proposal
Permissibility Notice, and such Employee Offer Proposal Permissibility Notice
shall indicate the price which the Company would be required to purchase the
Shares pursuant to the Employee Offer Proposal. If any installment is deferred
as set forth above, such installment will be paid (together with accrued
interest) at the earliest time such payment is permitted.

                                      -22-
<PAGE>   26

                                    ARTICLE V
                               REGISTRATION RIGHTS

     Section 5.1. Piggyback Registrations.

     (a) Right to Piggyback. If (x) in connection with the IPO, Shares are
proposed to be sold by shareholders of the Company other than Employee Parties
or (y) after the completion of the IPO, whenever the Company proposes to
register any of its equity securities under the Securities Act (other than a
registration on Form S-4 or Form S-8 or any successor or similar forms) and the
registration form to be used may be used for the registration of Registrable
Securities (a "Piggyback Registration"), whether or not for sale for its own
account, the Company will give prompt written notice to Employee Parties and the
Investors LLC Parties of its intention to effect such a registration and will
include in such registration all Registrable Securities with respect to which
the Company has received written requests for inclusion therein within 15 days
after the receipt of the Company's notice. Any Piggyback Registration may be
abandoned at any time without prejudice to the Company or any shareholder of the
Company. The Company may elect to terminate any Piggyback Registration rights of
the Employee Parties in connection with the IPO or any Piggyback Registration as
determined by the Board of Directors in good faith (it being understood that the
Board of Directors can exercise such termination right when the sale by Employee
Parties could adversely affect an offering of Shares), provided, however, that,
except as provided in Section 5.1(b) or 5.1(c) so long as the Covalt Family
Group owns 5% of the Shares then outstanding on a fully diluted basis (excluding
Stock Options) from time to time the Company may not terminate (i) any Piggyback
Registration rights of a member of the Covalt Family Group at a time that Covalt
is not an employee, officer or director of the Company and (ii) any Piggyback
Registration rights of the Covalt Family Group (other than Covalt) to extent
that Covalt was not required to be disclosed as the beneficial owner of such
Shares in the registration statement for the Piggyback Registration.

     (b) Priority on Primary Registrations. If a Piggyback Registration is an
underwritten primary registration under the Securities Act on behalf of the
Company, and the managing underwriters or the Company determines that the number
of securities requested to be included in such registration exceeds the number
which can be sold in such offering within a price range reasonably acceptable to
the Company, the Company will include in such registration (i) first, the
securities the Company proposes to sell and (ii) second, all other securities
(including the Registrable Securities and securities held by holders other than
the shareholders a party hereto) requested to be included in such registration,
pro rata among the respective holders thereof on the basis of the number of
securities owned by each such holder subject to registration rights with the
Company.

                                      -23-
<PAGE>   27

     (c) Priority on Secondary Registrations. If a Piggyback Registration is an
underwritten secondary registration under the Securities Act on behalf of
holders of the Company's securities, and the managing underwriters or the
Company determines that the number of securities requested to be included in
such registration exceeds the number which can be sold in such offering within a
price range reasonably acceptable to such holders or Investors, the Company will
include in such registration the securities (including the Registrable
Securities and securities held by holders other than the shareholders a party
hereto) requested to be included in such registration, pro rata among the
respective holders thereof on the basis of the number of securities owned by
each such holder subject to registration rights with the Company.

     (d) Subject to the last sentence of paragraph (a), each Employee Party
shall only be able to include Registrable Securities in any Piggyback
Registration to the extent that such Employee Party requires registration under
the Securities Act to sell its Registrable Securities.

