PAXAR CORP
8-K, 1998-08-26
COMMERCIAL PRINTING
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<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                         Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


        Date of Report (Date of earliest event reported): August 11, 1998


                                Paxar Corporation
             (Exact name of registrant as specified in its charter)


         New York                     0-5610                  13-5670050
(State or Other Jurisdiction  (Commission File Number) (IRS Employer Ident. No.)
    of Incorporation)


             105 Corporate Park Drive, White Plains, New York 10604
               (Address of Principal Executive Offices) (Zip Code)


                                 (914) 697-6800
               Registrant's telephone number, including area code
<PAGE>   2
ITEM 5.  OTHER EVENTS.

         On August 11, 1998, the Registrant entered into an Amended and Restated
Credit Agreement (the "Amended Credit Agreement") with Fleet Bank, N.A.
("Fleet"), as Initial Issuing Bank, Swing Line Bank, and Administrative Agent,
and with certain other banks and financial institutions (the "Other Lenders"),
providing for an unsecured five-year $200 million revolving credit facility. The
Amended Credit Agreement amended and restated the Registrant's unsecured,
six-year $280 million Credit Agreement, dated as of March 3, 1997 (the "Credit
Agreement"), with Fleet and the Other Lenders, which had provided for a $140
million revolving credit facility and a $140 million term loan. Under the
Amended Credit Agreement, the Registrant repaid the term loan with the proceeds
of the Senior Notes described below, and the Banks increased the Registrant's
revolving credit facility to $200 million. Loans under the Amended Credit
Agreement bear interest at rates referenced to the London Interbank Offered Rate
(with applicable margins varying in accordance with the Company's attainment of
specified financial thresholds) or the Prime Rate (as defined), and are
guaranteed by certain domestic subsidiaries of the Registrant.

         On August 11, 1998, the Registrant sold an aggregate of $150 million
of unsecured 6.74% Senior Notes (the "Senior Notes") to  18 institutional
lenders, primarily insurance companies, pursuant to the terms of a Note
Purchase Agreement, dated as of August 4, 1998, with each such lender. The
Senior Notes bear interest at 6.74% per year payable semi-annually and are due
on August 11, 2008. The Registrant used the proceeds of the Senior Notes to
repay the $140 million term loan outstanding under the Credit Agreement and a
portion of the revolving loan outstanding thereunder. The Senior Notes were
issued in a transaction not involving any public offering exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended.

ITEM 7.  FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.

         (c)      Exhibits.

         10.1     Amended and Restated Credit Agreement, dated as of August 11,
                  1998, among Paxar Corporation, Fleet Bank, N.A., as Initial
                  Issuing Bank, Swing Line Bank, and Administrative Agent, and
                  the banks, financial institutions and other institutional
                  lenders listed on the signature pages thereof.

         10.2     Form of Note Purchase Agreement, dated as of August   
                  4, 1998, between Paxar Corporation and each of the
                  institutional lenders listed on Schedule A thereto.

                                     -2-

<PAGE>   3
                                    SIGNATURE


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                               PAXAR CORPORATION
                                               (Registrant)



Date: August 26, 1998                          By:/s/ John P. Jordan
                                               --------------------------
                                                    John P. Jordan
                                                    Vice President and Treasurer


                                       -3-
<PAGE>   4
                                  EXHIBIT INDEX

Exhibit No.       Description.

10.1              Amended and Restated Credit Agreement, dated as of August 11, 
                  1998, among Paxar Corporation, Fleet Bank, N.A., as Initial
                  Issuing Bank, Swing Line Bank, and Administrative Agent, and
                  the banks, financial institutions and other institutional
                  lenders listed on the signature pages thereof.

10.2              Form of Note Purchase Agreement, dated as of August
                  4, 1998, between Paxar Corporation and each of the
                  institutional lenders listed on Schedule A thereto.




<PAGE>   1
                                                                  EXECUTION COPY



                                U.S. $200,000,000


                      AMENDED AND RESTATED CREDIT AGREEMENT

                           Dated as of August 11, 1998

                                      Among

                                PAXAR CORPORATION

                                   as Borrower

                                       and

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

          as Initial Lenders, Initial Issuing Bank and Swing Line Bank

                                       and

                                FLEET BANK, N.A.

                             as Administrative Agent
<PAGE>   2
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS


                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

<S>                                                                                                              <C>
         SECTION 1.01.  Certain Defined Terms.....................................................................1
         SECTION 1.02.  Computation of Time Periods..............................................................19
         SECTION 1.03.  Accounting Terms.........................................................................19

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES
                            AND THE LETTERS OF CREDIT

         SECTION 2.01.  The Advances.............................................................................19
         SECTION 2.02.  Making the Advances......................................................................21
         SECTION 2.03.  The Competitive Bid Advances.............................................................23
         SECTION 2.04.  Issuance of and Drawings and Reimbursement Under Letters of Credit.......................27
         SECTION 2.05.  Fees.....................................................................................28
         SECTION 2.06.  Termination or Reduction of the Commitments..............................................28
         SECTION 2.07.  Repayment of Advances....................................................................29
         SECTION 2.08.  Interest.................................................................................30
         SECTION 2.09.  Interest Rate Determination..............................................................31
         SECTION 2.10.  Conversion of Advances...................................................................32
         SECTION 2.11.  Prepayments..............................................................................32
         SECTION 2.12.  Increased Costs..........................................................................33
         SECTION 2.13.  Illegality...............................................................................34
         SECTION 2.14.  Payments and Computations................................................................34
         SECTION 2.15.  Taxes....................................................................................35
         SECTION 2.16.  Sharing of Payments, Etc.................................................................37
         SECTION 2.17.  Use of Proceeds..........................................................................37
         SECTION 2.18.  Additional Borrowers.....................................................................37

                                   ARTICLE III

                     CONDITIONS TO EFFECTIVENESS AND LENDING

         SECTION 3.01.  Conditions Precedent to Effectiveness of Sections 2.01, 2.03 and 2.04....................37
         SECTION 3.02.  Conditions Precedent to the Initial Borrowing of Each
                                Additional Borrower..............................................................39
         SECTION 3.03.  Conditions Precedent to Each Borrowing (other than a Competitive Bid
                                Borrowing and Issuance...........................................................40
         SECTION 3.04.  Conditions Precedent to Each Competitive Bid Borrowing...................................41
         SECTION 3.05.  Determinations Under Section 3.01........................................................41
</TABLE>
<PAGE>   3
                                       ii

<TABLE>
<CAPTION>
                                                                                                               Page


                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

<S>                                                                                                              <C>
         SECTION 4.01.  Representations and Warranties of the Borrowers..........................................42

                                    ARTICLE V

                               COVENANTS OF PAXAR

         SECTION 5.01.  Affirmative Covenants....................................................................44
         SECTION 5.02.  Negative Covenants.......................................................................47
         SECTION 5.03.  Financial Covenants......................................................................52

                                   ARTICLE VI

                                EVENTS OF DEFAULT

         SECTION 6.01.  Events of Default........................................................................53

                                   ARTICLE VII

                            THE ADMINISTRATIVE AGENT

         SECTION 7.01.  Authorization and Action.................................................................55
         SECTION 7.02.  Administrative Agent's Reliance, Etc.....................................................56
         SECTION 7.03.  Fleet and Affiliates.....................................................................56
         SECTION 7.04.  Lender Credit Decision...................................................................56
         SECTION 7.05.  Indemnification..........................................................................56
         SECTION 7.06.  Successor Administrative Agent...........................................................57

                                  ARTICLE VIII

                                    GUARANTY

         SECTION 8.01.  Guaranty.................................................................................57
         SECTION 8.02.  Guaranty Absolute........................................................................58
         SECTION 8.03.  Waivers and Acknowledgments..............................................................59
         SECTION 8.04.  Subrogation..............................................................................59
         SECTION 8.05.  Continuing Guarantee; Assignments........................................................60
</TABLE>
<PAGE>   4
                                       iii

<TABLE>
<CAPTION>
                                                                                                               Page

                                   ARTICLE IX

                                  MISCELLANEOUS
<S>                                                                                                              <C>
         SECTION 9.01.  Amendments, Etc..........................................................................60
         SECTION 9.02.  Notices, Etc.............................................................................61
         SECTION 9.03.  No Waiver; Remedies......................................................................61
         SECTION 9.04.  Costs and Expenses.......................................................................61
         SECTION 9.05.  Right of Set-off.........................................................................62
         SECTION 9.06.  Binding Effect...........................................................................63
         SECTION 9.07.  Assignments, Designations and Participations.............................................63
         SECTION 9.08.  Confidentiality..........................................................................66
         SECTION 9.09.  No Liability of the Issuing Bank.........................................................66
         SECTION 9.10.  Governing Law............................................................................67
         SECTION 9.11.  Execution in Counterparts................................................................67
         SECTION 9.12.  Judgment.................................................................................67
         SECTION 9.13.  Jurisdiction, Etc........................................................................68
         SECTION 9.14.  Waiver of Jury Trial.....................................................................69
</TABLE>
<PAGE>   5
                                       iv
Schedules

Schedule I -                    List of Applicable Lending Offices

Schedule 4.01(c) -              Required Authorizations and Approvals

Schedule 4.01(f) -              Environmental Actions

Schedule 4.01(i) -              Environmental Laws

Schedule 5.02(a) -              Existing Liens

Schedule 5.02(d) -              Existing Debt

Schedule 5.02(g) -              Scheduled Investments


Exhibits

Exhibit A-1      -   Form of Revolving Credit Note

Exhibit A-2      -   Form of Competitive Bid Note

Exhibit B-1      -   Form of Notice of Borrowing

Exhibit B-2      -   Form of Notice of Competitive Bid Borrowing

Exhibit C        -   Form of Assignment and Acceptance

Exhibit D        -   Form of Designation Agreement

Exhibit E       -    Form of Credit Agreement Supplement

Exhibit F-1      -   Form of Opinion of Counsel for Paxar

Exhibit F-2      -   Form of Opinion of Counsel for Additional Borrowers

Exhibit G        -   Form of Acceptance of Process Agent

Exhibit H       -    Subsidiary Guaranty

<PAGE>   6

                      AMENDED AND RESTATED CREDIT AGREEMENT
                           Dated as of August 11, 1998


                  Paxar Corporation, a New York corporation ("Paxar"), any other
Subsidiary (as hereinafter defined) that becomes a Borrower (as hereinafter
defined) pursuant to the terms hereof, the banks, financial institutions and
other institutional lenders (the "Initial Lenders") listed on the signature
pages hereof as the Initial Lenders, Fleet Bank, N.A. ("Fleet") as initial
issuing bank (in such capacity, the "Initial Issuing Bank"), Fleet as the swing
line bank (in such capacity, the "Swing Line Bank"), and Fleet as administrative
agent (in such capacity, the "Administrative Agent") for the Lender Parties (as
hereinafter defined), agree to amend and restate the Existing Credit Agreement
(as defined below) in its entirety as follows:


                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

                  SECTION 1.01. Certain Defined Terms. As used in this
Agreement, 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):

                  "Administrative Agent's Account" means (a) in the case of
         Advances denominated in US Dollars, the account of the Administrative
         Agent maintained by the Administrative Agent at Fleet Bank, N.A. with
         its office at 1133 Avenue of the Americas, 40th Floor, New York, New
         York 10036, Account No. 1983580, Attention: Joann Zegarelli and (b) in
         the case of Advances denominated in any Primary Currency, the account
         of the Administrative Agent designated in writing from time to time by
         the Administrative Agent to Paxar, the other Borrowers and the Lender
         Parties for such purpose.

                  "Advance" means a Revolving Credit Advance, a Swing Line
         Advance, a Letter of Credit Advance or a Competitive Bid 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
         vote 5% or more of the Voting Stock of such Person or to direct or
         cause the direction of the management and policies of such Person,
         whether through the ownership of Voting Stock, by contract or
         otherwise.

                  "Applicable Lending Office" means, with respect to each Lender
         Party, such Lender Party's Domestic Lending Office in the case of a
         Prime Rate Advance and such Lender Party's Eurocurrency Lending Office
         in the case of a Eurocurrency Rate Advance and, in the case of a
         Competitive Bid Advance, the office of such Lender Party notified by
         such Lender Party to the Administrative Agent as its Applicable Lending
         Office with respect to such Competitive Bid Advance.
<PAGE>   7
                                        2

                  "Applicable Margin" means, at any time, a percentage per annum
         determined by reference to the Debt to EBITDA Ratio as set forth below:


                                                      Applicable Margin for
                                Debt To                 Revolving Credit
                             EBITDA Ratio                   Advances
                      Level 1
                      Greater than or
                      equal to 3.00 to 1
                      or above                               0.5000%
                      
                      Level 2
                      Greater than or
                      equal to 2.50 to 1
                      but less than 3.00 to
                      1                                      0.4125%
                      
                      Level 3
                      Greater than or
                      equal to 2.00 to 1
                      but less than 2.50 to
                      1                                      0.3500%
                      
                      Level 4
                      Greater than or
                      equal to 1.50 to 1
                      but less than 2.00 to
                      1                                      0.3000%
                      
                      Level 5
                      Greater than or
                      equal to 1.00 to 1
                      but less than 1.50 to
                      1                                      0.2500%
                      
                      Level 6                                       
                      Less than 1.00 to 1                    0.2200%

         The Applicable Margin for each Advance (other than a Competitive Bid
         Advance) shall be determined by reference to the Debt to EBITDA Ratio
         in effect on the first day of each Interest Period for such Advance;
         provided, however, that no change in the Applicable Margin shall be
         effective until three Business Days after the date on which the
         Administrative Agent receives financial statements pursuant to Section
         5.01(m)(i) or (ii) and a certificate of the chief financial officer or
         the treasurer of Paxar demonstrating such ratio.
<PAGE>   8
                                        3

                  "Applicable Percentage" means, at any time, a percentage per
         annum determined by reference to the Debt to EBITDA Ratio as set forth
         below:


                           Debt To                        Applicable
                        EBITDA Ratio                      Percentage
               Level 1                                      0.2500%
               Greater than or equal to
               3.00 to 1 or above
               
               Level 2                                      0.1875%
               Greater than or equal to
               2.50 to 1 but less than 3.00 to 1
               
               Level 3                                      0.1500%
               Greater than or equal to
               2.00 to 1 but less than
               2.50 to 1
               
               Level 4                                      0.1250%
               Greater than or equal to
               1.50 to 1 but less than
               2.00 to 1
               
               Level 5                                      0.1000%
               Greater than or equal to
               1.00 to 1 but less than
               1.50 to 1
               
               Level 6                                      0.0800%
               Less than 1.00 to 1

         The Applicable Percentage for the Revolving Credit Facility shall be
         determined by reference to the Debt to EBITDA Ratio in effect from time
         to time; provided, however, that no change in the Applicable Percentage
         shall be effective until three Business Days after the date on which
         the Administrative Agent receives financial statements pursuant to
         Section 5.01(m)(i) or (ii) and a certificate of the chief financial
         officer or the treasurer of Paxar demonstrating such ratio.

                  "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 substantially the form of Exhibit C
         hereto.
<PAGE>   9
                                        4

                  "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).

                  "Borrower" means Paxar and each wholly owned Subsidiary of
         Paxar that has delivered a Credit Agreement Supplement which has become
         effective; provided, however, that in no event shall the number of
         Borrowers hereunder exceed four at any one time.

                  "Borrowing" means a Revolving Credit Borrowing, a Swing Line
         Borrowing or a Competitive Bid Borrowing.

                  "Business Day" means a day of the year on which banks are not
         required or authorized by law to close in New York City and, if the
         applicable Business Day relates to any Eurocurrency Rate Advances, on
         which dealings are carried on in the London interbank market and banks
         are open for business in the country of issue of the currency of such
         Eurocurrency Rate Advance.

                  "Capital Expenditures" means, for any Person for any period,
         the sum of (a) all expenditures made, directly or indirectly, by such
         Person or any of its Subsidiaries during such period 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, 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.

                  "Capitalized Leases" means all leases that have been or should
         be, in accordance with GAAP, recorded as capitalized leases.

                  "Cash Equivalents" means any of the following, to the extent
         owned by Paxar or any of its Subsidiaries free and clear of all Liens
         and having a maturity of not greater than 180 days from the date of
         issuance 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, issues (or the
         parent of which issues) commercial paper rated as described in clause
         (c), is organized under the laws of the United States or any state
         thereof and has combined capital and surplus of at least $1 billion,
         (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 or "A-1" (or the then equivalent
         grade) by S&P or (d) Investments in money market funds that invest
         primarily in Cash Equivalents of the types described in clauses (a),
         (b) and (c) above and are established by a Lender Party or any
         Affiliate of a Lender Party.

                  "Commitment" means a Revolving Credit Commitment or a Letter
         of Credit Commitment.
<PAGE>   10
                                        5

                  "Competitive Bid Advance" means an advance by a Lender Party
         to Paxar as part of a Competitive Bid Borrowing resulting from the
         competitive bidding procedure described in Section 2.03 and refers to a
         Fixed Rate Advance or a LIBO Rate Advance (each of which may only be in
         US Dollars).

                  "Competitive Bid Borrowing" means a borrowing consisting of
         simultaneous Competitive Bid Advances from each of the Lender Parties
         to Paxar whose offer to make one or more Competitive Bid Advances as
         part of such borrowing has been accepted under the competitive bidding
         procedure described in Section 2.03.

                  "Competitive Bid Note" means a promissory note of Paxar
         payable to the order of any Lender Party, in substantially the form of
         Exhibit A-3 hereto, evidencing the indebtedness of Paxar to such Lender
         Party resulting from a Competitive Bid Advance made by such Lender
         Party.

                  "Confidential Information" means information that any Borrower
         furnishes to the Administrative Agent or any Lender Party in a writing
         designated as confidential, but does not include any such information
         that is or becomes generally available to the public or that is or
         becomes available to the Administrative Agent or such Lender Party from
         a source other than the Borrowers.

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

                  "Convert", "Conversion" and "Converted" each refers to a
         conversion of Advances (other than Competitive Bid Advances) of one
         Type into Advances of the other Type (other than Competitive Bid
         Advances) pursuant to Section 2.09 or 2.10.

                  "Credit Agreement Supplement" has the meaning specified in
         Section 2.18.

                  "Debt" of any Person means, without duplication, (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 90 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, contingent or otherwise, of such Person in respect of
         acceptances, letters of credit or similar extensions of credit, (g) all
         Obligations of such Person in respect of Hedge Agreements, (h) all
         Obligations of such Person to purchase, redeem, retire, defease or
         otherwise make any payment in respect of any capital stock of or other
         ownership or profit interest in such Person or any other Person or any
         warrants, rights or options to acquire such capital stock, (i) Debt of
         others referred to in clauses (a) through (h) above or clause (j) below
         guaranteed directly or indirectly in any manner by such Person, or in
         effect guaranteed directly or indirectly by such Person through an
         agreement (1) to pay or purchase such Debt or to advance or supply
         funds for the payment or purchase of such Debt, (2) to purchase, sell
<PAGE>   11
                                        6

         or lease (as lessee or lessor) property, or to purchase or sell
         services, primarily for the purpose of enabling the debtor to make
         payment of such Debt or to assure the holder of such Debt against loss,
         (3) to supply funds to or in any other manner invest in the debtor
         (including any agreement to pay for property or services irrespective
         of whether such property is received or such services are rendered) or
         (4) otherwise to assure a creditor against loss, and (j) all Debt
         referred to in clauses (a) through (i) above 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 Debt.

                  "Debt to EBITDA Ratio" means, for any fiscal quarter of Paxar,
         a ratio of Debt of Paxar and its Subsidiaries as at the end of such
         fiscal quarter to Consolidated EBITDA of Paxar and its Subsidiaries for
         the most recently completed four fiscal quarters.

                  "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.

                  "Designated Bidder" means (a) an Eligible Assignee or (b) a
         special purpose corporation that is engaged in making, purchasing or
         otherwise investing in commercial loans in the ordinary course of its
         business and that issues (or the parent of which issues) commercial
         paper rated at least "Prime-1" (or the then equivalent grade) by
         Moody's or "A-1" (or the then equivalent grade) by S&P that, in the
         case of either clause (a) or (b), (i) is organized under the laws of
         the United States or any State thereof, (ii) shall have become a party
         hereto pursuant to Section 9.07(d), (e) and (f) and (iii) is not
         otherwise a Lender Party.

                  "Designation Agreement" means a designation agreement entered
         into by a Lender Party (other than a Designated Bidder) and a
         Designated Bidder, and accepted by the Administrative Agent, in
         substantially the form of Exhibit D hereto.

                  "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,
         or such other office of such Lender Party as such Lender Party may from
         time to time specify to Paxar and the Administrative Agent.

                  "EBIT" means, for any period, net income (or net loss) before
         deduction for income taxes and net interest expense, in each case
         determined in accordance with GAAP for such period.

                  "EBITDA" means, for any period, net income (or net loss) plus
         the sum of (a) interest expense, (b) income tax expense, (c)
         depreciation expense and (d) amortization expense, in each case
         determined in accordance with GAAP for such period and, in the case of
         clauses (a) through (d), to the extent such expenses are actually
         deducted in calculating net income (or net loss); provided, however,
         that the $2,300,000 non-recurring charge taken by Paxar in respect of
         the quarter ended June 30, 1998 shall be excluded from the calculations
         of EBITDA for all purposes of this Agreement.
<PAGE>   12
                                        7

                  "Effective Date" has the meaning specified in Section 3.01.

                  "Eligible Assignee" means (i) a Lender Party; (ii) an
         Affiliate of a Lender Party; (iii) a commercial bank organized under
         the laws of the United States, or any State thereof, and having total
         assets in excess of $500,000,000; (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 $500,000,000; (v) a
         commercial bank organized under the laws of any other country that is a
         member of the Organization for Economic Cooperation and Development or
         has concluded special lending arrangements with the International
         Monetary Fund associated with its General Arrangements to Borrow, or a
         political subdivision of any such country, and having total assets in
         excess of $500,000,000, so long as such bank is acting through a branch
         or agency located in the United States; (vi) the central bank of any
         country that is a member of the Organization for Economic Cooperation
         and Development; (vii) a finance company, insurance company or other
         financial institution or fund (whether a corporation, partnership,
         trust or other entity) 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 $500,000,000 and (viii)
         any other Person approved by the Administrative Agent and, unless an
         Event of Default has occurred and is continuing at the time any
         assignment is effected in accordance with Section 9.07, Paxar, such
         approval not to be unreasonably withheld or delayed; provided, however,
         that neither Paxar nor an Affiliate of Paxar shall qualify as an
         Eligible Assignee.

                  "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 in any way to any Environmental
         Law, Environmental Permit or Hazardous Materials or arising from
         alleged injury or threat of injury 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 any 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, judgment,
         decree or judicial or agency interpretation, policy or guidance
         relating to pollution or protection of the environment, health, safety
         or natural resources, including, 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.

                  "Equivalent" means (a) in US Dollars of any Primary Currency
         on any date of determination, the equivalent in US Dollars of such
         Primary Currency determined by using the quoted spot rate at which
         Fleet's principal office in New York City, New York, offers to exchange
         US Dollars for such Primary Currency in New York City, New York, at the
         opening of business on such date and (b) in any Primary Currency of US
         Dollars on any date of determination, the equivalent in such Primary
         Currency of US Dollars determined by using the quoted spot rate at
<PAGE>   13
                                        8

         which Fleet's principal office in New York City, New York offers to
         exchange such Primary Currency for US Dollars in New York City, New
         York at the opening of business 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 Paxar's controlled group, or under common
         control with Paxar, 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 subsection (1)
         of Section 4043(b) of ERISA (without regard to subsection (2) of such
         Section) are met with 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 Paxar or any ERISA Affiliate in the
         circumstances described in Section 4062(e) of ERISA; (e) the withdrawal
         by Paxar 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 the 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,
         a Plan.

                  "Eurocurrency Lending Office" means, with respect to any
         Lender Party, the office of such Lender Party specified as its
         "Eurocurrency 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 Paxar and the Administrative Agent.

                  "Eurocurrency Liabilities" has the meaning assigned to that
         term in Regulation D of the Board of Governors of the Federal Reserve
         System, as in effect from time to time.

                  "Eurocurrency Rate" means, for any Interest Period for each
         Eurocurrency Rate Advance comprising part of the same Borrowing (other
         than a Competitive Bid Borrowing), the rate per annum (rounded upwards
         to the nearest 1/16 of 1%) at which deposits in US Dollars or in the
         applicable Primary Currency, as the case may be, appear on Page 3740 or
         3750 of the Dow Jones Telerate Screen at or about 11:00 A.M. (London
         time) two Business Days before the first day of such Interest Period
         and for a period equal to such Interest Period. If for any reason such
         rate is
<PAGE>   14
                                        9

         not available, the term "Eurocurrency Rate" shall mean, for any
         Interest Period for each Eurocurrency Rate Advance comprising part of
         the same Borrowing, the rate per annum (rounded upwards to the nearest
         1/16 of 1%) appearing on the appropriate Reuters Screen as the London
         interbank offered rate for deposits in US Dollars or in the applicable
         Primary Currency, as the case may be, 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 such Reuters Screen, the
         applicable rate shall be the arithmetic mean of all such rates.

                  "Eurocurrency Rate Advance" means an Advance (other than a
         Competitive Bid Advance) denominated in US Dollars or in a Primary
         Currency that bears interest as provided in Section 2.08(a)(ii).

                  "Eurocurrency Rate Reserve Percentage" means, with respect to
         any Lender for any Interest Period for any Eurocurrency Rate Advance
         made by such Lender from time to time, 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 thereto) for
         determining the maximum reserve requirement (including, without
         limitation, any emergency, supplemental or other marginal reserve
         requirement) for such Lender 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 rate on Eurocurrency Rate Advances is determined)
         having a term equal to such Interest Period.

                  "Events of Default" has the meaning specified in Section 6.01.

                  "Existing Credit Agreement" means the Credit Agreement dated
         as of March 3, 1997, as amended by Letter Amendment dated as of October
         1, 1997 and Letter Amendment No. 2 dated as of June ____, 1998, among
         the Borrower, the banks, financial institutions and other institutional
         lenders party thereto and Fleet as administrative agent.

                  "Existing Debt" has the meaning specified in Section
         5.02(d)(iii)(B) hereof.

                  "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, pension plan reversions,
         proceeds of insurance (other than proceeds of business interruption
         insurance to the extent such proceeds constitute compensation for lost
         earnings), condemnation awards (and payments in lieu thereof) and
         indemnity payments; 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 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 6 months
         after the occurrence of such damage or loss.
<PAGE>   15
                                       10

                  "Facility" means the Revolving Credit Facility, the Swing Line
         Facility or the Letter of Credit 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 on such
         transactions received by the Administrative Agent from three Federal
         funds brokers of recognized standing selected by it.

                  "Fiscal Year" means a fiscal year of Paxar and its
         Consolidated Subsidiaries ending on December 31 in any calendar year.

                  "Fixed Rate Advances" has the meaning specified in Section
         2.03(a)(i), which Advances shall be denominated in US Dollars.

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

                  "Foreign Loan Amount" means, at any date, the sum of the
         Equivalent on such date of the aggregate principal amount on such date
         of the outstanding Revolving Credit Advances denominated in any Primary
         Currency plus the aggregate principal amount on such date of the
         outstanding advances made by Paxar and its domestic Subsidiaries to any
         wholly-owned foreign Subsidiaries of Paxar.

                  "Funded Debt" of any Person means Debt in respect of the
         Advances, in the case of any 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 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.

                  "Guaranteed Obligations" has the meaning specified in Section
         8.01.

                  "Guaranty" has the meaning specified in Section 8.01.

                  "Hazardous Materials" means (a) petroleum and petroleum
         products, byproducts 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.
<PAGE>   16
                                       11

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

                  "Indemnified Party" has the meaning specified in Section
         9.04(b).

                  "Information Memorandum" means the information memorandum
         dated July __, 1998 used by the Administrative Agent in connection with
         the syndication of the Commitments.

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

                  "Initial Lenders" has the meaning specified in the recital of
         parties to this 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.

                  "Interest Period" means, for each Eurocurrency Rate Advance
         comprising part of the same Borrowing (other than a Competitive Bid
         Borrowing) and each LIBO Rate Advance comprising part of the same
         Competitive Bid Borrowing, the period commencing on the date of such
         Eurocurrency Rate Advance or LIBO Rate Advance or the date of the
         Conversion of any Prime Rate Advance into such Eurocurrency Rate
         Advance and ending on the last day of the period selected by the
         relevant Borrower pursuant to the provisions below and, thereafter,
         with respect to Eurocurrency Rate Advances, 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 such Borrower
         pursuant to the provisions below. The duration of each such Interest
         Period shall be one, two, three or six months, as the relevant 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:

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

                           (ii) Interest Periods commencing on the same date for
                  Eurocurrency Rate Advances comprising part of the same
                  Borrowing (other than a Competitive Bid Borrowing) or for LIBO
                  Rate Advances comprising part of the same Competitive Bid
                  Borrowing shall be of the same duration;
<PAGE>   17
                                       12

                           (iii) 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

                           (iv) 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.

                  "Investment" in any Person means any loan or advance to such
         Person, any purchase or other acquisition of any capital stock or other
         ownership or profit interest, warrants, rights, options, obligations or
         other securities of such Person, any capital contribution to such
         Person or any other investment in such Person, including, without
         limitation, any arrangement pursuant to which the investor incurs Debt
         of the types referred to in clause (i) or (j) of the definition of
         "Debt" in respect of such Person.

                  "Issuing Bank" means the Initial Issuing Bank and each
         Eligible Assignee to which the Letter of Credit Commitment hereunder
         has been assigned pursuant to Section 9.07.

                  "L/C Related Documents" has the meaning specified in Section
         2.07(c)(ii).

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

                  "Lenders" means the Initial Lenders and each Person that shall
         become a party hereto pursuant to Section 9.07(a), (b) and (c) and,
         except when used in reference to a Borrowing (other than a Competitive
         Bid Borrowing), a Note (other than a Competitive Bid Note), a
         Commitment or a related term, each Designated Bidder.

                  "Letter of Credit" has the meaning specified in Section
         2.01(c).

                  "Letter of Credit Advance" means an advance made by the
         Issuing Bank or any Lender pursuant to Section 2.04(c), which advance
         shall be denominated in US Dollars.

                  "Letter of Credit Agreement" has the meaning specified in
         Section 2.04(a).

                  "Letter of Credit Commitment" means, with respect to the
         Issuing Bank at any time, $5,000,000 or, if the Issuing Bank has
         entered into one or more Assignments and Acceptances, set forth for the
         Issuing Bank in the Register maintained by the Administrative Agent
         pursuant to
<PAGE>   18
                                       13

         Section 9.07(g) as the Issuing Bank's "Letter of Credit Commitment"
         and, in each case, as such amount may be reduced at or prior to such
         time pursuant to Section 2.06.

                  "Letter of Credit 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 2.06.

                  "LIBO Rate" means, for any Interest Period for all LIBO Rate
         Advances comprising part of the same Competitive Bid Borrowing, the
         rate per annum (rounded upwards to the nearest 1/16 of 1%) appearing on
         Telerate Page 3750 (or any successor page) as the London interbank
         offered rate for deposits in US 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. If for any reason
         such rate is not available, the term "LIBO Rate" shall mean, for any
         Interest Period for each LIBO Rate Advance comprising part of the same
         Competitive Bid Borrowing, the rate per annum (rounded upwards to the
         nearest 1/16 of 1%) appearing on Reuters Screen LIBO Page as the London
         interbank offered rate for deposits in US 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.

                  "LIBO Rate Advances" has the meaning specified in Section
         2.03(a)(i).

                  "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 this Agreement, the Notes, the
         Subsidiary Guaranty, any Credit Agreement Supplement entered into by a
         Borrower and any pledge agreement or security agreement entered into by
         Paxar or any Subsidiary Guarantor pursuant to the provisions of Section
         5.02(d)(ii).

                  "Loan Parties" means each Borrower and each Subsidiary
         Guarantor.

                  "Material Adverse Change" means any material adverse change in
         the business, condition (financial or otherwise), operations,
         performance, properties or prospects of Paxar or Paxar and its
         Subsidiaries taken as a whole.

                  "Material Adverse Effect" means a material adverse effect on
         (a) the business, condition (financial or otherwise), operations,
         performance, properties or prospects of Paxar or Paxar and its
         Subsidiaries taken as a whole, (b) the rights and remedies of the
         Administrative Agent or any Lender Party under the Loan Documents or
         (c) the ability of any Loan Party to perform its obligations under the
         Loan Documents.

                  "Moody's" means Moody's Investors Service, Inc.
<PAGE>   19
                                       14

                  "Multiemployer Plan" means a multiemployer plan, as defined in
         Section 4001(a)(3) of ERISA, to which Paxar 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 Paxar or any ERISA Affiliate and at least one Person other
         than Paxar and the ERISA Affiliates or (b) was so maintained and in
         respect of which Paxar 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 the sale or
         issuance of any Debt or capital stock or other ownership or profit
         interest, any securities convertible into or exchangeable for capital
         stock or other ownership or profit interest or any warrants, rights,
         options or other securities to acquire capital stock or other ownership
         or profit interest by 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) (a) reasonable and customary brokerage
         commissions, underwriting fees and discounts, legal fees, finder's fees
         and other similar fees and commissions and (b) the amount of taxes
         payable in connection with or as a result of such transaction and (c)
         the amount of any Debt secured by a Lien on such asset that, by the
         terms of such transaction, is required to be repaid upon such
         disposition, in each case to the extent, but only to the extent, that
         the amounts so deducted are, at the time of receipt of such costs,
         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.

                  "Net Interest Expense" means, for any period, the sum of the
         aggregate net interest expense of any Person and its Subsidiaries for
         such period, as determined in accordance with GAAP, and in any event
         including, without duplication, all commissions, discounts and other
         fees and charges owed with respect to letters of credit and bankers'
         acceptances and net costs under interest rate protection agreements and
         the portion of any obligation under Capitalized Leases allocable to
         consolidated net interest expense.

                  "Note" means a Revolving Credit Note or a Competitive Bid
         Note.

                  "Notice of Borrowing" has the meaning specified in Section
         2.02(a).

                  "Notice of Competitive Bid Borrowing" has the meaning
         specified in Section 2.03(a)(i).

                  "Notice of Issuance" has the meaning specified in Section
         2.04(a).

                  "Notice of Renewal" has the meaning specified in Section
         2.01(c).

                  "Notice of Swing Line Borrowing" has the meaning specified in
         Section 2.02(b).
<PAGE>   20
                                       15

                  "Notice of Termination" has the meaning specified in Section
         2.01(c).

                  "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 the Loan
         Parties 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 any Loan Party under any Loan Document and (b) the
         obligation of any 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.

                  "Other Taxes" has the meaning specified in Section 2.15(b).

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

                  "Permitted Asset Sale Amount" means, with respect to any
         Fiscal Year, an amount equal to the Net Cash Proceeds from asset sales
         permitted by Section 5.02(f)(iii).

                  "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 required to be paid
         under Section 5.01(b) hereof; (b) Liens imposed by law, such as
         materialmen's, mechanics', carriers', workmen's and repairmen's Liens
         and other similar Liens arising in the ordinary course of business
         securing obligations that are not overdue for a period of more than 30
         days; (c) pledges or deposits to secure obligations under workers'
         compensation laws or similar legislation or to secure public or
         statutory obligations; and (d) easements, rights of way and other
         encumbrances on title to real property that do not render title to the
         property encumbered thereby unmarketable or materially adversely affect
         the use of such property for its present purposes.

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

                  "Plan" means a Single Employer Plan or a Multiple Employer
         Plan.

                  "Primary Currencies" means, collectively, the lawful currency
         of the United Kingdom of Great Britain and Northern Ireland, the lawful
         currency of the Federal Republic of Germany, the lawful currency of the
         Republic of France, the lawful currency of The Kingdom of the
         Netherlands, the lawful currency of The Swiss Confederation, the lawful
         currency of Spain, the lawful currency of Italy, the lawful currency of
         Belgium, the lawful currency of Australia and the lawful currency of
         Canada; provided, however, that any of the above-enumerated currencies
         shall
<PAGE>   21
                                       16

         cease to be a "Primary Currency" upon notification by the Required
         Lenders to the Administrative Agent that such currency is not freely
         transferable and convertible into US Dollars or dealings in deposits in
         such currency are not carried out in the London interbank market.

                  "Prime 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 the higher of:

                           (a) the rate of interest announced publicly by Fleet
                  in New York, New York, from time to time, as Fleet's prime
                  rate; and

                           (b) 1/2 of one percent per annum above the Federal
                  Funds Rate.

                  "Prime Rate Advance" means an Advance (other than a
         Competitive Bid Advance) that bears interest as provided in Section
         2.08(a)(i).

                  "Pro Rata Share" of any amount means, with respect to any
         Lender at any time, the product of such amount times a fraction the
         numerator of which is the amount of such Lender's Revolving Credit
         Commitment at such time and the denominator of which is the Revolving
         Credit Facility at such time.

                  "Register" has the meaning specified in Section 9.07(g).

                  "Registration Rights Agreement" means the Registration Rights
         Agreement dated as of March 3, 1997 between Paxar and Odyssey Partners,
         L.P., as the same may be amended, modified or otherwise supplemented
         from time to time in accordance with the terms of this Agreement.

                  "Regulation U" means Regulation U of the Board of Governors of
         the Federal Reserve System, as in effect from time to time.

                  "Related Documents" means the Stock Purchase Agreement, the
         Warrant Agreement and the Registration Rights Agreement.

                  "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 (other than Competitive Bid Advances)
         outstanding at such time and (b) the aggregate Available Amount of all
         Letters of Credit outstanding at such time, or, if no such principal
         amount and no Letters of Credit are outstanding at such time, Lenders
         holding at least a majority in interest of the aggregate of the
         Revolving Credit Commitments. 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 Lenders ratably in accordance with their respective
         Revolving Credit Commitments.

                  "Revolving Credit Advance" has the meaning specified in
         Section 2.01(a).
<PAGE>   22
                                       17

                  "Revolving Credit Borrowing" means a borrowing consisting of
         simultaneous Revolving Credit Advances of the same Type made by each of
         the Lender Parties pursuant to Section 2.01(a).

                  "Revolving Credit Commitment" means, with respect to any
         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 Assignments and
         Acceptances, set forth for such Lender in the Register maintained by
         the Administrative Agent pursuant to Section 9.07(g) as such Lender's
         "Revolving Credit Commitment", as such amount may be reduced at or
         prior to such time pursuant to Section 2.06.

                  "Revolving Credit Facility" means, at any time, the aggregate
         amount of the Lenders' Revolving Credit Commitments at such time.

                  "Revolving Credit Note" means a promissory note of each
         Borrower payable to the order of any Lender, in substantially the form
         of Exhibit A-1 hereto, evidencing the aggregate indebtedness of such
         Borrower to such Lender resulting from the Revolving Credit Advances
         made by such Lender to such Borrower.

                  "S&P" means Standard & Poor's, a division of The McGraw-Hill
         Companies, Inc.

                  "Senior Notes" means the 6.74% Senior Notes due 2008 issued by
         Paxar in an aggregate principal amount not to exceed $150,000,000.

                  "Single Employer Plan" means a single employer plan, as
         defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
         employees of Paxar or any ERISA Affiliate and no Person other than
         Paxar and the ERISA Affiliates or (b) was so maintained and in respect
         of which Paxar 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 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.

                  "Standby Letter of Credit" means any Letter of Credit issued
         under the Letter of Credit Facility, other than a Trade Letter of
         Credit.
<PAGE>   23
                                       18

                  "Stock Purchase Agreement" means the Purchase and Sale
         Agreement dated as of December 20, 1996 between Paxar and Odyssey
         Partners, L.P., as the same may be amended, modified or otherwise
         supplemented from time to time in accordance with the terms of this
         Agreement.

