Exhibit 4 (vii)

                            364-DAY CREDIT AGREEMENT

                         dated as of September 19, 2001

                                      among

                               TOYS "R" US, INC.,

                            THE LENDERS PARTY HERETO

                                       and

                              THE BANK OF NEW YORK,
                             as Administrative Agent

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

                                 CITIBANK, N.A.,
                                       and
                               J.P. MORGAN CHASE,
                            as Co-Syndication Agents

                           CREDIT SUISSE FIRST BOSTON,
                           FIRST UNION NATIONAL BANK,
                       THE DAI-ICHI KANGYO BANK, LTD. and
                                SOCIETE GENERALE,
                           as Co-Documentation Agents

                           BNY CAPITAL MARKETS, INC.,
                        as Lead Arranger and Book Manager


<PAGE>

                                TABLE OF CONTENTS


ARTICLE 1. DEFINITIONS.........................................................1
      Section 1.1. Defined Terms...............................................1
      Section 1.2. Classification of Loans and Borrowings.....................13
      Section 1.3. Terms Generally............................................13
      Section 1.4. Accounting Terms; GAAP.....................................13

ARTICLE 2. The Credits........................................................14
      Section 2.1. Commitments................................................14
      Section 2.2. Loans and Borrowings.......................................14
      Section 2.3. Requests for Borrowings....................................15
      Section 2.4. Termination, Reduction and Extension of Commitments........15
      Section 2.5. Funding of Borrowings......................................16
      Section 2.6. Interest Elections.........................................17
      Section 2.7. Repayment of Loans; Evidence of Debt.......................18
      Section 2.8. Prepayment of Loans........................................19
      Section 2.9. Fees.......................................................20
      Section 2.10. Interest..................................................20
      Section 2.11. Alternate Rate of Interest................................21
      Section 2.12. Increased Costs, Illegality, Etc..........................22
      Section 2.13. Break Funding Payments....................................24
      Section 2.14. Taxes.....................................................25
      Section 2.15. Payments Generally; Pro Rata Treatment; Sharing
                      of Set-offs.............................................27
      Section 2.16. Mitigation Obligations; Replacement of Lenders............28
      Section 2.17. Increases in Commitments..................................30

ARTICLE 3. Representations and Warranties.....................................31
      Section 3.1. Organization and Powers....................................31
      Section 3.2. Authorization..............................................31
      Section 3.3. Enforceability.............................................31
      Section 3.4. Litigation.................................................31
      Section 3.5. Required Consents..........................................32
      Section 3.6. Compliance with Applicable Laws............................32
      Section 3.7. Taxes......................................................32
      Section 3.8. Governmental Regulations...................................32
      Section 3.9. Federal Reserve Regulations; Use of Loan Proceeds..........33
      Section 3.10. Financial Statements......................................33
      Section 3.11. Material Adverse Change...................................33
      Section 3.12. No Conflicting Agreements.................................33
      Section 3.13. Disclosure................................................33


<PAGE>

ARTICLE 4. Conditions Precedent...............................................34
      Section 4.1. Effective Date.............................................34
      Section 4.2. Each Credit Event..........................................35

ARTICLE 5. Affirmative Covenants..............................................35
      Section 5.1. Financial Statements.......................................35
      Section 5.2. Certificates; Other Information............................36
      Section 5.3. Legal Existence............................................36
      Section 5.4. Taxes......................................................37
      Section 5.5. Observance of Legal Requirements...........................37
      Section 5.6. Inspection of Property; Books and Records; Discussions.....37

ARTICLE 6. Negative Covenants.................................................37
      Section 6.1. Merger or Consolidation, Etc...............................37
      Section 6.2. Subsidiary Indebtedness....................................38
      Section 6.3. Liens, Etc.................................................39
      Section 6.4. Change in Nature of Business...............................40
      Section 6.5. Use of Proceeds............................................40
      Section 6.6. Fixed Charge Coverage Ratio................................40
      Section 6.7. Capitalization.............................................40

ARTICLE 7. Events of Default..................................................41

ARTICLE 8. The Administrative Agent...........................................43

ARTICLE 9. Miscellaneous......................................................46
      Section 9.1. Notices....................................................46
      Section 9.2. Waivers; Amendments........................................46
      Section 9.3. Expenses; Indemnity; Damage Waiver.........................47
      Section 9.4. Successors and Assigns.....................................48
      Section 9.5. Survival...................................................51
      Section 9.6. Counterparts; Integration; Effectiveness...................51
      Section 9.7. Severability...............................................51
      Section 9.8. Right of Setoff............................................52
      Section 9.9. Governing Law; Jurisdiction; Consent to Service
                     of Process...............................................52
      Section 9.10. WAIVER OF JURY TRIAL......................................53
      Section 9.11. Headings..................................................53
      Section 9.12. Confidentiality...........................................53
      Section 9.13. Interest Rate Limitation..................................54


                                      -2-
<PAGE>

      SCHEDULES:

      Schedule 2.1 -- Commitments
      Schedule 3.4 -- Disclosed Matters
      Schedule 6.2 -- Existing Subsidiary Indebtedness
      Schedule 6.3 -- Existing Liens


      EXHIBITS:

      Exhibit A   -- Form of Assignment and Acceptance
      Exhibit B-1 -- Form of Opinion of Borrower's Counsel
      Exhibit B-2 -- Form of Opinion of Weil, Gotshal & Manges LLP
      Exhibit C   -- Form of Guarantee Agreement
      Exhibit D   -- Form of Accession Agreement
      Exhibit E   -- Form of Borrowing Request
      Exhibit F   -- Form of Interest Election Request


                                      -3-
<PAGE>

            364-DAY CREDIT AGREEMENT, dated as of September 19, 2001, among TOYS
"R" US, INC., the LENDERS party hereto, CITIBANK, N.A. and J.P. MORGAN CHASE, as
Co-Syndication  Agents,  CREDIT SUISSE FIRST BOSTON,  FIRST UNION NATIONAL BANK,
THE DAI-ICHI KANGYO BANK, LTD. and SOCIETE GENERALE, as Co-Documentation Agents,
and THE BANK OF NEW YORK, as Administrative Agent.

            The parties hereto agree as follows:

ARTICLE 1. DEFINITIONS

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

            "ABR" when used in  reference  to any Loan or  Borrowing,  refers to
whether such Loan, or the Loans comprising such Borrowing,  are bearing interest
at a rate determined by reference to the Alternate Base Rate.

            "Accession  Agreement" means the accession agreement,  substantially
in the form of Exhibit D, to be entered into by the  Administrative  Agent and a
Prospective Lender.

            "Accountants" means Ernst & Young LLP (or any successor thereto), or
any other firm of certified public  accountants of recognized  national standing
selected by the Borrower.

            "Accumulated  Funding  Deficiency" has the meaning  assigned to such
term in Section 302 of ERISA.

            "Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any  Interest  Period,  an  interest  rate per annum  (rounded  upwards,  if
necessary,  to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.

            "Administrative  Agent" means BNY, in its capacity as administrative
agent for the Lenders hereunder, and any assigns.

            "Administrative Questionnaire" means an Administrative Questionnaire
in a form supplied by the Administrative Agent.

            "Affiliate"  means,  with  respect to a  specified  Person,  another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.

            "Agreement" means this 364-Day Credit Agreement.

            "Alternate Base Rate" means,  for any day, a rate per annum equal to
the  greater  of (a) the Prime  Rate in  effect on such day and (b) the  Federal
Funds  Effective  Rate in effect on


<PAGE>

such day plus 1/2 of 1%. Any change in the  Alternate  Base Rate due to a change
in the Prime Rate or the Federal Funds  Effective  Rate shall be effective  from
and including the effective date of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.

            "Applicable  Lending  Office" means,  as to any Lender,  the office,
branch or affiliate of such Lender  designated as such Lender's  lending  office
for Loans hereunder,  as reported by such Lender to the Administrative Agent and
the Borrower.

            "Applicable  Percentage"  means,  with  respect to any  Lender,  the
percentage of the total Commitments represented by such Lender's Commitment.  If
the Commitments  have  terminated or expired,  the Applicable  Percentages  with
respect to any  Lender  shall be  determined  based  upon the  Commitments  most
recently in effect, giving effect to any assignments.

            "Applicable Rate" means, for any day, with respect to any Eurodollar
Loan,  or  with  respect  to the  facility  fees  or  utilization  fees  payable
hereunder,  as the case may be, the  applicable  rate per annum set forth  below
under the caption  "Facility Fee",  "LIBOR Spread" or "Utilization  Fee", as the
case may be, based upon the ratings by Moody's and S&P, respectively, applicable
on such date to the Index Debt:

<TABLE>
<CAPTION>
===========================================================================================
Category            Ratings                 Facility Fee    LIBOR Spread    Utilization Fee
                    (S&P/Moody's)
-------------------------------------------------------------------------------------------
<S>                 <C>                     <C>             <C>             <C>
Category 1          A+/A1 or higher         .065%           .285%           .100%
-------------------------------------------------------------------------------------------
Category 2          A/A2                    .075%           .325%           .100%
-------------------------------------------------------------------------------------------
Category 3          A-/A3                   .100%           .400%           .125%
-------------------------------------------------------------------------------------------
Category 4          BBB+/Baa1               .125%           .500%           .125%
-------------------------------------------------------------------------------------------
Category 5          BBB/Baa2                .150%           .600%           .150%
-------------------------------------------------------------------------------------------
Category 6          BBB-/Baa3 or lower      .200%           .925%           .150%
===========================================================================================
</TABLE>

            For purposes of the foregoing, (a) if Moody's and S&P shall not have
in effect a rating for the Index Debt (other than by reason of the circumstances
referred  to in the last  sentence  of this  definition),  then each such rating
agency  shall be deemed to have  established  a rating in Category 6; (b) if the
ratings  established  or deemed to have been  established by Moody's and S&P for
the Index Debt shall fall within different Categories, the Applicable Rate shall
be based on the higher of the two  ratings,  unless the lower of the two ratings
is in Category 6, in which case the Applicable Rate shall be based on such lower
rating,  and, in each case under this clause (b),  unless one of the two ratings
is two or more  Categories  lower than the other,  in which case the  Applicable
Rate shall be  determined  by  reference  to the  Category  one level  below the
category  corresponding to the higher rating; and (c) if the ratings established
or deemed to have been  established  by Moody's and S&P for the Index Debt shall
be changed  (other than as a result of a change in the rating  system of Moody's
or S&P),  such  change  shall be  effective  as of the date on which it is first
announced by the applicable  rating agency.  Each change in the Applicable  Rate
shall apply during the period  commencing on the  effective  date of such change
and ending on the date immediately preceding the effective date of the next such
change.  If the rating system of Moody's or S&P shall change,  or if either such
rating  agency  shall  cease to be in


                                      -2-
<PAGE>

the business of rating corporate debt obligations,  the Borrower and the Lenders
shall  negotiate in good faith to amend this  definition to reflect such changed
rating  system or the  unavailability  of ratings  from such rating  agency and,
pending the  effectiveness  of any such amendment,  the Applicable Rate shall be
determined  by  reference  to the rating most  recently in effect  prior to such
change or cessation.

            "Assignment  and  Acceptance"  means an  assignment  and  acceptance
entered  into by a Lender and an  assignee  (with the consent of any party whose
consent is required by Section 9.4), and accepted by the  Administrative  Agent,
substantially  in the  form of  Exhibit  A or any  other  form  approved  by the
Administrative Agent.

            "Availability  Period"  means  the  period  from and  including  the
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.

            "BNY" means The Bank of New York and its successors.

            "Board" means the Board of Governors of the Federal  Reserve  System
of the United States of America.

            "Borrower" means Toys "R" Us, Inc., a Delaware corporation.

            "Borrowing"  means  Loans  of  the  same  Type  made,  converted  or
continued on the same date and, in the case of Eurodollar  Loans,  as to which a
single Interest Period is in effect.

            "Borrowing  Request" means a request by the Borrower for a Borrowing
in  substantially  the form of  Exhibit  E or any  other  form  approved  by the
Administrative Agent.

            "Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that, when used in connection with a Eurodollar Loan,
the term  "Business  Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.

            "Capital Lease  Obligations"  of any Person means the obligations of
such  Person  to pay  rent  or  other  amounts  under  any  lease  of (or  other
arrangement  conveying  the  right  to use)  real  or  personal  property,  or a
combination  thereof,  which  obligations  are  required  to be  classified  and
accounted  for as capital  leases on a balance  sheet of such Person under GAAP,
and the  amount of such  obligations  shall be the  capitalized  amount  thereof
determined in accordance with GAAP.

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

            "Commitment"  means, with respect to each Lender,  the commitment of
such  Lender to make Loans  hereunder  in an  aggregate  outstanding  amount not
exceeding  the  amount of such  Lender's  Revolving  Commitment  as set forth on
Schedule  2.1,  or in the  Assignment  and  Acceptance  or  Accession  Agreement
pursuant to which such Lender shall have assumed its Commitment,  as applicable,
as such commitment may be (a) reduced from time to time pursuant


                                      -3-
<PAGE>

to Section 2.4, (b) increased  from time to time pursuant to Section 2.17 or (c)
reduced or increased  from time to time  pursuant to  assignments  by or to such
Lender  pursuant to Section  9.4. The initial  aggregate  amount of the Lenders'
Commitments is $316,666,666.67.

            "Consolidated"  refers  to the  Borrower  and the  Subsidiaries  the
accounts of which are  consolidated  with those of the  Borrower  for  financial
reporting purposes.

            "Consolidated Cash Interest Expense" means, for any period, interest
expense  (net  of  interest   income)  of  the  Borrower  and  the  Consolidated
Subsidiaries  for such  period,  including,  without  duplication,  Consolidated
interest  capitalized  in such period,  minus non-cash  interest  expense of the
Borrower  and the  Consolidated  Subsidiaries  for  such  period,  in each  case
determined in accordance with GAAP.

            "Consolidated  EBITDAR"  means,  for any period,  net income (or net
loss) of the Borrower and the Consolidated Subsidiaries for such period plus (a)
the sum of (i)  interest  expense  (net of  interest  income),  (ii)  income tax
expense, (iii) depreciation expense, (iv) amortization expense, (v) Consolidated
Rent Expense,  (vi) extraordinary  losses in excess of $5,000,000 and (vii) LIFO
charges of the Borrower and the Consolidated Subsidiaries, in each case for such
period, minus (b) the sum of (i) extraordinary gains in excess of $5,000,000 and
(ii) LIFO  credits of the Borrower and the  Consolidated  Subsidiaries,  in each
case for such period, all determined in accordance with GAAP.

            "Consolidated  Rent Expense" means,  for any period,  rental expense
(net  of  rental  income)  of the  Borrower  and the  Consolidated  Subsidiaries
determined in accordance with GAAP for such period.

            "Consolidated   Tangible   Net   Worth"   means,   at  any  date  of
determination,   the  sum  of  all  amounts   which  would  be  included   under
shareholders'  equity on a  Consolidated  balance  sheet of the Borrower and the
Subsidiaries  determined in accordance with GAAP as at such date less all assets
of the Borrower and the Subsidiaries, determined on a Consolidated basis at such
date, that would be classified as intangible assets in accordance with GAAP.

            "Control" means the possession, directly or indirectly, of the power
to direct or cause the  direction  of the  management  or  policies of a Person,
whether  through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.

            "Credit Parties" means the Administrative Agent and the Lenders.

            "Default" means any event or condition which constitutes an Event of
Default or which  upon  notice,  lapse of time or both  would,  unless  cured or
waived, become an Event of Default.

            "dollars"  or "$"  refers to lawful  money of the  United  States of
America.

            "Effective Date" means the date on which the conditions specified in
Section 4.1 are satisfied (or waived in accordance with Section 9.2).


                                      -4-
<PAGE>

            "Employee  Benefit  Plan" means an employee  benefit plan within the
meaning of Section 3(3) of ERISA maintained,  sponsored or contributed to by the
Borrower, any of the Subsidiaries or any ERISA Affiliate.

            "Environmental  Laws" means all applicable federal,  state, local or
foreign  statutes,  laws,  ordinances,   rules,   regulations,   codes,  orders,
judgments, decrees or judicial or agency interpretations,  policies or guidances
relating to  pollution  or  protection  of the  environment,  health,  safety or
natural resources.

            "Environmental   Liability"  means  any  liability,   contingent  or
otherwise   (including  any  liability  for  damages,   costs  of  environmental
remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary
directly  or  indirectly  resulting  from or  based  upon (a)  violation  of any
Environmental Law, (b) the generation, use, handling,  transportation,  storage,
treatment or disposal of any Hazardous Materials,  (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract,  agreement or other consensual  arrangement
pursuant to which  liability  is assumed or imposed  with  respect to any of the
foregoing.

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

            "ERISA  Affiliate"  when used with  respect to an  Employee  Benefit
Plan,  ERISA, the PBGC or a provision of the Code pertaining to employee benefit
plans,  means any Person that is a member of any group of  organizations  within
the meaning of Section 414(b), (c), (m) or (o) of the Code of which the Borrower
or any of the Subsidiaries is a member.

            "Eurodollar" when used in reference to any Loan or Borrowing, refers
to whether  such Loan,  or the Loans  comprising  such  Borrowing,  are  bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.

            "Event of Default" has the meaning  assigned to such term in Article
7.

            "Existing  Credit  Documents"  means (i) the  Amended  and  Restated
Credit  Agreement,  dated as of December 19, 1997, among the Borrower,  Toys "R"
Us-Delaware,  Inc., the subsidiary  borrowers  party thereto,  the lenders party
thereto and BNY, as  administrative  agent  thereunder,  (ii) the 364-Day Credit
Agreement,  dated as of December 8, 2000, among the Borrower,  the lenders party
thereto and The Chase Manhattan Bank, as administrative  agent  thereunder,  and
(iii) each  agreement,  instrument and other  document  executed or delivered in
connection with either of the foregoing.

            "Existing  Maturity  Date" has the meaning  assigned to such term in
Section 2.4(c).

            "Federal  Funds  Effective  Rate"  means,  for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) 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


                                      -5-
<PAGE>

such rate is not so  published  for any day that is a Business  Day, the average
(rounded upwards,  if necessary,  to the next 1/100 of 1%) of the quotations for
such day for such transactions  received by the Administrative  Agent from three
Federal funds brokers of recognized standing selected by it.

            "Financial  Officer" means the chief  financial  officer,  principal
accounting officer, treasurer or controller of the Borrower.

            "Financial  Statements"  has the  meaning  assigned  to such term in
Section 5.1.

            "Five-Year  Credit  Agreement" means the Five-Year Credit Agreement,
dated as of September 19, 2001,  among the  Borrower,  the lenders party thereto
and BNY, as administrative agent thereunder.

            "Fixed Charge Coverage Ratio" means, on each date of  determination,
the ratio of  Consolidated  EBITDAR  to the sum of  Consolidated  Cash  Interest
Expense  and  Consolidated  Rent  Expense,  in each case for the  period of four
consecutive  fiscal  quarters of the Borrower ended on or  immediately  prior to
such date.

            "Foreign  Lender" means any Lender that is organized  under the laws
of a jurisdiction other than that in which the Borrower is located. For purposes
of this  definition,  the United  States of America,  each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

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

            "Governmental  Authority"  means the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency,  authority,  instrumentality,  regulatory body, court,
central  bank or  other  entity  exercising  executive,  legislative,  judicial,
taxing,  regulatory  or  administrative  powers or functions of or pertaining to
government.

