Exhibit 4.1


                                                                 CONFORMED COPY





                                             CREDIT AGREEMENT

                                dated as of September 30, 1988, as amended
                                    and restated as of December 5, 2000

                                                   among

                                       BURLINGTON INDUSTRIES, INC.,

                                                as Borrower

                                         THE LENDERS PARTY HERETO

                                                    and

                                         THE CHASE MANHATTAN BANK,

                                          as Administrative Agent

                                                    and

                                      CHASE MANHATTAN BANK USA, N.A.,

                                             as Fronting Bank
                              ----------------------------------------------

                                          BANK OF AMERICA, N.A.,

                                           as Syndication Agent,

                                          CHASE SECURITIES, INC.,

                                                as Arranger









<PAGE>



                                        i



                                             TABLE OF CONTENTS




Section           Heading                                                 Page

Section 1         DEFINITIONS..................................................1
                                                                               -
1.1      Certain Defined Terms.................................................1
                                                                               -
1.2      Accounting Terms.....................................................19
                                                                              --
1.3      Other Definitional Provisions; Anniversaries.........................20
                                                                              --

Section 2         AMOUNT AND TERMS OF COMMITMENTS AND LOANS...................20
                                                                              --
2.1      Letters of Credit....................................................20
                                                                              --
2.2      Loans................................................................26
                                                                              --
2.3      Swingline Loans......................................................27
                                                                              --
2.4      Total Commitment; Limitations on Outstanding Revolving
            Loan Amounts......................................................28
                                                                              --
2.5      Interest on the Loans................................................28
                                                                              --
2.6.     Fees.................................................................31
                                                                              --
2.7      Prepayments and Payments; Reductions in Commitments..................31
                                                                              --
2.8      Use of Proceeds......................................................36
                                                                              --
2.9      Special Provisions Governing Eurodollar Rate Revolving Loans.........36
                                                                              --
2.10     Capital Requirements.................................................40
                                                                              --

Section 3         CONDITIONS TO LOANS AND ISSUANCES OF LETTERS OF CREDIT......40
                                                                              --
3.1      Conditions to the Effective Date and the Initial Loans...............40
                                                                              --
3.2      Conditions to All Loans..............................................43
                                                                              --
3.3      Conditions to All Issuances of Letters of Credit.....................44
                                                                              --

Section 4         REPRESENTATIONS AND WARRANTIES OF BORROWER..................44
                                                                              --
4.1      Organization, Powers, Good Standing, Business and Subsidiaries.......44
                                                                              --
4.2      Authorization of Borrowing, etc......................................45
                                                                              --
4.3      Financial Condition..................................................45
                                                                              --
4.4      No Adverse Material Change...........................................46
                                                                              --
4.5      Title to Properties; Liens...........................................46
                                                                              --
4.6      Litigation; Adverse Facts............................................46
                                                                              --
4.7      Payment of Taxes.....................................................47
                                                                              --
4.8      Performance of Agreements............................................47
                                                                              --
4.9      Governmental Regulation..............................................47
                                                                              --
4.10     Securities Activities................................................47
                                                                              --
4.11     Employee Benefit Plans...............................................47
                                                                              --
4.12     Certain Fees.........................................................48
                                                                              --
4.13     Disclosure...........................................................48
                                                                              --
4.14     Patents, Trademarks, etc.............................................49
                                                                              --
4.15     Subsidiaries.........................................................49
                                                                              --
4.16     Insurance............................................................49
                                                                              --
4.17     Labor Matters........................................................49
                                                                              --
4.18     Environmental Matters................................................49
                                                                              --
4.19     Solvency.............................................................50
                                                                              --
4.20     Security Documents...................................................51
                                                                              --

Section 5         AFFIRMATIVE COVENANTS OF BORROWER...........................51
                                                                              --
5.1      Financial Statements and Other Reports...............................52
                                                                              --
5.2      Corporate Existence, etc.............................................55
                                                                              --
5.3      Payment of Obligations; Payment of Taxes and Claims; Tax
           Consolidation......................................................55
                                                                              --
5.4      Maintenance of Properties; Insurance.................................55
                                                                              --
5.5      Books and Records; Inspection and Audit Rights.......................55
                                                                              --
5.6      Compliance with Laws, etc............................................56
                                                                              --
5.7      Notices of Material Events...........................................56
                                                                              --
5.8      Information Regarding Collateral.....................................56
                                                                              --
5.9      Casualty and Condemnation............................................57
                                                                              --
5.10     Additional Subsidiaries..............................................57
                                                                              --
5.11     Further Assurances...................................................57
                                                                              --
5.12     Environmental Events.................................................58
                                                                              --
5.13     Sales of Receivables.................................................58
                                                                              --

Section 6         NEGATIVE COVENANTS OF BORROWER..............................58
                                                                              --
6.1      Indebtedness; Certain Equity Securities..............................58
                                                                              --
6.2      Liens................................................................59
                                                                              --
6.3      Fundamental Changes..................................................60
                                                                              --
6.4      Investments, Loans, Advances, Guarantees and Acquisitions............60
                                                                              --
6.5      Asset Sales..........................................................62
                                                                              --
6.6      Interest Rate Protection.............................................63
                                                                              --
6.7      Restricted Payments; Certain Payments of Indebtedness................63
                                                                              --
6.8      Transactions with Affiliates.........................................63
                                                                              --
6.9      Restrictive Agreements...............................................64
                                                                              --
6.10     Sale and Lease-Back Transactions.....................................64
                                                                              --
6.11     Amendment of Material Documents......................................64
                                                                              --
6.12     Interest Expense Coverage Ratio......................................65
                                                                              --
6.13     Leverage Ratio.......................................................65
                                                                              --
6.14     Senior Secured Leverage Ratio........................................65
                                                                              --
6.15     Net Worth............................................................65
                                                                              --
6.16.    Capital Expenditures.................................................66
                                                                              --
6.17     Consolidated Lease Expense...........................................66
                                                                              --

Section 7         EVENTS OF DEFAULT...........................................66
                                                                              --
7.1      Failure to Make Payments When Due....................................66
                                                                              --
7.2      Default in Other Agreements..........................................66
                                                                              --
7.3      Breach of Certain Covenants..........................................67
                                                                              --
7.4      Breach of Warranty...................................................67
                                                                              --
7.5      Other Defaults Under Agreement or Loan Documents.....................67
                                                                              --
7.6      Involuntary Bankruptcy; Appointment of Receiver, etc.................67
                                                                              --
7.7      Voluntary Bankruptcy, Appointment of Receiver, etc...................67
                                                                              --
7.8      Ability to Pay Debts.................................................68
                                                                              --
7.9      Judgments and Attachments............................................68
                                                                              --
7.10     Dissolution..........................................................68
                                                                              --
7.11     Liens................................................................68
                                                                              --
7.12     Guarantees...........................................................68
                                                                              --
7.13     Unfunded ERISA Liabilities...........................................68
                                                                              --
7.14     Liability Under Multiemployer Plans..................................69
                                                                              --
7.15     Change in Control....................................................69
                                                                              --

Section 8         THE ADMINISTRATIVE AGENT....................................70
                                                                              --
8.1      Appointment..........................................................70
                                                                              --
8.2      Powers; General Immunity.............................................71
                                                                              --
8.3      Representations and Warranties; No Responsibility for
           Appraisal of Creditworthiness......................................72
                                                                              --
8.4      Right to Indemnity...................................................72
                                                                              --
8.5      Successor Administrative Agent.......................................72
                                                                              --

Section 9         MISCELLANEOUS...............................................72
                                                                              --
9.1      Representation of Lenders............................................72
                                                                              --
9.2      Assignments and Participations in Loans..............................73
                                                                              --
9.3      Expenses; Indemnity; Damage Waiver...................................75
                                                                              --
9.4      Setoff...............................................................76
                                                                              --
9.5      Ratable Sharing......................................................76
                                                                              --
9.6      Amendments and Waivers...............................................77
                                                                              --
9.7      Independence of Covenants............................................77
                                                                              --
9.8      Change in Accounting Principles, Fiscal Year or Tax Laws.............77
                                                                              --
9.9      Notices..............................................................78
                                                                              --
9.10     Survival of Warranties and Certain Agreements........................78
                                                                              --
9.11     Failure or Indulgence Not Waiver; Remedies Cumulative................78
                                                                              --
9.12     Severability.........................................................79
                                                                              --
9.13     Obligations Several; Independent Nature of Lenders' Rights...........79
                                                                              --
9.14     Headings.............................................................79
                                                                              --
9.15     Applicable Law.......................................................79
                                                                              --
9.16     Successors and Assigns, Subsequent Holders of Loans..................79
                                                                              --
9.17     Consent to Jurisdiction and Service of Process; Waiver of
          Jury Trial..........................................................81
                                                                              --
9.18     Confidentiality......................................................82
                                                                              --
9.19     Counterparts.........................................................82
                                                                              --
9.20     No Third Party Beneficiaries.........................................82
                                                                              --



<PAGE>





Section           Heading                                                  Page



SCHEDULES

A                 SUBSIDIARIES AND FOREIGN SUBSIDIARIES
B                 LENDERS' COMMITMENTS AND PRO RATA SHARES
C                 EXISTING INDEBTEDNESS
D                 EXISTING LIENS
E                 EXISTING INVESTMENTS
F                 EXISTING CONTINGENT OBLIGATIONS
G                 EXISTING RESTRICTIONS
H                 EXISTING LETTERS OF CREDIT
I                 EXISTING AFFILIATE TRANSACTIONS
J                 REPORTING DIVISION
K                 FINANCIAL INFORMATION
L                 REAL PROPERTY
M                 MORTGAGED PROPERTIES
M-1               SPECIFIED MORTGAGE PROPERTIES
N                 ENVIRONMENTAL MATTERS
O                 DISCLOSURE LETTER
P                 INSURANCE



<PAGE>




EXHIBITS

I                 FORM OF ASSIGNMENT AND ACCEPTANCE
II                FORM OF ADMINISTRATIVE QUESTIONNAIRE
III               FORM OF NOTICE OF BORROWING
IV                FORM OF NOTICE OF CONVERSION/CONTINUATION
V                 FORM OF COMPLIANCE CERTIFICATE
VI                FORM OF INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT
VII               FORM OF GUARANTEE AGREEMENT
VIII              FORM OF PLEDGE AGREEMENT
IX                FORM OF SECURITY AGREEMENT
X                 FORM OF MORTGAGE
XI                OPINION OF BORROWER'S COUNSEL
XII               OPINION OF LOCAL COUNSEL




<PAGE>






                          BURLINGTON INDUSTRIES, INC.,

                                CREDIT AGREEMENT

                         dated as of September 30, 1988,
                 as amended and restated as of December 5, 2000

         CREDIT  AGREEMENT  dated as of  September  30,  1988,  as  amended  and
restated as of December 5, 2000 (as amended, supplemented or otherwise modified,
extended or restated  from time to time,  this  "Agreement"),  among  BURLINGTON
INDUSTRIES, INC., a Delaware corporation ("Borrower"),  THE LENDERS PARTY HERETO
(individually  referred  to herein as a "Lender"  and  collectively  referred to
herein as "Lenders"),  THE CHASE MANHATTAN BANK, as administrative agent for the
Lenders (in such capacity, the "Administrative  Agent") and CHASE MANHATTAN BANK
USA, N.A., as Fronting Bank ("Fronting Bank").


                                    RECITALS

         WHEREAS, Borrower desires that the 1995 Credit Agreement (such term and
other  capitalized  terms  used in this  recital  having the  meanings  assigned
thereto  in Section 1 of this  Agreement)  be amended  and  restated  in full to
provide  that Lenders  will  continue to extend  certain  credit  facilities  to
Borrower  in order to allow  for,  among  other  things,  (i) on and  after  the
Effective Date,  borrowings for working capital and general  corporate  purposes
and (ii) on and after the  Effective  Date,  the issuance or deemed  issuance by
Fronting  Bank of Letters of Credit on behalf of or for the  benefit of Borrower
and its  Subsidiaries,  all on the terms and subject to the conditions set forth
herein;

         NOW,  THEREFORE,  in  consideration of the premises and the agreements,
provisions and covenants herein  contained,  Borrower,  Lenders,  Administrative
Agent and Fronting Bank agree,  upon the terms and subject to the conditions set
forth herein,  effective  upon the Effective  Date to amend and restate the 1995
Credit Agreement in full as follows:

Section 1         DEFINITIONS

         1.1      Certain Defined Terms.

         The  following  terms used in this  Agreement  shall have the following
meanings:

         "ABR Loans" means Revolving Loans bearing  interest at rates determined
by reference to the Alternate Base Rate as provided in subsection 2.5A.

