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DAL-TILE INTERNATIONAL INC.,
as Holdings
DAL-TILE GROUP INC.,
as the Borrower

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$325,000,000
AMENDED AND RESTATED CREDIT AND GUARANTEE AGREEMENT
October 26, 2001

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CREDIT LYONNAIS NEW YORK BRANCH,
FIRST UNION NATIONAL BANK and
MIZUHO FINANCIAL GROUP
as Co-Documentation Agents
BANK OF AMERICA, N.A.
as Syndication Agent
THE CHASE MANHATTAN BANK
as Administrative Agent

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J.P. MORGAN SECURITIES INC.,
as Sole Advisor, Lead Arranger and Bookrunner

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TABLE OF CONTENTS

 
   
SECTION 1 .  DEFINITIONS 1 .1 Defined Terms 1 .2 Other Definitional Provisions;
Financial Calculations SECTION 2 .  AMOUNT AND TERMS OF TERM LOAN COMMITMENTS 2
.1 Term Loans 2 .2 Procedure for Term Loan Borrowing 2 .3 Repayment of Term
Loans 2 .4 Evidence of Term Loan Debt SECTION 3 .  AMOUNT AND TERMS OF REVOLVING
CREDIT COMMITMENTS 3 .1 Revolving Credit Commitments 3 .2 Procedure for
Revolving Credit Borrowing 3 .3 Commitment Fee 3 .4 Termination or Reduction of
Commitments 3 .5 Repayment of Revolving Credit Loans; Evidence of Debt 3 .6
Swing Line Commitment 3 .7 Repayment of Swing Line Loans; Evidence of Debt 3 .8
Procedure for Borrowing Swing Line Loans 3 .9 Swing Line Loan Participations 3
.10 L/C Commitment 3 .11 Procedure for Issuance of Letters of Credit 3 .12 Fees,
Commissions and Other Charges 3 .13 L/C Participations 3 .14 Reimbursement
Obligation of the Borrower 3 .15 Obligations Absolute 3 .16 Letter of Credit
Payments 3 .17 Application 3 .18 Certain Reporting Requirements SECTION 4 . 
GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT 4 .1 Optional and
Mandatory Prepayments 4 .2 Conversion and Continuation Options 4 .3 Minimum
Amounts and Maximum Number of Tranches 4 .4 Interest Rates and Payment Dates 4
.5 Computation of Interest and Fees 4 .6 Inability to Determine Interest Rate 4
.7 Pro Rata Treatment and Payments 4 .8 Illegality 4 .9 Requirements of Law 4
.10 Taxes 4 .11 Indemnity 4 .12 Change of Lending Office; Filing of Certificates
or Documents 4 .13 Replacement Lenders

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SECTION 5 .  REPRESENTATIONS AND WARRANTIES 5 .1 Financial Condition 5 .2 No
Change 5 .3 Corporate Existence; Compliance with Law 5 .4 Corporate Power;
Authorization; Enforceable Obligations 5 .5 No Legal Bar 5 .6 No Material
Litigation 5 .7 No Default 5 .8 Ownership of Property; Liens 5 .9 Intellectual
Property 5 .10 No Burdensome Restrictions 5 .11 Taxes 5 .12 Federal Regulations
5 .13 ERISA 5 .14 Investment Company Act; Other Regulations 5 .15 Subsidiaries 5
.16 Purpose of Loans 5 .17 Environmental Matters 5 .18 Accuracy of Information 5
.19 Solvency 5 .20 Labor Matters 5 .21 Security Documents SECTION 6 . 
CONDITIONS PRECEDENT 6 .1 Conditions to Term Loans 6 .2 Conditions to Each
Extension of Credit SECTION 7 .  AFFIRMATIVE COVENANTS 7 .1 Financial Statements
7 .2 Certificates; Other Information 7 .3 Payment of Obligations 7 .4 Conduct of
Business and Maintenance of Existence 7 .5 Maintenance of Property; Insurance 7
.6 Inspection of Property; Books and Records; Discussions 7 .7 Notices 7 .8
Environmental Laws 7 .9 Additional Collateral 7 .10 Consummation of Permitted
Securitization Transaction

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SECTION 8 .  NEGATIVE COVENANTS 8 .1 Financial Condition Covenants 8 .2
Limitation on Indebtedness 8 .3 Limitation on Liens 8 .4 Limitation on Guarantee
Obligations 8 .5 Limitation on Fundamental Changes 8 .6 Limitation on Sale of
Assets 8 .7 [Intentionally Omitted.] 8 .8 Limitation on Restricted Payments 8 .9
Limitation on Capital Expenditures 8 .10 Limitation on Investments, Loans and
Advances 8 .11 Limitation on Transactions with Affiliates 8 .12 Limitation on
Sales and Leasebacks 8 .13 Limitation on Changes in Fiscal Year 8 .14 Limitation
on Certain Clauses 8 .15 Limitation on Lines of Business 8 .16 Amendments to
Permitted Securitization Transaction 8 .17 Limitation on Optional Payments and
Modifications of Debt Instruments SECTION 9 .  NEGATIVE COVENANTS OF HOLDINGS 9
.1 Limitation on Holdings' Activities 9 .2 Restricted Payments 9 .3 Equity Net
Proceeds 9 .4 Dividends SECTION 10 . GUARANTEE 10 .1 Guarantee 10 .2 No
Subrogation, Contribution, Reimbursement or Indemnity 10 .3 Amendments, etc.
with respect to the Obligations; Waiver of Rights 10 .4 Guarantee Absolute and
Unconditional 10 .5 Reinstatement 10 .6 Payments SECTION 11 . EVENTS OF DEFAULT
SECTION 12 . THE ADMINISTRATIVE AGENT 12 .1 Appointment 12 .2 Delegation of
Duties 12 .3 Exculpatory Provisions 12 .4 Reliance by Administrative Agent 12 .5
Notice of Default 12 .6 Non-Reliance on Administrative Agent and Other Lenders
12 .7 Indemnification 12 .8 Administrative Agent in Its Individual Capacity 12
.9 Successor Administrative Agent 12 .10 Issuing Bank; Swing Line Lender 12 .11
Annual Administration Fee

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SECTION 13 . MISCELLANEOUS 13 .1 Amendments and Waivers 13 .2 Notices 13 .3 No
Waiver; Cumulative Remedies 13 .4 Survival of Representations and Warranties 13
.5 Payment of Expenses and Taxes 13 .6 Successors and Assigns; Participations
and Assignments 13 .7 Adjustments; Set-off 13 .8 Counterparts 13 .9 Severability
13 .10 Integration 13 .11 GOVERNING LAW 13 .12 Submission To Jurisdiction;
Waivers 13 .13 Acknowledgements 13 .14 WAIVERS OF JURY TRIAL 13 .15
Confidentiality 13 .16 Usury Savings Clause 13 .17 Release of Collateral 13 .18
Effect of Agreement

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ANNEXES:

Annex A  Pricing Grid

SCHEDULES:     Schedule 1.1(a)   Commitments, Addresses and Lending Offices
Schedule 1.1(b)   Mortgaged Properties Schedule 3.10   Continuing Letters of
Credit Schedule 5.15   Subsidiaries of Holdings and the Borrower Schedule
5.21(a)   UCC Financing Statement Filing Jurisdictions Schedule 5.21(b)  
Mortgage Filing Jurisdictions Schedule 8.2(e)   Existing Indebtedness Schedule
8.3(g)   Existing Liens Schedule 8.4(a)   Existing Guarantee Obligations
Schedule 8.10   Existing Investments Schedule 8.11   Existing Transactions with
Affiliates
EXHIBITS:
 
  Exhibit A-1   Form of Subsidiaries' Guarantee Exhibit A-2   Form of Borrower
Domestic Subsidiary Stock Pledge Agreement Exhibit A-3   Form of Borrower
Foreign Subsidiary Stock Pledge Agreement Exhibit A-4   Form of Borrower
Security Agreement Exhibit A-5   Form of Collateral Agreement Exhibit A-6   Form
of Holdings Pledge Agreement Exhibit B   Form of Swing Line Loan Participation
Certificate Exhibit C   Form of Term Note Exhibit D   Form of Revolving Credit
Note Exhibit E   Form of Swing Line Note Exhibit F   Form of Closing Certificate
Exhibit G   Form of Opinion of Fried, Frank, Harris, Shriver & Jacobson Exhibit
H   Form of Assignment and Acceptance Exhibit I   Form of Exemption Certificate
Exhibit J   Form of Issuing Bank Agreement Exhibit K   Form of Mortgage

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    AMENDED AND RESTATED CREDIT AND GUARANTEE AGREEMENT, dated as of August 14,
1996, as amended and restated as of October 26, 2001, among:

(1)DAL-TILE INTERNATIONAL INC, a Delaware corporation ("Holdings");

(2)DAL-TILE GROUP INC., a Delaware corporation (the "Borrower");

(3)THE SEVERAL BANKS, FINANCIAL INSTITUTIONS AND OTHER ENTITIES from time to
time parties to this Agreement (collectively, the "Lenders"; individually, a
"Lender");

(4)CREDIT LYONNAIS NEW YORK BRANCH, FIRST UNION NATIONAL BANK and MIZUHO
FINANCIAL GROUP, each as a Co-Documentation Agent (in such capacity, the
"Co-Documentation Agents");

(5)BANK OF AMERICA, N.A., as Syndication Agent (in such capacity, the
"Syndication Agent"); and

(6)THE CHASE MANHATTAN BANK, a New York banking corporation, as Administrative
Agent (as hereinafter defined) for the Lenders hereunder (together with the
Syndication Agent and the Co-Documentation Agents, the "Managing Agents").

W I T N E S S E T H:

    WHEREAS, the Borrower desires to amend and restate the Credit Agreement
dated as of August 14, 1996, as amended (as so amended prior to the date hereof,
the "Existing Credit Agreement"), among Holdings, the Borrower, the several
banks and other financial institutions from time to time parties thereto, Credit
Suisse First Boston, as documentation agent, and The Chase Manhattan Bank, as
administrative agent, in accordance with the terms and conditions set forth in
this Agreement; and

    WHEREAS, all the obligations of the Borrower hereunder will be secured by
among other things, (i) a perfected lien on and security interest in certain
collateral described in the Security Agreements, including without limitation, a
pledge of all the issued and outstanding Capital Stock of the Borrower and each
of the other direct and indirect Domestic Subsidiaries of the Borrower (other
than any Receivables Subsidiary) and 65% of the issued and outstanding Capital
Stock of each of the direct Foreign Subsidiaries of the Borrower and its
Domestic Subsidiaries and (ii) unconditional guarantees by each of the
Guarantors;

    NOW, THEREFORE, in consideration of the mutual covenants and premises
contained herein, the parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

    1.1  Defined Terms.   As used in this Agreement, the following terms shall
have the following meanings:

    "ABR": for any day, a rate per annum (rounded upwards, if necessary, to the
next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such
day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of
1%. For purposes hereof: "Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by the Administrative Agent as its prime
rate in effect at its principal office in New York City (the Prime Rate not
being intended to be the lowest rate of interest charged by the Administrative
Agent in connection with extensions of credit to debtors); and "Federal Funds
Effective Rate" shall mean, for any day, 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 on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by it. Any change in the
ABR due to a change in the Prime Rate or

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the Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.

    "ABR Loans": Loans the rate of interest applicable to which is based upon
the ABR.

    "Adjustment Date": the first Business Day following receipt by the
Administrative Agent of both (i) the financial statements required to be
delivered pursuant to subsection 7.1(a) or 7.1(b), as the case may be, for the
most recently completed fiscal period and (ii) the certificate required to be
delivered pursuant to subsection 7.2(b) with respect to such fiscal period,
provided that April 30, 2002 shall be the first Adjustment Date.

    "Administrative Agent": Chase, together with its affiliates, as the
administrative agent for the Lenders under this Agreement and the other Loan
Documents, and any successor thereto pursuant to subsection 12.9.

    "Affiliate": as to any Person, any other Person (other than a Subsidiary),
which, directly or indirectly, is in Control of, is Controlled by, or is under
common Control with, such Person.

    "Aggregate Revolving Credit Outstandings": as to any Revolving Credit Lender
at any time, an amount equal to the sum of (a) the aggregate principal amount of
all Revolving Credit Loans made by such Revolving Credit Lender then outstanding
plus (b) such Revolving Credit Lender's Revolving Credit Commitment Percentage
of the L/C Obligations then outstanding plus (c) such Revolving Credit Lender's
Revolving Credit Commitment Percentage of all Swing Line Loans then outstanding.

    "Agreement": this Amended and Restated Credit and Guarantee Agreement, as
amended, supplemented or otherwise modified from time to time.

    "Annual Administration Fee": as defined in subsection 12.11.

    "Applicable Margin": with respect to any Revolving Credit Loan or Term Loan
(i) if such Revolving Credit Loan or Term Loan, as the case may be, is an ABR
Loan, 0.625% and (ii) if such Revolving Credit Loan or Term Loan, as the case
may be, is a Eurodollar Loan, 1.625%, provided that the Applicable Margin for
Revolving Credit Loans and Term Loans will be adjusted, if required, on each
Adjustment Date, to the Applicable Margin set forth on Annex A hereto opposite
the Leverage Ratio Level of the Borrower in effect on such Adjustment Date,
provided further that, in the event that the financial statements required to be
delivered pursuant to subsection 7.1(a) or 7.1(b), as applicable, and the
related certificate required pursuant to subsection 7.2(b), are not delivered
when due, then, during the period from the date upon which such financial
statements were required to be delivered until one Business Day following the
date upon which they actually are delivered, the Applicable Margin for Revolving
Credit Loans and Term Loans which are ABR Loans shall be 1.125% and the
Applicable Margin for Revolving Credit Loans and Term Loans which are Eurodollar
Loans shall be 2.125%.

    "Application": an application, in such form as the relevant Issuing Bank may
specify from time to time, requesting such Issuing Bank to open a Letter of
Credit.

    "Arranger": J.P. Morgan Securities Inc., in its capacity as sole advisor,
lead arranger and bookrunner.

    "Asset Sale": as to any Person, any sale or other disposition (including any
sale or other disposition in connection with a Sale/Leaseback Transaction and
any mortgage (other than the Mortgages) or lease of real property) subsequent to
the Original Closing Date of any property of such Person (except sales or other
dispositions permitted under subsection 8.6(a) through 8.6(f) and subsection
8.6(h) through 8.6(k)).

    "Assignee": as defined in subsection 13.6(c).

    "Available Revolving Credit Commitment": as to any Revolving Credit Lender
at any time, an amount equal to the excess, if any, of (a) the amount of such
Revolving Credit Lender's Revolving

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Credit Commitment at such time over (b) such Revolving Credit Lender's Aggregate
Revolving Credit Outstandings at such time; collectively, as to all the
Revolving Credit Lenders, the "Available Revolving Credit Commitments".

    "Board of Governors": the Board of Governors of the Federal Reserve System
and any Governmental Authority which succeeds to the powers and functions
thereof.

    "Borrower": as defined in the Preamble to this Agreement.

    "Borrower Pledge Agreements": collectively, (i) the Amended and Restated
Borrower Domestic Subsidiary Stock Pledge Agreement, dated as of August 14,
1996, as amended and restated as of the date hereof, made by the Borrower in
favor of the Administrative Agent, substantially in the form of Exhibit A-2, and
(ii) each Amended and Restated Borrower Foreign Subsidiary Stock Pledge
Agreement, dated as of October 4, 1996, as amended and restated as of the date
hereof, made by the Borrower in favor of the Administrative Agent, substantially
in the form of Exhibit A-3, and in each case as the same may be further amended,
restated, amended and restated, supplemented or otherwise modified from time to
time after the Closing Date.

    "Borrower Security Agreement": the Amended and Restated Security Agreement,
dated as of June 19, 1997, as amended and restated as of the date hereof,
executed and delivered by the Borrower in favor of the Administrative Agent,
substantially in the form of Exhibit A-4, and as the same may be further
amended, restated, amended and restated, supplemented or otherwise modified from
time to time after the Closing Date.

    "Borrowing Date": any Business Day specified in a notice pursuant to
subsection 2.2, 3.2 or 3.8 as a date on which the Borrower requests the Lenders
to make Loans or the Swing Line Lender to make Swing Line Loans hereunder.

    "Business Day": a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close.

    "Capital Expenditures": as to any Person for any period, the aggregate
amount of all expenditures by such Person and its Subsidiaries (other than any
such expenditures in respect of the purchase price of Investments permitted
under subsection 8.10(f) and 8.10(g)) for the rental, lease, purchase (including
by way of the acquisition of securities of a Person), construction or use of any
property during such period, which, in accordance with GAAP, are or should be
included in "capital expenditures" or similar items in such Person's
consolidated statement of cash flows for such period, excluding (a) any such
expenditure in respect of any Replacement Asset (other than capital expenditures
for ordinary maintenance purposes), (b) any such expenditure made to restore,
replace or rebuild property to the condition of such property immediately prior
to a Casualty Event with respect to such property, to the extent such
expenditure is made with the Net Proceeds from such Casualty Event, (c) any such
expenditure which represents capitalized interest in respect of the financing of
any such expenditures and (d) any such expenditures made with the proceeds of
sales or dispositions of assets permitted under Section 8.6(e).

    "Capital Stock": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants or options to purchase any of the foregoing.

    "Cash Equivalents": (a) securities issued or directly and fully guaranteed
or insured by the United States Government, or any agency or instrumentality
thereof, having maturities of not more than one year from the date of
acquisition, (b) marketable general obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition thereof, having a credit
rating of "A" or better from either S&P or Moody's; (c) certificates of deposit,
time deposits, eurodollar time deposits, overnight bank deposits or bankers'
acceptances having maturities of

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not more than one year from the date of acquisition thereof of any Lender, or of
any domestic commercial bank the long-term debt of which is rated at the time of
acquisition thereof at least A or the equivalent thereof by S&P, or A or the
equivalent thereof by Moody's, and having capital and surplus in excess of
$300,000,000, (d) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (a), (b) and
(c) entered into with any bank meeting the qualifications specified in
clause (c) above, (e) commercial paper rated at the time of acquisition thereof
at least A-2 or the equivalent thereof by S&P or P-2 or the equivalent thereof
by Moody's, or carrying an equivalent rating by a nationally recognized rating
agency, if both of the two named rating agencies cease publishing ratings of
investments, and in either case maturing within 270 days after the date of
acquisition thereof, (f) other investment instruments approved in writing by the
Required Lenders and offered by any Lender or by any financial institution which
has a combined capital and surplus of not less than $100,000,000 or
(g) short-term investments (not exceeding 30 days) in loans made to obligors
having an investment grade rating from each of S&P and Moody's.

    "Casualty Event": with respect to any property of any Person, the receipt by
such Person of insurance proceeds, or proceeds of a condemnation award or other
compensation in connection with any loss of or damage to, or any condemnation or
other taking of, such property.

    "Change in Control": (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than 35% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of Holdings; (b) occupation of a
majority of the seats (other than vacant seats) on the board of directors of
Holdings or the Borrower by Persons who were neither (i) nominated by the board
of directors of Holdings or the Borrower, as applicable, nor (ii) appointed by
directors so nominated; or (c) Holdings shall not own 100% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of
the Borrower.

    "Chase": The Chase Manhattan Bank, a New York banking corporation.

    "Closing Date": the date on which the conditions precedent set forth in
subsection 6.1 shall be satisfied or waived (but in no event later than
November 30, 2001).

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

    "Co-Documentation Agents": as defined in the Preamble to this Agreement.

    "Collateral": all assets (other than any Excluded Property) of the Loan
Parties, now owned or hereinafter acquired, upon which a Lien is purported to be
created by any Security Document.

    "Collateral Agreement": the Amended and Restated Collateral Agreement, dated
as of June 19, 1997, as amended and restated as of the date hereof, executed and
delivered by each Guarantor (other than Holdings), substantially in the form of
Exhibit A-5, as the same may be amended, restated, amended and restated,
supplemented or otherwise modified from time to time.

    "Commercial Letter of Credit": as defined in subsection 3.10(b)(i)(2).

    "Commitment": with respect to any Lender, the collective reference to such
Lender's Term Loan Commitment and/or Revolving Credit Commitment; collectively,
as to all the Lenders, the "Commitments".

    "Commitment Fee Rate": as defined in subsection 3.3.

    "Commitment Percentage": as to any Lender (a) at any time prior to the
termination of the Revolving Credit Commitments, the percentage which (i) the
sum of (x) such Lender's Revolving Credit Commitment plus (y) such Lender's Term
Loan Commitment (or, after the Term Loans are made, the outstanding principal
amount of such Lender's Term Loan) then constitutes of (ii) the sum of (x) the
Revolving Credit Commitments of all the Lenders plus (y) the Term Loan
Commitments of

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all the Lenders (or, after the Term Loans are made, the aggregate principal
amount of Term Loans of all the Lenders then outstanding), and (b) at any time
after the termination of the Revolving Credit Commitments, the percentage which
(i) the sum of (x) the principal amount of such Lender's Loans (other than Swing
Line Loans) then outstanding plus (y) the product of such Lender's Revolving
Credit Commitment Percentage times the sum of (I) the L/C Obligations then
outstanding and (II) the Swing Line Loans then outstanding then constitutes of
(ii) the sum of (x) the aggregate principal amount of Loans of all the Lenders
then outstanding plus (y) the aggregate L/C Obligations of all the Lenders then
outstanding.

    "Common Stock": the Common Stock of Holdings, par value $.01 per share.

    "Commonly Controlled Entity": an entity, whether or not incorporated, which
is under common control with the Borrower within the meaning of Section 4001 of
ERISA or is part of a group which includes the Borrower and which is treated as
a single employer under Section 414(b) or (c) of the Code or, solely for
purposes of determining liability under Section 412 of the Code, which is
treated as a single employer under Section 414 (b), (c), (m) or (o) of the Code.

    "Conduit Lender": any special purpose corporation organized and administered
by any Lender for the purpose of making Loans otherwise required to be made by
such Lender and designated by such Lender in a written instrument; provided,
that the designation by any Lender of a Conduit Lender shall not relieve the
designating Lender of any of its obligations to fund a Loan under this Agreement
if, for any reason, its Conduit Lender fails to fund any such Loan, and the
designating Lender (and not the Conduit Lender) shall have the sole right and
responsibility to deliver all consents and waivers required or requested under
this Agreement with respect to its Conduit Lender, and provided, further, that
no Conduit Lender shall (a) be entitled to receive any greater amount pursuant
to Section 4.9, 4.10, 4.11 or 13.5 than the designating Lender would have been
entitled to receive in respect of the extensions of credit made by such Conduit
Lender or (b) be deemed to have any Commitment.

    "Consolidated Capitalization": at any date of determination, the sum of
(a) Consolidated Total Debt at such date of determination plus (b) Consolidated
Net Worth at such date of determination, all as determined on a consolidated
basis in accordance with GAAP.

    "Consolidated EBITDA": for any period, the Consolidated Net Income for such
period, plus, to the extent deducted in determining such Consolidated Net
Income, (a) Consolidated Interest Expense, (b) depreciation, (c) amortization
and (d) all Federal, state, local and foreign income taxes, all as determined on
a consolidated basis in accordance with GAAP.

    "Consolidated Interest Coverage Ratio": for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period.

    "Consolidated Interest Expense": for any period, an amount equal to the sum
of, without duplication, (a) the amount of interest expense (net of interest
income), both expensed and capitalized, of Holdings (or, if the Merger is
consummated, the Borrower) and its Subsidiaries for such period as determined on
a consolidated basis in accordance with GAAP and (b) an amount equal to the
interest (or other fees or other amounts in the nature of interest or discount
accrued and paid or payable in cash for such period) in respect of the Permitted
Securitization Transaction.

    "Consolidated Lease Expense": for any period, the aggregate amount of fixed
and contingent rentals payable by Holdings (or, if the Merger is consummated,
the Borrower) and its Subsidiaries for such period with respect to leases of
real and personal property, determined on a consolidated basis in accordance
with GAAP.

    "Consolidated Leverage Ratio": for any period, the ratio of (a) Consolidated
Total Debt at the last day of such period to (b) Consolidated EBITDA for such
period.

    "Consolidated Net Income": for any period, the net income of Holdings (or,
if the Merger is consummated, the Borrower) and its Subsidiaries for such period
as determined on a consolidated basis

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in accordance with GAAP, but excluding from the determination thereof (without
duplication) (a) any extraordinary gains or losses, (b) any restructuring
charges or non-recurring gains or losses in an aggregate amount not to exceed
$50,000,000, with no more than $10,000,000 of such $50,000,000 to be in cash, in
each case, during any four-quarter period, (c) gains or losses from the proposed
or actual disposition of material assets, (d) goodwill and intangible asset
write-downs (but deducting from the determination of Consolidated Net Income for
any period, cash payments made during such period in respect of any goodwill and
intangible asset write-downs recorded after the Closing Date), (e) non-cash
charges resulting from the vesting or exercise of stock options or stock
appreciation rights granted to management of the Borrower and (f) non-cash gains
or losses which are specific to hedge transactions which are disallowed hedge
accounting treatment under the Statements of Financial Accounting Standards
numbers 133 and 138.

    "Consolidated Net Revenue": of any Person for any period, the net revenue of
such Person and its consolidated Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.

    "Consolidated Net Worth": at any date of determination, all items which
would, in accordance with GAAP, be included under shareholders' equity on a
consolidated balance sheet of Holdings (or, if the Merger is consummated, the
Borrower) and its Subsidiaries at such date of determination, but excluding from
the determination thereof (without duplication) the effect of (a) any foreign
currency translation adjustments, (b) any extraordinary gains or losses, (c) any
restructuring charges or non-recurring gains or losses in an aggregate amount
not to exceed $200,000,000, with no more than $50,000,000 of such $200,000,000
to be in cash, in each case, during the term of this Agreement, (d) gains or
losses taken in accordance with the Statements of Financial Accounting Standards
numbers 133 and 138 adjustments, (e) stock repurchases and dividends consummated
in accordance with subsection 8.8(d), (f) non-cash intangible and material
write-downs of assets (but deducting from the determination of Consolidated Net
Worth for any period, cash payments made during such period in respect of any
write-downs recorded after the Closing Date) and (g) non-cash charges resulting
from the vesting or exercise of stock options or stock appreciation rights
granted to management of the Borrower.

    "Consolidated Total Assets": of any Person at any date of determination, the
total assets of such Person and its consolidated Subsidiaries at such date of
determination, determined on a consolidated basis in accordance with GAAP.

    "Consolidated Total Debt": at any date of determination, an amount equal to
the sum of, without duplication, (a) all Indebtedness of Holdings (or, if the
Merger is consummated, the Borrower) and its consolidated Subsidiaries at such
date of determination as determined on a consolidated basis in accordance with
GAAP and (b) the aggregate cash proceeds received by the Borrower and its
Subsidiaries (net of amounts repaid) from the financing of then outstanding
Receivables pursuant to a Permitted Securitization Transaction at such date of
determination.

    "Continuing Letter of Credit": any Existing Letter of Credit issued by a
Lender.

    "Contractual Obligation": as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

    "Control": of a Person means the power, directly or indirectly, either to
(a) vote 10% or more of the securities having ordinary voting power for the
election of directors of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.

    "Currency Rate Protection Agreements": as to any Person, all foreign
exchange contracts, currency swap agreements or other similar agreements or
arrangements entered into in the ordinary course of business by such Person
designed to protect such Person against fluctuations in currency values.

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    "De Minimus Asset Sale": as defined in subsection 4.1(b).

    "Default": any of the events specified in Section 11, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.

    "Dollars" and "$": dollars in lawful currency of the United States of
America.

    "Domestic Subsidiary": any Subsidiary of the Borrower other than a Foreign
Subsidiary.

    "Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.

    "Environmental Permits": all permits, licenses, registrations,
notifications, exemptions, and other authorizations required under Environmental
Laws.

    "ERISA": the Employee Retirement Income Security Act of 1974, as amended
from time to time.

    "Eurocurrency Reserve Requirements": for any day as applied to a Eurodollar
Loan, the aggregate (without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors or other Governmental Authority having
jurisdiction with respect thereto) dealing with reserve requirements prescribed
for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board of Governors) maintained by a member bank of the
Federal Reserve System.

    "Eurodollar Base Rate": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, the rate per annum determined on the basis of
the rate for deposits in Dollars for a period equal to such Interest Period
commencing on the first day of such Interest Period appearing on Page 3750 of
the Telerate screen as of 11:00 A.M., London time, two Business Days prior to
the beginning of such Interest Period. In the event that such rate does not
appear on Page 3750 of the Telerate screen (or otherwise on such screen), the
"Eurodollar Base Rate" shall be determined by reference to such other comparable
publicly available service for displaying eurodollar rates as may be selected by
the Administrative Agent or, in the absence of such availability, by reference
to the rate at which the Administrative Agent is offering Dollar deposits at or
about 11:00 A.M., New York City time, two Business Days prior to the beginning
of such Interest Period in the interbank eurodollar market where its eurodollar
and foreign currency and exchange operations are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein.