            "Guarantee"  of  or  by  any  Person  (the  "guarantor")  means  any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of  guaranteeing  any  Indebtedness  or other  obligation of any
other  Person  (the  "primary  obligor")  in any  manner,  whether  directly  or
indirectly,  and including any obligation of the guarantor,  direct or indirect,
(a) to purchase or pay (or advance or supply  funds for the  purchase or payment
of) such  Indebtedness  or other  obligation  or to  purchase  (or to advance or
supply funds for the purchase of) any security for the payment  thereof,  (b) to
purchase or lease  property,  securities or services for the purpose of assuring
the owner of such  Indebtedness or other obligation of the payment thereof,  (c)
to maintain  working  capital,  equity capital or any other financial  statement
condition  or  liquidity  of the  primary  obligor so as to enable  the  primary
obligor to pay such  Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty  issued to support such
Indebtedness or obligation;  provided, that the term Guarantee shall not include
endorsements  for collection or deposit in the ordinary course of


                                      -6-
<PAGE>

business; and provided,  further, that the amount of any such Guarantee shall be
deemed  to be the  lower of (i) an amount  equal to the  stated or  determinable
amount of the primary  obligation in respect of which such Guarantee is made and
(ii) the  maximum  amount for which such  Person may be liable  pursuant  to the
terms of the agreement embodying such Guarantee,  unless such primary obligation
and the  maximum  amount for which  such  Person may be liable are not stated or
determinable,  in which case the amount of such Guarantee shall be such Person's
maximum  reasonably  anticipated  liability in respect  thereof as determined by
such Person in good faith.

            "Guarantee  Agreement" means the guarantee agreement,  substantially
in the form of Exhibit C, to be entered into by the Administrative Agent and the
Guarantors.

            "Guarantor"  means (a) Toys "R" Us-Delaware,  Inc. and (b) any other
direct or  indirect  subsidiary  of the  Borrower  that  shall be a party to the
Guarantee Agreement from time to time.

            "Hazardous  Materials"  means all  materials,  substances  or wastes
regulated,  characterized or otherwise classified under any Environmental Law as
hazardous,  toxic,  pollutants,   contaminants  or  words  of  similar  meaning,
including  petroleum or petroleum  distillates,  asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes.

            "Indebtedness"  of any Person means, at a particular time, all items
which constitute,  without  duplication,  (a) indebtedness for borrowed money or
the deferred  purchase price of Property  (other than trade payables and accrued
liabilities  incurred in the  ordinary  course of  business),  (b)  indebtedness
evidenced by notes, bonds,  debentures or similar  instruments,  (c) obligations
with  respect  to  any  conditional  sale  or  title  retention  agreement,  (d)
indebtedness arising under acceptance  facilities and the amount available to be
drawn under all letters of credit issued for the account of such Person, (e) all
drafts  drawn under  letters of credit  issued for the account of such Person to
the extent such Person  shall not have  reimbursed  the issuer in respect of the
issuer's payment of such drafts, (f) all liabilities  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  (other  than  carriers',
warehousemen's,  mechanics',  repairmen's,  landlords'  or other like  statutory
Liens arising in the ordinary course of business), (g) obligations under capital
leases  and (h)  Guarantees  in  respect  of the  foregoing;  provided  that any
Indebtedness  owing  by  the  Borrower  to any  of  the  Subsidiaries  or by any
Subsidiary to the Borrower or by any  Subsidiary to any other  Subsidiary or any
Guarantees in respect thereof shall not constitute  Indebtedness for purposes of
this Agreement.

            "Indemnified  Tax" has the meaning  assigned to such term in Section
2.14(a).

            "Indemnitee"  has  the  meaning  assigned  to such  term in  Section
9.3(b).

            "Index Debt" means senior,  unsecured,  long-term  indebtedness  for
borrowed  money of the Borrower that is not guaranteed by any Person (other than
a Guarantor) or subject to any other credit enhancement.


                                      -7-
<PAGE>

            "Interest  Election  Request"  means a request  by the  Borrower  to
convert or continue a Borrowing, substantially in the form of Exhibit F.

            "Interest  Payment Date" means (a) with respect to any ABR Loan, the
last day of each March,  June,  September and December,  (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar  Borrowing with an
Interest Period of more than three months' duration,  each day prior to the last
day of such Interest  Period that occurs at intervals of three months'  duration
after  the  first  day of such  Interest  Period  and (c) as to all  Loans,  the
Maturity Date.

            "Interest Period" means,  with respect to any Eurodollar  Borrowing,
the  period  commencing  on  the  date  of  such  Borrowing  and  ending  on the
numerically corresponding day in the calendar month that is one, two, three, six
or, if available to all of the Lenders, nine or twelve months thereafter, as the
Borrower may elect;  provided that (a) if any Interest Period would end on a day
other than a Business Day,  such  Interest  Period shall be extended to the next
succeeding  Business Day, unless such next succeeding Business Day would fall in
the next calendar  month,  in which case such  Interest  Period shall end on the
next preceding  Business Day, and (b) any Interest  Period that commences on the
last  Business  Day of a  calendar  month  (or on a day for  which  there  is no
numerically  corresponding  day in the  last  calendar  month  of such  Interest
Period) shall end on the last  Business Day of the last  calendar  month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and  thereafter  shall be the effective
date of the most recent conversion or continuation of such Borrowing.

            "Lenders"  means the Persons  listed on  Schedule  2.1 and any other
Person  that shall have become a party  hereto from time to time  pursuant to an
Assignment  and  Acceptance or Accession  Agreement,  other than any such Person
that shall have ceased to be a party  hereto  pursuant to any  provision of this
Agreement, including by way of an Assignment and Acceptance.

            "LIBO Rate" means, with respect to any Eurodollar  Borrowing for any
Interest Period,  the rate appearing on Page 3750 of the Telerate Service (or on
any  successor  or  substitute  page of such  Service,  or any  successor  to or
substitute  for such  Service,  providing  rate  quotations  comparable to those
currently  provided  on  such  page  of  such  Service,  as  determined  by  the
Administrative  Agent from time to time for purposes of providing  quotations of
interest rates applicable to dollar deposits in the London interbank  market) at
approximately   11:00  a.m.,  London  time,  two  Business  Days  prior  to  the
commencement  of such Interest  Period,  as the rate for dollar  deposits with a
maturity  comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar  Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered  by  the  principal  London  office  of  the  Administrative   Agent  in
immediately  available  funds in the London  interbank  market at  approximately
11:00 a.m.,  London time,  two Business Days prior to the  commencement  of such
Interest Period.


                                      -8-
<PAGE>

            "Lien" means,  with respect to any Property,  any mortgage,  deed of
trust, lien, pledge, hypothecation,  encumbrance having the effect of a security
interest, sale-leaseback arrangement or other charge or security interest in, on
or of such asset.

            "Loan Documents" means this Agreement and the Guarantee Agreement.

            "Loans"  means the  revolving  loans  referred to in Section 2.1 and
made by the Lenders to the Borrower pursuant to Section 2.3.

            "Material Adverse Change" means a material adverse change in (i) the
financial condition,  business or Property of the Borrower and the Subsidiaries,
taken as a whole,  or (ii) the ability of the  Borrower  and the  Guarantors  to
perform their respective obligations under the Loan Documents.

            "Material Adverse Effect" means a material adverse effect on (a) the
financial condition,  business or Property of the Borrower and the Subsidiaries,
taken as a whole,  or (b) the  ability of the  Borrower  and the  Guarantors  to
perform their respective obligations under the Loan Documents.

            "Material  Subsidiary  Group"  means  any  Subsidiary  or  group  of
Subsidiaries as to which, individually or in the aggregate, any of the following
tests are met: (a) the Borrower's and the other Subsidiaries' investments in and
advances to such  Subsidiary  or group of  Subsidiaries  exceed 10% of the total
assets of the Borrower and the  Subsidiaries  on a Consolidated  basis as of the
last day of the most recently  completed  fiscal year of the Borrower;  (b) such
Subsidiary's or group of Subsidiaries'  proportionate  share of the total assets
(after  intercompany  eliminations)  of the Borrower and the  Subsidiaries  on a
Consolidated  basis  exceeds  10% of the total  assets of the  Borrower  and the
Subsidiaries  on a  Consolidated  basis as of the last day of the most  recently
completed  fiscal  year of the  Borrower;  or (c) the equity in the income  from
continuing   operations  before  income  taxes,   extraordinary  items  and  the
cumulative  effect of a change in accounting  principles  of such  Subsidiary or
group  of  Subsidiaries  exceeds  10% of such  income  of the  Borrower  and the
Subsidiaries  on a  Consolidated  basis (after giving effect to the exclusion of
minority interests) for the most recently completed fiscal year of the Borrower.
In the event any new Subsidiary  shall be acquired or formed,  the status of any
one or more Subsidiaries as a Material Subsidiary Group shall be determined on a
pro forma basis, giving effect to such acquisition or formation,  as applicable,
as if it had occurred at the  beginning of the most  recently  completed  fiscal
year of the Borrower.

            "Maturity  Date" means the day which is 364 days after the Effective
Date, as the same may be extended  from time to time in accordance  with Section
2.4(c).

            "Moody's" means Moody's Investors Service, Inc.

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

            "Non-Extending  Lender"  has the  meaning  assigned  to such term in
Section 2.4(c).


                                      -9-
<PAGE>

            "Participant"  has the  meaning  assigned  to such  term in  Section
9.4(e).

            "PBGC" means the Pension Benefit  Guaranty  Corporation  established
pursuant  to  Subtitle  A of Title IV of ERISA,  or any  Governmental  Authority
succeeding to the functions thereof.

            "Pension  Plan"  means at any date of  determination,  any  Employee
Benefit Plan (including a Multiemployer Plan), the funding requirements of which
(under  Section  302 of ERISA or Section  412 of the Code)  are,  or at any time
within the six years immediately  preceding such date, were in whole or in part,
the  responsibility  of  the  Borrower,  any of the  Subsidiaries  or any  ERISA
Affiliate.

            "Permitted Encumbrances" means:

            (a) Liens imposed by law for Taxes that are not overdue by more than
90 days or are being contested in compliance with Section 5.4;

            (b)   carriers',    warehousemen's,    mechanics',    materialmen's,
repairmen's and other like Liens imposed by law,  arising in the ordinary course
of business and securing  obligations  that are not overdue by more than 90 days
or are being contested in good faith by appropriate proceedings;

            (c) pledges and deposits made in the ordinary  course of business in
compliance with workers'  compensation,  unemployment insurance and other social
security laws or regulations or to secure public or statutory obligations;

            (d) Liens  securing  the  performance  of, or payment in respect of,
bids, trade contracts,  leases, statutory obligations,  surety and appeal bonds,
performance  bonds and other  obligations of a like nature,  in each case in the
ordinary course of business;

            (e) judgment Liens in respect of judgments that do not constitute an
Event of Default under clause (i) of Article 7;

            (f) any  interest  or title of a lessor or  sublessor  (other than a
lessor or sublessor  under a lease or sublease that  constitutes a Capital Lease
Obligation or that is entered into as part of a sale-leaseback  arrangement) and
any  restriction or encumbrance to which the interest or title of such lessor or
sublessor may be subject that is incurred in the ordinary course of business;

            (g) Liens in favor of customs and revenue  authorities  arising as a
matter of law or  pursuant  to a bond to secure  payment  of  customs  duties in
connection with the importation of goods;

            (h)  customary  rights of setoff  upon  deposits of cash in favor of
banks or other  depository  institutions in which such cash is maintained in the
ordinary course of business;


                                      -10-
<PAGE>

            (i)  Liens  on  goods  (or  related  documents  of  title)  securing
reimbursement  obligations  under trade letters of credit issued for the account
of the  Borrower  or the  Subsidiaries  in the  ordinary  course of  business in
connection with the purchase of such goods; and

            (j) easements, operating agreements,  covenants,  conditions, rights
of way, survey exceptions,  licenses, zoning restrictions and other encumbrances
on title to, or restrictions on the use of, real property that do not materially
and adversely  affect the value of such property or the use of such property for
its present purposes;

provided  that,  except as provided in clauses (d), (h) and (i) above,  the term
"Permitted Encumbrances" shall not include any Lien securing Indebtedness.

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

            "Prime Rate" means the rate of interest per annum publicly announced
from time to time by BNY as its prime  commercial  lending rate at its principal
office in New York City;  each change in the Prime Rate being effective from and
including  the date such change is publicly  announced as being  effective.  The
Prime Rate is not  intended to be the lowest rate of interest  charged by BNY in
connection with extensions of credit to borrowers.

            "Prohibited  Transaction"  means a  transaction  that is  prohibited
under  Section  4975 of the Code or Section  406 of ERISA and not  exempt  under
Section 4975 of the Code or Section 408 of ERISA.

            "Property" means all types of real, personal,  tangible,  intangible
or mixed property.

            "Prospective Lender" has the meaning set forth in Section 2.17.

            "Register" has the meaning set forth in Section 9.4(c).

            "Related Parties" means, with respect to any specified Person,  such
Person's Affiliates and the respective directors,  officers,  employees,  agents
and advisors of such Person and such Person's Affiliates.

            "Required  Lenders"  means,  at any time,  Lenders having  Revolving
Exposures and unused  Commitments  representing  more than 50% of the sum of the
total Revolving Exposures and unused Commitments at such time.

            "Revolving  Exposure" means, with respect to any Lender at any time,
the sum of the aggregate  outstanding principal amount of such Lender's Loans at
such time.

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


                                      -11-
<PAGE>

            "SEC" means United States Securities and Exchange Commission.

            "Statutory Reserve Rate" means a fraction  (expressed as a decimal),
the  numerator  of which is the number one and the  denominator  of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal,  special,  emergency or supplemental  reserves) expressed as a decimal
established  by the  Board to which  the  Administrative  Agent is  subject  for
eurocurrency  funding  (currently  referred to as "eurocurrency  liabilities" in
Regulation D of the Board) during any Interest Period.  Such reserve percentages
shall include  those imposed  pursuant to such  Regulation D.  Eurodollar  Loans
shall be deemed to  constitute  eurocurrency  funding  and to be subject to such
reserve requirements  without benefit of or credit for proration,  exemptions or
offsets  that  may be  available  from  time to time to any  Lender  under  such
Regulation D or any comparable  regulation.  The Statutory Reserve Rate shall be
adjusted  automatically  on and as of the  effective  date of any  change in any
reserve  percentage.

            "subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation,  limited liability company,  partnership,  association or
other  entity of which more than 50% of the Voting Stock is or, in the case of a
partnership,  more than 50% of the general partnership interests are, as of such
date, owned, Controlled or held by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.

            "Subsidiary" means any subsidiary of the Borrower.

            "Successor  Person" shall have the meaning  assigned to such term in
Section 6.1.

            "Tax on the  Income" as to any  Person,  means a Tax  imposed by the
jurisdiction  in which such  Person's  principal  office (and,  in the case of a
Lender,  its Applicable  Lending Office for Loans) is located,  or in which such
Person is deemed to be doing business, or by any political subdivision or taxing
authority thereof based on or measured by all or part of the net income, profits
or gains of that Person or any affiliate  thereof  (whether  worldwide,  or only
insofar as such income, profits or gains are considered to arise in or to relate
to a particular jurisdiction, or otherwise).

            "Taxes" means any and all present or future taxes, levies,  imposts,
duties,  deductions,   charges  or  withholdings  imposed  by  any  Governmental
Authority.

            "Termination Event" means, with respect to any Pension Plan, (a) any
event set forth in Section 4043(b) (other than any such event as to which the 30
day  notice  requirement  is waived by the PBGC under  applicable  regulations),
4062(c)  or  4063(a)  of  ERISA  or the  regulations  thereunder,  (b) an  event
requiring  the  Borrower,  any of the  Subsidiaries  or any ERISA  Affiliate  to
provide security to a Pension Plan under Section 401(a)(29) of the Code, (c) any
failure to make any  payment  required  by Section  412(m) of the Code,  (d) the
termination  of a Pension Plan, or the filing of a notice of intent to terminate
a Pension Plan,  or the  treatment of a Pension Plan  amendment as a termination
under Section 4041(c) of ERISA,  (e) the institution of proceedings to terminate
a Pension Plan under Section 4042 of ERISA,  or (f) the appointment of a trustee
to administer any Pension Plan under Section 4042 of ERISA.


                                      -12-
<PAGE>

            "Transactions" means (a) the execution,  delivery and performance by
each of the Borrower and the  Guarantors  of each Loan Document to which it is a
party,  (b) the  borrowing  of the Loans and (c) the use of the  proceeds of the
Loans.

            "Type" when used in  reference to any Loan or  Borrowing,  refers to
whether  the rate of  interest  on such Loan,  or on the Loans  comprising  such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.

            "Voting  Stock"  means  capital  stock issued by a  corporation,  or
equivalent  interests in any other Person,  the holders of which are ordinarily,
in the absence of contingencies,  entitled to vote for the election of directors
(or persons performing  similar functions) of such Person,  even if the right so
to vote has been suspended by the happening of such a contingency.

      Section 1.2. Classification of Loans and Borrowings.  For purposes of this
Agreement, Loans and Borrowings may be classified and referred to by Type (e.g.,
a "Eurodollar Loan" or "ABR Borrowing").

      Section 1.3. Terms Generally.  The definitions of terms herein shall apply
equally to the  singular  and plural  forms of the terms  defined.  Whenever the
context may require,  any pronoun  shall  include the  corresponding  masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed  by the phrase  "without  limitation".  The word "will"
shall be  construed  to have the same  meaning  and effect as the word  "shall".
Unless the context requires  otherwise (a) any definition of or reference to any
agreement,  instrument or other  document  herein,  including any Loan Document,
shall be construed as referring to such agreement,  instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any  reference  herein to any Person  shall be  construed  to  include  such
Person's  successors  and  assigns,   (c)  the  words  "herein",   "hereof"  and
"hereunder",  and words of similar  import,  shall be construed to refer to this
Agreement in its entirety and not to any particular  provision  hereof,  (d) all
references  herein  to  Articles,  Sections,  Exhibits  and  Schedules  shall be
construed to refer to Articles and Sections of, and Exhibits and  Schedules  to,
this  Agreement and (e) the words "asset" and  "property"  shall be construed to
have the same meaning and effect and to refer to any and all Property.

      Section  1.4.  Accounting  Terms;  GAAP.  Except  as  otherwise  expressly
provided  herein,  all  terms of an  accounting  or  financial  nature  shall be
construed  in  accordance  with GAAP,  as in effect from time to time;  provided
that,  if the  Borrower  notifies  the  Administrative  Agent that the  Borrower
requests an amendment  to any  provision  hereof to eliminate  the effect of any
change occurring after the date hereof in GAAP or in the application  thereof on
the operation of such  provision (or if the  Administrative  Agent  notifies the
Borrower that the Required  Lenders request an amendment to any provision hereof
for such  purpose),  regardless  of whether any such  notice is given  before or
after such change in GAAP or in the  application  thereof,  then such  provision
shall be interpreted  on the basis of GAAP as in effect and applied  immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.