                  "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 (a) the issued and outstanding capital stock
         having ordinary voting power to elect a majority of the Board of
         Directors of such corporation (irrespective of whether at the time
         capital stock of any other class or classes of such corporation shall
         or might have voting power upon the occurrence of any contingency), (b)
         the interest in the capital or profits of such limited liability
         company, partnership or joint venture or (c) the beneficial interest in
         such trust or estate 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 of the Subsidiaries of
         Paxar that is organized under the laws of the United States of America
         or any state thereof.

                  "Subsidiary Guaranty" means the Guaranty dated as of March 3,
         1997 (which is attached hereto as Exhibit H) made by the Subsidiary
         Guarantors in favor of the Administrative Agent and the Lender Parties,
         as the same may be amended, modified or otherwise supplemented from
         time to time.

                  "Swing Line Advance" means an advance which shall be
         denominated in US Dollars made by (a) the Swing Line Bank pursuant to
         Section 2.01(b) or (b) any Lender pursuant to Section 2.02(b).

                  "Swing Line Bank" has the meaning specified in the recital of
         parties to this Agreement.

                  "Swing Line Borrowing" means a borrowing consisting of a Swing
         Line Advance made by the Swing Line Bank.

                  "Swing Line Facility" has the meaning specified in Section
         2.01(b).

                  "Termination Date" means the earlier of August 11, 2003 and
         the date of termination in whole of the Commitments pursuant to Section
         2.06 or 6.01.

                  "Trade Letter of Credit" means any Letter of Credit that is
         issued under the Letter of Credit Facility for the benefit of a
         supplier of inventory to Paxar or any of its Subsidiaries to effect
         payment for such inventory.

                  "Type" refers to the distinction between Advances (other than
         Competitive Bid Advances) bearing interest at the Prime Rate and
         Advances bearing interest at the Eurocurrency Rate.
<PAGE>   24
                                       19

                  "Unused Revolving Credit Commitment" means, with respect to
         any 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 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 2.04(c) and
         outstanding at such time, (C) the aggregate principal amount of all
         Swing Line Advances made by the Swing Line Bank pursuant to Section
         2.01(b) and outstanding at such time, and (D) the aggregate principal
         amount of all Competitive Bid Advances outstanding at such time.

                  "US Dollars" and the "$" sign each mean the lawful money of
         the United States of America.

                  "Voting Stock" means capital stock issued by a corporation, or
         equivalent 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.

                  "Warrant Agreement" means the Warrant Agreement dated as of
         March 3, 1997 between Paxar and Odyssey Partners, L.P., as the same may
         be amended, modified or otherwise supplemented from time to time in
         accordance with the terms of this Agreement.

                  "Year 2000 Risk" means the risk that computer applications
         used by Paxar and its Subsidiaries and/or its suppliers, vendors and
         customers may be unable to recognize and perform without error
         date-sensitive functions involving certain dates prior to and any date
         after December 31, 1999.

                  SECTION 1.02. Computation of Time Periods. In this Agreement
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".

                  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(e) ("GAAP").


                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES
                            AND THE LETTERS OF CREDIT

                  SECTION 2.01. The Advances. (a) The Revolving Credit Advances.
Each Lender severally agrees, on the terms and conditions hereinafter set forth,
to make advances (each a "Revolving Credit Advance") to each Borrower from time
to time on any Business Day during the period from the
<PAGE>   25
                                       20

Effective Date until the Termination Date in an amount for each such Revolving
Credit Advance (determined in the case of any Revolving Credit Advance
denominated in a Primary Currency by reference to the Equivalent thereof in US
Dollars on such Business Day) not to exceed such Lender's Unused Revolving
Credit Commitment at such time; provided, however, that, after giving effect to
such Revolving Credit Borrowing, the sum of (x) the aggregate principal amount
of all Revolving Credit Advances, Swing Line Advances, Letter of Credit Advances
and Competitive Bid Advances made hereunder and outstanding on such Business Day
plus (y) the aggregate Available Amount of all Letters of Credit outstanding on
such Business Day shall not exceed the Revolving Credit Facility on such
Business Day. Each Revolving Credit Borrowing shall be in an aggregate amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof (or the
Equivalent thereof in the Primary Currency in which such Revolving Credit
Borrowing is denominated) (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 of the same Type and in the same currency made simultaneously by the
Lenders ratably according to their Revolving Credit Commitments; provided,
however, that after giving effect to any Revolving Credit Borrowing denominated
in a Primary Currency, the Foreign Loan Amount on such date shall not exceed
$100,000,000. Any "Revolving Credit Advances" outstanding on the Effective Date
under the Existing Credit Agreement shall be Revolving Credit Advances for all
purposes hereunder and under the other Loan Documents. Within the limits of each
Lender's Commitment, the Borrowers may borrow under this Section 2.01, prepay
pursuant to Section 2.11 and reborrow under this Section 2.01.

                  (b) The Swing Line Advances. Paxar may request the Swing Line
Bank to make, and the Swing Line Bank shall make, on the terms and conditions
hereinafter set forth, Swing Line Advances to Paxar from time to time on any
Business Day during the period from the date hereof until the Termination Date
(i) in an aggregate amount not to exceed at any time outstanding $5,000,000 (the
"Swing Line Facility") and (ii) in an amount for each such Swing Line Borrowing
not to exceed the aggregate of the Unused Revolving Credit Commitments of the
Lenders at such time. 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 shall be in an amount of $100,000 or an integral multiple of
$100,000 in excess thereof and shall be made as a Prime Rate Advance or shall
bear interest at such other interest rate, if any, as may be agreed upon by
Paxar and the Swing Line Bank. Any "Swing Line Advances" outstanding on the
Effective Date under the Existing Credit Agreement shall be Swing Line Advances
for all purposes hereunder and under the other Loan Documents. Within the limits
of the Swing Line Facility and within the limits referred to in clause (ii)
above, Paxar may borrow under this Section 2.01(b), repay pursuant to Section
2.07(c) or prepay pursuant to Section 2.11 and reborrow under this Section
2.01(b).

                  (c) Letters of Credit. The Issuing Bank agrees, on the terms
and conditions hereinafter set forth, to issue letters of credit (the "Letters
of Credit") for the account of a Borrower from time to time on any Business Day
during the period from the date hereof until 60 days before the Termination Date
(i) in an aggregate Available Amount for all Letters of Credit not to exceed at
any time the Issuing Bank's Letter of Credit Commitment at such time and (ii) in
an Available Amount for each such Letter of Credit not to exceed the lesser of
(x) the Letter of Credit Facility at such time and (y) the Unused Revolving
Credit Commitments of the Lenders at such time. No Letter of Credit shall have
an expiration date (including all rights of the relevant Borrower or the
beneficiary to require renewal) later than the earlier of 60 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 automatically
renewable annually upon notice

<PAGE>   26
                                       21

(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 such Issuing Bank has notified the
relevant 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 30 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, 60 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 the Issuing Bank that
issued such Standby Letter of Credit 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 60 days before the Termination Date. If either a
Notice of Renewal is not given by the relevant 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
relevant 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. Any "Letters of Credit" outstanding on the
Effective Date under the Existing Credit Agreement shall be Letters of Credit
for all purposes hereunder and under the other Loan Documents. Within the limits
of the Letter of Credit Facility, and subject to the limits referred to above,
the Borrower may request the issuance of Letters of Credit under this Section
2.01(c), repay any Letter of Credit Advances resulting from drawings thereunder
pursuant to Section 2.04(c) and request the issuance of additional Letters of
Credit under this Section 2.01(c).

                  SECTION 2.02. Making the Advances. (a) Except as otherwise
provided in Section 2.02(b) or 2.03, each Borrowing (other than a Competitive
Bid Borrowing) shall be made on notice, given not later than 12:00 Noon (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 Eurocurrency Rate Advances,
or the first Business Day prior to the date of the proposed Borrowing in the
case of a Borrowing consisting of Prime Rate Advances, by the relevant Borrower
to the Administrative Agent, which shall give to each Lender prompt notice
thereof by telecopier or telex. Each such notice of a Borrowing (a "Notice of
Borrowing") shall be by telephone, confirmed immediately in writing, or
telecopier or telex 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, and (v) in the case of a Borrowing
consisting of Eurocurrency Rate Advances, initial Interest Period and the
currency for each such Advance. Each Lender shall, before 12:00 Noon (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. 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 Borrower at the
Administrative Agent's address referred to in Section 9.02.
<PAGE>   27
                                       22

                  (b) Each Swing Line Borrowing shall be made on notice, given
not later than 12:00 Noon (New York City time) on the date of the proposed Swing
Line Borrowing, by Paxar to the Swing Line Bank and the Administrative 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,
specifying therein the requested (i) date of such Borrowing, (ii) amount of such
Borrowing and (iii) interest rate to be applicable to the Advances comprising
such Borrowing (which interest rate shall either be the Prime Rate or such other
interest rate as may be agreed upon by Paxar and the Swing Line Bank). The Swing
Line Bank will make the amount thereof available to the Administrative Agent at
the Administrative Agent's Account, in same day funds. 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 Paxar at the Administrative Agent's address referred to in Section
9.02. Upon written demand by the Swing Line Bank, with a copy of such demand to
the Administrative Agent, each other Lender shall purchase from the Swing Line
Bank, and the Swing Line Bank shall sell and assign to each such other Lender,
such other Lender's Pro Rata Share of such outstanding Swing Line Advance 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 the Swing Line
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 Swing
Line Advance to be purchased by such Lender. Paxar hereby agrees to each such
sale and assignment. Effective upon each such sale and assignment, each Swing
Line Advance purchased by a Lender shall be, for all purposes under this
Agreement, a Revolving Credit Advance (which shall be a Prime Rate Advance).
Upon any such assignment by the Swing Line Bank to any other Lender of a portion
of a Swing Line Advance, the Swing Line Bank represents and warrants to such
other Lender that the Swing Line 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
Swing Line Advance, the Loan Documents or any Loan Party. If and to the extent
that any Lender shall not have so made the amount of such Swing Line Advance
available to the Administrative Agent, such 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 Swing Line Bank 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 Swing Line Bank 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 Swing Line Bank shall be reduced by
such amount on such Business Day.

                  (c) Anything in subsection (a) above to the contrary
notwithstanding, (i) a Borrower may not select Eurocurrency Rate Advances for
any Borrowing if the aggregate amount of such Borrowing is less than $5,000,000
or if the obligation of the Lenders to make Eurocurrency Rate Advances shall
then be suspended pursuant to Section 2.09 or 2.13 and (ii) the Eurocurrency
Rate Advances 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 relevant Borrower. In the case
of any Borrowing that the related Notice of Borrowing specifies is to be
comprised of Eurocurrency Rate Advances, the relevant Borrower shall indemnify
each 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
<PAGE>   28
                                       23

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 a Lender prior to the date of any Borrowing 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) or (b) of this Section 2.02 and the
Administrative Agent may, in reliance upon such assumption, make available to
the appropriate 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 the appropriate Borrower severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the appropriate Borrower until the date such
amount is repaid to the Administrative Agent, at (i) in the case of such
Borrower, the interest rate applicable at the time to Advances comprising such
Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such
Lender shall repay to the Administrative Agent such corresponding amount, such
amount so repaid shall constitute such Lender's Advance as part of such
Borrowing for purposes of this Agreement.

                  (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. The Competitive Bid Advances. (a) Each Lender
severally agrees that Paxar may make Competitive Bid Borrowings under this
Section 2.03 from time to time on any Business Day during the period from the
date hereof until the date occurring 30 days prior to the Termination Date in
the manner set forth below; provided that, following the making of each
Competitive Bid Borrowing, (x) the aggregate amount of the Competitive Bid
Advances then outstanding shall not exceed $60,000,000 and (y) the sum of the
aggregate principal amount of the Revolving Credit Advances, the Swing Line
Advances, the Letter of Credit Advances and the Competitive Bid Advances then
outstanding plus the aggregate Available Amount of all Letters of Credit
outstanding at such time shall not exceed the aggregate amount of the Revolving
Credit Commitments of the Lenders.

                  (i) Paxar may request a Competitive Bid Borrowing under this
         Section 2.03 by delivering to the Administrative Agent, by telecopier
         or telex, a notice of a Competitive Bid Borrowing (a "Notice of
         Competitive Bid Borrowing"), in substantially the form of Exhibit B-2
         hereto, specifying therein the requested (v) date of such proposed
         Competitive Bid Borrowing, (w) aggregate amount of such proposed
         Competitive Bid Borrowing, (x) in the case of a Competitive Bid
         Borrowing consisting of LIBO Rate Advances, the Interest Period for and
         the maturity date of such LIBO Rate Advance, or in the case of a
         Competitive Bid Borrowing consisting of Fixed Rate Advances, maturity
         date for repayment of each Fixed Rate Advance to be made as part of
         such Competitive Bid Borrowing (which maturity date may not be earlier
         than the date occurring 7 days after the date of such Competitive Bid
         Borrowing or later than the earlier
<PAGE>   29
                                       24

         of (I) 180 days after the date of such Competitive Bid Borrowing and
         (II) the Termination Date), (y) interest payment date or dates relating
         thereto, and (z) other terms (if any) to be applicable to such
         Competitive Bid Borrowing, not later than 10:00 A.M. (New York City
         time) (A) at least one Business Day prior to the date of the proposed
         Competitive Bid Borrowing, if Paxar shall specify in the Notice of
         Competitive Bid Borrowing that the rates of interest to be offered by
         the Lenders shall be fixed rates per annum (the Advances comprising any
         such Competitive Bid Borrowing being referred to herein as "Fixed Rate
         Advances") and (B) at least five Business Days prior to the date of the
         proposed Competitive Bid Borrowing, if Paxar shall instead specify in
         the Notice of Competitive Bid Borrowing that the rates of interest be
         offered by the Lenders are to be based on the LIBO Rate (the Advances
         comprising such Competitive Bid Borrowing being referred to herein as
         "LIBO Rate Advances"). Each Notice of Competitive Bid Borrowing shall
         be irrevocable and binding on Paxar. The Administrative Agent shall in
         turn promptly notify each Lender of each request for a Competitive Bid
         Borrowing received by it from Paxar by sending such Lender a copy of
         the related Notice of Competitive Bid Borrowing.

                  (ii) Each Lender may, if, in its sole discretion, it elects to
         do so, irrevocably offer to make one or more Competitive Bid Advances
         to Paxar as part of such proposed Competitive Bid Borrowing at a rate
         or rates of interest specified by such Lender in its sole discretion,
         by notifying the Administrative Agent (which shall give prompt notice
         thereof to Paxar), before 9:30 A.M. (New York City time) on the date of
         such proposed Competitive Bid Borrowing, in the case of a Competitive
         Bid Borrowing consisting of Fixed Rate Advances and before 10:00 A.M.
         (New York City time) three Business Days before the date of such
         proposed Competitive Bid Borrowing, in the case of a Competitive Bid
         Borrowing consisting of LIBO Rate Advances, of the minimum amount and
         maximum amount of each Competitive Bid Advance which such Lender would
         be willing to make as part of such proposed Competitive Bid Borrowing
         (which amounts may, subject to the proviso to the first sentence of
         this Section 2.03(a), exceed such Lender's Commitment, if any), the
         rate or rates of interest therefor and such Lender's Applicable Lending
         Office with respect to such Competitive Bid Advance; provided that if
         the Administrative Agent in its capacity as a Lender shall, in its sole
         discretion, elect to make any such offer, it shall notify Paxar of such
         offer at least 30 minutes before the time and on the date on which
         notice of such election is to be given to the Administrative Agent by
         the other Lenders. If any Lender shall elect not to make such an offer,
         such Lender shall so notify the Administrative Agent, before 10:00 A.M.
         (New York City time) on the date on which notice of such election is to
         be given to the Administrative Agent by the other Lenders, and such
         Lender shall not be obligated to, and shall not, make any Competitive
         Bid Advance as part of such Competitive Bid Borrowing; provided that
         the failure by any Lender to give such notice shall not cause such
         Lender to be obligated to make any Competitive Bid Advance as part of
         such proposed Competitive Bid Borrowing.

                  (iii) Paxar shall, in turn, before 10:30 A.M. (New York City
         time) on the date of such proposed Competitive Bid Borrowing, in the
         case of a Competitive Bid Borrowing consisting of Fixed Rate Advances
         and before 11:00 A.M. (New York City time) three Business Days before
         the date of such proposed Competitive Bid Borrowing, in the case of a
         Competitive Bid Borrowing consisting of LIBO Rate Advances, either:
<PAGE>   30
                                       25

                           (x) cancel such Competitive Bid Borrowing by giving
                  the Administrative Agent notice to that effect, or

                           (y) accept one or more of the offers made by any
                  Lender or Lenders pursuant to paragraph (ii) above, in its
                  sole discretion, by giving notice to the Administrative Agent
                  of the amount of each Competitive Bid Advance (which amount
                  shall be equal to or greater than the minimum amount, and
                  equal to or less than the maximum amount, notified to Paxar by
                  the Administrative Agent on behalf of such Lender for such
                  Competitive Bid Advance pursuant to paragraph (ii) above) to
                  be made by each Lender as part of such Competitive Bid
                  Borrowing, and reject any remaining offers made by Lenders
                  pursuant to paragraph (ii) above by giving the Administrative
                  Agent notice to that effect. Paxar shall accept the offers
                  made by any Lender or Lenders to make Competitive Bid Advances
                  in order of the lowest to the highest rates of interest
                  offered by such Lenders. If two or more Lenders have offered
                  the same interest rate, the amount to be borrowed at such
                  interest rate will be allocated among such Lenders in
                  proportion to the amount that each such Lender offered at such
                  interest rate.

                  (iv) If Paxar notifies the Administrative Agent that such
         Competitive Bid Borrowing is canceled pursuant to paragraph (iii)(x)
         above, the Administrative Agent shall give prompt notice thereof to the
         Lenders and such Competitive Bid Borrowing shall not be made.

                  (v) If Paxar accepts one or more of the offers made by any
         Lender or Lenders pursuant to paragraph (iii)(y) above, the
         Administrative Agent shall in turn promptly notify (A) each Lender that
         has made an offer as described in paragraph (ii) above, of the date and
         aggregate amount of such Competitive Bid Borrowing and whether or not
         any offer or offers made by such Lender pursuant to paragraph (ii)
         above have been accepted by Paxar, (B) each Lender that is to make a
         Competitive Bid Advance as part of such Competitive Bid Borrowing, of
         the amount of each Competitive Bid Advance to be made by such Lender as
         part of such Competitive Bid Borrowing, and (C) each Lender that is to
         make a Competitive Bid Advance as part of such Competitive Bid
         Borrowing, upon receipt, that the Administrative Agent has received
         forms of documents appearing to fulfill the applicable conditions set
         forth in Article III. Each Lender that is to make a Competitive Bid
         Advance as part of such Competitive Bid Borrowing shall, before 1:00
         P.M. (New York City time) on the date of such Competitive Bid Borrowing
         specified in the notice received from the Administrative Agent pursuant
         to clause (A) of the preceding sentence or any later time when such
         Lender shall have received notice from the Administrative Agent
         pursuant to clause (C) of the preceding sentence, 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 portion of such Competitive Bid Borrowing. Upon fulfillment of
         the applicable conditions set forth in Article III and after receipt by
         the Administrative Agent of such funds, the Administrative Agent will
         make such funds available to Paxar at the Administrative Agent's
         address referred to in Section 9.02. Promptly after each Competitive
         Bid Borrowing the Administrative Agent will notify each Lender of the
         amount of the Competitive Bid Borrowing and the Unused Revolving Credit
         Commitments of the Lenders after giving effect to such Competitive Bid
         Borrowing.
<PAGE>   31
                                       26

                  (vi) If Paxar notifies the Administrative Agent that it
         accepts one or more of the offers made by any Lender or Lenders
         pursuant to paragraph (iii)(y) above, such notice of acceptance shall
         be irrevocable and binding on Paxar. Paxar shall indemnify each 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 the
         related Notice of Competitive Bid Borrowing for such Competitive Bid
         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 Competitive Bid Advance to be made by such Lender as part of such
         Competitive Bid Borrowing when such Competitive Bid Advance, as a
         result of such failure, is not made on such date.

                  (b) Each Competitive Bid Borrowing shall be in an aggregate
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof
and, following the making of each Competitive Bid Borrowing, the Borrowers shall
be in compliance with the limitations set forth in the proviso to the first
sentence of subsection (a) above.

                  (c) Within the limits and on the conditions set forth in this
Section 2.03, Paxar may from time to time borrow under this Section 2.03, repay
or prepay pursuant to subsection (d) below, and reborrow under this Section
2.03, provided that a Competitive Bid Borrowing shall not be made within three
Business Days of the date of any other Competitive Bid Borrowing.

                  (d) Paxar shall repay to the Administrative Agent for the
account of each Lender that has made a Competitive Bid Advance, on the maturity
date of each Competitive Bid Advance (such maturity date being that specified by
Paxar for repayment of such Competitive Bid Advance in the related Notice of
Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above and
provided in the Competitive Bid Note evidencing such Competitive Bid Advance),
the then unpaid principal amount of such Competitive Bid Advance. Paxar shall
have no right to prepay any principal amount of any Competitive Bid Advance
unless, and then only on the terms, specified by Paxar for such Competitive Bid
Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to
subsection (a)(i) above and set forth in the Competitive Bid Note evidencing
such Competitive Bid Advance.

                  (e) Paxar shall pay interest on the unpaid principal amount of
each Competitive Bid Advance from the date of such Competitive Bid Advance to
the date the principal amount of such Competitive Bid Advance is repaid in full,
at the rate of interest for such Competitive Bid Advance specified by the Lender
making such Competitive Bid Advance in its notice with respect thereto delivered
pursuant to subsection (a)(ii) above, payable on the interest payment date or
dates specified by Paxar for such Competitive Bid Advance in the related Notice
of Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above, as
provided in the Competitive Bid Note evidencing such Competitive Bid Advance.
Upon the occurrence and during the continuance of an Event of Default, Paxar
shall pay interest on the amount of unpaid principal of and interest on each
Competitive Bid Advance owing to a Lender, payable in arrears on the date or
dates interest is payable thereon, at a rate per annum equal at all times to 2%
per annum above the rate per annum required to be paid on such Competitive Bid
Advance under the terms of the Competitive Bid Note evidencing such Competitive
Bid Advance unless otherwise agreed in such Competitive Bid Note.
<PAGE>   32
                                       27

                  (f) The indebtedness of Paxar resulting from each Competitive
Bid Advance shall be evidenced by a separate Competitive Bid Note of Paxar
payable to the order of the Lender making such Competitive Bid Advance.

                  (g) Upon delivery of each Notice of Competitive Bid Borrowing,
Paxar shall pay a non-refundable fee of $3,500 to the Administrative Agent for
its own account.

                  SECTION 2.04. 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 relevant Borrower to the Issuing Bank, which shall give to the
Administrative Agent and each 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 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 such Borrower for use in connection with such
requested Letter of Credit (a "Letter of Credit Agreement"). If (x) the
requested form of such Letter of Credit is acceptable to the Issuing Bank in its
sole discretion and (y) it has not received written notice of objection to such
issuance from the Required Lenders, the Issuing Bank will, upon fulfillment of
the applicable conditions set forth in Article III, make such Letter of Credit
available to the relevant Borrower at its office referred to in Section 9.02 or
as otherwise agreed with such 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 and each 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 (B) to the Administrative Agent and each 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 Prime 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 Lender shall purchase from the Issuing Bank, and the Issuing Bank
shall sell and assign to each such 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. Each Borrower hereby agrees to each
such sale and assignment. Each Lender agrees to purchase its Pro Rata Share of
an outstanding Letter of Credit Advance on (i) the Business Day
<PAGE>   33
                                       28

on which demand therefor is made by the Issuing Bank, provided 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 other Lender of a portion of a Letter of Credit Advance, the Issuing Bank
represents and warrants to such other Lender that the 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 Lender shall not have so made
the amount of such Letter of Credit Advance available to the Administrative
Agent, such 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 2.04(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 2.05. Fees. (a) Revolving Credit Facility Fee. Paxar
agrees to pay to the Administrative Agent for the account of each Lender (other
than the Designated Bidders) a facility fee on the aggregate amount of such
Lender's Revolving Credit Commitment from the Effective Date in the case of each
Initial Lender and from the later of the Effective Date and the effective date
specified in the Assignment and Acceptance pursuant to which it became a Lender
in the case of each other Lender until the Termination Date at a rate per annum
equal to the Applicable Percentage in effect from time to time, payable in
arrears quarterly on the last day of each March, June, September and December,
commencing September 30, 1998, and on the Termination Date.

                  (b) Letter of Credit Fees, Etc. (i) Paxar shall pay to the
Administrative Agent for the account of each Lender a commission, payable in
arrears quarterly on the last Business Day of each March, June, September and
December, commencing September 30,1998, and on the earliest to occur of the full
drawing, expiration, termination or cancellation of any such 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 all Letters of Credit
outstanding from time to time at the Applicable Margin then in effect for the
Revolving Credit Facility.

                  (ii) Paxar shall pay to the Issuing Bank, for its own account,
such commissions, issuance fees, fronting fees, transfer fees and other fees and
charges in connection with the issuance or administration of each Letter of
Credit as Paxar and the Issuing Bank shall agree.
<PAGE>   34
                                       29

                  (c) Administrative Agent's Fees. Paxar shall pay to the
Administrative Agent for its own account such fees as may from time to time be
agreed between Paxar and the Administrative Agent.

                  SECTION 2.06. Termination or Reduction of the Commitments. The
Borrower shall have the right, upon at least five Business Days' notice to the
Administrative Agent, to terminate in whole or reduce ratably in part the Unused
Revolving Credit Commitments of the Lenders, provided that each partial
reduction shall be in the aggregate amount of $10,000,000 or an integral
multiple of $1,000,000 in excess thereof and provided further that the aggregate
amount of the Revolving Credit Commitments of the Lenders shall not be reduced
to an amount that is less than an amount equal to the sum of (x) the aggregate
principal amount of the Competitive Bid Advances then outstanding and (y) the
aggregate Available Amount of all Letters of Credit then outstanding.

                  SECTION 2.07. Repayment of Advances. (a) Revolving Credit
Advances. Each Borrower shall repay to the Administrative Agent for the ratable
account of the Lenders on the Termination Date the aggregate principal amount of
the Revolving Credit Advances then outstanding.

                  (b) Swing Line Advances. Paxar shall repay to the
Administrative Agent for the account of the Swing Line Bank and each other
Lender that has made a Swing Line Advance the outstanding principal amount of
each Swing Line Advance made by each of them on the earliest of (i) the date
repayment is demanded by the Swing Line Bank, (ii) 60 days after such Swing Line
Advance is made and (iii) the Termination Date.

                  (c) Letter of Credit Advances. (i) The relevant Borrower shall
repay to the Administrative Agent for the account of the Issuing Bank and each
other 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 each 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 a Borrower is without prejudice to, and does not
constitute a waiver of, any rights such Borrower might have or might acquire as
a result of the payment by the Issuing Bank of any draft or the reimbursement by
such 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 any 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;
<PAGE>   35
                                       30

                  (C) the existence of any claim, set-off, defense or other
         right that a Borrower may have at any time against any beneficiary or
         any transferee of a Letter of Credit (or any Persons for whom 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 any release or amendment or waiver of or consent to departure from
         the Guaranty, the Subsidiary Guaranty or any other guarantee, for all
         or any of the Obligations of a Borrower in respect of the L/C Related
         Documents; or

                  (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, a Borrower or a guarantor.

                  SECTION 2.08. Interest. (a) Scheduled Interest. Each Borrower
shall pay interest on the unpaid principal amount of each Advance (other than
Competitive Bid Advances or Swing Line Advances that are not Prime Rate
Advances) owing to each Lender by such Borrower from the date of such Advance
until such principal amount shall be paid in full, at the following rates per
annum:

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

                  (ii) Eurocurrency Rate Advances. During such periods as such
         Advance is a Eurocurrency Rate Advance, a rate per annum equal at all
         times during each Interest Period for such Advance to the sum of (x)
         the Eurocurrency Rate for such Interest Period for such Advance plus
         (y) 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
         Eurocurrency Rate Advance shall be Converted or paid in full.

                  (b) Default Interest. Upon the occurrence and during the
continuance of an Event of Default, each Borrower shall pay interest on (i) the
unpaid principal amount of each Advance (other than a Competitive Bid Advance)
owing to each Lender by such Borrower, payable in arrears on the dates referred
to in clause (a)(i) or (a)(ii) above, at a rate per annum equal at all times to
2% per annum above
<PAGE>   36
                                       31

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 hereunder 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 on Prime Rate Advances pursuant to clause (a)(i) above.

                  (c) Additional Interest on Eurocurrency Rate Advances. Each
Borrower shall pay to each Lender, so long as and to the extent such Lender
shall be required under regulations of the Board of Governors of the Federal
Reserve System to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities, additional interest on the
unpaid principal amount of each Eurocurrency Rate Advance of such Lender, from
the date of such Eurocurrency Rate Advance until such principal amount is paid
in full, at an interest rate per annum equal at all times to the remainder
obtained by subtracting (a) the Eurocurrency Rate for the applicable Interest
Period for such Eurocurrency Rate Advance from (b) the rate obtained by dividing
such Eurocurrency Rate by a percentage equal to 100% minus the Eurocurrency Rate
Reserve Percentage of such Lender for such Interest Period, payable on each date
on which interest is otherwise payable on such Eurocurrency Rate Advance. Such
Lender shall as soon as practicable provide notice to the Administrative Agent
and the Borrowers of any such additional interest arising in connection with any
such Eurocurrency Rate Advance, which notice shall be conclusive and binding,
absent manifest error.

                  SECTION 2.09. Interest Rate Determination. (a) The
Administrative Agent shall give prompt notice to the Borrowers and the Lenders
of the applicable interest rate determined by the Administrative Agent for
purposes of Section 2.08(a)(i) or (ii).

                  (b) If, with respect to any Eurocurrency Rate Advances, the
Required Lenders notify the Administrative Agent that the Eurocurrency Rate for
any Interest Period for such Advances will not adequately reflect the cost to
such Required Lenders of making, funding or maintaining their respective
Eurocurrency Rate Advances for such Interest Period, the Administrative Agent
shall forthwith so notify the Borrowers and the Lenders, whereupon (i) each
Eurocurrency Rate Advance will automatically, on the last day of the then
existing Interest Period therefor, (A) if such Eurocurrency Rate Advances are
denominated in US Dollars, Convert into Prime Rate Advances and (B) if such
Eurocurrency Rate Advances are denominated in a Primary Currency, be exchanged
for an Equivalent amount of US Dollars and converted into Prime Rate Advances,
and (ii) the obligation of the Lenders to make, or to Convert Revolving Credit
Advances into, Eurocurrency Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrowers and the Lenders that the
circumstances causing such suspension no longer exist.

                  (c) If a Borrower shall fail to select the duration of any
Interest Period for any Eurocurrency 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 such Borrower and the Lenders and
such Advances will automatically, on the last day of the then existing Interest
Period therefor, (i) if such Eurocurrency Rate Advances are denominated in US
Dollars, Convert into Prime Rate Advances and (ii) if such Eurocurrency Rate
Advances are denominated in a Primary Currency, be exchanged for an Equivalent
amount of US Dollars and Converted into Prime Rate Advances.
<PAGE>   37
                                       32

                  (d) On the date on which the aggregate unpaid principal amount
of Eurocurrency Rate Advances comprising any Borrowing shall be reduced, by
payment or prepayment or otherwise, to less than $5,000,000, such Advances shall
automatically (i) if such Eurocurrency Rate Advances are denominated in US
Dollars, Convert into Prime Rate Advances and (ii) if such Eurocurrency Rate
Advances are denominated in a Primary Currency, be exchanged for an Equivalent
amount of US Dollars and Converted into Prime Rate Advances.

                  (e) Upon the occurrence and during the continuance of any
Event of Default, (i) each Eurocurrency Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, (A) if such Eurocurrency
Rate Advances are denominated in US Dollars, Convert into Prime Rate Advances
and (B) if such Eurocurrency Rate Advances are denominated in a Primary
Currency, be exchanged for an Equivalent amount of US Dollars and Converted into
Prime Rate Advances and (ii) the obligation of the Lenders to make, or to
Convert Advances into, Eurocurrency Rate Advances shall be suspended.

                  SECTION 2.10. Conversion of Advances. Each Borrower may on any
Business Day, upon notice given to the Administrative Agent not later than 12:00
Noon (New York City time) on the third Business Day prior to the date of the
proposed Conversion and subject to the provisions of Sections 2.09 and 2.13,
Convert all Advances owing by such Borrower (other than Competitive Bid
Advances) of one Type comprising the same Borrowing into Advances (other than
Competitive Bid Advances) of the other Type, so long as, after giving effect to
any such Conversion, each such Borrowing is comprised of Advances denominated in
the same currency and, in the case of any Borrowing comprised of Eurocurrency
Rate Advances, having the same Interest Period; provided, however, that (w) no
Eurocurrency Rate Advances of one currency shall be Converted into Eurocurrency
Rate Advances of another currency, (x) any Conversion of Eurocurrency Rate
Advances into Prime Rate Advances shall be made only on the last day of an
Interest Period for such Eurocurrency Rate Advances, (y) any Conversion of Prime
Rate Advances into Eurocurrency Rate Advances shall be in an amount not less
than the minimum amount specified in Section 2.02(c) and (z) no Conversion of
any such Advances shall result in more separate Borrowings than permitted under
Section 2.02(c). Each such notice of a 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 Eurocurrency Rate Advances,
the currency of and the duration of the initial Interest Period for each such
Advance. Each notice of Conversion shall be irrevocable and binding on the
relevant Borrower.

                  SECTION 2.11. Prepayments. (a) Optional. Each Borrower may,
upon at least one Business Day's notice in the case of Prime Rate Advances and
three Business Days' notice in the case of Eurocurrency Rate Advances, in each
case to the Administrative Agent stating the proposed date and aggregate
principal amount of the prepayment, and if such notice is given such Borrower
shall, prepay the outstanding principal amount of the Advances owing by such
Borrower and comprising part of the same Borrowing in whole or ratably in part,
together with accrued interest to the date of such prepayment on the principal
amount prepaid; provided, however, that (x) each partial prepayment shall be in
an aggregate principal amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof (or the Equivalent thereof in the Primary Currency
in which such Revolving Credit Borrowing is denominated, determined on the date
the related notice of prepayment is given) and (y) in the event of any such
prepayment of a
<PAGE>   38
                                       33

Eurocurrency Rate Advance, such Borrower shall be obligated to reimburse the
Lenders in respect thereof pursuant to Section 9.04(c).

                  (b) Mandatory. (i) Paxar 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 equal to the amount by which (A) the sum of the aggregate principal
amount of (u) the Revolving Credit Advances denominated in US Dollars, plus (v)
the Equivalent on such day of the Revolving Credit Advances denominated in
Primary Currencies, plus (w) the Letter of Credit Advances, plus (x) the
aggregate Available Amount of all Letters of Credit then outstanding, plus (y)
the Swing Line Advances plus (z) the Competitive Bid Advances then outstanding
exceeds (B) the Revolving Credit Facility.

                  (ii) Prepayments of the Revolving Credit Facility made
pursuant to clause (i) 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 and third applied to prepay Revolving Credit Advances then outstanding
comprising part of the same Borrowings until such Advances are paid in full.

                  (iii) All prepayments under this subsection (b) shall be made
together with accrued interest to the date of such prepayment on the principal
amount prepaid.

                  SECTION 2.12. Increased Costs. (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 making, funding or maintaining Eurocurrency Rate Advances or LIBO Rate
Advances (excluding for purposes of this Section 2.12 any such increased costs
resulting from (i) Taxes or Other Taxes (as to which Section 2.15 shall govern)
and (ii) changes in the basis of taxation of overall net income or overall gross
income by the United States or by the foreign jurisdiction or state under the
laws of which such Lender Party is organized or has its Applicable Lending
Office or any political subdivision thereof), then Paxar 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. A certificate as to the amount of such increased cost,
submitted to Paxar and the Administrative Agent by such Lender Party, shall be
conclusive and binding for all purposes, absent manifest error.

                  (b) If any Lender Party determines that compliance with any
law or regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Lender Party or any corporation controlling such Lender Party and that the
amount of such capital is increased by or based upon the existence of such
Lender Party's commitment to lend or to issue or participate in Letters of
Credit hereunder and other commitments of this type or the issuance or
maintenance of, or participation in, the Letters of Credit (or similar
contingent obligations), then, upon demand by such Lender Party (with a copy of
such demand to the Administrative Agent), Paxar shall pay to the Administrative
Agent for the account of such Lender Party, from time to time as specified by
such
<PAGE>   39
                                       34

Lender Party, additional amounts sufficient to compensate such Lender Party or
such corporation 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 hereunder or to the issuance or maintenance of,
or participation in, any Letters of Credit. A certificate as to such amounts
submitted to Paxar and the Administrative Agent by such Lender Party shall be
conclusive and binding for all purposes, absent manifest error.

                  SECTION 2.13. Illegality. Notwithstanding any other provision
of this Agreement, if any Lender shall notify the Administrative Agent that the
introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or any central bank or other governmental
authority asserts that it is unlawful, for any Lender or its Eurocurrency
Lending Office to perform its obligations hereunder to make Eurocurrency Rate
Advances or LIBO Rate Advances or to fund or maintain Eurocurrency Rate Advances
or LIBO Rate Advances hereunder, (i) each Eurocurrency Rate Advance or LIBO Rate
Advance, as the case may be, will automatically, upon such demand, be exchanged
for an Equivalent amount of US Dollars and Converted into a Prime Rate Advance
or an Advance that bears interest at the rate set forth in Section 2.08(a)(i),
as the case may be, and (ii) the obligation of the Lenders to make Eurocurrency
Rate Advances or LIBO Rate Advances or to Convert Prime Rate Advances into
Eurocurrency Rate Advances shall be suspended until the Administrative Agent
shall notify Paxar and the Lenders that the circumstances causing such
suspension no longer exist.

                  SECTION 2.14. Payments and Computations. (a) Each Borrower
shall make each payment required to be made by it hereunder and under the Notes
not later than 12:00 Noon (New York City time) on the day when due in like funds
as advanced to the Administrative Agent at the Administrative Agent's Account in
same day funds. The Administrative Agent will promptly thereafter cause to be
distributed like funds relating to the payment of principal or interest or
facility or Letter of Credit fees ratably (other than amounts payable pursuant
to Section 2.03, 2.12, 2.15 or 9.04(c)) to the Lender Parties for the account of
their respective Applicable Lending Offices, and like funds relating to the
payment of any other amount payable to any 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. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 9.07(g), from and after the effective date
specified in 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 Borrower hereby authorizes each Lender Party, if and
to the extent payment owed to such Lender Party is not made when due hereunder
or under any Note held by such Lender Party, to charge from time to time against
any or all of such Borrower's accounts with such Lender Party any amount so due.

                  (c) All computations of interest based on the Prime Rate shall
be made by the Administrative Agent on the basis of a year of 365 or 366 days,
as the case may be, and all computations of interest based on the Eurocurrency
Rate or the Federal Funds Rate and of Facility and Letter of Credit fees shall
be made by the Administrative Agent on the basis of a year of 360 days, in each
case for the
<PAGE>   40
                                       35

actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest or facility fees are payable.
Each determination by the Administrative Agent of an interest 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 facility or Letter
of Credit fee, as the case may be; provided, however, that, if such extension
would cause payment of interest on or principal of Eurocurrency Rate Advances or
LIBO Rate Advances to be made in the next following calendar month, such payment
shall be made on the next preceding Business Day.

                  (e) Unless the Administrative Agent shall have received notice
from a Borrower prior to the date on which any payment is due to any Lender
Party hereunder that such Borrower will not make such payment in full, the
Administrative Agent may assume that such Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Lender Party on
such due date an amount equal to the amount then due such Lender Party. If and
to the extent a Borrower shall not have so made such payment in full to the
Administrative Agent, each 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.