    "Eurodollar Loans": Loans the rate of interest applicable to which is based
upon the Eurodollar Rate.

    "Eurodollar Rate": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/1,000th
of 1%):

Eurodollar Base Rate

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

1.00—Eurocurrency Reserve Requirements

    "Event of Default": any of the events specified in Section 11, provided that
all requirements for the giving of notice, the lapse of time, or both, have been
satisfied.

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    "Excess Securitization Amount": an amount equal to the aggregate cash
proceeds received by the Borrower and its Subsidiaries (net of amounts repaid)
in excess of $100,000,000 from the financing of then outstanding Receivables
pursuant to a Permitted Securitization Transaction.

    "Excluded Property": for so long as any Permitted Securitization Transaction
is in effect (whether before or after termination of any other Permitted
Securitization Transaction) and to the extent such property described below is
subject to a Permitted Securitization Transaction, all right, title and interest
of the Seller in and to: (i) all Securitization Receivables; (ii) all Related
Security; (iii) with respect to each Securitization Receivable, all cash
collections and other cash proceeds of such Securitization Receivable, including
all cash proceeds of Related Security with respect to such Securitization
Receivable, and all funds deemed to have been received as a collection as a
result of dilution or a breach of representations; (iv) each bank account
maintained by the Seller to the extent such account contains cash collections or
other cash proceeds of Securitization Receivables or cash proceeds of any
Related Security with respect to Securitization Receivables, together with all
funds in each such account to the extent such funds constitute cash collections
or other cash proceeds of Securitization Receivables or cash proceeds of any
Related Security with respect to Securitization Receivables and (v) to the
extent not included in the foregoing, all proceeds of any and all of the
foregoing.

    "Existing Letter of Credit": at any date, any letter of credit issued and
outstanding under the Existing Credit Agreement.

    "Existing Credit Agreement": as defined in the Preamble to this Agreement.

    "Extension of Credit": with respect to any Lender, the making of a Loan by
such Lender, and, if such Lender is a Revolving Credit Lender, the issuance of a
Letter of Credit; with respect to all the Lenders, the "Extensions of Credit".

    "FDIC": the Federal Deposit Insurance Corporation and any Governmental
Authority which succeeds to the powers and functions thereof.

    "Federal Funds Effective Rate": as defined in the definition of ABR
contained in this subsection 1.1.

    "Financing Lease": any lease of property, real or personal, the obligations
of the lessee in respect of which are required in accordance with GAAP to be
capitalized on a balance sheet of the lessee.

    "Financing Lease Obligations": as to any Person, the obligations of such
Person to pay rent or other amounts under any Financing Lease; the amount of
such obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.

    "Foreign Holding Company": any Subsidiary organized under the laws of the
United States of America or any State thereof the principal assets of which
consist of the Capital Stock of one or more Foreign Subsidiaries or other
Foreign Holding Companies.

    "Foreign Subsidiary": (a) any Subsidiary of the Borrower organized under the
laws of any jurisdiction outside the United States of America and (b) any
Foreign Holding Company.

    "GAAP": generally accepted accounting principles in the United States of
America in effect from time to time.

    "Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

    "Guarantee": the guarantee contained in Section 10 or in the Subsidiaries'
Guarantee.

    "Guarantee Obligation": as to any Person (the "Guaranteeing Person"), any
obligation of (a) the Guaranteeing Person or (b) another Person (including,
without limitation, any bank under any letter of credit) to induce the creation
of which the Guaranteeing Person has issued a reimbursement, counter

8

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indemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, lease, dividend or other obligation (the "Primary
Obligations") of any other third Person (the "Primary Obligor") in any manner,
whether directly or indirectly, including, without limitation, any obligation of
the Guaranteeing Person, whether or not contingent, (i) to purchase any such
Primary Obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or payment of any
such Primary Obligation or (2) to maintain working capital or equity capital of
the Primary Obligor or otherwise to maintain the net worth or solvency of the
Primary Obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such Primary Obligation of the
ability of the Primary Obligor to make payment of such Primary Obligation or
(iv) otherwise to assure or hold harmless the owner of any such Primary
Obligation against loss in respect thereof, provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation of any Guaranteeing Person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the Primary Obligation in
respect of which such Guarantee Obligation is made and (b) the maximum amount
for which such Guaranteeing Person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such Primary Obligation
and the maximum amount for which such Guaranteeing Person may be liable are not
stated or determinable, in which case the amount of such Guarantee Obligation
shall be such Guaranteeing Person's maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.

    "Guarantors": Holdings and each Subsidiary Guarantor.

    "Hazardous Materials": any petroleum (including crude oil or any fraction
thereof) or petroleum products, polychlorinated biphenyls, urea-formaldehyde
insulation, asbestos and asbestos-containing materials, pollutants,
contaminants, and all other materials and substances including but not limited
to radioactive materials regulated pursuant to any Environmental Laws or that
could result in liability under any Environmental Law.

    "Holdings": as defined in the Preamble to this Agreement.

    "Holdings Pledge Agreement": the Pledge Agreement, dated as of August 14,
1996, as amended and restated as of the date hereof, made by Holdings in favor
of the Administrative Agent, substantially in the form of Exhibit A-6, as the
same may be amended, restated, amended and restated, supplemented or otherwise
modified from time to time.

    "Indebtedness": of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade payables or liabilities
and deferred payment for services to employees and former employees incurred in
the ordinary course of business and payable in accordance with customary
practices and other deferred compensation practices), (b) any other indebtedness
of such Person which is evidenced by a note, bond, debenture or similar
instrument, (c) all obligations of such Person under Financing Leases, (d) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person, (e) the face amount of all letters of credit issued for
the account of such Person and, without duplication, all drafts drawn thereunder
and (f) all indebtedness of others of the types described in (a) through
(d) above secured by any Lien on any property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment thereof
(the amount of such indebtedness with respect to such Person being deemed to be
the lesser of the value of such property or the amount of indebtedness of others
so secured), but in any event excluding customer deposits in the ordinary course
of business.

    "Index Debt": the senior unsecured, long-term, non-credit enhanced debt
rating of the Borrower.

    "Insolvency": with respect to any Multiemployer Plan, the condition that
such Plan is insolvent within the meaning of Section 4245 of ERISA.

9

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    "Insolvent": pertaining to a condition of Insolvency.

    "Intellectual Property": the collective reference to all rights, priorities
and privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including copyrights,
copyright licenses, patents, patent licenses, trademarks, trademark licenses,
trademark applications, service marks, service mark licenses, service mark
applications, domain names, technology, know-how and processes, and all rights
to sue at law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom.

    "Interest Payment Date": (a) as to ABR Loans, the last day of each March,
June, September and December, (b) as to any Eurodollar Loan having an Interest
Period of three months or less, the last day of such Interest Period and (c) as
to any Eurodollar Loan having an Interest Period longer than three months, each
day which is three months, or a whole multiple thereof, after the first day of
such Interest Period and the last day of such Interest Period.

    "Interest Period": with respect to any Eurodollar Loan:

     (i) initially, the period commencing on the borrowing or conversion date,
as the case may be, with respect to such Eurodollar Loan and ending one, two,
three or six months thereafter, as selected by the Borrower in its notice of
borrowing or notice of conversion, as the case may be, given with respect
thereto; and

    (ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending one,
two, three or six months thereafter, as selected by the Borrower by irrevocable
notice to the Administrative Agent not less than three Business Days prior to
the last day of the then current Interest Period with respect thereto;

provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:

    (1) if any Interest Period pertaining to a Eurodollar Loan would otherwise
end on a day that is not a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;

    (2) no Interest Period that would otherwise extend beyond the Revolving
Credit Termination Date or beyond the date final payment is due on the Term
Loans shall be selected by the Borrower;

    (3) any Interest Period pertaining to a Eurodollar Loan that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and

    (4) the Borrower shall select Interest Periods so as not to require a
payment or prepayment of any Eurodollar Loan during an Interest Period for such
Eurodollar Loan.

    "Interest Rate Protection Agreements": as to any Person, all interest rate
swaps, caps or collar agreements or similar arrangements entered into by such
Person providing for protection against fluctuations in interest rates or the
exchange of nominal interest obligations, either generally or under specific
contingencies.

    "Investment": as defined in subsection 8.10.

    "Issuing Bank": (a) with respect to Letters of Credit (other than Continuing
Letters of Credit), Chase, any of its Affiliates or any other Lender (designated
as an Issuing Bank in an Issuing Bank Agreement executed by such Lender, the
Borrower and the Administrative Agent), in each case in its capacity as issuer
of any Letter of Credit and (b) with respect to Continuing Letters of Credit,
the Lender which issued such Continuing Letter of Credit under the Existing
Credit Agreement.

10

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    "Issuing Bank Agreement": an agreement, substantially in the form of
Exhibit J, executed by a Lender, the Borrower, and the Administrative Agent
(which consent shall not be unreasonably withheld) pursuant to which such Lender
agrees to become an Issuing Bank hereunder.

    "Joint Venture": (i) any joint venture arrangement, including interests in
business units, formed after the Closing Date to engage in a Related Business in
which the Borrower or any of its Subsidiaries owns an equity interest not in
excess of 50% of the equity interest of all joint venturers thereof, and which
is not controlled by or under common control with the Borrower or such
Subsidiary, whether such joint venture is structured as a corporation,
partnership, trust, limited liability company or any other Person or (ii) if
clause (i) above is not applicable, any joint venture arrangement, including
interests in business units, formed after the Closing Date, that by the terms of
such joint venture's organizational documents may not be a Subsidiary Guarantor
hereunder.

    "L/C Commitment": $35,000,000.

    "L/C Fee Payment Date": the last day of each March, June, September and
December.

    "L/C Fee Percentage": as defined in subsection 3.12(b).

    "L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of then unpaid Reimbursement Obligations.

    "L/C Participants": collectively, all the Revolving Credit Lenders.

    "Lenders": as defined in the Preamble to this Agreement; provided, that
unless the context otherwise requires, each reference herein to the Lenders
shall be deemed to include any Conduit Lender.

    "Lender Affiliate": (a) any Affiliate of any Lender, (b) any Person that is
administered or managed by any Lender or any Affiliate of any Lender and that is
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business
and (c) with respect to any Lender which is a fund that invests in commercial
loans and similar extensions of credit, any other fund that invests in
commercial loans and similar extensions of credit and is managed or advised by
the same investment advisor as such Lender or by an Affiliate of such Lender or
investment advisor.

    "Letters of Credit": collectively, Commercial Letters of Credit and Standby
Letters of Credit.

    "Leverage Ratio Level": as to the Borrower, the existence of Leverage Ratio
Level I, Leverage Ratio Level II, Leverage Ratio Level III, Leverage Ratio Level
IV, or Leverage Ratio Level V, as the case may be.

    "Leverage Ratio Level I": as to the Borrower, shall exist on an Adjustment
Date if the Consolidated Leverage Ratio for the period of four consecutive
fiscal quarters ending on the last day of the period covered by the financial
statements relating to such Adjustment Date is equal to or greater than 3.00 to
1.00.

    "Leverage Ratio Level II": as to the Borrower, shall exist on an Adjustment
Date if the Consolidated Leverage Ratio for the period of four consecutive
fiscal quarters ending on the last day of the period covered by the financial
statements relating to such Adjustment Date is less than 3.00 to 1.0, but
greater than or equal to 2.50 to 1.0.

    "Leverage Ratio Level III": as to the Borrower, shall exist on an Adjustment
Date if the Consolidated Leverage Ratio for the period of four consecutive
fiscal quarters ending on the last day of the period covered by the financial
statements relating to such Adjustment Date is less than 2.50 to 1.0, but
greater than or equal to 1.50 to 1.0.

11

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    "Leverage Ratio Level IV": as to the Borrower, shall exist on an Adjustment
Date if the Consolidated Leverage Ratio for the period of four consecutive
fiscal quarters ending on the last day of the period covered by the financial
statements relating to such Adjustment Date is less than 1.50 to 1.0, but
greater than or equal to 1.00 to 1.0.

    "Leverage Ratio Level V": as to the Borrower, shall exist on an Adjustment
Date if the Consolidated Leverage Ratio for the period of four consecutive
fiscal quarters ending on the last day of the period covered by the financial
statements relating to such Adjustment Date is less than 1.00 to 1.0.

    "Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Financing Lease
having substantially the same economic effect as any of the foregoing), except
for the filing of financing statements in connection with obligations under
leases other than Financing Leases incurred by the Company or its Subsidiaries
to the extent that such financing statements relate to the property subject to
such lease obligations.

    "Loan": any Term Loan, Revolving Credit Loan or Swing Line Loan.

    "Loan Documents": this Agreement, any Notes, the Guarantees, the
Applications and the Security Documents.

    "Loan Participant": as defined in subsection 13.6(b).

    "Loan Parties": the Borrower, Holdings and each Subsidiary of the Borrower
that is a party to a Loan Document.

    "Managing Agents": as defined in the Preamble to this Agreement.

    "Material Adverse Effect": a material adverse effect on (a) the business,
operations, property or condition (financial or otherwise) of the Borrower and
its Subsidiaries taken as a whole or (b) the validity or enforceability of this
Agreement or any of the other Loan Documents or the rights or remedies of the
Administrative Agent or the Lenders hereunder or thereunder.

    "Material Subsidiary": any Subsidiary (a) the Consolidated Total Assets of
which exceed 5% of the Consolidated Total Assets of the Borrower and its
consolidated Subsidiaries as of the end of the most recently completed fiscal
year or (b) the Consolidated Net Revenue of which exceeds 5% of the Consolidated
Net Revenue of the Borrower and its consolidated Subsidiaries as of the end of
the most recently completed fiscal year.

    "Merger": the merger of the Borrower with and into Holdings, with Holdings
as the surviving corporation.

    "Mexican Subsidiary": Dal-Tile of Mexico, S.A. de C.V.

    "Moody's": Moody's Investors Service, Inc., and its successors.

    "Mortgaged Properties": the real properties listed on Schedule 1.1(b), as to
which the Administrative Agent for the benefit of the Lenders has been (or will
be) granted a Lien pursuant to the Mortgages.

    "Mortgages": the collective reference to the mortgages, deeds of trust and
other similar documents executed and delivered from time to time by the Borrower
and the Guarantors in favor of the Administrative Agent pursuant to this
Agreement, substantially in the form of Exhibit K or, if such Exhibit is not
appropriate under applicable law in the jurisdiction in which the relevant real
property is located, in such other form as shall be reasonably satisfactory to
the Borrower and the Administrative Agent, as each of the same may be amended,
restated, supplemented or otherwise modified from time to time.

12

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

    "Net Proceeds": as to any Person, (a) with respect to any Asset Sale by such
Person, the cash proceeds (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) of such Asset Sale net of (i) attorneys' fees, accountants' fees,
investment banking fees, survey costs, title insurance premiums, and related
search and recording charges, transfer taxes, deed or mortgage recording taxes,
other customary expenses, amounts required to be applied to the repayment of
Indebtedness secured by a Lien expressly permitted hereunder on any asset which
is the subject of such Asset Sale (other than any Lien in favor of the
Administrative Agent for the benefit of the Lenders) or to the satisfaction of
other amounts owing under Contractual Obligations which become payable as a
result of such Asset Sale and were not incurred in contemplation thereof and
brokerage, consultant and other customary fees and expenses actually incurred in
connection therewith, (ii) taxes attributable thereto and, in the case of any
Asset Sale in a foreign jurisdiction, any taxes reasonably attributable to the
repatriation of the proceeds of such Asset Sale reasonably estimated by such
Person to be payable, and (iii) the aggregate amount of reserves required in the
reasonable judgment of such Person to be maintained on the books of such Person
in order to pay contingent obligations in respect of agreements entered into in
connection with such Asset Sale, provided, that amounts deducted from aggregate
proceeds pursuant to this clause (iii) and not actually paid by such Person in
liquidation of such contingent obligations shall be deemed to be Net Proceeds at
such time as such contingent obligations shall cease to be obligations of such
Person or to the extent such amounts are no longer required in the reasonable
judgment of such Person as a reserve with respect to such contingent
obligations, and (b) with respect to any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation received by
the Borrower and its Subsidiaries in respect of such Casualty Event net of
(i) reasonable expenses incurred by the Borrower and its Subsidiaries in
connection therewith, (ii) amounts required to be applied to the repayment of
Indebtedness secured by a Lien expressly permitted hereunder on any property
which is the subject of such Casualty Event (other than any Lien in favor of the
Administrative Agent for the benefit of the Lenders) and (iii) amounts applied
or that such Person intends with reasonable promptness and diligence to apply to
repair or replace the property subject to the Casualty Event, provided that
amounts deducted from aggregate proceeds pursuant to this clause (iii) shall be
Net Proceeds at such time as such proceeds are, in such Person's good faith
judgment, no longer required for such repair or replacement and (c) with respect
to any Subordinated Debt, the cash proceeds (including Cash Equivalents)
received by the Borrower or any of its Subsidiaries from the issuance or
incurrence of such Subordinated Debt net of all investment banking fees, legal
fees, accountants fees, underwriting discounts and commissions and other
customary fees and expenses, actually incurred by the Borrower or any of its
Subsidiaries and documented in connection therewith.

    "New Lending Office": as defined in subsection 4.10(b)(i)(A).

    "Non-Excluded Taxes": as defined in subsection 4.10(a).

    "Non-Recourse Indebtedness": Indebtedness of the Borrower or any of its
Subsidiaries in respect of which the holders of such Indebtedness agree in
writing that they will look solely to the property securing such Indebtedness
for payment in full of the principal thereof and interest thereon and
outstanding fees and costs associated therewith or are not legally entitled to
enforce such Indebtedness against the Borrower or any of its Subsidiaries.

    "Notes": collectively, the Swing Line Note, Revolving Credit Notes, and Term
Notes, if any.

    "Obligations": the unpaid principal of and interest on the Loans and the
Reimbursement Obligations and all other obligations and liabilities of the
Borrower to the Administrative Agent and the Lenders (or, in the case of
Specified Hedge Agreements, any Lender Affiliate) (including, without
limitation, interest accruing at the then applicable rate provided in this
Agreement after the maturity of

13

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the Loans and interest accruing at the then applicable rate provided in this
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, the other Loan Documents, any
Specified Hedge Agreement or any other document made, delivered or given in
connection herewith or therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Administrative Agent or to the Lenders that are required to be paid by
the Borrower pursuant to the terms of this Agreement, any other Loan Document or
any Specified Hedge Agreement).

    "Obsolete Property": any property of the Borrower or any of its Subsidiaries
which is obsolete, outdated or worn out or the useful life of which has ended,
in each case in the good faith determination of the Borrower or any applicable
Subsidiary.

    "Original Closing Date": August 14, 1996.

    "PBGC": the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA and any Governmental Authority which succeeds to
the powers and functions thereof.

    "Permitted Securitization Transaction": a transaction or series of related
transactions pursuant to which a Receivables Subsidiary incurs obligations or
issues interests, the proceeds of which are used to finance Receivables of the
Borrower and its Subsidiaries on terms and conditions satisfactory to the
Administrative Agent.

    "Person": an individual, partnership, corporation, business trust, joint
stock company, limited liability company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.

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

    "Pledge Agreements": collectively, the Borrower Pledge Agreements and the
Holdings Pledge Agreement.

    "Prepayment Account": as defined in subsection 4.1(d).

    "Primary Obligation": as defined in the definition of "Guarantee Obligation"
contained in this subsection 1.1.

    "Properties": as defined in subsection 5.17.

    "Receivables": all accounts (as defined in the Uniform Commercial Code in
effect in the State of New York on the date hereof) and accounts receivable of
the Borrower or any of its Subsidiaries (including any thereof constituting or
evidenced by chattel paper, instruments or general intangibles), and all
proceeds thereof and rights (contractual and other) and collateral related
thereto. Receivables shall include any and all Securitization Receivables.

    "Receivables Obligor": a Person obligated to make payments pursuant to a
Securitization Contract.

    "Receivables Subsidiary": any special purpose, bankruptcy-remote Subsidiary
of the Borrower that acquires, on a revolving basis, Receivables generated by
the Borrower or any of its Subsidiaries and that engages in no operations or
activities other than those related to Permitted Securitization Transactions.

    "Register": as defined in subsection 13.6(d).

14

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    "Regulation U": Regulation U of the Board of Governors as in effect from
time to time.

    "Reimbursement Obligation": the obligation of the Borrower to reimburse the
Issuing Bank pursuant to subsection 3.14(a) for amounts drawn under Letters of
Credit.

    "Related Business": any business in which the Borrower or any of its
Subsidiaries is engaged on the date hereof or which is reasonably related
thereto.

    "Related Security": with respect to each Securitization Receivable, (i) all
of the Seller's interest in any merchandise (including returned merchandise) the
sale of which gives rise to such Securitization Receivable; (ii) all security
interests or liens and property subject thereto from time to time purporting to
secure payment of such Securitization Receivable, whether pursuant to a
Securitization Contract or otherwise, together with all financing statements
signed by a Receivables Obligor describing any collateral securing such
Securitization Receivable; (iii) all guaranties, insurance and other agreements
or arrangements of whatever character from time to time supporting or securing
payment of such Securitization Receivable whether pursuant to a Securitization
Contract or otherwise; and (iv) each Securitization Contract and all other
books, records and other information (including, without limitation, computer
programs, tapes, discs, punch cards, data processing software and similar
property and rights) but solely to the extent relating to such Securitization
Receivable and the related Receivables Obligor.

    "Reorganization": with respect to any Multiemployer Plan, the condition that
such plan is in reorganization within the meaning of Section 4241 of ERISA.

    "Replacement Asset": any property acquired by the Borrower or any of its
Subsidiaries subsequent to the Closing Date which replaces Obsolete Property of
the same type and utility as the property acquired.

    "Reportable Event": any of the events set forth in Section 4043(c) of ERISA,
other than those events as to which the thirty day notice period is waived under
subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. § 2615.

    "Required Lenders": at any time, Lenders the Commitment Percentages of which
aggregate more than 50%.

    "Required Revolving Credit Lenders": at any time, Revolving Credit Lenders
the Revolving Credit Commitment Percentages of which aggregate more than 50%.

    "Required Term Loan Lenders": at any time, Term Loan Lenders the Term Loan
Commitment Percentages of which aggregate more than 50%.

    "Requirement of Law": as to any Person, the Certificate of Incorporation and
By-Laws or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.

    "Responsible Officer": as to any Person, the chief executive officer and the
president of such Person or, with respect to financial matters, the chief
financial officer of such Person or, in either case, such other executive
officers as may be designated from time to time by such Person in writing to the
Administrative Agent.

    "Restricted Payments": as defined in subsection 8.8.

    "Revolving Credit Commitment": with respect to any Lender, its obligation to
make Revolving Credit Loans and/or issue or participate in Letters of Credit
issued on behalf of the Borrower and/or make or participate in Swing Line Loans
made to the Borrower in an aggregate amount not to exceed the amount set forth
opposite such Lender's name on Schedule 1.1(a) under the heading "Revolving

15

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Credit Commitment", as such amount may be reduced from time to time pursuant to
this Agreement or as such amount may be adjusted from time to time pursuant to
subsection 13.6; collectively, as to all such Lenders, the "Revolving Credit
Commitments". The aggregate Revolving Credit Commitments initially shall be
$200,000,000.

    "Revolving Credit Commitment Percentage": as to any Revolving Credit Lender
(a) at any time prior to the termination of the Revolving Credit Commitments,
the percentage of the Revolving Credit Commitments then constituted by such
Revolving Credit Lender's Revolving Credit Commitment and (b) at any time after
the termination of the Revolving Credit Commitments, the percentage which
(i) the sum of (x) such Revolving Credit Lender's Revolving Credit Loans then
outstanding plus (y) the product of such Revolving Credit Lender's Revolving
Credit Commitment Percentage immediately prior to the termination of the
Revolving Credit Commitments (after giving effect to any permitted assignment
pursuant to subsection 13.6) times the sum of (I) the L/C Obligations then
outstanding and (II) the Swing Line Loans then outstanding then constitutes of
(ii) the sum of (x) the aggregate principal amount of Revolving Credit Loans of
all the Revolving Credit Lenders then outstanding plus (y) the aggregate L/C
Obligations then outstanding plus (z) the aggregate principal amount of Swing
Line Loans then outstanding.

    "Revolving Credit Commitment Period": the period from and including the
Closing Date to but not including the Revolving Credit Termination Date or such
earlier date on which the Revolving Credit Commitments shall terminate as
provided herein.

    "Revolving Credit Lender": any Lender with an unused Revolving Credit
Commitment hereunder and/or any Revolving Credit Loans outstanding hereunder;
collectively, the "Revolving Credit Lenders".

    "Revolving Credit Loans": as defined in subsection 3.1(a).

    "Revolving Credit Note": as defined in subsection 3.5(e).

    "Revolving Credit Termination Date": October 26, 2006.

    "RISA": Recubrimientos Interceramic, S.A. de C.V., a Mexican corporation.

    "S&P": Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc., and its successors.

    "Sale/Leaseback Transaction": as defined in subsection 8.12

    "SEC": the Securities and Exchange Commission or any Governmental Authority
which succeeds to the powers and functions thereof.

    "Securitization Contract": an agreement between the Seller and a Receivables
Obligor, substantially in the form of one of the written contracts or (in the
case of any open account agreement) one of the invoices approved by DTSC, Inc.
(or its successor or assignee), pursuant to or under which such Receivables
Obligor shall be obligated to pay for merchandise or services from time to time.

    "Securitization Receivables": all existing and hereafter arising accounts
(as defined in the Uniform Commercial Code in effect in the State of New York on
the date hereof), payment intangibles and other indebtedness of any Receivables
Obligor (other than a Receivables Obligor which is an affiliate of Dal-Tile
International Inc. or the Seller) resulting from the provision of services or
the sale of merchandise or services by the Seller or any other Subsidiary of the
Borrower to such Receivables Obligor pursuant to a Securitization Contract,
including the right to payment of any interest or finance charges and other
obligations of such Receivables Obligor with respect thereto; provided, however,
that any such indebtedness created by the Corporate Strategic Business Unit or
the R&M Strategic Business Unit of the Seller shall not be included in
Securitization Receivables.

    "Security Agreements": the collective reference to the Borrower Security
Agreement and the Collateral Agreement.

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    "Security Documents": the collective reference to the Mortgages, the
Security Agreements, the Pledge Agreements and all other security documents
hereafter delivered to the Administrative Agent granting a Lien on any asset or
assets of any Person to secure the obligations and liabilities of the Borrower
hereunder and under any of the other Loan Documents or to secure any guarantee
of any such obligations and liabilities.

    "Seller": Dal-Tile Corporation, a Pennsylvania corporation and a wholly
owned Subsidiary of the Borrower.

    "Significant Subsidiaries": at any date of determination, any Subsidiary the
Consolidated Assets of which exceed $1,000,000 at such date of determination.

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

    "Solvent": when used with respect to any Person, means that, as of any date
of determination, (a) the amount of the "present fair saleable value" of the
assets of such Person will, as of such date, exceed the amount that will be
required to pay all "liabilities of such Person, contingent or otherwise", as of
such date (as such quoted terms are determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors) as
such debts become absolute and matured, (b) such Person will not have, as of
such date, an unreasonably small amount of capital with which to conduct its
business, and (c) such Person will be able to pay its debts as they mature,
taking into account the timing of and amounts of cash to be received by such
Person and the timing of and amounts of cash to be payable on or in respect of
indebtedness of such Person; in each case after giving effect to (A) as of the
Closing Date, the making of the extensions of credit to be made on the Closing
Date and to the application of the proceeds of such extensions of credit and
(B) on any date after the Closing Date, the making of any extension of credit to
be made on such date, and to the application of the proceeds of such extension
of credit. For purposes of this definition, (i) "debt" means liability on a
"claim", and (ii) "claim" means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal equitable, secured or unsecured
or (y) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured or unmatured,
disputed, undisputed, secured or unsecured.

    "Specified Hedge Agreements": collectively, any Currency Rate Protection
Agreements, Interest Rate Protection Agreements, production hedge agreements and
any other hedge agreements not entered for speculative purposes (hedge
agreements existing on the Closing Date will be deemed not to be speculative),
in each case, entered into by the Borrower and any Lender or Lender Affiliate.

    "Standby Letter of Credit": as defined in subsection 3.10(b)(i)(1).

    "Subordinated Debt": any unsecured Indebtedness of the Borrower: no part of
the principal of which is required to be paid (whether by way of mandatory
sinking fund, mandatory redemption, mandatory prepayment or otherwise) prior to
October 31, 2007; the payment of the principal of and interest on which and
other obligations of the Borrower in respect thereof are subordinated to the
prior payment in full of the principal of and interest (including post-filing or
post-petition interest, whether or not a claim for post-filing or post-petition
interest is allowed in any bankruptcy, insolvency, reorganization or like
proceeding) on the Loans and all other obligations (including the Obligations)
and liabilities of the Borrower to the Administrative Agent and the Lenders
(and, in the case of Specified Hedge Agreements, the Lender Affiliates)
hereunder on terms and conditions satisfactory to the Required Lenders; and all
other terms and conditions of which are reasonably satisfactory in form and
substance to the Required Lenders.