                                      -13-
<PAGE>

ARTICLE 2. The Credits

      Section 2.1.  Commitments.  Subject to the terms and  conditions set forth
herein,  each  Lender  agrees to make  Loans to the  Borrower  from time to time
during the Availability  Period in dollars in an aggregate principal amount that
will not result in (a) such Lender's  Revolving Exposure exceeding such Lender's
Commitment or (b) the sum of the total Revolving  Exposures  exceeding the total
Commitments. Within the foregoing limits and subject to the terms and conditions
set forth herein, the Borrower may borrow, prepay and reborrow Loans.

      Section 2.2. Loans and Borrowings.  (a) Each Loan shall be made as part of
a Borrowing  consisting of Loans made by the Lenders  ratably in accordance with
their  respective  Commitments.  The  failure  of any  Lender  to make  any Loan
required to be made by it shall not relieve any other Lender of its  obligations
hereunder;  provided  that the  Commitments  of the  Lenders  are several and no
Lender  shall be  responsible  for any other  Lender's  failure to make Loans as
required.

            (b)  Subject to Section  2.11,  each  Borrowing  shall be  comprised
entirely  of ABR  Loans or  Eurodollar  Loans as the  Borrower  may  request  in
accordance  herewith.  Each Lender at its option may make any Eurodollar Loan by
causing any domestic or foreign  branch or Affiliate of such Lender to make such
Loan;  provided that any exercise of such option shall not affect the obligation
of the  Borrower  to  repay  such  Loan in  accordance  with  the  terms of this
Agreement or subject the  Borrower to any  additional  or increased  obligations
under this Agreement.

            (c) At the  commencement  of each Interest Period for any Eurodollar
Borrowing,  such Borrowing  shall be in an aggregate  amount that is an integral
multiple of  $500,000  and not less than  $1,000,000.  At the time that each ABR
Borrowing is made,  such  Borrowing  shall be in an aggregate  amount that is an
integral multiple of $500,000 and not less than $1,000,000; provided that an ABR
Borrowing  may be in an  aggregate  amount  that is equal to the  entire  unused
balance  of the  total  Commitments.  Borrowings  of more  than  one Type may be
outstanding at the same time;  provided that there shall not at any time be more
than a total of ten Eurodollar Borrowings outstanding.

            (d)  Notwithstanding  any other  provision  of this  Agreement,  the
Borrower  shall not be entitled to request,  or to elect to convert or continue,
any Borrowing if the Interest  Period  requested with respect  thereto would end
after the Maturity Date.

      Section 2.3. Requests for Borrowings. To request a Borrowing, the Borrower
shall notify the  Administrative  Agent of such request by telephone  (a) in the
case of a Eurodollar  Borrowing,  not later than 11:00 a.m., New York City time,
three Business Days before the date of the proposed Borrowing or (b) in the case
of an ABR Borrowing,  not later than 11:00 a.m., New York City time, on the date
of the  proposed  Borrowing.  Except as  provided  in  Section  2.12,  each such
telephonic  Borrowing  Request  shall be  irrevocable  and  shall  be  confirmed
promptly by hand delivery or telecopy to the  Administrative  Agent of a written
Borrowing  Request  signed by the  Borrower.  Each such  telephonic  and written
Borrowing  Request shall specify the following  information  in compliance  with
Section 2.2 and this Section:


                                      -14-
<PAGE>

                        (i) the aggregate amount of the requested Borrowing;

                        (ii)  the  date  of such  Borrowing,  which  shall  be a
            Business Day;

                        (iii)  whether such  Borrowing is to be an ABR Borrowing
            or a Eurodollar Borrowing;

                        (iv) in the case of a Eurodollar Borrowing,  the initial
            Interest  Period to be applicable  thereto,  which shall be a period
            contemplated by the definition of the term "Interest Period"; and

                        (v) the location and number of the Borrower's account to
            which  funds  are to be  disbursed,  which  shall  comply  with  the
            requirements of Section 2.5.

If no election as to the Type of  Borrowing  is  specified,  then the  requested
Borrowing  shall be an ABR  Borrowing.  If no Interest  Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration.  Promptly following
receipt  of  a  Borrowing   Request  in  accordance   with  this  Section,   the
Administrative  Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.

      Section 2.4.  Termination,  Reduction and Extension of Commitments.(a) The
Borrower  may  at  any  time  terminate,  or  from  time  to  time  reduce,  the
Commitments;  provided that (i) each reduction of the Commitments shall be in an
amount that is an integral  multiple of $1,000,000 and not less than  $1,000,000
and (ii) the Borrower  shall not terminate or reduce the  Commitments  if, after
giving  effect to any  concurrent  prepayment  of the Loans in  accordance  with
Section  2.8,  the sum of the  aggregate  Revolving  Exposures  would exceed the
aggregate Commitments.

            (b) The  Borrower  shall  notify  the  Administrative  Agent  of any
election to  terminate or reduce the  Commitments  under  paragraph  (a) of this
Section  at  least  three  Business  Days  prior to the  effective  date of such
termination  or  reduction,  specifying  the  effective  date of such  election.
Promptly following receipt of any such notice,  the  Administrative  Agent shall
advise  the  Lenders of the  contents  thereof.  Each  notice  delivered  by the
Borrower  pursuant to this Section shall be irrevocable;  provided that a notice
of termination of the Commitments  delivered by the Borrower may state that such
notice is conditioned  upon the  effectiveness  of other credit  facilities,  in
which  case  such  notice  may be  revoked  by the  Borrower  (by  notice to the
Administrative  Agent  on or  prior  to the  specified  effective  date) if such
condition is not  satisfied.  Any  termination  or reduction of the  Commitments
shall be  permanent.  Each  reduction of the  Commitments  shall be made ratably
among the applicable Lenders in accordance with their respective Commitments.

            (c) The Borrower may, by notice to the  Administrative  Agent (which
shall  promptly  deliver a copy to each of the  Lenders)  given not less than 30
days and not more than 60 days prior to the Maturity Date at any time in effect,
request that the Lenders  extend the Maturity Date for an  additional  period of
not more than 364 days as specified in such notice. Each Lender


                                      -15-
<PAGE>

shall, by notice to the Borrower and the Administrative  Agent given not earlier
than the 30th day and not  later  than the 20th day prior to the  Maturity  Date
then in effect,  advise the Borrower  whether or not it agrees to such extension
on the terms set forth in such  notice.  Any Lender  that has not so advised the
Borrower  and the  Administrative  Agent by such day  shall  be  deemed  to have
declined to agree to such  extension.  If the Borrower  shall have requested and
Lenders representing at least 50% of the aggregate Commitments shall have agreed
to an extension of the Maturity  Date,  then the Maturity Date shall be extended
for the additional  period and on the terms specified in the Borrower's  notice.
The  decision to agree or withhold  agreement  to any  extension of the Maturity
Date hereunder shall be at the sole discretion of each Lender. The Commitment of
any Lender that has declined to agree to any requested extension of the Maturity
Date (a  "Non-Extending  Lender")  shall  terminate on the Maturity Date then in
effect prior to giving  effect to any such  extension  (the  "Existing  Maturity
Date"),  and the principal amount of any outstanding  Loans made by such Lender,
together  with any accrued  interest  thereon,  and any  accrued  fees and other
amounts  payable to or for the account of such Lender under the Loan  Documents,
shall be due and payable on the  Existing  Maturity  Date.  Notwithstanding  the
foregoing  provisions  of this  paragraph  (c), (i) the Borrower  shall have the
right,  pursuant to Section  2.16(b),  to replace a Non-Extending  Lender with a
Lender or other  financial  institution  that will agree to an  extension of the
Maturity Date and (ii) the Borrower shall have the right,  any time prior to the
Existing Maturity Date, to withdraw its request for an extension of the Maturity
Date by notice to the  Administrative  Agent  (which  shall  promptly  deliver a
notice  to each  Lender),  in which  case  the  Commitments  of all the  Lenders
(including Non-Extending Lenders) will terminate on the Existing Maturity Date.

      Section 2.5.  Funding of Borrowings.  (a) Each Lender shall make each Loan
to be made by it  hereunder on the  proposed  date  thereof by wire  transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the  Administrative  Agent most  recently  designated  by it for such purpose by
notice to the Lenders.  The Administrative  Agent will make such Loans available
to the Borrower by promptly crediting the amounts so received, in like funds, to
an  account  of the  Borrower  designated  by  the  Borrower  in the  applicable
Borrowing Request.

            (b) Unless the Administrative  Agent shall have received notice from
a Lender prior to the proposed date of any  Borrowing  that such Lender will not
make  available  to  the  Administrative  Agent  such  Lender's  share  of  such
Borrowing,  the  Administrative  Agent may assume that such Lender has made such
share  available on such date in accordance  with paragraph (a) of this Section,
and may, in reliance  upon such  assumption,  make  available  to the Borrower a
corresponding  amount. In such event, if a Lender has not in fact made its share
of the applicable  Borrowing  available to the  Administrative  Agent,  then the
applicable Lender and the Borrower  severally agree to pay to the Administrative
Agent forthwith on demand such corresponding  amount with interest thereon,  for
each day from and  including  the date  such  amount  is made  available  to the
Borrower to but excluding the date of payment to the  Administrative  Agent,  at
(i) in the case of such Lender,  the greater of the Federal Funds Effective Rate
and a rate  determined by the  Administrative  Agent in accordance  with banking
industry  rules on interbank  compensation  or (ii) in the case of the Borrower,
the interest rate applicable to such Loans at the time. If such Lender pays such
amount to the Administrative Agent prior to the


                                      -16-
<PAGE>

payment thereof by the Borrower, then such amount shall constitute such Lender's
Loan included in such Borrowing.

      Section 2.6. Interest Elections.  (a) Each Borrowing initially shall be of
the Type  specified in the  applicable  Borrowing  Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request.  Thereafter, the Borrower may elect to convert such Borrowing
to a  different  Type  or to  continue  such  Borrowing  and,  in the  case of a
Eurodollar  Borrowing,  may elect Interest Periods therefor,  all as provided in
this Section. The Borrower may elect different options with respect to different
portions of the affected  Borrowing,  in which case each such  portion  shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans  comprising  each such  portion  shall be  considered  a  separate
Borrowing.

            (b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing  Request  would be required  under  Section 2.3 if the  Borrower  were
requesting a Borrowing of the Type  resulting  from such  election to be made on
the effective  date of such election.  Except as provided in Section 2.12,  each
such  telephonic  Interest  Election  Request shall be irrevocable  and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Interest Election Request signed by the Borrower.

            (c) Each  telephonic  and written  Interest  Election  Request shall
specify  the  following  information  in  compliance  with  Section 2.2 and this
Section:

                        (i)  the  Borrowing  to  which  such  Interest  Election
            Request  applies  and, if different  options are being  elected with
            respect to different  portions  thereof,  the portions thereof to be
            allocated to each resulting Borrowing (in which case the information
            to be  specified  pursuant to clauses  (iii) and (iv) below shall be
            specified for each resulting Borrowing);

                        (ii) the effective date of the election made pursuant to
            such Interest Election Request, which shall be a Business Day;

                        (iii)  whether the  resulting  Borrowing is to be an ABR
            Borrowing or a Eurodollar Borrowing; and

                        (iv)  if  the   resulting   Borrowing  is  a  Eurodollar
            Borrowing, the Interest Period to be applicable thereto after giving
            effect to such election, which shall be a period contemplated by the
            definition of the term "Interest Period".

If any such Interest  Election Request requests a Eurodollar  Borrowing but does
not  specify  an  Interest  Period,  then the  Borrower  shall be deemed to have
selected an Interest Period of one month's duration.

            (d) Promptly following receipt of an Interest Election Request,  the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.


                                      -17-
<PAGE>

            (e) If the  Borrower  fails to  deliver a timely  Interest  Election
Request with respect to a Eurodollar  Borrowing prior to the end of the Interest
Period  applicable  thereto,  then,  unless such Borrowing is repaid as provided
herein,  at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing.  Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is  continuing  and the  Administrative  Agent,  at the
request of the Required Lenders,  so notifies the Borrower,  then, so long as an
Event of Default is continuing, (i) no outstanding Borrowing may be converted to
or continued as a Eurodollar  Borrowing and (ii) unless repaid,  each Eurodollar
Borrowing  shall be  converted  to an ABR  Borrowing  at the end of the Interest
Period applicable thereto.

      Section 2.7. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally  promises to pay to the Administrative  Agent for the account of
each Lender the then unpaid principal amount of each Loan on the Maturity Date.

            (b) Each Lender shall maintain in accordance with its usual practice
an account or  accounts  evidencing  the  indebtedness  of the  Borrower to such
Lender  resulting  from each Loan made by such Lender,  including the amounts of
principal  and  interest  payable  and  paid to such  Lender  from  time to time
hereunder.

            (c) The  Administrative  Agent shall  maintain  accounts in which it
shall  record (i) the amount of each Loan made  hereunder,  the Type thereof and
any 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
Lender hereunder and (iii) the amount of any sum received by the  Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.

            (d)  The  entries  made  in  the  accounts  maintained  pursuant  to
paragraph (b) or (c) of this Section  shall,  absent  manifest  error,  be prima
facie evidence of the existence and amounts of the obligations recorded therein;
provided that the failure of any Lender or the Administrative  Agent to maintain
such accounts or any error therein shall not in any manner affect the obligation
of the  Borrower  to repay  the  Loans  in  accordance  with  the  terms of this
Agreement.

            (e) Any Lender may request  that Loans made by it be  evidenced by a
promissory note. In such event, the Borrower shall prepare,  execute and deliver
to such  Lender a  promissory  note  payable to the order of such Lender (or, if
requested by such Lender,  to such Lender and its  registered  assigns) and in a
form  approved by the  Administrative  Agent and  reasonably  acceptable  to the
Borrower.  Thereafter,  the Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment  pursuant to Section 9.4)
be represented by one or more promissory notes in such form payable to the order
of the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).

      Section 2.8. Prepayment of Loans. (a) The Borrower shall have the right at
any time and from  time to time to  prepay  any  Borrowing  in whole or in part,
subject to prior notice in accordance with paragraph (b) of this Section.


                                      -18-
<PAGE>

            (b) The Borrower shall notify the Administrative  Agent by telephone
(confirmed  by telecopy) of any  prepayment  of a Borrowing  hereunder not later
than  11:00  a.m.,  New York City time,  two  Business  Days  before the date of
prepayment.  Each  such  notice  shall be  irrevocable  and  shall  specify  the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid; provided that, if a notice of prepayment is given in connection with
a conditional  notice of  termination  of the  Commitments  as  contemplated  by
Section  2.4,  then such notice of  prepayment  may be revoked if such notice of
termination  is revoked in  accordance  with  Section  2.4.  Promptly  following
receipt of any such notice  relating to a Borrowing,  the  Administrative  Agent
shall advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing  shall  be in an  amount  that  would be  permitted  in the case of an
advance  of a  Borrowing  of the same Type as  provided  in  Section  2.2.  Each
prepayment of a Borrowing  shall be applied ratably to the Loans included in the
prepaid  Borrowing.  Prepayments  shall be accompanied  by accrued  interest and
breakage  fees  to the  extent  required  by  Section  2.10  and  Section  2.13,
respectively.

      Section 2.9.  Fees. (a) The Borrower  agrees to pay to the  Administrative
Agent for the account of each Lender a facility  fee,  which shall accrue at the
Applicable  Rate  with  respect  to  facility  fees on the  daily  amount of the
Commitment of such Lender  (whether  used or unused)  during the period from and
including  the date hereof to but  excluding  the date on which such  Commitment
terminates;  provided  that,  if such  Lender  continues  to have any  Revolving
Exposure after its Commitment terminates,  then such facility fee shall continue
to accrue  on the daily  amount of such  Lender's  Revolving  Exposure  from and
including the date on which its Commitment  terminates to but excluding the date
on which such Lender ceases to have any  Revolving  Exposure.  Accrued  facility
fees shall be payable in arrears on the last day of March,  June,  September and
December of each year,  on each date on which the  Commitments  are  permanently
reduced,  on the date on which the  Commitments  terminate and on any other date
after the Commitments  terminate on which all outstanding  Loans shall be repaid
or prepaid.  All  facility  fees shall be computed on the basis of a year of 360
days and shall be payable for the actual number of days elapsed  (including  the
first day but excluding the last day).

            (b) The Borrower agrees to pay to the  Administrative  Agent for the
account of each Lender a utilization  fee,  which shall accrue at the Applicable
Rate with respect to utilization  fees on the amount of such Lender's  Revolving
Exposure for each day during the period from and including the Effective Date to
but excluding the Maturity Date on which the sum of the total Revolving Exposure
on such day plus the total  Revolving  Exposure  (as  defined  in the  Five-Year
Credit Agreement) on such day exceeds 50% of the sum of the total Commitments on
such day  plus  the  total  Commitments  (as  defined  in the  Five-Year  Credit
Agreement) on such day. Accrued  utilization fees shall be payable in arrears on
the last day of March,  June,  September  and December of each year,  and on the
Maturity Date. All utilization  fees shall be computed on the basis of a year of
360 days and shall be payable for the actual  number of days elapsed  (including
the first day but excluding the last day).

            (c) The  Borrower  agrees to pay to each Credit  Party,  for its own
account,  fees  payable in the amounts and at the times  separately  agreed upon
between the Borrower and the Administrative Agent.


                                      -19-
<PAGE>

            (d) All fees  payable  hereunder  shall be paid on the dates due, in
immediately  available  funds.  Fees  paid  shall  not be  refundable  under any
circumstances.

      Section 2.10. Interest.  (a) The Loans comprising each ABR Borrowing shall
bear interest at the Alternate Base Rate.

            (b) The  Loans  comprising  each  Eurodollar  Borrowing  shall  bear
interest at the Adjusted  LIBO Rate for the  Interest  Period in effect for such
Borrowing plus the Applicable Rate with respect to Eurodollar Loans.

            (c) Notwithstanding  the foregoing,  if any principal of or interest
on any Loan, or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise,  such
overdue amount shall bear interest,  after as well as before judgment, at a rate
per annum  equal to (i) in the case of  overdue  principal  of any Loan,  2% per
annum  plus  the rate  otherwise  applicable  to such  Loan as  provided  in the
preceding paragraphs of this Section or (ii) in the case of any other amount, 2%
per annum plus the rate  applicable to ABR Loans as provided in paragraph (a) of
this Section.

            (d)  Accrued  interest  on each Loan  shall be payable in arrears on
each  Interest   Payment  Date  for  such  Loan  and  upon  termination  of  the
Commitments;  provided  that (i) interest  accrued  pursuant to paragraph (c) of
this Section  shall be payable on demand,  (ii) in the event of any repayment or
prepayment  of any Loan (other than a prepayment of an ABR Loan prior to the end
of the Availability Period),  accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such  repayment or prepayment  and (iii)
in the event of any  conversion of any  Eurodollar  Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be payable
on the effective date of such conversion.

            (e) All interest  hereunder shall be computed on the basis of a year
of 360 days,  except that interest  computed by reference to the Alternate  Base
Rate at times when the  Alternate  Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed  (including the
first day but  excluding  the last day).  The  applicable  Alternate  Base Rate,
Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.