                  SECTION 2.15. Taxes. (a) Any and all payments by a Borrower
hereunder or under the Notes shall be made, in accordance with Section 2.14,
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 the
Administrative Agent, taxes imposed on its overall net income, and franchise
taxes imposed on it in lieu of overall net income taxes, by the jurisdiction
under the laws of which such Lender Party or the Administrative Agent (as the
case may be) is organized or any political subdivision thereof and, in the case
of each Lender Party, taxes imposed on its overall net income, and franchise
taxes imposed on it in lieu of overall net income taxes, by the jurisdiction of
such Lender Party's Applicable Lending Office or any political subdivision
thereof (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"). If a Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder or under
any Note to any Lender Party or the Administrative Agent, (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.15) such Lender Party or the Administrative Agent (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make such deductions and (iii)
such Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.

                  (b) In addition, each Borrower shall pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or under the Notes or
from the execution, delivery or registration of, performing under, or otherwise
with respect to, this Agreement or the Notes (hereinafter referred to as "Other
Taxes").
<PAGE>   41
                                       36

                  (c) Each Borrower shall indemnify each Lender Party and the
Administrative Agent for and hold it harmless against the full amount of Taxes
and Other Taxes (including, without limitation, taxes of any kind imposed by any
jurisdiction on amounts payable under this Section 2.15) imposed on or paid by
such Lender Party or the Administrative Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 30 days from the date
such Lender Party or the Administrative Agent (as the case may be) makes written
demand therefor.

                  (d) Within 30 days after the date of any payment of Taxes, the
relevant Borrower shall furnish to the Administrative Agent, at its address
referred to in Section 9.02, the original or a certified copy of a receipt
evidencing such payment. In the case of any payment hereunder or under the Notes
by or on behalf of a Borrower through an account or branch outside the United
States or by or on behalf of a Borrower by a payor that is not a United States
person, if such Borrower determines that no Taxes are payable in respect
thereof, such 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 subsection (d) and subsection (e), the terms "United States"
and "United States person" shall have the meanings specified in Section 7701 of
the Internal Revenue Code.

                  (e) Each Lender Party organized under the laws of a
jurisdiction outside the United States, on or prior to the date of its execution
and delivery of this Agreement in the case of each Initial Lender or the Initial
Issuing Bank, as the case may be, and on the date of the Assignment and
Acceptance pursuant to which it becomes a Lender Party in the case of each other
Lender Party, and from time to time thereafter as requested in writing by a
Borrower (but only so long as such Lender Party remains lawfully able to do so),
shall provide each of the Administrative Agent and the Borrower with two
original Internal Revenue Service Forms 1001 or 4224, as appropriate, or any
successor or other 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. If
the form provided by a Lender Party at the time such Lender Party first becomes
a party to this Agreement indicates 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 form; provided, however, that, if at the date of the Assignment and
Acceptance pursuant to which a Lender Party assignee becomes a party to this
Agreement, the Lender Party assignor was entitled to payments under subsection
(a) 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 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 Form 1001 or 4224, that the
applicable Lender Party reasonably considers to be confidential, such Lender
Party, if legally required to do so, shall give notice thereof to the Borrower
and shall not be obligated to include in such form or document such confidential
information.
<PAGE>   42
                                       37

                  (f) For any period with respect to which a Lender Party
required to do so has failed to provide a Borrower with the appropriate form
described in Section 2.15(e) (other than if such failure is due to a change in
law occurring subsequent to the date on which a form originally was required to
be provided, or if such form otherwise is not required under subsection (e)
above), such Lender Party shall not be entitled to indemnification under Section
2.15(a) or (c) with respect to Taxes imposed by the United States 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 Borrower
shall take such steps as such Lender Party shall reasonably request to assist
the Lender Party to recover such Taxes.

                  SECTION 2.16. Sharing of Payments, Etc. If any Lender Party
shall obtain any payment (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) (a) on account of obligations owing to
such Lender Party hereunder and under the Notes in excess of its ratable share
of payments on account of the Obligations owing to all Lender Parties hereunder
and under the Notes at such time obtained by all the Lender Parties at such
time, such Lender Party shall forthwith purchase from the other Lender Parties
such participations in the Obligations owing to them 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
Lender Party shall be rescinded and such Lender Party shall repay to the
purchasing Lender Party the purchase price to the extent of such recovery
together with an amount equal to such Lender Party's ratable share (according to
the proportion of (i) the amount of such Lender Party's required repayment to
(ii) 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. Each Borrower agrees that any Lender
Party so purchasing a participation from another Lender Party pursuant to this
Section 2.16 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender Party were the direct creditor of such
Borrower in the amount of such participation.

                  SECTION 2.17. Use of Proceeds. The proceeds of the Advances
shall be available (and Paxar agrees that it and any other Borrower shall use
such proceeds) solely for general corporate purposes of Paxar and its
Subsidiaries.

                  SECTION 2.18. Additional Borrowers. Upon the execution and
delivery by any Subsidiary of Paxar acceptable to the Required Lenders in their
reasonable judgment of a supplement to this Agreement, in substantially the form
of Exhibit E hereto (a "Credit Agreement Supplement"), (i) such Person shall be
referred to as a "Borrower" and shall be and become a Borrower, and each
reference in this Agreement to a "Borrower" shall also mean and be a reference
to such Borrower and each reference in any other Loan Document to a "Borrower"
or a "Loan Party" shall also mean and be a reference to such Borrower, and (ii)
such Person shall assume all of the Obligations of a Borrower hereunder. The
Administrative Agent shall promptly notify each Lender of each such additional
Borrower.
<PAGE>   43
                                       38

                                   ARTICLE III

                     CONDITIONS TO EFFECTIVENESS AND LENDING

                  SECTION 3.01. Conditions Precedent to Effectiveness of
Sections 2.01, 2.03 and 2.04. Sections 2.01, 2.03 and 2.04 of this Agreement
shall become effective on and as of the first date (the "Effective Date") on
which the following conditions precedent have been satisfied:

                  (a) There shall have occurred no Material Adverse Change since
         December 31, 1997.

                  (b) There shall exist no action, suit, investigation,
         litigation or proceeding affecting Paxar or any of its Subsidiaries
         pending or threatened before any court, governmental agency or
         arbitrator that (i) could be reasonably likely to have a Material
         Adverse Effect or (ii) purports to adversely affect the Facilities or
         the consummation of the transactions contemplated hereby.

                  (c) All governmental and third party consents and approvals
         necessary in connection with the Facilities and the other transactions
         contemplated hereby shall have been obtained (without the imposition of
         any conditions that are not acceptable to the Lender Parties) and shall
         remain in effect, and no law or regulation shall be applicable in the
         reasonable judgment of the Lender Parties that restrains, prevents or
         imposes materially adverse conditions upon the transactions
         contemplated hereby.

                  (d) Paxar shall have notified each Lender Party and the
         Administrative Agent in writing as to the proposed Effective Date.

                  (e) Paxar shall have paid all accrued fees and expenses of the
         Administrative Agent and the Lender Parties (including the accrued fees
         and expenses of counsel to the Administrative Agent).

                  (f) Paxar shall have received Net Cash Proceeds from the
         issuance of the Senior Notes of at least $149,000,000 and shall have
         applied such Net Cash Proceeds first, to prepay in full the "Term
         Advances" under the Existing Credit Agreement and second, to prepay the
         "Revolving Credit Advances" under the Existing Credit Agreement.

                  (g) On the Effective Date, the following statements shall be
         true and the Administrative Agent shall have received for the account
         of each Lender Party a certificate signed by a duly authorized officer
         of Paxar, dated the Effective Date, stating that:

                           (i) The representations and warranties contained in
                  Section 4.01 are correct on and as of the Effective Date, and

                           (ii) No event has occurred and is continuing that
                  constitutes a Default.
<PAGE>   44
                                       39

                  (h) The Administrative Agent shall have received on or before
         the Effective Date the following, each dated such day, in form and
         substance satisfactory to the Administrative Agent and in sufficient
         copies for each Lender Party:

                           (i) A certificate of the Secretary or an Assistant
                  Secretary of Paxar and each other Loan Party certifying the
                  names and true signatures of the officers of Paxar and such
                  other Loan Party authorized to sign this Agreement and the
                  Notes and the other documents to be delivered hereunder.

                           (ii) A copy of the charter of Paxar and each other
                  Loan Party and each amendment thereto, certified (as of a date
                  reasonably near the Effective Date) by the Secretary of State
                  of the jurisdiction of its incorporation as being a true and
                  correct copy thereof.

                           (iii) A consent executed by each of the Loan Parties
                  (other than Paxar) to the amendment and restatement of the
                  Existing Credit Agreement, in form and substance reasonably
                  satisfactory to the Administrative Agent.

                           (iv) Certificates, in form and substance satisfactory
                  to the Lender Parties, attesting to the Solvency of each Loan
                  Party after giving effect to the Transaction and the other
                  transactions contemplated hereby, from its chief financial
                  officer.

                           (v) A favorable opinion of Snow Becker Krauss P.C.,
                  counsel for Paxar, substantially in the form of Exhibit F-1
                  hereto and as to such other matters as any Lender Party
                  through the Administrative Agent may reasonably request.

                  (i) The Existing Credit Agreement shall have been terminated
         and all amounts due and owing under the Existing Credit Agreement shall
         have been paid in full in cash.

                  SECTION 3.02. Conditions Precedent to the Initial Borrowing of
Each Additional Borrower. The obligation of each Lender to make an initial
Advance to each Borrower (other than Paxar) following its designation as a
Borrower hereunder pursuant to Section 2.18 on the occasion of the initial
Borrowing thereby is subject to the Administrative Agent's receipt on or before
the date of such initial Borrowing of each of the following, in form and
substance satisfactory to the Administrative Agent and dated such date:

                  (a) The Credit Agreement Supplement relating to such Borrower,
         in substantially the form of Exhibit E hereto.

                  (b) A Revolving Credit Note of such Borrower to the order of
         each of the Lenders, respectively.

                  (c) A certificate of the Secretary or an Assistant Secretary
         (or person performing similar functions) of such Borrower certifying
         (A) appropriate resolutions of the board of directors (or persons
         performing similar functions) of such Borrower approving this Agreement
         and its
<PAGE>   45
                                       40

         Revolving Credit Notes, and all documents evidencing other necessary
         corporate (or equivalent) action and governmental approvals, if any,
         with respect to this Agreement and its Revolving Credit Notes (copies
         of which shall be attached thereto), (B) copies of the by-laws (or the
         equivalent thereof) of such Borrower (copies of which shall be attached
         thereto) and (C) the names and true signatures of the officers of such
         Borrower authorized to sign the Credit Agreement Supplement relating to
         such Borrower and its Revolving Credit Notes and the other documents to
         be delivered by such Borrower hereunder.

                  (d) A copy of the charter or articles (or other similar
         organizational document) of such Borrower, certified (as of a date
         reasonably near the date of such Borrowing) as being a true and
         complete copy thereof by the Secretary of State (or other appropriate
         governmental authority) of the jurisdiction of organization of such
         Borrower or, if such certificate is not provided in the jurisdiction of
         organization of such Borrower, certified (as of a date reasonably near
         the date of such Borrowing) as being a true and complete copy thereof
         by a duly authorized officer of such Borrower.

                  (e) A copy of a certificate of the Secretary of State (or
         other appropriate governmental authority) of the jurisdiction of
         organization of such Borrower, dated reasonably near the date of such
         Borrowing, certifying that such Borrower is duly organized and in good
         standing (or the equivalent thereof) under the laws of the jurisdiction
         of its organization.

                  (f) A certificate signed by a duly authorized officer of such
         Borrower, dated as of the date of such Borrowing, certifying that such
         Borrower has obtained all authorizations, consents, approvals
         (including, without limitation, exchange control approvals) and
         licenses of any governmental authority or other third party necessary
         for such Borrower to execute and deliver its Credit Agreement
         Supplement and its Revolving Credit Notes and to perform its
         obligations under this Agreement or any of its Revolving Credit Notes.

                  (g) Evidence of acceptance by Paxar of its appointment as the
         process agent of such Borrower in accordance with Section 9.13(a), in
         substantially the form of Exhibit G hereto.

                  (h) A favorable opinion of counsel for such Borrower
         reasonably acceptable to the Administrative Agent, dated the date of
         such Borrowing, in substantially the form of Exhibit F-2 hereto, and
         addressing such other matters as any Lender Party through the
         Administrative Agent may reasonably request.

                  (i) Such other documents, opinions and other information as
         any Lender Party, through the Administrative Agent, may reasonably
         request.

                  SECTION 3.03. Conditions Precedent to Each Borrowing (other
than a Competitive Bid Borrowing) and Issuance. The obligation of each Lender to
make an Advance (other than a Competitive Bid Advance, a Letter of Credit
Advance made by the Issuing Bank or a Lender pursuant to Section 2.04(c) and a
Swing Line Advance made by a Lender pursuant to Section 2.02(b)) on the occasion
of each Borrowing (other than a Competitive Bid Borrowing but including the
Initial Extension of Credit), and the obligation of the Issuing Bank to issue a
Letter of Credit (including the initial issuance) or renew a Letter
<PAGE>   46
                                       41

of Credit and the right of a Borrower to request a Swing Line Borrowing or the
issuance or renewal of a Letter of Credit, shall be subject to the conditions
precedent that the Effective Date shall have occurred and 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
relevant 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 Paxar and such Borrower that 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 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 event has occurred and is continuing, or would result
         from such Borrowing or issuance or renewal or from the application of
         the proceeds therefrom, that constitutes a Default;

and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as any Lender Party through the Administrative Agent may
reasonably request.

                  SECTION 3.04. Conditions Precedent to Each Competitive Bid
Borrowing. The obligation of each Lender that is to make a Competitive Bid
Advance on the occasion of a Competitive Bid Borrowing to make such Competitive
Bid Advance as part of such Competitive Bid Borrowing is subject to the
conditions precedent that (i) the Administrative Agent shall have received the
written confirmatory Notice of Competitive Bid Borrowing with respect thereto,
(ii) on or before the date of such Competitive Bid Borrowing, but prior to such
Competitive Bid Borrowing, the Administrative Agent shall have received a
Competitive Bid Note payable to the order of such Lender for each of the one or
more Competitive Bid Advances to be made by such Lender as part of such
Competitive Bid Borrowing, in a principal amount equal to the principal amount
of the Competitive Bid Advance to be evidenced thereby and otherwise on such
terms as were agreed to for such Competitive Bid Advance in accordance with
Section 2.03, and (iii) on the date of such Competitive Bid Borrowing the
following statements shall be true (and each of the giving of the applicable
Notice of Competitive Bid Borrowing and the acceptance by Paxar of the proceeds
of such Competitive Bid Borrowing shall constitute a representation and warranty
by such Borrower that on the date of such Competitive Bid Borrowing such
statements are true):

                  (a) the representations and warranties contained in each Loan
         Document are correct on and as of the date of such Competitive Bid
         Borrowing, before and after giving effect to such Competitive Bid
         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 such Competitive Bid Borrowing, in which case as of such
         specific date,

                  (b) no event has occurred and is continuing, or would result
         from such Competitive Bid Borrowing or from the application of the
         proceeds therefrom, that constitutes a Default, and
<PAGE>   47
                                       42

                  (c) no event has occurred and no circumstance exists as a
         result of which the information concerning Paxar that has been provided
         to the Administrative Agent and each Lender by Paxar in connection
         herewith would include an untrue statement of a material fact or omit
         to state any material fact or any fact necessary to make the statements
         contained therein, in the light of the circumstances under which they
         were made, not misleading.

                  SECTION 3.05. Determinations Under Section 3.01. For purposes
of determining compliance with the conditions specified in Section 3.01, 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 this Agreement shall have received notice from such Lender Party
prior to the date that the Borrower, by notice to the Lender Parties, designates
as the proposed Effective Date, specifying its objection thereto. The
Administrative Agent shall promptly notify the Lender Parties of the occurrence
of the Effective Date.


                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  SECTION 4.01. Representations and Warranties of the Borrowers.
Each Borrower represents and warrants as follows:

                  (a) Each Loan Party is a corporation duly organized, validly
         existing and in good standing under the laws of the jurisdiction of its
         incorporation.

                  (b) The execution, delivery and performance by each Loan Party
         of this Agreement, the Notes and each other Loan Document to which it
         is or is to be a party, and the consummation of the transactions
         contemplated hereby, 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 by-laws, (ii) violate any
         law (including, without limitation, the Securities Exchange Act of 1934
         and the Racketeer Influenced and Corrupt Organizations Chapter of the
         Organized Crime Control Act of 1970), 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) conflict with or result in the breach of,
         or constitute a default under, any 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.

                  (c) 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 and performance by any Loan Party of this Agreement, the Notes
         or any other Loan Document to which it is or is to be a party or for
         the consummation of the transactions contemplated hereby or (ii) the
         exercise by the Administrative Agent or any Lender Party of its
<PAGE>   48
                                       43

         rights under the Loan Documents, except for those authorizations,
         approvals, actions, notices and filings listed on Schedule 4.01(c)
         hereto, all of which have been duly obtained, taken, given or made and
         are in full force and effect.

                  (d) This Agreement, each of the Notes and each other Loan
         Document has been duly executed and delivered by each Loan Party
         thereto. This Agreement, each of the Notes and each other Loan Document
         is the legal, valid and binding obligation of each Loan Party party
         thereto, enforceable against such Loan Party in accordance with its
         respective terms.

                  (e) The Consolidated balance sheet of Paxar and its
         Subsidiaries as at December 31, 1997, and the related Consolidated
         statements of income and cash flows of Paxar and its Subsidiaries for
         the fiscal year then ended, accompanied by an opinion of Arthur
         Andersen LLP, independent public accountants, and the Consolidated
         balance sheet of Paxar and its Subsidiaries as at March 31, 1998, and
         the related Consolidated statements of income and cash flows of Paxar
         and its Subsidiaries for the three months then ended, duly certified by
         the chief financial officer or treasurer of Paxar, copies of which have
         been furnished to each Lender Party, fairly present, subject, in the
         case of said balance sheet as at March 31, 1998, and said statements of
         income and cash flows for the three months then ended, to year-end
         audit adjustments, the Consolidated financial condition of Paxar and
         its Subsidiaries as at such dates and the Consolidated results of the
         operations of Paxar and its Subsidiaries for the periods ended on such
         dates, all in accordance with generally accepted accounting principles
         consistently applied. Since December 31, 1997, there has been no
         Material Adverse Change.

                  (f) Except with respect to the matters disclosed on Schedule
         4.01(f), there is no pending or threatened action, suit, investigation,
         litigation or proceeding, including, without limitation, any
         Environmental Action, affecting the Borrower or any of its Subsidiaries
         before any court, governmental agency or arbitrator that (i) could be
         reasonably likely to have a Material Adverse Effect or (ii) purports to
         affect the legality, validity or enforceability of this Agreement or
         any Note or the consummation of the transactions contemplated hereby.

                  (g) No Borrower is engaged in the business of extending credit
         for the purpose of purchasing or carrying margin stock (within the
         meaning of Regulation U issued by the Board of Governors of the Federal
         Reserve System), and no proceeds of any Advance 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.

                  (h) Neither the Information Memorandum nor any other
         information, exhibit or report furnished by any Loan Party to the
         Administrative Agent or any Lender Party in connection with the
         negotiation of the Loan Documents or pursuant to the terms of the Loan
         Documents contained any untrue statement of a material fact or omitted
         to state a material fact necessary to make the statements made therein
         not misleading.

                  (i) Except with respect to the matters disclosed on Schedule
         4.01(i), the operations and properties of Paxar and each of its
         Subsidiaries comply in all material respects with all applicable
         Environmental Laws and Environmental Permits, all past non-compliance
         with such
<PAGE>   49
                                       44

         Environmental Laws and Environmental Permits has been resolved without
         ongoing obligations or costs, and no circumstances exist that would be
         reasonably likely to (i) form the basis of an Environmental Action
         against any Loan Party or any of its Subsidiaries or any of their
         properties that could have a Material Adverse Effect or (ii) cause any
         such property to be subject to any restrictions on ownership,
         occupancy, use or transferability under any Environmental Law.

                  (j) 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 the
         making of any Advances, nor the issuance of any Letters of Credit, nor
         the application of the proceeds or repayment thereof by the Borrower,
         nor the consummation of the other transactions contemplated hereby,
         will violate any provision of such Act or any rule, regulation or order
         of the Securities and Exchange Commission thereunder.

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

                  (l) Paxar has reviewed the Year 2000 Risk and is taking such
         action as may be necessary to ensure that the Year 2000 Risk will not
         adversely affect its business operations and/or financial condition.



                                    ARTICLE V

                               COVENANTS OF PAXAR

                  SECTION 5.01. Affirmative Covenants. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
Party shall have any Commitment hereunder, Paxar 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 Environmental Laws as
         provided in Section 5.01(l).

                  (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 Paxar 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.
<PAGE>   50
                                       45

                  (c) 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 Paxar
         or such Subsidiary operates.

                  (d) Preservation of Corporate Existence, Etc. Preserve and
         maintain, and cause each of its Subsidiaries to preserve and maintain,
         its corporate existence, rights (charter and statutory) and franchises;
         provided, however, that Paxar and its Subsidiaries may consummate any
         merger or consolidation permitted under Section 5.02(b), and provided
         further that neither Paxar nor any of its Subsidiaries shall be
         required to preserve any right or franchise if the Board of Directors
         of Paxar or such Subsidiary shall determine that the preservation
         thereof is no longer desirable in the conduct of the business of Paxar
         or such Subsidiary, as the case may be, and that the loss thereof is
         not disadvantageous in any material respect to Paxar, such Subsidiary
         or the Lender Parties.

                  (e) Visitation Rights. At any reasonable time and from time to
         time, permit (i) the Administrative Agent 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,
         Paxar and any of its Subsidiaries, and (ii) the Administrative Agent or
         any of the Lender Parties or any agents or representatives thereof to
         discuss, in connection with the Loan Documents, the affairs, finances
         and accounts of Paxar and any of its Subsidiaries with any of their
         officers and with their independent certified public accountants.

                  (f) 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 Paxar and each such Subsidiary in accordance with generally
         accepted accounting principles in effect from time to time.

                  (g) 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.

                  (h) Compliance with Terms of Leaseholds. Make all payments and
         otherwise perform all obligations in respect of all leases of real
         property to which Paxar or any of its Subsidiaries is a party, 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
         canceled, 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.

                  (i) Performance of Related Documents. Perform and observe all
         of the terms and provisions of each Related Document to be performed or
         observed by it, maintain each such Related Document in full force and
         effect, enforce such Related Document in accordance with its terms,
         take all such action to such end as may be from time to time requested
         by the
<PAGE>   51
                                       46

         Administrative Agent and, upon request of the Administrative Agent,
         make to each other party to each such Related Document such demands and
         requests for information and reports or for action as Paxar is entitled
         to make under such Related Document.

                  (j) Transactions with Affiliates. Conduct, and cause each of
         its Subsidiaries to conduct, all transactions otherwise permitted under
         this Agreement with any of their Affiliates on terms that are fair and
         reasonable and no less favorable to Paxar or such Subsidiary than it
         would obtain in a comparable arm's-length transaction with a Person not
         an Affiliate.

                  (k) Compliance with Environmental Laws. Comply, and cause each
         of its Subsidiaries and 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
         Environmental Permits necessary for its operations and properties; and
         conduct, and cause each of its Subsidiaries to conduct, any
         investigation, study, sampling and testing, and undertake any cleanup,
         removal, remedial or other action necessary to remove and clean up all
         Hazardous Materials from any of its properties, in accordance with the
         requirements of all Environmental Laws; provided, however, that neither
         Paxar nor any of its Subsidiaries shall be required to undertake any
         such cleanup, removal, remedial or other 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.

                  (l) Preparation of Environmental Reports. If an Event of
         Default shall have occurred and be continuing, at the request of the
         Required Lenders, provide to the Lender Parties within 60 days after
         such request, at the expense of Paxar, an environmental site assessment
         report for the properties described in such request, prepared by an
         environmental consulting firm acceptable to the Required Lenders,
         indicating the presence or absence of Hazardous Materials and the
         estimated cost of any compliance, removal or remedial action in
         connection with any Hazardous Materials on such properties; without
         limiting the generality of the foregoing, if the Required Lenders
         determine at any time that a material risk exists that any such report
         will not be provided within the time referred to above, the Required
         Lenders may retain an environmental consulting firm to prepare such
         report at the expense of Paxar, and Paxar 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 Administrative Agent, 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.

                  (m) Reporting Requirements. Furnish to the Lender Parties:

                           (i) as soon as available and in any event within 50
                  days after the end of each of the first three quarters of each
                  fiscal year of Paxar, Consolidated and consolidating balance
                  sheets of Paxar and its Subsidiaries as of the end of such
                  quarter and Consolidated and consolidating statements of
                  income and cash flows of Paxar and its Subsidiaries for the
                  period commencing at the end of the previous fiscal year and
                  ending with the end of such quarter, duly certified (subject
                  to year-end audit adjustments) by the chief financial
<PAGE>   52
                                       47

                  officer or treasurer of Paxar as having been prepared in
                  accordance with generally accepted accounting principles and
                  certificates of the chief financial officer of Paxar as to
                  compliance with the terms of this Agreement and setting forth
                  in reasonable detail the calculations necessary to demonstrate
                  compliance with Section 5.03, provided that in the event of
                  any change in GAAP used in the preparation of such financial
                  statements, Paxar shall also provide, if necessary for the
                  determination of compliance with Section 5.03, a statement of
                  reconciliation conforming such financial statements to GAAP;

                           (ii) as soon as available and in any event within 105
                  days after the end of each fiscal year of Paxar, a copy of the
                  annual audit report for such year for Paxar and its
                  Subsidiaries, containing Consolidated and consolidating
                  balance sheets of Paxar and its Subsidiaries as of the end of
                  such fiscal year and Consolidated and consolidating statements
                  of income and cash flows of Paxar and its Subsidiaries for
                  such fiscal year, together with a certificate of the chief
                  financial officer of Paxar as to compliance with the terms of
                  this Agreement and setting forth in reasonable detail the
                  calculations necessary to demonstrate compliance with Section
                  5.03 and in each case accompanied by an opinion acceptable to
                  the Required Lenders by Arthur Andersen LLP or other
                  independent public accountants acceptable to the Required
                  Lenders, provided that in the event of any change in GAAP used
                  in the preparation of such financial statements, Paxar shall
                  also provide, if necessary for the determination of compliance
                  with Section 5.03, a statement of reconciliation conforming
                  such financial statements to GAAP;

                           (iii) as soon as available and in any event no later
                  than 105 days after the end of each fiscal year of Paxar,
                  forecasts prepared by management of Paxar, in form
                  satisfactory to the Administrative Agent, of balance sheets,
                  income statements and cash flow statements on an annual basis
                  for each of the three immediately succeeding fiscal years;

                           (iv) as soon as possible and in any event within five
                  days after the occurrence of each Default continuing on the
                  date of such statement, a statement of the chief financial
                  officer or treasurer of Paxar setting forth details of such
                  Default and the action that Paxar has taken and proposes to
                  take with respect thereto;

                           (v) promptly after the sending or filing thereof,
                  copies of all reports that Paxar sends to any of its security
                  holders, and copies of all reports and registration statements
                  that Paxar or any Subsidiary files with the Securities and
                  Exchange Commission or any national securities exchange;

                           (vi) promptly after the commencement thereof, notice
                  of all actions and proceedings before any court, governmental
                  agency or arbitrator affecting Paxar or any of its
                  Subsidiaries of the type described in Section 4.01(f);

                           (vii) promptly after the assertion or occurrence
                  thereof, notice of any Environmental Action against or of any
                  noncompliance by Paxar or any of its Subsidiaries
<PAGE>   53
                                       48

                  with any Environmental Law or Environmental Permit that could
                  reasonably be expected to have a Material Adverse Effect; and

                           (viii) such other information respecting Paxar or any
                  of its Subsidiaries as any Lender Party through the
                  Administrative Agent may from time to time reasonably request.

                  SECTION 5.02. Negative Covenants. So long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender Party
shall have any Commitment hereunder, Paxar will not:

                  (a) Liens, Etc. Create or suffer to exist, or permit any of
         its Subsidiaries to create or suffer to exist, any Lien on or with
         respect to any of its properties, whether now owned or hereafter
         acquired, or assign, or permit any of its Subsidiaries to assign, any
         right to receive income, other than:

                           (i)      Permitted Liens,

                           (ii) purchase money Liens upon or in any real
                  property or equipment acquired or held by Paxar 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 such property or equipment, or Liens existing on such
                  property or equipment at the time of its acquisition (other
                  than any such Liens created in contemplation of such
                  acquisition that were not incurred to finance the acquisition
                  of such property) 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 properties of any character other than the real property
                  or equipment being acquired, and no such extension, renewal or
                  replacement shall extend to or cover any properties not
                  theretofore subject to the Lien being extended, renewed or
                  replaced, provided further that the sum of the aggregate
                  principal amount of the indebtedness secured by the Liens
                  referred to in this clause (ii) plus the aggregate principal
                  amount of the indebtedness secured by the Liens referred to in
                  clause (iv) below shall not exceed the amount specified
                  therefor in Section 5.02(d)(iii)(C) at any time outstanding,

                           (iii) the Liens existing on the Effective Date and
                  described on Schedule 5.02(a) hereto,

                           (iv) Liens arising in connection with Capitalized
                  Leases permitted under Section 5.02(d)(iii)(C); provided that
                  no such Lien shall extend to or cover any assets other than
                  the assets subject to such Capitalized Leases,

                           (v) 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, and
<PAGE>   54
                                       49

                           (vi) other Liens securing Debt in an aggregate
                  principal amount not to exceed the amount specified therefor
                  in Section 5.02(d)(iii)(H) at any time outstanding.

                  (b) Mergers, Etc. Merge or consolidate with or into any
         Person, or permit any of its Subsidiaries to do so, except that (i) any
         domestic Subsidiary of Paxar may merge or consolidate with or into any
         other domestic Subsidiary of Paxar, (ii) any foreign Subsidiary of
         Paxar may merge or consolidate with or into any other foreign
         Subsidiary of Paxar, (iii) any Subsidiary of Paxar may merge into Paxar
         and (iv) the Borrower may merge into or consolidate with any other
         Person or permit any other Person to merge into or consolidate with it;
         provided, however, in each case, that no Default shall have occurred
         and be continuing at the time of such proposed transaction or would
         result therefrom and, in the case of any merger or consolidation to
         which the Borrower is a party, the Borrower shall be the surviving
         corporation.

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

                  (d) Debt. Create, incur, assume or suffer to exist, or permit
         any of its Subsidiaries to create, incur, assume or suffer to exist,
         any Debt other than:

                           (i) in the case of Paxar, Debt in respect of Hedge
                  Agreements designed to hedge against fluctuations in interest
                  rates incurred in the ordinary course of business and
                  consistent with prudent business practice;

                           (ii) (A) in the case of any of its domestic
                  Subsidiaries, Debt owed to Paxar or to a wholly-owned
                  Subsidiary of Paxar and (B) in the case of any of its foreign
                  Subsidiaries, Debt owed to Paxar or to a wholly-owned domestic
                  Subsidiary of Paxar, provided that (1) after giving effect to
                  the incurrence of any such Debt referred to in this clause
                  (B), the Foreign Loan Amount shall not exceed $100,000,000 and
                  (2) any such Debt referred to in this clause (B) shall be
                  evidenced by a promissory note and such promissory note shall
                  be pledged in favor of the Administrative Agent and the Lender
                  Parties pursuant to the terms of a pledge agreement or a
                  security agreement in form and substance reasonably
                  satisfactory to the Administrative Agent; and

                           (iii) in the case of Paxar and any of its
                  Subsidiaries,

                                    (A)     Debt under the Loan Documents,

                                    (B) Debt existing on the Effective Date or
                           Debt created or incurred under a loan or credit
                           facility existing on the Effective Date and, in each
                           case, described on Schedule 5.02(d) hereto (the
                           "Existing Debt"), and any Debt extending the maturity
                           of, or refunding or refinancing, in whole or in part,
                           the Existing Debt, provided that (1) the principal
                           amount of such Existing Debt shall not be increased
                           above the principal amount thereof outstanding
                           immediately prior to such extension, refunding or
                           refinancing, and the direct and contingent obligors
<PAGE>   55
                                       50

                           therefor shall not be changed, as a result of or in
                           connection with such extension, refunding or
                           refinancing and (2) any Existing Debt constituting
                           Debt owed by a foreign Subsidiary to Paxar or to a
                           wholly owned domestic Subsidiary of Paxar shall be
                           evidenced by a promissory note and such promissory
                           note shall be pledged in favor of the Administrative
                           Agent and the Lender Parties pursuant to the terms of
                           the Pledge Agreement or a pledge agreement or a
                           security agreement in form and substance reasonably
                           satisfactory to the Administrative Agent,

                                    (C) Capitalized Leases and Debt secured by
                           Liens permitted by Section 5.02(a)(ii), provided that
                           (i) on any date the sum of Capitalized Leases then
                           outstanding plus the aggregate amount of Debt then
                           outstanding and secured by Liens permitted by Section
                           5.02(a)(ii) plus the aggregate amount of Debt then
                           outstanding and secured by Liens permitted by Section
                           5.02(a)(vi) shall not exceed $50,000,000 and (ii)
                           after giving effect to the creation, incurrence or
                           assumption of such Capitalized Lease or such Debt,
                           the Debt to EBITDA Ratio of Paxar and its
                           Subsidiaries (calculated on a pro forma basis) as of
                           the end of the most recently ended fiscal quarter of
                           Paxar would be less than 3.25:1,

                                    (D) in the case of Existing Debt of Paxar
                           and its Subsidiaries, Debt of Paxar and its domestic
                           Subsidiaries of the type described in clause (i) of
                           the definition of "Debt" guaranteeing the Obligations
                           of Paxar or such Subsidiary, as the case may be,
                           under such Existing Debt,

                                    (E) Debt of Paxar or any of its wholly owned
                           domestic Subsidiaries that is subordinate to the
                           Obligations of the Loan Parties under the Loan
                           Documents in an aggregate principal amount acceptable
                           to the Required Lenders and on terms and conditions
                           satisfactory to the Required Lenders,

                                    (F) endorsement of negotiable instruments
                           for deposit or collection or similar transactions in
                           the ordinary course of business;

                                    (G) Debt of Paxar or any of its wholly owned
                           Subsidiaries so long as (i) both before and after
                           giving effect to the creation, incurrence or
                           assumption of such Debt, no Default shall occur and
                           be continuing and (ii) after giving effect to the
                           creation, incurrence or assumption of such Debt, the
                           Debt to EBITDA Ratio of Paxar and its Subsidiaries
                           (calculated on a pro forma basis) as of the end of
                           the most recently ended fiscal quarter of Paxar would
                           be less than 3.25:1,

                                    (H) secured Debt of Paxar or any of its
                           wholly owned Subsidiaries, provided that (i) on any
                           date the sum of Capitalized Leases then outstanding
                           plus the aggregate amount of Debt then outstanding
                           and secured by Liens permitted by Section 5.02(a)(ii)
                           plus the aggregate amount of Debt then outstanding
                           and secured by Liens permitted by Section 5.02(a)(vi)
                           shall not exceed $50,000,000 and (ii) after giving
                           effect to the creation, incurrence or assumption of
                           such Debt, the Debt to EBITDA Ratio of Paxar and its
                           Subsidiaries (calculated on an pro
<PAGE>   56
                                       51

                           forma basis) as of the end of the most recently ended
                           fiscal quarter of Paxar would be less than 3.25:1,
                           and

                                    (I) in the case of Paxar, the Senior Notes
                           in an aggregate principal amount not to exceed
                           $150,000,000 at any time outstanding.

                  (e) 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, except (i) sales of
         inventory in the ordinary course of its business, (ii) in a transaction
         authorized by subsection (b) of this Section and (iii) sales of assets
         for cash and for fair value in an aggregate amount not to exceed an
         amount equal to 10% of the Consolidated total assets of Paxar and its
         Subsidiaries.

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

                           (i) (A) Investments by Paxar and its domestic
                  Subsidiaries in their Subsidiaries outstanding on the date
                  hereof and additional Investments in wholly owned domestic
                  Subsidiaries of Paxar that, prior to the making of such
                  Investments, were wholly owned Subsidiaries of Paxar, (B)
                  Investments by Paxar and its Subsidiaries in wholly owned
                  Subsidiaries of Paxar that, prior to the making of such
                  Investments were not wholly owned Subsidiaries of Paxar,
                  provided that (i) both before and after giving effect to such
                  Investment, no Default shall have occurred and be continuing
                  and (ii) with respect to Investments in any newly acquired or
                  created wholly owned Subsidiary of Paxar, (1) the aggregate
                  amount (including the fair market value of any non-cash
                  portion of any such Investment) invested in each such
                  Subsidiary shall not exceed $75,000,000, (2) if the aggregate
                  amount (including the fair market value of any non-cash
                  portion of any such Investment) invested in any such
                  Subsidiary is greater than $25,000,000, Paxar must deliver,
                  prior to such Investment, a certificate of the chief financial
                  officer of Paxar, describing such Investment and demonstrating
                  compliance with the covenants (on a pro forma basis giving
                  effect to such Investment) set forth in Section 5.03 and (3)
                  such Subsidiary (if it is a domestic Subsidiary of Paxar)
                  shall become a Subsidiary Guarantor pursuant to the terms of
                  the Subsidiary Guaranty, (C) Investments by the foreign
                  Subsidiaries of Paxar in their Subsidiaries outstanding on the
                  date hereof and (D) the Investment described on Schedule
                  5.02(g) hereto;

                           (ii) loans and advances to employees in the ordinary
                  course of the business of Paxar and its Subsidiaries as
                  presently conducted in an aggregate principal amount not to
                  exceed $5,000,000 at any time outstanding;

                           (iii) Investments in Cash Equivalents;

                           (iv) Investments in overnight Eurodollar deposits
                  with any commercial bank that is a Lender Party or a member of
                  the Federal Reserve System, issues (or the parent of which
                  issues) commercial paper rated as described in clause (c) of
                  the definition of
<PAGE>   57
                                       52

                  "Cash Equivalents", is organized under the laws of the United
                  States or any State thereof and has combined capital and
                  surplus of at least $1 billion;

                           (v) Investments consisting of intercompany Debt
                  permitted under Section 5.02(d)(ii); and

                           (vi) other Investments in an aggregate amount
                  invested not to exceed $25,000,000 in Persons other than
                  wholly owned Subsidiaries; provided that with respect to any
                  such Investment in any newly acquired or created domestic
                  Subsidiary of Paxar, such Subsidiary shall become a Subsidiary
                  Guarantor pursuant to the terms of the Subsidiary Guaranty.

                  (g) Change in Nature of Business. Engage, or permit any of its
         Subsidiaries to engage, to any substantial extent in any business other
         than the businesses in which Paxar and its Subsidiaries are engaged on
         the Effective Date and businesses reasonably related thereto or in
         furtherance thereof.

                  (h) Charter Amendments. Amend, or permit any of its
         Subsidiaries to amend, its certificate of incorporation or bylaws,
         other than any amendment which would not adversely affect the rights or
         interests of the Lender Parties hereunder and under the other Loan
         Documents.

                  (i) Prepayments, Etc. of Debt. (x) 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 unless both before and after giving effect to any such
         prepayment, redemption, purchase, defeasance or satisfaction, no
         Default shall have occurred and be continuing, or (y) amend, modify or
         change in any manner any term or condition of any Existing Debt or the
         Senior Notes, or permit any of its Subsidiaries to do any of the
         foregoing other than to prepay any Debt payable to Paxar.

                  (j) 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 manner any term or
         condition of any Related Document (other than any amendment,
         modification or change which would not adversely affect the rights or
         interests of the Lender Parties hereunder and under the other Loan
         Documents) or give any consent, waiver or approval thereunder (other
         than any consent, waiver or approval which would not adversely affect
         the rights or interests of the Lender Parties hereunder and under the
         other Loan Documents), waive any default under or any breach of any
         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 Paxar thereunder or that would impair the rights or interests of the
         Administrative Agent or any Lender Party, or permit any of its
         Subsidiaries to do any of the foregoing.
<PAGE>   58
                                       53

                  (k) 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 any Subsidiary of Paxar the sole
         assets of which consist of its interest in such partnership or joint
         venture.