    "Subsidiaries' Guarantee": the Amended and Restated Subsidiaries' Guarantee,
dated as of August 14, 1996, as amended and restated as of the date hereof,
executed and delivered by each

17

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Subsidiary Guarantor in favor of the Administrative Agent, substantially in the
form of Exhibit A-1, as the same may be amended, restated, amended and restated,
supplemented or otherwise modified from time to time.

    "Subsidiary": as to any Person, a corporation, partnership or other entity
of which shares of stock or other ownership interests having ordinary voting
power (other than stock or such other ownership interests having such power only
by reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Borrower or Holdings, as the context may require.

    "Subsidiary Guarantor": each Subsidiary of the Borrower set forth on
Schedule 5.15 under the heading "Initial Subsidiary Guarantors", together with
each other Subsidiary of the Borrower other than (i) any Foreign Subsidiary,
(ii) any Joint Venture and (iii) any Receivables Subsidiary.

    "Swing Line Commitment": $25,000,000.

    "Swing Line Lender": as defined in subsection 3.6.

    "Swing Line Loan Participation Certificate": a certificate substantially in
the form of Exhibit B.

    "Swing Line Loans": as defined in subsection 3.6.

    "Swing Line Note": as defined in subsection 3.7(e).

    "Swing Line Participation Amount": as defined in subsection 3.9(b).

    "Syndication Agent": as defined in the Preamble to this Agreement.

    "Term Loan": as defined in subsection 2.1.

    "Term Loan Commitment": as to any Lender, its obligation to make a Term Loan
to the Borrower in an amount equal to the amount set forth opposite such
Lender's name in Schedule 1.1(a) under the heading "Term Loan Commitment", as
such amount may be reduced from time to time pursuant to this Agreement or as
such amount may be adjusted from time to time pursuant to subsection 13.6;
collectively, as to all such Lenders, the "Term Loan Commitments". The initial
aggregate Term Loan Commitments shall be $125,000,000.

    "Term Loan Commitment Percentage": as to any Term Loan Lender at any time,
the percentage of the Term Loan Commitments then constituted by such Term Loan
Lender's Term Loan Commitment (or, after the Term Loans are made, the percentage
of the aggregate Term Loans then constituted by such Term Loan Lender's Term
Loan).

    "Term Loan Lender": any Lender with an unused Term Loan Commitment hereunder
and/or any Term Loans outstanding hereunder; collectively, the "Term Loan
Lenders".

    "Term Note": as defined in subsection 2.4(d).

    "Tranche": collectively, Eurodollar Loans the then current Interest Periods
with respect to all of which begin on the same date and end on the same later
date (whether or not such Loans shall originally have been made on the same
day); Tranches may be identified as "Eurodollar Tranches".

    "Transferee": as defined in subsection 13.6(f).

    "Type": as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.

    "UCC Filing Collateral": Collateral (other than fixtures) as to which filing
financing statements under the uniform commercial code of the applicable
jurisdiction is an appropriate method of perfection of a security interest in
such Collateral.

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    "Uniform Customs": the Uniform Customs and Practice for Documentary Credits
(1993 Revision), International Chamber of Commerce Publication No. 500, as the
same may be amended from time to time.

    "Voting Stock": Capital Stock, the holders of which are ordinarily, in the
absence of contingencies, entitled to elect a majority of the corporate
directors (in the case of a corporation) or to appoint Persons performing
similar functions (in the case of entities which are not corporations).

    1.2  Other Definitional Provisions; Financial Calculations.   (a) Unless
otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in the other Loan Documents or any certificate or
other document made or delivered pursuant hereto or thereto.

    (b) As used herein and in any Notes, and any certificate or other document
made or delivered pursuant hereto, accounting terms relating to Holdings, the
Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms
partly defined in subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.

    (c) The words "hereof", "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Section, subsection, Schedule
and Exhibit references are to this Agreement unless otherwise specified.

    (d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.

    (e) Notwithstanding anything to the contrary herein, for purposes of making
all calculations in connection with the covenants contained in Section 9, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP consistently
applied as in effect on the date of this Agreement. In the event of any material
difference at any time between GAAP in effect on the date of this Agreement and
GAAP from time to time in effect, the certificate of a Responsible Officer
required pursuant to subsection 7.2(b)(ii) shall include a reconciliation of the
calculations required thereby with the financial statements being delivered with
such certificate.

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SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS

    2.1  Term Loans.   Subject to the terms and conditions hereof, each Term
Loan Lender severally and not jointly agrees to make a term loan (a "Term Loan")
to the Borrower on the Closing Date in an amount equal to the Term Loan
Commitment of such Term Loan Lender. The Term Loans may from time to time be
(a) Eurodollar Loans, (b) ABR Loans or (c) a combination thereof, as determined
by the Borrower and notified to the Administrative Agent in accordance with
subsections 2.2 and 4.2.

    2.2  Procedure for Term Loan Borrowing.   The Borrower hereby requests a
Term Loan borrowing on the Closing Date in an amount equal to the aggregate
amount of the Term Loan Commitments of the Term Loan Lenders. The Borrower shall
give the Administrative Agent irrevocable notice (which notice must be received
by the Administrative Agent prior to 12:00 Noon, New York City time, three
Business Days prior to the Closing Date), if all or any part of the Term Loans
are to be initially Eurodollar Loans, specifying (a) the amount of Term Loans
which are initially to be Eurodollar Loans and (b) the respective amounts
thereof and the lengths of the initial Interest Periods therefor. To the extent
that the Borrower does not deliver a notice pursuant to the immediately
preceding sentence, the Term Loans shall initially be ABR Loans. Upon receipt of
any such notice from the Borrower, the Administrative Agent shall promptly
notify each Term Loan Lender thereof. Each Term Loan Lender will make the amount
of its pro rata share of the Term Loans available to the Administrative Agent
for the account of the Borrower at the office of the Administrative Agent
specified in subsection 13.2 prior to 11:00 A.M., New York City time, on the
Closing Date in Dollars and in funds immediately available to the Administrative
Agent. The Administrative Agent shall credit the account of the Borrower by
12:00 Noon, New York City time, on the Closing Date on the books of such office
of the Administrative Agent or such other account as may be specified by the
Borrower with the aggregate of the amounts made available to the Administrative
Agent by the Term Loan Lenders and in like funds as received by the
Administrative Agent.

    2.3  Repayment of Term Loans.   The Borrower hereby unconditionally promises
to pay to the Administrative Agent for the account of the Term Loan Lenders the
principal amount of the Term Loans made by such Term Loan Lenders in twenty
consecutive quarterly installments, payable as

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follows (or on such earlier date on which the Term Loans become due and payable
pursuant to Section 11):

Year

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

  Amount

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

January 31, 2002   3,750,000 April 30, 2002   3,750,000 July 31, 2002  
3,750,000 October 31, 2002   3,750,000
January 31, 2003
 
3,750,000 April 30, 2003   3,750,000 July 31, 2003   3,750,000 October 31, 2003
  3,750,000
January 31, 2004
 
5,000,000 April 30, 2004   5,000,000 July 31, 2004   5,000,000 October 31, 2004
  5,000,000
January 31, 2005
 
6,250,000 April 30, 2005   6,250,000 July 31, 2005   6,250,000 October 31, 2005
  6,250,000
January 31, 2006
 
12,500,000 April 30, 2006   12,500,000 July 31, 2006   12,500,000 October 31,
2006   12,500,000

The Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Term Loans from time to time outstanding from the date hereof
until payment in full thereof at the rates per annum, and on the dates, set
forth in subsection 4.4.

    2.4  Evidence of Term Loan Debt.   (a) Each Term Loan Lender shall maintain
in accordance with its usual practice an account or accounts evidencing
indebtedness of the Borrower to such Term Loan Lender from time to time in
respect of the Term Loan of such Term Loan Lender, including the amounts of
principal and interest payable and paid to such Term Loan Lender in respect of
such Term Loan from time to time under this Agreement.

    (b) The Administrative Agent shall record in the Register, with separate
subaccounts therein for each Term Loan Lender, (i) the amount of each Term Loan,
the Type thereof and, in the case of Eurodollar Loans, each Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Term Loan Lender
hereunder and (iii) both the amount of any sum received by the Administrative
Agent hereunder from the Borrower and each Term Loan Lender's share thereof, if
any.

    (c) The entries made in the Register and the accounts of each Term Loan
Lender maintained pursuant to subsections 2.4(a) and 2.4(b) shall, to the extent
permitted by applicable law, be prima facie evidence of the existence and
amounts of the Obligations of the Borrower therein recorded, provided, however,
that the failure of any Term Loan Lender or the Administrative Agent to maintain
the Register or any such account, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay (with applicable interest) the
Term Loans in accordance with the terms of this Agreement.

    (d) The Borrower agrees that, upon the request to the Administrative Agent
by any Term Loan Lender, which request is communicated to the Borrower, the
Borrower will execute and deliver to such

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Term Loan Lender, a promissory note of the Borrower dated the Closing Date
evidencing the Term Loan of such Term Loan Lender, substantially in the form of
Exhibit C (a "Term Note"), payable to the order of such Term Loan Lender and in
a principal amount equal to the lesser of (A) the initial Term Loan Commitment
of such Term Loan Lender or (B) the unpaid principal amount of the Term Loan of
such Term Loan Lender. Each Term Loan Lender is hereby authorized to record the
date, Type and amount of the Term Loan of such Term Loan Lender, the date and
amount of each payment or prepayment of principal thereof, each continuation of
all or a portion thereof as the same Type, each conversion of all or a portion
thereof to another Type and, in the case of Eurodollar Loans, the length of each
Interest Period and Eurodollar Rate with respect thereto, on the schedule (or
any continuation of the schedule) annexed to and constituting a part of its Term
Note and any such recordation shall, to the extent permitted by applicable law,
constitute prima facie evidence of the accuracy of the information so recorded,
provided that the failure to make any such recordation (or any error therein)
shall not affect the obligation of the Borrower to repay (with applicable
interest) the Term Loans in accordance with the terms of this Agreement.

SECTION 3. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS

    3.1  Revolving Credit Commitments.   (a) Subject to the terms and conditions
hereof, each Revolving Credit Lender severally and not jointly agrees to make
revolving credit loans ("Revolving Credit Loans") to the Borrower from time to
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding which, when added to such Revolving Credit
Lender's Revolving Credit Commitment Percentage of (i) the then outstanding
Swing Line Loans and (ii) the then outstanding L/C Obligations, does not exceed
the amount of such Revolving Credit Lender's Revolving Credit Commitment. During
the Revolving Credit Commitment Period, the Borrower may use the Revolving
Credit Commitments by borrowing, prepaying and reborrowing Revolving Credit
Loans, all in accordance with the terms and conditions hereof.

    (b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with subsections
3.2 and 4.2, provided that no Revolving Credit Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Revolving Credit
Termination Date.

    3.2  Procedure for Revolving Credit Borrowing.   The Borrower may borrow
under the Revolving Credit Commitments during the Revolving Credit Commitment
Period on any Business Day, provided that the Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business
Days prior to the requested Borrowing Date, if all or any part of the requested
Revolving Credit Loans are to be initially Eurodollar Loans, or (b) prior to
12:00 Noon, New York City time, one Business Day prior to the requested
Borrowing Date, otherwise), specifying (i) the amount to be borrowed, (ii) the
requested Borrowing Date, (iii) whether the borrowing is to be of Eurodollar
Loans, ABR Loans or a combination thereof and (iv) if the borrowing is to be
entirely or partly of Eurodollar Loans, the respective amounts of each such Type
of Loan and the lengths of the initial Interest Periods therefor. Each borrowing
under the Revolving Credit Commitments shall be in an amount equal to (x) in the
case of ABR Loans, $3,000,000 or a whole multiple of $1,000,000 in excess
thereof (or, if the then Available Revolving Credit Commitments are less than
$3,000,000, such lesser amount) and (y) in the case of Eurodollar Loans,
$3,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon receipt of
any such notice from the Borrower, the Administrative Agent shall promptly
notify each Revolving Credit Lender thereof. Each Revolving Credit Lender will
make the amount of its pro rata share of each borrowing available to the
Administrative Agent for the account of the Borrower at the office of the
Administrative Agent specified in subsection 13.2 prior to 11:00 Noon, New York
City time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to the Borrower by the Administrative Agent crediting the account of
the Borrower on the books of such office prior to 12:00 Noon, New York City
time, on such

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Borrowing Date with the aggregate of the amounts made available to the
Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.

    3.3  Commitment Fee.   The Borrower agrees to pay to the Administrative
Agent for the account of each Revolving Credit Lender a commitment fee for the
period from and including the first day of the Revolving Credit Commitment
Period to the Revolving Credit Termination Date, computed at the rate of 0.375%
per annum (the "Commitment Fee Rate") on the average daily amount of the unused
Revolving Credit Commitment (it being understood that for purposes of this
subsection 3.3, any outstanding Swing Line Loans shall not be deemed to be
utilization of the Revolving Credit Commitment) of such Revolving Credit Lender
during the period for which payment is made, payable quarterly in arrears on the
last day of each March, June, September and December and on the Revolving Credit
Termination Date or such earlier date as the Revolving Credit Commitments shall
terminate as provided herein, commencing on the first of such dates to occur
after the date hereof, provided that, from and after March 31, 2002, the
Commitment Fee Rate will be adjusted, if required, on each Adjustment Date, to
the rate set forth on Annex A hereto opposite the Leverage Ratio Level of the
Borrower in effect on such Adjustment Date and provided, further, that, in the
event that the financial statements required to be delivered pursuant to
subsection 7.1(a) or 7.1(b), as applicable, and the related certificate required
pursuant to subsection 7.2(b), are not delivered when due, then, during the
period from the date upon which such financial statements were required to be
delivered until one Business Day following the date upon which they actually are
delivered, the Commitment Fee Rate shall be 0.50%.

    3.4  Termination or Reduction of Commitments.   The Borrower shall have the
right, upon not less than one Business Day's prior notice to the Administrative
Agent, to terminate the Revolving Credit Commitments or, from time to time, to
reduce the amount of the Revolving Credit Commitments, provided that no such
termination or reduction shall be permitted if, after giving effect thereto and
to any prepayments of the Revolving Credit Loans and Swing Line Loans made on
the effective date thereof, the aggregate principal amount of the Revolving
Credit Loans then outstanding, when added to the then outstanding L/C
Obligations and Swing Line Loans, would exceed the Revolving Credit Commitments
then in effect. Any such reduction shall be in an amount equal to $5,000,000 or
a whole multiple of $1,000,000 in excess thereof and shall reduce permanently
the Revolving Credit Commitments then in effect. The Revolving Credit
Commitments are also subject to reduction as provided in subsection 4.1.

    3.5  Repayment of Revolving Credit Loans; Evidence of Debt.   (a) The
Borrower hereby unconditionally promises to pay to the Administrative Agent for
the account of each Revolving Credit Lender the then unpaid principal amount of
each Revolving Credit Loan of such Revolving Credit Lender on the Revolving
Credit Termination Date (or such earlier date on which the Revolving Credit
Loans become due and payable pursuant to Section 11). The Borrower hereby
further agrees to pay interest on the unpaid principal amount of the Revolving
Credit Loans from time to time outstanding from the date hereof until payment in
full thereof at the rates per annum, and on the dates, set forth in subsection
4.4.

    (b) Each Revolving Credit Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to such
Revolving Credit Lender from time to time in respect of each Revolving Credit
Loan of such Revolving Credit Lender, including the amounts of principal and
interest payable and paid to such Revolving Credit Lender in respect of such
Revolving Credit Loans from time to time under this Agreement.

    (c) The Administrative Agent shall record in the Register, with separate
subaccounts for each Revolving Credit Lender, (i) the amount and Borrowing Date
of each Revolving Credit Loan, the Type thereof and each Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Revolving Credit Lender
hereunder

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and (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Revolving Credit Lender's share thereof, if
any.

    (d) The entries made in the Register and the accounts of each Revolving
Credit Lender maintained pursuant to subsections 3.5(a) and 3.5(b) shall, to the
extent permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations of the Borrower therein recorded, provided, however,
that the failure of any Revolving Credit Lender or the Administrative Agent to
maintain the Register or any such account, or any error therein, shall not in
any manner affect the obligation of the Borrower to repay (with applicable
interest) the Revolving Credit Loans in accordance with the terms of this
Agreement.

    (e) The Borrower agrees that, upon the request to the Administrative Agent
by any Revolving Credit Lender, which request is communicated to the Borrower,
the Borrower will execute and deliver to such Revolving Credit Lender a
promissory note of the Borrower, dated the Closing Date, evidencing the
Revolving Credit Loans of such Revolving Credit Lender, substantially in the
form of Exhibit D (a "Revolving Credit Note"), payable to the order of such
Revolving Credit Lender and in a principal amount equal to the lesser of (A) the
Revolving Credit Commitment of such Revolving Credit Lender and (B) the
aggregate unpaid principal amount of Revolving Credit Loans of such Revolving
Credit Lender. Each Revolving Credit Lender is hereby authorized to record the
date, Type and amount of each Revolving Credit Loan of such Revolving Credit
Lender, the date and amount of each payment or prepayment of principal thereof,
each continuation of all or a portion thereof as the same Type, each conversion
of all or a portion thereof to another Type and, in the case of Eurodollar
Loans, the length of each Interest Period and Eurodollar Rate with respect
thereto, on the schedule (or any continuation of the schedule) annexed to and
constituting a part of its Revolving Credit Note, and any such recordation
shall, to the extent permitted by applicable law, constitute prima facie
evidence of the accuracy of the information so recorded, provided that the
failure to make any such recordation (or any error therein) shall not affect the
obligation of the Borrower to repay (with applicable interest) the Revolving
Credit Loans in accordance with the terms of this Agreement.

    3.6  Swing Line Commitment.   Subject to the terms and conditions hereof,
Chase (in such capacity, the "Swing Line Lender") agrees to make a portion of
the Revolving Credit Commitments available to the Borrower during the Revolving
Credit Commitment Period by making swing line loans ("Swing Line Loans") to the
Borrower in an aggregate principal amount not to exceed at any one time
outstanding the Swing Line Commitment, provided that (a) the aggregate principal
amount of Swing Line Loans outstanding at any time shall not exceed the
Revolving Credit Commitments at such time and (b) the Borrower shall not
request, and the Swing Line Lender shall not make, any Swing Line Loan if, after
giving effect to the making of such Swing Line Loan, the Aggregate Revolving
Credit Outstandings of all the Revolving Credit Lenders at such time would
exceed the Revolving Credit Commitments at such time. During the Revolving
Credit Commitment Period, the Borrower may use the Swing Line Commitment by
borrowing, repaying and reborrowing Swing Line Loans all in accordance with the
terms and conditions hereof. Swing Line Loans may be ABR Loans only.

    3.7  Repayment of Swing Line Loans; Evidence of Debt.   (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of the Swing Line Lender the then unpaid principal amount of the Swing
Line Loans on the Revolving Credit Termination Date (or such earlier date on
which the Swing Line Loans become due and payable pursuant to Section 11). The
Borrower hereby further agrees to pay interest on the unpaid principal amount of
the Swing Line Loans from time to time outstanding from the date hereof until
payment in full thereof at the rates per annum, and on the dates, set forth in
subsection 4.4.

    (b) The Swing Line Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower from
time to time in respect of the Swing Line Loans made hereunder, including the
amounts of principal and interest payable and paid in respect of such Swing Line
Loans from time to time under this Agreement.

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    (c) The Administrative Agent shall record in the Register (i) the amount and
Borrowing Date of each Swing Line Loan, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower in
respect thereof and (iii) the amount of any sum received by the Administrative
Agent hereunder in respect of Swing Line Loans.

    (d) The entries made in the Register pursuant to subsection 3.7(c) shall, to
the extent permitted by applicable law, be prima facie evidence of the existence
and amounts of the obligations of the Borrower therein recorded, provided,
however, that the failure of the Swing Line Lender or the Administrative Agent
to maintain the Register, or any error therein, shall not in any manner affect
the obligation of the Borrower to repay (with applicable interest) the Swing
Line Loans in accordance with the terms of this Agreement.

    (e) The Borrower agrees that, upon the request to the Administrative Agent
by the Swing Line Lender, which request is communicated to the Borrower, the
Borrower will execute and deliver to the Swing Line Lender a promissory note of
the Borrower, dated the Closing Date, evidencing the Swing Line Loans of the
Swing Line Lender, substantially in the form of Exhibit E (a "Swing Line Note"),
and in a principal amount equal to the lesser of (A) the Swing Line Commitment
and (B) the aggregate unpaid principal amount of Swing Line Loans. The Swing
Line Lender is hereby authorized to record the date and amount of each Swing
Line Loan of the Swing Line Lender and the date and amount of each payment or
prepayment of principal thereof on the schedule annexed to and constituting a
part of the Swing Line Note, and any such recordation shall, to the extent
permitted by applicable law, constitute prima facie evidence of the accuracy of
the information so recorded, provided that the failure to make any such
recordation (or any error therein) shall not affect the obligation of the
Borrower to repay (with applicable interest) the Swing Line Loans in accordance
with the terms of this Agreement.

    3.8  Procedure for Borrowing Swing Line Loans.   Whenever the Borrower
desires that the Swing Line Lender make Swing Line Loans under subsection 3.6,
it shall give the Swing Line Lender irrevocable telephonic notice confirmed
promptly in writing (which telephonic notice must be received by the Swing Line
Lender not later than 1:00 P.M., New York City time, on the proposed Borrowing
Date), specifying (i) the amount to be borrowed and (ii) the requested Borrowing
Date (which shall be a Business Day during the Revolving Credit Commitment
Period). Each borrowing under the Swing Line Commitment shall be in a minimum
amount of $500,000. Not later than 2:00 P.M., New York City time, on the
Borrowing Date specified in a notice in respect of Swing Line Loans, the Swing
Line Lender shall make available to the Administrative Agent for the account of
the Borrower at the office of the Administrative Agent specified in subsection
13.2 an amount in immediately available funds equal to the amount of the Swing
Line Loan to be made by the Swing Line Lender. The Administrative Agent shall
make the proceeds of such Swing Line Loan available to the Borrower not later
than 3:00 p.m., New York City time, on such Borrowing Date by crediting the
account of the Borrower, on the books of such office, in like funds as received
by the Administrative Agent.

    3.9  Swing Line Loan Participations.   (a) Notwithstanding anything herein
to the contrary, the Swing Line Lender shall not, unless otherwise requested by
the Required Lenders, make any Swing Line Loans if a Default or an Event of
Default shall have occurred and be continuing.

    (b) If prior to the repayment of any Swing Line Loan, one of the events
described in subsection 11(f) shall have occurred, or at any time as the Swing
Line Lender shall request, each Revolving Credit Lender shall purchase an
undivided participating interest in an amount equal to such Revolving Credit
Lender's Revolving Credit Commitment Percentage of the aggregate principal
amount of Swing Line Loans then outstanding (the "Swing Line Participation
Amount"). On the date of such purchase, each Revolving Credit Lender shall
transfer to the Swing Line Lender, in immediately available funds, such
Revolving Credit Lender's Swing Line Participation Amount and upon receipt
thereof the Swing Line Lender shall deliver to such Revolving Credit Lender a
Swing Line Loan Participation Certificate dated the date of receipt by the Swing
Line Lender of such funds and in an amount equal to such Revolving Credit
Lender's Swing Line Participation Amount.

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    (c) Whenever, at any time after the Swing Line Lender has received from any
Revolving Credit Lender such Revolving Credit Lender's Swing Line Participation
Amount, the Swing Line Lender receives any payment on account of the Swing Line
Loans, the Swing Line Lender will distribute to such Revolving Credit Lender its
pro rata share of such payment (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Revolving Credit
Lender's participating interest was outstanding and funded), provided, however,
that in the event that such payment received by the Swing Line Lender is
required to be returned, such Revolving Credit Lender will return to the Swing
Line Lender any portion thereof previously distributed to it by the Swing Line
Lender.

    (d) Each Revolving Credit Lender's obligation to purchase participating
interests pursuant to subsection 3.9(b) shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation,
(i) any set-off, counterclaim, recoupment, defense or other right which such
Revolving Credit Lender or the Borrower may have against the Swing Line Lender,
the Borrower or any other Person for any reason whatsoever; (ii) the occurrence
or continuance of a Default or an Event of Default; (iii) any adverse change in
the condition (financial or otherwise) of the Borrower; (iv) any breach of this
Agreement or any other Loan Document by any of the Loan Parties or any other
Lender; or (v) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing.

    3.10  L /C Commitment.   (a) Subject to the terms and conditions hereof,
each Issuing Bank, in reliance on the agreements of the other Revolving Credit
Lenders set forth in subsection 3.13(a), agrees to issue Letters of Credit for
the account of the Borrower on any Business Day during the Revolving Credit
Commitment Period in such form as may be approved from time to time by the
relevant Issuing Bank, provided that no Issuing Bank shall have any obligation
to, and shall not, issue any Letter of Credit if, after giving effect to such
issuance, (i) the L/C Obligations would exceed the lesser of (A) the L/C
Commitment and (B) the Revolving Credit Commitments at such time or (ii) the
Aggregate Revolving Credit Outstandings of all the Revolving Credit Lenders at
such time would exceed the Revolving Credit Commitments at such time. Any
Continuing Letter of Credit, including those set forth on Schedule 3.10, shall
be deemed to be issued under this Agreement on the Closing Date and shall be a
Letter of Credit for all purposes hereof (other than subsection 3.11).

    (b) Each Letter of Credit shall:

     (i) be denominated in Dollars and shall be either (1) a standby letter of
credit issued to support obligations of the Borrower, contingent or otherwise,
in connection with the working capital and business needs of the Borrower in the
ordinary course of business (a "Standby Letter of Credit") or (2) a commercial
letter of credit issued in respect of the purchase of goods or services by the
Borrower and its Subsidiaries in the ordinary course of business (a "Commercial
Letter of Credit"); and

    (ii) expire no later than the earlier of (A) five Business Days prior to the
Revolving Credit Termination Date and (B) one year after the date of issuance
thereof (or, with respect to Letters of Credit the L/C Obligations in respect of
which do not in the aggregate exceed $10,000,000 at any time, two years after
the date of issuance thereof), provided that, subject to clause (A) above and
subsection (d) below, any such Letter of Credit with an expiration date on or
prior to the first anniversary of the date of issuance thereof may, at the
request of the Borrower as set forth in the applicable Application or prior to
expiration thereof, be automatically renewed on each anniversary of the issuance
thereof for an additional period of one year unless the relevant Issuing Bank
shall have given 60 days prior written notice to the Borrower and the
beneficiary of such Letter of Credit that such Letter of Credit will not be
renewed.

    (c) Each Letter of Credit shall be subject to the Uniform Customs and, to
the extent not inconsistent therewith, the laws of the State of New York.

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    (d) No Issuing Bank shall at any time be obligated to issue any Letter of
Credit hereunder if such issuance would conflict with, or cause such Issuing
Bank or any L/C Participant to exceed any limits imposed by, any applicable
Requirement of Law. The Issuing Banks and the Lenders agree that if the Required
Lenders otherwise direct during the existence of a Default or Event of Default,
each Issuing Bank shall take appropriate steps to prevent the automatic
extension of any Letter of Credit described in clause (b)(ii) above.

    3.11  Procedure for Issuance of Letters of Credit.   The Borrower may from
time to time request that an Issuing Bank issue a Letter of Credit by delivering
to such Issuing Bank at its address for notices specified in its Issuing Bank
Agreement an Application therefor, completed to the reasonable satisfaction of
such Issuing Bank, and such other certificates, documents and other papers and
information as such Issuing Bank may reasonably request. The relevant Issuing
Bank shall notify the Revolving Credit Lenders promptly of the receipt of any
request pursuant to the immediately preceding sentence. Upon receipt of any
Application, the relevant Issuing Bank will process such Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall
such Issuing Bank be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by such Issuing Bank and the Borrower. The relevant
Issuing Bank shall furnish a copy of such Letter of Credit to the Administrative
Agent and the Borrower promptly following the issuance thereof.

    3.12  Fees, Commissions and Other Charges.   (a) The Borrower shall pay to
the Administrative Agent, for the account of each Issuing Bank, a fronting fee
with respect to each Letter of Credit, computed for the period from the date of
issuance of such Letter of Credit or the immediately preceding L/C Fee Payment
Date, as the case may be, to the next L/C Fee Payment Date to occur thereafter
at the rate of 0.25% per annum (or such lower rate agreed between the Borrower
and the relevant Issuing Bank in its Issuing Bank Agreement), calculated on the
basis of a 360-day year for actual days elapsed, of the aggregate amount
available to be drawn under such Letter of Credit during the period for which
such fee is calculated. Such fronting fee shall be payable in arrears on each
L/C Fee Payment Date to occur after the issuance of such Letter of Credit and on
the Revolving Credit Termination Date and shall be nonrefundable.