     Section 5.2. Demand Registration. As soon as practicable after receipt by
the Company of each Qualified Request (as defined in subparagraph (i) below)
from one or more holders of Registrable Securities to register under the
Securities Act part or all of the Restricted Securities held by such holder or
holders, the Company will cause a Registration Statement on Form S-1 (or on Form
S-2 or Form S-3 if either such form can be used) under the Securities Act, or
any comparable form then in force, to be filed and shall use its best efforts to
cause the registration statement to become effective, subject to the following:

             (i) Prior to an IPO, a Qualified Request shall be a written request
or requests to the Company from Investors LLC or one or more persons that are
Investors LLC Parties and members of the Covalt Family Group (subject to clause
(iii) below) who hold Registrable Securities evidencing securities which
aggregate at least 51% of the sum of all outstanding shares of the Common Stock
which are then Registrable Securities held by Investors LLC Parties and the
Covalt Family Group (subject to clause (iii) below). After the IPO, a Qualified
Request shall be a written request or requests to the Company from Investors LLC
or one or more persons that are Investors LLC Parties and members of Covalt
Family Group (subject to clause (iii) below) who hold Registrable Securities
evidencing securities which aggregate at least 25% of the sum of all outstanding
shares of the Common Stock which are then Registrable Securities held by
Investors LLC Parties and members of Covalt Family Group (subject to clause
(iii) below) and which have an estimated value of no less than $5,000,000. The
Company agrees to promptly furnish to Covalt written notice of any Qualified
Request delivered pursuant to this Section 5.2(i) and the Covalt Family Group
shall have 10 days to notify the Company that it is joining in such request; and

                                      -24-
<PAGE>   28

             (ii) The Company shall not be required to file any such
registration statement within six months after the effective date of any earlier
registration statement pursuant to this Section 5.2 or any Piggyback
Registration, nor shall it be required to file a total of more than three
registration statements pursuant to this Section 5.2.

             (iii) The provisions of Section 5.2 (i) and (ii) above shall apply
to members of the Covalt Family Group so long as the Covalt Family Group owns 5%
of the Shares then outstanding on a fully diluted basis (excluding Stock
Options) from time to time and then only, (x) with respect to Registrable
Securities owned by Covalt, at such time as Covalt is not an employee, officer
or director of the Company, and (y) with respect to the Registrable Securities
owned by Covalt's Permitted Transferees, to the extent that Covalt was not
required to be disclosed as the beneficial owner of such Permitted Transferee's
Registrable Securities in the registration statement for the Demand
Registration, of the Registerable Securities owned by Covalt and/or such
Permitted Transferee, as the case may be, provided further that no member of the
Covalt Family Group shall solicit requests or otherwise seek approval of other
members of the Investors LLC Parties.

     Section 5.3. Holdback. Each shareholder party hereto agrees that, if
requested by the Company or the managing underwriters, if any, in writing, it
will not directly or indirectly (x) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant for the sale of or otherwise dispose of or
transfer any shares of Common Stock or securities convertible into or
exchangeable or exercisable for shares of Common Stock or (y) enter into any
swap or other agreement that transfers, in whole or in part, the economic
consequence of ownership of the shares whether any such swap or transaction is
to be settled by delivery of shares of Common Stock or other securities, in cash
or otherwise (other than securities, if any, of such party included in such
Secondary Offering), during the time period requested in such written request,
not to exceed a period beginning 7 days before and ending two years after the
date the registration statement for any offering of Common Stock is declared
effective. Requests under this section need not be uniformly applied to all
shareholders.

     Section 5.4. Registration Procedures. Whenever the parties hereto have
requested that any Registrable Securities be registered in a Piggyback
Registration pursuant to Section 5.1 or a Demand Registration has been requested
pursuant to Section 5.2, the Company will use its reasonable efforts to effect
the registration and the sale of such Registrable Securities in accordance with
the intended method of disposition thereof, and pursuant thereto the Company
will as expeditiously as possible:

                                      -25-
<PAGE>   29

     (a) prepare and file with the Commission a registration statement with
respect to such Registrable Securities and thereafter use its reasonable efforts
to cause such registration statement to become effective (provided that, before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company will furnish to the counsel selected by the holders of a
majority of the Registrable Securities covered by such registration statement
copies of all such documents proposed to be filed, which documents will be
subject to review of such counsel);