      Section 2.11. Alternate Rate of Interest.  If prior to the commencement of
any  Interest  Period for a Eurodollar  Borrowing  the  Administrative  Agent is
advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate, as
applicable,  for such Interest Period will not adequately and fairly reflect the
cost to such  Lenders (or Lender) of making or  maintaining  their Loans (or its
Loan)   included  in  such  Borrowing  for  such  Interest   Period,   then  the
Administrative  Agent shall give notice  thereof to the Borrower and the Lenders
by telephone or telecopy as promptly as  practicable  thereafter  and, until the
Administrative   Agent   notifies   the   Borrower  and  the  Lenders  that  the
circumstances  giving  rise to such  notice no longer  exist,  (a) any  Interest
Election   Request  that  requests  the  conversion  of  any  Borrowing  to,  or
continuation  of any Borrowing as, a Eurodollar  Borrowing  shall be ineffective
and (b) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing
shall be made as an ABR Borrowing;  provided


                                      -20-
<PAGE>

that,  if the  circumstances  giving rise to such notice affect only one Type of
Borrowings, then the other Type of Borrowings shall be permitted.

      Section 2.12. Increased Costs, Illegality,  Etc. (a) In the event that any
Lender with respect to clauses (ii) and (iii) below or the Administrative  Agent
with  respect to clause (i) below  shall have  determined  (which  determination
shall,  absent  manifest  error,  be final and  conclusive  and binding upon all
parties hereto):

                        (i) on the second Business Day immediately preceding the
            making  of any  requested  Eurodollar  Loan  that,  by reason of any
            changes  arising  after the date  hereof  affecting  the  applicable
            interbank  market,   adequate  and  fair  means  do  not  exist  for
            ascertaining the applicable  interest rate on the basis provided for
            in the definition of the LIBO Rate; or

                        (ii) at any time that such Lender has incurred increased
            costs or reductions in the amounts received or receivable  hereunder
            with respect to any Eurodollar  Loan, in each case by an amount such
            Lender  deems to be  material,  because of any change since the date
            hereof in any law, rule,  regulation,  order or guideline applicable
            to such  Lender or the  compliance  by such  Lender with any request
            (whether  or not having the force of law) from any  central  bank or
            other  Governmental  Authority made subsequent to the date hereof or
            in the  interpretation or  administration  thereof and including the
            introduction after the date hereof of any new law, rule, regulation,
            order,  guideline or request,  such as, for example, but not limited
            to: (A) a change in the basis of  taxation  of payment to any Lender
            of the principal of or interest on such Eurodollar Loan or any other
            amounts payable hereunder (except for changes in the rate of tax on,
            or  determined  by  reference  to,  the  Tax on the  Income  of such
            Lender),  or (B) a change in official  reserve  (including,  without
            limitation, any marginal, emergency,  supplemental, special or other
            reserve)   requirements  (except  to  the  extent  included  in  the
            computation  of the  Adjusted  LIBO Rate),  or any special  deposit,
            assessment or similar  requirement  against assets of, deposits with
            or for the  account  of, or credit  extended  by, any Lender (or its
            Applicable Lending Office); or

                        (iii) at any time that the making or  continuance of any
            Eurodollar  Loan  has  been  made (A)  unlawful  by any  law,  rule,
            regulation or order or (B) impossible by compliance by any Lender in
            good faith with any  governmental  directive or request  (whether or
            not having the force of law);

then,  and in any such event,  such Lender,  in the case of clause (ii) or (iii)
above,  or the  Administrative  Agent,  in the case of clause (i)  above,  shall
promptly give notice (by telephone  confirmed in writing) to the Borrower,  and,
except in the case of clause  (i)  above,  to the  Administrative  Agent of such
determination  (which notice the Administrative Agent shall promptly transmit to
each of the Lenders).  Thereafter,  (1) in the case of clause (i) above,  in the
event that Eurodollar Loans are so affected, Eurodollar Loans shall no longer be
available until such time as the Administrative  Agent notifies the Borrower and
the  Lenders  that  the  circumstances   giving  rise  to  such  notice  by  the
Administrative Agent no longer exist, and any notices given by the Borrower with
respect to Eurodollar  Loans which have not yet been incurred


                                      -21-
<PAGE>

(including by way of conversion) shall be deemed rescinded by the Borrower,  (2)
in the case of clause (ii) above, the Borrower shall pay to such Lender,  within
15 days of written demand therefor,  such additional  amounts (in the form of an
increased rate of, or a different  method of calculating,  interest or otherwise
as such  Lender  in its  reasonable  discretion  shall  determine)  as  shall be
required to  compensate  such Lender for such  increased  costs or reductions in
amounts received or receivable  hereunder (a written notice as to the additional
amounts  owed to such  Lender,  showing the basis for the  calculation  thereof,
submitted to the Borrower by such Lender in good faith  shall,  absent  manifest
error, be final and conclusive and binding on all the parties hereto) and (3) in
the case of clause  (iii)  above,  the  Borrower  shall take one of the  actions
specified in paragraph (b) below. Each of the Administrative Agent and the other
Credit  Parties  agree  that if it gives  notice to the  Borrower  of any of the
events  described in clause (i) or (iii)  above,  it shall  promptly  notify the
Borrower and, in the case of any such other Lender, the Administrative Agent, if
such event ceases to exist.  If any such event  described in clause (i) or (iii)
above  with  respect to  Eurodollar  Loans  ceases to exist as to a Lender,  the
obligations of such Lender to make  Eurodollar  Loans and to convert Loans to or
continue Loans as Eurodollar Loans on the terms and conditions  contained herein
shall be reinstated.

            (b)  At any  time  that  any  Eurodollar  Loan  is  affected  by the
circumstances  described in Section  2.12(a)(ii) or (iii), the Borrower may (and
in the case of a  Eurodollar  Loan  affected by the  circumstances  described in
Section  2.12(a)(iii)  shall) either (i) if the affected Eurodollar Loan is then
being  made  initially  or  pursuant  to a  conversion,  cancel  the  respective
borrowing or conversion by giving the  Administrative  Agent  telephonic  notice
(confirmed  in writing) on the same date that the  Borrower  was notified by the
affected Lender or the Administrative  Agent pursuant to Section  2.12(a)(ii) or
(iii) or (ii) if the affected Eurodollar Loan is then outstanding, upon at least
three Business Days' written notice to the Administrative Agent and the affected
Lender,  require the affected Lender to convert such Eurodollar Loan into an ABR
Loan as of the end of the Interest  Period then  applicable  to such  Eurodollar
Loan or within the time required by law, if earlier.

            (c)  If any  Lender  determines  that  after  the  date  hereof  the
introduction  of or any change in any applicable law, rule,  regulation,  order,
guideline, directive or compliance by such Lender or any corporation controlling
such Lender  with any request  (whether or not having the force of law) from any
Governmental  Authority  or central bank  concerning  capital  adequacy,  or any
change in interpretation or administration thereof by any Governmental Authority
or central bank, in each case made subsequent to the date hereof,  will have the
effect of reducing the rate of return on the capital  required to be  maintained
by such Lender or any corporation controlling such Lender based on the existence
of such Lender's  Commitment  hereunder or its obligations  hereunder to a level
below that which such Lender or such  corporation  could have  achieved  but for
such  application  or  compliance  (taking into  account  such  Lender's or such
corporation's  policies with respect to capital adequacy) by an amount deemed by
such Lender to be  material,  the Borrower  shall pay to such Lender,  within 15
days of its  written  demand  therefor,  such  additional  amounts  as  shall be
required to compensate  such Lender or such other  corporation for the increased
cost to such Lender or such other  corporation  or the  reduction in the rate of
return to such Lender or such other  corporation as a result of such  reduction.
In determining such additional  amounts,  each Lender will act reasonably and in
good faith and will use averaging and attribution  methods which are reasonable;
provided that such Lender's


                                      -22-
<PAGE>

reasonable good faith  determination of compensation  owing under this paragraph
shall,  absent  manifest  error,  be final and conclusive and binding on all the
parties hereto.  Each Lender,  upon determining that any additional amounts will
be payable  pursuant to this paragraph,  will give prompt written notice thereof
to the  Borrower,  which  notice  shall show the basis for  calculation  of such
additional amounts.

            (d) Each Lender  shall  notify the  Borrower of any event  occurring
after the  Effective  Date  entitling  such  Lender to  compensation  under this
Section 2.12 as promptly as  practicable,  but in any event within 30 days after
the officer having  primary  responsibility  for this  Agreement  obtains actual
knowledge thereof; provided that no such notice shall be required if such Lender
has determined not to seek  compensation  under this Section 2.12 as a result of
such event. Each Lender will furnish to the Borrower a certificate setting forth
the basis and amount of each request by such Lender for compensation  under this
Section 2.12.  Determinations and allocations by any Lender for purposes of this
Section  2.12 on its  costs  or rate  of  return  of  maintaining  Loans  or its
obligation  to make Loans,  or on amounts  receivable by it in respect of Loans,
and of the amounts  required to  compensate  such Lender under this Section 2.12
shall be prima facie evidence of such determinations and allocations.

            (e)  Notwithstanding  the foregoing,  no Lender shall be entitled to
any compensation  described in this Section 2.12 unless, at the time it requests
such  compensation,  it is the  policy or  general  practice  of such  Lender to
request  compensation  for  comparable  costs  in  similar  circumstances  under
comparable provisions of other credit agreements for comparable customers unless
specific facts or  circumstances  applicable to the Borrower or the transactions
contemplated  by this  Agreement  would alter such  policy or general  practice,
provided that nothing in this paragraph shall preclude a Lender from waiving the
collection of similar costs from one or more of its other customers.

            (f) If any Lender  fails to give the notice  described  in paragraph
(d) above  within 30 days after it obtains  such actual  knowledge  of the event
required to be described in such notice,  such Lender shall, with respect to any
compensation  that would  otherwise  be owing to such Lender  under this Section
2.12,  only be entitled to payment for increased  costs  incurred from and after
the date that such Lender does give such notice.

      Section 2.13. Break Funding  Payments.  In the event of (a) the payment of
any principal of any  Eurodollar  Loan other than on the last day of an Interest
Period applicable  thereto  (including as a result of an Event of Default),  (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest
Period  applicable  thereto,  (c) the  failure to borrow,  convert,  continue or
prepay any Loan on the date specified in any notice  delivered  pursuant  hereto
(regardless  of whether such notice may be revoked under  Section  2.8(b) and is
revoked in accordance  therewith),  or (d) the assignment of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto as a result
of a request by the Borrower  pursuant to Section 2.16, then, in any such event,
the  Borrower  shall  compensate  each  Lender  for the loss,  cost and  expense
attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender  shall be deemed to include an amount  determined  by such
Lender to be the excess,  if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted  LIBO  Rate or LIBO  Rate,  as the case may be,


                                      -23-
<PAGE>

that would have been  applicable  to such Loan,  for the period from the date of
such event to the last day of the then current  Interest Period therefor (or, in
the case of a failure to borrow,  convert or continue, for the period that would
have been the Interest  Period for such Loan),  over (ii) the amount of interest
which would accrue on such principal amount for such period at the interest rate
which such Lender would bid were it to bid, at the  commencement of such period,
for dollar  deposits of a  comparable  amount and period from other banks in the
London interbank market. A certificate of any Lender setting forth any amount or
amounts that such Lender is entitled to receive  pursuant to this Section  shall
be delivered to the Borrower and shall be conclusive  absent manifest error. The
Borrower  shall pay such Lender the amount shown as due on any such  certificate
within 15 days after receipt thereof.

      Section 2.14.  Taxes.  (a) Provided that all  documentation,  if any, then
required to be delivered by any Credit Party pursuant to paragraph (c) below has
been  delivered,  all sums  payable to each Credit  Party by the Borrower or any
Guarantor under any Loan Document shall be paid free and clear of and (except to
the extent  required by law) without any deduction or  withholding on account of
any Taxes (other than a Tax on the Income of any Credit Party (for which payment
need not be free and clear but no deduction or withholding  shall be made unless
then  required by  applicable  law))  imposed,  levied,  collected,  withheld or
assessed  by or within the United  States or any  political  subdivision  of the
United States or any other jurisdiction within or without the United States from
which a payment is made by or on behalf of the  Borrower or any  Guarantor or in
which the  Borrower  or an  Affiliate  thereof  has an office or is deemed to be
doing business (each an "Indemnified Tax").

            (b) If the Borrower or any  Guarantor or any other Person  acting as
agent or intermediary  for the Borrower or any Guarantor is required by any law,
rule, regulation, order, directive, treaty or guideline to make any deduction or
withholding  on account of any  Indemnified  Tax from any sum paid or payable by
the Borrower or any Guarantor to any Credit Party under any Loan Document:

                        (i) the Borrower,  the Guarantors and such Credit Party,
            as  applicable,  will cooperate with each other to notify each other
            of any such  requirement  or any change in any such  requirement  as
            soon as it becomes aware of such  requirement and the  applicability
            of such requirement to any Loan Document;

                        (ii) the Borrower,  such Guarantor or such other Person,
            as applicable, shall pay any such Indemnified Tax before the date on
            which  penalties  attach  thereto,  such  payment to be made (if the
            liability to pay is imposed on the Borrower,  such Guarantor or such
            other  Person,  as  applicable)  for  its  own  account  or (if  the
            liability  is imposed on such Credit  Party) on behalf of and in the
            name of such Credit Party;

                        (iii) the sum payable by the Borrower, such Guarantor or
            such other Person, as applicable,  to the Credit Party in respect of
            which the  relevant  deduction,  withholding  or payment is required
            shall be increased to the extent necessary to ensure that, after the
            making of that deduction,  withholding or payment, such Credit Party
            receives  on the due date  therefor a net sum equal to what it would
            have  received had no such  deduction,  withholding  or payment been
            required; and


                                      -24-
<PAGE>

                        (iv)  within the later of (A) 30 days  after  paying any
            sum  from  which it is  required  by law to make  any  deduction  or
            withholding,  and (B) 30 days  after the due date of  payment of any
            Tax which it is required by this clause (b) to pay,  the Borrower or
            such Guarantor,  as applicable,  shall deliver to the Administrative
            Agent and the applicable Lender evidence reasonably  satisfactory to
            the  Administrative  Agent and such Lender of the remittance of such
            Tax to the relevant Governmental Authority;

provided  that no such  additional  amount  shall be  required to be paid to any
Credit Party under this Section 2.14 with respect to an  Indemnified  Tax to the
extent that (1) such  additional  amount  would have been  required to have been
paid under any law, rule, regulation,  order, directive,  treaty or guideline in
effect  on the date  hereof  (in the case of each  Credit  Party  listed  on the
signature  pages  hereof)  or on  the  effective  date  of  the  Assignment  and
Acceptance  pursuant  to which it  became  a Lender  (in the case of each  other
Credit Party) or (2) the obligation to deduct,  withhold or pay such  additional
amount  would not have arisen but for a failure by the  Administrative  Agent or
such Credit Party to comply with subsection (c) below.

            (c) Each Foreign  Lender shall deliver to the  Administrative  Agent
and to the Borrower,  (i) on or prior to the Effective Date (in the case of each
Lender  listed on the signature  pages  hereto) or on the effective  date of the
Assignment and Acceptance  pursuant to which it becomes a Lender (in the case of
each other Lender), (ii) on or before the date, if any, such Lender designates a
new Applicable  Lending Office and (iii) at such other times as may be necessary
in the  determination of the Borrower or the  Administrative  Agent (each in the
reasonable  exercise of its discretion),  such certificates,  documents or other
evidence,  properly  completed  and duly  executed  by such  Lender  (including,
without limitation, Internal Revenue Service Form W-8 BEN or Form W-8 ECI or any
other certificate or statement of exemption (or any successor  thereto) required
by  applicable  Treasury  Regulations)  to establish  that such Lender is wholly
exempt from any deduction or  withholding  of United States  federal  income tax
under  Section  1441,  1442 or  3406 of the  Code or  otherwise  (or  under  any
comparable  provisions of any successor statute) with respect to any payments to
such Lender of principal, interest, fees or other amounts payable under any Loan
Document.  Neither the Borrower nor any  Guarantor  shall be required to pay any
additional  amount to any such Lender under this Section 2.14 with respect to an
Indemnified Tax imposed,  levied,  collected,  withheld or assessed by or within
the United States or any political subdivision thereof if such Lender shall have
failed to  satisfy  the  requirements  of the  immediately  preceding  sentence;
provided that if such Lender shall have  satisfied such  requirements  (A) on or
prior to the Effective  Date (in the case of each Lender listed on the signature
pages hereto) or on the effective date of the Assignment and Acceptance pursuant
to which it became a Lender  (in the case of each  other  Lender)  or (B) on the
date such Lender  designates a new Applicable  Lending  Office,  nothing in this
subsection  shall  relieve the Borrower and each  Guarantor of their  respective
obligations to pay any additional  amounts  pursuant to this Section 2.14 in the
event that,  as a result of any change in  applicable  law  (including,  without
limitation,  any change in the interpretation thereof), such Lender is no longer
properly  entitled to deliver  certificates,  documents  or other  evidence at a
subsequent  date  establishing  the fact that  such  Lender  is not  subject  to
withholding as described in the immediately preceding sentence.


                                      -25-
<PAGE>

      Section 2.15. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) Each of the Borrower and the Guarantors  shall make each payment required to
be made by it hereunder or under any other Loan Document  (whether of principal,
interest,  fees, or of amounts payable under Section 2.12, 2.13, 2.14 or 9.3, or
otherwise)  prior to 12:00  noon,  New York City time,  on the date when due, in
immediately  available  funds,  without  set-off or  counterclaim.  Any  amounts
received   after  such  time  on  any  date  may,  in  the   discretion  of  the
Administrative  Agent,  be deemed to have been  received on the next  succeeding
Business Day for purposes of  calculating  interest  thereon.  All such payments
shall be made to the Administrative Agent at its offices at One Wall Street, New
York, New York or such other office specified by the  Administrative  Agent from
time to time, except that payments pursuant to Sections 2.12, 2.13, 2.14 and 9.3
shall be made directly to the Persons entitled thereto. The Administrative Agent
shall  distribute any such payments  received by it for the account of any other
Person to the appropriate  recipient promptly following receipt thereof.  If any
payment hereunder shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding  Business Day, and, in the case
of any payment  accruing  interest,  interest  thereon  shall be payable for the
period of such extension. All payments hereunder shall be made in dollars.

            (b) If at any time insufficient  funds are received by and available
to the Administrative Agent to pay fully all amounts of principal,  interest and
fees then due hereunder,  such funds shall be applied (i) first, towards payment
of interest  and fees then due  hereunder,  ratably  among the parties  entitled
thereto in  accordance  with the amounts of  interest  and fees then due to such
parties,  and (ii)  second,  towards  payment of principal  then due  hereunder,
ratably among the parties  entitled  thereto in  accordance  with the amounts of
principal then due to such parties.