    (b) The Borrower shall pay to the Administrative Agent, for the account of
the L/C Participants, a letter of credit commission with respect to each Letter
of Credit, computed for the period from the date of issuance of such Letter of
Credit or the immediately preceding L/C Fee Payment Date, as the case may be, to
the next L/C Fee Payment Date to occur thereafter at the rate of 1.625% per
annum (the "L/C Fee Percentage"), calculated on the basis of a 360-day year for
actual days elapsed, of the aggregate amount available to be drawn under such
Letter of Credit during the period for which such fee is calculated, to be
shared ratably among the L/C Participants in accordance with their respective
Revolving Credit Commitment Percentages, provided, that from and after March 31,
2002, the L/C Fee Percentage shall be equal to the Applicable Margin for
Eurodollar Loans in effect from time to time. Such commissions shall be payable
in arrears on each L/C Fee Payment Date to occur after the issuance of such
Letter of Credit and on the Revolving Credit Termination Date and shall be
nonrefundable.

    (c) In addition to the foregoing fees and commissions, the Borrower shall
pay or reimburse each Issuing Bank for such normal and customary costs and
expenses as are incurred or charged by such Issuing Bank in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit.

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    (d) The Administrative Agent shall, promptly following its receipt thereof,
distribute to each Issuing Bank and the L/C Participants all fees and
commissions received by the Administrative Agent for their respective accounts
pursuant to this subsection.

    3.13  L/C Participations.   (a) Each Issuing Bank irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce each Issuing
Bank to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from each Issuing
Bank, on the terms and conditions hereinafter stated, for such L/C Participant's
own account and risk an undivided interest equal to such L/C Participant's
Revolving Credit Commitment Percentage in such Issuing Bank's obligations and
rights under each Letter of Credit issued hereunder and the amount of each draft
paid by such Issuing Bank thereunder. Each L/C Participant unconditionally and
irrevocably agrees with each Issuing Bank that, if a draft is paid under any
Letter of Credit for which the relevant Issuing Bank is not reimbursed in full
by the Borrower in accordance with the terms of this Agreement, such L/C
Participant shall pay to such Issuing Bank upon demand at such Issuing Bank's
address for notices specified in its Issuing Bank Agreement an amount equal to
such L/C Participant's Revolving Credit Commitment Percentage of the amount of
such draft, or any part thereof, which is not so reimbursed.

    (b) If any amount required to be paid by any L/C Participant to any Issuing
Bank pursuant to subsection 3.13(a) in respect of any unreimbursed portion of
any payment made by such Issuing Bank under any Letter of Credit is paid to such
Issuing Bank within three Business Days after the date such payment is due, such
L/C Participant shall pay to such Issuing Bank on demand an amount equal to the
product of (i) such amount, times (ii) the daily average Federal Funds Effective
Rate, during the period from and including the date such payment is required to
the date on which such payment is immediately available to such Issuing Bank,
times (iii) a fraction the numerator of which is the number of days that elapse
during such period and the denominator of which is 360. If any such amount
required to be paid by any L/C Participant pursuant to subsection 3.13(a) is not
in fact made available to the relevant Issuing Bank by such L/C Participant
within three Business Days after the date such payment is due, such Issuing Bank
shall be entitled to recover from such L/C Participant, on demand, such amount
with interest thereon calculated from such due date at the rate per annum
applicable to ABR Loans hereunder. A certificate of the relevant Issuing Bank
submitted to any L/C Participant with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error.

    (c) Whenever, at any time after an Issuing Bank has made payment under any
Letter of Credit and has received from any L/C Participant its pro rata share of
such payment in accordance with subsection 3.13(a), such Issuing Bank receives
any payment related to such Letter of Credit (whether directly from the Borrower
or otherwise, including proceeds of Collateral applied thereto by such Issuing
Bank), or any payment of interest on account thereof, such Issuing Bank will
distribute to such L/C Participant its pro rata share thereof, provided,
however, that in the event that any such payment received by such Issuing Bank
shall be required to be returned by such Issuing Bank, such L/C Participant
shall return to such Issuing Bank the portion thereof previously distributed by
such Issuing Bank to it.

    3.14  Reimbursement Obligation of the Borrower.   (a) Each Issuing Bank
shall notify the Borrower promptly of each drawing under a Letter of Credit. The
Borrower agrees to reimburse the relevant Issuing Bank on the Business Day
immediately following each date on which such Issuing Bank notifies the Borrower
of the date and amount of a draft presented under any Letter of Credit and paid
by such Issuing Bank for the amount of (i) such draft so paid and (ii) any
taxes, fees, charges or other costs or expenses incurred by such Issuing Bank in
connection with such payment. Each such payment shall be made to the relevant
Issuing Bank at its address for notices specified herein in lawful money of the
United States of America and in immediately available funds.

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    (b) Interest shall be payable on any and all amounts remaining unpaid by the
Borrower under this subsection 3.14 (i) from the date the draft presented under
the affected Letter of Credit is paid to the date on which the Borrower is
required to pay such amounts pursuant to paragraph (a) of this subsection at the
rate which would then be payable on ABR Loans and (ii) thereafter, until payment
in full at the rate which would be payable on any ABR Loans which were then
overdue.

    (c) Each drawing under any Letter of Credit shall constitute a request by
the Borrower to the Administrative Agent for a borrowing pursuant to subsection
3.2 of ABR Loans in the amount of such drawing (but without any requirement for
compliance with the conditions set forth in subsection 6.2). The Borrowing Date
with respect to such borrowing shall be the Business Day immediately following
the date of such drawing and each Revolving Credit Lender shall make its
Revolving Credit Commitment Percentage of such borrowing available to the
Administrative Agent on such date to be used to repay the Reimbursement
Obligation created by such drawing. The relevant Issuing Bank shall notify the
Revolving Credit Lenders promptly of each drawing under a Letter of Credit to be
reimbursed pursuant to this subsection 3.14(c). The application of such Loans
shall satisfy the Borrower's Obligations under subsection 3.14(a) in the amount
thereof.

    3.15  Obligations Absolute.   (a) The Borrower's Obligations under
subsection 3.14 shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrower may have or have had against any Issuing Bank, any
Lender or any beneficiary of a Letter of Credit.

    (b) The Borrower also agrees with the Issuing Banks and the Lenders that no
Issuing Bank nor any Lender shall be responsible for, and the Borrower's
Reimbursement Obligations under subsection 3.14(a) shall not be affected by,
among other things, (i) the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or (ii) any dispute between or among the Borrower
and any beneficiary of any Letter of Credit or any other party to which such
Letter of Credit may be transferred or (iii) any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or any such
transferee.

    (c) No Issuing Bank shall be liable for any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors,
omissions, interruptions or delays caused by such Issuing Bank's gross
negligence or willful misconduct.

    (d) The Borrower agrees that any action taken or omitted by any Issuing Bank
under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards of care specified in the Uniform Customs, and
to the extent not inconsistent therewith, the Uniform Commercial Code of the
State of New York, shall be binding on the Borrower and shall not result in any
liability of such Issuing Bank to the Borrower.

    3.16  Letter of Credit Payments.   If any draft shall be presented for
payment under any Letter of Credit, the relevant Issuing Bank shall, within a
reasonable time after its receipt thereof, examine all documents purporting to
represent a demand for payment under such Letter of Credit to ascertain that the
same appear on their face to be in conformity with the terms and conditions of
such Letter of Credit. The relevant Issuing Bank shall also promptly notify the
Borrower of the date and amount thereof. The responsibility of the relevant
Issuing Bank to the Borrower in connection with any draft presented for payment
under any Letter of Credit shall, in addition to any payment obligation
expressly provided for in such Letter of Credit, be limited to determining that
the documents (including each draft) delivered under such Letter of Credit in
connection with such presentment appear on their face to be in conformity with
such Letter of Credit.

    3.17  Application.   To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.

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    3.18  Certain Reporting Requirements.   Each Issuing Bank will report in
writing to the Administrative Agent (i) on the first Business Day of each week,
the aggregate stated amount of Letters of Credit issued by it and outstanding as
of the last Business Day of the preceding week and (ii) on or prior to each
Business Day on which an Issuing Bank expects to issue or amend any Letter of
Credit, the date of such issuance or amendment and the aggregate stated amount
of Letters of Credit to be issued by it and outstanding after giving effect to
such issuance or amendment (and such Issuing Bank shall advise the
Administrative Agent on such Business Day whether such issuance or amendment
occurred and whether the amount thereof changed).

SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT

    4.1  Optional and Mandatory Prepayments.   (a) The Borrower may at any time
and from time to time prepay the Loans, in whole or in part, without premium or
penalty, upon irrevocable notice to the Administrative Agent prior to
11:00 a.m., New York City time, one Business Day prior to such prepayment,
specifying the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans, ABR Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each, provided that, if such prepayment is of
Term Loans, such prepayment shall be applied to prepay the remaining
installments of the Term Loans in the scheduled order of maturity. Upon receipt
of any such notice the Administrative Agent shall notify each affected Lender
thereof on the date of receipt of such notice. If any such notice is given, the
amount specified in such notice shall be due and payable on the date specified
therein, together with any amounts payable pursuant to subsection 4.11 and, in
the case of prepayments of the Term Loans, accrued interest to such date on the
amount prepaid. Amounts prepaid on account of the Term Loans may not be
reborrowed. Partial prepayments shall be in an aggregate principal amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof.

    (b) Unless the Required Lenders otherwise agree, the Term Loans shall be
prepaid and the Revolving Credit Commitments shall be permanently reduced (and,
in connection with any such reduction, the Swing Line Loans and Revolving Credit
Loans shall be prepaid and/or the Letters of Credit shall be cash collateralized
as provided in subsection 4.1(c)) as set forth in subsection 4.1(c) in an amount
equal to 100% of (i) the Excess Securitization Amount, (ii) the Net Proceeds of
any Asset Sale by Holdings, the Borrower or any of their Subsidiaries, provided
that, if the Net Proceeds realized from any such Asset Sale (or series of
related Asset Sales) is equal to or less than $1,000,000 (each such Asset Sale
or series of related Asset Sales, a "De Minimus Asset Sale"), such Net Proceeds
shall not result in any prepayment or reduction pursuant to this subsection,
provided, further, if the aggregate Net Proceeds realized from De Minimus Asset
Sales are equal to or greater than $5,000,000, such Net Cash Proceeds shall be
subject to prepayment or reduction under this subsection and (iii) the Net
Proceeds of any Casualty Event suffered by the Borrower or any of its
Subsidiaries. Notwithstanding anything to the contrary contained in this
subsection 4.1(b), so long as no Default or Event of Default has occurred or is
continuing or would result therefrom, the Borrower may elect, by notice to the
Administrative Agent, to retain, without compliance with respect thereto with
this subsection 4.1(b), up to $20,000,000 in the aggregate of Net Proceeds from
Asset Sales and Casualty Events occurring after the Closing Date which the
Borrower would otherwise be required to apply to prepayment of the Term Loans
and the reduction of the Revolving Credit Commitments (and, in connection with
any such reduction, the prepayment of Swing Line Loans and Revolving Credit
Loans and/or the cash collateralization of Letters of Credit as provided in
subsection 4.1(c)). Unless the Required Lenders otherwise agree, the Term Loans
shall be prepaid and the Revolving Credit Commitments shall be permanently
reduced (and, in connection with any such reduction, the Swing Line Loans and
Revolving Credit Loans shall be prepaid and/or the Letters of Credit shall be
cash collateralized as provided in subsection 4.1(c)) as set forth in subsection
4.1(c) in an amount equal to 100% of the Net Proceeds of any Subordinated Debt
issued or incurred by the Borrower, provided, if the Consolidated Leverage Ratio
(calculated on a pro forma basis to give effect to such issuance or incurrence
of Subordinated

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Debt) is less than 2.5 to 1.0, but greater than 2.0 to 1.0 at the time of such
issuance or incurrence, the percentage of Net Proceeds to be applied in
accordance with this sentence shall be 50%, provided, further, if the
Consolidated Leverage Ratio (calculated on a pro forma basis to give effect to
such issuance or incurrence of Subordinated Debt) is less than 2.0 to 1.0 at the
time of such issuance or incurrence, the percentage of Net Proceeds to be
applied in accordance with this sentence shall be 0%. Except as otherwise
provided in this subsection 4.1(b), each prepayment required pursuant to this
subsection 4.1(b) shall be made, and each reduction of Revolving Credit
Commitments pursuant to this subsection shall be effective, on the third
Business Day following receipt of any Excess Securitization Amount, the Net
Proceeds from the relevant Asset Sale or Casualty Event or the issuance or
incurrence of the relevant Subordinated Debt.

    (c) All mandatory prepayments of Loans and all reductions of Revolving
Credit Commitments pursuant to subsection 4.1(b) shall be made in the following
order of priority: first the Term Loans shall be prepaid (with the amount of
such prepayment being applied to prepay the remaining installments of the Term
Loans in the scheduled order of maturity), and second, after the Term Loans
shall have been prepaid in full, the Revolving Credit Commitments shall be
reduced (and, to the extent that there are any Swing Line Loans and Revolving
Credit Loans outstanding, the Swing Line Loans and the Revolving Credit Loans
shall be prepaid (with the Swing Line Loans to be prepaid first)) in an
aggregate amount equal to the lesser of (i) the amount of such reduction and
(ii) the aggregate principal amount of then outstanding Swing Line Loans and
Revolving Credit Loans, provided, that no further reduction of the Revolving
Credit Commitments shall be required pursuant to this subsection 4.1 once the
Revolving Credit Commitments have been reduced to $50,000,000.

    (d) Amounts to be applied pursuant to this subsection 4.1 to the prepayment
of Term Loans and Revolving Credit Loans shall be applied first to reduce
outstanding Term Loans and Revolving Credit Loans which are ABR Loans. Any
amounts remaining after such application shall be applied to prepay Term Loans
and Revolving Credit Loans which are Eurodollar Loans immediately and/or shall
be deposited in the Prepayment Account (as defined below). The Administrative
Agent shall apply any cash deposited in the Prepayment Account (i) allocable to
Term Loans to prepay Term Loans which are Eurodollar Loans and (ii) allocable to
Revolving Credit Loans to prepay Revolving Credit Loans which are Eurodollar
Loans, in each case on the last day of the respective Interest Periods therefor
(or, at the direction of the Borrower, on any earlier date) until all
outstanding Term Loans and/or Revolving Credit Loans which are Eurodollar Loans
have been prepaid or until all cash on deposit in the Prepayment Account with
respect to such Loans has been exhausted. For purposes of this Agreement, the
term "Prepayment Account" shall mean an account established by the Borrower with
the Administrative Agent and over which the Administrative Agent shall have
control, including the right of withdrawal for application in accordance with
this subsection 4.1(d). The Administrative Agent will, at the request of the
Borrower, invest amounts on deposit in the Prepayment Account in Cash
Equivalents that mature prior to the last day of the applicable Interest Periods
of the Eurodollar Loans to be prepaid, provided that (i) the Administrative
Agent shall not be required to make any investment that, in its sole judgment,
would require or cause the Administrative Agent to be in, or would result in
any, violation of any Requirement of Law and (ii) the Administrative Agent shall
have no obligation to invest amounts on deposit in the Prepayment Account if a
Default or Event of Default shall have occurred and be continuing. The Borrower
shall indemnify the Administrative Agent for any losses relating to the
investments so that the amount available to prepay Eurodollar Loans on the last
day of the applicable Interest Periods therefor is not less than the amount that
would have been available had no investments been made. Other than any interest
earned on such investments, the Prepayment Account shall not bear interest.
Interest or profits, if any, on such investments shall be deposited and
reinvested and disbursed as described above. The Borrower hereby grants to the
Administrative Agent, for its benefit and the benefit of the Lenders, a security
interest in the Prepayment Account and in any Cash Equivalents in which the
Administrative Agent has invested any amounts in the Prepayment Account and in
the proceeds of each thereof to secure the Obligations.

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    4.2  Conversion and Continuation Options.   (a) The Borrower may elect from
time to time to convert Eurodollar Loans to ABR Loans by giving the
Administrative Agent at least one Business Day's prior irrevocable notice of
such election, provided that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto (or on any other
day if on the date of such conversion the Borrower pays to the Administrative
Agent for the account of the applicable Lenders accrued interest on such
Eurodollar Loans to the date of such conversion together with all amounts
payable under subsection 4.11). The Borrower may elect from time to time to
convert ABR Loans to Eurodollar Loans by giving the Administrative Agent at
least three Business Days' prior irrevocable notice of such election. Any such
notice of conversion to Eurodollar Loans shall specify the length of the initial
Interest Period or Interest Periods therefor. Upon receipt of any such notice
the Administrative Agent shall promptly notify each affected Lender thereof. All
or any part of outstanding Eurodollar Loans and ABR Loans may be converted as
provided herein, provided that (i) no Loan may be converted into a Eurodollar
Loan when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Required Term Loan Lenders or the Required
Revolving Credit Lenders, as the case may be, have determined that such a
conversion is not appropriate and (ii) no Loan may be converted into a
Eurodollar Loan after the date that is one month prior to the Revolving Credit
Termination Date (in the case of conversions of Revolving Credit Loans) or the
date of the final installment of principal of the Term Loans (in the case of
conversions of Term Loans).

    (b) Any Eurodollar Loans may be continued as such upon the expiration of the
then current Interest Period with respect thereto by the Borrower giving notice
to the Administrative Agent, in accordance with the applicable provisions of the
term "Interest Period" set forth in subsection 1.1, of the length of the next
Interest Period to be applicable to such Loans, provided that no Eurodollar Loan
may be continued as such (i) when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Required Term Loan Lenders or
the Required Revolving Credit Lenders, as the case may be, have determined that
such a continuation is not appropriate or (ii) after the date that is one month
prior to the Revolving Credit Termination Date (in the case of continuations of
Revolving Credit Loans) or the date of the final installment of principal of the
Term Loans (in the case of continuations of Term Loans) and provided, further,
that if the Borrower shall fail to give such notice or if such continuation is
not permitted the affected Eurodollar Loans shall be automatically converted to
ABR Loans on the last day of such then expiring Interest Period.

    4.3  Minimum Amounts and Maximum Number of Tranches.   All borrowings,
conversions and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the Loans comprising each Eurodollar Tranche shall be equal to $3,000,000 or
a whole multiple of $1,000,000 in excess thereof. In no event shall there be
more than 12 Eurodollar Tranches outstanding at any time.

    4.4  Interest Rates and Payment Dates.   (a) Each Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.

    (b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR
plus the Applicable Margin.

    (c) If all or a portion of (i) the principal amount of any Loan, (ii) any
interest payable thereon or (iii) any commitment fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise, but taking into account any applicable grace period
under subsection 11(a)), such overdue amount shall bear interest at a rate per
annum which is (x) in the case of overdue principal, the rate that would
otherwise be applicable thereto pursuant to subsection 4.4(a) or (b), as the
case may be, plus 2% or (y) in the case of overdue interest, commitment fees or
other amounts due and payable hereunder, the rate described in subsection 4.4(b)

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plus 2%, in each case from the date of such non-payment until such amount is
paid in full (after as well as before judgment).

    (d) Interest shall be payable in arrears on each applicable Interest Payment
Date and the Revolving Credit Termination Date, provided that interest accruing
pursuant to subsection 4.4(c) shall be payable from time to time on demand.

    4.5  Computation of Interest and Fees.   (a) Commitment fees and interest
shall be calculated on the basis of a 360-day year for the actual days elapsed,
except that whenever interest is calculated on the basis of the Prime Rate,
interest shall be calculated on the basis of a 365- (or 366-, as the case may
be) day year for the actual days elapsed. The Administrative Agent shall as soon
as practicable, notify the Borrower and the affected Lenders of each
determination of a Eurodollar Rate. Any change in the interest rate on a Loan
resulting from a change in the ABR or the Eurocurrency Reserve Requirement shall
become effective as of the opening of business on the day on which such change
becomes effective. The Administrative Agent shall, as soon as practicable,
notify the Borrower and the affected Lenders of the effective date and the
amount of each such change in interest rate.

    (b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to subsection 4.4(a).

    4.6  Inability to Determine Interest Rate.   If prior to the first day of
any Interest Period:

    (a) the Administrative Agent shall have determined (which determination
shall be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, or

    (b) the Administrative Agent shall have received notice from the Required
Term Loan Lenders or the Required Revolving Credit Lenders, as appropriate, that
the Eurodollar Rate determined or to be determined for such Interest Period will
not adequately and fairly reflect the cost to such Lenders (as conclusively
certified by such Lenders) of making or maintaining their affected Loans during
such Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the affected Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans requested to be made on the first day
of such Interest Period shall be made as ABR Loans, (y) any Loans that were to
have been converted on the first day of such Interest Period to Eurodollar Loans
shall be continued as ABR Loans and (z) any outstanding Eurodollar Loans shall
be converted, on the first day of such Interest Period, to ABR Loans. Until such
notice has been withdrawn by the Administrative Agent or the Required Term Loan
Lenders or the Required Revolving Credit Lenders, as the case may be, no further
Eurodollar Loans shall be made or continued as such, nor shall the Borrower have
the right to convert ABR Loans to Eurodollar Loans.

    4.7  Pro Rata Treatment and Payments.   (a) All payments (including
prepayments) to be made by the Borrower hereunder, whether on account of
principal, interest, fees or otherwise, shall be made without set off or
counterclaim and shall be made prior to 12:30 P.M., New York City time, on the
due date thereof to the Administrative Agent, for the account of the Revolving
Credit Lenders or the Term Loan Lenders, as the case may be, at the
Administrative Agent's office specified in subsection 13.2, in Dollars and in
immediately available funds. Payments received by the Administrative Agent after
such time shall be deemed to have been received on the next Business Day. The
Administrative Agent shall distribute such payments to the Lenders entitled to
receive the same promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes

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due and payable on a day other than a Business Day, such payment shall be
extended to the next succeeding Business Day, and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension. If any payment on a Eurodollar Loan becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day (and, with respect to payments of principal,
interest shall be payable thereon at the then applicable rate during such
extension) unless the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.

    (b) Unless the Administrative Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount that
would constitute its portion of such borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender is making such
amount available to the Administrative Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Administrative Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Administrative Agent, on demand, such amount with interest thereon at a rate
equal to the daily average Federal Funds Effective Rate for the period until
such Lender makes such amount immediately available to the Administrative Agent.
A certificate of the Administrative Agent submitted to any Lender with respect
to any amounts owing under this subsection shall be conclusive in the absence of
manifest error. If such Lender's portion of such borrowing is not made available
to the Administrative Agent by such Lender within three Business Days of such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to ABR Loans
hereunder, on demand, from the Borrower, without prejudice to any right or claim
the Borrower may have against such Lender.

    (c) Each borrowing by the Borrower of Term Loans and Revolving Credit Loans
shall be made ratably from the Term Loan Lenders and Revolving Credit Lenders,
respectively, in accordance with their respective Term Loan Commitment
Percentages and Revolving Credit Commitment Percentages. Any reduction of the
Revolving Credit Commitments shall be made ratably among the Revolving Credit
Lenders, in accordance with their respective Revolving Credit Commitment
Percentages.

    4.8  Illegality.   Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof occurring after the date hereof shall make it unlawful for
any Lender to make or maintain Eurodollar Loans as contemplated by this
Agreement, (a) the commitment of such Lender hereunder to make Eurodollar Loans,
continue Eurodollar Loans as such and convert ABR Loans to Eurodollar Loans
shall forthwith be suspended until such time as it shall no longer be unlawful
for such Lender to make or maintain Eurodollar Loans as contemplated by this
Agreement and (b) such Lender's Loans then outstanding as Eurodollar Loans, if
any, shall be converted automatically to ABR Loans on the respective last days
of the then current Interest Periods with respect to such Loans or within such
earlier period as required by law. If any such conversion of a Eurodollar Loan
occurs on a day which is not the last day of the then current Interest Period
with respect thereto, the Borrower shall pay to such Lender such amounts, if
any, as may be required pursuant to subsection 4.11.

    4.9  Requirements of Law.   (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority, in each case made
subsequent to the date hereof:

     (i) shall subject any Lender to any tax of any kind whatsoever with respect
to this Agreement, any Note, any Letter of Credit, any Application or any
Eurodollar Loan made by it, or change the basis of taxation of payments to such
Lender in respect thereof (except for Non-Excluded Taxes and changes in the rate
of tax on the overall net income of such Lender);

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    (ii) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of such Lender which
is not otherwise included in the determination of the Eurodollar Rate hereunder;
or

    (iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall, within 10 Business Days
after receipt by the Borrower of such Lender's written demand (with a copy to
the Administrative Agent), pay such Lender such additional amount or amounts as
will compensate such Lender for such increased cost or reduced amount
receivable. If any Lender has demanded compensation under this subsection 4.9(a)
with respect to any Eurodollar Loan, the Borrower shall have the option to
convert immediately such Eurodollar Loan into an ABR Loan until the
circumstances giving rise to such demand for compensation no longer apply,
provided, that (i) no such conversion shall affect the Borrower's obligation to
pay compensation as provided herein which is due with respect to the period
prior to such conversion and (ii) on the date of such conversion the Borrower
shall pay to the Administrative Agent for the benefit of the relevant Lender
accrued interest on such Eurodollar Loan to the date of conversion, together
with any amounts payable pursuant to subsection 4.11.

    (b) If any Lender shall have determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority, in each case made
subsequent to the date hereof, shall have the effect of reducing the rate of
return on such Lender's or such corporation's capital as a consequence of its
obligations hereunder or under any Letter of Credit to a level below that which
such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then from time to time, within 10 Business Days
after receipt by the Borrower of such Lender's written demand (with a copy to
the Administrative Agent), the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender for such reduction.

    (c) If any Lender becomes entitled to claim any additional amounts pursuant
to subsection 4.9(a) or (b), it shall promptly notify the Borrower (with a copy
to the Administrative Agent) of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to this
subsection submitted by such Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
Borrower shall not be obligated to compensate any Lender pursuant to this
subsection 4.9 for amounts accruing prior to the date which is 180 days
(provided, if the circumstances giving rise to such claim have a retroactive
effect, then such 180 day period shall be extended to include the period of such
retroactive effect) before the date such Lender notifies the Borrower of the
event by reason of which it has become entitled to additional amounts pursuant
to subsection 4.9(a) or (b), provided that such notice need not include a
computation of amounts in respect thereof. The agreements in this subsection
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.

    4.10  Taxes.   (a) Except as required by law, all payments made by the
Borrower under this Agreement and any Notes shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any

35

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Governmental Authority, excluding taxes imposed on the Administrative Agent or
any Lender (or Transferee) as a result of any future, present or former
connection between the Administrative Agent or such Lender (or Transferee) and
the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender (or
Transferee) having executed, delivered or performed its obligations or received
a payment under, or enforced, this Agreement or any Note or any other Loan
Document). If any such non-excluded taxes, levies, imposts, duties, charges,
fees deductions or withholdings ("Non-Excluded Taxes") are required to be
withheld from any amounts payable to the Administrative Agent or any Lender (or
Transferee) hereunder or under any Note, the amounts so payable to the
Administrative Agent or such Lender (or Transferee) shall be increased
("increased amounts") to the extent necessary to yield to the Administrative
Agent or such Lender (or Transferee) (after payment of all Non-Excluded Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement, provided, however, that the Borrower shall
not be required to pay any increased amounts in the circumstances described in
subparagraph (c) of this subsection. Whenever any Non-Excluded Taxes are payable
by the Borrower under the provisions of this subsection 4.10, the Borrower shall
(i) pay such Taxes when due and (ii) promptly send to the Administrative Agent
for its own account or for the account of such Lender (or Transferee), as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof or other evidence of remittance of Non-Excluded
Taxes reasonably acceptable to the Administrative Agent. If the Borrower fails
to comply with clauses (i) or (ii) of the previous sentence, the Borrower shall
indemnify the Administrative Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by the Administrative Agent or any
Lender as a result of any such failure including the amount of Non-Excluded
Taxes paid by such Lender (or Transferee) or the Administrative Agent, as the
case may be, and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. The agreements in this subsection
4.10 shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.