     (b) prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for a period of
either (i) not less than six months (subject to extension pursuant to Section
5.7(b)) or, if such registration statement relates to an underwritten offering,
such longer period as in the opinion of counsel for the underwriters a
prospectus is required by law to be delivered in connection with sales of
Registrable Securities by an underwriter or dealer or (ii) such shorter period
as will terminate when all of the securities covered by such registration
statement have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement (but in any event not before the expiration of any longer period
required under the Securities Act), and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement;

     (c) furnish to each seller of Registrable Securities such number of copies
of such registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as such seller may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by such
seller;

     (d) use its reasonable efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller (provided that the Company will not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);

                                      -26-
<PAGE>   30

     (e) notify each seller of such Registrable Securities, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, upon discovery that, or upon the discovery of the happening of any event as
a result of which, the prospectus included in such registration statement
contains an untrue statement of a material fact or omits any fact necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made, and, at the request of any such seller, the Company
will prepare and furnish to such seller a reasonable number of copies of a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made;

     (f) cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed;

     (g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;

     (h) enter into such customary agreements (including underwriting agreements
in customary form) and take all such other actions as the holders of a majority
of the Registrable Securities being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities (including, without limitation, effecting a stock split or a
combination of shares);

     (i) make available for inspection by any seller of Registrable Securities,
any underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;

     (j) otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months beginning with the first day of the Company's
first full calendar quarter after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder;

                                      -27-
<PAGE>   31

     (k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such registration statement for sale in any
jurisdiction, the Company will use its reasonable efforts promptly to obtain the
withdrawal of such order;

     (l) obtain a cold comfort letter, dated the effective date of such
registration statement (and, if such registration includes an underwritten
public offering, dated the date of the closing under the underwriting
agreement), signed by the Company's independent public accountants in customary
form and covering such matters of the type customarily covered by cold comfort
letters as the holders of a majority of the Registrable Securities being sold
reasonably request (provided that such Registrable Securities constitute at
least 10% of the securities covered by such registration statement); and

     (m) provide a legal opinion of the Company's outside counsel, dated the
effective date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the closing under
the underwriting agreement), with respect to the registration statement, each
amendment and supplement thereto, the prospectus included herein (including the
preliminary prospectus) and such other documents relating thereto in customary
form and covering such matters of the type customarily covered by legal opinions
of such nature.

The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request in writing.

     Section 5.5. Registration Expenses. (a) The Company shall pay all
Registration Expenses relating to any registration of Registrable Securities
hereunder. "Registration Expenses" shall mean any and all fees and expenses
incident to the Company's performance of or compliance with this Article V,
including, without limitation: (i) Commission, stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees and all
listing fees and fees with respect to the inclusion of securities on the Nasdaq
National Market, (ii) fees and expenses of compliance with state securities or
"blue sky" laws and in connection with the preparation of a "blue sky" survey,
including, without limitation, reasonable fees and expenses of blue sky counsel,
(iii) printing expenses, (iv) messenger and delivery expenses, (v) fees and
disbursements of counsel for the Company, (vi) with respect to each
registration, reasonable fees and disbursements of one counsel for the selling
holders of Shares (selected by the holders of a majority of the Shares included
in such registration),

                                      -28-
<PAGE>   32

(vii) fees and disbursements of all independent public accountants (including
the expenses of any audit and/or "cold comfort" letter) and fees and expenses of
other persons, including special experts, retained by the Company, and (viii)
any other fees and disbursements of underwriters, if any, customarily paid by
issuers or sellers of securities.

     (b) Notwithstanding the foregoing, (i) the provisions of this Section 5.5
shall be deemed amended to the extent necessary to cause these expense
provisions to comply with "blue sky" laws of each state in which the offering is
made and (ii) in connection with any registration hereunder, each holder of
Registrable Securities being registered shall pay all underwriting discounts and
commissions and transfer taxes, if any, attributable to the Registrable
Securities included in the offering by such holder.