            (c) If any  Lender  shall,  by  exercising  any right of  set-off or
counterclaim  or  otherwise,  obtain  payment in respect of any  principal of or
interest on any of its Loans  resulting  in such Lender  receiving  payment of a
greater  proportion  of the aggregate  amount of its Loans and accrued  interest
thereon  than the  proportion  received  by any other  Lender,  then the  Lender
receiving  such  greater  proportion  shall  purchase  (for cash at face  value)
participations in the Loans of other Lenders to the extent necessary so that the
benefit  of all  such  payments  shall  be  shared  by the  Lenders  ratably  in
accordance  with the  aggregate  amount of principal of and accrued  interest on
their  respective  Loans;  provided  that  (i) if any  such  participations  are
purchased  and  all or any  portion  of  the  payment  giving  rise  thereto  is
recovered,  such  participations  shall  be  rescinded  and the  purchase  price
restored  to the  extent  of such  recovery,  without  interest,  and  (ii)  the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower  pursuant to and in  accordance  with the express  terms of this
Agreement  or  any  payment  obtained  by a  Lender  as  consideration  for  the
assignment  of or sale of a  participation  in any of its Loans to any assignee,
other than to the Borrower or any Subsidiary or other  Affiliate  thereof (as to
which the  provisions of this paragraph  shall apply).  Each of the Borrower and
the  Guarantors  consents  to the  foregoing  and  agrees,  to the extent it may
effectively  do  so  under   applicable   law,  that  any  Lender   acquiring  a
participation  pursuant to the foregoing  arrangements  may exercise  against it
rights of set-off and counterclaim  with respect to such  participation as fully
as if  such  Lender  were a  direct  creditor  thereof  in the  amount  of  such
participation.


                                      -26-
<PAGE>

            (d) Unless the Administrative  Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the  account  of the  applicable  Credit  Parties  hereunder  that the
Borrower or such  Guarantor,  as  applicable,  will not make such  payment,  the
Administrative  Agent  may  assume  that  the  Borrower  or such  Guarantor,  as
applicable,  has made such payment on such date in accordance  herewith and may,
in reliance upon such  assumption,  distribute to such Credit Parties the amount
due. In such event, if the Borrower or such Guarantor, as applicable, has not in
fact made such payment, then each such Credit Party severally agrees to repay to
the  Administrative  Agent forthwith on demand the amount so distributed to such
Credit Party with  interest  thereon,  for each day from and  including the date
such amount is  distributed  to it to but  excluding  the date of payment to the
Administrative  Agent,  at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative  Agent in accordance with banking industry
rules on interbank compensation.

            (e) If any Credit  Party shall fail to make any payment  required to
be made by it pursuant to Section  2.5(b) or  2.15(d),  then the  Administrative
Agent may, in its discretion  (notwithstanding  any contrary  provision hereof),
apply  any  amounts  thereafter  received  by the  Administrative  Agent for the
account of such Credit Party to satisfy such Credit  Party's  obligations  under
such Sections until all such unsatisfied obligations are fully paid.

      Section 2.16. Mitigation  Obligations;  Replacement of Lenders. (a) If any
Lender requests  compensation under Section 2.12, or if the Borrower is required
to pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender  pursuant  to Section  2.14,  then such  Lender  shall use
reasonable  efforts to  designate  a  different  Applicable  Lending  Office for
funding or booking  its Loans (or any  participation  therein)  hereunder  or to
assign its rights and obligations hereunder to another of its offices,  branches
or  affiliates,  if,  in the  judgment  of  such  Lender,  such  designation  or
assignment  (i) would  eliminate or reduce amounts  payable  pursuant to Section
2.12 or 2.14,  as the case may be, in the future and (ii) would not subject such
Lender to any material  unreimbursed  cost or expense and would not otherwise be
materially disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.

            (b) If at any  time  (i)  any  Lender  requests  compensation  under
Section 2.12, or if the Borrower is required to pay any additional amount to any
Lender or any  Governmental  Authority for the account of any Lender pursuant to
Section 2.14, (ii) any Lender becomes a Non-Extending  Lender,  (iii) any Lender
defaults in its  obligation  to fund Loans  hereunder,  (iv) any Lender  becomes
insolvent  and its assets  become  subject to a receiver,  liquidator,  trustee,
custodian  or other Person  having  similar  powers or (v) any Lender  becomes a
"Non-Consenting  Lender" (as defined below),  then the Borrower may, at its sole
expense and effort,  upon  notice to such Lender and the  Administrative  Agent,
require  such Lender to (and such Lender  shall)  assign and  delegate,  without
recourse  (in  accordance  with and  subject to the  restrictions  contained  in
Section 9.4), all its interests,  rights and obligations under this Agreement to
an assignee (selected by the Borrower) that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such  assignment);  provided
that (i) the  Borrower  shall have  received  the prior  written  consent of the
Administrative Agent, which consent shall not unreasonably be withheld, and (ii)
such Lender shall have  received  payment of an amount equal to the  outstanding
principal


                                      -27-
<PAGE>

of its Loans,  accrued  interest  thereon,  accrued  fees and all other  amounts
payable to it under the Loan Documents, from the assignee (to the extent of such
outstanding  principal  and accrued  interest  and fees) or the Borrower (in the
case of all other  amounts).  A Lender  shall not be  required  to make any such
assignment and  delegation  if, prior  thereto,  as a result of a waiver by such
Lender or otherwise,  the  circumstances  entitling the Borrower to require such
assignment and delegation  cease to apply. In the event that (x) the Borrower or
the Agent has  requested  the Lenders to consent to a departure or waiver of any
provisions of the Loan Documents or to agree to any amendment  thereto,  (y) the
consent,  waiver or amendment in question  requires the agreement of all Lenders
in  accordance  with the terms of Section 9.2 and (z) the Required  Lenders have
agreed to such consent, waiver or amendment,  then any Lender who does not agree
to such  consent,  waiver or  amendment  within  three  Business  Days after the
condition  set  forth in  clause  (z)  above  has been  satisfied  and a request
therefor has been made to such Lender shall be deemed a "Non-Consenting Lender".

            (c) In lieu of replacing a Lender  pursuant to paragraph  (b) above,
provided  that no Event of Default  shall  exist,  the  Borrower may direct in a
writing delivered to the  Administrative  Agent and such Lender that such Lender
be terminated as a Lender and that the aggregate  amount of the  Commitments  be
reduced by the amount of the  Commitment  of such Lender;  provided that no more
than five Lenders in the aggregate may be terminated pursuant to this paragraph.
In such case,  the Borrower  shall pay to such Lender an amount equal to the sum
of (i) an amount  equal to the  principal  of, and all accrued  interest on, all
outstanding  Loans of such  Lender,  (ii) an amount  equal to all  accrued,  but
theretofore  unpaid,  fees owing to such Lender, and (iii) all other obligations
of the Borrower and the Guarantors owing to such Lender  concurrently  with such
termination.  Upon such  notice and  payment,  (A) such  Lender  shall  cease to
constitute a Lender hereunder, except with respect to indemnification provisions
under  this  Agreement,  which  shall  survive  as to such  Lender,  and (B) the
aggregate amount of Commitments  shall be reduced by the amount of such Lender's
Commitment  and the  Applicable  Percentages  of the remaining  Lenders shall be
adjusted accordingly.

      Section  2.17.  Increases in  Commitments.  The  Borrower  may, by written
notice to the  Administrative  Agent,  executed by the  Borrower and one or more
financial  institutions,  which may include one or more  existing  Lenders (each
such  financial  institution  being  called  a  "Prospective   Lender"),   cause
Commitments to be extended by the Prospective  Lenders (or cause the Commitments
of the  Prospective  Lenders to be increased,  as the case may be), in an amount
for each Prospective Lender set forth in such notice,  provided,  however,  that
(a)  each  such  extension  or  increase  shall  be  effected   ratably  with  a
corresponding  extension  or  increase  in the  Commitments  (as  defined in the
Five-Year Credit  Agreement),  (b) immediately  after giving effect to each such
extension or increase,  the sum of the aggregate  amount of all such  extensions
and increases  plus the aggregate  amount of all  corresponding  extensions  and
increases  under  the  Five-Year  Credit  Agreement  shall  in no  event  exceed
$50,000,000, (c) each such extension or increase shall be in an aggregate amount
that is an integral  multiple of $5,000,000 and not less than  $10,000,000,  (d)
the Commitments shall in no event be extended or increased under this Section on
more than four (4)  occasions,  (e) each  Prospective  Lender,  if not already a
Lender hereunder,  shall be subject to the approval of the Administrative  Agent
(which  approval shall not be  unreasonably  withheld) and (f) each  Prospective
Lender,  if not  already  a  Lender  hereunder,  shall  become  a party  to this
Agreement  by  completing  and  delivering  to the  Administrative  Agent


                                      -28-
<PAGE>

a  duly  executed  Accession   Agreement.   New  Commitments  and  increases  in
Commitments pursuant to this Section shall become effective (i) in the case of a
Prospective  Lender not  already  party  hereto,  on the  effective  date of the
applicable  Accession  Agreement  and (ii) in the case of a  Prospective  Lender
already party hereto, on the date specified in the notice delivered  pursuant to
this Section.  Upon the  effectiveness  of any Accession  Agreement to which any
Prospective  Lender  not  already a party  hereto  becomes  a  Lender,  (A) such
Prospective  Lender shall  thereafter be deemed to be a party to this  Agreement
and shall be entitled to all rights,  benefits and privileges  accorded a Lender
hereunder and subject to all obligations of a Lender  hereunder and (B) Schedule
2.1 shall be deemed  to have been  amended  to  reflect  the  Commitment  of the
additional   Lender  as  provided  in  such   Accession   Agreement.   Upon  the
effectiveness  of any extension or increase under this Section in the Commitment
of a Lender already a party hereunder, Schedule 2.1 shall be deemed to have been
amended  to  reflect  the  extended  or  increased  Commitment  of such  Lender.
Notwithstanding the foregoing, no extension or increase in the total Commitments
(or in the Commitment of any Lender) shall become  effective  under this Section
unless the Administrative Agent shall have received a certificate dated the date
of such  increase  and duly  executed by a Financial  Officer  stating  that the
conditions  set forth in  paragraphs  (a),  (b) and (c) of Section 4.2 have been
satisfied as of the date of such  extension or increase  (with all references in
such  paragraphs to a Borrowing  being deemed to be references to such extension
or increase).  If Loans would be outstanding  immediately after giving effect to
any   extension  or  increase  of  a  Commitment   under  this   Section,   then
simultaneously with such extension or increase,  (1) each applicable Prospective
Lender  and each  other  Lender  shall be deemed to have  entered  into a master
assignment and acceptance agreement, in form and substance substantially similar
to Exhibit A,  pursuant to which each such other Lender  shall have  assigned to
each  such  Prospective  Lender a  portion  of its Loans  necessary  to  reflect
proportionately  the Commitments as adjusted in accordance with this Section and
(2) in connection with such assignment,  each such Prospective  Lender shall pay
to the Administrative  Agent, for the account of the other Lenders,  such amount
as shall be necessary to  appropriately  reflect the  assignment to it of Loans,
and in connection  with such master  assignment each such other Lender may treat
the  assignment  of Eurodollar  Borrowings  as a prepayment  of such  Eurodollar
Borrowings for purposes of Section 2.13.

ARTICLE 3. Representations and Warranties

            In order to induce the Credit  Parties to enter into this  Agreement
and  the  Lenders  to  make  the  Loans,   the  Borrower   makes  the  following
representations and warranties to the Credit Parties:

      Section 3.1. Organization and Powers. Each of the Borrower, the Guarantors
and the other  Subsidiaries is duly organized or formed and validly  existing in
good  standing  under  the  laws of the  jurisdiction  of its  incorporation  or
formation and has all  requisite  power and authority to own its Property and to
carry on its  business  as now  conducted,  except in the case of  non-Guarantor
Subsidiaries  where the failure to be so  organized  or formed,  or to have such
power and authority, or to own such Property, or to carry on such business could
not reasonably be expected to have a Material Adverse Effect.


                                      -29-
<PAGE>

      Section 3.2.  Authorization.  Each of the Borrower and the  Guarantors has
full legal power and authority to enter into,  execute,  deliver and perform the
terms of each Loan  Document  to which it is a party,  to incur the  obligations
provided  for herein or therein  and, in the case of the  Borrower,  to make the
borrowings  contemplated  hereby,  all of which have been duly authorized by all
proper and  necessary  corporate  or other  applicable  action,  and each of the
Borrower  and the  Guarantors  is in full  compliance  with its  certificate  of
incorporation, by-laws or other organizational documents.

      Section 3.3.  Enforceability.  Each Loan Document  constitutes a valid and
legally  binding  obligation  of each of the Borrower and the  Guarantors to the
extent it is a party thereto,  enforceable in accordance with its terms,  except
as such  enforceability  may be limited by  applicable  bankruptcy,  insolvency,
reorganization  or other similar laws  affecting the  enforcement  of creditors'
rights generally.

      Section 3.4.  Litigation.  Except as set forth in the Financial Statements
or Schedule 3.4, there are no actions,  suits or proceedings at law or in equity
or by or before any Governmental Authority (whether purportedly on behalf of the
Borrower  or  any of the  Subsidiaries)  pending  or,  to the  knowledge  of the
Borrower,  threatened  against the Borrower or any of the Subsidiaries or any of
their  respective  Properties or rights,  which could  reasonably be expected to
have a Material Adverse Effect and result in a violation of Section 6.7.

      Section 3.5. Required Consents. Except for information and similar filings
required to be made in the ordinary course of business which are not a condition
to the  Borrower's  or any  Guarantor's  performance  under any Loan Document to
which it is a party,  no consent,  authorization  or approval  of,  filing with,
notice to, or exemption by, any Governmental Authority is required to authorize,
or is required in connection with the execution, delivery and performance by the
Borrower or any Guarantor  of, any Loan  Document to which it is a party,  or is
required as a condition to the validity or  enforceability  of any Loan Document
to which it is a party, except for consents, authorizations, approvals, filings,
notices or  exemptions  which were not  required to be obtained on or before the
Effective  Date and either have been obtained or the failure to obtain could not
reasonably be expected to have a Material Adverse Effect.

      Section 3.6. Compliance with Applicable Laws. Neither the Borrower nor any
of the  Subsidiaries  is in default with respect to any judgment,  order,  writ,
injunction, decree or decision of any Governmental Authority which default could
reasonably be expected to have a Material  Adverse Effect.  Each of the Borrower
and the  Subsidiaries  is complying in all material  respects with all statutes,
regulations,  rules and orders applicable to it of all Governmental Authorities,
a violation  of which could  reasonably  be expected to have a Material  Adverse
Effect.

      Section 3.7. Taxes. Each of the Borrower and the Subsidiaries has filed or
caused to be filed all tax  returns  required  to be filed and has paid,  or has
made  adequate  provision  for the  payment  of,  all taxes  shown to be due and
payable on said returns or in any  assessments  made against it,  except (a) any
Taxes that are being contested in good faith by appropriate  proceedings and for
which the Borrower or such Subsidiary, as applicable, has set aside on its books
adequate  reserves as shall be required by the  Accountants  in accordance  with
GAAP or (b) to the  extent  that the  failure to do so could not  reasonably  be
expected to result in a Material Adverse Effect.


                                      -30-
<PAGE>

      Section  3.8.  Governmental  Regulations.  Neither  the  Borrower  nor any
Guarantor is subject to regulation  under the Public Utility Holding Company Act
of 1935,  as amended,  the Federal  Power Act or the  Investment  Company Act of
1940,  as amended,  and neither the Borrower nor any Guarantor is subject to any
statute or regulation  which prohibits the incurrence of indebtedness  under any
Loan Document to which it is a party, including statutes or regulations relative
to common or contract carriers or to the sale of electricity, gas, steam, water,
telephone, telegraph or other public utility services.

      Section 3.9. Federal Reserve Regulations; Use of Loan Proceeds. No part of
the proceeds of the Loans will be used,  directly or  indirectly,  for a purpose
which violates the provisions of Regulations T, U or X of the Board, as amended.
The  execution,  delivery and  performance  of each Loan Document by each of the
Borrower  and the  Guarantors,  to the  extent it is a party  thereto,  will not
violate any material law, rule or regulation of any Governmental Authority.

      Section 3.10. Financial Statements.  The Borrower has heretofore furnished
to the Credit Parties its  Consolidated  balance sheet and statements of income,
stockholders  equity  and cash  flows (i) as of and for the  fiscal  year  ended
February  3,  2001,  reported  on by  Ernst  &  Young  LLP,  independent  public
accountants,  and (ii) as of and for the fiscal  quarter  and the portion of the
fiscal year ended May 5, 2001,  certified by its chief financial  officer.  Such
financial  statements  present fairly, in all material  respects,  the financial
position  and  results  of  operations  and cash flows of the  Borrower  and the
Consolidated  Subsidiaries  as of such dates and for such periods in  accordance
with GAAP, subject to year-end audit adjustments and the absence of footnotes in
the case of the statements referred to in clause (ii) above.

      Section 3.11.  Material Adverse Change.  Since May 5, 2001, there has been
no Material Adverse Change.

      Section 3.12.  No  Conflicting  Agreements.  The  execution,  delivery and
performance  by each of the Borrower and the Guarantors of each Loan Document to
which it is a party will not constitute a default  under,  or result in a breach
of the terms of, any mortgage, indenture, contract or agreement to which it is a
party or by which it or any of its Property is bound which could  reasonably  be
expected to have a Material  Adverse  Effect or to be materially  adverse to the
rights or interests of the Credit Parties.

      Section 3.13. Disclosure. The Borrower has disclosed to the Credit Parties
all agreements,  instruments and corporate or other  restrictions to which it or
any of the  Subsidiaries  is subject,  and all other  matters known to it, that,
individually  or in the  aggregate,  could  reasonably  be  expected  to  have a
Material  Adverse Effect.  The reports,  financial  statements,  certificates or
other written or formally  presented  information  (other than projected and pro
forma  financial  information  and  opinions)  furnished  by or on behalf of the
Borrower to any Credit  Party in  connection  with the  negotiation  of the Loan
Documents  or  delivered  thereunder  (as  modified  or  supplemented  by  other
information so furnished),  considered as a whole, does not contain any material
misstatement  of fact or omit to state any material  fact  necessary to make the
statements  therein,  in the light of the  circumstances  under  which they were
made, not  misleading.  The projected and pro forma  financial  information  and
opinions  furnished  by or on


                                      -31-
<PAGE>

behalf of the Borrower to any Credit Party in connection with the negotiation of
the Loan  Documents or delivered  thereunder  were  prepared in good faith based
upon assumptions believed to be reasonable at the time.

ARTICLE 4. Conditions Precedent

      Section 4.1.  Effective Date. The obligations of the Lenders to make Loans
hereunder  shall  not  become  effective  until  the date on  which  each of the
following  conditions  shall have been  satisfied (or waived in accordance  with
Section 9.2):

            (a) The  Administrative  Agent (or its counsel)  shall have received
from each party hereto  either (i) a  counterpart  of this  Agreement  signed on
behalf of such party or (ii) written evidence satisfactory to the Administrative
Agent (which may include  telecopy  transmission  of a signed  signature page of
this Agreement) that such party has signed a counterpart of this Agreement.

            (b) The  Administrative  Agent (or its counsel)  shall have received
the Guarantee Agreement signed on behalf of each Guarantor.

            (c) The Administrative Agent shall have received a favorable written
opinion  (addressed  to the  Credit  Parties  and dated the  Effective  Date) of
Michael L. Tumolo,  Vice President - Counsel of the Borrower,  substantially  in
the form of  Exhibit  B-1,  and Weil,  Gotshal  & Manges  LLP,  counsel  for the
Borrower and the Guarantors, substantially in the form of Exhibit B-2.