    (b) Each Lender (and each Transferee) that is not incorporated or organized
under the laws of the United States of America or a state thereof shall:

     (i) in the case of a Lender or Assignee that is a "bank" under
Section 881(c)(3)(A) of the Code, or any Loan Participant;

    (A) on or before the date it becomes a party to this Agreement (or, in the
case of a Loan Participant, on or before the date such Loan Participant becomes
a Loan Participant hereunder) and on or before the date, if any, such Lender (or
Transferee) changes its applicable lending office by designating a different
lending office (a "New Lending Office") deliver to the Borrower and the
Administrative Agent (or, in the case of a Participant, the Lender from which
such participation was acquired) two properly completed and duly executed copies
of United States Internal Revenue Service Form W-8ECI or W-8BEN, or successor
applicable form, as the case may be;

    (B) deliver to the Borrower and the Administrative Agent (or, in the case of
a Participant, the Lender from which such participation was acquired) two
further properly completed and duly executed copies of any such form or
certification on or before the date that any such form or certification expires
or becomes obsolete and after the occurrence of any event requiring a change in
the most recent form previously delivered by it to the Borrower (or, in the case
of a Participant, the Lender from which such participation was acquired) or upon
the request of the Borrower or the Administrative Agent (or, in the case of a
Participant, the Lender from which such participation was acquired); and

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    (C) obtain such extensions of time for filing and completing such forms or
certifications as may reasonably be requested by the Borrower (or, in the case
of a Participant, the Lender from which such participation was acquired);

    (ii) in the case of a Lender or Assignee that is not a "bank" under
Section 881(c)(3)(A) of the Code:

    (A) on or before the date it becomes a party to this Agreement deliver to
the Borrower and the Administrative Agent (I) a certificate in the form of
Exhibit I (an "Exemption Certificate") certifying under penalties of perjury
that such Lender is eligible for a complete exemption from withholding on any
payment hereunder under Section 881(c) of the Code and (II) a properly completed
and duly executed Internal Revenue Service Form W-8BEN or Form W-8ECI or
applicable successor form;

    (B) deliver to the Borrower and the Administrative Agent two further
properly completed and duly executed copies of said Exemption Certificate at
least annually and said Form W-8BEN or Form W-8ECI, or any successor applicable
form on or before the date that any such form expires or becomes obsolete or, in
either case, after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower or upon the request of
the Borrower; and

    (C) obtain such extensions of time for filing and completing such forms or
certifications as may be reasonably requested by the Borrower or the
Administrative Agent;

and each Lender (or Transferee) that is incorporated or organized under the laws
of the United States of America or a state thereof shall provide two properly
completed and duly executed copies of Form W-9, or successor applicable form, at
the times specified for delivery of forms under paragraph (b)(i) of this
subsection unless, in any such case, any change in law or regulation has
occurred subsequent to the date such Lender (or Transferee) became a party to
this Agreement (or in the case of a Loan Participant, the date such Loan
Participant became a Loan Participant hereunder) which renders all such forms
inapplicable or which would prevent such Lender (or Transferee) from properly
completing and executing any such form with respect to it and such Lender (or
Transferee) so advises the Borrower and the Administrative Agent in writing no
later than 15 calendar days before any payment hereunder or under any Note is
due. Each such Lender (and each Transferee) shall certify (i) in the case of a
Form W-8BEN or W-8ECI, that it is entitled to an exemption from, or reduction
in, withholding of any United States federal income taxes with respect to
payments under this Agreement and (ii) in the case of a Form W-8BEN, Form W-8ECI
or W-9, that it is entitled to an exemption from United States backup
withholding tax.

    (c) The Borrower shall not be required to indemnify any Lender (or
Transferee), or to pay any increased amounts to any Lender (or Transferee) in
respect of any Non-Excluded Tax, pursuant to this subsection 4.10 to the extent
that (i) any obligation to withhold or deduct amounts with respect to taxes
existed on the date such Lender (or Transferee) became a party to this Agreement
(or, in the case of a Loan Participant, on the date such Loan Participant became
a Loan Participant hereunder) or, with respect to payments to a New Lending
Office, the date such Lender (or Transferee) designated such New Lending Office
with respect to a Loan, provided, however, that this clause (i) shall not apply
to any Transferee or New Lending Office that becomes a Transferee or New Lending
Office as a result of an assignment, participation, transfer or designation made
at the written request of the Borrower, or (ii) any Lender (or Transferee) fails
to comply in full with the provisions of subsection 4.10(b) hereof.

    (d) If the Administrative Agent or any Lender (or Transferee) receives a
refund in respect of Non-Excluded Taxes paid by the Borrower, which in the good
faith judgment of such Lender is allocable to such payment, it shall promptly
pay such refund, together with any other amounts paid by the Borrower in
connection with such refunded Non-Excluded Taxes, to the Borrower, net of all

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out-of-pocket expenses of such Lender incurred in obtaining such refund,
provided, however, that the Borrower agrees to promptly return such refund to
the Administrative Agent or the applicable Lender (or Transferee), as the case
may be, if it receives notice from the Administrative Agent or applicable Lender
(or Transferee) that such Administrative Agent or Lender (or Transferee) is
required to repay such refund.

    4.11  Indemnity.   The Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense (other than the loss of any
payments in respect of the Applicable Margin) which such Lender may sustain or
incur as a consequence of (a) default by the Borrower in making a borrowing of,
conversion into or continuation of Eurodollar Loans after the Borrower has given
a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment of a Eurodollar
Loan after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment of Eurodollar
Loans or converting any Eurodollar Loans to ABR Loans on a day which is not the
last day of an Interest Period with respect thereto. Such indemnification may
include an amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed, converted
or continued, for the period from the date of such prepayment or of such failure
to borrow, convert or continue to the last day of such Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. This covenant shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.

    4.12  Change of Lending Office; Filing of Certificates or Documents.   Each
Lender agrees that if it makes any demand for payment, or becomes entitled to
any increased amounts, under subsection 4.8, 4.10 or 4.11(a) or if any adoption
or change of the type described in subsection 4.9 shall occur with respect to
it, it will use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions and so long as such efforts would not be
disadvantageous to it, as determined in its sole discretion) to designate a New
Lending Office or file any certificate or document reasonably requested in
writing by the Borrower if such action would reduce or obviate the need for the
Borrower to make payments under subsection 4.8, 4.10 or 4.11(a) or would
eliminate or reduce the effect of any adoption or change described in subsection
4.9.

    4.13  Replacement Lenders.   In the event that the Borrower becomes
obligated to pay additional amounts or increased amounts to, or receives notice
from, any Lender pursuant to subsection 4.8, 4.9 or 4.10 then, unless such
Lender has theretofore removed or cured the conditions which result in the
obligation to pay such additional amounts or increased amounts, the Borrower
may, on ten Business Days' prior written notice to the Administrative Agent and
such Lender, cause such Lender to (and such Lender shall) assign pursuant to
subsection 13.6(c) all of its rights and obligations under this Agreement to
another bank or financial institution which is willing to become a Lender and is
acceptable (which acceptance shall not be unreasonably withheld) to the
Administrative Agent, for a purchase price equal to the outstanding principal
amount of the Loans payable to such Lender plus any accrued but unpaid interest
on such Loans, any accrued but unpaid commitment fees in respect of such
Lender's Commitment and any other amounts payable to such Lender under this
Agreement (including, without limitation, amounts payable under subsection
4.11).

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SECTION 5. REPRESENTATIONS AND WARRANTIES

    To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, Holdings and the Borrower hereby jointly and severally represent and
warrant to the Administrative Agent and each Lender that:

    5.1  Financial Condition.   The consolidated balance sheet of Holdings and
its consolidated Subsidiaries as at December 29, 2000 and the related
consolidated statements of operations and of cash flows for the fiscal year
ended on such date, reported on by Ernst & Young LLP, copies of which have
heretofore been furnished to each Lender, are complete and correct and present
fairly the consolidated financial condition of Holdings and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the fiscal year then ended. The unaudited
consolidated balance sheet of Holdings and its consolidated Subsidiaries as at
March 30, 2001 and June 29, 2001 and the related unaudited consolidated
statements of operations and of cash flows for the three-month period ended on
such date, certified by a Responsible Officer, copies of which have heretofore
been furnished to each Lender, are complete and correct and present fairly the
consolidated financial condition of Holdings and its consolidated Subsidiaries
as at such date, and the consolidated results of their operations and their
consolidated cash flows for the three-month period then ended (subject to normal
year-end audit adjustments). All such financial statements, including the
related schedules thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants and as disclosed therein). Neither Holdings nor any of its
consolidated Subsidiaries had, at the date of the most recent balance sheet
referred to above, any material Guarantee Obligation, contingent liability or
liability for taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, any interest rate or foreign currency
swap or exchange transaction, which is not reflected in the foregoing statements
or in the notes thereto. During the period from December 29, 2000 to and
including the date of this Agreement there has been no sale, transfer or other
disposition by Holdings or any of its consolidated Subsidiaries of any material
part of its or their business or property and no purchase or other acquisition
of any business or property (including any Capital Stock of any other Person)
material in relation to the consolidated financial condition of Holdings and its
consolidated Subsidiaries at December 29, 2000.

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    5.2  No Change.   (a) Since December 29, 2000, there has been no development
or event which has had or could reasonably be expected to have a Material
Adverse Effect, and (b) during the period from December 29, 2000 to and
including the date of this Agreement no dividends or other distributions have
been declared, paid or made upon the Capital Stock of Holdings nor has any of
the Capital Stock of Holdings been redeemed, retired, purchased or otherwise
acquired for value by Holdings or any of its Subsidiaries.

    5.3  Corporate Existence; Compliance with Law.   Each Loan Party (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the corporate power and authority to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified or
licensed to do business as a foreign corporation and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification except where the failure
to be so qualified and/or in good standing, in the aggregate is not reasonably
likely to have a Material Adverse Effect and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith is
not, in the aggregate, reasonably likely to have a Material Adverse Effect.

    5.4  Corporate Power; Authorization; Enforceable Obligations.   Each Loan
Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrower, to borrow hereunder. Each Loan Party has taken all necessary
corporate action to authorize the Extensions of Credit on the terms and
conditions of this Agreement and any Notes and to authorize the execution,
delivery and performance by it of the Loan Documents to which it is a party. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required to be
obtained or made by any Loan Party in connection with the Extensions of Credit
hereunder or with the execution, delivery or performance by each applicable Loan
Party or the validity or enforceability with respect to or against any Loan
Party of the Loan Documents to which it is a party. This Agreement has been, and
each other Loan Document will be, duly executed and delivered on behalf of each
Loan Party that is a party thereto. This Agreement constitutes, and each other
Loan Document when executed and delivered will constitute, a legal, valid and
binding obligation of each Loan Party that is a party thereto enforceable
against such Loan Party in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).

    5.5  No Legal Bar.   The execution, delivery and performance of the Loan
Documents, the Extensions of Credit hereunder and the use of the proceeds
thereof will not violate any Requirement of Law or Contractual Obligation of any
Loan Party and will not result in, or require, the creation or imposition of any
Lien on any of its or their respective properties or revenues pursuant to any
such Requirement of Law or Contractual Obligation other than as contemplated in
or permitted by the Loan Documents.

    5.6  No Material Litigation.   No litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against any Loan Party or against
any of their respective properties or revenues (a) with respect to any of the
Loan Documents or any of the transactions contemplated hereby or thereby or
(b) which has a reasonable possibility of an adverse determination, and if
adversely determined, is reasonably likely to have a Material Adverse Effect.

    5.7  No Default.   No Loan Party is in default under or with respect to any
of its Contractual Obligations in any respect which is reasonably likely to have
a Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.

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    5.8  Ownership of Property; Liens.   Each Loan Party has good record and
marketable title in fee simple to, or a valid leasehold interest in, all its
real property except for such matters as do not materially adversely affect the
use of the property in the conduct of the business as currently conducted, and
good title to, or a valid leasehold interest in, all its other material
property, and none of such property is subject to any Lien except as permitted
by subsection 8.3.

    5.9  Intellectual Property.   (a) Each Loan Party owns, or is licensed to
use, all material Intellectual Property necessary for the conduct of its
business except for those the failure to own or license which is not reasonably
likely to have a Material Adverse Effect and (b) no claim of which Holdings or
the Borrower has been given notice has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does
Holdings or the Borrower know of any valid basis for any such claim, except for
such claims that, in the aggregate, are not reasonably likely to have a Material
Adverse Effect.

    5.10  No Burdensome Restrictions.   No Requirement of Law or Contractual
Obligation applicable to any Loan Party is reasonably likely to have a Material
Adverse Effect.

    5.11  Taxes.   Holdings and the Borrower and its Subsidiaries have filed or
caused to be filed all tax returns which, to the knowledge of Holdings and its
Subsidiaries, are required to be filed in respect of periods subsequent to the
Closing Date and have paid all taxes shown to be due and payable on said returns
or on any assessments made against it or any of its property in respect of such
periods and all other material taxes imposed on it or any of its property by any
Governmental Authority (other than any taxes the amount or validity of which are
being contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the books of the
applicable Loan Party and other than any taxes which in the aggregate would not
have a Material Adverse Effect as the case may be) in respect of such periods;
no tax lien has been filed (except as permitted by subsection 8.3).

    5.12  Federal Regulations.   No part of the proceeds of any Extension of
Credit will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U. If requested
by any Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in
Regulation U.

    5.13  ERISA.   Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code, except where, in connection with any such event or non-compliance,
the liability which would be likely to result is not reasonably likely to have a
Material Adverse Effect. No termination of a Single Employer Plan has occurred
except where, in connection with any such termination, the liability which would
be likely to result is not reasonably likely to have a Material Adverse Effect,
and no Lien (except as permitted by subsection 8.3) which remains unsatisfied in
favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by an amount in excess of $15,000,000. Neither the Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan; neither the Borrower nor any Commonly Controlled Entity
would become subject to any liability under ERISA if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made; and no such Multiemployer Plan is in

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Reorganization or Insolvent, except where, in any such case, the liability which
would be likely to result is not reasonably likely to have a Material Adverse
Effect.

    5.14  Investment Company Act; Other Regulations.   No Loan Party is, or is
"controlled" by, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended. The Borrower is not subject to regulation under
any Federal or State statute or regulation (other than Regulation X of the Board
of Governors) which limits its ability to incur Indebtedness as contemplated
herein.

    5.15  Subsidiaries.   The Subsidiaries of Holdings and the Borrower, as set
forth in Schedule 5.15, constitute all the Subsidiaries of Holdings and the
Borrower as of the Closing Date. The Material Subsidiaries of the Borrower, as
set forth in Schedule 5.15, constitute all the Material Subsidiaries of the
Borrower as of the Closing Date.

    5.16  Purpose of Loans.   The proceeds of the Term Loans shall be used by
the Borrower to refinance and repurchase existing indebtedness of the Borrower
under the Existing Credit Agreement. The proceeds of the Revolving Credit Loans
shall be used by the Borrower (i) to refinance and repurchase existing
indebtedness of the Borrower under the Existing Credit Agreement, (ii) for
general corporate purposes, including working capital needs, of the Borrower and
its Subsidiaries in the ordinary course of business, (iii) for acquisitions
permitted under this Agreement and (iv) for Investments permitted under this
Agreement (including in Joint Ventures).

    5.17  Environmental Matters.   Except to the extent that the inaccuracy of
any of the following (or the circumstances giving rise to such inaccuracy),
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect:

    (a) The facilities and properties owned (including without limitation the
Mortgaged Properties), leased or operated by the Borrower or any of its
Subsidiaries (the "Properties") do not contain any Hazardous Materials in
amounts or concentrations which (i) constitute a violation of, or (ii) could
give rise to any liability under, any Environmental Law or could interfere with
the continued operation of the Properties or could reasonably be expected to
impair the fair saleable value thereof.

    (b) The Borrower and its Subsidiaries and the Properties are in compliance,
and to the knowledge of the Borrower and its Subsidiaries have in the last three
years been in compliance with all applicable Environmental Laws and applicable
Environmental Permits, and the Borrower and its Subsidiaries reasonably believe
that they will be able to comply with all applicable Environmental Laws in the
future and renew or obtain all Environmental Permits necessary for their
operations in the future.

    (c) Hazardous Materials have not been transported, disposed of, emitted,
discharged, or otherwise released or threatened to be released, nor has their
disposal been arranged for, (i) by the Borrower or any of its Subsidiaries in
violation of, or (ii) in a manner or to a location which is reasonably likely to
give rise to liability under, any applicable Environmental Law; nor have any
Hazardous Materials been generated, treated, stored, emitted, discharged or
otherwise released or threatened to be released or disposed of at, on or under
any of the Properties in violation of, or in a manner that could reasonably be
expected to give rise to liability under, any applicable Environmental Law.

    (d) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower or any of its Subsidiaries,
threatened, under any Environmental Law to which the Borrower or any Subsidiary
is or to the knowledge of the Borrower or any of its Subsidiaries will be named
as a party, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements

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outstanding under any Environmental Law with respect to the Borrower or any of
its Subsidiaries, or the Properties or the Business.

    5.18  Accuracy of Information.   The factual statements and information
contained in the Confidential Information Memorandum dated September 2001
relating to Holdings and its Subsidiaries (as the same may be supplemented in
writing through the Closing Date, the "Information Memorandum"), when taken as a
whole, were, as of the date of such Information Memorandum or the dates
otherwise specified therein or written supplements thereto, accurate in all
material respects and did 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 such statements were made,
provided that to the extent any such information therein was based upon or
constitutes a forecast or projection or pro forma financial information,
Holdings and the Borrower represent only that such forecasts or projections or
pro forma financial information were based upon good faith estimates and
assumptions believed by management of the Borrower to be reasonable at the time
made.

    5.19  Solvency.   As of the Closing Date, after giving effect to the
transactions contemplated to occur on the Closing Date and the making of the
Term Loans and the initial Revolving Credit Loans (as if such Term Loans and
Revolving Credit Loans were made on the Closing Date), each Loan Party is
Solvent.

    5.20  Labor Matters.   There are no strikes pending or, to Holdings' or the
Borrower's knowledge, threatened against the Borrower or any of its Subsidiaries
which, individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect. The hours worked and payments made to employees of the Borrower
and each of its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law, except to the extent
such violations are not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect. The consummation of the transactions
contemplated hereby will not give rise to a right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which the Borrower or any of its Subsidiaries (or any predecessor) is a party
or by which the Borrower or any of its Subsidiaries (or any predecessor) is
bound.

    5.21  Security Documents.   (a) The Security Documents are effective to
create in favor of the Administrative Agent, for the benefit of the Lenders (and
the Lender Affiliates party to any Specified Hedge Agreement), a legal, valid
and enforceable security interest in the Collateral described therein and
proceeds thereof. In the case of the Pledged Stock described in the Security
Documents, when stock certificates representing such Pledged Stock, together
with stock powers executed in blank, are delivered to and maintained by the
Administrative Agent, and in the case of the other Collateral described in the
Security Documents, when financing statements and other filings specified on
Schedule 5.21(a) in appropriate form are filed in the offices specified on
Schedule 5.21(a), the Security Documents shall constitute a fully perfected Lien
on, and security interest in, all right, title and interest of the Loan Parties
in the Pledged Stock and such Collateral covered by and perfected by filing
pursuant to Article 9 of the Uniform Commercial Code and the proceeds thereof,
as security for the Obligations, in each case prior and superior in right to any
other Person (except, in the case of Collateral other than Pledged Stock, Liens
permitted by subsection 8.3).

    (b) Each of the Mortgages is or, upon execution, will be effective to create
in favor of the Administrative Agent, for the benefit of the Lenders (and the
Lender Affiliates party to any Specified Hedge Agreement), a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and the Mortgages, or when the Mortgages are filed in the offices
specified on Schedule 5.21(b), each such Mortgage shall, constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in the Mortgaged Properties and the proceeds thereof, as
security for the Obligations (as defined in the relevant Mortgage), in each case
prior and

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superior in right to any other Person, except for Liens permitted by subsection
8.3. Schedule 1.1B lists the Mortgaged Properties.

    (c) No Mortgage encumbers or will encumber improved real property that is
located in an area that has been identified by the Secretary of Housing and
Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of 1968
and has not been obtained.

SECTION 6. CONDITIONS PRECEDENT

    6.1  Conditions to Term Loans.   The effectiveness of this Agreement and the
agreement of each Lender to make the Term Loan requested to be made by it is
subject to the satisfaction on the Closing Date, of the following conditions
precedent:

    (a) Loan Documents. The Administrative Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of Holdings and
the Borrower with a counterpart for the Administrative Agent and each Lender,
(ii) each Borrower Pledge Agreement, executed and delivered by a duly authorized
officer of the Borrower with a counterpart for the Administrative Agent and each
Lender, (iii) the Borrower Security Agreement, executed and delivered by a duly
authorized officer of the Borrower with a counterpart for the Administrative
Agent and each Lender, (iv) the Collateral Agreement, executed and delivered by
a duly authorized officer of each Guarantor with a counterpart for the
Administrative Agent and each Lender, (v) the Holdings Pledge Agreement,
executed and delivered by a duly authorized officer of Holdings with a
counterpart for the Administrative Agent and each Lender, (vi) the Subsidiaries'
Guarantee, executed and delivered by a duly authorized officer of each Loan
Party party thereto with a counterpart for the Administrative Agent and each
Lender, (vii) for the account of each Revolving Credit Lender which requests a
Revolving Credit Note on the Closing Date, a Revolving Credit Note conforming to
the requirements hereof and executed by a duly authorized officer of the
Borrower, (viii) for the account of each Term Loan Lender which requests a Term
Note on the Closing Date, a Term Note conforming to the requirements hereof and
executed by a duly authorized officer of the Borrower, and (ix) if requested by
the Swing Line Lender on the Closing Date, for the account of the Swing Line
Lender, a Swing Line Note conforming to the requirements hereof and executed by
a duly authorized officer of the Borrower.

    (b) Closing Certificate. The Administrative Agent shall have received, with
a counterpart for each Lender, a certificate of each Loan Party, dated the
Closing Date, substantially in the form of Exhibit F, with appropriate
insertions and attachments, satisfactory in form and substance to the
Administrative Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of such Loan Party.

    (c) Corporate Proceedings of the Loan Parties. The Administrative Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative Agent, of
the Board of Directors of each Loan Party authorizing (i) the execution,
delivery and performance of each Loan Document to which it is a party, and
(ii) with respect to the Borrower, the Extensions of Credit contemplated
hereunder, certified by the Secretary or an Assistant Secretary of such Loan
Party as of the Closing Date, which certificate shall be in form and substance
reasonably satisfactory to the Administrative Agent and shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded.

    (d) Incumbency Certificate. The Administrative Agent shall have received,
with a counterpart for each Lender, a certificate of each Loan Party, dated the
Closing Date, as to the incumbency and signature of the officers of such Loan
Party executing any Loan Document which certificate shall be reasonably
satisfactory in form and substance to the Administrative Agent and shall be

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executed by the President or any Vice President and the Secretary or any
Assistant Secretary of such Loan Party.

    (e) Corporate Documents. The Administrative Agent shall have received, with
a counterpart for each Lender, true and complete copies of the certificate of
incorporation and by-laws (or equivalent organizational documents) of each Loan
Party, certified as of the Closing Date as complete and correct copies thereof
by the Secretary or an Assistant Secretary of such Loan Party.

    (f)  Fees and Expenses. The Lenders and the Administrative Agent shall have
received all fees required to be paid, and all expenses for which invoices have
been presented (including the reasonable fees and expenses of legal counsel), on
or before the Closing Date.

    (g) Legal Opinions. The Administrative Agent shall have received, with a
counterpart for each Lender, the executed legal opinion of Fried, Frank, Harris,
Shriver & Jacobson, special counsel to Holdings, the Borrower and the Subsidiary
Guarantors, substantially in the form of Exhibit G, and the executed legal
opinions of such local or special counsel as the Administrative Agent deems
reasonably advisable. Such legal opinions shall cover such other matters
incident to the transactions contemplated by this Agreement as the
Administrative Agent may reasonably require.

    (h) Interim Consolidated Financial Statements. The Lenders shall have
received, to the extent available, the unaudited consolidated balance sheet of
Holdings and its consolidated Subsidiaries as at March 30, 2001 and June 29,
2001 and the related unaudited consolidated statements of income and of cash
flows for the three-month periods ended on such dates, certified by a
Responsible Officer of Holdings to be complete and correct and present fairly
the consolidated financial condition of Holdings and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the three-month periods then ended.

    (i)  Representations and Warranties. Each of the representations and
warranties made by the Borrower and the other Loan Parties in or pursuant to the
Loan Documents shall be true and correct in all material respects on and as of
the Closing Date, except to the extent such representations and warranties
expressly relate to an earlier date in which case such representations and
warranties shall be true and correct in all material respects as of such earlier
date.

    (j)  No Default. No Default or Event of Default shall have occurred and be
continuing on the Closing Date.

    (k) Approvals. All governmental and third party approvals necessary to enter
into and consummate the transactions contemplated hereby shall have been
obtained and be in full force and effect.

    (l)  Pledged Stock and Stock Powers. The Administrative Agent shall have
received the certificates representing the shares of Capital Stock pledged
pursuant to the Security Documents, together with an undated stock power for
each such certificate executed in blank by a duly authorized officer of the
pledgor thereof.

    (m) Filings, Registrations and Recordings. Each document required by the
Security Documents or under law or reasonably requested by the Administrative
Agent to be filed, registered or recorded in order to create in favor of the
Administrative Agent, for the benefit of the Lenders (and Lender Affiliates
party to any Specified Hedge Agreement), a perfected Lien on the Collateral
described therein, prior and superior in right to any other Person (other than
with respect to Liens expressly permitted by subsection 8.3), shall have been
filed or shall be in proper form for filing, registration or recordation.

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    (n) Insurance. The Administrative Agent shall have received insurance
certificates satisfying the requirements of subsection 4.3 of the Collateral
Agreement.

    6.2  Conditions to Each Extension of Credit.   The agreement of each Lender
to make any Extension of Credit requested to be made by it on any date (other
than the Term Loans), and the agreement of the Issuing Bank to issue any Letter
of Credit for which an Application is presented, is subject to the satisfaction
of the following conditions precedent:

    (a) Closing Date. The Closing Date shall have occurred on or prior to such
date.

    (b) Representations and Warranties. Each of the representations and
warranties made by the Borrower and the other Loan Parties in or pursuant to the
Loan Documents shall be true and correct in all material respects on and as of
such date as if made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date.

    (c) No Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the Extension of Credit
requested to be made on such date.

    (d) Borrowing Requests and Applications. The Administrative Agent shall have
received a request or Application for such Loan or Letter of Credit if and as
required by subsection 3.2, 3.8, 3.11 or 3.14, as applicable.

Each such Extension of Credit hereunder shall constitute a representation and
warranty by the Borrower as of the date thereof that the conditions contained in
clauses (a), (b) and (c) of this subsection have been satisfied.

SECTION 7. AFFIRMATIVE COVENANTS

    Holdings and the Borrower hereby jointly and severally agree that, so long
as the Commitments remain in effect or any amount is owing to any Lender or the
Administrative Agent hereunder or under any other Loan Document or any Letter of
Credit remains outstanding, it shall and (except in the case of delivery of
financial information, reports and notices which shall be performed by the
Borrower) shall cause each of its Subsidiaries (other than any Joint Venture and
any Receivables Subsidiary) to, unless the Required Lenders shall otherwise
consent in writing:

    7.1  Financial Statements.   Furnish to each Lender:

    (a) as soon as available, but in any event within 90 days after the end of
each fiscal year of Holdings or the Borrower, as the case may be, a copy of the
audited consolidated balance sheet of Holdings and its consolidated
Subsidiaries, or if the Merger is consummated, the Borrower and its consolidated
Subsidiaries, as at the end of such year and the related audited consolidated
statements of operations and of cash flows for such year, setting forth in each
case in comparative form the figures for the previous year, reported on without
a "going concern" or like qualification or exception, or a qualification arising
out of the scope of the audit, by Ernst & Young LLP or other independent
certified public accountants of nationally recognized standing; and

    (b) as soon as available, but in any event not later than 45 days after the
end of each of the first three quarterly periods of each fiscal year of Holdings
or the Borrower, as the case may be, the unaudited consolidated balance sheet of
Holdings and its consolidated Subsidiaries, or if the Merger is consummated, the
Borrower and its consolidated Subsidiaries, as at the end of such quarter and
the related unaudited consolidated statements of operations and of cash flows of
Holdings and its consolidated Subsidiaries, or if the Merger is consummated, the
Borrower and its consolidated Subsidiaries, for such quarter and the portion of
the fiscal year through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year,

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certified by a Responsible Officer of Holdings or the Borrower, as the case may
be, as being fairly stated in all material respects (subject to normal year-end
audit adjustments);

all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or Responsible Officer, as the
case may be, and disclosed therein).