         "Adjusted  Eurodollar Rate" means, for any Interest Rate  Determination
Date, the rate (rounded upward to the next highest one hundredth of one percent)
obtained by dividing (i) the Eurodollar  Rate for that date by (ii) a percentage
equal to 100% minus the  stated  maximum  rate of all  reserves  required  to be
maintained against  "Eurocurrency  Liabilities" as specified in Regulation D (or
against any other category of liabilities  which includes  deposits by reference
to which the interest rate on Eurodollar  Rate Revolving  Loans is determined or
any category of extensions of credit or other assets which  includes  loans by a
non-United States office of any Lender to United States residents).

         "Administrative  Agent" means Chase, in its capacity as  administrative
agent for Lenders hereunder.

         "Administrative  Questionnaire"  means an administrative  questionnaire
substantially in the form of Exhibit II annexed hereto,  which each Lender shall
complete and return to the Administrative Agent.

         "Affected  Interest  Period" has the  meaning  assigned to that term in
subsection 2.9B.


<PAGE>





                                       84

         "Affected  Lender"  means  any  Lender  affected  by any of the  events
described in subsection 2.9B or 2.9C.

         "Affiliate",  as applied to any Person, means any other Person directly
or indirectly  controlling,  controlled by, or under common  control with,  that
Person.  For  the  purposes  of  this  definition,   "control"  (including  with
correlative meanings, the terms "controlling", "controlled by" and "under common
control  with") as applied to any  Person,  means the  possession,  directly  or
indirectly,  of the power to direct or cause the direction of the management and
policies of that Person,  whether through the ownership of voting  securities or
by  contract or  otherwise.  Neither any Lender nor any parent of any Lender nor
any  subsidiary of any such Lender or parent shall be treated as an  "Affiliate"
of Borrower or any  Subsidiary  of Borrower or shall be deemed to be a holder of
5% or more of any class of equity  securities  of Borrower  for the  purposes of
subsection 6.8 hereof.

         "Agreement" has the meaning  assigned to that term in the  introduction
hereto.

         "Alternate  Base Rate"  means,  for any day, a rate per annum  (rounded
upwards, if necessary,  to the next 1/16 of 1%) equal to the greatest of (i) the
Prime  Rate in effect  an such day,  (ii) the Base CD Rate in effect on such day
plus 1% and (iii) the Federal  Funds  Effective  Rate in effect on such day plus
1/2 of 1%.  "Prime  Rate" means the  arithmetic  average  (rounded  upwards,  if
necessary,  to the next 1/16 of 1%) of the rate of interest  per annum  publicly
announced from time to time by Administrative  Agent as its prime rate in effect
at its principal office in New York City; each change in the Prime Rate shall be
effective  on the date such change is  publicly  announced  as being  effective.
"Base CD Rate" means the sum of (i) the product of (a) the Three-Month Secondary
CD Rate and (b) Statutory  Reserves and (ii) the Assessment  Rate.  "Three-Month
Secondary CD Rate" means, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if such day
shall not be a  Business  Day,  the next  preceding  Business  Day) by the Board
through the public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Board, be published in
Federal Reserve  Statistical  Release  H.15(519)  during the week following such
day),  or,  if such  rate  shall  not be so  reported  on such day or such  next
preceding  Business  Day, the average of the  secondary  market  quotations  for
three-month certificates of deposit of major money center banks in New York City
received at  approximately  10:00 a.m.,  New York City time, on such day (or, if
such day shall not be a Business  Day, on the next  preceding  Business  Day) by
Administrative Agent from three New York City negotiable  certificate of deposit
dealers of recognized  standing  selected by it.  "Federal Funds Effective Rate"
means, for any day, the weighted average of the rates on overnight Federal funds
transactions  with  members of the Federal  Reserve  System  arranged by Federal
funds broker,  as published on the next  succeeding  Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a  Business  Day,  the  average  of  the  quotations  for  the  day  of  such
transactions  received by Administrative  Agent from three Federal funds brokers
of recognized  standing selected by it. If for any reason  Administrative  Agent
shall have determined (which  determination  shall be conclusive absent manifest
error)  that it is unable to  ascertain  the Base CD Rate or the  Federal  Funds
Effective  Rate or both for any reason,  including  the  inability or failure of
Administrative  Agent to obtain  sufficient  quotations in  accordance  with the
terms  thereof,  the Alternate  Base Rate shall be determined  without regard to
clause (ii) or (iii),  or both,  of the first  sentence of this  definition,  as
appropriate,  until the  circumstances  giving rise to such  inability no longer
exist.  Any change in the Alternate Base Rate due to a change in the Prime Rate,
the  Three-Month  Secondary CD Rate or the Federal Funds Effective Rate shall be
effective  on the  effective  date  of  such  change  in  the  Prime  Rate,  the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate, respectively.

         "Applicable  Rate"  means,  (a)  3.25%  per  annum,  in the  case  of a
Eurodollar  Rate Revolving Loan, (b) 2.25% per annum, in the case of an ABR Loan
and (c) 0.50%, in the case of Commitment Fees.

         "Asbestos  Laws" means the common law and all federal,  state and local
laws or regulations,  codes, orders,  decrees,  judgments or injunctions issued,
promulgated,  approved  or  entered  thereunder,  now or  hereafter  in  effect,
relating to or concerning asbestos or asbestos-containing  material,  including,
without limitation, exposure to asbestos or asbestos-containing material.



<PAGE>


         "Assessment  Rate" means,  for any day, the annual  assessment  rate in
effect  on such  day that is  payable  by a member  of the Bank  Insurance  Fund
classified  as  "well-capitalized"  and within  supervisory  subgroup  "B" (or a
comparable successor risk  classification)  within the meaning of 12 C.F.R. Part
327 (or any successor  provision) to the Federal Deposit  Insurance  Corporation
(or any successor) for insurance by such Corporation (or such successor) of time
deposits  made in dollars at the  offices of such  member in the United  States;
provided that if, as a result of any change in any law, rule or  regulation,  it
is no longer  possible to determine the Assessment  Rate as aforesaid,  then the
Assessment   Rate  shall  be  such  annual  rate  as  shall  be   determined  by
Administrative  Agent  to be  representative  of the cost of such  insurance  to
Lenders.

         "Assignment and Acceptance" means an assignment and acceptance  entered
into by a Lender and an assignee,  and accepted by Administrative  Agent, in the
form of Exhibit I.

         "Bankruptcy  Code"  means Title 11 of the United  States Code  entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.

         "Base CD Rate" has the meaning  assigned to that term in the definition
of "Alternate Base Rate".

         "Benefitted  Subsidiary"  means,  with respect to any Letter of Credit,
the Person for whose  benefit  such Letter of Credit was issued,  which shall be
one of  Borrower's  Subsidiaries,  as  specified  by Borrower in the request for
issuance of such Letter of Credit made pursuant to subsection 2.1B.

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

         "Borrower" has the meaning assigned to that term in the introduction to
this Agreement.

         "Borrower Property" has the meaning assigned to such term in subsection
4.18D.

         "Business  Day"  means (i) for all  purposes  other  than as covered by
clause (ii) below,  any day  excluding  Saturday,  Sunday and any day which is a
legal  holiday  under  the  laws of the  State  of New York or is a day on which
banking  institutions located in such state are authorized or required by law or
other  governmental  action  to close  and (ii)  with  respect  to all  notices,
determinations,  fundings and payments in connection  with the Eurodollar  Rate,
any day which is a Business Day  described in clause (i) and which is also a day
for trading by and between banks in Dollar deposits in the applicable  interbank
Eurodollar market.

         "Capital  Expenditures"  means,  for any period,  (a) the  additions to
property, plant and equipment and other capital expenditures of the Borrower and
its consolidated Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of the Borrower for such period  prepared in  accordance
with GAAP and (b) Capital  Lease  Obligations  incurred by the  Borrower and its
consolidated Subsidiaries during such period.

         "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.

         "Cash" means money, currency or a credit balance in a Deposit Account.

         "CERCLA" has the meaning assigned to that term in subsection 4.18A.

         "Chase" means The Chase Manhattan Bank and its successors.

         "Chase USA" means Chase Manhattan Bank USA, N.A. and its successors.

         "Collateral"   means  any  and  all  "Collateral"  as  defined  in  any
applicable Security Document.


<PAGE>


         "Collateral Agent" means Chase, in its capacity as collateral agent for
the Secured  Parties (as defined in the Security  Agreement)  under the Security
Documents.

         "Collateral and Guarantee Requirement" means the requirement that:

                  (a)  Administrative  Agent shall have  received from each Loan
         Party either (i) a counterpart of each of the Guarantee Agreement,  the
         Indemnity, Subrogation and Contribution Agreement, the Pledge Agreement
         and the Security Agreement, in each case duly executed and delivered on
         behalf  of such  Loan  Party  or (ii) in the  case of any  Person  that
         becomes a Loan Party after the Effective  Date, a supplement to each of
         the Guarantee  Agreement,  the Indemnity,  Subrogation and Contribution
         Agreement,  the Pledge  Agreement and the Security  Agreement,  in each
         case in the form  specified  therein,  duly  executed and  delivered on
         behalf of such Loan Party;

                  (b) all outstanding  Equity Interests of each Subsidiary owned
         directly  by any Loan Party  shall have been  pledged  pursuant  to the
         Pledge Agreement (except that the Loan Parties shall not be required to
         pledge (x) more than 65% of the outstanding  voting Equity Interests of
         any  Foreign  Subsidiary  that is not a Loan  Party and (y) any  Equity
         Interests of Immaterial  Subsidiaries) and  Administrative  Agent shall
         have received  certificates or other instruments  representing all such
         Equity  Interests,  together with stock powers or other  instruments of
         transfer with respect thereto endorsed in blank;

                  (c) all Indebtedness of Borrower and each  Subsidiary,  except
         for Immaterial Subsidiaries,  that is owing to any Loan Party and is in
         an amount of at least $100,000 shall be evidenced by a promissory  note
         and shall  have been  pledged  pursuant  to the  Pledge  Agreement  and
         Administrative  Agent shall have  received all such  promissory  notes,
         together with  instruments of transfer with respect thereto endorsed in
         blank;

                  (d) a completed  Perfection  Certificate  dated the  Effective
         Date and signed by a financial  officer of Borrower,  together with all
         attachments contemplated thereby,  including the results of a search of
         the Uniform  Commercial Code (or equivalent)  filings made with respect
         to the Loan Parties in the jurisdictions contemplated by the Perfection
         Certificate  and  copies  of  the  financing   statements  (or  similar
         documents)   disclosed   by  such   search  and   evidence   reasonably
         satisfactory  to the  Administrative  Agent that the Liens indicated by
         such  financing  statements  (or similar  documents)  are  permitted by
         subsection 6.2 or have been released.

                  (e)  all  documents   and   instruments,   including   Uniform
         Commercial  Code  financing  statements,  required by law or reasonably
         requested  by the  Administrative  Agent  to be  filed,  registered  or
         recorded  to create the Liens  intended  to be created by the  Security
         Agreement and the Pledge Agreement  (including any supplements thereto)
         and perfect such Liens to the extent required by, and with the priority
         required by, the Security  Agreement  and the Pledge  Agreement,  shall
         have been filed,  registered or recorded or delivered to Administrative
         Agent for filing, registration or recording;

                  (f) Administrative  Agent shall have received (i) counterparts
         of a Mortgage with respect to each Mortgaged Property duly executed and
         delivered by the record owner of such Mortgaged Property, (ii) a policy
         or policies of title insurance issued by a nationally  recognized title
         insurance  company  insuring the Lien of each such  Mortgage as a valid
         first Lien on the Mortgaged  Property  described  therein,  free of any
         other Liens except as expressly  permitted by subsection 6.2,  together
         with such  endorsements,  coinsurance and reinsurance as Administrative
         Agent may  reasonably  request,  and  (iii)  such  surveys,  abstracts,
         appraisals,  legal opinions and other documents as Administrative Agent
         may  reasonably  request with respect to any such Mortgage or Mortgaged
         Property; and



<PAGE>


                  (g) each Loan  Party  shall have  obtained  all  consents  and
         approvals  required  to  be  obtained  by  it in  connection  with  the
         execution  and  delivery  of all  Security  Documents  (or  supplements
         thereto) to which it is a party,  the  performance  of its  obligations
         thereunder and the granting by it of the Liens thereunder.