                  SECTION 5.03. Financial Covenants. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
Party shall have any Commitment hereunder, Paxar will:

                  (a) Net Worth. Maintain at all times an excess of Consolidated
         total assets over Consolidated total liabilities, in each case of Paxar
         and its Subsidiaries, of not less than $190,000,000 plus 50% of
         Consolidated net income (without taking into account any net loss that
         occurs for any period after the date hereof) of Paxar and its
         Subsidiaries for the period after October 1, 1997 to and including each
         date of determination computed on a cumulative basis for said entire
         period plus 100% of the Net Cash Proceeds received by Paxar from the
         sale or issuance by Paxar of its capital stock on and after October 1,
         1997.

                  (b) Debt to EBITDA Ratio. Maintain at the end of each fiscal
         quarter of Paxar, a Debt to EBITDA Ratio of Paxar and its Subsidiaries
         of less than 3.25:1.

                  (c) Fixed Charge Coverage Ratio. Maintain at the end of each
         fiscal quarter of Paxar a ratio of Consolidated EBITDA of Paxar and its
         Subsidiaries for the most recently completed four fiscal quarters of
         Paxar and its Subsidiaries less the aggregate amount of Capital
         Expenditures made by Paxar and its Subsidiaries during such four fiscal
         quarter period to the sum of (i) interest and fees payable on all Debt
         during such four fiscal quarter period plus (ii) principal amounts of
         all Debt scheduled to be payable during such four fiscal quarter period
         plus (iii) the aggregate amount of all taxes payable in cash during
         such four fiscal quarter period, in each case by Paxar and its
         Subsidiaries, of not less 1.50:1.


                                   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) The Borrower shall fail to pay any principal of any
         Advance when the same becomes due and payable; or the Borrower shall
         fail to pay any interest on any Advance or make any other payment of
         fees or other amounts payable under this Agreement or any Note within
         two days after the same becomes due and payable; or

                  (b) Any representation or warranty made or deemed made by any
         Loan Party (or any of its officers) in connection with any Loan
         Document shall prove to have been incorrect in any material respect
         when made or deemed made; or
<PAGE>   59
                                       54

                  (c) (i) Paxar shall fail to perform or observe any term,
         covenant or agreement contained in Section 5.01(d), (e), (j) or (k),
         5.02 or 5.03, or (ii) 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 10 days after the earlier of the date on which (A) an
         officer of Paxar becomes aware of such failure or (B) written notice
         thereof shall have been given to Paxar by the Administrative Agent or
         any Lender Party; or

                  (d) Paxar or any of its Subsidiaries shall fail to pay any
         principal of or premium or interest on any Debt that is outstanding in
         a principal or notional amount of at least $500,000 in the aggregate
         (but excluding Debt outstanding hereunder) of Paxar or such Subsidiary
         (as the case may be), when 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 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; or

                  (e) Paxar or any of its Subsidiaries 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 Paxar 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,
         custodian 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), either such proceeding shall
         remain undismissed or unstayed for a period of 30 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 for any
         substantial part of its property) shall occur; or Paxar or any of its
         Subsidiaries shall take any corporate action to authorize any of the
         actions set forth above in this subsection (e); or

                  (f) Any judgment or order for the payment of money in excess
         of $500,000 shall be rendered against Paxar 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 10 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


<PAGE>   60

                                       55

                  (g) Any non-monetary judgment or order shall be rendered
         against Paxar or any of its Subsidiaries that could be reasonably
         expected to have a Material Adverse Effect, and there shall be any
         period of 10 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

                  (h) (i) Any Person or two or more Persons acting in concert
         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, of Voting Stock of Paxar
         (or other securities convertible into such Voting Stock) representing
         30% or more of the combined voting power of all Voting Stock of Paxar;
         or (ii) 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 Paxar shall cease for any reason
         to constitute a majority of the board of directors of Paxar; or (iii)
         any Person or two or more Persons acting in concert shall have acquired
         by contract or otherwise, or shall have entered into a contract or
         arrangement that, upon consummation, will result in its or their
         acquisition of the power to exercise, directly or indirectly, a
         controlling influence over the management or policies of Paxar; or

                  (i) Paxar or any of its ERISA Affiliates shall incur or, in
         the reasonable opinion of the Required Lenders, shall be reasonably
         likely to incur liability in excess of $500,000 in the aggregate as a
         result of one or more of the following: (i) the occurrence of any ERISA
         Event; (ii) the partial or complete withdrawal of Paxar or any of its
         ERISA Affiliates from a Multiemployer Plan; or (iii) the reorganization
         or termination of a Multiemployer Plan;

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 each of the
Borrowers, declare the obligation of each Lender to make Advances to be
terminated, whereupon the same shall forthwith terminate, and (ii) shall at the
request, or may with the consent, of the Required Lenders, by notice to each of
the Borrowers, declare the Notes, all interest thereon and all other amounts
payable under this Agreement 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 each of the Borrowers; provided,
however, that in the event of an actual or deemed entry of an order for relief
with respect to any Borrower under the Federal Bankruptcy Code, (A) the
obligation of each Lender to make Advances shall automatically be terminated and
(B) 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 each of the Borrowers.
<PAGE>   61
                                       56

                                   ARTICLE VII

                            THE ADMINISTRATIVE AGENT

                  SECTION 7.01. Authorization and Action. Each Lender Party
hereby appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers and discretion under this
Agreement as are delegated to the Administrative Agent by the terms hereof,
together with such powers and discretion as are reasonably incidental thereto.
As to any matters not expressly provided for by this Agreement (including,
without limitation, enforcement or collection of the Notes), the Administrative
Agent shall not 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 the Administrative Agent shall not be
required to take any action that exposes the Administrative Agent to personal
liability or that is contrary to this Agreement or applicable law. The
Administrative Agent agrees to give to each Lender Party prompt notice of each
notice given to it by Paxar pursuant to the terms of this Agreement and, upon
request by any Lender Party, a copy of any such notice.

                  SECTION 7.02. Administrative Agent's Reliance, Etc. Neither
the Administrative Agent nor any of its 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 this Agreement, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent: (i) may treat the payee of any Note as the
holder thereof until the Administrative Agent receives and accepts an Assignment
and Acceptance entered into by the Lender Party that is the payee of such Note,
as assignor, and an Eligible Assignee, as assignee, as provided in Section 9.07;
(ii) may consult with legal counsel (including counsel for Paxar), 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; (iii) 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 this Agreement; (iv) 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 this Agreement on the part of Paxar or to
inspect the property (including the books and records) of Paxar; (v) shall not
be responsible to any Lender Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; and (vi) shall incur no
liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier,
telegram or telex) believed by it to be genuine and signed or sent by the proper
party or parties.

                  SECTION 7.03. Fleet and Affiliates. With respect to its
Commitment, the Advances made by it and the Note issued to it, Fleet shall have
the same rights and powers under this Agreement as any other Lender Party and
may exercise the same as though it were not the Administrative Agent; and the
term "Lender", "Lenders", "Lender Party" or "Lender Parties" shall, unless
otherwise expressly indicated, include Fleet in its individual capacity. Fleet
and its 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, Paxar, any of its Subsidiaries and any Person who
may do business
<PAGE>   62
                                       57

with or own securities of Paxar or any such Subsidiary, all as if Fleet were not
the Administrative Agent and without any duty to account therefor to the Lender
Parties.

                  SECTION 7.04. Lender Credit Decision. Each Lender Party
acknowledges that it has, independently and without reliance upon the
Administrative 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 the Administrative Agent 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.

                  SECTION 7.05. Indemnification. The Lender Parties (other than
the Designated Bidders) agree to indemnify the Administrative Agent (to the
extent not reimbursed by Paxar), ratably according to the respective principal
amounts of the Notes then held by each of them (or if no Notes are at the time
outstanding or if any Notes are held by Persons that are not Lender Parties,
ratably according to the respective amounts of their Commitments), from and
against 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
Administrative Agent in any way relating to or arising out of this Agreement or
any action taken or omitted by the Administrative Agent under this Agreement
(collectively, the "Indemnified Costs"), provided that no Lender Party shall be
liable for any portion of the Indemnified Costs resulting from the
Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender Party (other than the Designated
Bidders) agrees to reimburse the Administrative Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including counsel fees)
incurred by the Administrative Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, to the
extent that the Administrative Agent is not reimbursed for such expenses by the
Borrower, provided that no Lender Party shall be required to reimburse any
portion of such out-of-pocket expenses resulting from the Administrative Agent's
gross negligence or willful misconduct. In the case of any investigation,
litigation or proceeding giving rise to any Indemnified Costs, this Section 7.05
applies whether any such investigation, litigation or proceeding is brought by
the Administrative Agent, any Lender Party or a third party.

                  SECTION 7.06. Successor Administrative Agent. The
Administrative Agent may resign at any time by giving written notice thereof to
the Lender Parties and Paxar 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 Administrative
Agent. If no successor Administrative Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Administrative Agent's giving of notice of resignation or the
Required Lenders' removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lender Parties, appoint a
successor Administrative Agent, which shall be a commercial bank organized under
the laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $50,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, discretion, privileges and duties of
<PAGE>   63
                                       58

the retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations under this Agreement. After any
retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, 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
Administrative Agent under this Agreement.


                                  ARTICLE VIII

                                    GUARANTY

                  SECTION 8.01. Guaranty. Paxar absolutely, unconditionally and
irrevocably guarantees (the undertaking by Paxar under this Article VIII being
the "Guaranty") the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations of each other Loan Party now or
hereafter existing under the Loan Documents, whether for principal, interest,
fees, commissions, expenses or otherwise (such Obligations being the "Guaranteed
Obligations"), and agrees to pay any and all expenses (including, without
limitation, reasonable fees and expenses of counsel) incurred by the
Administrative Agent or any Lender Party in enforcing any rights under this
Guaranty. Without limiting the generality of the foregoing, Paxar's liability
shall extend to all amounts that constitute part of the Guaranteed Obligations
and would be owed by any other Loan Party to the Administrative Agent or any
Lender Party under 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.

                  SECTION 8.02. Guaranty Absolute. Paxar 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 the
Administrative Agent or any other Lender Party with respect thereto. The
Obligations of Paxar under this Guaranty are independent of the Guaranteed
Obligations or any other Obligations of any Loan Party under the Loan Documents,
and a separate action or actions may be brought and prosecuted against Paxar to
enforce this Guaranty, irrespective of whether any action is brought against any
other Loan Party or whether any other Loan Party is joined in any such action or
actions. The liability of Paxar under this Guaranty shall be absolute,
unconditional and irrevocable irrespective of, and Paxar hereby irrevocably
waives any defenses it may now or hereafter have in any way relating to, any and
all of the following:

                  (a) any lack of validity or enforceability of any Loan
         Document or any other agreement or instrument relating thereto;

                  (b) any change in the time, manner or place of payment of, or
         in any other term of, all or any of the Guaranteed Obligations or any
         other Obligations of any Loan Party under 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 taking, release or amendment or waiver of or consent
         to departure from any other guarantee for all or any of the Guaranteed
         Obligations;
<PAGE>   64
                                       59

                  (d) any change, restructuring or termination of the corporate
         structure or existence of any other Loan Party or any of its
         Subsidiaries;

                  (e) any failure of the Administrative Agent or any Lender
         Party to disclose to any Loan Party any information relating to the
         financial condition, operations, properties or prospects of any other
         Loan Party now or hereafter known to the Administrative Agent or such
         Lender Party, as the case may be; or

                  (f) any other circumstance (including, without limitation, any
         statute of limitations or any existence of or reliance on any
         representation by the Administrative Agent or any Lender Party) that
         might otherwise constitute a defense available to, or a discharge of,
         Paxar, any other 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 the Administrative Agent or any Lender Party or
by any other Person upon the insolvency, bankruptcy or reorganization of any
other Loan Party or otherwise, all as though such payment had not been made.

                  SECTION 8.03. Waivers and Acknowledgments. (a) Paxar hereby
unconditionally and irrevocably waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty, and any requirement that the Administrative Agent
or any Lender Party exhaust any right or take any action against any other Loan
Party or any other Person or any Collateral.

                  (b) Paxar hereby unconditionally and irrevocably waives any
duty on the part of the Administrative Agent or any Lender Party to disclose to
Paxar any matter, fact or thing relating to the business, operation or condition
of any other Loan Party or any of its Subsidiaries or its property and assets
now or hereafter known by the Administrative Agent or such Lender Party.

                  (c) Paxar hereby unconditionally 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.

                  (d) Paxar 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 this Section 8.03 are knowingly made
in contemplation of such benefits.

                  SECTION 8.04. Subrogation. Paxar hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now have or may
hereafter acquire against any other Loan Party or any other insider guarantor
that arise from the existence, payment, performance or enforcement of its
Obligations under this Guaranty or under 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 the Administrative Agent or any Lender against such other Loan Party
or any other insider guarantor, 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 such other
<PAGE>   65
                                       60

Loan Party or any other insider guarantor, directly or indirectly, in cash or
other property or by setoff or in any other manner, payment or security on
account of such claim, remedy or right, until such time as all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall have been
paid in full in cash, all of the Letters of Credit shall have expired,
terminated or been canceled and the Commitments shall have expired or
terminated. If any amount shall be paid to Paxar in violation of the immediately
preceding sentence at any time prior to the latest of (a) the payment in full in
cash of all of the Guaranteed Obligations and all other amounts payable under
this Guaranty, (b) the full drawing, termination, expiration or cancellation of
all Letters of Credit and (c) the Termination Date, such amount shall be held in
trust for the benefit of the Administrative Agent and the Lender Parties and
shall forthwith be paid to the Administrative Agent 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) Paxar shall pay
to the Administrative Agent 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) all of the Letters of
Credit shall have expired, terminated or been canceled, and (iv) the Termination
Date shall have occurred, the Administrative Agent and the Lender Parties will,
at Paxar's request and expense, execute and deliver to Paxar appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer of subrogation to Paxar of an interest in the Guaranteed
Obligations resulting from the payment made by Paxar.

                  SECTION 8.05. Continuing Guarantee; Assignments. This Guaranty
is a continuing guaranty and shall (a) remain in full force and effect until
(subject to reinstatement pursuant to Section 8.02) the latest of (i) the
payment in full in cash of all of the Guaranteed Obligations and all other
amounts payable under this Guaranty, (ii) the full drawing, termination,
expiration or cancellation of all Letters of Credit, and (iii) the Termination
Date, (b) be binding upon Paxar and its respective successors and assigns and
(c) inure to the benefit of, and be enforceable by, the Administrative Agent and
the Lender Parties and their respective successors, transferees and assigns.
Without limiting the generality of clause (c) of the immediately preceding
sentence, any Lender Party may assign or otherwise transfer all or any portion
of its rights and obligations under this Agreement (including, without
limitation, all or any portion of its Commitment or Commitments, the Advances
owing to it and the 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 Lender Party under this Article VIII or otherwise, in each case as
provided in Section 9.07.


                                   ARTICLE IX

                                  MISCELLANEOUS

                  SECTION 9.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes, nor consent to any departure by Paxar
therefrom, shall in any event be effective unless the same shall be in writing
and signed 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 no amendment, waiver or consent shall, unless in
writing and signed by all the Lenders (other than the Designated Bidders), do
any of the following: (a) waive any of the conditions specified
<PAGE>   66
                                       61

in Section 3.01, (b) increase the Commitments of the Lenders or subject the
Lenders to any additional obligations, (c) reduce the principal of, or interest
on, the Notes (other than Competitive Bid Notes) or any fees or other amounts
payable hereunder, (d) postpone any date fixed for any payment of principal of,
or interest on, the Notes (other than Competitive Bid Notes) or any fees or
other amounts payable hereunder, (e) change the percentage of the Commitments or
of the aggregate unpaid principal amount of the Notes (other than Competitive
Bid Notes), or the number of Lenders, that shall be required for the Lenders or
any of them to take any action hereunder, (f) reduce or limit the obligations of
Paxar under Section 8.01 or otherwise limit the Obligations of any Loan Party
owing to any Lender Party or the Administrative Agent under the Loan Documents,
(g) reduce or limit the obligations of Paxar under Article VIII or reduce or
limit the obligations of any Subsidiary Guarantor under the Subsidiary Guaranty
or release Paxar or any Subsidiary Guarantor from its respective obligations
under Article VIII or the Subsidiary Guaranty, as the case may be, or limit
Paxar's or any Subsidiary Guarantor's liability with respect to the Obligations
owing to the Administrative Agent and the other Lender Parties or (h) amend this
Section 9.01; and provided further that no 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 Agreement or any Note; provided further that no
amendment, waiver or consent shall, unless in writing and signed by the Swing
Line Bank 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
Swing Line Bank or of the Issuing Bank, as the case may be, under this
Agreement.

                  SECTION 9.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including telecopier,
telegraphic or telex communication) and mailed, telecopied, telegraphed, telexed
or delivered, if to Paxar, at its address at 105 Corporate Park Drive, White
Plains, New York 10604-3814, Attention: Jack Plaxe, Chief Financial Officer; if
to any other Borrower, at its address specified in the applicable Credit
Agreement Supplement; if to any Initial Lender, at its Domestic Lending Office
specified opposite its name on Schedule I hereto; if to any other Lender Party,
at its Domestic Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender Party; and if to the Administrative Agent,
at its address at 244 Westchester Avenue, White Plains, New York 10604,
Attention: Michael Dwyer; or, as to Paxar 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 Paxar and the Administrative
Agent. All such notices and communications shall, when mailed, telecopied,
telegraphed or telexed, be effective when deposited in the mails, telecopied,
delivered to the telegraph company or confirmed by telex answerback,
respectively, except that notices and communications to the Administrative Agent
pursuant to Article II, III or VII 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 the Notes or of any
Exhibit hereto to be executed and delivered hereunder shall be effective as
delivery of a manually executed counterpart thereof.

                  SECTION 9.03. No Waiver; Remedies. No failure on the part of
any Lender Party or the Administrative 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.
<PAGE>   67
                                       62

                  SECTION 9.04. Costs and Expenses. (a) Paxar agrees to pay on
demand all costs and expenses of the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification and amendment of
this Agreement, the Notes, the other Loan Documents and the other documents to
be delivered hereunder, including, without limitation, (A) all due diligence,
syndication (including printing, distribution and bank meetings),
transportation, computer, duplication, appraisal, consultant, and audit expenses
and (B) the reasonable fees and expenses of counsel for the Administrative Agent
with respect thereto and with respect to advising the Administrative Agent as to
its rights and responsibilities under this Agreement. The Borrower further
agrees to pay on demand all costs and expenses of the Administrative Agent and
the Lender Parties, if any (including, without limitation, reasonable counsel
fees and expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the Notes and
the other documents to be delivered hereunder, including, without limitation,
reasonable fees and expenses of counsel for the Administrative Agent and each
Lender Party in connection with the enforcement of rights under this Section
9.04(a).

                  (b) Paxar agrees to indemnify and hold harmless the
Administrative Agent and each Lender Party and each of their Affiliates and
their officers, directors, employees, agents and advisors (each, an "Indemnified
Party") from and against 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
Notes, this Agreement, the other Loan Documents, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the
Advances or (ii) the actual or alleged presence of Hazardous Materials on any
property of Paxar or any of its Subsidiaries or any Environmental Action
relating in any way to Paxar or any of its Subsidiaries, 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 gross negligence or willful misconduct. In the
case of an investigation, litigation or other proceeding to which the indemnity
in this Section 9.04(b) applies, such indemnity shall be effective whether or
not such investigation, litigation or proceeding is brought by Paxar, its
directors, shareholders or creditors or an Indemnified Party or any other Person
or any Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated. Paxar also agrees not to
assert any claim against the Administrative Agent, any Lender Party, any of
their Affiliates, or any of their respective directors, officers, employees,
attorneys and agents, on any theory of liability, for special, indirect,
consequential or punitive damages arising out of or otherwise relating to the
Notes, this Agreement, any of the other Loan Documents, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the
Advances.

                  (c) If any payment of principal of, or Conversion of, any
Eurocurrency Rate Advance or LIBO Rate Advance is made by a Borrower to or for
the account of a Lender Party other than on the last day of the Interest Period
for such Advance, or if any payment of principal of any Swing Line Advance
(other than a Swing Line Advance that is a Prime Rate Advance) is made by Paxar
to or for the account of the Swing Line Bank other than on the day on which
Paxar and the Swing Line Bank had agreed such Swing Line Advance would be
payable, as a result of a payment or Conversion pursuant to Section 2.09(d) or
(e), 2.11 or 2.13, acceleration of the maturity of the Notes pursuant to Section
6.01 or for any other reason, such Borrower shall, upon demand by such Lender
(with a copy of such demand to
<PAGE>   68
                                       63

the Administrative Agent), pay to the Administrative Agent for the account of
such Lender any amounts required to compensate such Lender for any additional
losses, costs or expenses that it may reasonably incur as a result of such
payment or Conversion, 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 to fund or
maintain such Advance.

                  (d) Without prejudice to the survival of any other agreement
of the Borrowers hereunder, the agreements and obligations of the Borrowers
contained in Sections 2.12, 2.15 and 9.04 shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under the Notes.

                  SECTION 9.05. Right of Set-off. Upon (i) the occurrence and
during the continuance of any Event of Default and (ii) 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 Lender Party and each of its 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 Lender Party or such Affiliate to or for the credit or
the account of a Borrower against any and all of the obligations of the
Borrowers now or hereafter existing under this Agreement and the Notes held by
such Lender Party, whether or not such Lender Party shall have made any demand
under this Agreement or such Note and although such obligations may be
unmatured. Each Lender Party agrees promptly to notify the relevant Borrower
after any such set-off and application, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of each Lender Party and its Affiliates under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) that such Lender Party and its Affiliates may have.

                  SECTION 9.06. Binding Effect. This Agreement shall become
effective (other than Sections 2.01, 2.03 and 2.04, which shall only become
effective upon satisfaction of the conditions precedent set forth in Section
3.01) when it shall have been executed by Paxar and the Administrative Agent and
when the Administrative Agent shall have been notified by each Initial Lender
and the Initial Issuing Bank that such Initial Lender and the Initial Issuing
Bank has executed it and thereafter shall be binding upon and inure to the
benefit of the Borrowers, the Administrative Agent and each Lender Party and
their respective successors and assigns, except that no Borrower shall have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Lender Parties.

                  SECTION 9.07. Assignments, Designations and Participations.
(a) Each Lender (other than the Designated Bidders) may assign to one or more
Persons all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments, the
Advances (other than Competitive Bid Advances) owing to it and the Note or Notes
(other than any Competitive Bid Note) held by it); provided, however, that (i)
each such assignment shall be of a constant, and not a varying, percentage of
all rights and obligations under this Agreement (other than any right to make
Competitive Bid Advances, Competitive Bid Advances owing to it and Competitive
Bid Notes), (ii) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Lender or an assignment of all of a
Lender's rights and obligations under this Agreement, the amount of the
Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as

<PAGE>   69

                                       64

of the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than $5,000,000, (iii) each such assignment shall be
to an Eligible Assignee, and (iv) 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
subject to such assignment and a processing and recordation fee of $3,500. Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, (x) 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 hereunder and (y) the Lender 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
and be released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto).

                  (b) By executing and delivering an Assignment and Acceptance,
the Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other instrument or document furnished pursuant hereto or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other instrument or document furnished pursuant hereto;
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrowers or any
other Loan Party or the performance or observance by the Borrowers or any other
Loan Party of any of their respective obligations under this Agreement or any
other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in Section 4.01 or Section 5.01(o) and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Administrative
Agent, such assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers and discretion under this Agreement as are
delegated to the Administrative Agent by the terms hereof, together with such
powers and discretion as are reasonably incidental thereto; and (vii) such
assignee agrees that it will 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 a Lender.

                  (c) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee representing that it is an Eligible
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, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to Paxar. Within five Business Days after
its receipt of such notice, the Borrowers, at Paxar's own expense, shall execute
and deliver to the Administrative Agent in exchange for the surrendered Note a
new Note to the order of such
<PAGE>   70
                                       65

Eligible Assignee in an amount equal to the Commitment assumed by it pursuant to
such Assignment and Acceptance and, if the assigning Lender has retained a
Commitment hereunder, a new Note to the order of the assigning Lender in an
amount equal to the Commitment retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit A-1 or A-2 hereto, as the case may be.

                  (d) Each Lender (other than the Designated Bidders) may
designate one or more banks or other entities to have a right to make
Competitive Bid Advances as a Lender pursuant to Section 2.03; provided,
however, that (i) no such Lender shall be entitled to make more than one such
designation, (ii) each such Lender making one or more of such designations shall
retain the right to make Competitive Bid Advances as a Lender pursuant to
Section 2.03, (iii) each such designation shall be to a Designated Bidder and
(iv) the parties to each such designation shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, a
Designation Agreement. Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Designation Agreement, the
designee thereunder shall be a party hereto with a right to make Competitive Bid
Advances as a Lender pursuant to Section 2.03 and the obligations related
thereto.

                  (e) By executing and delivering a Designation Agreement, the
Lender making the designation thereunder and its designee thereunder confirm and
agree with each other and the other parties hereto as follows: (i) such Lender
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
this Agreement or any other instrument or document furnished pursuant hereto or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrowers or any
other Loan Party or the performance or observance by the Borrowers or any other
Loan Party of any of their respective obligations under this Agreement or any
other instrument or document furnished pursuant hereto; (iii) such designee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Designation Agreement; (iv) such designee will,
independently and without reliance upon the Administrative Agent, such
designating Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
designee confirms that it is a Designated Bidder; (vi) such designee appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers and discretion under this Agreement as are
delegated to the Administrative Agent by the terms hereof, together with such
powers and discretion as are reasonably incidental thereto; and (vii) such
designee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.

                  (f) Upon its receipt of a Designation Agreement executed by a
designating Lender and a designee representing that it is a Designated Bidder,
the Administrative Agent shall, if such Designation Agreement has been completed
and is substantially in the form of Exhibit D hereto, (i) accept such
<PAGE>   71
                                       66

Designation Agreement, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to Paxar.

                  (g) The Administrative Agent shall maintain at its address
referred to in Section 9.02 a copy of each Assignment and Acceptance and each
Designation Agreement delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lender Parties and, with respect
to Lender Parties other than Designated Bidders, the Commitment of, and
principal amount of the Advances owing 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 each Borrower, the Administrative
Agent and the Lender Parties may 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 Borrowers or any Lender Party
at any reasonable time and from time to time upon reasonable prior notice.

                  (h) 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 (i) except in the case of an
assignment to a Person that immediately prior to such assignment was an Issuing
Bank or an assignment of all of an Issuing Bank's rights and obligations under
this Agreement, the amount of the Letter of Credit Commitment of the assigning
Issuing Bank being assigned pursuant to each such assignment (determined as of
the date of the Assignment and Acceptance with respect to such assignment) shall
in no event be less than the undrawn portion of the Letter of Credit Commitment
at such time, (ii) each such assignment shall be to an Eligible Assignee and
(iii) 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.

                  (i) Each Lender Party may sell participations to one or more
banks or other entities (other than Paxar 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 held by it); provided, however, that (i) such Lender
Party's obligations under this Agreement (including, without limitation, its
Commitments to the Borrower hereunder) 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 Borrowers, the
Administrative Agent 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 this Agreement or any Note or any other Loan Document, or any
consent to any departure by the Borrowers 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, or 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.

                  (j) Any Lender Party may, in connection with any assignment,
designation or participation or proposed assignment, designation or
participation pursuant to this Section 9.07, disclose to the assignee, designee
or participant or proposed assignee, designee or participant, any information
relating to the Borrowers or any other Loan Party furnished to such Lender Party
by or on behalf of the Borrowers; provided that, prior to any such disclosure,
the assignee, designee or participant or proposed
<PAGE>   72
                                       67

assignee, designee or participant shall agree to preserve the confidentiality of
any Confidential Information relating to the Borrowers received by it from such
Lender.

                  (k) 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 9.08. Confidentiality. Neither the Administrative
Agent nor any Lender Party shall disclose any Confidential Information to any
other Person without the consent of Paxar, other than (a) to the Administrative
Agent's or such Lender Party's Affiliates and their officers, directors,
employees, agents and advisors and, as contemplated by Section 9.07(j), to
actual or prospective assignees and participants, and then only on a
confidential basis, (b) as required by any law, rule or regulation or judicial
process, (c) 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 any Borrower
received by it from such Lender and (d) as requested or required by any state,
federal or foreign authority or examiner regulating banks or banking.

                  SECTION 9.09. No Liability of the Issuing Bank. Each 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
relevant Borrower shall have a claim against the Issuing Bank, and the Issuing
Bank shall be liable to such Borrower, to the extent of any direct, but not
consequential, damages suffered by such Borrower that such Borrower proves were
caused by (i) the Issuing Bank's willful misconduct or gross negligence in
determining whether documents presented under any Letter of Credit issued on
account of such Borrower comply with the terms of the Letter of Credit or (ii)
the Issuing Bank's willful failure to make lawful payment under a Letter of
Credit issued on account of such Borrower 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, the
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.

                  SECTION 9.10. 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 9.11. 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 a manually executed
counterpart of this Agreement.
<PAGE>   73
                                       68

                  SECTION 9.12. Judgment. (a) Rate of Exchange. If, for the
purpose of obtaining judgment in any court, it is necessary to convert a sum due
hereunder (including, without limitation, under Section 8.01) or under any Note
or Notes in another currency into US Dollars or into a Primary Currency, as the
case may be, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which, in
accordance with normal banking procedures, a Lender Party could purchase such
other currency with US Dollars or with a Primary Currency, as the case may be,
in New York City, New York at the close of business on the Business Day
immediately preceding the day on which final judgment is given, together with
any premiums and costs of exchange payable in connection with such purchase.

                  (b) Indemnity. The obligation of each Borrower in respect of
any sum due from it to the Administrative Agent or any Lender Party hereunder or
under any Note or Notes shall, notwithstanding any judgment in a currency other
than US Dollars or a Primary Currency, as the case may be, be discharged only to
the extent that on the Business Day next succeeding receipt by the
Administrative Agent or such Lender Party of any sum adjudged to be so due in
such other currency, the Administrative Agent or such Lender Party may, in
accordance with normal banking procedures, purchase US Dollars or such Primary
Currency, as the case may be, with such other currency. If the US Dollars or
such Primary Currency so purchased are less than the sum originally due to the
Administrative Agent or such Lender Party in US Dollars or in such Primary
Currency, each Borrower agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify the Administrative Agent or such Lender Party
against such loss, and if the US Dollars or such Primary Currency so purchased
exceed the sum originally due to the Administrative Agent or any Lender Party in
US Dollars or in such Primary Currency, as the case may be, the Administrative
Agent or such Lender Party agrees to remit to such Borrower such excess.

                  SECTION 9.13. 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 the Notes or the other Loan Documents, 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 extent permitted by law, in such federal court. Each Borrower
further irrevocably consents to the service of process in any action or
proceeding in such courts by the mailing thereof by any parties thereto by
registered or certified mail, postage prepaid, to such Borrower at its address
specified pursuant to Section 9.02 or in the Credit Agreement Supplement. Each
Borrower (other than Paxar) hereby further agrees that service of process in any
such action or proceeding brought in any such New York state court or in any
such federal court may be made upon Paxar at its address specified in Section
9.02, and each Borrower (other than Paxar) hereby irrevocably appoints Paxar as
its authorized agent to accept such service of process, and hereby irrevocably
agrees that the failure of Paxar to give any notice of such service to such
Borrower shall not impair or affect the validity of such service or of any
judgment rendered in any action or proceeding based thereon. 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 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 the Notes 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 the Notes
or the
<PAGE>   74
                                       69

other Loan Documents 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.

                  (c) To the extent that any Borrower has or hereafter may
acquire any immunity from the 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 Borrower hereby irrevocably waives such immunity in
respect of its obligations under this Agreement and the Notes and the other Loan
Documents.

                  SECTION 9.14. Waiver of Jury Trial. Each of the Borrowers, the
Administrative Agent and the Lender Parties 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 the
Notes or the other Loan Documents or the actions of the Administrative Agent or
any Lender Party in the negotiation, administration, performance or enforcement
thereof.
<PAGE>   75
                                       70



                  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.

                                         PAXAR CORPORATION


                                         By
                                           --------------------------------
                                           Title:
<PAGE>   76
                                       71




                                              FLEET BANK, N.A.,
                                                as Administrative Agent


                                              By
                                                -------------------------------
                                                Title:


                                              FLEET BANK, N.A.,
                                                as Initial Issuing Bank


                                              By
                                                -------------------------------
                                                Title:

                                     Initial Lenders

                                              FLEET BANK, N.A.


                                              By
                                                -------------------------------
                                                 Title:


                                              BANK OF BOSTON CONNECTICUT


                                              By
                                                -------------------------------
                                                 Title:


                                              THE BANK OF NEW YORK


                                              By
                                                -------------------------------
                                                 Title:
<PAGE>   77
                                       72




                                              CREDITO ITALIANO S.p.A.


                                              By
                                                -------------------------------
                                                 Title:

                                              By
                                                -------------------------------
                                                 Title:


                                              FIRST UNION NATIONAL BANK


                                              By
                                                -------------------------------
                                                 Title:


                                              KEYBANK, NATIONAL ASSOCIATION


                                              By
                                                -------------------------------
                                                 Title:

                                              MARINE MIDLAND BANK


                                              By
                                                -------------------------------
                                                 Title:

                                              MELLON BANK, N.A.


                                              By
                                                -------------------------------
                                                 Title:


                                              NATIONAL CITY BANK


                                              By
                                                -------------------------------
                                                 Title:
<PAGE>   78
                                                        73

                                              NATIONSBANK, N.A.


                                              By
                                                -------------------------------
                                                 Title:


                                              STATE STREET BANK AND TRUST
                                              COMPANY


                                              By
                                                -------------------------------
                                                 Title:


                                              SUNTRUST BANK, ATLANTA


                                              By
                                                -------------------------------
                                                 Title:

                                              By
                                                -------------------------------
                                                 Title:


                                              WACHOVIA BANK OF GEORGIA, N.A.


                                              By
                                                -------------------------------
                                                 Title:
<PAGE>   79
                                                           EXHIBIT A-1 - FORM OF
                                                                REVOLVING CREDIT
                                                                 PROMISSORY NOTE



U.S. _______________                                    Dated: August __, 1998


                  FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a
_________________________ corporation (the "Borrower"), HEREBY PROMISES TO PAY
to the order of _________________________ (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 (as defined
below) owing to the Lender by the Borrower pursuant to the Amended and Restated
Credit Agreement dated as of August 11, 1998 among the Borrower, [Paxar
Corporation,] the other Borrowers party thereto, the Lender and certain other
lenders party thereto, and Fleet Bank, N.A., as Administrative Agent for the
Lender and such other lenders (as amended or modified from time to time, the
"Credit Agreement"; the terms defined therein being used herein as therein
defined) on the Termination Date.

                  The Borrower promises to pay the Lender interest on the unpaid
principal amount of each Revolving Credit Advance from the date of such
Revolving Credit 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 Fleet Bank, N.A., as Administrative Agent, at
_________________________, ____________________, __________, in same day funds.
Each Revolving Credit Advance owing to the Lender by the Borrower pursuant to
the Credit Agreement, 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.

                  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
(the "Revolving Credit Advances") by the Lender to the 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 Borrower resulting
from each such Revolving Credit 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 Borrower under this Promissory Note
and the Credit Agreement, and the obligations of the other Loan Parties under
the Loan Documents, are secured by the Collateral as provided in the Loan
Documents.

                  The Borrower hereby waives presentment, demand, protest and
notice of any kind. No failure to exercise, and no delay in exercising, any
rights hereunder on the part of the holder hereof shall operate as a waiver of
such rights.

                  This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
<PAGE>   80
                                        2

                                              [NAME OF BORROWER]


                                              By
                                                -------------------------------
                                                 Title:
<PAGE>   81

                       ADVANCES AND PAYMENTS OF PRINCIPAL


<TABLE>
<CAPTION>
                                 Amount of
             Amount of         Principal Paid       Unpaid Principal          Notation
Date          Advance            or Prepaid             Balance               Made By
<S>          <C>               <C>                  <C>                       <C>

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

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

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

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

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

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

</TABLE>
<PAGE>   82
                                                           EXHIBIT A-2 - FORM OF
                                                                 COMPETITIVE BID
                                                                 PROMISSORY NOTE



U.S. _______________                              Dated:  _______________, 199_


                  FOR VALUE RECEIVED, the undersigned, PAXAR CORPORATION, a New
York corporation ("Paxar"), HEREBY PROMISES TO PAY to the order of
_________________________ (the "Lender") for the account of its Applicable
Lending Office (as defined in the Amended and Restated Credit Agreement dated as
of August 11, 1998 among Paxar, the other Borrowers party thereto, the Lender
and certain other lenders party thereto, and Fleet Bank, N.A., as Administrative
Agent for the Lender and such other lenders (as amended or modified from time to
time, the "Credit Agreement"; the terms defined therein being used herein as
therein defined)), on _______________, 199_, the principal amount of U.S.

- ---------------.

                  Paxar promises to pay interest on the unpaid principal amount
hereof from the date hereof until such principal amount is paid in full, at the
interest rate and payable on the interest payment date or dates provided below:

         Interest Rate: _____% per annum (calculated on the basis of a year of
         _____ days for the actual number of days elapsed).

         Interest Payment Date:  _____ and  _____.

                  Both principal and interest are payable in lawful money of the
United States of America to Fleet Bank, N.A. for the account of the Lender at
the office of Fleet Bank, N.A., at _________________________ in same day funds.

                  This Promissory Note is one of the Competitive Bid Notes
referred to in, and is entitled to the benefits of, the Credit Agreement. The
Credit Agreement, among other things, contains provisions for acceleration of
the maturity hereof upon the happening of certain stated events. The obligations
of Paxar under this Promissory Note and the Credit Agreement are secured by
collateral as provided therein.

                  Paxar hereby waives presentment, demand, protest and notice of
any kind. No failure to exercise, and no delay in exercising, any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
<PAGE>   83
                                        2

                  This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of New York.

                                         PAXAR CORPORATION


                                         By
                                           -----------------------------------
                                           Title:
<PAGE>   84
                                                           EXHIBIT B-1 - FORM OF
                                                             NOTICE OF BORROWING


Fleet Bank, N.A., as Administrative Agent
  for the Lenders parties
  to the Credit Agreement
  referred to below

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

- -------------------------                                          [Date]

                  Attention:  _______________

Ladies and Gentlemen:

                  The undersigned, [Name of Borrower], refers to the Amended and
Restated Credit Agreement, dated as of August 11, 1998 (as amended or modified
from time to time, the "Credit Agreement", the terms defined therein being used
herein as therein defined), among [Paxar Corporation], the undersigned, the
other Borrowers party thereto, certain Lenders party thereto and Fleet Bank,
N.A., as Administrative Agent for said Lenders, 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
         _______________, 199_.

                  (ii) The Facility under which the Proposed Borrowing is
         requested is the ________ Facility.

                  (iii) The Type of Advances comprising the Proposed Borrowing
         is [Prime Rate Advances] [Eurocurrency Rate Advances].

                  (iv) The aggregate amount of the Proposed Borrowing is
         _______________.

                  [(v) The initial Interest Period [and the currency] for each
         Eurocurrency Rate Advance made as part of the Proposed Borrowing is
         _____ month[s] and [Primary Currency].]

                  The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Revolving Credit Borrowing:

                  (A) the representations and warranties contained in each Loan
         Document are correct, 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 such Proposed Borrowing, in which case as of such specific
         date); and
<PAGE>   85
                                        2

                  (B) no event has occurred and is continuing, or would result
         from such Proposed Borrowing or from the application of the proceeds
         therefrom, that constitutes a Default.