            (d) The  Administrative  Agent  shall have  received a  certificate,
dated the Effective Date, of the Secretary or an Assistant  Secretary of each of
the Borrower and the  Guarantors,  (i) attaching a true and complete copy of the
resolutions (or excerpts thereof) of its Board of Directors and of all documents
evidencing other necessary  corporate  action (in form and substance  reasonably
satisfactory  to the  Administrative  Agent) taken by it to authorize  each Loan
Document to which it is a party,  (ii) attaching a true and complete copy of its
certificate  of  incorporation,  by-laws or other  organizational  documents and
(iii) attesting as to the incumbency of each of its officers executing each Loan
Document to which it is a party,  including therein a signature specimen of each
such officer.

            (e) The  Administrative  Agent  shall have  received a  certificate,
dated  the  Effective  Date  and  signed  by  a  Financial  Officer,  confirming
compliance  with the  conditions  set forth in  paragraphs  (a),  (b) and (c) of
Section 4.2.

            (f) The Existing Credit Documents shall have been terminated and all
amounts due thereunder shall have been paid, and the Administrative  Agent shall
have received  evidence,  in form and substance  reasonably  satisfactory to it,
thereof.

            (g) The Administrative  Agent shall have received all fees and other
amounts due and payable on or prior to the  Effective  Date,  including,  to the
extent  invoiced,


                                      -32-
<PAGE>

reimbursement or payment of all reasonable out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder.

The  Administrative  Agent  shall  notify the  Borrower  and the  Lenders of the
Effective Date, and such notice shall be conclusive and binding.

      Section 4.2.  Each Credit Event.  The  obligation of each Lender to make a
Loan on the occasion of any Borrowing  shall be subject to the  satisfaction  of
the following conditions:

            (a) The  representations and warranties of the Borrower set forth in
this  Agreement  (other than those  contained  in Section 3.4 and 3.11) shall be
true  and  correct  in all  material  respects  on and as of the  date  of  such
Borrowing.

            (b) At the  time of and  immediately  after  giving  effect  to such
Borrowing, no Default shall have occurred and be continuing.

            (c) At the  time of and  immediately  after  giving  effect  to such
Borrowing, no default shall have occurred with respect to any obligations of the
Borrower or any of the Subsidiaries  representing a Material  Subsidiary  Group,
whether  as  principal,  guarantor,  surety or  otherwise,  for the  payment  of
Indebtedness as defined in clause (a), (b), (c), (e) or (g) of the definition of
such term, in an aggregate  Consolidated  principal amount exceeding $25,000,000
that would,  immediately or with the lapse of time, permit the holder or holders
of such  obligations  or any  representative  acting  on its or their  behalf to
declare such  obligations to be due and payable prior to the expressed  maturity
thereof.

Each Borrowing  shall be deemed to constitute a  representation  and warranty by
the Borrower on the date thereof as to the matters  specified in paragraphs (a),
(b) and (c) of this Section.

ARTICLE 5. Affirmative Covenants

            The Borrower  agrees that,  so long as this  Agreement is in effect,
any Loan remains  outstanding and unpaid, or any other amount is owing under any
Loan Document to any Credit Party, the Borrower will:

      Section  5.1.  Financial   Statements.   Maintain  a  standard  system  of
accounting in accordance  with GAAP, and furnish or cause to be furnished to the
Administrative Agent and each Lender:

            (a) Form 10-K.  As soon as  available,  but in any event  within 105
days after the end of each  fiscal  year of the  Borrower,  a copy of the annual
audited  Consolidated  financial statements of the Borrower and the Subsidiaries
prepared  in  conformity  with GAAP and as filed with the SEC in the  Borrower's
Annual Report on Form 10-K for such fiscal year. Such financial statements shall
be certified by the Accountants,  which  certification  shall (i) state that the
examination by the Accountants in connection with such financial  statements has
been made in accordance  with  generally  accepted  auditing  standards and (ii)
include the opinion of the Accountants that such financial  statements have been
prepared in accordance with GAAP.


                                      -33-
<PAGE>

            (b) Form 10-Q. As soon as available, but in any event within 50 days
after the end of each fiscal  quarter  (except the last fiscal  quarter) of each
fiscal  year  of  the  Borrower,  copies  of  unaudited  Consolidated  financial
statements  of the  Borrower and the  Subsidiaries  as filed with the SEC in the
Borrower's Quarterly Report on Form 10-Q for such fiscal quarter.

            (c)  Ratings.  As soon as  available,  but in any event  within  two
Business  Days after any downgrade or withdrawal by either S&P or Moody's of any
debt rating  assigned to the Index Debt,  written  notice to the  Administrative
Agent thereof,  and of the effective  date thereof,  in each case certified by a
Financial Officer.

            (d) Compliance Certificate. The financial statements to be delivered
pursuant to paragraphs (a) and (b) above (the "Financial  Statements")  shall be
accompanied by a certificate  of a Financial  Officer,  (i)  certifying  that no
Default  has  occurred  and was  continuing  as of the end of the fiscal  period
covered  by  such  statements,  or,  if  such a  Default  has  occurred  and was
continuing at the end of such fiscal period, the action the Borrower proposes to
take  with  respect   thereto  and  (ii)  setting  forth   reasonably   detailed
calculations demonstrating compliance with Sections 6.6 and 6.7.

            (e) Other Information. Such other information regarding the Borrower
or any  Subsidiary as any Credit Party may,  through the  Administrative  Agent,
reasonably and in good faith request in writing.

      Section   5.2.   Certificates;   Other   Information.   Furnish   to   the
Administrative Agent and each Lender:

            (a) prompt  written  notice if there shall occur and be continuing a
Default; and

            (b) promptly upon their becoming available,  copies of all (i) 10-K,
10-Q, 8-K or other material, regular, periodic or special reports, schedules and
other  documents  which  the  Borrower  or any of the  Subsidiaries  may  now or
hereafter be required to file with or deliver to any securities  exchange or the
SEC and (ii) material news releases and annual reports  relating to the Borrower
or any of the Subsidiaries.

      Section  5.3.  Legal  Existence.  Except as  permitted in Section 6.1, the
Borrower  shall  maintain  its (i)  legal  existence  and good  standing  in the
jurisdiction  of  its  incorporation  and  (ii)  good  standing  in  each  other
jurisdiction in which the failure so to do could  reasonably be expected to have
a Material Adverse Effect, and except as a result of any transaction involving a
Subsidiary  that is not prohibited by this  Agreement,  the Borrower shall cause
each of the  Subsidiaries  (other than  Subsidiaries  that do not  constitute  a
Material Subsidiary Group) to maintain its (a) legal existence and good standing
in the  jurisdiction of its  incorporation or formation and (b) good standing in
each  other  jurisdiction  in which the  failure  so to do could  reasonably  be
expected to have a Material Adverse Effect.

      Section  5.4.  Taxes.  Pay and  discharge  when due, and cause each of the
Subsidiaries so to do, all Taxes,  assessments and governmental charges, license
fees and levies  which,  if  unpaid,  could  reasonably  be  expected  to have a
Material Adverse Effect, except such Taxes,  assessments,


                                      -34-
<PAGE>

charges,  license  fees and levies that shall be  contested in good faith and by
appropriate  proceedings diligently conducted by the Borrower or such Subsidiary
and provided that the Borrower shall give the Administrative Agent prompt notice
of such contest and that such reserve or other appropriate provision as shall be
required  by the  Accountants  in  accordance  with  GAAP  shall  have been made
therefor.

      Section 5.5. Observance of Legal  Requirements.  Observe and comply in all
respects,  and  cause  each  of  the  Subsidiaries  so to  do,  with  all  laws,
ordinances,  orders,  judgments,  rules,  regulations  and  requirements  of all
Governmental  Authorities,  which now or at any time hereafter may be applicable
to it, a  violation  of which  could  reasonably  be expected to have a Material
Adverse  Effect,  except such thereof as shall be contested in good faith and by
appropriate  proceedings  diligently conducted by it, provided that the Borrower
shall give the Administrative  Agent prompt notice of such contest and that such
reserve or other  appropriate  provision as shall be required by the Accountants
in accordance with GAAP shall have been made therefor.

      Section 5.6. Inspection of Property; Books and Records;  Discussions. Keep
proper  books of record and account in which full,  true and correct  entries in
conformity  with GAAP and all  requirements of law shall be made of all dealings
and  transactions  in relation to its business  and  activities  and,  after the
occurrence  and  during  the   continuance  of  an  Event  of  Default,   permit
representatives  of any Credit  Party,  upon at least two  Business  Days' prior
written  notice,  to  visit  its  corporate  headquarters,  and to  discuss  the
business,  operations,  prospects, licenses, Property and financial condition of
the Borrower and the Subsidiaries with the respective officers thereof.

ARTICLE 6. Negative Covenants

            Until the  Commitments  have expired or terminated and the principal
of and interest on each Loan and all fees payable under the Loan  Documents have
been paid in full,  the Borrower  covenants  and agrees with the Credit  Parties
that it will not:

      Section 6.1.  Merger or  Consolidation,  Etc.  (a)  Consolidate  with,  be
acquired by, or merge into or with any Person,  or convey or otherwise  transfer
all  or  substantially  all  of its  Property,  except  that  the  Borrower  may
consolidate  with or merge with  another  Person,  or convey or transfer  all or
substantially  all of its  Property  to another  Person,  provided  that (i) the
Borrower shall have given the  Administrative  Agent prior notice thereof,  (ii)
the Person formed by such consolidation or into which the Borrower is merged, or
the Person which acquires by conveyance or transfer all or substantially  all of
such Property, or any Person owning beneficially 100 percent of the Voting Stock
of such Person (in each case, the "Successor  Person") shall expressly assume by
an  instrument  executed and  delivered  to the  Administrative  Agent,  in form
reasonably  satisfactory  to the  Administrative  Agent,  the obligations of the
Borrower under the Loan Documents (at which time the Borrower shall be deemed to
be released from the Loan Documents), (iii) no Default or Event of Default shall
exist before or after giving effect  thereto and (iv) the  Administrative  Agent
shall  have  received  such   documents,   opinions  and   certificates  as  the
Administrative Agent shall have reasonably requested in connection therewith.


                                      -35-
<PAGE>

            (b) Upon any  consolidation or merger, or any conveyance or transfer
of all or  substantially  all of the Property of the Borrower in accordance with
Section 6.1(a),  the Successor  Person shall succeed to, and be substituted for,
and may  exercise  every  right  and  power  of,  and  shall be  subject  to all
obligations  and  liabilities of, the Borrower under the Loan Documents with the
same effect as if such Successor  Person had been named as the Borrower  herein.
In  the  event  of  any  such  conveyance  or  transfer,  the  Borrower,  as the
predecessor  Person,  may be  dissolved,  wound  up or  liquidated  at any  time
thereafter.

      Section 6.2.  Subsidiary  Indebtedness.  (a) Permit any Subsidiary that is
not a Guarantor  to create,  incur,  assume or permit to exist any  Indebtedness
described in clause (a),  (b),  (c), (e) or (g) of the  definition of such term,
other than:

                        (i) any such  Indebtedness  existing  on the date hereof
            and  set  forth  in  Schedule  6.2  and  extensions,   renewals  and
            replacements  of any  such  Indebtedness  that do not  increase  the
            outstanding  principal  amount  thereof  (unless  such  increase  is
            otherwise permitted by this Section);

                        (ii) any such  Indebtedness to the Borrower or any other
            Subsidiary; and

                        (iii) other such Indebtedness;  provided that the sum of
            (i) the aggregate outstanding principal amount of such Indebtedness,
            (ii) the aggregate  outstanding  principal amount of any increase of
            any  Indebtedness  permitted by paragraph (a)(i) of this Section and
            (ii) the aggregate  outstanding  principal amount of the obligations
            secured by Liens permitted under Section 6.3(h) does not at any time
            exceed 10% of Consolidated Tangible Net Worth.

            (b) Permit any Subsidiary to enter into, assume or be a party to any
Guarantee of  Indebtedness of the Borrower,  unless such  Subsidiary  shall be a
Guarantor.

      Section 6.3.  Liens,  Etc.  Create,  assume,  incur or suffer to exist, or
permit any Subsidiary to create,  assume,  incur or suffer to exist, any Lien on
any  Property now owned or  hereafter  acquired by it, or assign,  or permit any
Subsidiary to assign, any income or right with respect thereto, other than:

            (a) Permitted Encumbrances;

            (b) any  Lien on any  Property  of the  Borrower  or any  Subsidiary
existing on the date hereof and set forth in Schedule 6.3, and any other Lien on
any Property of the Borrower or any Subsidiary  existing on the date hereof that
was  incurred  in the  ordinary  course  of  business  and does not  secure  (i)
Indebtedness  to Persons  other than the Borrower or any  Subsidiary of the type
described  in clauses  (a),  (b) or (g) of the  definition  of such term or (ii)
Guarantees in respect of any such  Indebtedness;  provided that (i) no such Lien
shall apply to any other Property of the Borrower or any Subsidiary  (other than
after  acquired  title in or on such  property  and proceeds and products of the
existing  collateral in accordance  with the instrument  creating such Lien) and
(ii) any such Lien shall secure only those  obligations  which it secures on the
date  hereof and any  increase  in such  obligations  not  otherwise  prohibited
hereunder;


                                      -36-
<PAGE>

            (c) any Lien  existing  on any  Property  prior  to the  acquisition
thereof by the Borrower or any Subsidiary, and any Lien existing on any Property
of any Person (other than a Subsidiary) that is merged into or consolidated with
the Borrower or a Subsidiary,  or that otherwise becomes a Subsidiary,  prior to
the time  such  Person is so merged or  consolidated  or  becomes a  Subsidiary;
provided that (i) such Lien is not created in contemplation of such acquisition,
merger or  consolidation  or such Person becoming a Subsidiary,  as the case may
be, (ii) such Lien shall not apply to any other  Property of the Borrower or any
Subsidiary  (other than after acquired title in or on such property and proceeds
and  products of the  existing  collateral  in  accordance  with the  instrument
creating  such  Lien) and (iii) such Lien shall  secure  only those  obligations
which it secures on the date of such acquisition, merger or consolidation or the
date such Person  becomes a Subsidiary,  as the case may be, and any increase in
such obligations not otherwise prohibited hereunder;

            (d)  Liens on fixed  or  capital  assets  acquired,  constructed  or
improved by the Borrower or any  Subsidiary  securing the purchase price of such
fixed or capital assets or Indebtedness (including Capital Lease Obligations) of
the Borrower or any  Subsidiary  incurred  and used to finance the  acquisition,
construction or improvement of such fixed or capital  assets;  provided that (i)
such Liens and the Indebtedness  secured thereby are incurred prior to or within
one year  after such  acquisition  or the  completion  of such  construction  or
improvement  and (ii) such Liens  shall not apply to any other  Property  of the
Borrower  or any  Subsidiary  (other  than  after  acquired  title in or on such
property and proceeds and products of the existing collateral in accordance with
the instrument creating such Lien);

            (e) Liens arising in connection  with Capital Lease  Obligations  of
non-Guarantor  Subsidiaries not prohibited  under Section 6.2;  provided that no
such Lien shall extend to or cover any Property other than the Property  subject
to such Capital Lease Obligations;

            (f) Liens on Property of any Subsidiary  securing  obligations owing
to the Borrower or any other Subsidiary;

            (g)  Liens  securing  any   extension,   renewal  or  refunding  (or
successive  extensions,  renewals  or  refundings)  in  whole  or in part of any
obligations secured by Liens referred to in the foregoing paragraphs (a) through
(f);  provided that the principal amount of the obligations  secured by any such
Lien shall not exceed the principal amount outstanding immediately prior to such
extension,  renewal or refunding and any increase in such  prinicpal  amount not
otherwise prohibited  hereunder,  and that any such Lien shall be limited to the
Property  which,  immediately  prior to such  extension,  renewal or  refunding,
secured such obligations; and

            (h) Liens not expressly  permitted by clauses (a) through (g) above;
provided that the sum,  without  duplication,  of (i) the aggregate  outstanding
principal  amount of the  Indebtedness  permitted by clause  (a)(iii) of Section
6.2,  (ii) the  aggregate  outstanding  principal  amount of any increase of any
obligations  permitted by  paragraph  (b), (c) and (g) of this Section and (iii)
the  aggregate  principal  amount of  outstanding  obligations  secured by Liens
(which amount, in the case of any sale of accounts  receivable,  shall be deemed
to equal the lesser of the aggregate uncollected balance of the accounts so sold
and the maximum claim of the purchaser


                                      -37-
<PAGE>

with respect  thereto)  permitted by this clause (h) does not at any time exceed
10% of Consolidated Tangible Net Worth.

      Section  6.4.  Change in Nature of  Business.  Make,  or permit any of the
Subsidiaries  (other  than  Subsidiaries  that  do  not  constitute  a  Material
Subsidiary  Group) to make, any material change in the nature of its business as
carried out at the date hereof, other than reasonable extensions thereof.

      Section 6.5. Use of Proceeds. (a) Use the proceeds of the Loans other than
for working capital and other general corporate purposes,  not inconsistent with
the terms hereof or (b) use any part of the  proceeds of the Loans,  directly or
indirectly, for a purpose which violates the provisions of Regulations T, U or X
of the Board, as amended.

      Section 6.6. Fixed Charge  Coverage  Ratio.  Permit,  as of the end of any
fiscal quarter of the Borrower,  the Fixed Charge Coverage Ratio to be less than
1.80 to 1.00.

      Section 6.7. Capitalization.  Permit, at any time, the aggregate amount of
all Indebtedness for borrowed money and Indebtedness under capital leases of the
Borrower and the Consolidated Subsidiaries determined in accordance with GAAP at
such time to be greater than 58% of the sum of (i) the  aggregate of all amounts
which would be included under  shareholders'  equity on a  Consolidated  balance
sheet of the Borrower and the Subsidiaries determined in accordance with GAAP at
such time plus (ii) the aggregate  amount of all Indebtedness for borrowed money
and  Indebtedness  under  capital  leases of the Borrower  and the  Consolidated
Subsidiaries determined in accordance with GAAP at such time.