     Section 5.6. Indemnification. (a) The Company agrees to indemnify and hold
harmless, to the extent permitted by law, each holder of Registrable Securities,
its officers, directors, members, general or limited partners and each Person
who controls such holder (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities, joint or several, to which such holder or
any such director, officer, member, general or limited partners or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon (i)
any untrue or alleged untrue statement of a material fact contained (A) in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or (B) in any application or other document or
communication (in this Section 5.6 collectively called an "application")
executed by or on behalf of the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify any securities covered by such registration statement under the "blue
sky" or securities laws thereof, or (ii) any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company will reimburse such holder and each such
director, officer, member, general or limited partner and controlling person for
any legal or any other expenses incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement, or omission or alleged omission, made in
such registration statement, any such prospectus or preliminary prospectus or
any amendment or supplement thereto, or in any application, in reliance upon and
in conformity with written information prepared and furnished to the Company by
such holder expressly for use therein or by such holder's failure to deliver a
copy of the registration statement or prospectus or any amendments or
supplements thereto after

                                      -29-
<PAGE>   33

the Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company will indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities.

     (b) In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder will furnish to the
Company in writing such information and documents regarding such holder and such
holder's intended method of distribution or otherwise required by the Securities
Act as the Company reasonably requests for use in connection with any such
registration statement or prospectus and, to the extent permitted by law, will
indemnify and hold harmless the Company, its directors and officers and each
other Person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities, joint or several, to which the
Company or any such director or officer or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon (i) any untrue or alleged untrue
statement of a material fact contained in the registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto or in
any application or (ii) any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission is
made in such registration statement, any such prospectus or preliminary
prospectus or any amendment or supplement thereto, or in any application, in
reliance upon and in conformity with written information prepared and furnished
to the Company by such holder expressly for use therein, and such holder will
reimburse the Company and each such director, officer and controlling person for
any legal or any other expenses incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided that the obligation to indemnify will be individual to each
holder and will be limited to the net amount of proceeds received by such holder
from the sale of Registrable Securities pursuant to such registration statement.
In connection with an underwritten offering, the holders of Registrable
Securities will indemnify such underwriters, their officers and directors and
each Person who controls such underwriters (within the meaning of the Securities
Act) to the same extent as provided above with respect to the indemnification of
the Company.

     (c) Any Person entitled to indemnification hereunder will (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party's reasonable
judgment

                                      -30-
<PAGE>   34

a conflict of interest between such indemnified and indemnifying parties may
exist with respect to such claim, permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party. If such defense is assumed, the indemnifying party will not be subject to
any liability for any settlement made by the indemnified party without its
consent. An indemnifying party who is not entitled to, or elects not to, assume
the defense of a claim will not be obligated to pay the fees and expenses of
more than one counsel for all parties indemnified by such indemnifying party
with respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim.

     (d) The indemnification provided for under this Agreement will remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, member, director or controlling Person of
such indemnified party and will survive the transfer of securities by any holder
thereof. The Company also agrees to make such provisions, as are reasonably
requested by any indemnified party, for contribution to such party in the event
the Company's indemnification is unavailable for any reason.

     Section 5.7. Participation in Underwritten Registrations. (a) In the case
of a registration pursuant to Section 5.1 or 5.2 hereof, if the Company shall
have determined to enter into any underwriting agreements in connection
therewith, all of the holders' Registrable Securities to be included in such
registration shall be subject to such underwriting agreement. Such underwriting
agreement shall also contain such representations, warranties, indemnities and
contributions by the participating holders as are customary in agreements of
that type.

     (b) Each Person that is participating in any registration hereunder agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 5.4(e) above, such Person will forthwith
discontinue the disposition of its Registrable Securities pursuant to the
registration statement until such Person's receipt of the copies of a
supplemented or amended prospectus as contemplated by such Section 5.4(e). In
the event the Company shall give any such notice, the applicable time period
mentioned in Section 5.4(b) during which a registration statement is to remain
effective shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to this paragraph to
and including the date when each seller of a Registrable Security covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by Section 5.4 (e).