         "Commercial  Letter of  Credit"  means any  letter of credit or similar
instrument  issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials,  goods or services by Borrower or
any of its  Subsidiaries  in the ordinary  course of business of Borrower or any
such Subsidiary.

         "Commitment" means, with respect to each Lender, the commitment of such
Lender to make Revolving Loans hereunder as set forth in subsection 2.2A, as the
same may be changed from time to time pursuant to subsection 2.7A(iv) or 9.2.

         "Commitment  Fees" has the meaning  assigned to that term in subsection
2.6A.

         "Commodities  Agreement"  means any forward  contract,  forward option,
futures contract,  futures option,  or similar agreement or arrangement  entered
into by Borrower  designed to protect Borrower or any of its  Subsidiaries  from
fluctuations in the price of commodities, and not for speculative purposes.

         "Compliance Certificate" means a certificate  substantially in the form
annexed  hereto as  Exhibit V  delivered  to  Lenders by  Borrower  pursuant  to
subsection 5.1(iv).

         "Consolidated  Cash Interest Expense" means, for any period, the excess
of (a) the sum of (i) the interest expense  (including  imputed interest expense
in respect of Capital Lease  Obligations) of Borrower and the  Subsidiaries  for
such period,  determined on a consolidated  basis in accordance  with GAAP, (ii)
any interest  accrued during such period in respect of  Indebtedness of Borrower
or any  Subsidiary  that is required to be  capitalized  rather than included in
consolidated  interest  expense for such period in  accordance  with GAAP,  plus
(iii) any cash  payments  made  during  such  period in respect  of  obligations
referred  to in clause  (b)(iii)  below  that were  amortized  or  accrued  in a
previous  period,  plus (iv) costs and expenses  associated with any Receivables
Purchase Program,  whether accounted for as interest expense or loss on the sale
of receivables, minus (b) the sum of (i) interest income of the Borrower and the
Subsidiaries for such period,  determined on a consolidated  basis in accordance
with GAAP, (ii) to the extent included in such consolidated interest expense for
such period,  non-cash  amounts  attributable to amortization of financing costs
paid  in  a  previous  period,  plus  (iii)  to  the  extent  included  in  such
consolidated interest expense for such period,  non-cash amounts attributable to
amortization of debt discounts or accrued interest for such period in respect of
instruments  that  permit  non-cash  payments  in  satisfaction  of  obligations
thereunder,  plus (iv) to the  extent  included  in such  consolidated  interest
expense, all non-recurring transaction and financing expenses resulting from the
Restatement  Transactions  and  all  non-recurring  expenses  arising  from  the
termination of any Interest Rate Protection Agreements.

         "Consolidated  EBITDA" means,  for any period,  Consolidated Net Income
for such  period  plus (a)  without  duplication  and to the extent  deducted in
determining such Consolidated Net Income,  the sum of (i) consolidated  interest
expense for such period,  (ii) consolidated  income tax expense for such period,
(iii) all amounts attributable to depreciation and amortization for such period,
(iv) any non-recurring  non-cash charges for such period,  (v) all non-recurring
transaction and financing expenses  resulting from the Restatement  Transactions
and all  non-recurring  expenses  arising from  termination of any Interest Rate
Protection   Agreements  and  (vi)  Excluded   Charges  and  minus  (b)  without
duplication  and to the extent  included in determining  such  Consolidated  Net
Income,   any  extraordinary   gains  for  such  period,  all  determined  on  a
consolidated basis in accordance with GAAP.

         "Consolidated  Lease Expense"  shall mean,  for any period,  all rental
expenses of Borrower and the  Subsidiaries  during such period  under  operating
leases for real or personal  property,  excluding  real estate taxes,  insurance
costs and common area maintenance charges and net of sublease income, other than
Capital  Lease  Obligations,  all  as  determined  on a  consolidated  basis  in
accordance with GAAP.



<PAGE>


         "Consolidated Net Income" means, for any period, the net income or loss
of Borrower and the  Subsidiaries  for such period  determined on a consolidated
basis in  accordance  with GAAP;  provided  that there shall be excluded (a) the
income or loss of any Joint Venture or any other Person in which Borrower or any
Subsidiary (other than any director holding qualifying shares in compliance with
applicable  law)  owns  an  Equity  Interest,  the  accounts  of  which  are not
consolidated  with  those  of  Borrower  in  Borrower's  consolidated  financial
statements  in  accordance  with  GAAP,  except to the  extent of the  amount of
dividends  or  other  distributions  actually  paid  to  Borrower  or any of the
Subsidiaries  during  such  period,  and (b) the  income  or loss of any  Person
accrued  prior  to the  date  it  becomes  a  Subsidiary  or is  merged  into or
consolidated  with  Borrower or any  Subsidiary  or the date that such  Person's
assets are acquired by Borrower or any Subsidiary.

         "Consolidated  Net  Worth"  means,  as of any date,  (a) the sum of (i)
common stock taken at par or stated  value,  (ii)  preferred  stock taken at its
liquidation  value,  (iii)  capital  surplus  relating to common  stock and (iv)
retained  earnings (or deficit) at such date minus (b) the sum of treasury stock
at such date,  all determined  for Borrower and its  Subsidiaries  in accordance
with GAAP and after giving effect to all adjustments required thereby.

         "Contingent Obligation",  as applied to any Person, means any direct or
indirect liability,  contingent or otherwise, of that Person (i) with respect to
any  indebtedness,  lease,  dividend,  letter of credit or other  obligation  of
another if the primary  purpose or intent  thereof by the Person  incurring  the
Contingent  Obligation is to provide assurance to the obligee of such obligation
of another that such  obligation of another will be paid or discharged,  or that
any  agreements  relating  thereto will be complied with, or that the holders of
such  obligation will be protected (in whole or in part) against loss in respect
thereof,  (ii) under any letter of credit  issued for the account of that Person
or for which that Person is otherwise liable for reimbursement thereof, or (iii)
under Commodities  Agreements,  Currency  Agreements or Interest Rate Protection
Agreements.  Contingent Obligations shall include,  without limitation,  (i) the
direct or indirect  guarantee,  endorsement  (otherwise  than for  collection or
deposit  in the  ordinary  course  of  business),  co-making,  discounting  with
recourse or sale with recourse by such Person of the obligation of another,  and
(ii) any  liability of such Person for the  obligations  of another  through any
agreement  (contingent  or otherwise)  (a) to purchase,  repurchase or otherwise
acquire such  obligation or any security  therefor,  or to provide funds for the
payment or discharge of such obligation (whether in the form of loans, advances,
stock  purchases,  capital  contributions  or  otherwise),  (b) to maintain  the
solvency or any balance  sheet item,  level of income or financial  condition of
another,  or (c) to make take-or-pay or similar payments if required  regardless
of nonperformance by any other party or parties to an agreement,  if in the case
of any  agreement  described  under  subclauses  (a) or (b) of this sentence the
primary purpose or intent thereof is as described in the preceding sentence. The
amount  of any  Contingent  Obligation  shall  be  equal  to the  amount  of the
obligation so guaranteed or otherwise supported; provided, however, that, in the
case of any  obligation  supported by any property of Borrower or any Subsidiary
of  Borrower,  if the  related  obligee  shall  have  recourse  solely  to  such
supporting  property,  the amount of the related Contingent  Obligation shall be
equal to the fair market value of such supporting property.

         "Contractual Obligation", as applied to any Person, means any provision
of any security  issued by that Person or of any material  indenture,  mortgage,
deed of trust,  contract,  undertaking,  agreement or other  instrument to which
that  Person is a party or by which it or any of its  properties  is bound or to
which it or any of its properties is subject.

         "Currency  Agreement"  means  any  forward  contract,  forward  option,
futures  contract,  futures option,  foreign  exchange  contract,  currency swap
agreement or other  similar  agreement or  arrangement  entered into by Borrower
designed to protect Borrower or any of its Subsidiaries  against fluctuations in
foreign exchange rates, and not for speculative purposes.

         "Deposit  Account"  means a demand,  time,  savings,  passbook  or like
account  with a  bank,  savings  and  loan  association,  credit  union  or like
organization,  other than an account  evidenced by a negotiable  certificate  of
deposit.



<PAGE>


         "Disclosure  Letter" means the letter of Borrower  substantially in the
form of  Schedule O annexed  hereto  delivered  to Lenders on such date  setting
forth  certain  exceptions  to the  representations  and  warranties of Borrower
contained in Section 4.

         "Dollars",  "dollars"  or the sign "$"  means the  lawful  money of the
United States of America.

         "Effective  Date" means the date on which the  conditions  specified in
subsection 3.1 are satisfied.

         "Eligible  Assignee"  shall mean (i) a  commercial  bank  having  total
assets in excess of $1,000,000,000; (ii) a finance company, insurance company or
other  financial  institution  or fund that in the  ordinary  course of business
extends credit of the type evidenced by the Loans and has total assets in excess
of $200,000,000 and whose becoming an assignee would not constitute a prohibited
transaction  under  Section 4975 of the Internal  Revenue Code or Section 406 of
ERISA;  or (iii) any other  financial  institution  reasonably  satisfactory  to
Borrower and Administrative Agent.

         "Environmental  Event"  means (i) any event,  fact or  violation of any
Environmental or Asbestos Law that Borrower or any of its  Subsidiaries  reports
or that  is  reportable  to any  governmental  authority  under  any  applicable
Environmental  or Asbestos Law, (ii) the awareness of Borrower or any Subsidiary
of Borrower of any actual or threatened  inquiry,  proceeding,  investigation or
other  action,  including  any request for  information  or notice of  potential
environmental liability of Borrower or any Subsidiary from any Person, (iii) the
discovery  by Borrower  or any  Subsidiary  of Borrower of any alleged  material
violation  by Borrower or any  Subsidiary  of any  applicable  Environmental  or
Asbestos Law or the  occurrence  of any material  event,  the subject  matter of
which is covered under any Environmental or Asbestos Law not otherwise  referred
to under  clause (i) above or (iv) the  discovery  of the release or  threatened
release of any Hazardous  Substance at, on, under or from any Borrower  Property
in excess of  reportable or allowable  standards or levels under any  applicable
Environmental or Asbestos Law or in a manner and/or amount that could reasonably
be expected to require  remediation or result in liability  under any applicable
Environmental or Asbestos Law.

         "Environmental  Laws" means all federal,  state, local and foreign laws
or  regulations,  codes,  orders,  decrees,  judgments  or  injunctions  issued,
promulgated,  approved  or  entered  thereunder,  now  or  hereafter  in  effect
(including  all  Asbestos  Laws),  relating to pollution  or  protection  of the
environment and relating to public health, including,  without limitation,  laws
relating  to (i)  emissions,  discharges,  releases  or  threatened  releases of
pollutants,   contaminants,   chemicals,  or  industrial,   toxic  or  hazardous
constituents,   substances,  or  wastes,  including,   without  limitation,  any
Hazardous Substance,  petroleum,  including crude oil or any fraction thereof or
any petroleum product or other wastes,  chemicals or substances regulated by any
Environmental Law, into the environment (including,  without limitation, ambient
air, surface water, ground water, land surface or subsurface strata) or (ii) the
manufacture,  processing,  distribution,  use, generation,  treatment,  storage,
disposal,  transport or handling of Hazardous  Substances and (iii)  underground
storage tanks,  and related  piping,  and emissions,  discharges and releases or
threatened releases therefrom.