    7.2  Certificates; Other Information.   Furnish to each Lender:

    (a) concurrently with the delivery of the financial statements referred to
in subsection 7.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default, except as specified in such certificate;

    (b) concurrently with the delivery of the financial statements referred to
in subsections 7.1(a) and (b), a certificate of a Responsible Officer of
Holdings and the Borrower (i) stating that, to the best of such Responsible
Officer's knowledge, Holdings and the Borrower during such period have observed
or performed all of their respective covenants and other agreements, and
satisfied every condition, contained in this Agreement and the other Loan
Documents to be observed, performed or satisfied by them during such period, and
that such Responsible Officer has obtained no knowledge of any Default or Event
of Default except as specified in such certificate, (ii) setting forth in
reasonable detail the calculations required to determine compliance with
subsections 4.1(b), 8.1, 8.2(c), 8.6(g), 8.8, 8.9 and 8.10(d) and (f) through
(h) inclusive and required to determine the Leverage Ratio Level as of the date
of delivery of such certificate, (iii) stating that no Subsidiary has been
formed or acquired (or, if any such Subsidiary has been formed or acquired, the
Borrower has complied with the requirements of subsection 7.9 with respect
thereto), (iv) stating that neither the Borrower nor any of its Subsidiaries has
changed its name or its jurisdiction of incorporation without complying with the
requirements of this Agreement and the Security Documents with respect thereto
and (v) setting forth a listing of any material Intellectual Property acquired
by any Loan Party;

    (c) not later than forty-five days after the beginning of each fiscal year
of the Borrower, a copy of a business plan and the projections by the Borrower
of the operating budget and cash flow budget of the Borrower and its
Subsidiaries for such fiscal year, such projections for such fiscal year to be
accompanied by a certificate of a Responsible Officer of the Borrower to the
effect that such projections have been prepared using assumptions believed in
good faith by management of the Borrower to be reasonable at the time made;

    (d) within five Business Days after the same are sent, copies of all
financial statements and reports which Holdings sends to the holders of any
securities of the Loan Parties registered with the SEC, and within ten Business
Days after the same are filed, copies of all financial statements and reports
which Holdings may make to, or file with, the SEC or any analogous Governmental
Authority;

    (e) in the event the Borrower elects to exercise its right to retain amounts
received in respect of a Casualty Event to repair or replace any property which
is the subject of such Casualty Event, the Borrower shall promptly deliver a
certificate of a Responsible Officer to the Administrative Agent setting forth
the amount of the Net Proceeds of such Casualty Event which the Borrower expects
to use for such purpose; and

    (f)  promptly, such additional financial and other information within the
possession of Holdings or of the Borrower or any of its Subsidiaries as any
Lender may from time to time reasonably request through the Administrative
Agent.

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    7.3  Payment of Obligations.   Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except (a) as contemplated by this
Agreement, (b) where the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and reserves in conformity with GAAP
with respect thereto have been provided on its books and (c) for other
delinquent obligations (including trade payables and liabilities) the failure to
pay which, individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect.

    7.4  Conduct of Business and Maintenance of Existence.   Continue to engage
in business of the same general type as now conducted by it and preserve, renew
and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except for rights, privileges
and franchises, the loss of which are not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect and except as otherwise
permitted pursuant to subsection 8.5; comply in all material respects with all
Contractual Obligations and Requirements of Law (excluding, for purposes of this
subsection 7.4, Requirements of Law and Contractual Obligations specifically
addressed elsewhere in this Section 7) except to the extent the failure to
comply therewith, in the aggregate, is not reasonably likely to have a Material
Adverse Effect.

    7.5  Maintenance of Property; Insurance.   Keep all property material to the
conduct of its business in good working order and condition (ordinary wear and
tear excepted); maintain insurance with financially sound and reputable
insurance companies (or, to the extent consistent with prudent business
practice, a program of self-insurance) on such of its property and in at least
such amounts and against at least such risks as are usually insured against in
the same general area by companies engaged in the same or a similar business;
and furnish to each Lender, upon written request, full information as to the
insurance carried.

    7.6  Inspection of Property; Books and Records; Discussions.   Keep proper
financial records in conformity with GAAP and all applicable Requirements of
Law; and permit (a) representatives of the Administrative Agent (and, after the
occurrence and during the continuance of an Event of Default, any Lender) to
visit and inspect any of its properties and examine and make abstracts from any
of its books and records at any reasonable time, upon reasonable notice, and as
often as may reasonably be desired, and (b) upon reasonable notice during normal
business hours, representatives of the Administrative Agent or any Lender to
discuss the business, operations, properties and financial and other condition
of the Borrower and its Subsidiaries with officers and employees of the Borrower
and its Subsidiaries and with its independent certified public accountants
(provided that officers of the Borrower or the applicable Subsidiary are offered
the reasonable opportunity to be present at such discussion).

    7.7  Notices.   Promptly give notice to the Administrative Agent and each
Lender of:

    (a) the occurrence of any Default or Event of Default;

    (b) any (i) default or event of default under any Contractual Obligation of
Holdings or of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between Holdings, the
Borrower or any of their respective Subsidiaries and any Governmental Authority,
which in either case, has a reasonable possibility of an adverse determination
or result, and if not cured, or resolved or if adversely determined, as the case
may be, is reasonably likely to have a Material Adverse Effect;

    (c) any litigation or proceeding affecting Holdings, the Borrower or any of
their respective Subsidiaries in which the amount involved is not covered by
insurance or in which injunctive or similar relief is sought which has a
reasonable possibility of an adverse determination and which, if adversely
determined, is reasonably likely to have a Material Adverse Effect;

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    (d) the following events, as soon as practicable and in any event within
30 days after Holdings knows or has reason to know thereof: (i) the occurrence
or expected occurrence of any Reportable Event with respect to any Plan, a
failure to make any required contribution to a Plan, the creation of any Lien in
favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution
of proceedings or the taking of any other action by the PBGC or the Borrower or
any Commonly Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the termination, Reorganization or Insolvency of, any Plan,
in each of cases (i) and (ii), where such event is reasonably likely to have a
Material Adverse Effect; and

    (e) any development or event which is reasonably likely to have a Material
Adverse Effect.

Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer of Holdings and the Borrower setting forth details of the
occurrence referred to therein and stating what action Holdings and the Borrower
propose to take with respect thereto.

    7.8  Environmental Laws.   Comply with, and use reasonable efforts to ensure
compliance by all tenants and subtenants, if any, with, all applicable
Environmental Laws (including, but not limited to, compliance with all
requirements as to investigations, studies, sampling and testing, and all
remedial, removal and other actions, under such Environmental Laws and
compliance with all lawful orders and directives of all Governmental Authorities
regarding such Environmental Laws) and obtain and comply with and maintain, and
use reasonable efforts to ensure that all tenants and subtenants obtain and
comply with and maintain, any and all Environmental Permits required by
applicable Environmental Laws, except, in each such case, to the extent the
failure to comply therewith, individually or in the aggregate, is not reasonably
likely to have a Material Adverse Effect.

    7.9  Additional Collateral.   (a) With respect to any assets acquired after
the Closing Date by the Borrower or any of its Domestic Subsidiaries (other than
any Joint Venture or Receivables Subsidiary) that are intended to be subject to
the Lien created by any of the Security Documents (it being agreed that Excluded
Property is not intended to be subject to the Lien created by any of the Loan
Documents) but which are not so subject (other than (x) any assets described in
paragraph (b) or (c) of this subsection and (y) any assets subject to a Lien
permitted by Section 8.3(f)), promptly (and in any event within 45 days after
the acquisition thereof): (i) execute and deliver to the Administrative Agent
such amendments to the relevant Security Documents or such other documents as
the Administrative Agent shall deem necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a Lien on such assets,
(ii) take all actions necessary or advisable to cause such Lien to be duly
perfected in accordance with all applicable Requirements of Law, including,
without limitation, the filing of financing statements (or other documents such
as United States Patent and Trademark Office filings and United States Copyright
Office filings) in such jurisdictions as may be requested by the Administrative
Agent (it being agreed that (A) no Mortgage shall be required to be executed and
delivered with respect to any parcel of real property acquired after the Closing
Date unless the book value of such parcel of real property exceeds $1,000,000
and (B) no action shall be required pursuant to this clause (ii) to perfect a
Lien in assets that would not constitute UCC Filing Collateral unless the book
value of such assets is greater than $1,000,000, and (iii) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described in clauses (i) and (ii) immediately preceding,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.

    (b) With respect to any Person that, subsequent to the Closing Date, becomes
a Subsidiary (other than a Foreign Subsidiary, Joint Venture or Receivables
Subsidiary), promptly upon the request of the Administrative Agent: (i) execute
and deliver to the Administrative Agent, for the benefit of the Lenders, a new
pledge agreement or such amendments to the relevant Pledge Agreement or
Collateral Agreement as the Administrative Agent shall deem necessary or
advisable to grant to the

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Administrative Agent, for the benefit of the Lenders, a Lien on the Capital
Stock of such Subsidiary which is owned by the Borrower or any of its
Subsidiaries, (ii) deliver to the Administrative Agent the certificates
representing such Capital Stock, together with undated stock powers executed and
delivered in blank by a duly authorized officer of the Borrower or such
Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to become a
party to the Subsidiaries' Guarantee and the Collateral Agreement, in each case
pursuant to documentation which is in form and substance satisfactory to the
Administrative Agent, and (B) to take all actions necessary or advisable to
cause the Lien created by the Collateral Agreement to be duly perfected in
accordance with all applicable Requirements of Law, including, without
limitation, the filing of financing statements (or other documents such as
United States Patent and Trademark Office filings and United States Copyright
Office filings) in such jurisdictions as may be requested by the Administrative
Agent and (iv) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described in clauses
(i), (ii) and (iii) immediately preceding, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.

    (c) With respect to any Person that, subsequent to the Closing Date, becomes
a first tier Foreign Subsidiary, promptly upon the request of the Administrative
Agent: (i) execute and deliver to the Administrative Agent a new pledge
agreement or such amendments to the relevant Pledge Agreement or Collateral
Agreement as the Administrative Agent shall deem necessary or advisable to grant
to the Administrative Agent, for the benefit of the Lenders, a Lien on the
Capital Stock of such Foreign Subsidiary which is owned by the Borrower or any
of its Subsidiaries (provided that in no event shall more than 65% of the
Capital Stock of any such Foreign Subsidiary be required to be so pledged),
(ii) deliver to the Administrative Agent any certificates representing such
Capital Stock, together with undated stock powers executed and delivered in
blank by a duly authorized officer of the Borrower or such Subsidiary, as the
case may be, and take or cause to be taken all such other actions under the law
of the jurisdiction of organization of such Foreign Subsidiary as may be
necessary or advisable to perfect such Lien on such Capital Stock and (iii) if
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described in clauses (i) and (ii) immediately
preceding, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.

    (d) Notwithstanding any other provision of this Agreement, any Security
Document or any other Loan Document, in no event shall any Excluded Property be
required to be subject to any Lien hereunder, under any Security Document or
under any other Loan Document.

    7.10  Consummation of Permitted Securitization Transaction.   Consummate
within 14 days of the Closing Date, pursuant to documentation satisfactory in
form and substance to the Administrative Agent, a Permitted Securitization
Transaction having a facility limit of not less than $75,000,000, provided, that
the Borrower may at any time after the consummation of such Permitted
Securitization Transaction, terminate such Permitted Securitization Transaction
so long as (i) after giving effect to such termination, Holdings shall be in pro
forma compliance with the covenants contained in subsection 8.1, (ii) both
immediately before and after giving effect to such termination, no Default or
Event of Default shall have occurred and be continuing and (iii) after giving
effect to such termination, the aggregate Available Revolving Credit Commitments
shall be at least $50,000,000. The Lenders and the Administrative Agent consent
to the execution and delivery of such documentation, in form and substance
satisfactory to the Administrative Agent, and the performance and consummation
of the transactions contemplated thereunder by all applicable Loan Parties.

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SECTION 8. NEGATIVE COVENANTS

    Holdings and the Borrower hereby jointly and severally agree that, so long
as the Commitments remain in effect or any amount is owing to any Lender or the
Administrative Agent hereunder or under any other Loan Document or any Letter of
Credit remains outstanding, neither Holdings nor the Borrower shall, nor (except
with respect to subsection 8.1) shall Holdings or the Borrower permit any of
their respective Subsidiaries (other than any Joint Venture and any Receivables
Subsidiary) to, directly or indirectly, unless the Required Lenders shall
otherwise agree in writing:

    8.1  Financial Condition Covenants.   

    (a) Maintenance of Net Worth. Permit Consolidated Net Worth at the end of
any fiscal quarter to be less than an amount equal to the sum of
(i) $262,977,000 and (ii) 50% of aggregate Consolidated Net Income for each
fiscal quarter ending after June 29, 2001 for which Consolidated Net Income is
positive.

    (b) Maintenance of Consolidated Interest Coverage Ratio. Permit for any
period of four consecutive fiscal quarters ending on the last day of any fiscal
quarter the Consolidated Interest Coverage Ratio for such period to be less than
2.50 to 1.00.

    (c) Maintenance of Consolidated Leverage Ratio. Permit for any period of
four consecutive fiscal quarters ending on the last day of any fiscal quarter
the Consolidated Leverage Ratio for such period to be greater than 3.25 to 1.00.

    8.2  Limitation on Indebtedness.   Create, incur, assume or suffer to exist
any Indebtedness, except:

    (a) Indebtedness in respect of the Loans, any Notes, the Guarantees, the
Letters of Credit and the other obligations of the Loan Parties under this
Agreement and the other Loan Documents;

    (b) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to
the Borrower or any other Subsidiary;

    (c) Non-Recourse Indebtedness secured by Liens permitted pursuant to
subsection 8.3(i), provided that the aggregate principal outstanding amount of
such Non-Recourse Indebtedness shall not exceed an amount equal to 5% of
Consolidated Capitalization at any time;

    (d) Indebtedness of Foreign Subsidiaries (other than Indebtedness owed to
the Borrower or any other Subsidiary) of up to $30,000,000 in aggregate
principal amount at any one time outstanding;

    (e) (i) Indebtedness outstanding on the date hereof and listed on
Schedule 8.2(e) and (ii) extensions, renewals, refinancings or successive
refinancings (in whole or in part) thereof that do not increase, or shorten the
maturity to a date prior to October 31, 2007 of, the principal amount thereof;

    (f)  Indebtedness in respect of performance bonds, indemnity bonds, bid
bonds, appeal bonds, bankers acceptances, letters of credit, surety bonds or
other similar obligations arising in the ordinary course of business, provided
that no such bond, bankers acceptance, letter of credit or similar obligation is
provided to secure or support the repayment of other Indebtedness;

    (g) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except in the
case of daylight overdrafts) drawn against insufficient funds in the ordinary
course of business, provided that such Indebtedness is extinguished within five
Business Days of notice to the Borrower or any Subsidiary of its incurrence;

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    (h) Indebtedness arising out of an Investment permitted under subsection
8.10(f) or an Asset Sale permitted under subsection 8.6(e) consisting of
(i) obligations with respect to customary post-closing adjustments with respect
to accounts receivable, accounts payable, net worth and/or similar items
typically subject to post-closing adjustments in similar transactions, provided
that such obligations are outstanding for a period of two years or less
following the creation thereof or (ii) customary indemnities granted to the
seller or buyer in connection with such Investment or Asset Sale, as the case
may be;

    (i)  Indebtedness of a Person which becomes a Subsidiary after the date
hereof, provided that (i) such Indebtedness existed at the time such Person
became a Subsidiary and was not created in anticipation of the acquisition and
(ii) immediately after giving effect to the acquisition of such Person no
Default or Event of Default shall have occurred and be continuing;

    (j)  Subordinated Debt, provided that the Net Proceeds of any such
Subordinated Debt are applied to prepay Loans (and/or cash collateralize Letter
of Credit) and the Revolving Credit Commitments are reduced, in each case to the
extent required by subsection 4.1(b); and

    (k) any additional Indebtedness of Holdings and any of its Subsidiaries,
including, without limitation, Indebtedness incurred to finance the acquisition,
construction, repair or improvement of fixed or capital assets (whether pursuant
to a loan, a Financing Lease or otherwise), provided, that the sum of (i) the
amount of outstanding guarantees under subsection 8.4(e) and (ii) the amount of
outstanding Indebtedness under this subsection 8.2(k), shall not exceed
$40,000,000 at any time outstanding.

    8.3  Limitation on Liens.   Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:

    (a) Liens for taxes not yet due or which are being contested in good faith
by appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of Holdings, the Borrower or the relevant
Subsidiary, as the case may be, in conformity with GAAP (or, in the case of
Foreign Subsidiaries, generally accepted accounting principles in effect from
time to time in their respective jurisdictions of incorporation);

    (b) statutory landlords' liens and carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business for sums which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings;

    (c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;

    (d) deposits to secure the performance of bids, trade contracts (other than
for borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;

    (e) easements, rights-of-way, restrictions, and other similar encumbrances
incurred in the ordinary course of business, which, in the aggregate, are not
substantial in amount and which do not in any case materially detract from the
use of the property subject thereto or materially interfere with the ordinary
conduct of the business of Holdings or such Subsidiary;

    (f)  Liens securing Indebtedness of Holdings and its Subsidiaries permitted
by subsection 8.2(k) incurred to finance all or any part of the acquisition,
construction, repair or improvement of fixed or capital assets, provided that
(i) such Liens shall be created within 90 days after the acquisition,
construction, repair or improvement of such fixed or capital assets, (ii) such
Liens do not at any time encumber any property other than the property acquired,
constructed, repaired or

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improved with the proceeds of such Indebtedness, (iii) the amount of
Indebtedness secured thereby shall not subsequently be increased and (iv) the
principal amount of Indebtedness secured by any such Lien shall at no time
exceed 100% of the original purchase price of such asset or the amount expended
to construct or improve such asset, as the case may be;

    (g) Liens in existence on the date hereof listed on Schedule 8.3(g),
provided that no such Lien is spread to cover any additional property after the
Closing Date and that the amount of Indebtedness secured thereby shall not
subsequently be increased;

    (h) Liens on assets of any Foreign Subsidiary (other than stock pledged
pursuant to any Borrower Pledge Agreement or the Collateral Agreement) securing
Indebtedness of such Foreign Subsidiary permitted by subsection 8.2(d);

    (i)  Liens securing Non-Recourse Indebtedness of Holdings and its
Subsidiaries permitted by subsection 8.2(c);

    (j)  Liens on documents of title and property covered thereby securing
Indebtedness in respect of Commercial Letters of Credit;

    (k) all building codes and zoning ordinances and other laws, ordinances,
regulations, rules, orders or determinations of any federal, state, county,
municipal or other governmental authority now or hereafter enacted;

    (l)  Liens on Excluded Property (including Securitization Receivables) which
are subject to any Permitted Securitization Transaction (granted in connection
with such Permitted Securitization Transaction), including Liens on the assets
of any Receivables Subsidiary (including Excluded Property) created pursuant to
any Permitted Securitization Transaction and Liens incurred by the Borrower and
its other Subsidiaries on Excluded Property (including Securitization
Receivables) to secure obligations owing by them in respect of such Permitted
Securitization Transaction;

    (m) Liens granted pursuant to the Loan Documents;

    (n) Liens on any property or assets of any Person which becomes a Subsidiary
after the date hereof (including as a result of a merger with a special purpose
Subsidiary formed in connection with such Person becoming a Subsidiary and
solely for such purpose) securing Indebtedness permitted by subsection 8.2(i),
provided that (i) such Liens existed at the time such Person became a Subsidiary
and were not created in anticipation of such event, (ii) any such Lien does not
by its terms cover any property or assets after the time such Person becomes a
Subsidiary which were not covered immediately prior thereto and (iii) any such
Lien does not by its terms secure any Indebtedness other than Indebtedness
existing immediately prior to the time such Person becomes a Subsidiary;

    (o) Liens arising out of the refinancing, extension, renewal or refunding of
any Indebtedness secured by any Lien permitted by clause (f) or (g) of this
Section and which are otherwise permitted hereunder; provided that (i) such
Liens do not at any time encumber any property other than the property subject
to the Lien being refinanced, extended, renewed or refunded and (ii) the amount
of Indebtedness secured thereby is not increased;

    (p) attachment, judgment or other similar Liens arising in connection with
court or arbitration proceedings involving in the aggregate a liability (not
paid or fully covered by insurance) not in excess of $5,000,000; provided the
same are vacated, discharged, stayed or bonded pending appeal within 60 days
from the entry thereof;

    (q) Liens in favor of customs and revenue authorities arising as a matter of
law to secure payment of customs duties in connection with the importation of
goods, so long as such Liens attach only to the goods so imported;

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    (r) Liens arising out of consignment or similar arrangements for the sale of
goods entered into in the ordinary course of business, so long as such Liens
attach only to the goods so consigned; and

    (s) Liens on funds in applicable bank accounts securing Indebtedness
permitted pursuant to subsection 8.2(g).

    8.4  Limitation on Guarantee Obligations.   Create, incur, assume or suffer
to exist any Guarantee Obligation except:

    (a) Guarantee Obligations in existence on the date hereof and listed on
Schedule 8.4(a);

    (b) the Guarantees and Letters of Credit;

    (c) guarantees made in the ordinary course of its business by Holdings or
the Borrower of obligations of any Subsidiary, which obligations are otherwise
permitted under this Agreement;

    (d) guarantees in respect of obligations to third parties issued in the
ordinary course of business in connection with relocation of employees of the
Borrower or any of its Subsidiaries;

    (e) guarantees by Holdings and its Subsidiaries incurred in the ordinary
course of business for an aggregate amount not to exceed $10,000,000 at any one
time outstanding, provided, that the sum of (i) the amount of outstanding
guarantees under this subsection 8.4(e) and (ii) the amount of outstanding
Indebtedness under subsection 8.2(k), shall not exceed $40,000,000 at any time
outstanding; and

    (f)  representations, warranties, covenants and indemnities entered into by
the Borrower or any other Loan Party and reasonably customary for securitization
transactions similar to the relevant Permitted Securitization Transaction;
provided, that, in no event, shall the Borrower or any other Loan Party
guarantee the ability to collect upon, or the payment by the Receivables Obligor
of, the Receivables subject to a Permitted Securitization Transaction or the
financing related thereto.

    8.5  Limitation on Fundamental Changes.   Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:

    (a) any Subsidiary of the Borrower may be merged or consolidated with or
into the Borrower (provided that (i) the Borrower shall be the continuing or
surviving corporation and (ii) if the Merger has occurred, such merger or
consolidation does not adversely affect the value of the Collateral) or with or
into any one or more wholly owned Subsidiaries of the Borrower (provided that
(i) the wholly owned Subsidiary or Subsidiaries shall be the continuing or
surviving corporation and (ii) the surviving corporation shall be a Subsidiary
Guarantor if either party to such merger or consolidation is a Subsidiary
Guarantor);

    (b) any wholly owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or otherwise) to
the Borrower (provided that, if the Merger has occurred, such sale, lease,
transfer or other disposition does not adversely affect the value of the
Collateral) or any other wholly owned Subsidiary of the Borrower and which is a
Subsidiary Guarantor if the transferor is a Subsidiary Guarantor;

    (c) pursuant to any transaction expressly permitted by subsection 8.6 or
8.10; and

    (d) the Merger, provided that, (i) Holdings shall thereafter be the
"Borrower" for all purposes of this Agreement, (ii) the provisions of Sections 9
and 10 shall cease to apply to Holdings and (iii) Holdings shall be deemed to
and hereby shall assume all of the Borrower's

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obligations under the Loan Documents (without limiting the foregoing, Holdings
shall execute such documents and take such other actions as the Administrative
Agent may reasonably request in connection with the Merger and the assumption of
the obligations of the "Borrower" under this Agreement and the other Loan
Documents) and provided, further, that there has not been a merger,
consolidation, sale, lease, transfer or other disposition pursuant to
paragraph (a) or (b) of this subsection 8.5 that, after giving effect to the
Merger, adversely affects the value of the Collateral.

    8.6  Limitation on Sale of Assets.   Convey, sell, lease, assign, transfer
or otherwise dispose of any of its property, business or assets (including,
without limitation, Receivables and leasehold interests and any sale, transfer
or other disposition in connection with a Sale/Leaseback Transaction), whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person other than
Holdings or any wholly owned Subsidiary, except:

    (a) the conveyance, sale, lease, assignment, transfer or other disposition
of Obsolete Property in the ordinary course of business;

    (b) the sale of inventory in the ordinary course of business;

    (c) the sale or discount for fair value without recourse of accounts
receivable arising in the ordinary course of business in connection with the
compromise or collection thereof;

    (d) as permitted by subsection 8.5(a), 8.5(b) or 8.5(d);

    (e) the sale or disposition of any asset or assets (other than as permitted
in clauses (a) through (d) of this subsection 8.6) in the ordinary course of
business, provided that the net proceeds from any such transaction do not exceed
$250,000;

    (f)  sales of Receivables pursuant to a Permitted Securitization
Transaction;

    (g) Asset Sales (other than Asset Sales of inventory and other than any
other Asset Sale permitted under this subsection 8.6) in the ordinary course of
business, provided that (i) the Net Proceeds of any such Asset Sale are applied
to prepay Loans (and/or cash collateralize Letters of Credit) and the Revolving
Credit Commitments are reduced, in each case to the extent required by
subsection 4.1(b), (ii) the aggregate amount of Net Proceeds of Asset Sales
subsequent to the Closing Date shall not exceed $70,000,000 and (iii) the Net
Proceeds from any Asset Sale subsequent to the Closing Date (or series of
related Asset Sales) shall not exceed $35,000,000;

    (h) the lease (as lessor) of real or personal property in the ordinary
course of business;

    (i)  any Investment permitted by Section 8.10 and any Restricted Payment
permitted by Section 8.8;

    (j)  consignment arrangements or similar arrangements for the sale of goods
in the ordinary course of business and consistent with the past practice of the
Borrower and its Subsidiaries prior to the Closing Date; and

    (k) licenses or sublicenses of software, trademarks and other Intellectual
Property in the ordinary course of business which do not materially interfere
with the business of Holdings, the Borrower or any Subsidiary, as the case may
be.

To the extent that any sale permitted under this subsection 8.6 is of the
capital stock of any Subsidiary, such capital stock shall be released from the
security interest therein created pursuant to the Security Documents and such
Subsidiary, if it is a Subsidiary Guarantor, shall be released from its
obligations under the Subsidiaries' Guarantee.

    8.7  [Intentionally Omitted.]   

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    8.8  Limitation on Restricted Payments.   Declare or pay any dividend (other
than dividends payable solely in common stock of the Borrower or in options,
warrants or other rights to purchase such common stock) on, or make any payment
on account of, or set apart assets for a sinking or other analogous fund for,
the purchase, redemption, defeasance, retirement or other acquisition of, any
shares of any class of Capital Stock of the Borrower or any warrants or options
to purchase any such Stock, whether now or hereafter outstanding, or make any
other distribution in respect thereof, either directly or indirectly, whether in
cash or property or in obligations of the Borrower or any Subsidiary (such
declarations, payments, setting apart, purchases, redemptions, defeasances,
retirements, acquisitions and distributions being herein called "Restricted
Payments"), except that,

    (a) the Borrower may pay cash dividends to Holdings to pay any taxes or
expenses required to be paid by Holdings in the ordinary course of business and
to maintain a cash balance of $250,000 for the payment of such taxes and
expenses, provided that any such taxes or expenses are paid no later than
fifteen Business Days after the date on which the relevant dividend is made;

    (b) the Borrower may pay dividends to Holdings to enable Holdings to make
investments and satisfy obligations permitted to be made and incurred under
Section 9;

    (c) so long as no Default or Event of Default has occurred or would occur
after giving effect to such declaration or payment, the Borrower may, from time
to time, declare and pay cash dividends to Holdings on the common stock of the
Borrower in an aggregate amount not to exceed $5,000,000 in any fiscal year of
the Borrower or $10,000,000 in the aggregate, provided, that the proceeds of
such dividends shall be used within 30 days of the receipt of such dividends by
Holdings to repurchase Holdings stock or stock options from, or to cash out
other management equity interests held by, management employees of Holdings or
any of its Subsidiaries, and provided, further, that such $10,000,000 amount
shall be increased by the proceeds of any additional Holdings capital stock
which is issued to any management employees of Holdings or any of its
Subsidiaries so long as such proceeds are contributed by Holdings to the capital
of the Borrower; and

    (d) so long as no Default or Event of Default shall have occurred and be
continuing, Holdings and the Borrower may redeem or repurchase shares of its own
common stock or common stock options or declare and pay cash dividends on its
own common stock in order to enable Holdings to declare and pay equivalent cash
dividends to its shareholders in an aggregate amount not to exceed $75,000,000,
provided, that, once the Index Debt of Holdings or the Borrower is rated BBB- or
higher (with a stable outlook) by S&P and Baa3 or higher (with a stable outlook)
by Moody's, Holdings and the Borrower may redeem or repurchase additional shares
of its own common stock or common stock options or pay cash dividends on its own
common stock in order to enable Holdings to declare and pay equivalent cash
dividends to its shareholders, in any fiscal year of the Borrower, in an
aggregate amount not to exceed 50% of Consolidated Net Income for the preceding
fiscal year of the Borrower.

    8.9  Limitation on Capital Expenditures.   Make or commit to make Capital
Expenditures in the aggregate for the Borrower and its Subsidiaries during any
fiscal year of the Borrower, in excess of $70,000,000, provided, that, up to
100% of any amount permitted to be expended in any fiscal year if not so
expended in the fiscal year for which it is permitted, may be carried over for
expenditure in the next following fiscal year but, if not so expended in the
fiscal year immediately succeeding the fiscal year for which it is permitted may
not be carried over for expenditure in succeeding fiscal years.