                                      -31-
<PAGE>   35

     Section 5.8. Pre-Emptive Rights. Prior to the occurrence of an IPO in the
event that the Company desires to issue any Shares or any securities convertible
into or exchangeable or exercisable for Shares in an offering or placement that
is not required to be registered under the Securities Act (a "Private
Offering"), the Company must first offer to sell such securities proposed to be
issued in such Private Offering in accordance with this Section 5.8 on the same
terms and conditions as the sale of such securities in such proposed Private
Offering.

     The offer (the "Pre-emptive Right Notice") shall be made by the Company to
each Employee Party who owns of record at least 5% of the Shares then
outstanding on a fully diluted basis (excluding Stock Options) from time to time
determined as of the date of the Pre-emptive Right Notice and to Investors LLC
(a "Notified Shareholder"), and shall be dated, shall be in writing and shall
set forth the terms of the proposed Private Offering, including, but not limited
to, the consideration to be paid, and all other terms and conditions related to
the proposed Private Offering.

     From and after the time that the Notified Shareholders receive the
Pre-emptive Right Notice, each Notified Shareholder shall have the right,
exercisable by giving written notice to the Company of such Notified
Shareholder's intent to exercise such right within 10 Business Days of the
Pre-emptive Right Notice, to subscribe for and purchase a number of securities
subject to the Pre-emptive Right Notice, on the terms set forth in the
Pre-emptive Right Notice, such that, after giving effect to the issuance of
securities subject to the Pre-emptive Right Notice and the exercise of the
rights of each Notified Shareholder set forth in this Section 5.8 (including,
for the purpose of this calculation, the issuance of Common Stock upon
conversion, exchange or exercise of any securities convertible, exchangeable or
exercisable into shares of Common Stock to be issued in such Private Offering),
the shares of Common Stock owned by such Notified Shareholder (assuming the
conversion of any securities held by such Notified Shareholder convertible into
Common Stock (whether or not then convertible) and the exercise of any options
owned by such Notified Shareholder exercisable for Common Stock but taking
appropriate account of the exercise price of any stock options or warrants)
shall represent the same percentage of the outstanding shares of Common Stock
owned by such Notified Shareholder prior to the consummation of such Private
Offering (assuming the conversion of any securities held by such Notified
Shareholder (whether or not then convertible) convertible into Common Stock and
the exercise of any option owned by such Notified Shareholder exercisable for
Common Stock but taking appropriate account of the exercise price of any stock
options or warrants). Any Notified Shareholder will be entitled at its option to
purchase non-voting securities in place of voting securities pursuant to a
Pre-emptive Right Notice. If any Notified Shareholder fails to give written
notice of such Notified Shareholder's election to exercise the rights of such
Notified Shareholder set forth in this Section 5.8 within 10 Business Days of
the date of Pre-emptive Right Notice,

                                      -32-
<PAGE>   36

such Notified Shareholder shall be deemed to have waived the rights granted to
such Notified Shareholder under this Section 5.8 with respect to the securities
so offered under such Pre-emptive Right Notice.

     Each Notified Shareholder that has exercised its rights to purchase
securities pursuant to this Section 5.8 shall, within 10 Business Days from the
date of the Pre-emptive Right Notice (such period to be extended as may be
required in order for necessary regulatory approvals to be obtained) purchase
the securities or other securities subject to the Pre-emptive Right Notice in
accordance with the terms of this Section 5.8.

     Notwithstanding the foregoing, the rights provided for in this Section 5.8
shall not apply (i) to any issuance to employees, directors or consultants of
the Company or its Subsidiary of securities or options to purchase securities
under an employee stock purchase plan or employee benefits plan adopted by the
Board of Directors of the Company, (ii) to any dividend paid in securities or
any subdivision or combination of securities, (iii) to the issuance of
securities in consideration for any acquisition by the Company and (iv) the
issuance of equity or equity equivalents as ancillary parts of a debt financing
transaction.