         "Environmental  Liens"  shall mean any Lien arising  under,  or imposed
pursuant to, CERCLA 42 U.S.C. ss. 9607(1), or any comparable state law, relating
to any  remedial  or  response  action on any real  property  of Borrower or any
Subsidiary.

         "Equity   Interests"   means  shares  of  capital  stock,   partnership
interests,  membership  interests  in a limited  liability  company,  beneficial
interests in a trust or other equity ownership interests in a Person.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended from time to time and any successor statute.

         "ERISA  Affiliate",  as  applied  to any  Person,  means  any  trade or
business  (whether  or not  incorporated)  which is a member of a group of which
that Person is a member and which is under common  control within the meaning of
Section  414 of the  Internal  Revenue  Code  and  the  regulations  promulgated
thereunder.



<PAGE>


         "Euro" means the single  currency of the European  Union as constituted
by the Treaty on European Union and as referred to in the new EMU legislation.

         "Eurodollar  Rate" means, with respect to any Eurodollar Rate Revolving
Loan for any Interest  Period,  the rate appearing on Page 3750 of the Dow Jones
Market 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  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 Eurodollar Rate
with respect to such  Eurodollar  Rate Revolving  Loan 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
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.

         "Eurodollar  Rate  Revolving  Loan" means any  Revolving  Loan  bearing
interest at rates  determined  by reference to the Adjusted  Eurodollar  Rate as
provided in subsection 2.5A.

         "Event of Default" means each of the events set forth in Section 7.

         "Exchange  Act" means the  Securities  Exchange Act of 1934, as amended
from time to time, and any successor statute.

         "Exchange  Rate"  means,  on any date  when an  amount  expressed  in a
currency  other than Dollars is to be  determined  with respect to any Letter of
Credit or any other  Indebtedness of Borrower or its  Subsidiaries,  the nominal
rate  of  exchange  of  Fronting  Bank in the  case of  Letters  of  Credit,  or
Administrative  Agent in the  case of all  other  Indebtedness,  in the New York
foreign  exchange  market for the  purchase by Fronting  Bank or  Administrative
Agent,  as the case may be, (by cable transfer) of such currency in exchange for
Dollars at 12:00  noon,  New York  time,  one  Business  Day prior to such date,
expressed as the number of units of such currency per one Dollar.

         "Excluded  Charges" means the  non-recurring  charges incurred or to be
incurred  during the four fiscal  quarters  commencing  with the fiscal  quarter
ending on October 1, 2000 and ending with the fiscal  quarter  ending on July 1,
2001 in respect of restructurings,  asset impairments or asset write-downs in an
amount not to exceed in the aggregate $67,000,000.

         "Existing   Indebtedness"   means  indebtedness  of  Borrower  and  its
Subsidiaries listed on Schedule C annexed hereto.

         "Existing Letters of Credit" means the Letters of Credit issued for the
benefit of Borrower or any Subsidiary of Borrower and in effect on the Effective
Date and listed on Schedule H annexed hereto.

         "Existing  Notes" means  Borrower's 7.25% Notes due September 15, 2005,
and Borrower's 7.25% Notes due August 1, 2027.

         "FCAA" has the meaning assigned to that term in subsection 4.18A.

         "Floor  Accents  Sale"  means  the  sale of  Borrower's  Floor  Accents
business (whether in the form of an asset sale or a sale of equity interests).

         "Foreign Factoring  Agreement" means the export receivables  agreements
between  (i)  Nationsbanc  Commercial  Corporation  and  Borrower  dated  as  of
September 9, 1997 and (ii)  Nationsbanc  Commercial  Corporation  and The Bacova
Guild, Ltd. dated as of June 3, 1998.


<PAGE>


         "Foreign Factoring Program" means the transactions  contemplated by the
Foreign Factoring Agreement.

         "Foreign  Subsidiary" means any Subsidiary of Borrower  organized under
the laws of a jurisdiction  other than the United States of America or any State
thereof.

         "Freely  Available  Foreign  Currencies"  means,  at  any  time,  Euro,
Sterling  and any other  currency  other  than  Dollars  that is  determined  by
Administrative Agent to be freely available to financial institutions on foreign
exchange markets in New York and London at such time.

         "Fronting  Bank"  means  Chase USA,  in its  capacity  as the issuer of
Letters of Credit hereunder, and its successors in such capacity.  Fronting Bank
may, in its  discretion,  arrange for one or more Letters of Credit to be issued
by  Affiliates  of Fronting  Bank,  including  with respect to Letters of Credit
denominated in Freely Available  Foreign  Currencies,  and in each such case the
term "Fronting Bank" shall include any such Affiliate with respect to Letters of
Credit  issued  by such  Affiliate.  In the  event  that  there is more than one
Fronting Bank at any time,  references herein and in the other Loan Documents to
Fronting  Bank  shall be  deemed to refer to  Fronting  Bank in  respect  of the
applicable  Letter of Credit or to all Fronting Banks, as the context  requires.
Notwithstanding  the foregoing,  each institution  listed in Schedule H shall be
deemed to be a  Fronting  Bank with  respect to the  Existing  Letters of Credit
issued by it.

         "Funding Date" means the date of the funding of a Loan.

         "FWCPA" has the meaning assigned to that term in subsection 4.18A.

         "GAAP" means generally accepted accounting  principles set forth in the
opinions and  pronouncements of the Accounting  Principles Board of the American
Institute of Certified Public  Accountants and statements and  pronouncements of
the Financial  Accounting  Standards  Board or in such other  statements by such
other  entity as may be  approved  by a  significant  segment of the  accounting
profession,  which  are  applicable  to  the  circumstances  as of the  date  of
determination;  provided,  however,  compliance  by Borrower  with the financial
covenants set forth in subsections  6.12,  6.13, 6.14, 6.15, 6.16 and 6.17 shall
be calculated in accordance with GAAP as in effect on the Effective Date.

         "Government  Acts" has the meaning  assigned to that term in subsection
2.1.

         "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 business.

         "Guarantee Agreement" means each Guarantee Agreement,  substantially in
the  form  of  Exhibit  VII,  made  by a  Subsidiary  Loan  Party  in  favor  of
Administrative Agent for the benefit of the Secured Parties.

         "Hazardous  Substance"  means (a) petroleum  products and  by-products,
asbestos, urea formaldahyde foam insulation,  polychlorinated  biphenyls,  radon
gas,  chlorofluorocarbons and all other ozone-depleting  substances;  or (b) any
chemical,   material  substance,   waste,   pollutant  or  contaminant  that  is
prohibited, limited or regulated by or pursuant to any Environmental Law.


<PAGE>


         "Immaterial  Subsidiary" means those subsidiaries of Borrower which (a)
are  inactive,  (b) own assets of less than $10,000 and (c) have no  outstanding
Indebtedness pursuant to which it is an obligor.

         "Indebtedness"  of any  Person  means,  without  duplication,  (a)  all
obligations  of such Person for  borrowed  money or with  respect to deposits or
advances of any kind,  (b) all  obligations  of such Person  evidenced by bonds,
debentures,  notes or similar  instruments,  (c) all  obligations of such Person
upon which interest  charges are  customarily  paid, (d) all obligations of such
Person under  conditional sale or other title retention  agreements  relating to
property acquired by such Person,  (e) all obligations of such Person in respect
of the  deferred  purchase  price of  property or  services  (excluding  current
accounts  payable  incurred  in  the  ordinary  course  of  business),  (f)  all
Indebtedness of others secured by (or for which the holder of such  Indebtedness
has an existing  right,  contingent or otherwise,  to be secured by) any Lien on
property  owned or  acquired  by such  Person,  whether or not the  Indebtedness
secured  thereby  has  been  assumed,  (g)  all  Guarantees  by such  Person  of
Indebtedness of others,  (h) all Capital Lease  Obligations of such Person,  (i)
all obligations,  contingent or otherwise, of such Person as an account party in
respect of letters of credit and  letters of guaranty  issued by third  parties,
and (j) all obligations,  contingent or otherwise,  of such Person in respect of
bankers'  acceptances.   The  Indebtedness  of  any  Person  shall  include  the
Indebtedness of any other entity (including any partnership in which such Person
is a general  partner) to the extent such Person is liable  therefor as a result
of such Person's  ownership  interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness  provide that such Person is
not liable therefor.

         "Indemnity,   Subrogation  and   Contribution   Agreement"   means  the
Indemnity,  Subrogation and Contribution Agreement  substantially in the form of
Exhibit VI, among  Borrower,  the  Subsidiary  Loan  Parties and  Administrative
Agent.

         "Information  Memorandum" means the Confidential Information Memorandum
of Borrower dated October 2000, as amended or supplemented by Borrower and Chase
through the Effective Date.

         "Insuratex" means Insuratex, Ltd., a Bermuda corporation.

         "Intercompany  Indebtedness"  means any Indebtedness of Borrower or any
of its  Subsidiaries or Joint Ventures which, in the case of Borrower,  is owing
to any  Subsidiary or Joint Venture and which,  in the case of any Subsidiary or
Joint Venture,  is owing to Borrower or any other Subsidiary or Joint Venture of
Borrower.

         "Intercompany  Preferred  Stock"  means  preferred  equity  interest or
capital stock of any Subsidiary held by Borrower or any other Subsidiary.

         "Interest Coverage Ratio" means, with respect to any fiscal period, the
ratio of (i) Consolidated  EBITDA to (ii) Consolidated Cash Interest Expense for
such fiscal period.

         "Interest  Payment  Date" means,  with respect to any  Eurodollar  Rate
Revolving  Loan,  the last day of each Interest  Period  applicable to such Loan
and, in the case of each Interest Period of three months or longer, the last day
of each  three-month  period  following the first day of, and occurring  during,
said Interest Period.

         "Interest  Period" has the meaning  assigned to that term in subsection
2.5B.

         "Interest Rate Determination  Date" means each date for calculating the
Eurodollar  Rate for purposes of determining  the interest rate in respect of an
Interest  Period.  The  Interest  Rate  Determination  Date  shall be the second
Business  Day  prior to the  first  day of the  related  Interest  Period  for a
Eurodollar Rate Revolving Loan.

         "Interest  Rate  Protection  Agreement"  means  any  forward  contract,
forward option, futures contract,  futures option, interest rate swap agreement,
interest rate cap  agreement,  interest  rate collar  agreement or other similar
agreement or arrangement  entered into by Borrower  designed to protect Borrower
or any of its Subsidiaries  against  fluctuations in interest rates, and not for
speculative purposes.


<PAGE>


         "Internal  Revenue  Code" means the Internal  Revenue Code of 1986,  as
amended to the date hereof and from time to time hereafter.

         "Joint Venture" means a joint venture,  partnership,  limited liability
company or other similar arrangement, whether in corporate, partnership or other
legal form in which Borrower or any Subsidiary has any direct or indirect Equity
Interest and that is not a Subsidiary.

         "Lender" and "Lenders" have the meanings assigned to those terms in the
introduction  to this  Agreement and shall include  Administrative  Agent in its
individual capacity.

         "Letter of  Credit" or  "Letters  of Credit"  means (i) the  Commercial
Letter of Credit or Commercial Letters of Credit and Standby Letter of Credit or
Standby  Letters of Credit and (ii) the  Existing  Letter of Credit or  Existing
Letters of Credit.

         "Letters of Credit Usage" means, as at any date of  determination,  the
sum of (i) the maximum  aggregate  amount which is or at any time thereafter may
become  available  under all  Letters of Credit then  outstanding  plus (ii) the
aggregate  amount of all drawings  under  Letters of Credit  honored by Fronting
Bank  and  not  theretofore   reimbursed  by  Borrower.  For  purposes  of  this
definition:  (x) any  amount  described  hereunder  which  is  denominated  in a
currency  other than dollars  shall be valued based on the  applicable  Exchange
Rate for such currency as of such date of determination;  and (y) (aa) the first
such date of determination with respect to any non-Dollar-denominated  Letter of
Credit shall be its date of issuance, and (bb) thereafter,  Administrative Agent
shall  recalculate  the value of all such Letters of Credit  outstanding no less
frequently than once per calendar week.