    8.10  Limitation on Investments, Loans and Advances.   Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of, or any assets constituting a
business unit of, or make any other investment in, any Person (an "Investment"),
except:

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    (a) extensions of trade credit (including to Foreign Subsidiaries) and
endorsements of negotiable instruments and other negotiable documents in the
ordinary course of business;

    (b) investments in Cash Equivalents;

    (c) payroll advances in the ordinary course of business and loans and
advances to employees and directors of Holdings, the Borrower or any of its
Subsidiaries for travel, entertainment and relocation expenses in the ordinary
course of business in an aggregate amount for Holdings, the Borrower and its
Subsidiaries not to exceed $500,000 at any time outstanding;

    (d) Investments in Subsidiaries and in RISA and Investments by such
Subsidiaries in the Borrower and in other Subsidiaries, provided that the
aggregate amount of all such Investments (including Investments in the nature of
sales and transfers of assets (including, pursuant to a transaction permitted
under subsection 8.5(b) and assumption or guarantees of Indebtedness) for less
than fair market value) after the Closing Date (i) in the Mexican Subsidiary and
RISA shall not exceed at any one time outstanding the sum of (A) $15,000,000 and
(B) the aggregate Capital Expenditures made by the Mexican Subsidiary and RISA
and funded by Investments by the Borrower or Holdings, provided further, that
additional Investments in the Mexican Subsidiary and RISA shall reduce on a
dollar-for-dollar basis acquisitions permitted under Section 8.10(f) and
Investments permitted under Section 8.10(g), (ii) in Foreign Subsidiaries
(including the Mexican Subsidiary and RISA) shall not exceed at any one time
outstanding the sum of (A) $25,000,000 and (B) the amount referred to in
clause (i)(B) above, provided further, that additional Investments in Foreign
Subsidiaries shall reduce on a dollar-for-dollar basis acquisitions permitted
under Section 8.10(f) and Investments permitted under Section 8.10(g), and
(iii) in Subsidiaries (other than Foreign Subsidiaries and RISA) which are not
Subsidiary Guarantors shall not exceed at any one time outstanding $15,000,000,
provided further, that additional Investments in Subsidiaries which are not
Subsidiary Guarantors shall reduce on a dollar-for-dollar basis acquisitions
permitted under Section 8.10(f) and Investments permitted under Section 8.10(g);

    (e) advances by the Borrower to Holdings, in lieu of the payment of cash
dividends, to enable Holdings to make the payments contemplated by subsection
8.8, provided that, if such advances are made with respect to the payments
contemplated by subsection 8.8(a) or 8.8(b), such advances are used to make such
payments within fifteen Business Days after such advances are made;

    (f)  acquisitions, by the Borrower or any Subsidiary Guarantor, of all the
Capital Stock of any Person or, acquisitions, by the Borrower, any Subsidiary
Guarantor, or any Foreign Subsidiary which is owned directly by the Borrower or
any Subsidiary Guarantor, of any assets constituting a business unit, so long as
(i) in each case, (A) no Default or Event of Default has occurred and is
continuing either before or immediately after giving effect to any such
acquisition, (B) Holdings shall be in pro forma compliance with the covenants
contained in subsection 8.1 after giving effect to any such acquisition, and
(C) after giving effect to any such acquisition, the sum of the acquisitions
pursuant to this subsection 8.10(f) and Investments pursuant to the provisos of
subsection 8.10(d) and subsection 8.10(g) shall not exceed $200,000,000,
(ii) with respect to any acquisition of any Person, the Person to be acquired
shall be in substantially the same line of business as the Borrower and
(iii) the requirements of subsection 7.9 shall be satisfied with respect to such
acquisition (after giving effect thereto);

    (g) Investments in any Joint Venture or in any Foreign Subsidiary which
Foreign Subsidiary is not directly owned by the Borrower or a Subsidiary
Guarantor (including Investments in the nature of sales and transfers of assets
for less than fair market value and assumptions or guarantees of Indebtedness),
so long as (i) no Default or Event of Default has occurred and is continuing
either before or immediately after giving effect to any such Investment,
(ii) Holdings shall be in pro forma compliance with the covenants contained in
subsection 8.1 after giving effect to any such

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Investment, (iii) the aggregate amount of Investments pursuant to this
subsection 8.10(g) does not exceed $100,000,000 (provided, that such
$100,000,000 basket may be replenished (up to the original available amount of
$100,000,000) on a dollar-for-dollar basis with cash received by the Borrower or
any Subsidiary from any Joint Venture or any Foreign Subsidiary, which Foreign
Subsidiary is not directly owned by the Borrower or a Subsidiary Guarantor, and,
in each case, which was invested in pursuant to this Section 8.10(g) to the
extent cash is used to repay Revolving Credit Loans pursuant to subsection 4.1),
(iv) once the aggregate amount of Investments under this subsection 8.10(g)
exceeds $50,000,000, on the date of any such Investment, the Consolidated
Leverage Ratio (calculated on a pro forma basis) of Holdings and its
consolidated Subsidiaries shall not exceed 2.75 to 1.00, and (v) after giving
effect to any such Investment, and subject to the proviso in clause (iii) above,
the sum of the Investments pursuant to the proviso of subsection 8.10(d),
acquisitions pursuant to subsection 8.10(f) and Investments pursuant to this
subsection 8.10(g) shall not exceed $200,000,000;

    (h) Investments comprised of capital contributions, loans or deferred
purchase price (whether in the form of cash, a note or other assets) in any
Receivables Subsidiary; provided, that the aggregate amount of such Investments
comprising of equity in any Receivables Subsidiary shall not exceed 5% of the
Receivables transferred to such Receivables Subsidiary; provided, further, that
non-equity Investments in any Receivables Subsidiary shall be pledged to the
Administrative Agent for the benefit of the Lenders;

    (i)  loans by the Borrower to members of its senior management in an
aggregate principal amount not to exceed $2,000,000 at any time;

    (j)  Investments identified on Schedule 8.10, without giving effect to any
additions thereto or replacements thereof;

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

    (l)  Specified Hedge Agreements permitted hereunder;

    (m) debt securities acquired as partial consideration for a sale of assets
permitted by Section 8.6; provided that the aggregate amount of such debt
securities acquired during the term of this Agreement shall not exceed
$10,000,000;

    (n) Investments resulting from or to effect Capital Expenditures permitted
by Section 8.9; and

    (o) pledges or deposits made in the ordinary course of business consistent
with past practice to secure obligations not considered Indebtedness.

    8.11  Limitation on Transactions with Affiliates.   Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate (other
than a Loan Party) unless such transaction is (a) otherwise permitted under this
Agreement, (b) in the ordinary course of the Borrower's or such Subsidiary's
business or, if not in the ordinary course of business, the terms of which are
set forth in writing and the board of directors of the Borrower or such
Subsidiary, as the case may be, has determined in good faith that such
transaction meets the applicable criteria set forth in clause (c) below, and
(c) upon fair and reasonable terms no less favorable to the Borrower or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate, provided, that the
foregoing restriction shall not prohibit (i) payment of reasonable fees,
expenses and compensation paid to, and indemnity provided on behalf of,
officers, directors and employees of Holdings, the Borrower and its
Subsidiaries, (ii) any payment or other transaction pursuant to any tax sharing
agreement,

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(iii) payments permitted under subsection 8.8 or subsection 8.10, (iv) the
Indebtedness permitted pursuant to subsection 8.2(b), (v) any employment
agreement entered into by the Borrower or any of its Subsidiaries in the
ordinary course of business, (vi) any issuance of securities in connection with
employment arrangements, stock options and stock ownership plans of the Borrower
entered into in the ordinary course of business, (vii) any Permitted
Securitization Transaction, and (viii) any other agreement as in effect on the
Closing Date and as set forth on Schedule 8.11, or any transaction contemplated
thereby, or any amendment thereto or any replacement agreement thereof, so long
as such amendment or replacement agreement is not more disadvantageous to the
Loan Parties or the Lenders in any material respect than the original agreement
as in effect on the Closing Date. .

    8.12  Limitation on Sales and Leasebacks.   Enter into any arrangement with
any Person providing for the leasing by the Borrower or any Subsidiary of real
or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary (a "Sale/Leaseback
Transaction"), other than Sale/Leaseback Transactions the Asset Sales with
respect to which are permitted under subsection 8.6(g).

    8.13  Limitation on Changes in Fiscal Year.   Change the fiscal year of
Holdings; provided that Holdings may change the basis of its fiscal year from
52/53 weeks to a calendar year.

    8.14  Limitation on Certain Clauses.   Enter into with any Person any
agreement, which prohibits or limits the ability of the Borrower or any of its
Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired or
which prohibits or limits loans or dividends by Subsidiaries to the Borrower,
other than (a) this Agreement, (b) any industrial revenue or development
financings, purchase money mortgages or Financing Leases permitted by this
Agreement (in which cases, any prohibition or limitation shall only be effective
against the assets financed thereby or securing any such financing, mortgage or
Lease) or other Liens permitted by subsection 8.3 (in which case any prohibition
or limitations may only be effective against the assets subject to such Liens),
or (c) any other Contractual Obligation permitted by this Agreement (provided
that any prohibition of the type limited by this subsection contained in any
such Contractual Obligation may be effective only against the rights of the
Borrower or its Subsidiary in the contract or agreement relating to such
Contractual Obligation and the assets subject thereto).

    8.15  Limitation on Lines of Business.   Enter into any business, either
directly or through any Subsidiary, except for those businesses in which the
Borrower and its Subsidiaries are engaged on the Closing Date (including the
manufacture and distribution of ceramic tile and related products and the
distribution of home furnishing, construction and renovation products connected
to ceramic tile and related products) or any Related Business.

    8.16  Amendments to Permitted Securitization Transaction.   Amend, modify or
change any of the terms of any Permitted Securitization Transaction (other than
by any amendment, modification, change, supplement or waiver which (a) would
extend the maturity thereof or, with the consent of the Administrative Agent
(which consent shall not be unreasonably withheld), change the fees payable with
respect thereto, (b) does not adversely affect in any material respect the
interests of the Administrative Agent or the Lenders hereunder or under the Loan
Documents or (c) is of a technical or clarifying nature).

    8.17  Limitation on Optional Payments and Modifications of Debt Instruments.
  (a) Make any optional payment or prepayment on or redemption or purchase of
any Subordinated Debt, (b) amend, modify or change, or consent or agree to any
amendment, modification or change to any of the terms of any Subordinated Debt
(other than any such amendment, modification or change which would extend the
maturity, shorten the maturity to a date not prior to October 31, 2007 or reduce
the amount of any payment of principal thereof or which would reduce the rate or
extend the date for payment of interest thereon or which would make the
covenants applicable thereto less restrictive on the Borrower and its
Subsidiaries), or (c) amend the subordination provisions of the Subordinated
Debt without obtaining the prior written consent of the Administrative Agent
(which consent shall not be unreasonably withheld).

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SECTION 9. NEGATIVE COVENANTS OF HOLDINGS

    Holdings agrees that, so long as the Commitments remain in effect or any
amount is owing to any Lender or the Administrative Agent hereunder or under any
other Loan Document or any Letter of Credit remains outstanding, Holdings shall
not, unless the Required Lenders shall otherwise agree in writing:

    9.1  Limitation on Holdings' Activities.   Create, incur, assume or suffer
to exist any Indebtedness, Lien or Guarantee Obligation, or make any
Investments, loans or advances to any Person, or purchase any material assets,
or conduct, transact or otherwise engage, or commit to transact, conduct or
otherwise engage, in any business or operations other than (i) transactions
contemplated in connection with the consummation of the Merger, (ii) the
ownership of the Capital Stock of the Borrower, and the exercise of rights and
performance of obligations in connection therewith, (iii) the entry into, and
exercise of rights and performance of obligations in respect of, (A) this
Agreement, (B) contracts and agreements with or for the benefit of officers,
directors and employees of Holdings or any Subsidiary thereof relating to their
employment or directorships, (C) insurance policies and related contracts and
agreements, (D) a Permitted Securitization Transaction and (E) equity
subscription agreements, registration rights agreements, warrant agreements,
voting and other stockholder agreements, engagement letters, underwriting
agreements and other agreements in respect of its equity securities or any
offering, issuance or sale thereof, (iv) transactions which would be permitted
for the Borrower pursuant to subsections 8.2, 8.3, 8.4, 8.6 and 8.10, provided
that (A) the qualitative and quantitative limitations described in those
subsections shall apply to Holdings, and (B) each such transaction shall reduce
the amount permitted for the Borrower under each such subsection, (v) the
offering, issuance and sale of its equity securities to the extent such
offering, issuance or sale does not constitute a Default or Event of Default
under subsection 11(j), (vi) the filing of registration statements, and
compliance with applicable reporting and other obligations, under and compliance
with its federal, state or other securities laws, (vii) the performance of
obligations under and compliance with its certificate of incorporation and
by-laws, or any applicable law, ordinance, regulation, rule, order, judgment,
decree or permit, including, without limitation, as a result of or in connection
with the activities of its Subsidiaries, (viii) the performance of contractual
obligations in existence on the date hereof or otherwise permitted hereunder,
(ix) the incurrence and payment of its business expenses and any taxes for which
it may be liable and (x) other activities necessarily incidental to the
foregoing.

    9.2  Restricted Payments.   Use any amount received by it pursuant to
subsection 8.8 from the Borrower or any of its Subsidiaries for any purpose
other than as set forth in such subsection.

    9.3  Equity Net Proceeds.   Fail to contribute the Net Proceeds of any
issuance of Common Stock by Holdings subsequent to the Closing Date to the
Borrower (or to a Person if Holdings' investment therein is permitted under
subsection 9.1) within five Business Days of the receipt of such Net Proceeds.

    9.4  Dividends.   Declare or pay any dividend (other than dividends payable
solely in Common Stock or other Capital Stock of Holdings) on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for the purchase, redemption, defeasance, retirement or other acquisition of
Capital Stock of Holdings, or any warrants or options to purchase any such
Stock, whether now or hereafter outstanding, or make any other distribution in
respect thereof, either directly or indirectly, whether in cash or property or
in obligations of Holdings or any of its Subsidiaries, except as contemplated by
clause (d) of subsection 8.8.

SECTION 10. GUARANTEE

    10.1  Guarantee.   (a) To induce the Administrative Agent and the Lenders to
execute and deliver this Agreement and to make the Extensions of Credit provided
for herein to the Borrower, Holdings hereby unconditionally and irrevocably
guarantees to the Administrative Agent and the Lenders (and

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the Lender Affiliates party to the Specified Hedge Agreements) and their
respective successors, permitted transferees and permitted assigns, the prompt
and complete payment and performance by the Borrower when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations. Holdings
further agrees to pay any and all reasonable expenses (including, without
limitation, all reasonable fees and disbursements of counsel) which may be paid
or incurred by the Administrative Agent or any Lender (or any Lender Affiliate
party to any Specified Hedge Agreement) in enforcing, or obtaining advice of
counsel in respect of, any rights with respect to, or collecting, any or all of
the Obligations and/or enforcing any rights with respect to, or collecting
against, Holdings under this Section 10. This Guarantee shall remain in full
force and effect until the Obligations (other than the Obligations with respect
to any Specified Hedge Agreement) are paid in full, the Commitments are
terminated and no Letter of Credit is outstanding or not fully collateralized on
terms satisfactory to the Administrative Agent, notwithstanding that from time
to time prior thereto the Borrower may be free from any Obligations.

    (b) No payment or payments made by the Borrower or any other Person or
received or collected by the Administrative Agent or any Lender (or any Lender
Affiliate party to any Specified Hedge Agreement) from the Borrower or any other
Person by virtue of any action or proceeding or any set-off or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Obligations shall be deemed to modify, reduce, release or otherwise affect
the liability of Holdings under this Section 10 which shall, notwithstanding any
such payment or payments, remain in full force and effect until the Obligations
(other than the Obligations with respect to any Specified Hedge Agreements) are
paid in full, the Commitments are terminated and no Letter of Credit is
outstanding or not fully collateralized on terms satisfactory to the
Administrative Agent. Holdings agrees that whenever, at any time, or from time
to time, it shall make any payment to the Administrative Agent or any Lender (or
any Lender Affiliate party to any Specified Hedge Agreement) on account of its
liability under this Section 10, it will notify the Administrative Agent and
such Lender (or such Lender Affiliate) in writing that such payment is made
under this Section 10 for such purpose.

    10.2  No Subrogation, Contribution, Reimbursement or Indemnity.
  Notwithstanding anything to the contrary in this Section 10, Holdings shall
not be entitled to be subrogated to any of the rights of the Administrative
Agent or any Lender (or any Lender Affiliate party to any Specified Hedge
Agreement) against the Borrower or any other Guarantor or any collateral
security or guarantee or right of offset held by any Lender (or any Lender
Affiliate party to any Specified Hedge Agreement) for the payment of the
Obligations, nor shall Holdings seek or be entitled to seek any contribution or
reimbursement from the Borrower or any other Guarantor in respect of payments
made by Holdings hereunder, until all amounts owing to the Administrative Agent
and the Lenders (and the Lender Affiliates party to the Specified Hedge
Agreements) by the Borrower on account of the Obligations (other than the
Obligations with respect to any Specified Hedge Agreement) are paid in full, the
Commitments are terminated and no Letter of Credit remains outstanding or not
fully collateralized on terms satisfactory to the Administrative Agent. If any
amount shall be paid to Holdings on account of such subrogation rights at any
time when all of the Obligations (other than the Obligations with respect to any
Specified Hedge Agreement) shall not have been paid in full, the Commitments
shall not have been terminated or a Letter of Credit remains outstanding, such
amount shall be held by Holdings in trust for the Administrative Agent and the
Lenders (and the Lender Affiliates party to the Specified Hedge Agreements),
segregated from other funds of Holdings, and shall, forthwith upon receipt by
Holdings, be turned over to the Administrative Agent in the exact form received
by Holdings (duly indorsed by Holdings to the Administrative Agent, if
required), to be applied against the Obligations, whether matured or unmatured,
in such order as the Administrative Agent may determine. The provisions of this
subsection shall survive the termination of the guarantee contained in this
Section 10 and the payment in full of the Obligations (other than the
Obligations with respect to any Specified Hedge Agreement), the termination of
the Commitments and the cancellation, revocation or termination of all
outstanding Letters of Credit.

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    10.3  Amendments, etc.   with respect to the Obligations; Waiver of Rights.
Holdings shall remain obligated hereunder notwithstanding that, without any
reservation of rights against Holdings, and without notice to or further assent
by Holdings, any demand for payment of any of the Obligations made by the
Administrative Agent or any Lender (or any Lender Affiliate party to any
Specified Hedge Agreement) may be rescinded by the Administrative Agent or such
Lender (or such Lender Affiliate), and any of the Obligations continued, and the
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Administrative Agent or any Lender (or any Lender Affiliate party to any
Specified Hedge Agreement), and this Agreement, the other Loan Documents, any
Specified Hedge Agreement and any other documents executed and delivered in
connection herewith or therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Required
Lenders, as the case may be) or such Lender or Lender Affiliate may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Administrative Agent or any Lender for the
payment of the Obligations may be sold, exchanged, waived, surrendered or
released. Neither the Administrative Agent nor any Lender (or any Lender
Affiliate party to any Specified Hedge Agreement) shall have any obligation to
protect, secure, perfect or insure any Lien at any time held by it as security
for the Obligations or for the guarantee contained in this Section 10 or any
property subject thereto. When making any demand hereunder against Holdings, the
Administrative Agent or any Lender (or any Lender Affiliate party to any
Specified Hedge Agreement) may, but shall be under no obligation to, make a
similar demand on the Borrower or any other guarantor, and any failure by the
Administrative Agent or any Lender (or any Lender Affiliate party to any
Specified Hedge Agreement) to make any such demand or to collect any payments
from the Borrower or any such other guarantor or any release of the Borrower or
such other guarantor shall not relieve Holdings of its obligations or
liabilities under this Section 10, and shall not impair or affect the rights and
remedies, express or implied, or as a matter of law, of the Administrative Agent
or any Lender (or any Lender Affiliate party to any Specified Hedge Agreement)
against Holdings. For the purposes hereof "demand" shall include the
commencement and continuance of any legal proceedings.

    10.4  Guarantee Absolute and Unconditional.   Holdings waives, to the
fullest extent permitted by applicable law, any and all notice of the creation,
renewal, extension or accrual of any of the Obligations and notice of or proof
of reliance by the Administrative Agent or any Lender (or any Lender Affiliate
party to any Specified Hedge Agreement) upon the guarantee contained in this
Section 10 or acceptance of the guarantee contained in this Section 10; the
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon the guarantee contained in this Section 10; and all dealings between the
Borrower or Holdings, on the one hand, and the Administrative Agent and the
Lenders (and the Lender Affiliates party to the Specified Hedge Agreements), on
the other hand, shall likewise be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this Section 10.
Holdings waives, to the fullest extent permitted by applicable law, diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower or Holdings with respect to the Obligations. This Guarantee
shall be construed as a continuing, absolute and unconditional guarantee of
payment without regard to (a) the validity, regularity or enforceability of this
Agreement, any Note, any other Loan Document, any Specified Hedge Agreement, any
of the Obligations or any guarantee or right of offset with respect thereto at
any time or from time to time held by the Administrative Agent or any Lender (or
any Lender Affiliate party to any Specified Hedge Agreement), (b) any defense,
set-off or counterclaim (other than a defense of payment or performance) which
may at any time be available to or be asserted by the Borrower against the
Administrative Agent or any Lender (or any Lender Affiliate party to any
Specified Hedge Agreement) or (c) any other circumstance whatsoever (other than
payment or other

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satisfaction in full) (with or without notice to or knowledge of the Borrower or
Holdings) which constitutes, or might be construed to constitute, an equitable
or legal discharge of the Borrower for the Obligations, or of Holdings under the
guarantee contained in this Section 10, in bankruptcy or in any other instance.
When pursuing its rights and remedies hereunder against Holdings, the
Administrative Agent and any Lender may, but shall be under no obligation to,
pursue such rights and remedies as it may have against the Borrower or any other
Person or against any guarantee for the Obligations or any right of offset with
respect thereto, and any failure by the Administrative Agent or any Lender (or
any Lender Affiliate party to any Specified Hedge Agreement) to pursue such
other rights or remedies or to collect any payments from the Borrower or any
such other Person or to realize upon any such guarantee or to exercise any such
right of offset, or any release of the Borrower or any such other Person or of
any such guarantee or right of offset, shall not relieve Holdings of any
liability hereunder, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Administrative
Agent or any Lender (or any Lender Affiliate party to any Specified Hedge
Agreement) against Holdings. The guarantee contained in this Section 10 shall
remain in full force and effect and be binding in accordance with and to the
extent of its terms upon Holdings and its successors, and shall inure to the
benefit of the Administrative Agent and the Lenders, and their respective
successors, permitted transferees and permitted assigns, until all the
Obligations (other than the Obligations with respect o the Specified Hedge
Agreements) and the obligations of Holdings under this Guarantee shall have been
satisfied by payment in full, the Commitments shall be terminated and no Letter
of Credit shall remain outstanding, notwithstanding that from time to time
during the term of this Agreement the Borrower may be free from any Obligations.

    10.5  Reinstatement.   The guarantee contained in this Section 10 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Obligations is rescinded or must
otherwise be restored or returned by the Administrative Agent or any Lender upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Borrower or any
substantial part of its property, or otherwise, all as though such payments had
not been made.

    10.6  Payments.   Holdings hereby agrees that the Obligations will be paid
to the Administrative Agent without set-off or counterclaim in Dollars at the
office of the Administrative Agent located at 270 Park Avenue, New York, New
York 10017.

SECTION 11. EVENTS OF DEFAULT

    If any of the following events shall occur and be continuing:

    (a) The Borrower shall fail to pay any principal of any Loan or any
Reimbursement Obligation when due in accordance with the terms thereof or
hereof; or the Borrower shall fail to pay any interest on any Loan, or any other
amount payable hereunder, within three Business Days after any such interest or
other amount becomes due in accordance with the terms thereof or hereof; or

    (b) Any representation or warranty made or deemed made by the Borrower or
any other Loan Party herein or in any other Loan Document or which is contained
in any certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been incorrect in any material respect on or as of
the date made or deemed made; or

    (c) The Borrower or any other Loan Party shall default in the observance or
performance of any agreement contained in subsection 7.9, Section 8 or
Section 9; or

    (d) The Borrower or any other Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement or any other Loan
Document (other than as provided in

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paragraphs (a) through (c) of this Section), and such default shall continue
unremedied for a period of 30 days after the earlier of (i) the date on which a
Responsible Officer of Holdings becomes aware of such default or (ii) the date
on which written notice thereof shall have been given to the Borrower by the
Administrative Agent or any Lender; or

    (e) Holdings, the Borrower or any its Subsidiaries shall (i) default in any
payment of principal of or interest on any Indebtedness (other than the Loans)
or in the payment of any Guarantee Obligation, beyond the period of grace (not
to exceed 60 days), if any, provided in the instrument or agreement under which
such Indebtedness or Guarantee Obligation was created, as the case may be, if
the aggregate amount of the Indebtedness and/or Guarantee Obligations in respect
of which such default or defaults shall have occurred is at least $5,000,000; or
(ii) default in the observance or performance of any other agreement or
condition to be observed or performed by such Person relating to any such
Indebtedness or Guarantee Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to become due prior to its
stated maturity or the full amount of such Guarantee Obligation to become
payable, provided, however, that, a default, event or condition described in
this subsection 11(e)(ii) shall not constitute an Event of Default under this
subsection 11(e) unless, at the time of such default, event or condition,
defaults, events or conditions of the type described in this subsection
11(e)(ii) shall have occurred and are continuing with respect to Indebtedness
and Guarantee Obligations the aggregate amount of which exceeds $5,000,000; or

    (f)  (i) The Borrower or any of its Significant Subsidiaries or Holdings
shall commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its
assets, or the Borrower or any of its Significant Subsidiaries or Holdings shall
make a general assignment for the benefit of its creditors; or (ii) there shall
be commenced against the Borrower or any of its Significant Subsidiaries or
Holdings any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against the
Borrower or any of its Significant Subsidiaries or Holdings any case, proceeding
or other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its assets
which results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days from
the entry thereof; or (iv) the Borrower or any of its Significant Subsidiaries
or Holdings shall take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) the Borrower or any of its Significant Subsidiaries
or Holdings shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or

    (g) (i) Any Person shall engage in any "prohibited transaction" (as defined
in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single

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Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required Lenders,
likely to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Lenders is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan, or (vi) any other similar event or condition shall occur or
exist with respect to a Plan that could result in a liability (other than in the
ordinary course), and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any, is
reasonably likely to have a Material Adverse Effect; or

    (h) One or more judgments or decrees shall be entered against the Borrower
or any of its Subsidiaries involving in the aggregate a liability (not paid or
fully covered by insurance) of $5,000,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending appeal
within 60 days from the entry thereof; or

    (i)  Any Guarantee shall cease, for any reason, to be in full force and
effect or any Guarantor shall so assert; or

    (j)  (i) Any of the Security Documents shall cease, for any reason, to be in
full force and effect, or the Borrower or any other Loan Party which is a party
to any of the Security Documents shall so assert or (ii) the Lien created by any
of the Security Documents shall cease to be enforceable and of the same effect
and priority purported to be created thereby; or

    (k) Any "Termination Event" under a Permitted Securitization Transaction or
any similar such event or occurrence as defined in the documentation relating to
a Permitted Securitization Transaction, or any event or circumstance entitling
the Persons purchasing, or financing the purchase of, Receivables under a
Permitted Securitization Transaction to stop so purchasing or financing (other
than by reason of the occurrence of the stated expiry date of such Permitted
Securitization Transaction or any termination of such Permitted Securitization
Transaction in compliance with Section 7.10), provided that any notices or cure
periods that are conditions to the rights of such Persons to stop purchasing, or
financing the purchase of, such Receivables have been given or have expired, as
the case may be; or

    (l)  A Change in Control shall occur;

then, and in any such event, (A) if such event is an Event of Default specified
in clause (i), (ii) or (iii) of paragraph (f) of this Section with respect to
the Borrower, automatically the Commitments (including the Swing Line
Commitment) shall immediately terminate and the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement (including,
without limitation, all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) shall immediately become due and payable, and
(B) if such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower declare the Commitments
(including the Swing Line Commitment) to be terminated forthwith, whereupon the
Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts (including, without limitation, all amounts of L/C Obligations, whether
or not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) owing under this Agreement to be
due and payable forthwith, whereupon the same shall immediately become due and
payable. Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.

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    With respect to all Letters of Credit with respect to which presentment for
honor shall not have occurred at the time of an acceleration pursuant to the
preceding paragraph, the Borrower shall at such time deposit in a cash
collateral account opened by the Administrative Agent an amount equal to the
aggregate then undrawn and unexpired amount of such Letters of Credit. The
Borrower hereby grants to the Administrative Agent, for the benefit of the
Issuing Bank and the L/C Participants, a security interest in such cash
collateral to secure all obligations of the Borrower under this Agreement and
the other Loan Documents. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other Obligations. After all such Letters of Credit shall have expired or
been fully drawn upon, all Reimbursement Obligations shall have been satisfied
and all other Obligations shall have been paid in full, the balance, if any, in
such cash collateral account shall be returned to the Borrower. The Borrower
shall execute and deliver to the Administrative Agent, for the account of the
Issuing Bank and the L/C Participants, such further documents and instruments as
the Administrative Agent may request to evidence the creation and perfection of
the security interest in such cash collateral account.