                                              Very truly yours,

                                              [NAME OF BORROWER]


                                              By
                                                 ----------------------------
                                                 Title:
<PAGE>   86
                                                 EXHIBIT B-2 - FORM OF NOTICE OF
                                                       COMPETITIVE BID BORROWING


Fleet Bank, N.A., as Administrative Agent
  for the Lenders parties
  to the Credit Agreement
  referred to below
- --------------------

- --------------------                                            [Date]


                  Attention:  _______________


Ladies and Gentlemen:

                  The undersigned, Paxar Corporation, refers to the Amended and
Restated Credit Agreement, dated as of August 11, 1998 (as amended or modified
from time to time, the "Credit Agreement", the terms defined therein being used
herein as therein defined), among the undersigned, the other Borrowers party
thereto, certain Lenders party thereto and Fleet Bank, N.A., as Administrative
Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to
Section 2.03 of the Credit Agreement that the undersigned hereby requests a
Competitive Bid Borrowing under the Credit Agreement, and in that connection
sets forth the terms on which such Competitive Bid Borrowing (the "Proposed
Competitive Bid Borrowing") is requested to be made:

         (A)  Date of Competitive Bid Borrowing           ____________________
         (B)  Amount of Competitive Bid Borrowing         ____________________
         (C)  [Maturity Date] [Interest Period]           ____________________
         (D)  Interest Rate Basis                         ____________________
         (E)  Interest Payment Date(s)                    ____________________
         (F)  ___________________                         ____________________
         (G)  ___________________                         ____________________
         (H)  ___________________                         ____________________

                  The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Competitive Bid Borrowing:

                  (a) the representations and warranties contained in each Loan
         Document are correct, before and after giving effect to the Proposed
         Competitive Bid 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 such Proposed Competitive Bid Borrowing, in
         which case as of such specific date);

                  (b) no event has occurred and is continuing, or would result
         from the Proposed Competitive Bid Borrowing or from the application of
         the proceeds therefrom, that constitutes a Default;

                  (c) no event has occurred and no circumstance exists as a
         result of which the information concerning the undersigned that has
         been provided to the Administrative Agent and
<PAGE>   87
                                        2

         each Lender by the undersigned in connection with the Credit Agreement
         would include an untrue statement of a material fact or omit to state
         any material fact or any fact necessary to make the statements
         contained therein, in the light of the circumstances under which they
         were made, not misleading; and

                  (d) the aggregate amount of the Proposed Competitive Bid
         Borrowing and all Revolving Credit Borrowings and Swing Line Borrowings
         to be made on the same day under the Credit Agreement is within the
         aggregate amount of the Unused Revolving Credit Commitments of the
         Lenders.

                  The undersigned hereby confirms that the Proposed Competitive
Bid Borrowing is to be made available to it in accordance with Section
2.03(a)(v) of the Credit Agreement.

                                           Very truly yours,

                                           PAXAR CORPORATION



                                           By
                                              -------------------------------
                                              Title:
<PAGE>   88
                                                             EXHIBIT C - FORM OF
                                                       ASSIGNMENT AND ACCEPTANCE


                  Reference is made to the Amended and Restated Credit Agreement
dated as of August 11, 1998 (as amended or modified from time to time, the
"Credit Agreement") among Paxar Corporation, a New York corporation ("Paxar"),
the other Borrowers (as defined in the Credit Agreement) party thereto, the
Lenders (as defined in the Credit Agreement) and Fleet Bank, N.A., as
administrative agent for the Lenders (the "Administrative Agent"). Terms defined
in the Credit Agreement are used herein with the same meaning.

                  The "Assignor" and the "Assignee" referred to on Schedule I
hereto agree as follows:

                  1. The Assignor hereby sells and assigns to the Assignee
without recourse, and the Assignee hereby purchases and assumes from the
Assignor, an interest in and to the Assignor's rights and obligations under the
Credit Agreement as of the date hereof (other than in respect of Competitive Bid
Advances and Competitive Bid Notes) equal to the percentage interest specified
on Schedule 1 hereto of all outstanding rights and obligations under the Credit
Agreement (other than in respect of Competitive Bid Advances and Competitive Bid
Notes). After giving effect to such sale and assignment, the Assignee's
Commitments and the amount of the Advances owing to the Assignee will be as set
forth on Schedule 1 hereto.

                  2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is 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 the Loan
Documents or any other instrument or document provided pursuant thereto 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, the Loan Documents 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 the Loan Documents or any other
instrument or document furnished pursuant thereto; and (iv) attaches the Note or
Notes held by the Assignor and requests that the Administrative Agent exchange
such Note or Notes for a new Note or Notes payable to the order of the Assignee
in an amount equal to the Commitments assumed by the Assignee pursuant hereto or
new Notes payable to the order of the Assignee in an amount equal to the
Commitment assumed by the Assignee pursuant hereto and the Assignor in an amount
equal to the Commitment retained by the Assignor under the Credit Agreement,
respectively, as specified on Schedule 1 hereto.

                  3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 4.01 or delivered pursuant to Section 5.01(o) 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 the Administrative
Agent, the 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) confirms that it is an Eligible Assignee; (iv) appoints and authorizes the
Administrative Agent to take such action as administrative agent on its behalf
and to exercise such powers and discretion under the Loan Documents as are
delegated to the Administrative Agent by the terms thereof, together with such
powers and discretion as are reasonably incidental thereto; (v) agrees that it
will perform in accordance with their
<PAGE>   89
                                        2

terms all of the obligations that by the terms of the Credit Agreement are
required to be performed by it as a Lender Party; and (vi) attaches any U.S.
Internal Revenue Service forms required under Section 2.15 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) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Acceptance, have
the rights and obligations of a Lender Party thereunder and (ii) the Assignor
shall, to the extent provided in this Assignment and Acceptance, relinquish its
rights, except under Section 2.11, 2.15 and 9.04 of the Credit Agreement, and be
released from its obligations under the Credit Agreement.

                  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 facility fees with respect thereto) to the Assignee. The Assignor
and 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 a manually executed counterpart of
this Assignment and Acceptance.

                  IN WITNESS WHEREOF, the Assignor and the 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.
<PAGE>   90
                                   Schedule 1
                                       to
                            Assignment and Acceptance


         Percentage interest assigned:                                 _____%


         Assignee's Commitment:
         ----------

         Aggregate outstanding principal amount of Revolving Credit Advances
         assigned:

         ----------

         Aggregate outstanding principal amount of Term Advances assigned:

         Principal amount of Revolving Credit Note payable to Assignee:

         ----------

         Principal amount of Term Note payable to Assignee:

         Principal amount of Revolving Credit Note payable to Assignor:

         ----------

         Principal amount of Term Note payable to Assignor:

         Effective Date*:           _______________, 199_


                                        [NAME OF ASSIGNOR], as Assignor

                                        By
                                          -----------------------------------
                                        Title:

                                        Dated:  _______________, 199_


                                        [NAME OF ASSIGNEE], as Assignee

                                        By
                                          -----------------------------------
                                        Title:

                                        Dated:  _______________, 199_

                                        Domestic Lending Office:
                                                 [Address]

- --------
*        This date should be no earlier than five Business Days after the
         delivery of this Assignment and Acceptance to the Administrative Agent.
<PAGE>   91
                                        2

                                          Eurocurrency Lending Office:
                                                   [Address]

Accepted [and Approved]* this
__________ day of _______________, 199_

FLEET BANK, N.A., as Administrative Agent

By
   Title:


[Approved this __________ day
of _______________, 199_

PAXAR CORPORATION

By  _____________________________  ]**

   Title:

- --------

*        Required if the Assignee is an Eligible Assignee solely by reason of
         clause (viii) of the definition of "Eligible Assignee".

**       Required if the Assignee is an Eligible Assignee solely by reason of
         clause (viii) of the definition of "Eligible Assignee".
<PAGE>   92
                                                             EXHIBIT D - FORM OF
                                                           DESIGNATION AGREEMENT

                           Dated _______________, 199_


                  Reference is made to the Amended and Restated Credit Agreement
dated as of August 11, 1998 (as amended or modified from time to time, the
"Credit Agreement") among Paxar Corporation, a New York corporation ("Paxar"),
the other Borrowers (as defined in the Credit Agreement) party thereto, the
Lenders (as defined in the Credit Agreement) and Fleet Bank, N.A., as agent for
the Lenders (the "Administrative Agent"). Terms defined in the Credit Agreement
are used herein with the same meaning.

                  _________________________ (the "Designor") and
__________________ (the "Designee") agree as follows:

                  1. The Designor hereby designates the Designee, and the
Designee hereby accepts such designation, to have a right to make Competitive
Bid Advances pursuant to Section 2.03 of the Credit Agreement.

                  2. The Designor makes no representation or warranty and
assumes no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Loan Documents or any other
instrument or document provided pursuant thereto 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, the Loan Documents or any other
instrument or document furnished pursuant thereto and (ii) the financial
condition of any Loan Party or the performance or observance by any Loan Party
of any of its obligations under the Loan Documents or any other instrument or
document furnished pursuant thereto.

                  3. The Designee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 4.01 or delivered pursuant to Section 5.01(o) thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Designation Agreement; (ii)
agrees that it will, independently and without reliance upon the Administrative
Agent, the Designor 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) confirms that it is a Designated Bidder; (iv) appoints and authorizes the
Administrative 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 the
Administrative Agent by the terms thereof, together with such powers and
discretion as are reasonably incidental thereto; and (v) agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Credit Agreement are required to be performed by it as a Designated
Bidder.

                  4. Following the execution of this Designation Agreement by
the Designor and its Designee, it will be delivered to the Administrative Agent
for acceptance and recording by the Administrative Agent. The effective date for
this Designation Agreement (the "Effective Date") shall be the date of
acceptance hereof by the Administrative Agent, unless otherwise specified on the
signature page hereto.

                  5. Upon such acceptance and recording by the Administrative
Agent, as of the Effective Date, the Designee shall be a party to the Credit
Agreement with a right to make Competitive
<PAGE>   93
                                        2

Bid Advances as a Designated Bidder pursuant to Section 2.03 of the Credit
Agreement and the rights and obligations of a Lender related thereto.

                  6. This Designation Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

                  7. This Designation 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 Designation Agreement by telecopier
shall be effective as delivery of a manually executed counterpart of this
Designation Agreement.

                  IN WITNESS WHEREOF, the Designor and the Designee have caused
this Designation Agreement to be executed by their officers thereunto duly
authorized as of the date first above written.

Effective Date*:                                     _______________, 199__


                                          [NAME OF DESIGNOR],
                                             as Designor


                                          By
                                            -------------------------------
                                            Title:

                                          [NAME OF DESIGNEE],
                                             as Designee


                                          By
                                            -------------------------------
                                            Title:

                                          Applicable Lending
                                          Office (and
                                          address for
                                          notices):

                                                   [Address]

Accepted this ____ day
of _______________, 199_

FLEET BANK, as Administrative Agent

By
  ------------------------------
   Title:

- --------

*        This date should be no earlier than five Business Days after the
         delivery of this Designation Agreement to the Administrative Agent.
<PAGE>   94
                                                             EXHIBIT E - FORM OF
                                                                CREDIT AGREEMENT
                                                                      SUPPLEMENT


                                                                          [DATE]

To each of the Banks under the Credit
      Agreement referred to below


Ladies and Gentlemen:

                  Reference is made to the Amended and Restated Credit Agreement
dated as of August 11, 1998 (as amended or modified from time to time, the
"Credit Agreement") among Paxar Corporation, a New York corporation ("Paxar"),
the other Borrowers (as defined in the Credit Agreement) party thereto, the
Lenders (as defined in the Credit Agreement) and Fleet Bank, N.A., as agent for
the Lenders (the "Administrative Agent"). Terms defined in the Credit Agreement
are used herein with the same meaning.

                  [NAME AND JURISDICTION OF INCORPORATION OF ADDITIONAL
BORROWER] (the "Additional Borrower"), in consideration of the agreement of each
Bank to extend credit to it from time to time under, and on the terms and
conditions set forth in, the Credit Agreement does hereby assume each of the
obligations imposed upon an Additional Borrower under the Credit Agreement and
agrees to be bound by all of the terms and conditions of the Credit Agreement.

         The Additional Borrower hereby agrees as follows:

                  1. The Additional Borrower hereby agrees, as of the date first
         above written, to be bound as a Borrower by all of the terms and
         conditions of the Credit Agreement to the same extent as each of the
         other Borrowers as if it had been a party thereto as a Borrower. The
         Additional Borrower further agrees, as of the date first above written,
         that each reference in the Credit Agreement to a "Borrower" shall, as
         and where the context requires also mean and be a reference to the
         Additional Borrower, and each reference in any other Loan Document to a
         "Borrower" or a "Loan Party" shall also mean, as and where the context
         requires and be a reference to the Additional Borrower.

                  2. The Additional Borrower hereby represents and warrants to
         the Administrative Agent and each of the Banks that the representations
         and warranties contained in each Loan Document are correct on and as of
         the date hereof as though made on and as of such date other than any
         such representations and warranties that, by their terms, refer to a
         date other than the date hereof, in which case as of such specific date
         (provided that the representations and warranties referred to therein
         may be qualified, to the reasonable satisfaction of the Administrative
         Agent, to take into account requirements of the local laws of the
         foreign jurisdiction in which the Additional Borrower is located)

                  3. Pursuant to the terms of the Credit Agreement, the
         Administrative Agent hereby indicates its approval of the Additional
         Borrower.
<PAGE>   95
                                        2

                  4. This Credit Agreement Supplement shall be governed by, and
         construed and enforced in accordance with, the laws of the State of New
         York.

                  5. (a) THIS CREDIT AGREEMENT SUPPLEMENT SHALL BE CONSTRUED IN
         ACCORDANCE WITH AND BE GOVERNED BY THE LAW 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 Additional Borrower hereby irrevocably accepts for
         itself and in respect of its property, generally and unconditionally,
         the jurisdiction of the aforesaid courts. The Additional Borrower
         hereby further irrevocably waives any claim that any such courts lack
         jurisdiction over such Additional 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
         Additional Borrower. The Additional 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 Additional 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 Additional 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
         Additional 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 Additional
         Borrower at its address set forth on the signature pages hereof, such
         service to become effective 30 days after such mailing. The Additional
         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 the Administrative 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 Additional Borrower in any other jurisdiction.

                  (b) The Additional 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 in clause (a) 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.

                  (c) To the extent that the Additional 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 Additional
         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
         subsection (c) shall have the fullest scope permitted under the United
         States Foreign Sovereign Immunities Act of 1976, as amended, or any
         other similarly
<PAGE>   96
                                        3

         applicable foreign law and are intended to be irrevocable for purposes
         of such Act or any other similarly applicable foreign law.

                  6. The Additional 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 the Administrative Agent or any
         Lender Party in the negotiation, administration, performance or
         enforcement thereof.


                                      Very truly yours,

                                      [NAME OF ADDITIONAL BORROWER]



                                      By _______________________________
                                         Name:
                                         Title:
                                         Address:

                                      Accepted and Agreed:

                                      FLEET BANK, N.A.,
                                        as Administrative Agent

                                      By________________________________
                                         Title:
<PAGE>   97
                                                             EXHIBIT G - FORM OF
                                                                   ACCEPTANCE OF
                                                                   PROCESS AGENT

                              [LETTERHEAD OF PAXAR]



                                                       [Date]


To each of the Lenders party to the Credit Agreement referred to below, and to
  Fleet Bank, N.A., as Administrative Agent for such Lenders


                          [Name of Additional Borrower]


Ladies and Gentlemen:

                  Reference is made to (a) the Amended and Restated Credit
Agreement dated as of August 11, 1998 (as amended or modified from time to time,
the "Credit Agreement") among Paxar Corporation, a New York corporation
("Paxar"), the other Borrowers (as defined in the Credit Agreement) party
thereto, the Lenders (as defined in the Credit Agreement) and Fleet Bank, N.A.,
as agent for the Lenders (the "Administrative Agent"), and (b) the Credit
Agreement Supplement dated _________, pursuant to which __________, a
___________ (the "Additional Borrower"), has become a "Borrower" under and for
all purposes of the Credit Agreement. Terms defined in the Credit Agreement are
used herein with the same meaning

                  Pursuant to Section 9.13 of the Credit Agreement and to the
Credit Agreement Supplement, the Additional Borrower has appointed Paxar (with
its address at _________________________, Attention: _______________) as its
process agent (the "Process Agent") to receive on behalf of the Additional
Borrower and its property service of copies of any summons and complaint and any
other process that may be served in any action or proceeding in any New York
state court or any federal court sitting in New York City, New York, and any
appellate court from any thereof, arising out of or relating to its Credit
Agreement Supplement, the Credit Agreement or any of the Notes issued by it.

                  The undersigned hereby accepts such appointment as the Process
Agent and agrees with each of you that (a) Paxar will maintain an office in
White Plains, through the Termination Date and will give the Administrative
Agent prompt notice of any change of its address, (b) Paxar will perform its
duties as the Process Agent to receive on behalf of the Additional Borrower and
its property service of copies of any summons and complaint and any other
process that may be served in any action or proceeding in any New York state
court or any federal court sitting in New York City, New York, and any appellate
court from any thereof, arising out of or relating to the Credit Agreement
Supplement of the Additional Borrower, the Credit Agreement or any of the Notes
issued by the Additional Borrower and (c) the undersigned will forward forthwith
to the Additional Borrower at its address at ________________ or,
<PAGE>   98
                                        2

if different, its then current address, copies of any summons, complaint and
other process that the undersigned receives in connection with its appointment
as the Process Agent therefor.

                  This acceptance and agreement shall be binding upon Paxar and
all of its successors and assigns.


                                           Very truly yours,

                                           PAXAR CORPORATION


                                           By
                                              --------------------------------
                                                Name:
                                                Title:
<PAGE>   99
                                SCHEDULE 4.01(c)


None.
<PAGE>   100
                                SCHEDULE 4.01(f)


None.
<PAGE>   101
                                SCHEDULE 4.01(i)


None.
<PAGE>   102
                                SCHEDULE 5.02(g)


None.



<PAGE>   1
                                                                [EXECUTION COPY]


                                PAXAR CORPORATION




                           6.74% Senior Notes due 2008




                             NOTE PURCHASE AGREEMENT





                           Dated as of August 4, 1998
<PAGE>   2
                                Table of Contents

<TABLE>
<CAPTION>
                                                                                               Page
<S>                                                                                            <C>
1. AUTHORIZATION OF NOTES ..................................................................    1
         1.1. The Notes ....................................................................    1
         1.2. The Subsidiary Guarantees ....................................................    1
                                                                                                
2. SALE AND PURCHASE OF NOTES ..............................................................    2
                                                                                                
3. CLOSING .................................................................................    2
                                                                                                
4. CONDITIONS TO CLOSING ...................................................................    2
         4.1. Representations and Warranties ...............................................    3
         4.2. Performance; No Default ......................................................    3
         4.3. Compliance Certificates ......................................................    3
         4.4. Opinions of Counsel ..........................................................    3
         4.5. Subsidiary Guarantees ........................................................    3
         4.6. Purchase Permitted by Applicable Law, etc ....................................    4
         4.7. Rating .......................................................................    4
         4.8. Payment of Special Counsel Fees ..............................................    4
         4.9. Private Placement Number .....................................................    4
         4.10. Changes in Corporate Structure ..............................................    4
         4.11. Proceedings and Documents ...................................................    5
         4.12. Sale of Notes to Other Purchasers ...........................................    5
                                                                                                
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ...........................................    5
         5.1. Organization; Power and Authority ............................................    5
         5.2. Authorization, etc ...........................................................    5
         5.3. Disclosure ...................................................................    6
         5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates .............    6
         5.5. Financial Statements .........................................................    7
         5.6. Compliance with Laws, Other Instruments, etc .................................    7
         5.7. Governmental Authorizations, etc .............................................    7
         5.8. Litigation; Observance of Agreements, Statutes and Orders ....................    8
         5.9. Taxes ........................................................................    8
         5.10. Title to Property; Leases ...................................................    8
         5.11. Licenses, Permits, etc ......................................................    9
         5.12. Compliance with ERISA .......................................................    9
         5.13. Private Offering by the Company .............................................   10
         5.14. Use of Proceeds; Margin Regulations .........................................   11
         5.15. Existing Indebtedness .......................................................   11
         5.16. Foreign Assets Control Regulations, etc .....................................   11
         5.17. Status Under Certain Statutes ...............................................   12
         5.18. Environmental Matters .......................................................   12
                                                                                               
6. REPRESENTATIONS OF THE PURCHASER ........................................................   12
         6.1. Purchase of Notes ............................................................   12
         6.2. Source of Funds ..............................................................   13
                                                                                               
7. INFORMATION AS TO COMPANY ...............................................................   14
</TABLE>
<PAGE>   3

<TABLE>
<S>                                                                                            <C>
         7.1. Financial and Business Information ...........................................   14
         7.2. Officer's Certificate ........................................................   17
         7.3. Inspection ...................................................................   18
                                                                                               
8. PREPAYMENT OF THE NOTES .................................................................   18
         8.1. Optional Prepayments with Make-Whole Amount ..................................   18
         8.2. Allocation of Partial Prepayments ............................................   19
         8.3. Maturity; Surrender, etc .....................................................   19
         8.4. Purchase of Notes ............................................................   19
         8.5. Make-Whole Amount ............................................................   20
                                                                                               
9. AFFIRMATIVE COVENANTS ...................................................................   21
         9.1. Compliance with Law ..........................................................   21
         9.2. Insurance ....................................................................   21
         9.3. Maintenance of Properties ....................................................   22
         9.4. Payment of Taxes and Claims ..................................................   22
         9.5. Corporate Existence, etc .....................................................   22
         9.6. Additional Subsidiary Guarantees; Release of Subsidiary Guarantees ...........   23
                                                                                               
10. NEGATIVE COVENANTS .....................................................................   23
         10.1. Total Indebtedness; Restricted Subsidiary Indebtedness ......................   23
         10.2. Liens .......................................................................   25
         10.3. Limitation on Sale and Leaseback Transactions ...............................   26
         10.4. Maintenance of Consolidated Net Worth .......................................   27
         10.5. Merger, Consolidation, etc ..................................................   27
         10.6. Lines of Business ...........................................................   28
         10.7. Transactions with Affiliates ................................................   28
         10.8. Designation of Restricted and Unrestricted Subsidiaries .....................   29
                                                                                               
11. EVENTS OF DEFAULT ......................................................................   30
                                                                                               
12. REMEDIES ON DEFAULT, ETC ...............................................................   32
         12.1. Acceleration ................................................................   32
         12.2. Other Remedies ..............................................................   33
         12.3. Rescission ..................................................................   33
         12.4. No Waivers or Election of Remedies, Expenses, etc ...........................   34
                                                                                               
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES ..........................................   34
         13.1. Registration of Notes .......................................................   34
         13.2. Transfer and Exchange of Notes ..............................................   34
         13.3. Replacement of Notes ........................................................   35
                                                                                               
14. PAYMENTS ON NOTES ......................................................................   35
         14.1. Place of Payment ............................................................   35
         14.2. Home Office Payment .........................................................   36
                                                                                               
15. EXPENSES, ETC ..........................................................................   36
         15.1. Transaction Expenses ........................................................   36
         15.2. Survival ....................................................................   37
</TABLE>


                                      (ii)
<PAGE>   4
<TABLE>
<S>                                                                                            <C>
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT ...........................   37
                                                                                               
17. AMENDMENT AND WAIVER ...................................................................   37
         17.1. Requirements ................................................................   37
         17.2. Solicitation of Holders of Notes ............................................   38
         17.3. Binding Effect, etc .........................................................   38
         17.4. Notes held by Company, etc ..................................................   39
                                                                                               
18. NOTICES ................................................................................   39
                                                                                               
19. REPRODUCTION OF DOCUMENTS ..............................................................   39
                                                                                               
20. CONFIDENTIAL INFORMATION ...............................................................   40
                                                                                               
21. SUBSTITUTION OF PURCHASER ..............................................................   41
                                                                                               
22. MISCELLANEOUS ..........................................................................   41
         22.1. Successors and Assigns ......................................................   41
         22.2. Construction ................................................................   42
         22.3. Payments Due on Non-Business Days ...........................................   42
         22.4. Severability ................................................................   42
         22.5. Accounting Terms; Pro Forma Calculations ....................................   42
         22.6. Counterparts ................................................................   43
         22.7. Governing Law ...............................................................   43
</TABLE>


Exhibit 1.1        --      Form of 6.74% Senior Note due 2008
Exhibit 1.2        --      Form of Subsidiary Guarantee
Exhibit 4.4(a)     --      Form of Opinion of Special Counsel for the Company
Exhibit 4.4(b)     --      Form of Opinion of Special Counsel for the Purchasers
                                                              
Schedule A         --      Names and Addresses of Purchasers  
Schedule B         --      Defined Terms                      
Schedule 5.3       --      Disclosure Documents               
Schedule 5.4       --      Subsidiaries                       
Schedule 5.5       --      Financial Statements               
Schedule 5.8       --      Litigation                         
Schedule 5.11      --      Licenses, etc.                     
Schedule 5.15      --      Existing Indebtedness              


                                     (iii)
<PAGE>   5
                                                                          
                                PAXAR CORPORATION
                            105 Corporate Park Drive
                             White Plains, NY 10604
                             Telephone: 914-697-6800
                                                                          
                                                                          
                                                                          
                           6.74% Senior Notes due 2008
                                                                          
                                                                          
                                                                          
                                                            As of August 4, 1998
                                                                            
                                                                            
TO EACH OF THE PURCHASERS LISTED IN                                         
         THE ATTACHED SCHEDULE A:                                           
                                                                            
Ladies and Gentlemen:                                                       
                                                                            
                  PAXAR CORPORATION, a New York corporation (the "COMPANY"),
agrees with you as follows:                                                 

1.         AUTHORIZATION OF NOTES.

1.1.       THE NOTES.

                  The Company has duly authorized the issue and sale of
$150,000,000 aggregate principal amount of its 6.74% Senior Notes due 2008 (the
"NOTES"), such notes to be substantially in the form set out in Exhibit 1.1. As
used herein, the term "NOTES" shall mean all notes originally delivered pursuant
to this Agreement and the Other Agreements referred to below and all notes
delivered in substitution or exchange for any such note and, where applicable,
shall include the singular number as well as the plural. The terms "NOTE" means
one of the Notes. Certain capitalized and other terms used in this Agreement are
defined in Schedule B; references to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement.

1.2.       THE SUBSIDIARY GUARANTEES.

                  The Notes will be unconditionally guaranteed by each of the
Company's existing United States Restricted Subsidiaries, pursuant to subsidiary
guarantees substantially in the form of Exhibit 1.2 (individually a "SUBSIDIARY
GUARANTEE" and collectively the "SUBSIDIARY GUARANTEES", which terms shall
include after the date of the Closing all additional Subsidiary Guarantees from
time to time executed and delivered pursuant to Section 9.6).
<PAGE>   6
                                       2


2.         SALE AND PURCHASE OF NOTES.

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

3.         CLOSING.

                  The sale and purchase of the Notes to be purchased by you and
the Other Purchasers shall occur at the offices of Willkie Farr & Gallagher, 787
Seventh Avenue, New York, NY 10019 at 10:00 a.m., New York time, at a closing
(the "CLOSING") on August 11, 1998 or on such other Business Day thereafter on
or prior to August 14, 1998 as may be agreed upon by the Company and you and the
Other Purchasers. At the Closing the Company will deliver to you the Notes to be
purchased by you in the form of a single Note (or such greater number of Notes
in denominations of at least $100,000 as you may request) dated the date of the
Closing and registered in your name (or in the name of your nominee), against
delivery by you to the Company or its order of immediately available funds in
the amount of the purchase price therefor by wire transfer of immediately
available funds to Paxar Corporation Concentration Account (account number
940-878-0187) at Fleet Bank, White Plains, New York, ABA number 011500010.

                  If at the Closing the Company shall fail to tender such Notes
to you as provided above in this Section 3, or any of the conditions specified
in Section 4 shall not have been fulfilled to your satisfaction, you shall, at
your election, be relieved of all further obligations under this Agreement,
without thereby waiving any rights you may have by reason of such failure or
such nonfulfillment.

4.         CONDITIONS TO CLOSING.

                  Your obligation to purchase and pay for the Notes to be sold
to you at the Closing is subject to the fulfillment to your satisfaction, prior
to or at the Closing, of the following conditions:
<PAGE>   7
                                       3


4.1.       REPRESENTATIONS AND WARRANTIES.

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

4.2.       PERFORMANCE; NO DEFAULT.

                  The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by it prior to or at the Closing and after giving effect to the
issue and sale of the Notes (and the application of the proceeds thereof as
contemplated by Section 5.14) no Default or Event of Default shall have occurred
and be continuing.

4.3.       COMPLIANCE CERTIFICATES.

                  (a) Officer's Certificate. The Company shall have delivered to
you an Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1, 4.2 and 4.10 have been fulfilled.

                  (b) Secretary's Certificate. The Company shall have delivered
to you a certificate of the Secretary or an Assistant Secretary of the Company
certifying as to the resolutions attached thereto and other corporate
proceedings relating to the authorization, execution and delivery of the Notes
and this Agreement and the Other Agreements.

4.4.       OPINIONS OF COUNSEL.

                  You shall have received opinions in form and substance
satisfactory to you, dated the date of the Closing (a) from Snow Becker Krauss
P.C., special counsel for the Company, substantially in the form set forth in
Exhibit 4.4(a) (as to certain matters given in reliance upon or accompanied by
separate opinion of Daniel S. Bishop, Esq., General Counsel of the Company) and
covering such other matters incident to the transactions contemplated hereby as
you or your counsel may reasonably request (and the Company hereby instructs its
counsel to deliver such opinion to you) and (b) from Willkie Farr & Gallagher,
your special counsel in connection with such transactions, substantially in the
form set forth in Exhibit 4.4(b) and covering such other matters incident to
such transactions as you may reasonably request.

4.5.       SUBSIDIARY GUARANTEES.

                  A Subsidiary Guarantee, dated as of a date on or before the
date of the Closing, shall have been executed and delivered by each United
States Restricted Subsidiary (in such capacity sometimes individually called a
"SUBSIDIARY GUARANTOR" and
<PAGE>   8
                                       4


collectively the "SUBSIDIARY GUARANTORS") in the form hereinabove recited and
shall be in full force and effect.

4.6.       PURCHASE PERMITTED BY APPLICABLE LAW, ETC.

                  On the date of the Closing your purchase of Notes shall (a) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (b) not
violate any applicable law or regulation (including without limitation
Regulation T, U or X of the Board of Governors of the Federal Reserve System)
and (c) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.

4.7.       RATING.

                  The Notes shall have been rated "BBB+" by Duff & Phelps Credit
Rating Co. and such rating shall be in full force and effect and not under
review on the date of the Closing.

4.8.       PAYMENT OF SPECIAL COUNSEL FEES.

                  Without limiting the provisions of Section 15.1, the Company
shall have paid on or before the Closing the fees, charges and disbursements of
your special counsel referred to in Section 4.4 to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to the Closing.

4.9.       PRIVATE PLACEMENT NUMBER.

                  A Private Placement Number issued by Standard & Poor's CUSIP
Service Bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Notes.

4.10.       CHANGES IN CORPORATE STRUCTURE.

                  The Company shall not have changed its jurisdiction of
incorporation or been a party to any merger or consolidation or succeeded to all
or any substantial part of the liabilities of any other entity at any time
following the date of the most recent financial statements referred to in
Schedule 5.5.
<PAGE>   9
                                       5


4.11.       PROCEEDINGS AND DOCUMENTS.

                  All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.

4.12.      SALE OF NOTES TO OTHER PURCHASERS.

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

5.         REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

                  The Company represents and warrants to you that:

5.1.       ORGANIZATION; POWER AND AUTHORITY.

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

5.2.       AUTHORIZATION, ETC.

                  This Agreement and the Other Agreements and the Notes have
been duly authorized by all necessary corporate action on the part of the
Company, and this Agreement constitutes, and upon execution and delivery thereof
each Note will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
<PAGE>   10
                                       6


5.3.       DISCLOSURE.

                  The Company, through its agents, Credit Suisse First Boston
Corporation and NationsBanc Montgomery Securities LLC, has delivered to you a
copy of a Confidential Offering Memorandum, dated May 1998 (the "MEMORANDUM"),
relating to the transactions contemplated hereby. The Memorandum fairly
describes, in all material respects, the general nature of the business and
principal properties of the Company and its Subsidiaries. This Agreement, the
Memorandum, the documents, certificates or other writings delivered to you by or
on behalf of the Company in connection with the transactions contemplated hereby
and described in Schedule 5.3 (together with the Memorandum, the "DISCLOSURE
DOCUMENTS"), and the financial statements listed in Schedule 5.5, taken as a
whole, do not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made, provided that to the
extent any information contained in the Disclosure Documents constitutes a
forecast or projection, the Company represents only that it acted in good faith
and utilized reasonable assumptions, due and careful consideration and the best
information known to it at the time in the preparation of such information, but
the same may not be predictive of actual results. Since December 31, 1997, there
has been no change in the financial condition, operations, business, properties
or prospects of the Company or any Subsidiary except as disclosed in the
Disclosure Documents or in the financial statements listed in Schedule 5.5 and
other changes that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.

5.4.       ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.

                  (a) Schedule 5.4 contains a complete and correct list of the
Company's Subsidiaries, showing, as to each Subsidiary, the correct name
thereof, the jurisdiction of its organization, and the percentage of shares of
each class of its capital stock or similar equity interests outstanding owned by
the Company and each other Subsidiary. Schedule 5.4 also identifies each
Restricted Subsidiary and each Domestic Restricted Subsidiary as of the date of
this Agreement. No Subsidiary listed in Schedule 5.4 is a guarantor under the
Bank Credit Agreement other than the United States Subsidiaries so identified in
Schedule 5.4.

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

                  (c) Each Subsidiary identified in Schedule 5.4 is a
corporation duly organized, validly existing and in good standing 
<PAGE>   11
                                       7


under the laws of its jurisdiction of organization, and is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each such
Subsidiary has the corporate power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business
it transacts and proposes to transact and, in the case of Subsidiary Guarantors,
to execute and deliver and perform its obligations under its respective
Subsidiary Guarantee.

5.5.       FINANCIAL STATEMENTS.

                  The Company has delivered to you copies of the financial
statements of the Company and its Subsidiaries listed in Schedule 5.5. All of
said financial statements (including in each case the related schedules and
notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).

5.6.       COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.

                  The execution, delivery and performance by the Company of this
Agreement and the Notes and by the Subsidiary Guarantors of their respective
Subsidiary Guarantees will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other material agreement or instrument to which the Company or
any Subsidiary is bound or by which the Company or any Subsidiary or any of
their respective properties may be bound or affected, (ii) conflict with or
result in a breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or Governmental Authority
applicable to the Company or any Subsidiary or (iii) violate any provision of
any statute or other rule or regulation of any Governmental Authority applicable
to the Company or any Subsidiary.

5.7.       GOVERNMENTAL AUTHORIZATIONS, ETC.

                  No consent, approval or authorization of, or registration,
filing or declaration with, any Governmental Authority is required for the
validity of the execution, delivery or performance by the Company of this
Agreement or the Notes or
<PAGE>   12
                                       8


by the Subsidiary Guarantors of their respective Subsidiary Guarantees.

5.8.       LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.

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

                  (b) Neither the Company nor any Subsidiary is in default under
any order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.

5.9.       TAXES.

                  The Company and its Subsidiaries have filed all tax returns
that are required to have been filed in any jurisdiction, and have paid all
taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (a) currently
payable without penalty or interest, (b) the amount of which is not individually
or in the aggregate Material or (c) the amount, applicability or validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which the Company or a Subsidiary, as the case may be, has
established adequate reserves in accordance with GAAP. The Federal income tax
liabilities of the Company and its Subsidiaries have been determined by the
Internal Revenue Service and paid for all fiscal years up to and including the
fiscal year ended December 31, 1993.

5.10.      TITLE TO PROPERTY; LEASES.

                  The Company and its Subsidiaries have good and marketable
title to their respective real properties and good and sufficient title to their
respective other properties, including all such properties reflected in the most
recent audited balance sheet listed on Schedule 5.5 or purported to have been
acquired by the Company or any Subsidiary after said date (except as sold or
otherwise disposed of in the ordinary course of business), in each case free and
clear of Liens prohibited by this Agreement. All leases that individually or in
the aggregate are Material are
<PAGE>   13
                                       9


valid and subsisting and are in full force and effect in all material respects.

5.11.      LICENSES, PERMITS, ETC.

                  Except as disclosed in Schedule 5.11,

                  (a) the Company and its Subsidiaries own or possess all
         licenses, permits, franchises, authorizations, patents, copyrights,
         proprietary software, service marks, trademarks and trade names, or
         rights thereto, that are Material, without known conflict with the
         rights of others, except for those conflicts that, individually or in
         the aggregate, would not have a Material Adverse Effect;

                  (b) to the best knowledge of the Company, no product of the
         Company infringes in any material respect any license, permit,
         franchise, authorization, patent, copyright, proprietary software,
         service mark, trademark, trade name or other right owned by any other
         Person; and

                  (c) to the best knowledge of the Company, there is no Material
         violation by any Person of any right of the Company or any of its
         Subsidiaries with respect to any patent, copyright, proprietary
         software, service mark, trademark, trade name or other right owned or
         used by the Company or any of its Subsidiaries.

5.12.      COMPLIANCE WITH ERISA.

                  (a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and could not reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any
ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee benefit
plans (as defined in Section 3 of ERISA), and no event, transaction or condition
has occurred or exists that would reasonably be expected to result in the
incurrence of any such liability by the Company or any ERISA Affiliate, or in
the imposition of any Lien on any of the rights, properties or assets of the
Company or any ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to such penalty or excise tax provisions or to section 401(a)(29) or
412 of the Code, other than such liabilities or Liens as would not be
individually or in the aggregate Material.

                  (b) The present value of the aggregate benefit liabilities
under each of the Plans (other than Multiemployer Plans), determined as of the
end of such Plan's most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent actuarial
valuation report, did not exceed the aggregate current 
<PAGE>   14
                                       10


value of the assets of such Plan allocable to such benefit liabilities. The term
"benefit liabilities" has the meaning specified in section 4001 of ERISA and the
terms "CURRENT VALUE" and "PRESENT VALUE" have the meaning specified in section
3 of ERISA.

                  (c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.

                  (d) The expected post retirement benefit obligation
(determined as of the last day of the Company's most recently ended fiscal year
in accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage mandated by
section 4980B of the Code) of the Company and its Subsidiaries is not Material.

                  (e) With respect to each employee benefit plan, if any,
disclosed by you in writing to the Company in accordance with Section 6.2(c),
neither the Company nor any "affiliate" of the Company (as defined in Section
V(c) of the QPAM Exemption) has at this time, nor has exercised at any time
during the immediately preceding year, the authority to appoint or terminate the
"QPAM" (as defined in Part V of the QPAM Exemption) disclosed by you to the
Company pursuant to Section 6.2(c) as manager of any of the assets of any such
plan or to negotiate the terms of any management agreement with such QPAM on
behalf of any such plan, and the Company is not an "affiliate" (as so defined)
of such QPAM. The Company is not a party in interest with respect to any
employee benefit plan disclosed by you in accordance with Section 6.2(b) or
6.2(e). The execution and delivery of this Agreement and the issuance and sale
of the Notes at the Closing hereunder will not involve any prohibited
transaction (as such term is defined in section 406(a) of ERISA and section
4975(c)(1)(A)-(D) of the Code), that could subject the Company or any holder of
a Note to any tax or penalty on prohibited transactions imposed under said
section 4975 of the Code or by section 502(i) of ERISA. The representation by
the Company in the preceding sentence of this Section 5.12(e) is made in
reliance upon and subject to the accuracy of your representation in Section 6.2
as to the source of the funds used to pay the purchase price of the Notes to be
purchased by you.