         "Leverage   Ratio"  means,   on  any  date,  the  ratio  of  (i)  Total
Indebtedness as of such date to (ii) Consolidated  EBITDA for the period of four
consecutive  fiscal quarters of Borrower ended on such date (or, if such date is
not the  last  day of a fiscal  quarter,  ended  on the  last day of the  fiscal
quarter of Borrower most recently ended prior to such date). For purposes of the
foregoing,  Total  Indebtedness  shall at all times include  obligations of such
Persons attributable to the Receivables Purchase Program.

         "Lien"  means,  with respect to any asset,  (a) any  mortgage,  deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such  asset,  (b) the  interest  of a  vendor  or a  lessor  under  any
conditional sale agreement,  capital lease or title retention  agreement (or any
financing  lease having  substantially  the same  economic  effect as any of the
foregoing)  relating  to such  asset  and (c) in the  case  of  securities,  any
purchase  option,  call or similar  right of a third party with  respect to such
securities.

         "Loan" or  "Loans"  means one or more of the loans  made by  Lenders to
Borrower pursuant to subsection 2.2A and 2.3A.

         "Loan Documents" means this Agreement, Letters of Credit, the Guarantee
Agreement,  the  Indemnity,  Subrogation  and  Contribution  Agreement  and  the
Security Documents.

         "Loan Parties" means Borrower and the Subsidiary Loan Parties.

         "Margin Stock" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal  Reserve  System as in effect from time to
time.

         "Material  Adverse  Effect" means a material  adverse effect on (a) the
business,  operations,  properties, assets or condition (financial or otherwise)
of Borrower and its Subsidiaries,  taken as a whole, (b) the ability of any Loan
Party to  perform  any of its  obligations  under any Loan  Document  or (c) the
rights of or benefits available to the Lenders under any Loan Document.

         "Maturity  Date"  means  the  earlier  of (a) June 5,  2003 and (b) the
Receivables Date.



<PAGE>


         "Mexican  Credit  Agreement"  means the  Credit  Agreement  dated as of
November 20, 1998,  among  Proyectos  Burlmex,  S. de R.L. de C.V., as Borrower,
Burlington   Industries,   Inc.,  as  Guarantor,   the  Lenders  party  thereto,
Nationsbank,   N.A.,  as   Administrative   Agent  and  Nationsbanc   Montgomery
Securities, LLC, as Arranger.

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

         "Mortgage"  means a mortgage,  deed of trust,  assignment of leases and
rents,  leasehold  mortgage or other  security  document  granting a Lien on any
Mortgaged   Property  to  secure  the   Obligations.   Each  Mortgage  shall  be
satisfactory in form and substance to Collateral Agent.

         "Mortgaged Property" means, initially, each parcel of real property and
the improvements thereto owned by a Loan Party and identified on Schedule M, and
includes  each other  parcel of real  property  and  improvements  thereto  with
respect to which a Mortgage is granted pursuant to subsections 5.10 or 5.11.

         "Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is  maintained  for employees of Borrower or any ERISA
Affiliate of Borrower.

         "1995  Credit  Agreement"  means  the  Credit  Agreement  dated  as  of
September  30,  1988,  as amended and  restated  as of  November 8, 1995,  among
Borrower,  the lenders listed therein,  Chemical Bank, Bank of America Illinois,
The Bank of Nova Scotia,  The Chase Manhattan Bank, First Union National Bank of
North Carolina, Nationsbank, N.A., and Wachovia Bank of North Carolina, N.A., as
managing agents,  Chemical Bank, as  administrative  agent, and The Bank of Nova
Scotia as Fronting Bank.

         "Nano-Tex" means Nano-Tex, LLC, a California limited liability company,
and its successors in interest.

         "Net Proceeds"  means,  with respect to any event (a) the cash proceeds
received in respect of such event  including any cash received in respect of any
non-cash proceeds,  but only as and when received, net of (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid by Borrower and the Subsidiaries
to third parties (other than Affiliates) in connection with such event,  (ii) in
the  case of a sale,  transfer  or  other  disposition  of an  asset  (including
pursuant to a sale and leaseback  transaction or a casualty or a condemnation or
similar proceeding),  the amount of all payments required to be made by Borrower
and the Subsidiaries as a result of such event to repay Indebtedness (other than
Loans) secured by such asset or otherwise  subject to mandatory  prepayment as a
result  of such  event,  (iii)  the  amount  of all  taxes  paid (or  reasonably
estimated to be payable) by Borrower and the Subsidiaries and (iv) the amount of
any reserves  established by Borrower and the  Subsidiaries  to fund  contingent
liabilities  reasonably  estimated  to be payable,  in each case during the year
that such  event  occurred  or the next  succeeding  year and that are  directly
attributable  to such event (as  determined  reasonably and in good faith by the
chief financial officer of Borrower).

         "Notes  Indenture"  means the indenture  governing  the Existing  Notes
dated as of  September  1, 1995,  between  Borrower  and the Trustee (as defined
therein).

         "Notice  of  Borrowing"  means a  notice  substantially  in the form of
Exhibit III annexed hereto with respect to a proposed borrowing.

         "Notice of Conversion/Continuation" means a notice substantially in the
form of Exhibit IV with respect to a proposed conversion or continuation.

         "Obligations"  has the meaning  assigned  to such term in the  Security
Agreement.



<PAGE>


         "Officers'  Certificate"  means,  as  applied  to  any  corporation,  a
certificate  executed  on behalf of such  corporation  by its  Chairman  or Vice
Chairman  of the  Board  (if an  officer)  or its  President  or one of its Vice
Presidents  and  by  its  Chief  Financial  Officer  or  its  Controller  or its
Treasurer;  provided  that  every  Officers'  Certificate  with  respect  to the
compliance with a condition  precedent to the making of any Loan hereunder shall
include  (i) a  statement  that the  officer or  officers  making or giving such
Officers'  Certificate  have read such  condition and any  definitions  or other
provisions contained in this Agreement relating thereto,  (ii) a statement that,
in the  opinion of the  signers,  they have made or have  caused to be made such
examination  or  investigation  as is  necessary  to enable  them to  express an
informed opinion as to whether or not such condition has been complied with, and
(iii) a statement as to whether,  in the opinion of the signers,  such condition
has been complied with.

         "Pension  Plan"  means  any  employee  plan  which  is  subject  to the
provisions of Title IV of ERISA or Section 412 of the Internal  Revenue Code and
which is  maintained  for  employees  of  Borrower  or any  ERISA  Affiliate  of
Borrower, other than a Multiemployer Plan.

         "Perfection  Certificate" means a certificate in the form of Annex I to
the Security Agreement or any other form approved by Collateral Agent.

         "Permitted Encumbrances" means the following types of Liens:

                  (i) Liens for taxes,  assessments or  governmental  charges or
         claims the payment of which is not at the time  required by  subsection
         5.3;

                  (ii)  Statutory  Liens of  landlords  and  Liens of  carriers,
         warehousemen,  mechanics,  materialmen  and other liens  imposed by law
         incurred in the ordinary course of business for sums not yet delinquent
         or being contested in good faith, if such reserve or other  appropriate
         provision,  if any,  as shall be  required by GAAP shall have been made
         therefore;

                  (iii)  Liens  (other  than  any Lien  imposed  by  ERISA,  the
         creation or  incurrence of which is addressed in  subsections  7.13 and
         7.14)  incurred or deposits made in the ordinary  course of business in
         connection with workers' compensation, unemployment insurance and other
         types of social  security,  or to secure the  performance  of  tenders,
         statutory obligations, bids, leases, government contracts,  performance
         and return-of-money  bonds and other similar obligations  (exclusive of
         obligations for the payment of borrowed money);

                  (iv)  Any  attachment  or  judgment  Lien  not  in  excess  of
         $10,000,000 (exclusive of any amount adequately covered by insurance as
         to which the insurance company has acknowledged coverage) and any other
         attachment  or  judgment  lien unless the  judgment  it secures  shall,
         within 60 days after the entry  thereof,  not have been  discharged  or
         execution  thereof  stayed  pending  appeal,  or shall  not  have  been
         discharged within 60 days after the expiration of any such stay;

                  (v) Leases or subleases  granted to others not  interfering in
         any material  respect  with the business of Borrower or any  Subsidiary
         Loan Party;

                  (vi) Easements, rights-of-way,  restrictions, minor defects or
         irregularities  in title and other similar charges or encumbrances  not
         interfering  in any material  respect with the ordinary  conduct of the
         business of Borrower or any Subsidiary Loan Party;

                  (vii) Liens  arising from Uniform  Commercial  Code  financing
         statements regarding leases permitted by this Agreement;

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

                  (ix) Liens  securing  surety  bonds in an amount not to exceed
         individually or in the aggregate $5,000,000 at any time outstanding, of
         which not more than $2,000,000 may at any time have been incurred other
         than in the ordinary course of business;


<PAGE>


                  (x) Liens  securing  appeal  bonds,  which  Liens do not cover
         assets having a value in excess of $25,000,000  individually  or in the
         aggregate at any time and which assets are valued at the greater of (A)
         fair market value and (B) book value;

                  (xi) Environmental  Liens for amounts involving,  individually
         or in the  aggregate,  a liability  (exclusive of any amount covered by
         insurance as to which the insurance  carrier has acknowledged  coverage
         without  reservation of rights) not in excess of $15,000,000 (A) to the
         extent that the related sums are not yet  delinquent or the validity or
         amount of such Liens is being contested in good faith and such reserves
         or other appropriate provisions, if any, as required by GAAP shall have
         been made  therefor or (B) that are  released or  otherwise  discharged
         within 10 Business Days after an officer of Borrower or any  Subsidiary
         of Borrower obtains knowledge thereof;

                  (xii) Liens securing  performance bonds in an aggregate amount
         not to exceed  $10,000,000 at any time  outstanding in connection  with
         the sale of products by Borrower or any Subsidiary  Loan Party pursuant
         to United States, state or local government contracts;

                  (xiii) any license or sublicense in existence on the Effective
         Date or similar  arrangements  entered into in the  ordinary  course of
         business;

                  (xiv) customary  security  deposits under operating  leases in
         the ordinary course of business;

                  (xv) customary rights of set off, revocation, refund or charge
         back under deposit  agreements or under the Uniform  Commercial Code of
         banks or other financial  institutions where the Borrower or any of its
         Subsidiaries  maintains  deposits (other than deposits intended as cash
         collateral) in the ordinary course of business;

                  (xvi) Liens in favor of banks  which arise under  Article 4 of
         the Uniform  Commercial  Code on items in collection  and the documents
         relating thereto and proceeds thereof; and

                  (xvii)  Liens in respect of interests  of  consignors  and UCC
         filings by consignors in respect of segregated inventory,  if any, held
         on consignment;  provided that the term "Permitted  Encumbrances" shall
         not include any Lien securing Indebtedness.

                  "Permitted Investments" means:

                  (a) direct obligations of, or obligations the principal of and
         interest on which are unconditionally  guaranteed by, the United States
         of America (or by any agency thereof to the extent such obligations are
         backed by the full faith and credit of the United  States of  America),
         in each case  maturing  within  one year  from the date of  acquisition
         thereof;

                  (b)  investments in commercial  paper maturing within 270 days
         from  the date of  acquisition  thereof  and  having,  at such  date of
         acquisition,  the highest  credit  rating  obtainable  from S&P or from
         Moody's;

                  (c)   investments  in   certificates   of  deposit,   banker's
         acceptances and time deposits maturing within 180 days from the date of
         acquisition  thereof  issued or guaranteed by or placed with, and money
         market deposit  accounts  issued or offered by, any domestic  office of
         any commercial  bank  organized  under the laws of the United States of
         America or any State thereof  which has a combined  capital and surplus
         and undivided profits of not less than $500,000,000;

                  (d) fully collateralized  repurchase agreements with a term of
         not more than 30 days for securities  described in clause (a) above and
         entered  into with a  financial  institution  satisfying  the  criteria
         described in clause (c) above;


<PAGE>


                  (e) money market funds at least 95% of the assets of which are
         continuously  invested in securities  of the type  described in clauses
         (a) and (b) above; and

                  (f) Cash.