ARTICLE 7. Events of Default

            If any of the following events ("Events of Default") shall occur:

            (a) Any  installment  of  principal on any Loan shall not be paid on
the date when due and payable; or

            (b) Any (i)  installment  of  interest on any Loan or any fees shall
not be paid within five  Business  Days of the date when due and payable or (ii)
expenses or other  amounts  payable  under any Loan Document or otherwise to any
Credit  Party shall not be paid within 30 days of the date when due and payable;
or

            (c) The failure of the  Borrower to observe or perform any  covenant
or agreement contained in Section 5.2(a), Section 5.3(a) or in Article 6; or

            (d) The  failure of the  Borrower  to  observe or perform  any other
term,  covenant,  or agreement  contained in any Loan  Document and such failure
shall have continued unremedied for a period of 30 days after the Administrative
Agent shall have notified the Borrower in writing thereof; or


                                      -38-
<PAGE>

            (e) Any  representation  or warranty made in any Loan Document or in
any  certificate,  report,  opinion  (other than an opinion of counsel) or other
document  delivered  pursuant  thereto shall prove to have been incorrect in any
material respect when made or deemed made; or

            (f)  Any  obligation  of the  Borrower  or  any of the  Subsidiaries
representing a Material  Subsidiary Group (other than its obligations in respect
of the Loans), whether as principal, guarantor, surety or other obligor, for the
payment  of any  Indebtedness  in an  aggregate  Consolidated  principal  amount
exceeding  $25,000,000 (i) shall be declared to be due and payable,  or shall be
required to be prepaid other than pursuant to a regularly  scheduled  prepayment
or required  prepayment (unless such required  prepayment results from a default
or event of default  thereunder),  prior to the expressed  maturity thereof,  or
(ii)  shall not be paid when due or within  any  grace  period  for the  payment
thereof; or

            (g) The Borrower or any of the Subsidiaries  representing a Material
Subsidiary Group shall (i) make an assignment for the benefit of creditors, (ii)
file a  voluntary  petition  in  bankruptcy,  (iii) file any  petition or answer
seeking for itself any reorganization, arrangement, composition, readjustment of
debt,  liquidation  or dissolution or similar relief under any present or future
statute,  law or regulation of any  jurisdiction,  (iv) petition or apply to any
tribunal for any receiver,  custodian or any trustee for any substantial part of
its Property, (v) be the subject of any bankruptcy,  reorganization,  insolvency
or similar proceeding filed against it which remains undismissed for a period of
60 days,  (vi) file any answer  admitting the material  allegations  of any such
petition filed against it in any such proceeding,  (vii) seek, approve,  consent
to, or acquiesce in any such  proceeding,  or in the appointment of any trustee,
receiver, sequestrator,  custodian or liquidator for it, or any substantial part
of its Property, or any order is entered appointing any such trustee,  receiver,
custodian or liquidator  and such order remains in effect for 60 days, or (viii)
take any formal action for the purpose of effecting any of the foregoing; or

            (h)  An  order  for  relief  is  entered  under  the  bankruptcy  or
insolvency  laws of any  jurisdiction  (i)  adjudging the Borrower or any of the
Subsidiaries  representing  a Material  Subsidiary  Group bankrupt or insolvent,
(ii) approving as properly filed a petition seeking reorganization, liquidation,
arrangement,  adjustment or  composition of or in respect of the Borrower or any
of  the  Subsidiaries   representing  a  Material  Subsidiary  Group  under  the
bankruptcy or insolvency laws of any jurisdiction,  (iii) appointing a receiver,
liquidator,  assignee,  trustee,  custodian,   sequestrator  (or  other  similar
official) of the  Borrower or any of the  Subsidiaries  representing  a Material
Subsidiary  Group or of any  substantial  part of the  Property  thereof or (iv)
ordering the winding up or  liquidation of the affairs of the Borrower or any of
the Subsidiaries  representing a Material  Subsidiary Group, and any such decree
or order continues unstayed and in effect for a period of 60 days; or

            (i) Judgments or decrees  against one or more of the Borrower or any
of the  Subsidiaries  representing a Material  Subsidiary  Group in an aggregate
Consolidated  amount  exceeding  $25,000,000  shall  be  rendered  by a court of
competent  jurisdiction  and remain  unpaid,  unstayed on appeal,  undischarged,
unbonded  or  undismissed  for a  period  of 30  days;  provided  that  any such
judgments  or  orders  shall  not give rise to an Event of  Default  under  this
paragraph


                                      -39-
<PAGE>

(i) if and to the  extent  that (i) the  aggregate  Consolidated  amount of such
judgments or orders,  to the extent exceeding  $25,000,000,  is fully covered by
one or more valid and binding  policies of  insurance  and (ii) each  applicable
insurer has been  notified,  and has not disputed its  applicable  share of such
coverage; or

            (j) any  Termination  Event  shall  occur with  respect to which the
Borrower or any of the Subsidiaries shall have been assessed any liability in an
aggregate  Consolidated  amount exceeding  $25,000,000 which amount shall remain
unpaid for a period of 30 days,  (ii) any Accumulated  Funding  Deficiency in an
aggregate  Consolidated amount exceeding $25,000,000 shall exist with respect to
any Pension Plan and such  Accumulated  Funding  Deficiency  shall not have been
eliminated within a period of 30 days after it shall have been determined, (iii)
any Person shall engage in any  Prohibited  Transaction  involving  any Employee
Benefit Plan and, as a result thereof,  the Borrower or any of the  Subsidiaries
shall have been  assessed  an excise tax  penalty in an  aggregate  Consolidated
amount exceeding $25,000,000 which amount shall remain unpaid for a period of 30
days;  unless and to the extent only that such  Termination  Event,  Accumulated
Funding  Deficiency or Prohibited  Transaction is being contested by appropriate
proceedings in good faith by the Borrower or such Subsidiary or Subsidiaries; or

            (k) (i) Any Person or two or more  Persons  acting in concert  shall
have  acquired  beneficial  ownership  (within  the meaning of Rule 13d-3 of the
Securities and Exchange Act of 1934), directly or indirectly, of Voting Stock of
the Borrower representing 20% or more of the combined voting power of all Voting
Stock of the Borrower; or (ii) during any period of up to 24 consecutive months,
commencing after the date of this Agreement, individuals who at the beginning of
such 24-month  period were directors of the Borrower shall cease to constitute a
majority of the board of directors of the Borrower and the replacements  thereof
shall not have been  approved by a vote of at least a majority of the members of
the board of directors then still in office who either were members of the board
of directors at the beginning of such period or whose election as members of the
board of directors was previously so approved; or

            (l) the  Guarantee  Agreement  shall be  determined  by a final  and
non-appealable decision of a court having jurisdiction over the matter, or shall
be claimed in writing by a Guarantor, not to be in full force and effect;

then,  and in every such event (other than an event with respect to the Borrower
described  in clause  (g) or (h) of this  Article),  and at any time  thereafter
during the continuance of such event, the  Administrative  Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then  outstanding  to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable),  and thereupon the principal of the Loans so
declared to be due and payable,  together with accrued  interest thereon and all
fees and other obligations of the Borrower accrued  hereunder,  shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind,  all of which are hereby  waived by the  Borrower;  and in case of any
event  with  respect  to the  Borrower  described  in clause  (g) or (h) of this
Article, the Commitments


                                      -40-
<PAGE>

shall  automatically  terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder,  shall automatically become due and payable, without
presentment,  demand,  protest  or other  notice of any  kind,  all of which are
hereby waived by the Borrower.

ARTICLE 8. The Administrative Agent

            Each of the Lenders hereby appoints the Administrative  Agent as its
agent and authorizes the Administrative Agent to take such actions on its behalf
and to exercise such powers as are delegated to the Administrative  Agent by the
terms hereof, together with such actions and powers as are reasonably incidental
thereto.

            The bank serving as the  Administrative  Agent  hereunder shall have
the same rights and powers in its  capacity as a Lender as any other  Lender and
may exercise the same as though it were not the  Administrative  Agent, and such
bank and its  Affiliates may accept  deposits from,  lend money to and generally
engage in any kind of  business  with the  Borrower or any  Subsidiary  or other
Affiliate thereof as if it were not the Administrative Agent hereunder.

            The  Administrative  Agent shall not have any duties or  obligations
except those expressly set forth herein.  Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other  implied  duties,  regardless  of whether a Default  has  occurred  and is
continuing,  (b) the  Administrative  Agent  shall not have any duty to take any
discretionary action or exercise any discretionary  powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or
percentage  of the  Lenders as shall be  necessary  under the  circumstances  as
provided  in Section  9.2) and (c) except as  expressly  set forth  herein,  the
Administrative  Agent  shall  not have any duty to  disclose,  and  shall not be
liable for the failure to disclose,  any information relating to the Borrower or
any of the Subsidiaries  that is communicated to or obtained by the bank serving
as  Administrative  Agent  or  any  of  its  Affiliates  in  any  capacity.  The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary  under the  circumstances  as
provided  in  Section  9.2) or in the  absence  of its own gross  negligence  or
willful  misconduct.  The  Administrative  Agent  shall  be  deemed  not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative  Agent by the Borrower or a Lender, and the Administrative  Agent
shall not be  responsible  for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with any Loan
Document,  (ii) the  contents  of any  certificate,  report  or  other  document
delivered  hereunder  or in  connection  therewith,  (iii)  the  performance  or
observance of any of the covenants,  agreements or other terms or conditions set
forth therein, (iv) the validity,  enforceability,  effectiveness or genuineness
of any Loan Document or any other  agreement,  instrument or document or (v) the
satisfaction  of any  condition  set forth in Article 4 or elsewhere in any Loan
Document,  other  than to  confirm  receipt of items  expressly  required  to be
delivered to the Administrative Agent.


                                      -41-
<PAGE>

            The  Administrative  Agent shall be entitled to rely upon, and shall
not incur any  liability  for relying upon,  any notice,  request,  certificate,
consent, statement,  instrument,  document or other writing believed by it to be
genuine and to have been signed or sent by the proper Person. The Administrative
Agent also may rely upon any  statement  made to it orally or by  telephone  and
believed  by it to be made  by the  proper  Person,  and  shall  not  incur  any
liability for relying thereon.  The Administrative  Agent may consult with legal
counsel (who may be counsel for the Borrower), independent accountants and other
experts  selected  by it, and shall not be liable  for any  action  taken or not
taken by it in accordance  with the advice of any such counsel,  accountants  or
experts.

            The  Administrative  Agent may  perform  any and all its  duties and
exercise  its  rights  and  powers  by or  through  any one or  more  sub-agents
appointed by the  Administrative  Agent. The  Administrative  Agent and any such
sub-agent  may perform any and all its duties and exercise its rights and powers
through their  respective  Related  Parties.  The exculpatory  provisions of the
preceding  paragraphs  shall  apply to any  such  sub-agent  and to the  Related
Parties of the Administrative  Agent and any such sub-agent,  and shall apply to
their  respective  activities in connection  with the  syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.

            Subject  to  the   appointment   and   acceptance   of  a  successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by  notifying  the  Lenders and the  Borrower.  Upon any such
resignation,  the Required Lenders shall have the right, with the consent of the
Borrower so long as no Event of Default  shall have  occurred and be  continuing
(such consent not to be unreasonably  withheld),  to appoint a successor.  If no
successor  shall have been so appointed  by the Required  Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative Agent
gives notice of its resignation,  then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent which shall be a
bank with an office in New York,  New York,  or an  Affiliate  of any such bank.
Upon the acceptance of its  appointment as  Administrative  Agent hereunder by a
successor,  such  successor  shall  succeed  to and become  vested  with all the
rights, powers,  privileges and duties of the retiring Administrative Agent, and
the  retiring  Administrative  Agent  shall be  discharged  from its  duties and
obligations hereunder.

            The  Administrative  Agent  may be  removed  at any time by a notice
executed by the Required  Lenders and delivered to the Lenders and the Borrower.
Upon any such  removal,  the  Required  Lenders  shall have the right,  with the
consent of the Borrower so long as no Event of Default  shall have  occurred and
be  continuing  (such  consent not to be  unreasonably  withheld),  to appoint a
successor.  If no successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within 30 days after the removal of the
Administrative  Agent, then the Borrower may appoint a successor  Administrative
Agent  which  shall be a bank  with an  office  in New  York,  New  York,  or an
Affiliate  of  any  such  bank.  Upon  the  acceptance  of  its  appointment  as
Administrative  Agent hereunder by a successor,  such successor shall succeed to
and become  vested with all the  rights,  powers,  privileges  and duties of the
removed   Administrative  Agent.  The  removed  Administrative  Agent  shall  be
discharged  from its duties and obligations  hereunder  effective at the time of
its removal.


                                      -42-
<PAGE>

            The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor  unless  otherwise  agreed
between  the  Borrower  and such  successor.  After the  Administrative  Agent's
resignation or removal hereunder, the provisions of this Article and Section 9.3
shall   continue  in  effect  for  the  benefit  of  such  retiring  or  removed
Administrative  Agent,  its sub-agents and their  respective  Related Parties in
respect of any actions  taken or omitted to be taken by any of them while it was
acting as Administrative Agent.

            Each  Lender  acknowledges  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 credit
analysis  and  decision  to  enter  into  this   Agreement.   Each  Lender  also
acknowledges  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 from time to time deem appropriate, continue to make its
own  decisions  in  taking or not  taking  action  under or based  upon any Loan
Document,   any  related  agreement  or  any  document  furnished  hereunder  or
thereunder.

ARTICLE 9. Miscellaneous

      Section   9.1.   Notices.   Except  in  the  case  of  notices  and  other
communications  expressly  permitted to be given by  telephone,  all notices and
other  communications  provided  for  herein  shall be in  writing  and shall be
delivered  by  hand  or  overnight  courier  service,  mailed  by  certified  or
registered mail or sent by telecopy, as follows:

            (a) if to the Borrower,  to it at 225 Summit Avenue,  Montvale,  New
Jersey 07645-1523,  Attention of Jon W. Kimmins, Senior Vice President-Treasurer
(Telecopy No. (201) 802-5877);

            (b) if to the Administrative  Agent, to it at One Wall Street,  18th
Floor,  New York,  New York 10286,  Attention of Susan E. Baratta  (Telecopy No.
(212)  635-4659),  with a copy to The Bank of New York, at One Wall Street,  New
York,  New York 10286,  Attention  of:  Howard F.  Bascom  (Telecopy  No.  (212)
635-1483); and

            (c) if to any other Credit Party,  to it at its address (or telecopy
number)  set forth in its  Administrative  Questionnaire,  a copy of  which,  if
requested by the Borrower, shall have been delivered to the Borrower.

Any party hereto may change its address or telecopy number for notices and other
communications  hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.

      Section 9.2.  Waivers;  Amendments.  (a) No failure or delay by any Credit
Party in exercising  any right or power under any Loan Document shall operate as
a waiver thereof,  nor shall any single or partial exercise of any such right or
power, or any abandonment or  discontinuance of steps to enforce such a right or
power,  preclude  any other or further  exercise  thereof or the exercise of any
other right or power.  The rights and remedies of the Credit  Parties


                                      -43-
<PAGE>

under the Loan  Documents are  cumulative and are not exclusive of any rights or
remedies that they would  otherwise have. No waiver of any provision of any Loan
Document or consent to any departure by the Borrower or any Guarantor  therefrom
shall in any event be effective  unless the same shall be permitted by paragraph
(b) of this Section,  and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given.  Without limiting the
generality  of the  foregoing,  the making of a Loan shall not be construed as a
waiver of any  Default,  regardless  of whether  any  Credit  Party may have had
notice or knowledge of such Default at the time.

            (b)  Neither  any Loan  Document  nor any  provision  thereof may be
waived,  amended or modified  except  pursuant to an agreement or  agreements in
writing entered into by the Borrower or the Guarantors,  as applicable,  and the
Required  Lenders or by the Borrower or the Guarantors,  as applicable,  and the
Administrative Agent with the consent of the Required Lenders;  provided that no
such  agreement  shall (i) increase  the  Commitment  of any Lender  without the
written consent of such Lender, (ii) reduce the principal amount of any Loan, or
reduce the rate of interest  thereon  (other  than under  Section  2.10(c)),  or
reduce any fees payable  hereunder,  without the written  consent of each Lender
affected thereby,  (iii) postpone the scheduled date of payment of the principal
amount of any Loan  (except as  provided  in Section  2.4(c)),  or any  interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse
any such payment, or postpone the scheduled date of expiration of any Commitment
(except as provided  in Section  2.4(c)),  without  the written  consent of each
Lender  affected  thereby,  (iv) change Section  2.15(b) or (c) in a manner that
would  alter the pro rata  sharing of  payments  required  thereby  without  the
written  consent  of each  Lender or (v) change  any of the  provisions  of this
Section or the definition of "Required  Lenders" or any other  provision  hereof
specifying  the number or  percentage  of Lenders  required  to waive,  amend or
modify any  rights  hereunder  or make any  determination  or grant any  consent
hereunder,  without the written consent of each Lender; provided,  further, that
no such agreement shall amend,  modify or otherwise  affect the rights or duties
of the  Administrative  Agent hereunder without the prior written consent of the
Administrative Agent.  Notwithstanding the foregoing,  any provision of any Loan
Document may be amended by an agreement in writing  entered into by the Borrower
or the Guarantors,  as applicable,  the Required Lenders and the  Administrative
Agent if (A) by the terms of such  agreement  the  Commitment of each Lender not
consenting  to the  amendment  provided  for  therein  shall  terminate  upon or
simultaneously  with  the  effectiveness  of  such  amendment  and  (B)  upon or
simultaneously  with  the  effectiveness  of such  amendment,  each  Lender  not
consenting  thereto  receives  payment in full of the  principal of and interest
accrued on each Loan made by it and all other amounts owing to it or accrued for
its account under the Loan Documents.

      Section 9.3.  Expenses;  Indemnity;  Damage Waiver. (a) The Borrower shall
pay (i) all reasonable  out-of-pocket  expenses  incurred by the  Administrative
Agent  and  its  Affiliates,   including  the  reasonable   fees,   charges  and
disbursements  of counsel for the  Administrative  Agent, in connection with the
syndication of the credit  facilities  provided for herein,  the preparation and
administration of each Loan Document or any amendments, modifications or waivers
of the provisions thereof (whether or not the transactions  contemplated thereby
shall be consummated),  and (ii) all reasonable  out-of-pocket expenses incurred
by any Credit  Party,  including  the fees,  charges  and  disbursements  of any
counsel for any Credit Party,  in connection


                                      -44-
<PAGE>

with the  enforcement  or protection  of its rights in connection  with the Loan
Documents,   including  its  rights  under  this  Section,  including  all  such
out-of-pocket   expenses   incurred   during  any  workout,   restructuring   or
negotiations in respect of such Loans.

            (b) The Borrower shall indemnify each Credit Party, and each Related
Party  of any of the  foregoing  Persons  (each  such  Person  being  called  an
"Indemnitee")  against,  and hold each  Indemnitee  harmless  from,  any and all
losses,  claims,  damages,  liabilities  and  related  expenses,  including  the
reasonable  fees,  charges and  disbursements of any counsel for any Indemnitee,
incurred by or asserted  against any  Indemnitee  arising out of, in  connection
with,  or as a result of (i) the  execution or delivery of any Loan  Document or
any agreement or instrument contemplated thereby, the performance by the parties
thereto of their  respective  obligations  thereunder or the consummation of the
Transactions or any other transactions  contemplated  thereby,  (ii) any Loan or
the use of the proceeds thereof,  (iii) any  Environmental  Liability related in
any way to the  Borrower  or any of the  Subsidiaries,  or (iv)  any  actual  or
prospective claim,  litigation,  investigation or proceeding  relating to any of
the  foregoing,  whether  based  on  contract,  tort  or any  other  theory  and
regardless  of whether any  Indemnitee  is a party  thereto;  provided that such
indemnity shall not, as to any Indemnitee,  be available to the extent that such
losses, claims, damages,  liabilities or related expenses have resulted from (A)
the gross  negligence  or willful  misconduct  of such  Indemnitee or any of its
Related Parties or (B) any material breach by such Indemnitee of its obligations
as set forth in this Agreement.

            (c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative  Agent under paragraph (a) or (b) of this
Section,  each Lender severally agrees to pay to the Administrative  Agent, such
Lender's  Applicable  Percentage  (determined as of the time that the applicable
unreimbursed  expense or  indemnity  payment is sought) of such  unpaid  amount;
provided that the  unreimbursed  expense or  indemnified  loss,  claim,  damage,
liability  or related  expense,  as the case may be, was incurred by or asserted
against the Administrative Agent in its capacity as such.