5.13.      PRIVATE OFFERING BY THE COMPANY.

                  Neither the Company nor anyone acting on its behalf has
offered the Notes, the Subsidiary Guarantees or any similar securities for sale
to, or solicited any offer to buy any of the same from, or otherwise approached
or negotiated in respect thereof with, any person other than you, the Other
Purchasers and not more than 60 other Institutional Investors, each of which has
been offered the Notes at a private sale for investment. Neither
<PAGE>   15
                                       11


the Company nor anyone acting on its behalf has taken, or will take, any action
that would subject the issuance or sale of the Notes or the issuance of the
Subsidiary Guarantees to the registration requirements of Section 5 of the
Securities Act.

5.14.      USE OF PROCEEDS; MARGIN REGULATIONS.

                  The Company will apply the net proceeds of the sale of the
Notes to repay Indebtedness outstanding under the Bank Credit Agreement. No part
of the proceeds from the sale of the Notes hereunder will be used, and no part
of the proceeds of such Indebtedness being repaid was used, directly or
indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR 221), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). Margin stock does not
constitute more than 5% of the value of the consolidated assets of the Company
and its Subsidiaries and the Company does not have any present intention that
margin stock will constitute more than 25% of the value of such assets. As used
in this Section, the terms "MARGIN STOCK" and "PURPOSE OF BUYING OR CARRYING"
shall have the meanings assigned to them in said Regulation U.

5.15.      EXISTING INDEBTEDNESS.

                  Schedule 5.15 sets forth a complete and correct list of all
outstanding Indebtedness of the Company and its Subsidiaries in an unpaid
principal amount exceeding $1,000,000 as of June 30, 1998, since which date
there has been no Material change in the amounts, interest rates, sinking funds,
installment payments or maturities of the Indebtedness of the Company or its
Subsidiaries. Neither the Company nor any Subsidiary is in default, and no
waiver of default is currently in effect, in the payment of any principal or
interest on any Indebtedness of the Company or such Subsidiary, and no event or
condition exists with respect to any such Indebtedness of the Company or any
Subsidiary that would permit (or that with the giving of notice or the lapse of
time, or both, would permit) one or more Persons to cause such Indebtedness to
become due and payable before its stated maturity or before its regularly
scheduled dates of payment.

5.16.      FOREIGN ASSETS CONTROL REGULATIONS, ETC.

                  Neither the sale of the Notes by the Company hereunder nor its
use of the proceeds thereof will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
<PAGE>   16
                                       12


5.17.      STATUS UNDER CERTAIN STATUTES.

                  Neither the Company nor any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, the Interstate Commerce Act, as
amended, or the Federal Power Act, as amended.

5.18.      ENVIRONMENTAL MATTERS.

                  Neither the Company nor any Subsidiary has knowledge of any
claim or has received any notice of any claim, and no proceeding has been
instituted raising any claim against the Company or any of its Subsidiaries or
any of their respective real properties now or formerly owned, leased or
operated by any of them or other assets, alleging any damage to the environment
or violation of any Environmental Laws, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect. Except as
otherwise disclosed to you in writing,

                  (a) neither the Company nor any Subsidiary has knowledge of
         any facts which would give rise to any claim, public or private, of
         violation of Environmental Laws or damage to the environment emanating
         from, occurring on or in any way related to real properties now or
         formerly owned, leased or operated by any of them or to other assets or
         their use, except, in each case, such as could not reasonably be
         expected to result in a Material Adverse Effect;

                  (b) neither the Company nor any of its Subsidiaries has stored
         any Hazardous Materials on real properties now or formerly owned,
         leased or operated by any of them and has not disposed of any Hazardous
         Materials in a manner contrary to any Environmental Laws in each case
         in any manner that could reasonably be expected to result in a Material
         Adverse Effect; and

                  (c) all buildings on all real properties now owned, leased or
         operated by the Company or any of its Subsidiaries are in compliance
         with applicable Environmental Laws, except where failure to comply
         could not reasonably be expected to result in a Material Adverse
         Effect.

6.         REPRESENTATIONS OF THE PURCHASER.

6.1.       PURCHASE OF NOTES.

                  You represent that you are purchasing the Notes for your own
account or for one or more separate accounts maintained by you or for the
account of one or more pension or trust funds and not with a view to the
distribution thereof, provided that the disposition of your or their property
shall at all times be within your or their control. You understand that the
Notes have 
<PAGE>   17
                                       13


not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.

6.2.       SOURCE OF FUNDS.

                  You represent that at least one of the following statements is
an accurate representation as to each source of funds (a "SOURCE") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:

                  (a) the Source is an "insurance company general account", as
         such term is defined in Prohibited Transaction Exemption ("PTE") 95-60
         (issued July 12, 1995), and there is no plan with respect to which the
         aggregate amount of such general account's reserves and liabilities for
         the contracts held by or on behalf of such plan and all other plans
         maintained by the same employer (and affiliates thereof as defined in
         section V(a)(1) of PTE 95-60) or by the same employee organization (in
         each case determined in accordance with PTE 95-60) exceeds or will
         exceed 10% of the total of all reserves and liabilities of such general
         account (determined in accordance with PTE 95-60, exclusive of separate
         account liabilities, plus any applicable surplus) as of the date of the
         Closing; or

                  (b) the Source is either (i) an insurance company pooled
         separate account, within the meaning of PTE 90-1 (issued January 29,
         1990), or (ii) a bank collective investment fund, within the meaning of
         the PTE 91-38 (issued July 12, 1991) and, except as you have disclosed
         to the Company in writing pursuant to this paragraph (b), no employee
         benefit plan or group of plans maintained by the same employer or
         employee organization beneficially owns more than 10% of all assets
         allocated to such pooled separate account or collective investment
         fund; or

                  (c) the Source constitutes assets of an "investment fund"
         (within the meaning of Part V of the QPAM Exemption) managed by a
         "qualified professional asset manager" or "QPAM" (within the meaning of
         Part V of the QPAM Exemption), no employee benefit plan's assets that
         are included in such investment fund, when combined with the assets of
         all other employee benefit plans established or maintained by the same
         employer or by an affiliate (within the meaning of Section V(c)(1) of
         the QPAM Exemption) of such employer or by the same employee
         organization and managed by such QPAM, exceed 20% of the total client
         assets managed by such QPAM, the conditions of Part I(c) and (g) of the
         QPAM Exemption are satisfied, neither the QPAM nor a person controlling
         or controlled by the QPAM (applying the definition of "control" 
<PAGE>   18
                                       14


         in section V(e) of the QPAM Exemption) owns a 5% or more interest in
         the Company and (i) the identity of such QPAM and (ii) the names of all
         employee benefit plans whose assets are included in such investment
         fund have been disclosed to the Company in writing pursuant to this
         paragraph (c); or

                  (d) the Source is a governmental plan; or

                  (e) the Source is one or more employee benefit plans, or a
         separate account or trust fund comprised of one or more employee
         benefit plans, each of which has been identified to the Company in
         writing pursuant to this paragraph (e); or

                  (f) the Source does not include assets of any employee benefit
         plan, other than a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN" and "SEPARATE ACCOUNT" shall have the respective meanings assigned to such
terms in section 3 of ERISA.

7.         INFORMATION AS TO COMPANY.

7.1.       FINANCIAL AND BUSINESS INFORMATION.

                  The Company shall deliver to each holder of Notes that is an
Institutional Investor:

                  (a) Quarterly Statements -- within 60 days after the end of
         each quarterly fiscal period in each fiscal year of the Company (other
         than the last quarterly fiscal period of each such fiscal year),
         duplicate copies of,

                           (i)  a consolidated balance sheet of the Company and 
                  its Restricted Subsidiaries as at the end of such quarter, and

                           (ii) consolidated statements of income, changes in
                  shareholders' equity and cash flows of the Company and its
                  Restricted Subsidiaries, for such quarter and (in the case of
                  the second and third quarters) for the portion of the fiscal
                  year ending with such quarter,

         setting forth in each case in comparative form the figures for the
         corresponding periods in the previous fiscal year, all in reasonable
         detail, prepared in accordance with GAAP applicable to quarterly
         financial statements generally, and certified by a Senior Financial
         Officer as fairly presenting, in all material respects, the financial
         position of the companies being reported on and their results of
         operations and cash flows, subject to changes resulting from year-end
         adjustments, provided that delivery within the time 
<PAGE>   19
                                       15


         period specified above of copies of the Company's Quarterly Report on
         Form 10-Q prepared in compliance with the requirements therefor and
         filed with the Securities and Exchange Commission shall be deemed to
         satisfy the requirements of this Section 7.1(a), unless the financial
         statements included in said Form 10-Q include the accounts of any
         Unrestricted Subsidiary;

                  (b) Annual Statements -- within 105 days after the end of each
         fiscal year of the Company, duplicate copies of,

                           (i)  a consolidated balance sheet of the Company and 
                  its Restricted Subsidiaries as at the end of such year, and

                           (ii) consolidated statements of income, changes in
                  shareholders' equity and cash flows of the Company and its
                  Restricted Subsidiaries for such year,

         setting forth in each case in comparative form the figures for the
         previous fiscal year, all in reasonable detail, prepared in accordance
         with GAAP, and accompanied by

                           (A) an opinion thereon of independent public
                  accountants of recognized national standing, which opinion
                  shall state that such financial statements present fairly, in
                  all material respects, the financial position of the companies
                  being reported upon and their results of operations and cash
                  flows and have been prepared in conformity with GAAP, and that
                  the examination of such accountants in connection with such
                  financial statements has been made in accordance with
                  generally accepted auditing standards, and that such audit
                  provides a reasonable basis for such opinion in the
                  circumstances, and

                           (B) a certificate of such accountants stating that
                  they have reviewed this Agreement and stating further whether,
                  in making their audit, they have become aware of any condition
                  or event that then constitutes a Default or an Event of
                  Default, and, if they are aware that any such condition or
                  event then exists, specifying the nature and period of the
                  existence thereof (it being understood that such accountants
                  shall not be liable, directly or indirectly, for any failure
                  to obtain knowledge of any Default or Event of Default unless
                  such accountants should have obtained knowledge thereof in
                  making an audit in accordance with generally accepted auditing
                  standards or did not make such an audit),

         provided that the delivery within the time period specified above of
         the Company's Annual Report on Form 10-K for such fiscal year (together
         with the Company's annual report to 
<PAGE>   20
                                       16


         shareholders, if any, prepared pursuant to Rule 14a-3 under the
         Exchange Act) prepared in accordance with the requirements therefor and
         filed with the Securities and Exchange Commission, together with the
         accountants' certificate described in clause (B) above, shall be deemed
         to satisfy the requirements of this Section 7.1(b), unless the
         financial statements included in said Form 10-K include the accounts of
         any Unrestricted Subsidiary;

                  (c) SEC and Other Reports -- promptly upon their becoming
         available, one copy of (i) each financial statement, report, notice or
         proxy statement sent by the Company or any Restricted Subsidiary
         generally to its shareholders or to its creditors (other than the
         Company or another Subsidiary), and (ii) each regular or periodic
         report, each registration statement (without exhibits except as
         expressly requested by such holder), and each prospectus and all
         amendments thereto filed by the Company or any Subsidiary with the
         Securities and Exchange Commission;

                  (d) Notice of Default or Event of Default -- promptly, and in
         any event within five days after a Responsible Officer becoming aware
         of the existence of any Default or Event of Default, a written notice
         specifying the nature and period of existence thereof and what action
         the Company is taking or proposes to take with respect thereto;

                  (e) ERISA Matters -- promptly, and in any event within five
         days after a Responsible Officer becoming aware of any of the
         following, a written notice setting forth the nature thereof and the
         action, if any, that the Company or an ERISA Affiliate proposes to take
         with respect thereto:

                           (i) with respect to any Plan, any reportable event,
                  as defined in section 4043(b) of ERISA and the regulations
                  thereunder, for which notice thereof has not been waived
                  pursuant to such regulations as in effect on the date hereof;
                  or

                           (ii) the taking by the PBGC of steps to institute, or
                  the threatening by the PBGC of the institution of, proceedings
                  under section 4042 of ERISA for the termination of, or the
                  appointment of a trustee to administer, any Plan, or the
                  receipt by the Company or any ERISA Affiliate of a notice from
                  a Multiemployer Plan that such action has been taken by the
                  PBGC with respect to such Multiemployer Plan; or

                           (iii) any event, transaction or condition that could
                  result in the incurrence of any liability by the Company or
                  any ERISA Affiliate pursuant to Title I or IV of ERISA or the
                  penalty or excise tax provisions of the Code relating to
                  employee benefit plans, or in the imposition of any Lien on
                  any of the rights, properties 
<PAGE>   21
                                       17


                  or assets of the Company or any ERISA Affiliate pursuant to
                  Title I or IV of ERISA or such penalty or excise tax
                  provisions, if such liability or Lien, taken together with any
                  other such liabilities or Liens then existing, could
                  reasonably be expected to have a Material Adverse Effect;

                  (f) Notices from Governmental Authority -- promptly, and in
         any event within 30 days of receipt thereof, copies of any notice to
         the Company or any Subsidiary from any Federal or state Governmental
         Authority relating to any order, ruling, statute or other law or
         regulation that could reasonably be expected to have a Material Adverse
         Effect; and

                  (g) Requested Information -- with reasonable promptness, such
         other data and information relating to the business, operations,
         affairs, financial condition, assets or properties of the Company or
         any of its Subsidiaries or relating to the ability of the Company to
         perform its obligations hereunder and under the Notes or relating to
         the ability of a Subsidiary Guarantor to perform its obligations under
         its respective Subsidiary Guarantee, in each case as from time to time
         may be reasonably requested by any such holder of Notes.

7.2.       OFFICER'S CERTIFICATE.

                  Each set of financial statements delivered to a holder of
Notes pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a
certificate of a Senior Financial Officer setting forth:

                  (a) Covenant Compliance -- the information (including detailed
         calculations) required in order to establish whether the Company was in
         compliance with the requirements of Sections 10.1 through 10.8,
         inclusive, during the quarterly or annual period covered by the
         statements then being furnished (including with respect to each such
         Section, where applicable, the calculations of the maximum or minimum
         amount, ratio or percentage, as the case may be, permissible under the
         terms of such Sections, and the calculation of the amount, ratio or
         percentage then in existence); and

                  (b) Default -- a statement that such Senior Financial Officer
         has reviewed the relevant terms hereof and has made, or caused to be
         made, under his or her supervision, a review of the transactions and
         conditions of the Company and its Subsidiaries from the beginning of
         the quarterly or annual period covered by the statements then being
         furnished to the date of the certificate and that such review shall not
         have disclosed the existence during such period of any condition or
         event that constitutes a Default or an Event of Default 
<PAGE>   22
                                       18


         or, if any such condition or event existed or exists (including,
         without limitation, any such event or condition resulting from the
         failure of the Company or any Subsidiary to comply with any
         Environmental Law), specifying the nature and period of existence
         thereof and what action the Company shall have taken or proposes to
         take with respect thereto.

7.3.       INSPECTION.

                  The Company shall permit the representatives of each holder of
Notes that is an Institutional Investor:

                  (a) No Default -- if no Default or Event of Default then
         exists, at the expense of such holder and upon reasonable prior notice
         to the Company, to visit the principal executive office of the Company,
         to discuss the affairs, finances and accounts of the Company and its
         Subsidiaries with the Company's officers, and (with the consent of the
         Company, which consent will not be unreasonably withheld) its
         independent public accountants, and (with the consent of the Company,
         which consent will not be unreasonably withheld) to visit the other
         offices and properties of the Company and each Subsidiary, all at such
         reasonable times and as often as may be reasonably requested in
         writing; and

                  (b) Default -- if a Default or Event of Default then exists,
         at the expense of the Company, to visit and inspect any of the offices
         or properties of the Company or any Subsidiary, to examine all their
         respective books of account, records, reports and other papers, to make
         copies and extracts therefrom, and to discuss their respective affairs,
         finances and accounts with their respective officers, employees and
         independent public accountants (and by this provision the Company
         authorizes said accountants to discuss the affairs, finances and
         accounts of the Company and its Subsidiaries), all at such times and as
         often as may be requested.

8.         PREPAYMENT OF THE NOTES.

                  In addition to the payment of the entire unpaid principal
amount of the Notes at the final maturity thereof, the Company may make optional
prepayments in respect of the Notes as hereinafter provided.

8.1.       OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.

                  The Company may, at its option and upon notice as provided
below, prepay at any time all, or from time to time any part of, the Notes (in a
minimum amount of $5,000,000 and otherwise in multiples of $100,000) at the
principal amount so prepaid, together with interest accrued thereon to the date
of such prepayment, plus the Make-Whole Amount determined for the 
<PAGE>   23
                                       19


prepayment date with respect to such principal amount. The Company will give
each holder of Notes written notice of each optional prepayment under this
Section 8.1 not less than 30 days and not more than 60 days prior to the date
fixed for such prepayment. Each such notice shall specify the date fixed for
such prepayment (which shall be a Business Day), the aggregate principal amount
of the Notes to be prepaid on such date, the principal amount of Notes held by
such holder to be prepaid (determined in accordance with Section 8.2) and the
interest to be paid on the prepayment date with respect to such principal amount
being prepaid.

                  Each such notice of prepayment shall be accompanied by a
certificate of a Senior Financial Officer as to the estimated Make-Whole Amount
due in connection with such prepayment (calculated as if the date of such notice
were the date of the prepayment), setting forth the details of such computation.
Two Business Days prior to such prepayment of Notes, the Company shall deliver
to each holder of Notes a certificate of a Senior Financial Officer specifying
the calculation of such Make-Whole Amount as of the specified prepayment date.

8.2.       ALLOCATION OF PARTIAL PREPAYMENTS.

                  In the case of a partial prepayment of the Notes pursuant to
Section 8.1, the principal amount of the Notes to be prepaid shall be allocated
among all of the Notes at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof.

8.3.       MATURITY; SURRENDER, ETC.

                  In the case of each prepayment of Notes pursuant to this
Section 8, the principal amount of each Note to be prepaid shall mature and
become due and payable on the date fixed for such prepayment, together with
interest on such principal amount accrued to such date and the applicable
Make-Whole Amount, if any. From and after such date, unless the Company shall
fail to pay such principal amount when so due and payable, together with the
interest and Make-Whole Amount, if any, as aforesaid, interest on such principal
amount shall cease to accrue. Any Note paid or prepaid in full shall be
surrendered to the Company and canceled and shall not be reissued, and no Note
shall be issued in lieu of any prepaid principal amount of any Note.

8.4.       PURCHASE OF NOTES.

                  The Company will not and will not permit any Affiliate to
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of
the outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes.
<PAGE>   24
                                       20


8.5.       MAKE-WHOLE AMOUNT.

                  The term "MAKE-WHOLE AMOUNT" means, with respect to any Note,
an amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, provided that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the Make-Whole Amount,
the following terms have the following meanings:

                  "CALLED PRINCIPAL" means, with respect to any Note, the
         principal of such Note that is to be prepaid pursuant to Section 8.1 or
         has become or is declared to be immediately due and payable pursuant to
         Section 12.1, as the context requires.

                  "DISCOUNTED VALUE" means, with respect to the Called Principal
         of any Note, the amount obtained by discounting all Remaining Scheduled
         Payments with respect to such Called Principal from their respective
         scheduled due dates to the Settlement Date with respect to such Called
         Principal, in accordance with accepted financial practice and at a
         discount factor (applied on the same periodic basis as that on which
         interest on the Notes is payable) equal to the Reinvestment Yield with
         respect to such Called Principal.

                  "REINVESTMENT YIELD" means, with respect to the Called
         Principal of any Note, .50% (50 basis points) over the yield to
         maturity implied by (i) the yields reported, as of 10:00 A.M. (New York
         City time) on the second Business Day preceding the Settlement Date
         with respect to such Called Principal, on (x) the Bloomberg Financial
         Markets News screen PX1 or the equivalent screen provided by Bloomberg
         Financial Markets News, or (y) if such on-line market data is not at
         the time provided by Bloomberg Financial Markets News, on the display
         designated as "Page 500" on the Dow Jones Markets service (or such
         other display as may replace Page 500 on the Dow Jones Markets
         service), in any case for actively traded U.S. Treasury securities
         having a maturity equal to the remaining life of such Called Principal
         as of such Settlement Date, or (ii) if such yields are not reported as
         of such time or the yields reported as of such time are not
         ascertainable (including by way of interpolation), the Treasury
         Constant Maturity Series Yields reported, for the latest day for which
         such yields have been so reported as of the second Business Day
         preceding the Settlement Date with respect to such Called Principal, in
         Federal Reserve Statistical Release H.15 (519) (or any comparable
         successor publication) for actively traded U.S. Treasury securities
         having a constant maturity equal to the remaining life of such Called
         Principal as of such Settlement Date. Such implied yield will be
         determined, if necessary, by (a) converting U.S. Treasury bill
         quotations to bond-equivalent yields in accordance with accepted
<PAGE>   25
                                       21


         financial practice and (b) interpolating linearly between (1) the
         actively traded U.S. Treasury security with a maturity closest to and
         greater than the remaining life and (2) the actively traded U.S.
         Treasury security with a maturity closest to and less than the
         remaining life.

                  "REMAINING SCHEDULED PAYMENTS" means, with respect to the
         Called Principal of any Note, all payments of such Called Principal and
         interest thereon that would be due after the Settlement Date with
         respect to such Called Principal if no payment of such Called Principal
         were made prior to its scheduled due date, provided that if such
         Settlement Date is not a date on which interest payments are due to be
         made under the terms of the Notes, then the amount of the next
         succeeding scheduled interest payment will be reduced by the amount of
         interest accrued to such Settlement Date and required to be paid on
         such Settlement Date pursuant to Section 8.1 or 12.1.

                  "SETTLEMENT DATE" means, with respect to the Called Principal
         of any Note, the date on which such Called Principal is to be prepaid
         pursuant to Section 8.1 or has become or is declared to be immediately
         due and payable pursuant to Section 12.1, as the context requires.

9.         AFFIRMATIVE COVENANTS.

                  The Company covenants that so long as any of the Notes are
outstanding:

9.1.       COMPLIANCE WITH LAW.

                  The Company will and will cause each of its Subsidiaries to
comply with all laws, ordinances or governmental rules or regulations to which
each of them is subject, including without limitation Environmental Laws, and
will obtain and maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the ownership of
their respective properties or to the conduct of their respective businesses, in
each case to the extent necessary to ensure that non-compliance with such laws,
ordinances or governmental rules or regulations or failures to obtain or
maintain in effect such licenses, certificates, permits, franchises and other
governmental authorizations would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

9.2.       INSURANCE.

                  The Company will and will cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers, insurance with respect
to their respective properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts (including
deductibles,
<PAGE>   26
                                       22


co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated.

9.3.       MAINTENANCE OF PROPERTIES.

                  The Company will and will cause each of its Subsidiaries to
maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary wear
and tear), so that the business carried on in connection therewith may properly
conducted at all times, provided that this Section shall not prevent the Company
or any Subsidiary from discontinuing the operation and the maintenance of any of
its properties if such discontinuance is desirable in the conduct of its
business and the Company has concluded that such discontinuance would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

9.4.       PAYMENT OF TAXES AND CLAIMS.

                  The Company will and will cause each of its Subsidiaries to
file all income tax or similar tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable on
such returns and all other taxes, assessments, governmental charges, or levies
payable by any of them, to the extent such taxes and assessments have become due
and payable and before they have become delinquent, provided that neither the
Company nor any Subsidiary need pay any such tax or assessment if (i) the
amount, applicability or validity thereof is contested by the Company or such
Subsidiary on a timely basis in good faith and in appropriate proceedings, and
the Company or a Subsidiary has established adequate reserves therefor in
accordance with GAAP on the books of the Company or such Subsidiary or (ii) the
nonpayment of all such taxes and assessments in the aggregate would not
reasonably be expected to have a materially adverse effect on the business,
operations, affairs, financial condition, properties or assets of the Company
and its Subsidiaries taken as a whole.

9.5.       CORPORATE EXISTENCE, ETC.

                  The Company will at all times preserve and keep in full force
and effect its corporate existence. Subject to Section 10.5, the Company will at
all times preserve and keep in full force and effect the corporate existence of
each of its Subsidiaries (unless merged into the Company or a Subsidiary) and
all rights and franchises of the Company and its Subsidiaries unless, in the
good faith judgment of the Company, the termination of or failure to preserve
and keep in full force and effect such corporate existence, right or franchise
would not, individually or in the aggregate, have a Material Adverse Effect.
<PAGE>   27
                                       23


9.6.       ADDITIONAL SUBSIDIARY GUARANTEES; RELEASE OF SUBSIDIARY GUARANTEES.

                 (a) So long as the Bank Credit Agreement remains in effect the
Company will cause each Subsidiary that becomes a borrower or a guarantor
thereunder or in respect thereof after the date of the Closing (if such
Subsidiary is not at the time a Subsidiary Guarantor) to become a Subsidiary
Guarantor by executing and delivering a Subsidiary Guarantee, prior to or
concurrently with so becoming a borrower or a guarantor; and promptly and in any
event within ten Business Days thereafter the Company will furnish each holder
of the Notes with a counterpart of such executed Subsidiary Guarantee, together
with an opinion of Snow Becker Krauss P.C. or other counsel reasonably
satisfactory to the Required Holders (which opinion shall be reasonably
satisfactory to the Required Holders and may be subject to customary exceptions,
qualifications and limitations under the circumstances) to the effect that such
Subsidiary Guarantee has been duly authorized, executed and delivered by such
Subsidiary and is valid, binding and enforceable in accordance with its terms.

                 (b) The Company will cause each Subsidiary Guarantee to remain
in full force and effect at all times after the execution and delivery thereof,
provided that any Subsidiary the Voting Stock of which is being disposed of as
an entirety shall, at the Company's request, be discharged from all of its
obligations and liabilities under its Subsidiary Guarantee by the Required
Holders entering into a release in form and substance reasonably satisfactory to
the Required Holders, and you and each other holder of a Note, by acceptance of
such Note, agree to enter into such a satisfactory release promptly upon
request, except that this proviso shall not apply (i) if a Default or Event of
Default has occurred and is continuing, (ii) to a Subsidiary if any amount is
then due and payable under its Subsidiary Guarantee or (iii) to a Subsidiary
which at the time is a guarantor of any other Indebtedness of the Company or
another Subsidiary party to a Subsidiary Guarantee that is not also concurrently
being released.

10.        NEGATIVE COVENANTS.

                  The Company covenants that so long as any of the Notes are
outstanding:

10.1.      TOTAL INDEBTEDNESS; RESTRICTED SUBSIDIARY INDEBTEDNESS.

                  (a) The Company will not and will not permit any Restricted
Subsidiary to create, assume, incur, guarantee or otherwise become liable in
respect of any Indebtedness except:

                  (i) Additional Borrowing Facility Indebtedness, provided that
         at the time such Additional Borrowing Facility Indebtedness is incurred
         the aggregate unpaid principal
<PAGE>   28
                                       24


         amount of Borrowing Facility Indebtedness does not exceed the Maximum
         Amount as then in effect,

                  (ii) Indebtedness owing by a Restricted Subsidiary to the
         Company or to a Wholly-Owned Restricted Subsidiary, and

                  (iii) other Indebtedness, provided that immediately after
         giving effect thereto and to the application of the proceeds of such
         Indebtedness the pro forma Total Indebtedness to EBITDA Ratio does not
         exceed 3.50 to 1.

                  (b) The Company will not permit any Restricted Subsidiary to
create, assume, incur, guarantee or otherwise become liable in respect of any
Indebtedness except

                  (i) Indebtedness secured by Liens permitted by Section 10.2(b)
         or (c),

                  (ii) in the case of any Person that after the date of the
         Closing becomes a Restricted Subsidiary or is consolidated with or
         merged with or into a Restricted Subsidiary or sells, leases or
         otherwise disposes of all of its property to a Restricted Subsidiary,
         Indebtedness outstanding at the time such Person becomes a Restricted
         Subsidiary or is so consolidated or merged or effects such sale, lease
         or other disposition of property (and not created in anticipation
         thereof),

                  (iii) Indebtedness evidenced by the Subsidiary Guarantees and
         other guarantees by the Subsidiary Guarantors in respect of unsecured
         Indebtedness of the Company (subject to the requirements of Section
         9.6),

                   (iv) Indebtedness owing to the Company or a Wholly-Owned
         Restricted Subsidiary, and

                   (v) other Indebtedness, provided that immediately after
         giving effect to such other Indebtedness Priority Debt does not exceed
         15% of Consolidated Capitalization and Adjusted Priority Debt does not
         exceed 5% of Consolidated Capitalization.

As used in this Agreement the term "PRIORITY DEBT" means, at any date, the sum
(without duplication) of (A) the aggregate unpaid principal amount of
Indebtedness (including Capitalized Lease Obligations) of the Company secured by
Liens permitted by Section 10.2(e) plus (B) the aggregate unpaid principal
amount of Indebtedness of all Restricted Subsidiaries (other than Indebtedness
permitted by subclause (i), (ii), (iii) or (iv) of clause (b) above) plus (C)
the aggregate Attributable Debt in connection with all sale and leaseback
transactions of the Company and its Subsidiaries entered into after the date of
the Closing in accordance with the provisions of Section 10.3; and 
<PAGE>   29
                                       25


the term "ADJUSTED PRIORITY DEBT" means, at any date, the aggregate amount of
Priority Debt attributable to the Company and its Domestic Restricted
Subsidiaries.

                  For purposes of this Section 10.1: a Restricted Subsidiary
shall be deemed to have incurred Indebtedness in respect of any obligation
previously owed to the Company or to a Wholly-Owned Restricted Subsidiary on the
date the obligee ceases for any reason to be the Company or a Wholly-Owned
Restricted Subsidiary; a Person that hereafter becomes a Restricted Subsidiary
shall be deemed at that time to have incurred all of its outstanding
Indebtedness; any Unrestricted Subsidiary or other Person that hereafter becomes
a Restricted Subsidiary shall be deemed at that time to have incurred all of its
outstanding Indebtedness; and the Company shall be deemed to have incurred
Indebtedness in respect of a Guaranty of the type described in clause (b)(ii) of
the definition of "Guaranty" in Schedule B, with respect to Indebtedness of any
other Person, at such time as the obligations of the Company in respect of such
Guaranty are required to be shown as a liability on the balance sheet of the
Company prepared in accordance with GAAP.

10.2.      LIENS.

                  The Company will not and will not permit any Restricted
Subsidiary to create, assume, incur or suffer to exist any Lien upon or with
respect to any property or assets, whether now owned or hereafter acquired,
securing any Indebtedness without making effective provision (pursuant to
documentation in form and substance reasonably satisfactory to the Required
Holders) whereby the Notes shall be secured by such Lien equally and ratably
with or prior to any and all Indebtedness and other obligations to be secured
thereby, provided that nothing in this Section 10.2 shall prohibit

                  (a) Liens in respect of property of the Company or a
         Restricted Subsidiary existing on the date of the Closing and described
         in Schedule 5.15, and any extension, renewal or replacement of any such
         Lien (including successive extensions, renewals and replacements),
         provided that the principal amount of Indebtedness (or the maximum
         commitment therefor) secured by any such Lien is not increased and such
         Lien does not extend to or cover any property other than the property
         covered by such Lien on the date of the Closing;

                  (b) Liens in respect of property acquired or constructed by
         the Company or a Restricted Subsidiary after the date of the Closing,
         which are created at the time of or within 180 days after acquisition
         or completion of construction of such property to secure Indebtedness
         assumed or incurred to finance all or any part of the purchase price or
         cost of construction of such property, provided that in any such case
<PAGE>   30
                                       26


                           (i) no such Lien shall extend to or cover any other
                  property of the Company or such Restricted Subsidiary, as the
                  case may be, and

                           (ii) the aggregate principal amount of Indebtedness
                  secured by all such Liens in respect of any such property
                  shall not exceed the cost of such property and any
                  improvements then being financed;

                  (c) Liens in respect of property acquired by the Company or a
         Restricted Subsidiary after the date of the Closing, existing on such
         property at the time of acquisition thereof (and not created in
         anticipation thereof), or in the case of any Person that after the date
         of the Closing becomes a Restricted Subsidiary or is consolidated with
         or merged with or into the Company or a Restricted Subsidiary or sells,
         leases or otherwise disposes of all or substantially all of its
         property to the Company or a Restricted Subsidiary, Liens existing at
         the time such Person becomes a Restricted Subsidiary or is so
         consolidated or merged or effects such sale, lease or other disposition
         of property (and not created in anticipation thereof), provided that in
         any such case no such Lien shall extend to or cover any other property
         of the Company or such Restricted Subsidiary, as the case may be;

                  (d) Liens securing Indebtedness owed by a Restricted
         Subsidiary to the Company or to a Wholly-Owned Restricted Subsidiary;
         and

                  (e) Liens which would otherwise not be permitted by Section
         10.2(a), (b), (c) or (d), securing additional Indebtedness of the
         Company or a Restricted Subsidiary, provided that after giving effect
         thereto Priority Debt does not exceed 15% of Consolidated
         Capitalization and Adjusted Priority Debt does not exceed 5% of
         Consolidated Capitalization.

For purposes of this Section 10.2 any Lien existing in respect of property at
the time such property is acquired or in respect of property of a Person at the
time such Person is acquired, consolidated or merged with or into the Company or
a Restricted Subsidiary shall be deemed to have been created at that time.

10.3.      LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.

                  The Company will not, and will not permit any Restricted
Subsidiary to sell, lease, transfer or otherwise dispose of (collectively, a
"TRANSFER") any asset on terms whereby the asset or a substantially similar
asset is or may be leased or reacquired by the Company or any Restricted
Subsidiary over a period in excess of three years, unless either
<PAGE>   31
                                       27


                  (a) after giving effect to such transaction and the incurrence
         of Attributable Debt in respect thereof Priority Debt does not exceed
         15% of Consolidated Capitalization and Adjusted Priority Debt does not
         exceed 5% of Consolidated Capitalization, or

                  (b) the net proceeds realized from the transfer are applied
         within 180 days after the receipt thereof to reinvest in property or
         assets for use in the business of the Company and its Restricted
         Subsidiaries or to repay unsubordinated Funded Indebtedness of the
         Company or a Restricted Subsidiary.

10.4.      MAINTENANCE OF CONSOLIDATED NET WORTH.

                  The Company will not at any time permit Consolidated Net Worth
to be less than the sum of (a) $190,000,000 plus (b) 35% of Consolidated Net
Income for the period of three consecutive fiscal quarters ending December 31,
1998 (if Consolidated Net Income for such period is positive) plus (c) 35% of
Consolidated Net Income for each fiscal year thereafter for which Consolidated
Net Income is positive.

10.5.      MERGER, CONSOLIDATION, ETC.

                  The Company will not and will not permit any Restricted
Subsidiary to consolidate with or merge with any other corporation or convey,
transfer or lease all or substantially all of its assets in a single transaction
or series of transactions to any Person except:

                  (a) a Restricted Subsidiary may consolidate with or merge with
         any other corporation or convey or transfer all or substantially all of
         its assets to

                           (i) the Company (provided that the Company shall be
                  the continuing or surviving corporation) or a then existing
                  Wholly-Owned Restricted Subsidiary, or

                           (ii)     any other Person, provided that

                                    (A) if such Restricted Subsidiary is a
                           Subsidiary Guarantor, the continuing, surviving or
                           acquiring corporation (if not such Subsidiary) shall
                           have (1) executed and delivered to each holder of a
                           Note its assumption of the due and punctual
                           performance and observance of all obligations of such
                           Restricted Subsidiary under its Subsidiary Guarantee
                           and (2) caused to be delivered to each holder of a
                           Note an opinion of counsel reasonably satisfactory to
                           the Required Holders to the effect that all
                           agreements or instruments effecting such assumption
                           are 
<PAGE>   32
                                       28


                           enforceable in accordance with their terms and comply
                           with the terms hereof, and

                                    (B) immediately after giving effect to such
                           transaction, no Default or Event of Default shall
                           have occurred and be continuing; and

                  (b) the Company may consolidate with or merge with any other
         corporation or convey or transfer all or substantially all of its
         assets to a corporation organized and existing under the laws of the
         United States or any State thereof, provided that

                           (i) the continuing, surviving or acquiring
                  corporation (if not the Company) shall have (A) executed and
                  delivered to each holder of a Note its assumption of the due
                  and punctual performance and observance of all obligations of
                  the Company under this Agreement, the Other Agreements and the
                  Notes and (B) caused to be delivered to each holder of a Note
                  an opinion of counsel reasonably satisfactory to the Required
                  Holders to the effect that all agreements or instruments
                  effecting such assumption are enforceable in accordance with
                  their terms and comply with the terms hereof, and

                           (ii) immediately after giving effect to such
                  transaction, (A) no Default or Event of Default shall have
                  occurred and be continuing and (B) the Company (or such
                  continuing, surviving or acquiring corporation if not the
                  Company) would be permitted to incur at least $1 of additional
                  Indebtedness under Section 10.1(a).

No such conveyance, transfer or lease of substantially all of the assets of the
Company or a Subsidiary Guarantor shall have the effect of releasing the Company
or such Subsidiary Guarantor or any successor corporation that shall theretofore
have become such in the manner prescribed in this Section 10.5 from its
liability under this Agreement or the Notes or its Subsidiary Guarantee, as the
case may be.

10.6.      LINES OF BUSINESS.

                  The Company will not and will not permit any Restricted
Subsidiary to engage to any substantial extent in any business other than the
businesses in which the Company and its Restricted Subsidiaries are engaged on
the date of the Closing (as described in the Memorandum) and businesses
reasonably related thereto or in furtherance thereof.

10.7.      TRANSACTIONS WITH AFFILIATES.

                  The Company will not and will not permit any Restricted
Subsidiary to enter into directly or indirectly any Material 
<PAGE>   33
                                       29


transaction or Material group of related transactions (including without
limitation the purchase, lease, sale or exchange of properties of any kind or
the rendering of any service) with any Affiliate (other than the Company or
another Restricted Subsidiary), except in the ordinary course and pursuant to
the reasonable requirements of the Company's or such Restricted Subsidiary's
business and upon fair and reasonable terms no less favorable to the Company or
such Restricted Subsidiary than would be obtainable in a comparable arm's-length
transaction with a Person not an Affiliate.

10.8.      DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES.

                  (a) Subject to paragraph (c) below, the Company will not
designate any Subsidiary as an Unrestricted Subsidiary after the date of the
Closing unless such Subsidiary was not previously (directly or indirectly) an
Unrestricted Subsidiary, except that any Unrestricted Subsidiary that is
designated as a Restricted Subsidiary after the date of the Closing pursuant to
paragraph (b) below may subsequently be redesignated as an Unrestricted
Subsidiary so long as such Subsidiary is not thereafter (directly or indirectly)
redesignated as a Restricted Subsidiary for at least five years after such
redesignation as an Unrestricted Subsidiary. After the expiration of such
five-year period before the redesignation of an Unrestricted Subsidiary as a
Restricted Subsidiary, the foregoing limitations as to designations and
redesignations shall apply with respect to such Subsidiary during successive
five-year periods.

                  (b) Subject to paragraph (c) below, the Company will not
designate any Subsidiary as a Restricted Subsidiary after the date of the
Closing unless such Subsidiary was not previously (directly or indirectly) a
Restricted Subsidiary, except that any Restricted Subsidiary that is designated
as an Unrestricted Subsidiary after the date of the Closing pursuant to
paragraph (a) above may subsequently be redesignated as a Restricted Subsidiary
so long as such Subsidiary is not thereafter (directly or indirectly)
redesignated as an Unrestricted Subsidiary for at least five years after such
redesignation as a Restricted Subsidiary. After the expiration of such five-year
period before the redesignation of a Restricted Subsidiary as an Unrestricted
Subsidiary, the foregoing limitations as to designations and redesignations
shall apply with respect to such Subsidiary during successive five-year periods.

                  (c) The Company will not designate any Restricted Subsidiary
as an Unrestricted Subsidiary or any Person as a Restricted Subsidiary unless
immediately after giving pro forma effect to such designation, (i) no Default or
Event of Default shall have occurred and be continuing and (ii) the Company
would be permitted to incur at least $1 of additional Indebtedness under Section
10.1(a).
<PAGE>   34
                                       30


                  (d) Forthwith and in any event within ten Business Days after
a designation pursuant to paragraph (a) or (b) above, the Company will furnish
each holder of the Notes with a certificate of a Senior Financial Officer
specifying the effective date of such designation and setting forth calculations
in reasonable detail demonstrating compliance with the conditions to such
designation set forth in paragraph (c) above.