         "Person"  means and includes  natural  persons,  corporations,  limited
partnerships,  general  partnerships,  joint stock  companies,  joint  ventures,
associations,  companies,  trusts, banks, trust companies, land trusts, business
trusts or other  organizations,  whether or not legal entities,  and governments
and agencies and political subdivisions thereof.

         "Pledge  Agreement"  means the Pledge  Agreement,  substantially in the
form of Exhibit VIII,  among Borrower,  the  Subsidiaries  party thereto and the
Collateral Agent for the benefit of the Secured Parties.

         "Potential  Event of Default"  means a condition or event which,  after
notice or lapse of time or both,  would  constitute  an Event of Default if that
condition or event were not cured or removed within the applicable grace or cure
period.

         "Prepayment Event" means:

                  (a)  any  sale,  transfer  or  other  disposition   (including
         pursuant to a sale and leaseback  transaction but excluding licenses of
         intellectual  property)  of any  property  or asset of  Borrower or any
         Subsidiary,  other than (i) dispositions  described in clauses (a), (b)
         and (d) of subsection 6.5 and (ii) any disposition  described in clause
         (e) of subsection  6.5 to the extent that (A) the Net Proceeds from any
         such disposition do not exceed $1,000,000 and (B) the Net Proceeds from
         any such  disposition,  together  with the Net Proceeds  from any other
         such   disposition  that  occurs  in  the  same  fiscal  year  as  such
         disposition, do not exceed $5,000,000; or

                  (b) any  casualty  or other  insured  damage to, or any taking
         under power of eminent domain or by condemnation or similar  proceeding
         of, any  property or asset of Borrower or any  Subsidiary,  but only to
         the extent that the Net  Proceeds  therefrom  have not been  applied to
         repair, restore or replace such property or asset within 180 days after
         receipt thereof.

         "Pro Rata Share" means, with respect to each of the Commitments of each
Lender and each Revolving Loan (including Swingline Loans and Letters of Credit)
to be made by and each payment (including,  without  limitation,  any payment of
principal,  interest  or  fees)  to be  made  to  each  Lender,  the  percentage
designated as such Lender's Pro Rata Share of such  Commitments,  such Revolving
Loans or such payments,  as applicable,  set forth under the name of such Lender
on  Schedule  B annexed  hereto,  in each case as such Pro Rata Share may change
from time to time as a result of assignments  made pursuant to subsection 9.2 or
9.16.

         "Qualified  Borrower PIK Preferred  Stock" means any preferred  capital
stock or preferred equity interest of Borrower (a) that does not provide for any
cash dividend  payments or other cash  distributions in respect thereof prior to
the  Maturity  Date and (b) that by its terms  (or by the terms of any  security
into which it is convertible or for which it is  exchangeable or exercisable) or
upon the  happening  of any event  does not (i)  mature  or  become  mandatorily
redeemable  pursuant to a sinking  fund  obligation  or  otherwise,  (ii) become
convertible or exchangeable at the option of the holder thereof for Indebtedness
or preferred stock that is not Qualified  Borrower PIK Preferred Stock, or (iii)
become  redeemable at the option of the holder thereof,  in whole or in part, in
each case on or prior to the first anniversary of the Maturity Date.

         "Receivables Date" means the later of (a) November 10, 2002 and (b) the
date  that is 30 days  prior  to the  termination  date  (maturity  date) of the
Receivables Purchase Program, after giving effect to any amendment,  refinancing
or replacement thereof after the Effective Date that is permitted hereunder.

         "RCRA" has the meaning assigned to that term in subsection 4.18A.



<PAGE>


         "Receivables  Purchase Agreement" means the agreement pursuant to which
the Receivables  Subsidiary  purchases accounts receivable of the sellers listed
therein,  dated  as  of  December  10,  1997,  as  such  agreement  is  amended,
supplemented or otherwise modified, extended or restated from time to time.

         "Receivables Purchase Facility" means the receivables purchase facility
established  by  Receivables  Subsidiary  in  connection  with  the  Receivables
Purchase  Agreement through that certain loan agreement dated as of December 10,
1997  among  the  Receivables  Subsidiary,  certain  financial  institutions  as
liquidity  and/or conduit  lenders and/or agent or agents,  as such agreement is
amended,  supplemented or otherwise modified,  extended or restated from time to
time, that certain amended and restated facility  agreement dated as of December
10,  1997  among  the  Receivables  Subsidiary,  Borrower  and  agents,  as such
agreement is amended,  supplemented or otherwise modified,  extended or restated
from time to time, and that certain security  agreement dated as of December 10,
1997 among the Receivables  Subsidiary and agents, as such agreement is amended,
supplemented or otherwise modified, extended or restated from time to time.

         "Receivables Purchase Program" means (a) the transactions  contemplated
by the  agreements  related to the  Receivables  Purchase  Facility  and (b) any
subsequent  receivables  purchase  program that shall  refinance and replace the
receivables  purchase program  described in clause (a) above,  provided that the
documentation in respect of any such subsequent receivables program (i) shall be
reasonably  satisfactory to Administrative Agent, (ii) shall not contain (A) any
covenants  in respect of Borrower  or any  Subsidiary  of  Borrower  (other than
Receivables  Subsidiary)  as to matters that are the subject matter of Section 6
of this  Agreement  that are more  restrictive  than the  covenants set forth in
Section 6 of this  Agreement or (B) any  cross-default  to this  Agreement,  and
(iii) shall have a termination  date (maturity  date) later than the Receivables
Purchase Facility.

         "Receivables  Subsidiary" means B.I. Funding,  Inc. or its successor in
interest, which, in either case, is a wholly owned,  bankruptcy-remote,  special
purpose  subsidiary  of  Borrower  formed  in  connection  with the  Receivables
Purchase Program.

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

         "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.

         "Reporting  Division"  means each of the divisions of the operations of
Borrower,  as set forth on  Schedule  J annexed  hereto as such  Schedule  J may
hereafter be amended, supplemented or modified from time to time by Borrower.

         "Requisite  Lenders" means at any time (a) for purposes of acceleration
of Loans  pursuant  to  Section  7,  Lenders  holding in excess of 662/3% of the
aggregate principal amount of the Loans outstanding at such time and (b) for any
other purpose,  Lenders having  Commitments  representing in excess of 662/3% of
the Total Commitments at such time.

         "Restatement  Transactions"  means the amendment and restatement of the
1995 Credit  Agreement,  including  the  granting of Liens  contemplated  by the
Collateral and Guarantee Requirement, on the terms and subject to the conditions
set forth herein.

         "Restricted Payment" means any dividend or other distribution  (whether
in cash,  securities or other property) with respect to any Equity  Interests in
Borrower  or any  Subsidiary  (including  stock  repurchases),  or  any  payment
(whether in cash,  securities or other property),  including any sinking fund or
similar   deposit,   on  account  of  the  purchase,   redemption,   retirement,
acquisition,  cancellation or termination of any Equity Interests in Borrower or
any Subsidiary or any option,  warrant or other right to acquire any such Equity
Interests in Borrower or any Subsidiary.



<PAGE>


         "Revolving  Loans"  means  revolving  loans made by Lenders to Borrower
pursuant to subsection  2.2A.  Each  Revolving  Loan shall be a Eurodollar  Rate
Revolving Loan or an ABR Loan.

         "Rights  Plan"  means  Borrower's  Shareholders'  Rights  Plan  adopted
December 3, 1997.

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

         "Secured  Parties" shall have the meaning  assigned to such term in the
Security Agreement.

         "Security Agreement" means the Security Agreement  substantially in the
form of  Exhibit  IX,  among  Borrower,  the  Subsidiary  Loan  Parties  and the
Collateral Agent for the benefit of the Secured Parties.

         "Security Document" means the Security Agreement, the Pledge Agreement,
the Mortgages and each other security  agreement or other instrument or document
executed and delivered  pursuant to  subsections  5.10 and 5.11 to secure any of
the obligations.

         "Securities" means any stock, shares, voting trust certificates, bonds,
debentures,  options,  warrants,  notes,  or other  evidences  of  indebtedness,
secured or unsecured, convertible,  subordinated or otherwise, or in general any
instruments  commonly known as  "securities"  or any  certificates  of interest,
shares or participations  in temporary or interim  certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.

         "Securities Act" means the Securities Act of 1933, as amended from time
to time, and any successor statute.

         "Senior Secured  Indebtedness"  means, with respect to Borrower and the
Subsidiaries  on a  consolidated  basis at any time (without  duplication),  any
Indebtedness  at such  time  that  constitutes  Total  Indebtedness  and that is
secured by a Lien, including the Loans and the obligations arising in respect of
the Receivables Purchase Program.

         "Senior  Secured  Leverage  Ratio" means, on any date, the ratio of (a)
Senior Secured  Indebtedness as of such date to (b) Consolidated  EBITDA for the
period of four  consecutive  fiscal quarters of Borrower ended on such date (or,
if such date is not the last day of a fiscal  quarter,  ended on the last day of
the fiscal quarter of Borrower most recently ended prior to such date).

         "Specified  Mortgage  Property"  means each parcel of real property and
improvements thereto owned by a Loan Party and identified on Schedule M-1.

         "Standby  Letter of Credit"  means any  letter of credit  that is not a
Commercial Letter of Credit.

         "Statutory  Reserves"  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 and any other banking authority to which Administrative
Agent is subject with respect to the Base CD Rate for new negotiable nonpersonal
time deposits in dollars of over $100,000 with maturities approximately equal to
three months.  Statutory  Reserves shall be adjusted  automatically on and as of
the effective date of any change in any reserve percentage.

         "Sterling" means the lawful money of the United Kingdom.



<PAGE>


         "subsidiary"  means, with respect to any Person ("parent") at any date,
any corporation,  limited liability company,  partnership,  association or other
entity the accounts of which would be  consolidated  with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared  in  accordance  with  GAAP as of  such  date,  as  well  as any  other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests  representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership,  more than 50% of the general partnership interests are, as of such
date,  owned,  controlled  or held,  or (b) that is, as of such date,  otherwise
controlled  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 Borrower, other than Nano-Tex.

         "Subsidiary  Loan Party" means any Subsidiary that is not (i) a Foreign
Subsidiary or (ii) an Immaterial Subsidiary.

         "Swingline Exposure" means, at any time, the aggregate principal amount
of all Swingline Loans  outstanding at such time. The Swingline  Exposure of any
Lender at any time shall be its Pro Rata Share of the total  Swingline  Exposure
at such time.

         "Swingline  Lender" means Chase, in its capacity as lender of Swingline
Loans hereunder.

         "Swingline Loan" means a Loan made pursuant to Section 2.3.

         "Termination Event" means (i) a "Reportable Event" described in Section
4043(6) of ERISA and the regulations issued thereunder (other than a "Reportable
Event" not subject to the  provision  for 30-day  notice to the Pension  Benefit
Guaranty  Corporation under such regulations) or (ii) the withdrawal of Borrower
or any of its ERISA  Affiliates  from a Pension Plan during a plan year in which
it was a "substantial  employer" as defined in Section  4001(a)(2) of ERISA,  or
(iii)  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 of
ERISA, or (iv) the institution of proceedings to terminate a Pension Plan by the
Pension Benefit Guaranty Corporation,  or (v) any other event or condition which
might  reasonably  be  expected  to  constitute  grounds  under  ERISA  for  the
termination of, or the  appointment of trustee to administer,  any Pension Plan;
provided,  however,  that for the purposes of Section 4 only, the termination of
any Pension Plan and any action taken with respect to such termination shall not
be a Termination Event if Borrower and its ERISA Affiliates have not and are not
reasonably  expected to incur net liabilities  aggregating more than $15,000,000
(such liabilities to include,  without limitation,  any liability to the Pension
Benefit Guaranty  Corporation (or any successor thereto),  or to any other party
under  Sections  4062,  4063,  and 4064 of ERISA or any other  provision of law)
resulting from or associated with such termination.

         "Total  Commitment"  means  at any  time the  aggregate  amount  of the
Lenders' Commitments, as in effect at such time.