            (d) To the extent  permitted by applicable  law, the Borrower  shall
not assert, and hereby waives,  any claim against any Indemnitee,  on any theory
of liability, for any special,  indirect,  consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or the use of the proceeds thereof.

            (e) All amounts  due under this  Section  shall be payable  promptly
after written demand therefor.

      Section 9.4. Successors and Assigns.  (a) The provisions of this Agreement
shall be binding  upon and inure to the benefit of the parties  hereto and their
respective successors and assigns permitted hereby, except that the Borrower may
not assign or  otherwise  transfer  any of its rights or  obligations  hereunder
without the prior written consent of each Credit Party unless such assignment or
transfer is made by the Borrower in  accordance  with Section 6.1 (and any other
attempted  assignment or transfer by the Borrower  without such consent shall be
null and void).  Nothing  in this  Agreement,  expressed  or  implied,  shall be
construed  to confer  upon any Person  (other  than the  parties  hereto,  their
respective  successors and assigns permitted hereby and, to the


                                      -45-
<PAGE>

extent expressly  contemplated hereby, the Related Parties of each Credit Party)
any  legal or  equitable  right,  remedy  or claim  under or by  reason  of this
Agreement.

            (b) Any Lender may assign to one or more  assignees all or a portion
of its rights and obligations  under this Agreement  (including all or a portion
of its  Commitment  and the Loans at the time  owing to it);  provided  that (i)
except in the case of an  assignment  to a Lender or an  Affiliate  of a Lender,
each of the Borrower and the Administrative  Agent must give their prior written
consent to such assignment  (which consent shall not be unreasonably  withheld),
(ii) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an  assignment  of the  entire  remaining  amount of the  assigning  Lender's
Commitment, the amount of the Commitment of the assigning Lender subject to each
such  assignment  (determined as of the date the Assignment and Acceptance  with
respect to such assignment is delivered to the  Administrative  Agent) shall not
be less than $5,000,000 unless each of the Borrower and the Administrative Agent
otherwise consent,  (iii) each partial assignment shall be made as an assignment
of a  proportionate  part of all the assigning  Lender's  rights and obligations
under this  Agreement,  (iv) the parties to each  assignment  shall  execute and
deliver to the Administrative Agent an Assignment and Acceptance, together with,
unless  otherwise  agreed  by  the   Administrative   Agent,  a  processing  and
recordation  fee of $3,500  and (v) the  assignee,  if it shall not be a Lender,
shall deliver to the  Administrative  Agent an Administrative  Questionnaire,  a
copy of which shall, if requested by the Borrower, be delivered to the Borrower;
and provided further that any consent of the Borrower  otherwise  required under
this  paragraph  shall not be required if an Event of Default  under clause (a),
(b),  (g) or (h) of  Article  7 has  occurred  and  is  continuing.  Subject  to
acceptance and recording thereof pursuant to paragraph (d) of this Section, from
and after the effective  date  specified in each  Assignment  and Acceptance the
assignee  thereunder  shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under the Loan Documents,  and the assigning Lender  thereunder shall, to
the extent of the  interest  assigned  by such  Assignment  and  Acceptance,  be
released from its  obligations  under the Loan Documents (and, in the case of an
Assignment  and  Acceptance  covering all of the assigning  Lender's  rights and
obligations  under this Agreement,  such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections 2.12,  2.13,  2.14
and 9.3). Any assignment or transfer by a Lender of rights or obligations  under
this  Agreement  that does not comply with this  paragraph  shall be treated for
purposes of this Agreement as a sale by such Lender of a  participation  in such
rights and obligations in accordance with paragraph (e) of this Section.

            (c) The Administrative Agent, acting for this purpose as an agent of
the  Borrower,  shall  maintain  at one of its offices in The City of New York a
copy of each  Assignment and  Acceptance  delivered to it and a register for the
recordation  of the names and addresses of the Lenders,  and the  Commitment of,
and  principal  amount of the Loans owing to, each Lender  pursuant to the terms
hereof from time to time (the "Register").  The entries in the Register shall be
conclusive,  and the Borrower and the Credit Parties may treat each Person whose
name is  recorded  in the  Register  pursuant  to the  terms  hereof as a Lender
hereunder  for all  purposes of this  Agreement,  notwithstanding  notice to the
contrary. The Register shall be available for inspection by the Borrower and any
Lender,  at any  reasonable  time and from  time to time upon  reasonable  prior
notice.


                                      -46-
<PAGE>

            (d) Upon its receipt of a duly  completed  Assignment and Acceptance
executed  by an  assigning  Lender and an  assignee,  the  assignee's  completed
Administrative  Questionnaire  (unless the  assignee  shall  already be a Lender
hereunder),  the processing and  recordation fee referred to in paragraph (b) of
this Section and any written  consent to such  assignment  required by paragraph
(b) of this Section,  the Administrative  Agent shall accept such Assignment and
Acceptance  and record the  information  contained  therein in the Register.  No
assignment  shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.

            (e) Any Lender  may,  without  the  consent of the  Borrower  or the
Administrative Agent, sell participations to one or more banks or other entities
(a  "Participant")  in all or a portion of such Lender's  rights and obligations
under this  Agreement  (including  all or a portion of its  Commitment and Loans
owing to it);  provided  that  (i)  such  Lender's  obligations  under  the Loan
Documents  shall  remain  unchanged,   (ii)  such  Lender  shall  remain  solely
responsible to the other parties hereto for the performance of such  obligations
and (iii) the Borrower and the Credit  Parties shall continue to deal solely and
directly  with  such  Lender  in  connection   with  such  Lender's  rights  and
obligations  under the Loan Documents.  Any agreement or instrument  pursuant to
which a Lender sells such a  participation  shall provide that such Lender shall
retain  the sole  right  to  enforce  the  Loan  Documents  and to  approve  any
amendment,  modification  or  waiver  of any  provision  of any  Loan  document;
provided  that such  agreement or  instrument  may provide that such Lender will
not,  without  the  consent  of  the   Participant,   agree  to  any  amendment,
modification  or waiver  described in the first  proviso to Section  9.2(b) that
affects such Participant. Subject to paragraph (f) of this Section, the Borrower
agrees that each Participant shall be entitled to the benefits of Sections 2.12,
2.13 and 2.14 to the same  extent as if it were a Lender  and had  acquired  its
interest by assignment  pursuant to paragraph (b) of this Section. To the extent
permitted  by law,  each  Participant  also shall be entitled to the benefits of
Section 9.8 as though it were a Lender,  provided such Participant  agrees to be
subject to Section 2.15(c) as though it were a Lender.

            (f) A  Participant  shall not be  entitled  to receive  any  greater
payment  under Section 2.12 or 2.14 than the  applicable  Lender would have been
entitled to receive with respect to the participation  sold to such Participant.
A  Participant  that would be a Foreign  Lender if it were a Lender shall not be
entitled to the  benefits of Section 2.14 unless the Borrower is notified of the
participation  sold to such  Participant and such  Participant  agrees,  for the
benefit of the  Borrower,  to comply  with  Section  2.14(c) as though it were a
Lender.

            (g) Any Lender may at any time pledge or assign a security  interest
in all or any  portion  of  its  rights  under  the  Loan  Documents  to  secure
obligations  of such  Lender,  including  any  pledge  or  assignment  to secure
obligations  to a Federal  Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security  interest;  provided that no such pledge
or  assignment  of a security  interest  shall  release a Lender from any of its
obligations  under the Loan Documents or substitute any such pledgee or assignee
for such Lender as a party  hereto and any  foreclosure  by any such  pledgee or
assignee (other than a Federal Reserve Bank) shall be subject to Section 9.4(b).


                                      -47-
<PAGE>

      Section 9.5.  Survival.  All covenants,  agreements,  representations  and
warranties  made  by  the  Borrower  herein  and in the  certificates  or  other
instruments  delivered in connection with or pursuant to this Agreement shall be
considered  to have been  relied  upon by the  other  parties  hereto  and shall
survive the  execution  and delivery of each Loan Document and the making of any
Loans,  regardless of any  investigation  made by any such other party or on its
behalf  and  notwithstanding  that any  Credit  Party  may have  had  notice  or
knowledge of any Default or incorrect representation or warranty at the time any
credit is  extended  hereunder,  and shall  continue in full force and effect as
long as the  principal of or any accrued  interest on any Loan or any fee or any
other amount  payable under any Loan Document is  outstanding  and unpaid and so
long as the  Commitments  have not  expired or  terminated.  The  provisions  of
Sections 2.12, 2.13, 2.14 and 9.3 and Article 8 shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby,  the repayment of the Loans,  and the  Commitments or the termination of
this Agreement or any provision hereof.

      Section 9.6. Counterparts;  Integration; Effectiveness. This Agreement may
be  executed in  counterparts  (and by  different  parties  hereto on  different
counterparts), each of which shall constitute an original, but all of which when
taken  together  shall  constitute a single  contract.  This  Agreement  and any
separate  letter  agreements  with  respect to fees  payable to any Credit Party
constitute the entire contract among the parties  relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written,  relating to the subject matter  hereof.  Except as provided in Section
4.1, this Agreement  shall become  effective when it shall have been executed by
the Administrative  Agent and when the Administrative  Agent shall have received
counterparts  hereof which, when taken together,  bear the signatures of each of
the other parties hereto,  and thereafter shall be binding upon and inure to the
benefit of the  parties  hereto and their  respective  successors  and  assigns.
Delivery of an executed  counterpart  of a signature  page of this  Agreement by
telecopy  shall be effective as delivery of a manually  executed  counterpart of
this Agreement.

      Section 9.7. Severability.  In the event any one or more of the provisions
contained  in this  Agreement  or in any  other  Loan  Document  should  be held
invalid,  illegal or  unenforceable in any respect,  the validity,  legality and
enforceability  of the remaining  provisions  contained herein and therein shall
not in any way be  affected or impaired  thereby (it being  understood  that the
invalidity of a particular  provision in a particular  jurisdiction shall not in
and of itself affect the validity of such provision in any other  jurisdiction).
The parties shall  endeavor in good-faith  negotiations  to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which  comes  as  close  as  possible  to  that  of  the  invalid,   illegal  or
unenforceable provisions.

      Section  9.8.  Right of Setoff.  In addition to any rights and remedies of
the Lenders  provided by law, upon the occurrence of an Event of Default and the
acceleration of the obligations  owing in connection with this Agreement,  or at
any time upon the occurrence and during the  continuance of an Event of Default,
under  clause  (a),  (b),  (g) or (h) of Article 7, each  Lender  shall have the
right,  without  prior notice to the Borrower,  any such notice being  expressly
waived by the Borrower to the extent not prohibited by applicable law, to setoff
and apply  against  any  indebtedness,  whether  matured  or  unmatured,  of the
Borrower to such Lender, any amount owing from such Lender to the Borrower,  at,
or at any time after, the happening of any of the


                                      -48-
<PAGE>

above-mentioned  events.  To the extent not  prohibited by  applicable  law, the
aforesaid  right of setoff may be exercised by such Lender  against the Borrower
or against any trustee in bankruptcy,  custodian, debtor in possession, assignee
for the benefit of creditors,  receiver,  or  execution,  judgment or attachment
creditor of the Borrower, or against anyone else claiming through or against the
Borrower  or such  trustee  in  bankruptcy,  custodian,  debtor  in  possession,
assignee  for the benefit of  creditors,  receiver,  or  execution,  judgment or
attachment  creditor,  notwithstanding  the fact that such right of setoff shall
not have been exercised by such Lender prior to the making,  filing or issuance,
or service upon such Lender of, or of notice of, any such  petition,  assignment
for the benefit of creditors,  appointment or application for the appointment of
a receiver,  or issuance of execution,  subpoena,  order or warrant. Each Lender
agrees  promptly to notify the Borrower and the  Administrative  Agent after any
such setoff and  application  made by such Lender,  provided that the failure to
give such notice shall not affect the validity of such setoff and application.

      Section 9.9. Governing Law;  Jurisdiction;  Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York.

            (b) Each of the Borrower and the Credit Parties  hereby  irrevocably
and unconditionally  submits,  for itself and its property,  to the nonexclusive
jurisdiction  of the Supreme  Court of the State of New York sitting in New York
County and of the United States  District Court of the Southern  District of New
York,  and any  appellate  court from any thereof,  in any action or  proceeding
arising out of or relating to this Agreement or the other Loan Documents, or for
recognition  or  enforcement  of any  judgment,  and each of the parties  hereto
hereby irrevocably and unconditionally  agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent  permitted  by law,  in such  Federal  court.  Each of the parties
hereto agrees that a final  judgment in any such action or  proceeding  shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.  Nothing in this Agreement shall affect any
right that any Credit Party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan  Documents  against the Borrower or
its properties, in the courts of any jurisdiction.

            (c) Each of the Borrower and the Credit Parties  hereby  irrevocably
and unconditionally waives, to the fullest extent it may legally and effectively
do so, any objection  which it may now or hereafter  have to the laying of venue
of any suit,  action or proceeding  arising out of or relating to this Agreement
or the other Loan  Documents in any court  referred to in paragraph  (b) of this
Section.  Each of the parties hereto hereby  irrevocably  waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.

            (d) Each party to this Agreement  irrevocably consents to service of
process in the manner  provided  for  notices  in Section  9.1.  Nothing in this
Agreement  will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.


                                      -49-
<PAGE>

      Section 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES,  TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY  IN ANY  LEGAL  PROCEEDING  DIRECTLY  OR  INDIRECTLY  ARISING  OUT OF OR
RELATING TO THIS  AGREEMENT OR THE  TRANSACTIONS  CONTEMPLATED  HEREBY  (WHETHER
BASED ON CONTRACT,  TORT OR ANY OTHER  THEORY).  EACH PARTY HERETO (A) CERTIFIES
THAT NO  REPRESENTATIVE,  AGENT OR ATTORNEY OF ANY OTHER PARTY HAS  REPRESENTED,
EXPRESSLY  OR  OTHERWISE,  THAT SUCH  OTHER  PARTY  WOULD  NOT,  IN THE EVENT OF
LITIGATION,  SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)  ACKNOWLEDGES  THAT IT
AND THE OTHER PARTIES  HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

      Section  9.11.  Headings.  Article and Section  headings  and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement  and  shall  not  affect  the   construction  of,  or  be  taken  into
consideration in interpreting, this Agreement.

      Section  9.12.  Confidentiality.  Each Credit Party agrees to maintain the
confidentiality  of the Information (as defined below),  except that Information
may be disclosed (a) to its and its Affiliates' directors,  officers,  employees
and agents,  including  accountants,  legal counsel and other advisors (it being
understood  that the Persons to whom such disclosure is made will be informed of
the  confidential  nature  of such  Information  and  instructed  to  keep  such
Information  confidential),  (b)  to the  extent  requested  by  any  regulatory
authority,  (c) to the extent  required by applicable  laws or regulations or by
any  subpoena  or  similar  legal  process,  (d) to any other  party to any Loan
Document,  (e) in  connection  with the exercise of any remedies  under any Loan
Document or any suit, action or proceeding  relating to any Loan Document or the
enforcement  of  rights  thereunder,  (f)  subject  to an  agreement  containing
provisions  substantially the same as those of this Section,  to any assignee of
or Participant in, or any prospective  assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the Borrower
or (h) to the extent such Information (i) becomes publicly  available other than
as a result of a breach of this Section or (ii) becomes  available to any Credit
Party on a nonconfidential basis from a source other than the Borrower or any of
its  Affiliates.  For the  purposes  of this  Section,  "Information"  means all
confidential  information received from the Borrower relating to the Borrower or
its business,  other than any such  information  that is available to any Credit
Party on a nonconfidential basis prior to disclosure by the Borrower. Any Person
required to maintain  the  confidentiality  of  Information  as provided in this
Section shall be  considered  to have  complied with its  obligation to do so if
such  Person  has   exercised   the  same   degree  of  care  to  maintain   the
confidentiality  of such  Information  as such  Person  would  accord to its own
confidential information.

      Section 9.13. Interest Rate Limitation. Notwithstanding anything herein to
the contrary,  if at any time the interest rate applicable to any Loan, together
with all fees,  charges and other  amounts which are treated as interest on such
Loan under applicable law (collectively the "charges"), shall exceed the maximum
lawful rate (the "maximum  rate") which may be contracted for,  charged,  taken,
received  or  reserved  by the  Lender  holding  such  Loan in  accordance  with
applicable law, the rate of interest  payable in respect of such Loan hereunder,


                                      -50-
<PAGE>

together with all charges  payable in respect  thereof,  shall be limited to the
maximum rate and, to the extent lawful, the interest and charges that would have
been  payable in  respect  of such Loan but were not  payable as a result of the
operation  of this  Section  shall be  cumulated  and the  interest  and charges
payable to such Lender in respect of other Loans or periods  shall be  increased
(but not above the maximum rate therefor) until such cumulated amount,  together
with  interest  thereon  at the  Federal  Funds  Effective  Rate to the  date of
repayment, shall have been received by such Lender.

                  [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]


                                      -51-
<PAGE>

                                TOYS "R" US, INC.
                            364 DAY CREDIT AGREEMENT

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

                                    TOYS "R" US INC.

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________


<PAGE>

                                TOYS "R" US, INC.
                            364 DAY CREDIT AGREEMENT

                                    THE BANK OF NEW  YORK,  individually  and as
                                    Administrative Agent

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________


<PAGE>

                                TOYS "R" US, INC.
                            364 DAY CREDIT AGREEMENT

                                    CITIBANK,    N.A.,   individually   and   as
                                    Co-Syndication Agent

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________


<PAGE>

                                TOYS "R" US, INC.
                            364 DAY CREDIT AGREEMENT

                                    J.P.  MORGAN  CHASE,   individually  and  as
                                    Co-Syndication Agent

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________


<PAGE>

                                TOYS "R" US, INC.
                            364 DAY CREDIT AGREEMENT

                                    CREDIT SUISSE FIRST BOSTON, individually and
                                    as Co-Documentation Agent

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________


<PAGE>

                                TOYS "R" US, INC.
                            364 DAY CREDIT AGREEMENT

                                    FIRST UNION NATIONAL BANK,  individually and
                                    as Co-Documentation Agent

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________


<PAGE>

                                TOYS "R" US, INC.
                            364 DAY CREDIT AGREEMENT

                                    THE DAI-ICHI KANGYO BANK, LTD., individually
                                    and as Co-Documentation Agent

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________


<PAGE>

                                TOYS "R" US, INC.
                            364 DAY CREDIT AGREEMENT

                                    SOCIETE   GENERALE,   individually   and  as
                                    Co-Documentation Agent

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________


<PAGE>

                                TOYS "R" US, INC.
                            364 DAY CREDIT AGREEMENT

                                    WELLS FARGO BANK, NATIONAL ASSOCIATION

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

<PAGE>

                                TOYS "R" US, INC.
                            364 DAY CREDIT AGREEMENT

                                    FIRSTAR BANK, NA

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

<PAGE>

                                TOYS "R" US, INC.
                            364 DAY CREDIT AGREEMENT

                                    BANK ONE, NA (MAIN OFFICE CHICAGO)

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

<PAGE>

                                TOYS "R" US, INC.
                            364 DAY CREDIT AGREEMENT

                                    FLEET NATIONAL BANK

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

<PAGE>

                                TOYS "R" US, INC.
                            364 DAY CREDIT AGREEMENT

                                    THE FIFTH THIRD BANK

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________