11.        EVENTS OF DEFAULT.

                  An "EVENT OF DEFAULT" shall exist if any of the following
conditions or events shall occur and be continuing:

                  (a) the Company defaults in the payment of any principal or
         Make-Whole Amount, if any, on any Note when the same becomes due and
         payable, whether at maturity or at a date fixed for prepayment or by
         declaration or otherwise; or

                  (b) the Company defaults in the payment of any interest on any
         Note for more than five Business Days after the same becomes due and
         payable; or

                  (c) the Company defaults in the performance of or compliance
         with any term contained in Section 7.1(d) or Sections 10.1 to 10.5,
         inclusive, or Section 10.8; or

                  (d) the Company defaults in the performance of or compliance
         with any term contained herein (other than those referred to in
         paragraphs (a), (b) and (c) of this Section 11) and such default is not
         remedied within 30 days after a Responsible Officer obtains knowledge
         of such default; or

                  (e) any representation or warranty made in writing by or on
         behalf of the Company or any Subsidiary or by any officer of the
         Company or any Subsidiary in this Agreement or a Subsidiary Guarantee
         or in any writing furnished in connection with the transactions
         contemplated hereby proves to have been false or incorrect in any
         material respect on the date as of which made; or

                  (f) (i) the Company or any Restricted Subsidiary is in default
         (as principal or as guarantor or other surety) in the payment of any
         principal of or premium or make-whole amount or interest on any
         Indebtedness (other than the Notes) that is outstanding in an aggregate
         principal amount of at least $5,000,000 beyond any period of grace
         provided with respect thereto, or (ii) the Company or any Restricted
         Subsidiary is in default in the performance of or compliance with any
         term of any evidence of any Indebtedness outstanding in an aggregate
         principal amount of at least $5,000,000 or of any mortgage, indenture
         or other agreement relating thereto or any other condition exists, and
         as a consequence of such default or condition such Indebtedness 
<PAGE>   35
                                       31


         has become, or has been declared, due and payable before its stated
         maturity or before its regularly scheduled dates of payment, or (iii)
         as a consequence of the occurrence or continuation of any event or
         condition (other than the passage of time or the right of the holder of
         Indebtedness outstanding in an aggregate principal amount of at least
         $5,000,000 to convert such Indebtedness into equity interests or a sale
         of assets or other transaction that is permitted if made in connection
         with a repayment of Indebtedness), the Company or any Restricted
         Subsidiary has become obligated to purchase or repay such Indebtedness
         before its regular maturity or before its regularly scheduled dates of
         payment; or

                  (g) the Company or any Significant Subsidiary (i) is generally
         not paying, or admits in writing its inability to pay, its debts as
         they become due, (ii) files, or consents by answer or otherwise to the
         filing against it of, a petition for relief or reorganization or
         arrangement or any other petition in bankruptcy, for liquidation or to
         take advantage of any bankruptcy, insolvency, reorganization,
         moratorium or other similar law of any jurisdiction, (iii) makes an
         assignment for the benefit of its creditors, (iv) consents to the
         appointment of a custodian, receiver, trustee or other officer with
         similar powers with respect to it or with respect to any substantial
         part of its property, (v) is adjudicated as insolvent or to be
         liquidated, or (vi) takes corporate action for the purpose of any of
         the foregoing; or

                  (h) a court or governmental authority of competent
         jurisdiction enters an order appointing, without consent by the Company
         or any Significant Subsidiary, a custodian, receiver, trustee or other
         officer with similar powers with respect to it or with respect to any
         substantial part of its property, or constituting an order for relief
         or approving a petition for relief or reorganization or any other
         petition in bankruptcy or for liquidation or to take advantage of any
         bankruptcy or insolvency law of any jurisdiction, or ordering the
         dissolution, winding-up or liquidation of the Company or any such
         Subsidiary, or any such petition shall be filed against the Company or
         any such Subsidiary and such petition shall not be dismissed within 60
         days; or

                  (i) a final judgment or judgments for the payment of money
         aggregating in excess of $5,000,000 are rendered against one or more of
         the Company and its Restricted Subsidiaries which judgments are not,
         within 60 days after entry thereof, bonded, paid, discharged or stayed
         pending appeal, or are not discharged within 60 days after the
         expiration of such stay; or

                  (j) if (i) any Significant Subsidiary (or any Person at its
         authorized direction or on its behalf) shall assert 
<PAGE>   36
                                       32


         in writing that the Subsidiary Guarantee of such Significant Subsidiary
         is unenforceable in any material respect or the Subsidiary Guarantee of
         any such Significant Subsidiary shall cease to be in full force and
         effect as an enforceable instrument, or (ii) any other Subsidiary
         Guarantee shall cease to be in full force and effect as an enforceable
         instrument (other than solely by reason of an event described in
         paragraph (g) or (h) above) or any other event described in clause (i)
         above shall occur both with respect to any such other Subsidiary
         Guarantee and with respect to the obligations of the respective
         Subsidiary Guarantor under the Bank Credit Agreement; or

                  (k) if (i) any Plan shall fail to satisfy the minimum funding
         standards of ERISA or the Code for any plan year or part thereof or a
         waiver of such standards or extension of any amortization period is
         sought or granted under section 412 of the Code, (ii) a notice of
         intent to terminate any Plan shall have been or is reasonably expected
         to be filed with the PBGC or the PBGC shall have instituted proceedings
         under ERISA section 4042 to terminate or appoint a trustee to
         administer any Plan or the PBGC shall have notified the Company or any
         ERISA Affiliate that a Plan may become a subject of any such
         proceedings, (iii) the aggregate "amount of unfunded benefit
         liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
         all Plans, determined in accordance with Title IV of ERISA, shall
         exceed $1,000,000, (iv) the Company or any ERISA Affiliate shall have
         incurred or is reasonably expected to incur any liability pursuant to
         Title I or IV of ERISA or the penalty or excise tax provisions of the
         Code relating to employee benefit plans, (v) the Company or any ERISA
         Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or
         any Subsidiary establishes or amends any employee welfare benefit plan
         that provides post-employment welfare benefits in a manner that would
         increase the liability of the Company or any Subsidiary thereunder; and
         any such event or events described in clauses (i) through (vi) above,
         either individually or together with any other such event or events,
         would reasonably be expected to have a Material Adverse Effect.

As used in Section 11(k), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in section 3 of ERISA.

12.        REMEDIES ON DEFAULT, ETC.

12.1.      ACCELERATION.

                  (a) If an Event of Default with respect to the Company
described in paragraph (g) or (h) of Section 11 has occurred, all the Notes then
outstanding shall automatically become immediately due and payable.
<PAGE>   37
                                       33


                  (b) If any other Event of Default has occurred and is
continuing, the Required Holders may at any time at its or their option, by
notice or notices to the Company, declare all the Notes at the time outstanding
to be immediately due and payable.

                  (c) If any Event of Default described in paragraph (a) or (b)
of Section 11 has occurred and is continuing, any holder or holders of Notes at
the time outstanding affected by such Event of Default may at any time, at its
or their option, by notice or notices to the Company, declare all the Notes held
by it or them to be immediately due and payable.

                  Upon any Note becoming due and payable under this Section
12.1, whether automatically or by declaration, such Note will forthwith mature
and the entire unpaid principal amount of such Note, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided) and that the provision for payment of a
Make-Whole Amount by the Company in the event that the Notes are prepaid or are
accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.

12.2.      OTHER REMEDIES.

                  If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have been
declared immediately due and payable under Section 12.1, the holder of any Note
at the time outstanding may proceed to protect and enforce the rights of such
holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise.

12.3.      RESCISSION.

                  At any time after any Notes have been declared due and payable
pursuant to paragraph (b) or (c) of Section 12.1, the Required Holders, by
written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Company has paid all overdue interest on the Notes,
all principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any 
<PAGE>   38
                                       34


overdue interest in respect of the Notes, at the Default Rate, (b) all Events of
Default and Defaults, other than the non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived
pursuant to Section 17, and (c) no judgment or decree has been entered for the
payment of any monies due pursuant hereto or to the Notes. No rescission and
annulment under this Section 12.3 will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.

12.4.      NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.

                  No course of dealing and no delay on the part of any holder of
any Note in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such holder's rights, powers or remedies. No
right, power or remedy conferred by this Agreement or by any Note upon any
holder thereof shall be exclusive of any other right, power or remedy referred
to herein or therein or now or hereafter available at law, in equity, by statute
or otherwise. Without limiting the obligations of the Company under Section 15,
the Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including without
limitation reasonable attorneys' fees, expenses and disbursements.

13.        REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

13.1.      REGISTRATION OF NOTES.

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

13.2.      TRANSFER AND EXCHANGE OF NOTES.

                  Upon surrender of any Note at the principal executive office
of the Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or his attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part
<PAGE>   39
                                       35


thereof), within five Business Days thereafter the Company shall execute and
deliver, at the Company's expense (except as provided below), one or more new
Notes (as requested by the holder thereof) in exchange therefor, in an aggregate
principal amount equal to the unpaid principal amount of the surrendered Note.
Each such new Note shall be payable to such Person as such holder may request.
Each such new Note shall be dated and bear interest from the date to which
interest shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $500,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $500,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representation set forth in Section 6.2 and
shall also be deemed to have agreed to provide customary assurances as to the
matters referred to in Section 6.1.

13.3.      REPLACEMENT OF NOTES.

                  Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any Note (which evidence shall be, in the case of an Institutional
Investor, notice from such Institutional Investor of such ownership and such
loss, theft, destruction or mutilation), and

                  (a) in the case of loss, theft or destruction, of indemnity
         reasonably satisfactory to it (provided that if the holder of such Note
         is, or is a nominee for, an original Purchaser or any other
         Institutional Investor, such Person's own unsecured agreement of
         indemnity shall be deemed to be satisfactory), or

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

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

14.        PAYMENTS ON NOTES.

14.1.      PLACE OF PAYMENT.

                  Subject to Section 14.2, payments of principal, premium, if
any, and interest becoming due and payable on the 
<PAGE>   40
                                       36


Notes shall be made at the principal office of Citibank, N.A. in New York City.
The Company may at any time, by notice to each holder of a Note, change the
place of payment of the Notes so long as such place of payment shall be either
the principal office of the Company in New York City or the principal office of
a bank or trust company in New York City.

14.2.      HOME OFFICE PAYMENT.

                  So long as you or your nominee shall be the holder of any
Note, and notwithstanding anything contained in Section 14.1 or in such Note to
the contrary, the Company will pay all sums becoming due on such Note for
principal, Make-Whole Amount, if any, and interest by the method and at the
address specified for such purpose below your name in Schedule A, or by such
other method or at such other address as you shall have from time to time
specified to the Company in writing for such purpose, without the presentation
or surrender of such Note or the making of any notation thereon, except that
upon written request of the Company made concurrently with or reasonably
promptly after payment or prepayment in full of any Note, you shall surrender
such Note for cancellation, reasonably promptly after any such request, to the
Company at its principal executive office or at the place of payment most
recently designated by the Company pursuant to Section 14.1. Prior to any sale
or other disposition of any Note held by you or your nominee you will, at your
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to the
Company in exchange for a new Note or Notes pursuant to Section 13.2. The
Company will afford the benefits of this Section 14.2 to any Institutional
Investor that is the direct or indirect transferee of any Note purchased by you
under this Agreement and that has made the same agreement relating to such Note
as you have made in this Section 14.2.

15.        EXPENSES, ETC.

15.1.        TRANSACTION EXPENSES.

                  Whether or not the transactions contemplated hereby are
consummated, the Company will pay all costs and expenses (including reasonable
attorneys' fees of your special counsel and, if reasonably required, local or
other counsel) incurred by you and each Other Purchaser or holder of a Note in
connection with such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement or the Notes (whether or not
such amendment, waiver or consent becomes effective), including without
limitation: (a) the costs and expenses incurred in enforcing or defending (or
reasonably determining whether or how to enforce or defend) any rights under
this Agreement or the Notes or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement or the Notes, or by reason of being a holder of any Note, and (b) the
costs and expenses,
<PAGE>   41
                                       37


including financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Company or any Subsidiary or in connection with any
work-out or restructuring of the transactions contemplated hereby and by the
Notes. The Company will pay, and will save you and each other holder of a Note
harmless from, all claims in respect of any fees, costs or expenses if any, of
brokers and finders (other than those retained by you).

                  In furtherance of the foregoing, on the date of the Closing
the Company will pay or cause to be paid the fees and disbursements and other
charges (including estimated unposted disbursements and other charges as of the
date of the Closing) of your special counsel which are reflected in the
statement of such special counsel submitted to the Company on or prior to the
date of the Closing. The Company will also pay, promptly upon receipt of
supplemental statements therefor, reasonable additional fees, if any, and
disbursements and charges of such special counsel in connection with the
transactions hereby contemplated (including disbursements and other charges
unposted as of the date of the Closing to the extent such disbursements exceed
estimated amounts paid as aforesaid).

15.2.        SURVIVAL.

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

16.        SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

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

17.        AMENDMENT AND WAIVER.

17.1.        REQUIREMENTS.

                  This Agreement and the Notes may be amended, and the
observance of any term hereof or of the Notes may be waived
<PAGE>   42
                                       38


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

17.2.        SOLICITATION OF HOLDERS OF NOTES.

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

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

17.3.      BINDING EFFECT, ETC.

                  Any amendment or waiver consented to as provided in this
Section 17 applies equally to all holders of Notes and is binding upon them and
upon each future holder of any Note and upon the Company without regard to
whether such Note has been marked to indicate such amendment or waiver. No such
amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or impair
any right consequent thereon. No course of dealing between the Company and the
holder of any Note nor any
<PAGE>   43
                                       39


delay in exercising any rights hereunder or under any Note shall operate as a
waiver of any rights of any holder of such Note. As used herein, the term "THIS
AGREEMENT" and references thereto shall mean this Agreement as it may from time
to time be amended or supplemented.

17.4.      NOTES HELD BY COMPANY, ETC.

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

18.        NOTICES.

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

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

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

                  (iii) if to the Company, to the Company at its address set
         forth at the beginning hereof to the attention of Chief Financial
         Officer, or at such other address as the Company shall have specified
         to the holder of each Note in writing.

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

19.        REPRODUCTION OF DOCUMENTS.

                  This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may hereafter
be executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
<PAGE>   44
                                       40


previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.

20.        CONFIDENTIAL INFORMATION.

                  For the purposes of this Section 20, "CONFIDENTIAL
INFORMATION" means information delivered to you by or on behalf of the Company
or any Subsidiary in connection with the transactions contemplated by or
otherwise pursuant to this Agreement that is proprietary in nature and that was
clearly marked or labeled or otherwise adequately identified when received by
you as being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was publicly known
or otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any person acting on
your behalf, (c) otherwise becomes known to you other than through disclosure by
the Company or any Subsidiary or (d) constitutes financial statements delivered
to you under Section 7.1 that are otherwise publicly available. You will
maintain the confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to protect confidential information of
third parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, officers, trustees, employees,
agents, attorneys and affiliates (to the extent such disclosure reasonably
relates to the administration of the investment represented by your Notes), (ii)
your financial advisors and other professional advisors whose duties require
them to hold confidential the Confidential Information substantially in
accordance with the terms of this Section 20, (iii) any other holder of any
Note, (iv) any Institutional Investor to which you sell or offer to sell such
Note or any part thereof or any participation therein (if such Person has agreed
in writing prior to its receipt of such Confidential Information to be bound by
the provisions of this Section 20), (v) any Person from which you offer to
purchase any security of the Company (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 20), (vi) any federal or state regulatory authority having
jurisdiction over you, (vii) the National Association of 
<PAGE>   45
                                       41


Insurance Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information about your
investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation to which
you are a party or (z) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under your Notes and this Agreement. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 20 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 20.

21.        SUBSTITUTION OF PURCHASER.

                  You shall have the right to substitute any one of your
Affiliates as the purchaser of the Notes that you have agreed to purchase
hereunder, by written notice to the Company, which notice shall be signed by
both you and such Affiliate, shall contain such Affiliate's agreement to be
bound by this Agreement and shall contain a confirmation by such Affiliate of
the accuracy with respect to it of the representations set forth in Section 6.
Upon receipt of such notice, wherever the word "you" is used in this Agreement
(other than in this Section 21), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so substituted as
a purchaser hereunder and such Affiliate thereafter transfers to you all of the
Notes then held by such Affiliate, upon receipt by the Company of notice of such
transfer, wherever the word "you" is used in this Agreement, such word shall no
longer be deemed to refer to such Affiliate, but shall refer to you, and you
shall have all the rights of an original holder of the Notes under this
Agreement.

22.        MISCELLANEOUS.

22.1.      SUCCESSORS AND ASSIGNS.

                  All covenants and other agreements contained in this Agreement
by or on behalf of any of the parties hereto bind and inure to the benefit of
their respective successors and assigns (including without limitation any
subsequent holder of a Note) whether so expressed or not.
<PAGE>   46
                                       42


22.2.      CONSTRUCTION.

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

22.3.      PAYMENTS DUE ON NON-BUSINESS DAYS.

                  Anything in this Agreement or the Notes to the contrary
notwithstanding (but without limiting the requirement in Section 8.1 that notice
of any optional prepayment specify a Business Day as the date fixed for such
prepayment), any payment of principal of or Make-Whole Amount (if any) or
interest on any Note that is due on a date other than a Business Day shall be
made on the next succeeding Business Day without including the additional days
elapsed in the computation of the interest payable on such next succeeding
Business Day.

22.4.      SEVERABILITY.

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

22.5.      ACCOUNTING TERMS; PRO FORMA CALCULATIONS.

                  All accounting terms used herein which are not expressly
defined in this Agreement have the meanings respectively given to them in
accordance with GAAP. Except as otherwise specifically provided herein, all
computations made pursuant to this Agreement shall be made in accordance with
GAAP and all balance sheets and other financial statements with respect thereto
shall be prepared in accordance with GAAP. Except as otherwise specifically
provided herein, any consolidated financial statement or financial computation
shall be done in accordance with GAAP; and, if at the time that any such
statement or computation is required to be made the Company shall not have any
Restricted Subsidiary, such terms shall mean a financial statement or a
financial computation, as the case may be, with respect to the Company only.

                  Any pro forma computation required to be made hereby shall
include adjustments (without limitation as to other 
<PAGE>   47
                                       43


appropriate pro forma adjustments in accordance with generally accepted
financial practice) giving effect to all acquisitions and dispositions made
during the period with respect to which such computation is being made as if
such acquisitions and dispositions were made on the first day of such period.

22.6.      COUNTERPARTS.

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

22.7.      GOVERNING LAW.

                  This Agreement and the Notes shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the laws
of the State of New York excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction other
than such State.
<PAGE>   48
                                       44


                  If you are in agreement with the foregoing, please sign the
form of agreement in the space below provided on a counterpart of this Agreement
and return it to the Company, whereupon the foregoing shall become a binding
agreement between you and the Company.


                                                     Very truly yours,

                                                     PAXAR CORPORATION


                                                     By______________________
                                                           President


The foregoing is hereby agreed 
to as of the date thereof.


[Purchaser]


By________________________

<PAGE>   49

                                   SCHEDULE A

                  This Schedule A shows the names and addresses of the
Purchasers under the foregoing Note Purchase Agreement and the Other Agreements
referred to therein and the respective principal amounts of Notes to be
purchased by each.
<TABLE>
<CAPTION>
                                                                                Principal Amount of
Name and Address of Purchaser                                                Notes to be Purchased
- -----------------------------                                                ---------------------
<S>                                                                          <C>        
THE NORTHWESTERN MUTUAL LIFE                                                          $50,000,000
     INSURANCE COMPANY

(1)      All payments on account of the Notes shall be made by wire
         transfer of immediately available funds to the account of The
         Northwestern Mutual Life Insurance Company, at Account No.
         00-000-027 at Bankers Trust Company, 16 Wall Street, Insurance
         Unit - 4th Floor, New York, NY  10005, ABA #021-001-033 with
         sufficient information to identify the source and application
         of such funds including the PPN: 704227 A* 8 for the 6.74%
         Senior Notes due 2008.

(2)      Address for all notices in respect of payments:

         720 East Wisconsin Avenue
         Milwaukee, WI  53202
         Attention: Investment Operations
         Fax: 414-299-5714

(3)      Address for all other communications:

         720 East Wisconsin Avenue
         Milwaukee, WI  53202
         Attention:  Securities Department
         Fax: 414-299-7124

(4)      Tax Identification No.: 39-0509570
</TABLE>
<PAGE>   50
<TABLE>
<CAPTION>

                                                                                Principal Amount of
Name and Address of Purchaser                                                Notes to be Purchased
- -----------------------------                                                ---------------------
<S>                                                                          <C>        
TEACHERS INSURANCE AND ANNUITY                                                        $20,000,000
     ASSOCIATION OF AMERICA

(1)      All payments on account of the Notes shall be made in
         immediately available funds prior to 12:00 noon (New
         York time) on the due date by electronic funds
         transfer through the Automated Clearing House System
         (identifying each payment as "Paxar Corporation, PPN
         704227 A* 8 6.74% Senior Notes due 2008 (principal or
         interest or premium)") to:

         The Chase Manhattan Bank
         ABA No. 021-000-021
         New York, New York

         Account of:  Teachers Insurance and Annuity Association of
         America
         Account Number: 900-9-000200
         For Further Credit to TIAA Account # G07040
         On Order of:  Paxar Corporation

(2)      Contemporaneous with the above electronic funds
         transfer payment, written confirmation of each such
         payment setting forth: (a) the full name, private
         placement number, interest rate and maturity date of
         the Notes; (b) allocation of payment between
         principal, interest, premium and any special payment;
         and (c) the name and address of the bank from which
         such electronic funds transfer was sent shall be
         delivered, mailed or faxed to:

         Teachers Insurance and Annuity Association
          of America
         730 Third Avenue
         New York, NY  10017
         Attention:  Securities Accounting Division
         Telephone Number:  (212) 916-6004
         Facsimile Number:  (212) 916-6955

(3)      All other communications shall be delivered or mailed to:
</TABLE>


                                      A-2
<PAGE>   51
         Teachers Insurance and Annuity Association
          of America
         730 Third Avenue
         New York, NY  10017
         Attention:  Securities Division, Private Placements
                                    Michelle Lee
         Telephone Number:  (212) 916-5781
         General Telephone Number:  (212) 490-9000
         Facsimile Number:  (212) 916-6582

(4)      Taxpayer I.D. Number:  13-1624203



                                      A-3
<PAGE>   52
<TABLE>
<CAPTION>

                                                                                Principal Amount of
Name and Address of Purchaser                                                Notes to be Purchased
- -----------------------------                                                ---------------------
<S>                                                                          <C>        
GENERAL ELECTRIC CAPITAL LIFE ASSURANCE                                               $10,000,000
     COMPANY OF NEW YORK
     (I/N/O SALKELD & CO.)

(1)      All payments on account of Notes held by 
         such purchaser shall be made by wire transfer 
         of immediately available funds for credit to:

         Bankers Trust Company
         16 Wall Street
         New York, NY 10015
         ABA 021001033
         Attn: 99-911-145
         FCC #098620

         Each such wire transfer shall set forth the name of
         the Company, a reference to Paxar Corporation 6.74%
         Senior Notes due 2008, Security No. INV ____, and the
         due date and application (as among principal,
         interest and Modified Make-Whole Amount) of the
         payment being made

(2)      Address for all notices relating to payments:

         General Electric Capital Life Assurance Company of New York
         c/o GE Financial Assurance
         Two Union Square
         601 Union Street
         Seattle, WA 98101
         Attn: Investment Accounting, 14th Floor
         Telephone: 206-516-2871
         Fax: 206-516-4740

(3)      Address for all other communications and notices:

         General Electric Capital Life Assurance Company of New York
         c/o GE Financial Assurance
         Two Union Square
         601 Union Street
         Seattle, WA 98101
         Attn: Investment Accounting,
                   VP Private Placements
         Telephone: 206-516-2894
         Fax: 206-516-4863

(4)      Tax Identification No.: 22-2882416
</TABLE>


                                      A-4
<PAGE>   53
<TABLE>
<CAPTION>         
                                                                                      Principal Amount of
Name and Address of Purchaser                                                        Notes to be Purchased
- -----------------------------                                                        ---------------------
<S>                                                                                   <C>        
GE CAPITAL EDISON LIFE INSURANCE COMPANY                                                  $10,000,000
     (I/N/O AUER & CO.)

(1)      All payments on account of Notes held by such purchaser shall be made
         by wire transfer of immediately available funds for credit to:

         Bankers Trust Company
         16 Wall Street
         New York, NY 10015
         ABA 021001033
         Attn: 00-154-093
         FCC #501551253

         Each such wire transfer shall set forth the name of the Company, a
         reference to Paxar Corporation 6.74% Senior Notes due 2008, Security
         No. INV ____, and the due date and application (as among principal,
         interest and Modified Make-Whole Amount) of the payment being made

(2) Address for all notices relating to payments:

         GE Capital Life Insurance Company
         c/o GE Financial Assurance
         Two Union Square
         601 Union Street
         Seattle, WA 98101
         Attn: Investment Accounting, 14th Floor
         Telephone: 206-516-2871
         Fax: 206-516-4740

(3) Address for all other communications and notices:

         GE Capital Life Insurance Company
         c/o GE Financial Assurance
         Two Union Square
         601 Union Street
         Seattle, WA 98101
         Attn: Investment Accounting,
                   VP Private Placements
         Telephone: 206-516-2894
         Fax: 206-516-4863
</TABLE>



                                      A-5
<PAGE>   54
<TABLE>
<CAPTION>
                                                                                            Principal Amount of
Name and Address of Purchaser                                                               Notes to be Purchased
- -----------------------------                                                              ---------------------
<S>                                                                                        <C>        
MASSACHUSETTS MUTUAL LIFE INSURANCE                                                             $15,000,000
     COMPANY

(1)     All payments on account of the Notes shall be made by crediting in the
        form of bank wire transfer of Federal or other immediately available
        funds (identifying each payment as Paxar Corporation 6.74% Senior Notes
        due 2008, interest and principal) as follows:

        (a)     for the Note in the original principal amount of
                $12,500,000:

                 Citibank, N.A.
                 111 Wall Street
                 New York, NY 10043
                 ABA No. 021000089
                 For MassMutual Long Term Pool
                 Account No. 4067-3488
                 Re: Description of security, principal and interest split

        (b)     for the Note in the original principal amount of $2,500,000:

                 The Chase Manhattan Bank
                 4 Chase MetroTech Center
                 New York, NY 10081
                 ABA No. 032000032
                 For MassMutual IFM Non-Traditional
                 Account No. 910-2509073
                 Re: Description of security, principal and interest split

         Each with telephone advice of payment to the Securities Custody and
         Collection Department of Massachusetts Mutual Life Insurance Company at
         (413) 744-3878


(2)      All notices and communications to be addressed to:

         Massachusetts Mutual Life
           Insurance Company
         1295 State Street
         Springfield, MA  01111
</TABLE>


                                      A-6
<PAGE>   55
         Attn:  Securities Investment Division


(3)     Notices with respect to payments and corporate actions to be addressed
        as provided in clause (2) above:

        Attention:  Securities Custody and Collection Department F 381

(4)     Tax Identification Number:  04-1590850



                                      A-7
<PAGE>   56
<TABLE>
<CAPTION>
                                                                                              Principal Amount of
Name and Address of Purchaser                                                               Notes to be Purchased
- -----------------------------                                                               ---------------------
<S>                                                                                         <C>       
KEMPER INVESTORS LIFE INSURANCE COMPANY                                                           $8,100,000
     (I/N/O HARE & CO)

(1)      All payments on account of the Notes shall be made by wire transfer of
         Federal or other immediate available funds to:

         HARE & CO - Account No. 195279
         at
         The Bank of New York
         ABA No. 021000018
         BNF
         IOC 566
         Attn: Security Income Collection

         with sufficient information (including issuer, interest rate, maturity,
         PPN 704227 A* 8 and whether payment is of principal, premium or
         interest) to identify the source and application of such funds.

(2)      Address for all communications:

         Kemper Investors Life Insurance Company
         c/o Zurich Investment Management, Inc.
         222 South Riverside Plaza
         Chicago, IL 60606-5808
         Attn: Private Placements

(3)     Tax Identification Number:  36-3050975
</TABLE>


                                      A-8
<PAGE>   57
<TABLE>
<CAPTION>
                                                                                                  Principal Amount of
Name and Address of Purchaser                                                                     Notes to be Purchased
- -----------------------------                                                                     ---------------------
<S>                                                                                               <C>       
FEDERAL KEMPER LIFE ASSURANCE COMPANY                                                                   $4,000,000
     (I/N/O HARE & CO)

(1)      All payments on account of the Notes shall be made by wire transfer of
         Federal or other immediate available funds to:

         HARE & CO - Account No. 195269
         at
         The Bank of New York
         ABA No. 021000018
         BNF
         IOC 566
         Attn: Security Income Collection

         with sufficient information (including issuer, interest rate, maturity,
         PPN 704227 A* 8 and whether payment is of principal, premium or
         interest) to identify the source and application of such funds.

(2)      Address for all communications:

         Federal Kemper Life Assurance Company
         c/o Zurich Investment Management, Inc.
         222 South Riverside Plaza
         Chicago, IL 60606-5808
         Attn: Private Placements

(3)     Tax Identification Number:  04-6046830
</TABLE>



                                      A-9
<PAGE>   58
<TABLE>
<CAPTION>
                                                                                             Principal Amount of
Name and Address of Purchaser                                                                Notes to be Purchased
- -----------------------------                                                                ---------------------
<S>                                                                                          <C>       
FIDELITY LIFE ASSOCIATION                                                                          $1,300,000
     (I/N/O HARE & CO)

(1)      All payments on account of the Notes shall be made by wire transfer of
         Federal or other immediate available funds to:

         HARE & CO - Account No. 195271
         at
         The Bank of New York
         ABA No. 021000018
         BNF
         IOC 566
         Attn: Security Income Collection

         with sufficient information (including issuer, interest rate, maturity,
         PPN 704227 A* 8 and whether payment is of principal, premium or
         interest) to identify the source and application of such funds.

(2)      Address for all communications:

         Fidelity Life Association
         c/o Zurich Investment Management, Inc.
         222 South Riverside Plaza
         Chicago, IL 60606-5808
         Attn: Private Placements

(3)     Tax Identification Number:  36-1068685
</TABLE>


                                      A-10
<PAGE>   59
<TABLE>
<CAPTION>
                                                                                          Principal Amount of
Name and Address of Purchaser                                                             Notes to be Purchased
- -----------------------------                                                             ---------------------
<S>                                                                                       <C>       
ZURICH LIFE INSURANCE COMPANY OF AMERICA                                                      $600,000
     (I/N/O HARE & CO)

(1)      All payments on account of the Notes shall be made by wire transfer of
         Federal or other immediate available funds to:

         HARE & CO - Account No. 399609
         at
         The Bank of New York
         ABA No. 021000018
         BNF
         IOC 566
         Attn: Security Income Collection

         with sufficient information (including issuer, interest rate, maturity,
         PPN 704227 A* 8 and whether payment is of principal, premium or
         interest) to identify the source and application of such funds.

(2)      Address for all communications:

         Zurich Life Insurance Company of America
         222 South Riverside Plaza
         Chicago, IL 60606-5808
         Attn: Private Placements

(3)     Tax Identification Number:  36-6071398
</TABLE>


                                      A-11
<PAGE>   60
<TABLE>
<CAPTION>
                                                                                          Principal Amount of
Name and Address of Purchaser                                                             Notes to be Purchased
- -----------------------------                                                             ---------------------
<S>                                                                                       <C>       
RELIASTAR LIFE INSURANCE COMPANY                                                              $6,000,000

(1)      All payments on account of the Notes shall be made by wire transfer of
         Federal or other immediate available funds to:

         US Bank N.A./Mpls
         601 2nd Ave. S., Mpls, MN
         Bank ABA #091000022
         Acct Name: ReliaStar Life Insurance Co.
         Acct. #110240014461
         Attn: Securities Accounting

         with sufficient information (including issuer, interest rate, maturity,
         PPN 704227 A* 8 and whether payment is of principal, premium or
         interest) to identify the source and application of such funds.

(2)      Address for all communications:

         Reliastar Investment Research
         100 Washington Avenue South
         Suite 800
         Minneapolis, MN 55401-2121
         Ref: James Tobin
         612-342-3204
         Fax: 612-372-5368

(3)     Tax Identification Number:  41-0451140
</TABLE>


                                      A-12
<PAGE>   61
<TABLE>
<CAPTION>
                                                                                          Principal Amount of
Name and Address of Purchaser                                                             Notes to be Purchased
- -----------------------------                                                             ---------------------
<S>                                                                                       <C>       
NORTHERN LIFE INSURANCE COMPANY                                                              $2,000,000

(1)      All payments on account of the Notes shall be made by wire transfer of
         Federal or other immediate available funds to:

         US Bank N.A./Mpls
         601 2nd Ave. S.
         Acct. #160232376105
         Bank ABA #091000022

         with sufficient information (including issuer, interest rate, maturity,
         PPN 704227 A* 8 and whether payment is of principal, premium or
         interest) to identify the source and application of such funds.

(2)      Address for all communications:

         Reliastar Investment Research
         100 Washington Avenue South
         Suite 800
         Minneapolis, MN 55401-2121
         Ref: James Tobin
         612-342-3204
         Fax: 612-372-5368

(3)     Tax Identification Number:  41-1295933
</TABLE>



                                      A-13
<PAGE>   62
<TABLE>
<CAPTION>
                                                                                          Principal Amount of
Name and Address of Purchaser                                                             Notes to be Purchased
- -----------------------------                                                             ---------------------
<S>                                                                                       <C>       
SECURITY CONNECTICUT LIFE INSURANCE COMPANY                                                   $2,000,000
     (I/N/O SIGLER & CO.)

(1)      All payments on account of the Notes shall be made by wire transfer of
         Federal or other immediate available funds to:

         Chase Manhattan Bank
         New York, New York
         ABA #021-000-021
         Beneficiary Account #544755102
         Reference: Sigler & Co.
         Tax I.D.: 13-3641527
         F/C #G54426

         with sufficient information (including issuer, interest rate, maturity,
         PPN 704227 A* 8 and whether payment is of principal, premium or
         interest) to identify the source and application of such funds.

(2)      Address for all notices in respect of payment:

         Sigler & Co.
         c/o Chase Manhattan Bank
         Dept. #3492
         P.O. Box 5000
         Newark, NJ 07101-8006

(3)      Address for all communications:

         Reliastar Investment Research
         100 Washington Avenue South
         Suite 800
         Minneapolis, MN 55401-2121
         Ref: James Tobin
         612-342-3204
         Fax: 612-372-5368

(4)     Tax Identification Number:  35-1468921
</TABLE>


                                      A-14
<PAGE>   63
<TABLE>
<CAPTION>
                                                                                          Principal Amount of
Name and Address of Purchaser                                                             Notes to be Purchased
- -----------------------------                                                             ---------------------
<S>                                                                                       <C>       
MUTUAL OF OMAHA INSURANCE COMPANY                                                            $6,000,000

(1)      All principal and interest payments on the Notes shall be made by wire
         transfer of immediately available funds to:

         Chase Manhattan Bank
         ABA #021000021
         Private Income Processing

         For Credit to:
         Mutual of Omaha Insurance Company
         Account #900-9000200
         a/c: G07096
         Cusip/PPN: 704227 A* 8
         Interest Amount:
         Principal Amount:

(2)      Address for all notices in respect of payment of Principal and
         Interest, Corporate Actions, and Reorganization Notifications:

         The Chase Manhattan Bank
         4 New York Plaza - 13th Floor
         New York, NY 10004
         Attn: Income Processing - J. Pipperato
         a/c: G07096

(3)      Address for all other communications:

         4 - Investment Loan Administration
         Mutual of Omaha Insurance company
         Mutual of Omaha Plaza
         Omaha, NE 68175-1011

(4)      Tax Identification Number:  47-0246511
</TABLE>


                                      A-15
<PAGE>   64
<TABLE>
<CAPTION>
                                                                                          Principal Amount of
Name and Address of Purchaser                                                             Notes to be Purchased
- -----------------------------                                                             ---------------------
<S>                                                                                       <C>       
UNITED OF OMAHA LIFE INSURANCE COMPANY                                                        $3,000,000

(1)      All principal and interest payments on the Notes shall be made by wire
         transfer of immediately available funds to:

         Chase Manhattan Bank
         ABA #021000021
         Private Income Processing

         For Credit to:
         United of Omaha Life Insurance Company
         Account #900-9000200
         a/c: G07097
         Cusip/PPN: 704227 A* 8
         Interest Amount:
         Principal Amount:

(2)      Address for all notices in respect of payment of Principal and
         Interest, Corporate Actions, and Reorganization Notifications:

         The Chase Manhattan Bank
         4 New York Plaza - 13th Floor
         New York, NY 10004
         Attn: Income Processing - J. Pipperato
         a/c: G07097

(3)      Address for all other communications:

         4 - Investment Loan Administration
         Mutual of Omaha Insurance company
         Mutual of Omaha Plaza
         Omaha, NE 68175-1011

(4)      Tax Identification Number:  47-0322111
</TABLE>



                                      A-16
<PAGE>   65
<TABLE>
<CAPTION>
                                                                                          Principal Amount of
Name and Address of Purchaser                                                             Notes to be Purchased
- -----------------------------                                                             ---------------------
<S>                                                                                       <C>       
UNITED WORLD LIFE INSURANCE COMPANY                                                            $1,000,000

(1)      All principal and interest payments on the Notes shall be made by wire
         transfer of immediately available funds to:

         Chase Manhattan Bank
         ABA #021000021
         Private Income Processing

         For Credit to:
         United World Life Insurance Company
         Account #900-9000200
         a/c: G07098
         Cusip/PPN: 704227 A* 8
         Interest Amount:
         Principal Amount:

(2)      Address for all notices in respect of payment of Principal and
         Interest, Corporate Actions, and Reorganization Notifications:

         The Chase Manhattan Bank
         4 New York Plaza - 13th Floor
         New York, NY 10004
         Attn: Income Processing - J. Pipperato
         a/c: G07098

(3)      Address for all other communications:

         4 - Investment Loan Administration
         Mutual of Omaha Insurance company
         Mutual of Omaha Plaza
         Omaha, NE 68175-1011

(4)      Tax Identification Number:  75-6010770
</TABLE>


                                      A-17
<PAGE>   66
<TABLE>
<CAPTION>
                                                                                          Principal Amount of
Name and Address of Purchaser                                                             Notes to be Purchased
- -----------------------------                                                             ---------------------
<S>                                                                                       <C>       
STATE FARM LIFE INSURANCE COMPANY                                                             $6,000,000

(1)      All payments on account of the Notes shall be made by wire
         transfer of immediately available funds to

         The Chase Manhattan Bank
         ABA No. 021000021
         SSG Private Income Processing
         A/C #900-9-000200
         For Credit to Account Number G 06893

         with sufficient information setting forth (i) the name of the Company,
         (ii) the maturity date, (iii) the PPN: 704227 A* 8 of the Notes, (iv)
         the amount of principal, interest and premium, if any, and (v) the due
         date of the payment being made.