         "Total  Indebtedness"  means,  as of any  date,  the  sum  of  (a)  the
aggregate  principal  amount of  Indebtedness  of Borrower and the  Subsidiaries
outstanding  as of such date, in the amount that would be reflected on a balance
sheet prepared as of such date on a consolidated  basis in accordance with GAAP,
plus (b) the  aggregate  principal  amount of  Indebtedness  of Borrower and the
Subsidiaries outstanding as of such date that is not required to be reflected on
a balance sheet in accordance  with GAAP,  determined on a  consolidated  basis;
provided that, for purposes of clause (b) above, the term  "Indebtedness"  shall
not include  contingent  obligations of Borrower or any Subsidiary as an account
party in  respect  of any  letter of credit or letter of  guaranty  unless  such
letter of credit or letter of  guaranty  supports  an  obligation  for  borrowed
money.  Without limiting the generality of the foregoing,  "Total  Indebtedness"
includes obligations arising in respect of the Receivable Purchase Program.

         "Total Utilization of Commitments" means, at any date of determination,
the sum of (i) the aggregate principal amount of all outstanding Revolving Loans
and (ii) the Letters of Credit Usage.

         "TSCA" has the meaning assigned to that term in subsection 4.18A.



<PAGE>


         1.2      Accounting Terms.

         For the purposes of this Agreement,  all accounting terms not otherwise
defined herein shall have the meanings assigned to them in conformity with GAAP.

         1.3      Other Definitional Provisions; Anniversaries.

         References to  "Sections"  and  "subsections"  shall be to Sections and
subsections,  respectively,  of this Agreement, and references to "Exhibits" and
"Schedules" shall be to Exhibits and Schedules, respectively, to this Agreement,
in each case unless otherwise specifically provided. Any of the terms defined in
subsection  1.1 may,  unless  the  context  otherwise  requires,  be used in the
singular  or the  plural  depending  on the  reference.  For  purposes  of  this
Agreement,  a monthly  anniversary of the Effective Date shall occur on the same
day of the applicable  month as the day of the month on which the Effective Date
occurred; provided that if the applicable month has no such day (i.e., 29, 30 or
31),  the  monthly  anniversary  shall be deemed to occur on the last day of the
applicable month.

Section 2         AMOUNT AND TERMS OF COMMITMENTS AND LOANS

         2.1      Letters of Credit.

         A.  Letters of  Credit.  Subject  to the terms and  conditions  of this
Agreement and in reliance upon the  representations  and  warranties of Borrower
set forth herein,  in addition to requesting that Lenders make Loans pursuant to
subsection 2.2, Borrower may request,  in accordance with the provisions of this
subsection  2.1A,  that on and after the  Effective  Date  Fronting  Bank  issue
Letters of Credit for the account of Borrower;  provided that (a) Borrower shall
not  request  that  Fronting  Bank issue any Letter of Credit if,  after  giving
effect to such issuance,  (i) the Total  Utilization of Commitments at such time
would exceed the Total  Commitment  then in effect or (ii) the Letters of Credit
Usage would be in excess of $75,000,000  and (b) in no event shall Fronting Bank
issue (w) any Letter of Credit  having an  expiration  date later than the fifth
Business Day prior to the Maturity Date, (x) any Letter of Credit denominated in
a currency other than Dollars unless Borrower shall have entered into a Currency
Agreement in form and substance  satisfactory  to Fronting Bank and covering the
stated amount of such Letter of Credit;  provided that Standby Letters of Credit
denominated  in a currency  other than Dollars may only be denominated in Freely
Available Foreign Currencies and the aggregate amount of such Standby Letters of
Credit  denominated in Freely Available Foreign  Currencies shall not exceed, at
any time, the Dollar equivalent of $5,000,000,  based on the applicable Exchange
Rate at such time,  (y) any Standby  Letter of Credit having an expiration  date
more than eighteen months after its date of issuance;  provided that, subject to
the foregoing  clause (w), this clause (y) shall not prevent Fronting Bank, with
the consent of Requisite  Lenders,  from agreeing that (aa) a Standby  Letter of
Credit,  denominated in Dollars,  will  automatically  be renewed annually for a
period not to exceed one year if Fronting  Bank does not cancel such  renewal or
(bb) a Standby  Letter of Credit,  denominated in a currency other than dollars,
will  automatically  be renewed  annually for a period not to exceed one year if
Fronting   Bank  does  not   cancel   such   renewal   and,   with   respect  to
non-dollar-denominated  Letters of Credit,  upon the request of Fronting Bank at
the time of such renewal, Borrower shall enter into a Currency Agreement in form
and substance  satisfactory  to Fronting Bank and covering such stated amount of
such Letter of Credit  requested by Fronting  Bank (failure by Borrower to enter
into such a Currency  Agreement to be  sufficient  grounds for  cancellation  by
Fronting  Bank  of its  non-dollar-denominated  Letter  of  Credit),  or (z) any
Commercial Letter of Credit having an expiration date which is not acceptable to
Fronting Bank in its reasonable  discretion or which is more than 180 days after
its date of issuance (it being  understood that any Commercial  Letter of Credit
having an  expiration  date of at least 30 days shall be  acceptable to Fronting
Bank). The issuance of any Letter of Credit in accordance with the provisions of
this  subsection  2.1  shall be given  effect  in the  calculation  of the Total
Utilization of Commitments and shall require the  satisfaction of each condition
set forth in subsections 3.2 and 3.3.



<PAGE>


         Immediately  upon the  issuance  of each  Letter of Credit  (or  deemed
issuance in respect of Existing Letters of Credit),  each Lender shall be deemed
to, and hereby  agrees to,  have  irrevocably  purchased  from  Fronting  Bank a
participation in such Letter of Credit and drawing thereunder in an amount equal
to such  Lender's  Pro Rata Share of the maximum  amount which is or at any time
may become available to be drawn thereunder.

         Each Letter of Credit may provide that Fronting Bank may (but shall not
be required to) pay the  beneficiary  thereof upon the occurrence of an Event of
Default and the  acceleration of the maturity of the Loans or, if payment is not
then due to the  beneficiary,  provide for the deposit of funds in an account to
secure payment to the  beneficiary and that any funds so deposited shall be paid
to the  beneficiary  of the Letter of Credit if  conditions  to such payment are
satisfied or returned to Fronting Bank for  distribution  to Lenders (or, if all
Obligations  shall  have been  indefeasibly  paid in full,  to  Borrower)  if no
payment  to the  beneficiary  has been made and the  final  date  available  for
drawings under the Letter of Credit has passed. Each payment or deposit of funds
by Fronting Bank as provided in this paragraph shall be treated for all purposes
of this  Agreement as a drawing duly honored by Fronting  Bank under the related
Letter of Credit.

         B. Notice of  Issuance.  Whenever  Borrower  desires the  issuance of a
Letter of Credit, it shall deliver to  Administrative  Agent and Fronting Bank a
written  notice no later than 1:00 P.M.  (New York  time) at least ten  Business
Days (in the case of Standby  Letters of Credit),  or five Business Days (in the
case of Commercial  Letters of Credit),  or in each case such shorter  period as
may be agreed to by Fronting Bank in any particular instance,  in advance of the
proposed  date of issuance.  That notice shall  specify (i) the proposed date of
issuance,  amendment,  renewal or extension (which shall be a business day under
the laws of the  jurisdiction  of  Fronting  Bank),  (ii) the face amount of the
Letter of Credit, (iii) the expiration date of the Letter of Credit (which shall
comply with Subsection 2.1A), (iv) the name and address of the beneficiary,  (v)
the Benefitted  Subsidiary or Benefitted  Subsidiaries,  if any, with respect to
such  Letter  of Credit  and the  amount  inuring  to the  benefit  of each such
Benefitted  Subsidiary  and (vi) the  currency  in which the Letter of Credit is
requested to be  denominated  (which shall be Dollars or,  subject to subsection
2.1A,  a Freely  Available  Foreign  Currency).  Prior to the date of  issuance,
Borrower  shall specify a precise  description of the documents and the verbatim
text of any  certificate  to be presented by the  beneficiary  of such Letter of
Credit,  which if presented by such beneficiary  prior to the expiration date of
the Letter of Credit,  would  require  Fronting  Bank to make payment  under the
Letter of Credit;  provided that Fronting Bank, in its sole reasonable judgment,
may require changes in any such documents and certificates, and provided further
that no Letter of Credit shall require payment against a conforming  draft to be
made thereunder on the same business day (under the laws of the  jurisdiction of
Fronting Bank) that such draft is presented if such  presentation  is made after
11:00  A.M.  in the  time  zone  of  Fronting  Bank  on such  business  day.  In
determining  whether to pay under any Letter of Credit,  Fronting  Bank shall be
responsible only to determine that the documents and certificates required to be
delivered  under that Letter of Credit have been  delivered and that they comply
on their face with the  requirements  of that Letter of Credit.  Promptly  after
receipt  of a notice of  issuance  of a Letter of Credit,  Administrative  Agent
shall  notify  each  Lender  of the  proposed  issuance  and the  amount of each
Lender's  respective  participation  therein,   determined  in  accordance  with
subsection 2.1A.

         C. Computations.  Interest and fees payable pursuant to this subsection
2.1 shall be  computed on the basis of a 360-day  year and the actual  number of
days elapsed in the period of accrual.



<PAGE>


         D. Payment of Amounts  Drawn Under  Letters of Credit.  In the event of
any request for a drawing under any Letter of Credit by the beneficiary thereof,
Fronting Bank shall notify  Borrower and  Administrative  Agent on or before the
date on which  Fronting Bank intends to honor such drawing,  and Borrower  shall
reimburse Fronting Bank on the day on which such drawing is honored in an amount
in same day funds  equal to the  amount of such  drawing  in Dollars or a Freely
Available Foreign Currency, as applicable;  provided that, anything contained in
this Agreement to the contrary  notwithstanding,  (i) unless Borrower shall have
notified  Administrative  Agent and Fronting  Bank prior to 11:00 A.M. (New York
time) on the  Business  Day  immediately  prior to the date of such drawing that
Borrower intends to reimburse  Fronting Bank for the amount of such drawing with
(a) funds  other  than the  proceeds  of  Revolving  Loans or (b) to the  extent
otherwise permitted under this Agreement,  funds that are proceeds of Loans that
are  Eurodollar  Rate Revolving  Loans,  Borrower shall be deemed to have timely
given a Notice of Borrowing to Administrative  Agent requesting  Lenders to make
Revolving Loans which are ABR Loans on the date on which such drawing is honored
in an  amount  equal  to the  amount  of  such  drawing,  and  (ii)  subject  to
satisfaction or waiver of the conditions  specified in subsection 3.3C,  Lenders
shall, on the date of such drawing,  make Revolving Loans which are ABR Loans in
the amount of such drawing,  the proceeds of which shall be applied  directly by
Administrative  Agent to reimburse Fronting Bank for the amount of such drawing;
and further provided that, if for any reason, proceeds of Loans are not received
by Fronting  Bank on such date in an amount equal to the amount of such drawing,
Borrower shall  reimburse  Fronting Bank, on the business day (under the laws of
the  jurisdiction  of  Fronting  Bank)  immediately  following  the date of such
drawing,  in an amount in same day funds  equal to the  excess of the  amount of
such drawing over the amount of such Loans, if any, which are so received,  plus
accrued interest on such amount at the rate set forth in subsection 2.1F(1)(ii).

         If  Borrower  fails  to make  such  reimbursement  payment  when due in
respect  of a  Letter  of  Credit  denominated  in a  Freely  Available  Foreign
Currency,   automatically  and  with  no  further  action  required,  Borrower's
obligation to reimburse the applicable  drawing shall be  permanently  converted
into an  obligation  to reimburse the Dollar  equivalent,  calculated  using the
Exchange  Rates on the date when such  payment  was due,  of such  drawing,  and
Administrative  Agent shall promptly  notify Fronting Bank and each other Lender
of the applicable drawing,  the Dollar equivalent thereof,  and the payment then
due from Borrower in respect thereof.