                                   ARTICLE VI
                               GENERAL PROVISIONS

     Section 6.1. Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:

     If to the Company:

     Sovereign Specialty Chemicals, Inc.
     Suite 2200
     225 West Washington Street
     Chicago, IL 60606
     Attn. Chief Executive Officer

     With a copy to:

     Timothy E. Peterson
     Fried, Frank, Harris, Shriver & Jacobson

                                      -33-
<PAGE>   37

     4 Chiswell Street
     London EC1Y 4UP
     Facsimile: (020 7) 972 9602

     With a copy to:

     Christine J. Smith, Esq.
     AEA Investors Inc.
     65 East 55th Street
     New York, NY 10022
     Facsimile:  (212) 888-1459

                                      -34-
<PAGE>   38

     If to Investors LLC:

     Christine J. Smith, Esq.
     AEA Investors Inc.
     65 East 55th Street
     New York, NY  10022
     Facsimile:  (212) 888-1459

     With a copy to:

     Timothy E. Peterson
     Fried, Frank, Harris, Shriver & Jacobson
     4 Chiswell Street
     London EC1Y 4UP
     Facsimile:  (020 7) 972 9602

     If to an Employee:

     To the address of Employee's place of business for the Company or any
Subsidiary.

or to such other address as any party shall specify by written notice so given
(if no address has been provided, the notice can be sent to the last known
address,) and such notice shall be deemed to have been delivered as of the date
so telecommunicated, personally delivered or mailed two business days following
the post-marked date.

     Section 6.2. Assignment; Binding Effect; Benefit; Additional Signatories.
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties, except by an
Investors LLC Party to any other Investors LLC Party. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this Agreement,
express or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement. In connection with certain share purchases or Stock Option
grants, additional employees may become party to this Agreement by executing the
Agreement and by being added to Schedule I hereof and shall be fully bound by,
and

                                      -35-
<PAGE>   39

subject to, all of the covenants, terms and conditions of the Agreement as
though original parties hereto and shall be deemed Employees for all purposes
hereof.

     Section 6.3. Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings (oral and written) among the
parties with respect thereto.

     Section 6.4. Amendment. This Agreement may be amended by the parties hereto
at any time, provided that no amendment shall be made which by law requires the
further approval of stockholders of the Company without obtaining such further
approval (provided that each Employee Party accepts and agrees that Covalt may
enter into additional agreements with the Company and Investors LLC which may
modify his rights and obligations hereunder.) This Agreement may not be amended
or modified except by an instrument in writing signed by or on behalf of the
Company, Investors LLC (or if Investors LLC is not a shareholder of the Company,
Investors LLC Parties constituting a majority of the Shares held by the
Investors LLC Parties) and Persons representing a majority of the Shares held by
the Employee Parties.

     Section 6.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
its rules of conflict of laws. Each of the Employee Parties hereby irrevocably
and unconditionally consents to submit to the exclusive jurisdiction of the
courts of the State of Delaware and of the United States of America located in
the State of Delaware for any litigation arising out of or relating to this
Agreement and the transactions contemplated hereby (and agrees not to commence
any litigation relating thereto except in such courts), waives any objection to
the laying of venue of any such litigation in such Delaware courts and agrees
not to plead or claim that such litigation brought in any such Delaware court
has been brought in an inconvenient forum.

     Section 6.6. Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies of
this Agreement, each of which may be signed by less than all of the parties
hereto, but together all such copies are signed by all of the parties hereto.

     Section 6.7. Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only and shall be given no
substantive or interpretive effect whatsoever.

                                      -36-
<PAGE>   40

     Section 6.8. Interpretation. In this Agreement, unless the context
otherwise requires, words describing the singular number shall include the
plural and vice versa, "including" shall mean including, without limitation, and
words denoting any gender shall include all genders and words denoting natural
persons shall include corporations and partnerships and vice versa.