(2)      All communications, including payment notices (as well as a photocopy
         of the original security), to:

         State Farm Life Insurance Company
         Investment Dept. E-10
         One State Farm Plaza
         Bloomington, IL 61710

(3)      Address for delivery of securities (via registered mail):

         Chase Manhattan Bank
         Attn: Barbara Walsh
         (North America Insurance)
         3 Chase Metrotech Center-6th Floor
         Brooklyn, NY 11245

         with a copy to:

         State Farm Life Insurance Companies
         One State Farm Plaza E-8
         Bloomington, IL 61710
         Attn: Investment Legal E-8
               Larry Rottunda, Investment Counsel

(5)      Tax Identification Number:  37-0533090
</TABLE>


                                      A-18
<PAGE>   67
<TABLE>
<CAPTION>
                                                                                          Principal Amount of
Name and Address of Purchaser                                                             Notes to be Purchased
- -----------------------------                                                             ---------------------
<S>                                                                                       <C>       
AMERICAN UNITED LIFE INSURANCE                                                                $4,000,000
     COMPANY

(1)     All payments on account of the Notes shall be made by wire transfer of
        federal or other immediately available funds to:

         Bank of New York
         Attn: P&I Department
         One Wall Street, 3rd Floor
         Window A
         New York, New York 10286
         ABA #21000018
         BNF: IOC566
         Account #186683/AUL

        With sufficient information (including interest rate and maturity) to
        identify the breakdown of principal and interest and should identify the
        full description of the Notes and payment date, including the PPN:
        704227 A* 8 of the Notes.

(2)     Address for all communications:

         Securities Department
         American United Life
           Insurance Company
         One American Square
         Indianapolis, IN  46282

(3)     Tax Identification No.:  35-0145825
</TABLE>

                                      A-19
<PAGE>   68
<TABLE>
<CAPTION>
                                                                                          Principal Amount of
Name and Address of Purchaser                                                             Notes to be Purchased
- -----------------------------                                                             ---------------------
<S>                                                                                       <C>       
THE STATE LIFE INSURANCE COMPANY                                                              $1,000,000

(1)     All payments on account of the Notes shall be made by wire transfer of
        federal or other immediately available funds to:

         Bank of New York
         Attn: P&I Department
         One Wall Street, 3rd Floor
         Window A
         New York, New York 10286
         ABA #21000018
         BNF: IOC566
         Account #343761
         State Life, c/o American United Life

         With sufficient information (including interest rate and maturity) to
         identify the breakdown of principal and interest and should identify
         the full description of the Notes and payment date, including the PPN:
         704227 A* 8 of the Notes.

(2)     Address for all communications:

         Securities Department
         American United Life
           Insurance Company
         One American Square
         Indianapolis, IN  46282

(3)     Tax Identification No.:  35-0684263
</TABLE>


                                      A-20
<PAGE>   69
                                                                      SCHEDULE B

                                  DEFINED TERMS

                  As used herein, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such term:

                  "ADDITIONAL BORROWING FACILITY INDEBTEDNESS" means, at any
time, any Borrowing Facility Indebtedness incurred after the date of this
Agreement other than pursuant to clause (ii) or (iii) of Section 10.1(a) to the
extent outstanding at such time.

                  "ADJUSTED PRIORITY DEBT" is defined in Section 10.1.

                  "AFFILIATE" means, at any time, (a) with respect to any Person
(including without limitation the Company), any other Person that at such time
directly or indirectly through one or more intermediaries Controls, or is
Controlled by, or is under common Control with, such first Person, and (b) with
respect to the Company, any Person beneficially owning or holding, directly or
indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.

                  "ATTRIBUTABLE DEBT" means, as to any particular lease relating
to a sale and leaseback transaction, the total amount of rent (discounted
semiannually from the respective due dates thereof at the interest rate implicit
in such lease) required to be paid by the lessee under such lease during the
remaining term thereof. The amount of rent required to be paid under any such
lease for any such period shall be (a) the total amount of the rent payable by
the lessee with respect to such period after excluding amounts required to be
paid on account of maintenance and repairs, insurance, taxes, assessments,
utilities, operating and labor costs and similar charges plus (b) without
duplication, any guaranteed residual value in respect of such lease to the
extent such guarantee would be included in indebtedness in accordance with GAAP.

                  "BANK CREDIT AGREEMENT" means the Amended and Restated Credit
Agreement dated as of August 11, 1998 between the Company and Fleet Bank, N.A.,
as Administrative Agent, and the Lenders named therein, as supplemented,
amended, restated or refinanced from time to time.

                                   Schedule B
<PAGE>   70
                                      -2-

                  "BORROWING FACILITY INDEBTEDNESS" means Funded Indebtedness of
the Company or any Restricted Subsidiary which either (a) has a final maturity
of less than 12 months from the date of determination but which by its terms is
renewable or extendible beyond 12 months from such date at the option of the
obligor or (b) is issued under a credit facility having a final termination or
maturity date of more than 12 months from the date of determination but which
permits amounts to be repaid and reborrowed thereunder at the option of the
obligor prior to such final termination or maturity date.

                  "BUSINESS DAY" means any day other than a Saturday, a Sunday
or a day on which commercial banks in New York City are required or authorized
to be closed.

                  "CAPITAL LEASE" means, at any time, a lease with respect to
which the lessee is required concurrently to recognize the acquisition of an
asset and the incurrence of a liability in accordance with GAAP.

                  "CAPITALIZED LEASE OBLIGATIONS" means with respect to any
Person, all outstanding obligations of such Person in respect of Capital Leases,
taken at the capitalized amount thereof accounted for as indebtedness in
accordance with GAAP.

                  "CLOSING" is defined in Section 3.

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

                  "COMPANY" means Paxar Corporation, a New York corporation.

                  "CONFIDENTIAL INFORMATION" is defined in Section 20.

                  "CONSOLIDATED CAPITALIZATION" means, at any date, the sum of
(a) Consolidated Indebtedness plus (b) Consolidated Net Worth plus (c) deferred
tax liabilities (if any), all as determined on a consolidated basis for the
Company and its Restricted Subsidiaries in accordance with GAAP.

                  "CONSOLIDATED INDEBTEDNESS" means, at any date, all
Indebtedness of the Company and its Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP, excluding Borrowing Facility
Indebtedness in an amount not exceeding the Maximum Amount.

                  "CONSOLIDATED INTEREST EXPENSE" for any period means the sum
for the Company and its Restricted Subsidiaries, determined on a consolidated
basis in accordance with GAAP, of all amounts which would be deducted in
computing Consolidated Net Income on account of interest on Indebtedness
(including imputed 

                                   Schedule B
<PAGE>   71
                                      -3-


interest in respect of Capitalized Lease Obligations and amortization of debt
discount and expense).

                  "CONSOLIDATED NET INCOME" for any period means the net income
of the Company and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP, excluding

                  (a) the proceeds of any life insurance policy,

                  (b) any gains arising from (i) the sale or other disposition
         of any assets (other than current assets) to the extent that the
         aggregate amount of the gains during such period exceeds the aggregate
         amount of the losses during such period from the sale, abandonment or
         other disposition of assets (other than current assets), (ii) any
         write-up of assets or (iii) the acquisition of outstanding securities
         of the Company or any Restricted Subsidiary,

                  (c) any amount representing any interest in the undistributed
         earnings of any other Person (other than a Restricted Subsidiary),

                  (d) any earnings, prior to the date of acquisition, of any
         Person acquired in any manner, and any earnings of any Restricted
         Subsidiary prior to its becoming a Restricted Subsidiary,

                  (e) any earnings of a successor to or transferee of the assets
         of the Company prior to its becoming such successor or transferee,

                  (f) any deferred credit (or amortization of a deferred credit)
         arising from the acquisition of any Person, and

                  (g) any extraordinary gains not covered by clause (b) above.

                  "CONSOLIDATED NET WORTH" means, at any date, on a consolidated
basis for the Company and its Restricted Subsidiaries, (a) the sum of (i)
capital stock taken at par or stated value plus (ii) capital in excess of par or
stated value relating to capital stock plus (iii) retained earnings (or minus
any retained earning deficit) minus (b) the sum of treasury stock, capital stock
subscribed for and unissued and other contra-equity accounts, all determined in
accordance with GAAP.

                  "CONSOLIDATED TOTAL ASSETS" means, at any date, the total
assets of the Company and its Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP.

                  "DEFAULT" means an event or condition the occurrence or
existence of which would, with the giving of notice or the lapse of time, or
both, become an Event of Default.

                                   Schedule B
<PAGE>   72
                                      -4-


                  "DEFAULT RATE" means that rate of interest that is the greater
of (i) 8.74% per annum and (ii) 2% above the rate of interest publicly announced
by Citibank, N.A. from time to time at its principal office in New York City as
its prime rate.

                  "DOMESTIC RESTRICTED SUBSIDIARY" means any Restricted
Subsidiary organized under the laws of the United States or any State thereof
and conducting substantially all of its business in the United States.

                  "EBITDA" for any period means Consolidated Net Income plus all
amounts deducted in the computation thereof on account of (a) Consolidated
Interest Expense, (b) depreciation and amortization expenses and other non-cash
charges and (c) income and profits taxes.

                  "ENVIRONMENTAL LAWS" means any and all Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.

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

                  "ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.

                  "EVENT OF DEFAULT" is defined in Section 11.

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

                  "FUNDED INDEBTEDNESS" of any Person as of any date means all
Indebtedness of such Person which by its terms or by the terms of any instrument
or agreement relating thereto matures, or which is otherwise payable or unpaid,
one year or more from, or is directly or indirectly renewable or extendible at
the option of the obligor in respect thereof to a date one year or more
(including without limitation an option of such obligor under a revolving credit
or similar agreement obligating the lender or lenders to extend credit over a
period of one year or more) from, the date of the creation thereof, and shall
also include the current maturities of any such Indebtedness as of such date.

                  "GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.


                                   Schedule B
<PAGE>   73
                                      -5-


                  "GOVERNMENTAL AUTHORITY" means

                  (a) the government of

                           (i) the United States of America or any State or
                  other political subdivision thereof, or

                           (ii) any jurisdiction in which the Company or any
                  Subsidiary conducts all or any part of its business, or which
                  asserts jurisdiction over any properties of the Company or any
                  Subsidiary, or

                  (b) any entity exercising executive, legislative, judicial,
         regulatory or administrative functions of, or pertaining to, any such
         government.

                  "GUARANTY" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any Indebtedness, dividend or other obligation of any other Person
in any manner, whether directly or indirectly, including without limitation
obligations incurred through an agreement, contingent or otherwise, by such
Person:

                  (a) to purchase such Indebtedness or obligation or any
         property constituting security therefor;

                  (b) to advance or supply funds (i) for the purchase or payment
         of such Indebtedness or obligation, or (ii) to maintain any working
         capital or other balance sheet condition or any income statement
         condition of any other Person;

                  (c) to lease properties or to purchase properties or services
         primarily for the purpose of assuring the owner of such Indebtedness or
         obligation of the ability of any other Person to make payment of the
         Indebtedness or obligation; or

                  (d) otherwise to assure the owner of such Indebtedness or
         obligation against loss in respect thereof.

In any computation of the Indebtedness or other liabilities of the obligor under
any Guaranty, the Indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

                  "HAZARDOUS MATERIAL" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health or
safety, the removal of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or 

                                   Schedule B
<PAGE>   74
                                      -6-


penalized by any applicable law (including without limitation asbestos, urea
formaldehyde foam insulation and polycholorinated biphenyls).


                  "HOLDER" means, with respect to any Note, the Person in whose
name such Note is registered in the register maintained by the Company pursuant
to Section 13.1.

                  "INDEBTEDNESS" with respect to any Person means, at any time,
         without duplication,

                  (a) its liabilities for borrowed money or its redemption
         obligations in respect of Preferred Stock that is mandatorily
         redeemable prior to the final maturity of the Notes,

                  (b) its liabilities for the deferred purchase price of
         property acquired by such Person (excluding accounts payable arising in
         the ordinary course of business and not overdue but including all
         liabilities created or arising under any conditional sale or other
         title retention agreement with respect to any such property),

                  (c) its Capitalized Lease Obligations,

                  (d) all liabilities for borrowed money secured by any Lien
         with respect to any property owned by such Person (whether or not it
         has assumed or otherwise become liable for such liabilities),

                  (e) all its liabilities in respect of letters of credit or
         instruments serving a similar function issued or accepted for its
         account by banks and other financial institutions (whether or not
         representing obligations for borrowed money),

                  (f) Swaps of such Person, and

                  (g) any Guaranty of such Person with respect to liabilities of
         a type described in any of clauses (a) through (f) above, provided that
         no obligation of the Company of the type described in clause (b)(ii) of
         the definition of "Guaranty", with respect to liabilities of any other
         Person, shall be deemed to constitute Indebtedness of the Company if at
         the time such obligation is not required to be shown as a liability on
         a balance sheet of the Company prepared in accordance with GAAP.

Indebtedness of any person shall include all obligations of such person of the
character described in clauses (a) through (g) above to the extent such person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.

                                   Schedule B
<PAGE>   75
                                      -7-



                  "INSTITUTIONAL INVESTOR" means (a) any original purchaser of a
Note, (b) any holder of a Note holding (together with one or more of its
Affiliates) more than 2% of the aggregate principal amount of the Notes then
outstanding, and (c) any bank, trust company, savings and loan association or
other financial institution, any pension plan, any investment company, any
insurance company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form.

                  "LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).

                  "MAKE-WHOLE AMOUNT" is defined in Section 8.5.

                  "MATERIAL" means material in relation to the business,
operations, affairs, financial condition, assets or properties of the Company
and its Restricted Subsidiaries taken as a whole.

                  "MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the business, operations, affairs, financial condition, assets or properties
of the Company and its Restricted Subsidiaries taken as a whole, (b) the ability
of the Company to perform its obligations under this Agreement and the Notes or
(c) the validity or enforceability of this Agreement or the Notes or the
Subsidiary Guarantee of any Significant Subsidiary.

                  "MAXIMUM AMOUNT" means on any date an amount equal to 20% of
pro forma consolidated net revenues of the Company and its Restricted
Subsidiaries for the four consecutive fiscal quarters then most recently ended,
determined on a consolidated basis in accordance with GAAP.

                  "MEMORANDUM" is defined in Section 5.3.

                  "MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).

                  "NOTES" is defined in Section 1.1.

                  "OFFICER'S CERTIFICATE" means a certificate of a Senior
Financial Officer or of any other officer of the Company whose responsibilities
extend to the subject matter of such certificate.

                  "OTHER AGREEMENTS" is defined in Section 2.

                  "OTHER PURCHASERS" is defined in Section 2.

                                   Schedule B
<PAGE>   76
                                      -8-


                  "PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.

                  "PERSON" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.

                  "PLAN" means an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA Affiliate may have
any liability.

                  "PREFERRED STOCK", as applied to any corporation, means shares
of such corporation that shall be entitled to preference or priority over any
other shares of such corporation in respect of either the payment of dividends
or the distribution of assets upon liquidation, or both.

                  "PRIORITY DEBT" is defined in Section 10.1.

                  "PROPERTY" or "PROPERTIES" means, unless otherwise
specifically limited, real or personal property of any kind, tangible or
intangible, inchoate or otherwise.

                  "PTE" is defined in Section 6.2.

                  "QPAM EXEMPTION" means Prohibited Transaction Class Exemption
84-14 issued on March 13, 1984 by the United States Department of Labor.

                  "REQUIRED HOLDERS" means, at any time, the holders of at least
a majority in unpaid principal amount of the Notes at the time outstanding.

                  "RESPONSIBLE OFFICER" means any Senior Financial Officer and
any other officer of the Company with responsibility for the administration of
the relevant portion of this Agreement.

                  "RESTRICTED SUBSIDIARY" means as of the date of this Agreement
each Subsidiary as designated in Schedule 5.4 and thereafter means each such
Subsidiary not designated as an Unrestricted Subsidiary pursuant to Section
10.8(a) and each other Subsidiary that is not an Unrestricted Subsidiary;
provided that each of Monarch Marking Systems, Inc. and International Imaging
Materials, Inc. shall at all times remain a Restricted Subsidiary, in each case
so long as such corporation is a Subsidiary.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
                                   Schedule B
<PAGE>   77
                                      -9-



                  "SENIOR FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.

                  "SIGNIFICANT SUBSIDIARY" means, at any date, a Restricted
Subsidiary (a) which, together with its Subsidiaries, produced more than 10% of
Consolidated Net Income for the fiscal year then most recently ended (calculated
on a pro forma basis in the case of any Person which became a Subsidiary during
or after the end of such fiscal year) or (b) the assets of which, together with
the assets of its Subsidiaries, exceeded 10% of the Consolidated Total Assets as
of the last day of such fiscal year (calculated on a pro forma basis as of the
last day of such fiscal year in the case of any Person which became a Restricted
Subsidiary thereafter).

                  "SUBSIDIARY" means, as to any Person, any corporation or other
business entity a majority of the combined voting power of all Voting Stock of
which is owned by such Person or one or more of its Subsidiaries or such Person
and one or more of its Subsidiaries. Unless the context otherwise clearly
requires, any reference to a "Subsidiary" is a reference to a Subsidiary of the
Company.

                  "SUBSIDIARY GUARANTEE" is defined in Section 1.2.

                  "SUBSIDIARY GUARANTORS" is defined in Section 4.5.

                  "SWAPS" means, with respect to any Person, payment obligations
with respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.

                  "TOTAL INDEBTEDNESS TO EBITDA RATIO" means, at any date, the
ratio of (a) Consolidated Indebtedness as at such date to (b) pro forma EBITDA
for the four consecutive fiscal quarters then most recently ended.

                  "UNRESTRICTED SUBSIDIARY" means any Subsidiary that has been
designated as an Unrestricted Subsidiary pursuant to Section 10.8(a) and has not
been subsequently redesignated as a Restricted Subsidiary pursuant to Section
10.8(b).

                                   Schedule B
<PAGE>   78
                                      -10-


                  "VOTING STOCK" means, with respect to any Person, any shares
of stock or other equity interests of any class or classes of such Person whose
holders are entitled under ordinary circumstances (irrespective of whether at
the time stock or other equity interests of any other class or classes shall
have or might have voting power by reason of the happening of any contingency)
to vote for the election of a majority of the directors, managers, trustees or
other governing body of such Person.

                  "WHOLLY-OWNED RESTRICTED SUBSIDIARY" means, at any time, any
Restricted Subsidiary all of the equity interests (except directors' qualifying
shares) and voting interests of which are owned by any one or more of the
Company and the Company's other Wholly-Owned Restricted Subsidiaries at such
time.

                                   Schedule B
<PAGE>   79
                                                                     EXHIBIT 1.1
                                 [FORM OF NOTE]


                                PAXAR CORPORATION

                           6.74% SENIOR NOTE DUE 2008

No. R-[_____]                                                New York, New York
$[_______]                                                               [Date]
PPN: 704227 A* 8

         FOR VALUE RECEIVED, the undersigned, PAXAR CORPORATION (the "COMPANY"),
a New York corporation, hereby promises to pay to [__________________ ], or
registered assigns, the principal sum of [________________ ] DOLLARS on August
11, 2008, with interest (computed on the basis of a 360-day year of twelve
30-day months) (a) from the date hereof on the unpaid balance thereof at the
rate of 6.74% per annum, payable semiannually on February 11 and August 11 in
each year, until the principal hereof shall have become due and payable, and (b)
on any overdue payment of principal, any overdue payment of interest (to the
extent permitted by applicable law) and any overdue payment of any premium or
Make-Whole Amount (as defined in the Note Purchase Agreements referred to
below), payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand) at a rate per annum from time to time equal to the
greater of (i) 8.74% and (ii) 2% above the rate of interest publicly announced
by Citibank, N.A. from time to time at its principal office in New York City as
its prime rate.

         Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at said principal office of Citibank, N.A. in New York City or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreements referred to below.

         This Note is one of a series of 6.74% Senior Notes due 2008 issued
pursuant to separate Note Purchase Agreements dated as of August 4, 1998 (as
from time to time amended, the "NOTE PURCHASE AGREEMENTS") between the Company
and the respective Purchasers named therein and is entitled to the benefits
thereof. This Note is also entitled to the benefits of certain Subsidiary
Guarantees that were executed and delivered pursuant to the Note Purchase
Agreements. Each holder of this Note will be deemed, by its acceptance hereof,
to have agreed to the confidentiality provisions set forth in Section 20 of the
Note Purchase Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a 
<PAGE>   80
                                      -2-

written instrument of transfer duly executed, by the registered holder hereof or
such holder's attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the Company
will not be affected by any notice to the contrary.

         The Company may make optional prepayments of principal, in whole or
from time to time in part, at the times and on the terms specified in the Note
Purchase Agreements, but not otherwise.

         If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable premium or Make-Whole Amount) and with the effect provided in the
Note Purchase Agreements.

         This Note shall be construed and enforced in accordance with, and the
rights of the Company and the holder hereof shall be governed by, the laws of
the State of New York, excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction other
than such State.

                                               PAXAR CORPORATION


                                               By_________________________
                                                 Title:


<PAGE>   81
                                                                     Exhibit 1.2


                               GUARANTEE AGREEMENT

                  GUARANTEE AGREEMENT dated as of _____________, ___ made by
________________________, a _________________ corporation (the "GUARANTOR"), in
favor of the holders from time to time of the Notes referred to below
(collectively the "OBLIGEES").

                  WHEREAS, Paxar Corporation, a New York corporation (the
"COMPANY"), has entered into several Note Purchase Agreements dated as of August
4, 1998 (as amended or otherwise modified from time to time, collectively the
"NOTE AGREEMENTS" and terms defined therein and not otherwise defined herein are
being used herein as so defined) with the institutional purchasers listed in
Schedule A thereto, pursuant to which the Company proposes to issue and sell to
such purchasers $150,000,000 aggregate principal amount of its 6.74% Senior
Notes due 2008 (the "NOTES"); and

                  WHEREAS, it is a [condition precedent to the purchase of the
Notes by such purchasers under/requirement of] the Note Agreements that the
Guarantor shall execute and deliver this Guarantee Agreement;

                  NOW, THEREFORE, in consideration of the premises the Guarantor
hereby agrees as follows:

                  SECTION 1. Guarantee. The Guarantor unconditionally and
irrevocably guarantees, as primary obligor and not merely as surety,

                  A. the punctual payment when due, whether at stated maturity,
         by acceleration or otherwise, of all obligations of the Company arising
         under the Notes and the Note Agreements, including all extensions,
         modifications, substitutions, amendments and renewals thereof, whether
         for principal, interest (including without limitation interest on any
         overdue principal, premium and interest at the rate specified in the
         Notes and interest accruing or becoming owing both prior to and
         subsequent to the commencement of any proceeding against or with
         respect to the Company under any chapter of the Bankruptcy Code of
         1978, 11 U.S.C. Section101 et seq.), Make-Whole Amount, Additional
         Amounts, fees, expenses, indemnification or otherwise, and

                  B. the due and punctual performance and observance by the
         Company of all covenants, agreements and conditions on its part to be
         performed and observed under the Notes and the Note Agreements;

(all such obligations are called the "GUARANTEED OBLIGATIONS"); provided that
the aggregate liability of the Guarantor hereunder 



<PAGE>   82

                                      - 2 -

in respect of the Guaranteed Obligations shall not exceed at any time the lesser
of (1) the amount of the Guaranteed Obligations and (2) the maximum amount for
which the Guarantor is liable under this Guarantee Agreement without such
liability being deemed a fraudulent transfer under applicable Debtor Relief Laws
(as hereinafter defined), as determined by a court of competent jurisdiction. As
used herein, the term "DEBTOR RELIEF LAWS" means any applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization or similar debtor relief laws affecting the rights of creditors
generally from time to time in effect.

                  The Guarantor also agrees to pay, in addition to the amount
stated above, any and all reasonable expenses (including reasonable counsel fees
and expenses) incurred by any Obligee in enforcing any rights under this
Guarantee Agreement or in connection with any amendment of this Guarantee
Agreement.

                  Without limiting the generality of the foregoing, this
Guarantee Agreement guarantees, to the extent provided herein, the payment of
all amounts which constitute part of the Guaranteed Obligations and would be
owed by any other Person to any Obligee but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Person.

                  SECTION 2. Guarantee Absolute. The obligations of the
Guarantor under Section 1 of this Guarantee Agreement constitute a present and
continuing guaranty of payment and not of collectability and the Guarantor
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with the terms of the Notes and the Note Agreements, 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 Obligee with respect thereto. The obligations
of the Guarantor under this Guarantee Agreement are independent of the
Guaranteed Obligations, and a separate action or actions may be brought and
prosecuted against the Guarantor to enforce this Guarantee Agreement,
irrespective of whether any action is brought against the Company or any other
Person liable for the Guaranteed Obligations or whether the Company or any other
such Person is joined in any such action or actions. The liability of the
Guarantor under this Guarantee Agreement shall be primary, absolute,
irrevocable, and unconditional irrespective of:

                  A. any lack of validity or enforceability of any Guaranteed
         Obligation, any Note, the Note Agreements 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 amendment or waiver of or any consent to departure from any Note,
         the Note Agreements or this Guarantee Agreement;


<PAGE>   83

                                      - 3 -

                  C. any taking, exchange, release or non-perfection of any
         collateral, or any taking, release or amendment or waiver of or consent
         to departure by the Guarantor or other Person liable, or any other
         guarantee, for all or any of the Guaranteed Obligations;

                  D. any manner of application of 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 assets of the
         Company or any other Subsidiary;

                  E. any change, restructuring or termination of the corporate
         structure or existence of the Company or any other Subsidiary; or

                  F. any other circumstance (including without limitation any
         statute of limitations) that might otherwise constitute a defense,
         offset or counterclaim available to, or a discharge of, the Company or
         the Guarantor, other than payment in full in cash.

                  This Guarantee Agreement 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
Obligee, or any other Person upon the insolvency, bankruptcy or reorganization
of the Company or otherwise, all as though such payment had not been made.

                    SECTION 3.  Waivers.  The Guarantor hereby irrevocably 
waives, to the extent permitted by applicable law:

                  A. promptness, diligence, presentment, notice of acceptance
         and any other notice with respect to any of the Guaranteed Obligations
         and this Guarantee Agreement;

                  B. any requirement that any Obligee or any other Person
         protect, secure, perfect or insure any Lien or any property subject
         thereto or exhaust any right or take any action against the Company or
         any other Person or any collateral;

                  C. any defense, offset or counterclaim arising by reason of
         any claim or defense based upon any action by any Obligee;

                  D. any duty on the part of any Obligee to disclose to the
         Guarantor any matter, fact or thing relating to the business, operation
         or condition of any Person and its assets now known or hereafter known
         by such Obligee; and

                  E. any rights by which it might be entitled to require suit on
         an accrued right of action in respect of any of the 


<PAGE>   84

                                     - 4 -

         Guaranteed Obligations or require suit against the Company or the
         Guarantor or any other Person.

                    SECTION 4. Waiver of Subrogation and Contribution. The
Guarantor shall not assert, enforce, or otherwise exercise (A) any right of
subrogation to any of the rights, remedies, powers, privileges or liens of any
Obligee or any other beneficiary against the Company or any other obligor on the
Guaranteed Obligations or any collateral or other security, or (B) any right of
recourse, reimbursement, contribution, indemnification, or similar right against
the Company, and the Guarantor hereby waives any and all of the foregoing
rights, remedies, powers, privileges and the benefit of, and any right to
participate in, any collateral or other security given to any Obligee or any
other beneficiary to secure payment of the Guaranteed Obligations, until such
time as the Guaranteed Obligations have been paid in full.

                    SECTION 5.  Representations and Warranties.  The Guarantor
hereby represents and warrants as follows:

                  A. The Guarantor is a corporation duly organized, validly
         existing and in good standing under the laws of its jurisdiction of
         incorporation. The execution, delivery and performance of this
         Guarantee Agreement have been duly authorized by all necessary action
         on the part of the Guarantor.

                  B. The execution, delivery and performance by the Guarantor of
         this Guarantee Agreement will not (i) contravene, result in any breach
         of, or constitute a default under, or result in the creation of any
         Lien in respect of any property of the Guarantor or any Subsidiary of
         the Guarantor under, any indenture, mortgage, deed of trust, loan,
         purchase or credit agreement, lease, corporate charter or by-laws, or
         any other material agreement or instrument to which the Guarantor or
         any Subsidiary of the Guarantor is bound or by which the Guarantor or
         any Subsidiary of the Guarantor or any of their respective properties
         may be bound or affected, (ii) conflict with or result in a breach of
         any of the terms, conditions or provisions of any order, judgment,
         decree, or ruling of any court, arbitrator or Governmental Authority
         applicable to the Guarantor or any Subsidiary of the Guarantor or (iii)
         violate any provision of any statute or other rule or regulation of any
         Governmental Authority applicable to the Guarantor or any Subsidiary of
         the Guarantor.

                  C. The Guarantor and the Company are members of the same
         consolidated group of companies and are engaged in related businesses
         and the Guarantor will derive substantial direct and indirect benefit
         from the execution and delivery of this Guarantee Agreement.


<PAGE>   85

                                     - 5 -

                  SECTION 6. Amendments, Etc. No amendment or waiver of any
provision of this Guarantee Agreement and no consent to any departure by the
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Required Holders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided that no amendment, waiver or consent shall, unless in
writing and signed by all Obligees, (i) limit the liability of or release the
Guarantor hereunder, (ii) postpone any date fixed for, or change the amount of,
any payment hereunder or (iii) change the percentage of Notes the holders of
which are, or the number of Obligees, required to take any action hereunder.

                  SECTION 7. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and (A) by telecopy if
the sender on the same day sends a confirming copy of such notice by a
recognized overnight delivery service (charges prepaid), or (B) by registered or
certified mail with return receipt requested (postage prepaid), or (C) by a
recognized overnight delivery service (with charges prepaid). Such notice if
sent to the Guarantor shall be addressed to it at the address of the Guarantor
provided below its name on the signature page of this Guarantee Agreement or at
such other address as the Guarantor may hereafter designate by notice to each
holder of Notes, or if sent to any holder of Notes, shall be addressed to it as
set forth in the Note Agreements. Any notice or other communication herein
provided to be given to the holders of all outstanding Notes shall be deemed to
have been duly given if sent as aforesaid to each of the registered holders of
the Notes at the time outstanding at the address for such purpose of such holder
as it appears on the Note register maintained by the Company in accordance with
the provisions of Section 13.1 of the Note Agreements. Notices under this
Section 7 will be deemed given only when actually received.

                  SECTION 8. No Waiver; Remedies. No failure on the part of any
Obligee 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 9. Continuing Guarantee. This Guarantee Agreement is a
continuing guarantee of payment and performance and shall (A) remain in full
force and effect until payment in full of the Guaranteed Obligations and all
other amounts payable under this Guarantee Agreement, (B) be binding upon the
Guarantor, its successors and assigns and (C) inure to the benefit of and be
enforceable by the Obligees and their successors, transferees and assigns.
<PAGE>   86

                                     - 6 -

                  SECTION 10. Jurisdiction and Process; Waiver of Jury Trial.
The Guarantor irrevocably submits to the non-exclusive in personam jurisdiction
of any New York State or federal court sitting in the Borough of Manhattan, The
City of New York, over any suit, action or proceeding arising out of or relating
to this Guarantee Agreement. To the fullest extent permitted by applicable law,
the Guarantor irrevocably waives and agrees not to assert, by way of motion, as
a defense or otherwise, any claim that it is not subject to the in personam
jurisdiction of any such court, any objection that it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding brought in any
such court and any claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.

                  The Guarantor consents to process being served in any suit,
action or proceeding of the nature referred to in this Section by mailing a copy
thereof by registered or certified mail, postage prepaid, return receipt
requested, to the Guarantor at its address specified in Section 7 or at such
other address of which you shall then have been notified pursuant to said
Section. The Guarantor agrees that such service upon receipt (i) shall be deemed
in every respect effective service of process upon it in any such suit, action
or proceeding and (ii) shall, to the fullest extent permitted by applicable law,
be taken and held to be valid personal service upon and personal delivery to the
Guarantor. Notices hereunder shall be conclusively presumed received as
evidenced by a delivery receipt furnished by the United States Postal Service or
any recognized courier or overnight delivery service.

                  Nothing in this Section 10 shall affect the right of any
holder of a Note to serve process in any manner permitted by law, or limit any
right that the holders of any of the Notes may have to bring proceedings against
the Guarantor in the courts of any appropriate jurisdiction or to enforce in any
lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

                  SECTION 11. [Tax Indemnification.

                  11.1. Payments Without Tax Withholding. All payments
whatsoever by the Guarantor under this Guarantee Agreement shall be made in the
lawful currency of the United States free and clear of, and without reduction or
liability for or on account of, any present or future taxes (whether income,
documentary, sales, stamp, registration, issue, capital, property, excise or
otherwise), levies, imposts, duties, fees, charges, deductions, withholding,
restrictions or conditions or any penalties, interest or additions thereto of
any nature whatsoever (herein called "TAX") unless any withholding or deduction
for or on account of any Tax is required by law.

                  11.2. Gross-Up for Required Tax Withholding. If the Guarantor
shall be obligated by law to make any such withholding 


<PAGE>   87

                                     - 7 -

or deduction for any Tax imposed, levied, collected, assessed or withheld by or
within the jurisdiction in which the Guarantor is organized or resident for tax
purposes (other than the United States) or any political subdivision or taxing
authority thereof or therein or by any other jurisdiction (or any taxing
authority thereof or therein) other than the United States from or through which
payments under the Guaranteed Obligations by the Guarantor are actually made
(hereinafter a "TAXING JURISDICTION"), then the Guarantor will promptly (i)
notify the affected holders of Guaranteed Obligations of such requirement, (ii)
pay such additional amounts of interest ("GUARANTEE ADDITIONAL AMOUNTS") as may
be necessary so that the net amount received by each holder of Guaranteed
Obligations (including Guarantee Additional Amounts) after such withholding or
deduction will not be less than the amount such holder would have received if
such Taxes had not been withheld or deducted, (iii) make such withholding or
deduction and remit the full amount deducted or withheld to the relevant
authority in accordance with applicable law and (iv) furnish such holder with
the original receipt of such payment from such government or taxing authority
(or such other evidence sufficient under United States Treasury Regulations
1.905-2(a)(2) under the Code (or any successor or subsequent provisions) so as
to allow such holder to verify that such Tax has been paid to such government or
taxing authority). Notwithstanding the provisions of this Section 11, no such
Guarantee Additional Amounts shall be payable for or on account of:

                    (a) any Tax which would not have been imposed but for (1)
         the connection of a holder with the Taxing Jurisdiction (other than the
         mere holding of a Note) including the existence of a permanent
         establishment or other fixed place of business of such holder in such
         Taxing Jurisdiction or (2) the appointment by a holder of a collecting
         agent in such Taxing Jurisdiction;

                    (b) any Tax that is imposed or withheld by reason of the
         failure by the holder of any Note, notwithstanding its legal and
         practical ability, promptly after becoming a holder of a Note to
         provide information concerning the nationality, residence or identity
         of such holder or to make such declaration or other similar claim or
         report (provided such declaration or claim does not require the holder
         to reveal any confidential or proprietary tax return or other
         information and does not require the holder to incur any undue expense)
         as may be required by a statute, treaty or regulation of the Taxing
         Jurisdiction as a precondition to exemption from all or part of such
         Tax; and

                  (c) any combination of clauses (A) and (B) above;

provided further, however, that no Guarantee Additional Amounts shall be payable
(x) in respect of any Guaranteed Obligation held by a holder who is a fiduciary
or a partnership or a beneficial 


<PAGE>   88

                                     - 8 -

owner who is other than the sole beneficial owner of such Guaranteed Obligation
to the extent a beneficiary or settlor with respect to such fiduciary or a
member of such partnership or a beneficial owner would not have been entitled to
such Guarantee Additional Amounts had it been the holder of such Guaranteed
Obligation or (y) in respect of any Guaranteed Obligation in excess of the
amount which the Guarantor would have been obligated to pay if such Guaranteed
Obligation had been beneficially owned at all relevant times by Persons who were
resident in the United States for purposes of the income tax treaty in effect
between the United States and such Taxing Jurisdiction.

                  If the Guarantor fails to pay any withheld or deducted Taxes
pursuant to clause (iii) of Section 11.2 in accordance with applicable law, then
the Guarantor shall indemnify and hold harmless the affected holder and
reimburse such holder for the amount of Taxes imposed on and paid by such holder
so that the net amount received by such holder after such reimbursement will not
be less than the net amount such holder would have received if Taxes on such
reimbursement had not been imposed, but excluding any Taxes on such holder's net
income generally or based on such holder's capital generally.

                  11.3. Taxes Imposed by Means Other Than Withholding. If any
Taxes are imposed on a holder of a Guaranteed Obligation (other than Taxes
imposed by the United States, any State thereof or other political subdivision
thereof) with respect to any payment made by the Guarantor hereunder by means
other than deduction or withholding and the Guarantor would be obligated to pay
Guarantee Additional Amounts to such holder hereunder if such Taxes had been
withheld or deducted, the Guarantor shall indemnify and hold harmless each such
holder and will upon notice by such holder and provided that reasonable
supporting documentation is provided, reimburse each such holder for the amount
of (i) any Taxes so levied or imposed and paid to such holder as a result of
payments made under or with respect to the Guaranteed Obligation and (ii) any
Taxes so levied or imposed with respect to any reimbursement under the foregoing
clause (i) so that the net amount received by such holder after such
reimbursement will not be less than the net amount the holder would have
received if Taxes on such reimbursement had not been imposed, but excluding any
Taxes on such holder's net income generally or based on such holder's capital
generally.

                  11.4. Tax Information Disclosure. For the avoidance of doubt,
nothing herein shall require any Person to disclose any information regarding
its tax affairs or computations to the Guarantor other than as shall be
necessary to permit the Guarantor to determine whether any Guarantee Additional
Amounts would be required to be paid pursuant to the provisions of this Section;
provided, however, that no Person shall be obligated to disclose any of its tax
returns to the Guarantor or any agent of the Guarantor.

<PAGE>   89

                                     - 9 -

                    11.5. Reimbursement of Guarantee Additional Amounts by
Holder. If any Taxes imposed on any holder are paid or indemnified against by
the Guarantor under this Section 11, and such holder receives a refund of any
amount of Taxes paid or reimbursed by such Guarantor and such holder is able, in
good faith, to identify the tax refund as being attributable to such payment or
reimbursement, such holder shall pay to such Guarantor an amount equal to such
refund.

                    Section 12. Judgment Currency. Any payment on account of an
amount that is payable hereunder by the Guarantor in U.S. Dollars which is made
to or for the account of any Obligee in any other currency, whether as a result
of any judgment or order or the enforcement thereof or the realization of any
security or the liquidation of such Guarantor, shall constitute a discharge of
such Guarantor's obligation under this Guarantee Agreement only to the extent of
the amount of U.S. Dollars which such Obligee could purchase in the foreign
exchange markets in London, England, with the amount of such other currency in
accordance with normal banking procedures at the rate of exchange prevailing on
the London Banking Day following receipt of the payment first referred to above.
If the amount of U.S. Dollars that could be so purchased is less than the amount
of U.S. Dollars originally due to such Obligee, the Guarantor agrees, to the
fullest extent permitted by law, to indemnify and save harmless such Obligee
from and against all loss or damage arising out of or as a result of such
deficiency. This indemnity shall, to the fullest extent permitted by law,
constitute an obligation separate and independent from the other obligations
contained in this Guarantee Agreement, shall give rise to a separate and
independent cause of action, shall apply irrespective of any indulgence granted
by such Obligee from time to time and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum in respect of an
amount due hereunder or under any judgment or order. As used herein the term
"LONDON BANKING DAY" shall mean any day other than Saturday or Sunday or a day
on which commercial banks are required or authorized by law to be closed in
London, England.

                    SECTION 13.]* Governing Law. This Guarantee Agreement shall
be construed and enforced in accordance with, and the rights of the Guarantor
and the Obligees shall be governed by, the laws of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.


- --------
* Bracketed Sections 11 and 12 to be inserted if the Guarantor is a Subsidiary
with a jurisdiction of incorporation outside the United States.

<PAGE>   90

                                     - 10 -

                    IN WITNESS WHEREOF, the Guarantor has caused this Guarantee
Agreement to be duly executed and delivered as of the date first above written.


                                        [GUARANTOR]


                                        By________________________
                                          Title:

                                          Address:


                                          Attention:
                                          Telephone:
                                          Telecopy:





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