SECTION 12. THE ADMINISTRATIVE AGENT

    12.1  Appointment.   Each Lender hereby irrevocably designates and appoints
the Administrative Agent as the agent of such Lender under this Agreement and
the other Loan Documents, and each such Lender irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.

    12.2  Delegation of Duties.   The Administrative Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.

    12.3  Exculpatory Provisions.   Neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Loan
Document (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or any
officer thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of the Borrower to perform its obligations hereunder
or thereunder. The Administrative Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.

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    12.4  Reliance by Administrative Agent.   The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or such other
Lenders as shall be required by this Agreement) as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
and the other Loan Documents in accordance with a request of the Required
Lenders (or such other Lenders as shall be required by this Agreement), and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and all future holders of the Loans.

    12.5  Notice of Default.   The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower or Holdings referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders (or such other Lenders as shall be
required by this Agreement, provided that unless and until the Administrative
Agent shall have received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders.

    12.6  Non-Reliance on Administrative Agent and Other Lenders.   Each Lender
expressly acknowledges that neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Administrative
Agent hereinafter taken, including any review of the affairs of the Borrower,
shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Borrower and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Administrative Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.

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    12.7  Indemnification.   The Lenders agree to indemnify the Administrative
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Commitment Percentages in effect on the date on which
indemnification is sought (or, if indemnification is sought after the date upon
which the Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with their Commitment Percentages immediately
prior to such date), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Loans) be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of, the Commitments, this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Administrative Agent under or in connection with any of the foregoing,
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct. The agreements in this subsection shall
survive the payment of the Loans and all other amounts payable hereunder.

    12.8  Administrative Agent in Its Individual Capacity.   The Administrative
Agent and its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Borrower as though the Administrative
Agent were not the Administrative Agent hereunder and under the other Loan
Documents. With respect to the Loans made by it and with respect to any Letter
of Credit issued or participated in by it, the Administrative Agent shall have
the same rights and powers under this Agreement and the other Loan Documents as
any Lender and may exercise the same as though it were not the Administrative
Agent, and the terms "Lender" and "Lenders" shall include the Administrative
Agent in its individual capacity.

    12.9  Successor Administrative Agent.   The Administrative Agent may resign
as Administrative Agent upon 10 days' notice to the Lenders and the Borrower. If
the Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders, which successor agent
shall be subject to the approval of the Borrower (which approval shall not be
unreasonably withheld), or shall appoint as a successor agent a financial
institution which is not a Lender and which is reasonably acceptable to the
Borrower, whereupon such successor agent shall succeed to the rights, powers and
duties of the Administrative Agent, and the term "Administrative Agent" shall
mean such successor agent effective upon such appointment and approval, and the
former Administrative Agent's rights, powers and duties as Administrative Agent
shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Section 12 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 and the other Loan Documents.

    12.10  Issuing Bank; Swing Line Lender.   The provisions of this Section 12
(other than subsection 12.9) shall apply to the Issuing Banks and the Swing Line
Lender mutatis mutandis to the same extent as such provisions apply to the
Administrative Agent.

    12.11  Annual Administration Fee.   The Borrower shall pay to the
Administrative Agent an annual administration fee (the "Annual Administration
Fee") on the Closing Date and annually in advance on each anniversary thereof
prior to the Revolving Credit Termination Date (or such earlier date on which
the Revolving Credit Commitments shall terminate pursuant to Section 11) and the
payment in full of all Obligations. The Annual Administration Fee payable on the
Closing Date shall be in an amount equal to $50,000 and the Annual
Administration Fee payable on each anniversary of the Closing Date in accordance
with the immediately preceding sentence shall be in an amount equal to $50,000.

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SECTION 13. MISCELLANEOUS

    13.1  Amendments and Waivers.   Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this subsection. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (a) enter into with the Borrower
and each Loan Party which is a party to the relevant Loan Documents written
amendments, supplements or modifications hereto and to the other Loan Documents
for the purpose of adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Lenders or of the Borrower
hereunder or thereunder or (b) waive, on such terms and conditions as the
Required Lenders or the Administrative Agent, as the case may be, may specify in
such instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences, provided,
however, that no such waiver and no such amendment, supplement or modification
shall (i) reduce the amount or extend the scheduled date of maturity of any Loan
made by any Lender or of any installment thereof, or reduce the stated rate of
any interest thereon or reduce the fees or any other amounts payable hereunder
to any Lender or extend the scheduled date of any payment thereof or increase
the aggregate amount or extend the expiration date of any Lender's Commitments,
in each case without the consent of each such Lender directly affected thereby,
(ii) amend, modify or waive any provision of this subsection or reduce the
percentage specified in the definition of Required Lenders or consent to the
assignment or transfer by any Loan Party (except any Subsidiary Guarantor to any
other Subsidiary Guarantor or the Borrower) of any of its rights and obligations
under this Agreement and the other Loan Documents or release all or
substantially all of the Guarantees or release all or substantially all of the
Collateral, in each case without the written consent of all the Lenders (except
that in connection with the Merger, the release of the capital stock of the
Borrower shall not require the consent of the Lenders and except as provided in
subsection 8.6), (iii) amend, modify or waive subsection 4.1(c) without the
written consent of the Required Term Loan Lenders or reduce the percentage in
the definition of Required Term Loan Lenders without the consent of all the Term
Loan Lenders, (iv) amend, modify or waive any provision of Section 3 without the
prior written consent of the Required Revolving Credit Lenders and each Issuing
Bank or reduce the percentage in the definition of Required Revolving Credit
Lenders or amend, modify or waive the penultimate sentence of subsection 4.7(c)
without the consent of all the Revolving Credit Lenders and the Issuing Banks or
(v) amend, modify or waive any provision of Section 12 without the written
consent of the then Administrative Agent. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the Lenders
and shall be binding upon the Borrower, the Lenders, the Administrative Agent
and all future holders of the Loans. In the case of any waiver, the Borrower,
the Lenders and the Administrative Agent shall be restored to their former
positions and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.

    13.2  Notices.   All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by facsimile
transmission), and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made when delivered, or three days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Borrower and the
Administrative Agent, and as set forth in

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Schedule 1.1(a) in the case of the other parties hereto, or to such other
address as may be hereafter notified by the respective parties hereto:

Holdings:   Dal-Tile International Inc.
7834 C.F. Hawn Freeway
P.O. Box 170130
Dallas, Texas 75217
Attention: Mr. Scott R. Veldman
Telecopy: (214) 309-4390
The Borrower:
 
Dal-Tile Group Inc.
7834 C.F. Hawn Freeway
P.O. Box 170130
Dallas, Texas 75217
Attention: Mr. Scott R. Veldman
Telecopy: (214) 309-4390
with a copy to:
 
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004-1980
Attention: Ms. Jean Hanson
Telecopy: (212) 859-4000
The Administrative Agent:
 
The Chase Manhattan Bank
2200 Ross Avenue
Dallas, Texas 75201
Attention: Allen King
Telecopy: (214) 965-2705
with a copy to:
 
The Chase Manhattan Bank
Agent Bank Services
140 East 45th Street, 29th Floor
New York, New York 10017
Attention: Muniram Appanna
Telecopy: (212) 552-2261

provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 2.2, 3.2, 3.4, 3.7 or 3.11 shall not be
effective until received.

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    13.3  No Waiver; Cumulative Remedies.   No failure to exercise and no delay
in exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.

    13.4  Survival of Representations and Warranties.   All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.

    13.5  Payment of Expenses and Taxes.   The Borrower agrees (a) to pay or
reimburse the Administrative Agent and the Arranger for all their reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent and the
Arranger, (b) to pay or reimburse each Lender and the Administrative Agent for
all its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents prepared in connection herewith or therewith,
including, without limitation, the fees and disbursements of counsel (including
the allocated fees and expenses of in-house counsel in lieu of the fees and
expenses of outside counsel) to each Lender and of counsel to the Administrative
Agent, (c) to pay, indemnify, and hold each Lender and the Administrative Agent
harmless from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
similar taxes, if any, which may be payable or determined to be payable in
connection with the execution and delivery of, or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and hold each
Lender and the Administrative Agent and their Affiliates and their respective
officers, directors, employees, advisors and agents harmless from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents, the Merger or the
use of the proceeds of the Loans, and any other documents, including, without
limitation, any of the foregoing relating to the violation of, noncompliance
with or liability under, any Environmental Law applicable to the operations of
the Borrower, any of its Subsidiaries or any of the Properties (all the
foregoing in this clause (d), collectively, the "indemnified liabilities"),
provided, that the Borrower shall have no obligation hereunder to the
Administrative Agent or any Lender with respect to indemnified liabilities
arising from (i) the gross negligence or willful misconduct of the
Administrative Agent or any such Lender, as the case may be, or (ii) legal
proceedings commenced against the Administrative Agent or any such Lender, as
the case may be, by any security holder or creditor thereof arising out of and
based upon rights afforded any such security holder or creditor solely in its
capacity as such. The agreements in this subsection shall survive repayment of
the Loans and all other amounts payable hereunder.

    13.6  Successors and Assigns; Participations and Assignments.   (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower,
Holdings, the Lenders, the Administrative Agent and their respective successors
and assigns, except that neither the Borrower nor Holdings may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each

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Lender and any assignment or transfer by any Lender of its rights or obligations
under this Agreement or any Loan Document must be made in compliance with this
subsection 13.6 (and any purported assignment in violation of this subsection
shall be null and void).

    (b) Any Lender other than any Conduit Lender may, in the ordinary course of
its lending or investment business and in accordance with applicable law, at any
time sell to one or more financial institutions or other entities ("Loan
Participants") participating interests in any Loan owing to such Lender, any
Commitment of such Lender or any other interest of such Lender hereunder and
under the other Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Loan Participant, (i) such Lender's obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible for the performance
thereof, (iii) such Lender shall remain the holder of any such Loan, Commitment
or other interest for all purposes under this Agreement and the other Loan
Documents, (iv) the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents, and (v) no Loan
Participant under any participation shall have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except with respect to the matters
described in clauses (i) and (ii) of the proviso to the second sentence of
subsection 13.1. The Borrower agrees that, while an Event of Default shall have
occurred and be continuing, if amounts outstanding under this Agreement are due
or unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Loan Participant shall, to the
maximum extent permitted by applicable law, be deemed to have the right of
setoff in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement, provided that, in
purchasing such participating interest, such Participant shall be deemed to have
agreed to share with the Lenders the proceeds thereof as provided in subsection
13.7(a) as fully as if it were a Lender hereunder. The Borrower also agrees that
each Loan Participant shall be entitled to the benefits of subsections 4.9, 4.10
and 4.11 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if it were a Lender, provided that, in the case
of subsection 4.10 such Loan Participant shall have complied with the
requirements of said subsection and provided, further, that no Loan Participant
shall (i) be required, on or before the date it becomes a Loan Participant or
thereafter, to deliver to the selling Lender the forms required in subsection
4.10, or (ii) be entitled to receive in respect of the amount of its
participation any greater amount pursuant to subsection 4.10 (or any other
subsection) than the transferor Lender would have been entitled to receive in
respect of the amount of the participation it transferred to such Loan
Participant if no such transfer had occurred.

    (c) Any Lender other than any Conduit Lender may, in the ordinary course of
its lending or investment business and in accordance with applicable law, at any
time and from time to time assign to any other Lender or any Lender Affiliate
or, with the consent of the Borrower and the Administrative Agent (which in each
case shall not be unreasonably withheld), to an additional bank, financial
institution or other entity (an "Assignee") all or any part of its rights and
obligations under this Agreement and the other Loan Documents pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit H, executed by
such Assignee and such assigning Lender (and, in the case of an Assignee that is
not then a Lender or an Affiliate thereof, by the Borrower and the
Administrative Agent) and delivered to the Administrative Agent for its
acceptance and recording in the Register, provided that, in the case of any such
assignment to an additional bank, financial institution or other entity, the sum
of the aggregate principal amount of Loans, the aggregate amount of L/C
Obligations, the aggregate Swing Line Participation Amounts and the aggregate
amount of unused Commitments being assigned and, if such assignment is of less
than all of the rights and obligations of the assigning Lender, the sum of the
aggregate principal amount of Loans, the aggregate amount of L/C Obligations,
the aggregate Swing Line Participation Amounts and the aggregate amount of the
unused

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Commitments remaining with the assigning Lender are each not less than
$5,000,000 (or $1,000,000 in the case of Term Loans) (or such lesser amount as
may be agreed to by the Borrower and the Administrative Agent). For purposes of
the proviso contained in the preceding sentence, the amount described therein
shall be aggregated in respect of each Lender and its Lender Affiliates, if any.
Upon such execution, delivery, acceptance and recording, from and after the
effective date determined pursuant to such Assignment and Acceptance, (x) the
Assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Commitment as set forth therein, and (y) the assigning Lender thereunder
shall, to the extent provided in such Assignment and Acceptance, 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 assigning Lender shall cease to be a
party hereto). Notwithstanding any provision of this paragraph (c) and
paragraph (e) of this subsection, the consent of the Borrower shall not be
required, and, unless requested by the Assignee and/or the assigning Lender, new
Notes shall not be required to be executed and delivered by the Borrower, for
any assignment which occurs when any of the events described in subsection 11(f)
shall have occurred and be continuing. Notwithstanding the foregoing, any
Conduit Lender may assign at any time to its designating Lender hereunder
without the consent of the Borrower or the Administrative Agent any or all of
the Loans it may have funded hereunder and pursuant to its designation agreement
and without regard to the limitations set forth in the first sentence of this
Section 13.6(c). An Assignor's rights under Section 13.5 shall survive the
assignment of its Commitments, L/C Obligations, Swing Line Participation Amounts
and Loans.

    (d) The Administrative Agent, on behalf of the Borrower, shall maintain at
the address of the Administrative Agent referred to in subsection 13.2 a copy of
each Assignment and Acceptance delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Lenders and the
Commitments of, and principal amounts of the Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Administrative Agent and the Lenders shall
treat each Person whose name is recorded in the Register as the owner of a Loan
or other obligation hereunder as the owner thereof for all purposes of this
Agreement and the other Loan Documents, notwithstanding any notice to the
contrary. Any assignment of any Loan or other obligation hereunder (whether or
not evidenced by a Note) shall be effective only upon appropriate entries with
respect thereto being made in the Register. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.

    (e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an Affiliate thereof, by the Borrower and the Administrative
Agent) together with, except in the case of an assignment pursuant to subsection
4.13, payment to the Administrative Agent of a registration and processing fee
of $3,500, the Administrative Agent shall (i) promptly accept such Assignment
and Acceptance and (ii) on the effective date determined pursuant thereto record
the information contained therein in the Register and give notice of such
acceptance and recordation to the Lenders and the Borrower.

    (f)  The Borrower authorizes each Lender to disclose to any Loan Participant
or Assignee (each, a "Transferee") and any prospective Transferee, subject to
the provisions of subsection 13.15, any and all financial information in such
Lender's possession concerning the Borrower and its Affiliates which has been
delivered to such Lender by or on behalf of Holdings or the Borrower pursuant to
this Agreement or which has been delivered to such Lender by or on behalf of
Holdings or the Borrower in connection with such Lender's credit evaluation of
the Borrower and its Affiliates prior to becoming a party to this Agreement.

    (g) For avoidance of doubt, the parties to this Agreement acknowledge that
the provisions of this subsection concerning assignments of Loans and Notes
relate only to absolute assignments and that

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such provisions do not prohibit assignments creating security interests,
including, without limitation, any pledge or assignment by a Lender of any Loan
or Note to any Federal Reserve Bank in accordance with applicable law, provided,
that any transfer of Loans or Notes upon, or in lieu of, enforcement of or the
exercise of remedies under any such pledge shall be treated as an assignment
thereof which shall not be made without compliance with the requirements of this
subsection 13.6.

    (h) Each of Holdings, the Borrower, each Lender and the Administrative Agent
hereby confirms that it will not institute against a Conduit Lender or join any
other Person in instituting against a Conduit Lender any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding under any
state bankruptcy or similar law, for one year and one day after the payment in
full of the latest maturing commercial paper note issued by such Conduit Lender;
provided, however, that each Lender designating any Conduit Lender hereby agrees
to indemnify, save and hold harmless each other party hereto for any loss, cost,
damage or expense arising out of its inability to institute such a proceeding
against such Conduit Lender during such period of forbearance.

    13.7  Adjustments; Set-off.   (a) If any Lender (a "Benefitted Lender")
shall at any time receive any payment of all or part of its Loans or the
Reimbursement Obligations owing to it, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in subsection 11(f),
or otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's Loans or
the Reimbursement Obligations owing to it, or interest thereon, such Benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loan or the Reimbursement
Obligations owing to it, or shall provide such other Lenders with the benefits
of any such collateral, or the proceeds thereof, as shall be necessary to cause
such Benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders, provided, however, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such Benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest. The Borrower agrees that each Lender so purchasing a portion of
another Lender's Loans and/or participating interests in any Letters of Credit
may exercise all rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such Lender were the direct
holder of such portion.

    (b) In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such set-off and application
made by such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application.

    13.8  Counterparts.   This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.

    13.9  Severability.   Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or

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unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

    13.10  Integration.   This Agreement and the other Loan Documents represent
the agreement of the Borrower, the Administrative Agent and the Lenders with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Lender relative
to subject matter hereof not expressly set forth or referred to herein or in the
other Loan Documents.

    13.11  GOVERNING LAW.   THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF.

    13.12  Submission To Jurisdiction; Waivers.   The Borrower and Holdings
hereby irrevocably and unconditionally:

    (a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;

    (b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

    (c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower or
Holdings at its address set forth in subsection 13.2 or at such other address of
which the Administrative Agent shall have been notified pursuant thereto;

    (d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

    (e) waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
subsection any special, exemplary, punitive or consequential damages.

    13.13  Acknowledgements.   The Borrower hereby acknowledges that:

    (a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;

    (b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
Administrative Agent and Lenders, on one hand, and the Borrower, on the other
hand, in connection herewith or therewith is solely that of debtor and creditor;
and

    (c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Borrower and the Lenders.

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    13.14  WAIVERS OF JURY TRIAL.   THE BORROWER, HOLDINGS, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

    13.15  Confidentiality.   Each Lender agrees to keep confidential (and to
cause its employees, officers, directors, agents, attorneys, accountants and
other professional advisors to keep confidential) all non-public information
provided to it by the Borrower or any Loan Party pursuant to or in connection
with this Agreement or any other Loan Documents designated as such by the
Borrower or such other Loan Party, provided that nothing herein shall prevent
any Lender from disclosing any such information (i) to the Administrative Agent,
any other Lender or any Lender Affiliate, (ii) to any Transferee or prospective
Transferee which agrees to comply with the provisions of this subsection,
(iii) on a need-to-know basis to its employees, directors, agents, attorneys,
accountants and other professional advisors (each of which shall be instructed
to hold the same in confidence), (iv) upon the request or demand of any
Governmental Authority (including, without limitation, the National Association
of Insurance Commissioners) having jurisdiction over such Lender, (v) in
response to any order of any court or other Governmental Authority or as may
otherwise be required pursuant to any Requirement of Law, (vi) which has been
publicly disclosed other than in breach of this Agreement or (vii) in connection
with the exercise of any remedy hereunder or under any of the other Loan
Documents.

    13.16  Usury Savings Clause.   It is the intention of the parties hereto to
comply with applicable usury laws (now or hereafter enacted); accordingly,
notwithstanding any provision to the contrary in this Agreement, any Notes, any
of the other Loan Documents or any other document related hereto or thereto, in
no event shall this Agreement or any such other document require the payment or
permit the collection of interest in excess of the maximum amount permitted by
such laws. If from any circumstances whatsoever, fulfillment of any provision of
this Agreement, any Notes, any of the other Loan Documents or of any other
document pertaining hereto or thereto, shall involve transcending the limit of
validity prescribed by applicable law for the collection or charging of
interest, then, ipso facto, the obligation to be fulfilled shall be reduced to
the limit of such validity, and if form any such circumstances the
Administrative Agent and the Lenders shall ever receive anything of value as
interest or deemed interest by applicable law under this Agreement, any Notes,
any of the other Loan Documents or any other document pertaining hereto or
otherwise an amount that would exceed the highest lawful rate, such amount that
would be excessive interest shall be applied to the reduction of the principal
amount owing under the Loans or on account of any other indebtedness of the
Borrower, and not to the payment of interest, or if such excessive interest
exceeds the unpaid balance of principal of such indebtedness, such excess shall
be refunded to the Borrower. In determining whether or not the interest paid or
payable with respect to any indebtedness of the Borrower to the Administrative
Agent and the Lenders, under any specified contingency, exceeds the Highest
Lawful Rate (as hereinafter defined), the Borrower, the Administrative Agent and
the Lenders shall, to the maximum extent permitted by applicable law,
(a) characterize any non-principal payment as an expense, fee or premium rather
than as interest, (b) exclude voluntary prepayments and the effects thereof,
(c) amortize, prorate, allocate and spread the total amount of interest
throughout the full term of such indebtedness so that interest thereon does not
exceed the maximum amount permitted by applicable law, and/or (d) allocate
interest between portions of such indebtedness, to the end that no such portion
shall bear interest at a rate greater than that permitted by applicable law.

    To the extent that the Texas Finance Code is relevant to the Administrative
Agent and the Lenders for the purpose of determining the Highest Lawful Rate,
the Administrative Agent and the Lenders hereby elect to determine the
applicable rate ceiling under such Code by the indicated (weekly) rate ceiling
form time to time in effect. Nothing set forth in this subsection 13.16 is
intended to or shall limit the effect or operation of subsection 13.11.

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    For purposes of this subsection 13.16, "Highest Lawful Rate" shall mean the
maximum rate of nonusurious interest that may be contracted for, taken, reserved
or received on the Loans under laws applicable to the Administrative Agent and
the Lenders.

    13.17  Release of Collateral.   (a) Notwithstanding anything to the contrary
contained herein or in any other Loan Document, the Administrative Agent is
hereby irrevocably authorized by each Lender (without requirement of notice to
or consent of any Lender) to take any action requested by the Borrower having
the effect of releasing any Collateral or Guarantee Obligations (i) to the
extent necessary to permit consummation of any transaction permitted by any Loan
Document or that has been consented to in accordance with subsections 7.10 or
13.1 or (ii) under the circumstances described in paragraph (b) below. Without
limiting the generality of the foregoing, the Administrative Agent is authorized
to enter into non-disturbance or similar agreements in connection with any lease
of Mortgaged Property entered into by the Borrower or any of its Subsidiaries as
landlord.

    (b) On the first date after the Closing Date on which the Borrower has Index
Debt of BBB- or higher from S&P and Baa3 or higher from Moody's, in each case on
stable watch or the equivalent, the Collateral (other than the Capital Stock of
the Borrower and each of its Domestic Subsidiaries, whether direct or indirect,
and 65% of the Capital Stock of direct Foreign Subsidiaries of the Borrower or
any Domestic Subsidiary) shall automatically be released from the Liens created
by the Security Documents (it being understood that the Guarantees shall
nevertheless remain in effect), provided, that if at any time thereafter the
Index Debt is rated BBB- (with a negative outlook or the equivalent) or lower by
S&P or Baa3 (with a negative outlook or the equivalent) or lower by Moody's in
each case for a period of six months, the Obligations under this Agreement and
the other Loan Documents shall be secured by the Collateral and the Borrower
shall and shall cause each of its Subsidiaries as soon as practicable (but in
any event no later than 30 days after the expiration of such six month period)
and, at its own expense, to consummate any and all actions necessary or
advisable in the reasonable discretion of the Administrative Agent to grant to
the Administrative Agent for the benefit of the Lenders a perfected first
priority security interest in the Collateral (subject in the case of all
Collateral, other than the pledged Capital Stock, to Liens permitted under
subsection 8.3).

    13.18  Effect of Agreement.   Holdings, the Borrower, the Administrative
Agent and the Lenders hereto which are parties to the Existing Credit Agreement
hereby agree that (i) the Existing Credit Agreement is amended to provide for
the facilities set forth in Section 2 and Section 3 herein and (ii) that
immediately following the repayment of the Term Loans (as defined in the
Existing Credit Agreement) and the Revolving Credit Loans (as defined in the
Existing Credit Agreement), the Term Loan Commitments and the Revolving Credit
Commitments (each as defined in the Existing Credit Agreement) shall be
terminated and the Existing Credit Agreement shall be and hereby is amended and
restated on the terms and conditions set forth herein. This Agreement is
intended to amend and restate the Existing Credit Agreement and shall be
construed and enforced to give effect to such intention, provided that each of
the parties hereto agrees that this Agreement shall be effective and enforceable
against each of them in accordance with its terms whether or not construed as or
constituting an amendment and restatement of the Existing Agreement. This
Agreement shall not be deemed a novation and any new Notes executed and
delivered by the Borrower under the terms of this Agreement shall be deemed to
amend and restate the existing Notes.

[Remainder of page left blank intentionally; Signature page to follow.]

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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

Annex A

PRICING GRID

Leverage Ratio Level   Commitment Fee Rate   Applicable Margin for Eurodollar
Loans   Applicable Margin for ABR Loans

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Leverage Ratio Level I   50 basis points   212.5 basis points   112.5 basis
points

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Leverage Ratio Level II
 
50 basis points
 
178.5 basis points
 
78.5 basis points

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Leverage Ratio Level III
 
37.5 basis points
 
162.5 basis points
 
62.5 basis points

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Leverage Ratio Level IV
 
37.5 basis points
 
137.5 basis points
 
37.5 basis points

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Leverage Ratio Level V
 
25 basis points
 
112.5 basis points
 
12.5 basis points

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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

         
 
 
DAL-TILE INTERNATIONAL INC., as Holdings
 
 
By:
 
/s/ MARK A. SOLLS   

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Name: Mark A. Solls
Title: Vice President
 
 
DAL-TILE GROUP INC., as the Borrower
 
 
By:
 
/s/ MARK A. SOLLS   

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Name: Mark A. Solls
Title: Vice President
 
 
THE CHASE MANHATTAN BANK, as Administrative Agent and as a Lender
 
 
By:
 
/s/ ALLEN K. KING   

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Name: Allen K. King
Title: Vice President
 
 
BANK OF AMERICA, N.A., as Syndication Agent and as a Lender
 
 
By:
 
/s/ STEVEN A. MACKENZIE   

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Name: Steven A. Mackenzie
Title: Vice President
 
 
CREDIT LYONNAIS NEW YORK BRANCH, as a Co-Documentation Agent and as a Lender
 
 
By:
 
/s/ ATTILA KOC   

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Name: Attila Koc
Title: Senior Vice President

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FIRST UNION NATIONAL BANK, as a Co-Documentation Agent and as a Lender
 
 
By:
 
/s/ DAVID J.C. SILANDER   

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Name: David J.C. Silander
Title: Vice President
 
 
ALLIED IRISH BANKS, P.L.C., as a Lender
 
 
By:
 
/s/ WILLIAM J. STRICKLAND   

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Name: William J. Strickland
Title: President and CEO
 
 
By:
 
/s/ GERMAINE REUSCH   

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Name: Germaine Reusch
Title: Vice President
 
 
BANK LEUMI USA, as a Lender
 
 
By:
 
/s/ ALIZ SADAN   

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Name: Aliz Sadan
Title: Assistant Treasurer
 
 
BANK ONE, NA, as a Lender
 
 
By:
 
/s/ KATHY TURNER   

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Name: Kathy Turner
Title: Director
 
 
BNP PARIBAS, as a Lender
 
 
By:
 
/s/ JEFF TEBEAUX   

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Name: Jeff Tebeaux
Title: Associate
 
 
By:
 
/s/ LLOYD G. COX   

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Name: Lloyd G. Cox
Title: Managing Director

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CREDIT SUISSE FIRST BOSTON, as a Lender
 
 
By:
 
/s/ KRISTIN LEPRI   

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Name: Kristin Lepri
Title: Assistant Vice President
 
 
By:
 
/s/ BILL O'DALY   

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Name: Bill O'Daly
Title: Vice President
 
 
SUNTRUST BANK, as a Lender
 
 
By:
 
/s/ BRADLEY J. STAPLES   

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Name: Bradey J. Staples
Title: Director
 
 
THE BANK OF NOVA SCOTIA, as a Lender
 
 
By:
 
/s/ A.S. NORSWORTHY   

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Name: A.S. Norsworthy
Title: Sr. Team Leader-Loan Operations
 
 
THE FUJI BANK, LIMITED, A MEMBER OF THE MIZUHO FINANCIAL GROUP, AS
CO-DOCUMENTATION AGENT, as a Lender
 
 
By:
 
/s/ NOBUKI KOIKE   

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Name: Nobuki Koike
Title: Senior Vice President
 
 
THE INDUSTRIAL BANK OF JAPAN, LIMITED NEW YORK BRANCH, A MEMBER OF THE MIZUHO
FINANCIAL GROUP, AS CO-DOCUMENTATION AGENT, as a Lender
 
 
By:
 
/s/ MICHAEL N. OAKES   

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Name: Michael N. Oakes
Title: Senior Vice President, Houston Office

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