     Section 6.9. Incorporation of Exhibits and Schedules. All exhibits and
schedules hereto are hereby incorporated herein and made a part hereof for all
purposes as if fully set forth herein.

     Section 6.10. Third Party Beneficiary. Investors is a third party
beneficiary under this Agreement.

     Section 6.11. Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or otherwise affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.

     Section 6.12. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any Delaware court, this
being in addition to any other remedy to which they may be entitled at law or in
equity.

     Section 6.13. Termination. The provision of Sections 3.1, 3.2, 3.3, 3.4,
4.1(d) and (e), 4.2, 4.3, 4.5, 4.6 and 5.8 shall terminate and shall cease to be
binding on the parties hereto upon an IPO. The rights and obligations of the
Covalt Family Group under Sections 5.1 to 5.5 shall terminate and shall cease to
be binding on the parties hereto at such time as less than 1% of the then
outstanding Shares on a fully diluted basis (excluding stock options) are owned
by the Covalt Family Group.

                                      -37-
<PAGE>   41

     IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf as of the day and year first written
above.

                         SSCI INVESTORS LLC
                         By:  SSCI Investors LP
                         By:  AEA SSC Investors Inc.
                              Its General Partner

                         By:      /s/ Brian R. Hoesterey
                                  ---------------------------------------------
                         Name:        Brian R. Hoesterey
                                  ---------------------------------------------
                         Title:       Vice President
                                  ---------------------------------------------

                         SOVEREIGN SPECIALTY CHEMICALS, INC

                         By:      /s/ Robert Covalt
                                  ---------------------------------------------
                         Name:        Robert Covalt
                                  ---------------------------------------------
                         Title:       Chairman, President, Chief Executive
                                        Officer
                                  ---------------------------------------------

                         /s/ Robert Covalt
                         ------------------------------------------------------
                         Robert Covalt

                         /s/ Robert Covalt
                         ------------------------------------------------------
                         Tregooden Partners, L.P.

                         /s/ Robert Covalt
                         ------------------------------------------------------
                         Nautical Partners, L.P.

                         /s/ Robert Covalt
                         ------------------------------------------------------
                         Serendipity Partners, L.P.

                                      -38-
<PAGE>   42
                         /s/ Louis Pace
                         ------------------------------------------------------
                         Louis Pace

                         ------------------------------------------------------
                         Martyn Howell-Jones

                         ------------------------------------------------------
                         Gerard A. Loftus

                         ------------------------------------------------------
                         Paul Gavlinski

                         ------------------------------------------------------
                         Stephan Zavodny

                         ------------------------------------------------------
                         Richard W. Johnston

                         ------------------------------------------------------
                         Richard Bashford

                         ------------------------------------------------------
                         Peter Longo

                                      -39-
<PAGE>   43

                         ------------------------------------------------------
                         Mark Longo

                         ------------------------------------------------------
                         Karen Kempa Seeberg

                         ------------------------------------------------------
                         Frederick Quinn

                         /s/ John R. Mellett
                         ------------------------------------------------------
                         John R. Mellett

                         ------------------------------------------------------
                         Anshyang Albert Lin

                         ------------------------------------------------------
                         Terence Cadby

                         ------------------------------------------------------
                         Gary Cassata

                         ------------------------------------------------------
                         Susan Cooper

                                      -40-
<PAGE>   44

                         ------------------------------------------------------
                         Brian Dorrenkott

                         ------------------------------------------------------
                         Kevin Johnston

                         ------------------------------------------------------
                         Richard Lawrence

                         ------------------------------------------------------
                         Robert D. Richardson

                         ------------------------------------------------------
                         Ashok Shah

                         /s/ Patrick W. Stanton
                         ------------------------------------------------------
                         Patrick W. Stanton

                         ------------------------------------------------------
                         Paul Szabo

                         ------------------------------------------------------
                          George Noggle

                                      -41-
<PAGE>   45

                         /s/ R. THURGOOD
                         ------------------------------------------------------
                         R. Thurgood

                                      -42-

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