         E.  Payment  by  Lenders.  In the event  that  Borrower  shall  fail to
reimburse Fronting Bank as provided in subsection 2.1D in an amount equal to the
amount of any drawing  honored by Fronting  Bank under a Letter of Credit issued
by it,  Fronting  Bank shall  promptly  notify each  Lender of the  unreimbursed
amount of such drawing and of such Lender's  respective  participation  therein.
Each Lender shall make available to Fronting  Bank, in Dollars,  an amount equal
to its Pro Rata Share of (i) each Letter of Credit disbursement made by Fronting
Bank in  Dollars  and  (ii) the  Dollar  equivalent  of each  Letter  of  Credit
disbursement  made by Fronting Bank  denominated in a Freely  Available  Foreign
Currency,  as  applicable,  and, in each case, not reimbursed by Borrower on the
date  due as  provided  in  subsection  2.1D,  or of any  reimbursement  payment
required to be refunded  to  Borrower  for any reason in same day funds,  at the
office of Fronting Bank specified in such notice,  not later than 1:00 P.M. (New
York time) on the business day (under the laws of the  jurisdiction  of Fronting
Bank) after the date  notified by  Fronting  Bank.  In the event that any Lender
fails  to  make   available  to  Fronting  Bank  the  amount  of  such  Lender's
participation  in such  drawing  under such Letter of Credit as provided in this
subsection  2.1E,  Fronting  Bank shall be  entitled  to recover  such amount on
demand from such Lender  together  with  interest  at the  Alternate  Base Rate.
Nothing in this  subsection  2.1E shall be deemed to prejudice  the right of any
Lender to recover from Fronting  Bank any amounts made  available by such Lender
to  Fronting  Bank  pursuant  to this  subsection  2.1E in the event  that it is
determined by a court of competent jurisdiction that the payment with respect to
a Letter of Credit by Fronting Bank in respect of which payment was made by such
Lender  constituted  gross  negligence  or  willful  misconduct  on the  part of
Fronting  Bank.  Fronting  Bank shall  distribute to each other Lender which has
paid all amounts  payable by it under this  subsection  2.1E with respect to any
Letter of Credit issued by Fronting  Bank such other  Lender's Pro Rata Share of
all  payments  received  by Fronting  Bank from  Borrower  in  reimbursement  of
drawings honored by Fronting Bank under such Letter of Credit when such payments
are received,  plus accrued interest on such amount received pursuant subsection
2.1F(1)(ii).

         F.  Compensation.  (1) Borrower agrees to pay the following  amounts to
Fronting Bank with respect to Letters of Credit issued by it:

                  (i) with respect to outstanding Letters of Credit, a fee equal
         to  1/8 of 1% per  annum  on the  aggregate  face  amount  of all  such
         outstanding  Letters of Credit,  payable in arrears on and  through the
         last day of each fiscal quarter of Borrower and upon the termination of
         Fronting Bank's obligation hereunder to issue Letters of Credit;

                  (ii) with respect to drawings made under any Letter of Credit,
         interest,  payable on demand,  on the amount paid by  Fronting  Bank in
         respect of each such drawing  from the date of the drawing  through the
         date  such  amount  is  reimbursed  by  Borrower  (including  any  such
         reimbursement out of the proceeds of Loans pursuant to subsection 2.1D)
         at a rate which is at all times  equal to 2% per annum in excess of the
         rate of interest  otherwise payable under this Agreement for ABR Loans;
         and


<PAGE>


                  (iii) with respect to the  issuance,  amendment or transfer of
         each Letter of Credit and each drawing made thereunder, documentary and
         processing charges in accordance with Fronting Bank's standard schedule
         for such  charges  in effect at the time of such  issuance,  amendment,
         transfer or drawing, as the case may be.

         (2) Borrower agrees to pay to Administrative  Agent for distribution to
each Lender in respect of all Letters of Credit  outstanding  such  Lender's Pro
Rata Share of a  commission  equal to a per-annum  rate equal to the  Applicable
Rate for interest on  Eurodollar  Rate  Revolving  Loans on the  aggregate  face
amount of all such  outstanding  Letters  of  Credit,  payable in arrears on and
through the last day of each fiscal quarter of Borrower and upon the termination
of the Commitments.

         Promptly upon receipt by  Administrative  Agent of any amount described
in clause (2) of this subsection 2.1F,  Administrative Agent shall distribute to
each Lender its Pro Rata Share of such amount.  Amounts payable under clause (l)
of this subsection 2.1F shall be paid directly to Fronting Bank.

         G.  Obligations  Absolute.  The  obligation  of Borrower  to  reimburse
Fronting Back for drawings made under the Letters of Credit issued by it and the
obligations  by  Lenders  under  subsection  2.1E  shall  be  unconditional  and
irrevocable  and shall be paid  strictly  in  accordance  with the terms of this
Agreement under all circumstances including,  without limitation,  the following
circumstances:

                  (1) any lack of validity or enforceability of any Letter of
         Credit;

                  (2) the existence of any claim, setoff, defense or other right
         which  Borrower  or any  Affiliate  of  Borrower  may  have at any time
         against a beneficiary or any transferee of any Letter of Credit (or any
         persons or entities for whom any such  beneficiary or transferee may be
         acting),  Fronting  Bank, any Lender (other than the defense of payment
         in accordance  with the terms of this Agreement or any defense based on
         the gross  negligence  or wilful  misconduct  of Fronting  Bank) or any
         other  Person,   whether  in  connection  with  this   Agreement,   the
         transactions   contemplated   herein  or  any   unrelated   transaction
         (including any underlying  transaction  between  Borrower or one of its
         Subsidiaries  and the  beneficiary  for which the  Letter of Credit was
         procured);

                  (3) any draft, demand, certificate or other document presented
         under any Letter of Credit proving to be forged, fraudulent, invalid or
         insufficient  in any respect or any  statement  therein being untrue or
         inaccurate in any respect, provided that payment by Fronting Bank under
         such  Letter of Credit  against  presentation  of such  draft,  demand,
         certificate  or  other  document  shall  not  have  constituted   gross
         negligence or wilful misconduct of Fronting Bank;

                  (4)  payment  by  Fronting  Bank  under  any  Letter of Credit
         against presentation of a draft, demand,  certificate or other document
         which does not comply with the terms of such Letter of Credit, provided
         that such payment shall not have constituted gross negligence or wilful
         misconduct of Fronting Bank;

                  (5) any other circumstance or happening  whatsoever,  which is
         similar to any of the  foregoing,  provided that such  circumstance  or
         happening  shall  not  have  constituted  gross  negligence  or  wilful
         misconduct of Fronting Back; or

                  (6) the fact that an Event of Default or a Potential  Event of
         Default  shall have  occurred  and be  continuing,  in which case,  all
         amounts that Borrower is at the time or thereafter  becomes required to
         reimburse  or  otherwise  pay to  Administrative  Agent in  respect  of
         drawings  made  under  any  Letter of  Credit  denominated  in a Freely
         Available   Foreign   Currency  shall  be  converted  into  the  Dollar
         equivalent, calculated using the Exchange Rates on such date.



<PAGE>


         It is  understood  that in making any payment  under a Letter of Credit
(A) Fronting Bank's  exclusive  reliance on the documents  presented to it under
such  Letter of Credit as to any and all matters  set forth  therein,  including
reliance  on the  amount of any draft  presented  under  such  Letter of Credit,
whether or not the amount due to the beneficiary equals the amount of such draft
and  whether or not any  document  presented  pursuant  to such Letter of Credit
proves to be insufficient  in any respect,  if such document on its face appears
to be in order,  and whether or not any other  statement  or any other  document
presented  pursuant to such  Letter of Credit  proves to be forged or invalid or
any  statement  therein  proves  to be  inaccurate  or  untrue  in  any  respect
whatsoever, and (B) any noncompliance in any immaterial respect of the documents
presented under a Letter of Credit with the terms thereof,  shall, in each case,
not be deemed wilful misconduct or gross negligence of Fronting Bank.

         H.  Additional  Payments.  If by reason of (a) any change in applicable
law,  regulation,  rule,  decree or regulatory  requirement or any change in the
interpretation  or  application  by any judicial or regulatory  authority of any
law,  regulation,  rule,  decree or regulatory  requirement or (b) compliance by
Fronting Bank or any Lender with any direction,  request or requirement (whether
or not  having  the  force of law) of any  governmental  or  monetary  authority
including, without limitation, Regulation D:

                  (i) any reserve,  deposit or similar requirement  (including a
         reserve,  deposit or similar  requirement that takes the form of a tax)
         is or shall be applicable, imposed or modified in respect of any Letter
         of Credit issued by Fronting Bank or  participations  therein purchased
         by any Lender; or

                  (ii) there shall be imposed on Fronting Bank or any Lender any
         other condition  regarding this subsection 2.1, any Letter of Credit or
         any participation therein;

and the result of the foregoing is to directly or  indirectly  increase the cost
to Fronting Bank or any Lender of issuing,  making or maintaining  any Letter of
Credit or of purchasing or maintaining any participation  therein,  or to reduce
the amount  receivable in respect  thereof by Fronting Bank or any Lender,  then
and in any such case  Fronting  Bank or such  Lender  may,  at any time within a
reasonable  period after the additional  cost is incurred or the amount received
is reduced,  notify  Borrower and  Borrower  shall pay on demand such amounts as
Fronting Bank or such Lender may specify to be necessary to compensate  Fronting
Bank or such Lender for such additional cost or reduced  receipt,  together with
interest on such amount from the date demanded  until payment in full thereof at
a rate per annum equal at all times to the rate  applicable to ABR Loans then in
effect;  provided,  however,  that this  subsection  2.1H shall not apply to any
additional cost or reduction in amounts receivable that is attributable to taxes
except as specified is subparagraph  (i) above.  The  determination  by Fronting
Bank or any  Lender,  as the case may be, of any  amount  due  pursuant  to this
subsection  2.1H as set forth in a  certificate  setting  forth the  calculation
thereof in reasonable detail,  shall, in the absence of manifest error, be final
and conclusive and binding on all of the parties hereto.



<PAGE>


         I. Cash  Collateralization.  If any Event of Default shall occur and be
continuing,   on  the  Business   Day  that   Borrower   receives   notice  from
Administrative  Agent  or  Requisite  Lenders  demanding  the  deposit  of  cash
collateral pursuant to this paragraph, Borrower shall deposit in an account with
Administrative Agent, in the name of Administrative Agent and for the benefit of
Lenders,  an amount in  Dollars  and in cash  equal to the  aggregate  amount of
outstanding  Letters  of  Credit as of such date  plus any  accrued  and  unpaid
interest thereon;  provided that (i) the portions of such amount attributable to
undrawn Freely  Available  Foreign  Currency  Letters of Credit or drawings in a
Freely Available Foreign Currency that Borrower is not late in reimbursing shall
be deposited in the applicable Freely Available Foreign Currency,  in the actual
amounts  of such  undrawn  Letters  of  Credit  and  drawings  and (ii) upon the
occurrence  of any Event of  Default  with  respect  to  Borrower  described  in
subsections  7.6 or 7.7 of  Section  7, the  obligation  to  deposit  such  cash
collateral  shall become  effective  immediately,  and such deposit shall become
immediately  due and payable in Dollars,  without  demand or other notice of any
kind. For the purposes of this  paragraph,  the aggregate  amount of outstanding
Letters  of Credit  issued  in  Freely  Available  Foreign  Currencies  shall be
calculated   using  the  Exchange  Rates  on  the  date  notice  demanding  cash
collateralization  is delivered to Borrower.  Each such deposit shall be held by
Administrative  Agent as  collateral  for the  payment  and  performance  of the
obligations of Borrower under this  Agreement.  Administrative  Agent shall have
exclusive  dominion and control,  including the exclusive  right of  withdrawal,
over such  account.  Other than any interest  earned on the  investment  of such
deposits,  which  investments shall be made at the option and sole discretion of
Administrative Agent and at Borrower's risk and expense, such deposits shall not
bear interest. Interest or profits, if any, on such investments shall accumulate
in such account. Moneys in such account shall be applied by Administrative Agent
to reimburse  Fronting Bank for drawings under any Letter of Credit for which it
has not been reimbursed and, to the extent not so applied, shall be held for the
satisfaction  of the  reimbursement  obligations  of Borrower  for the Letter of
Credit Usage at such time or, if the maturity of the Loans has been accelerated,
be applied to satisfy other  obligations  of Borrower under this  Agreement.  If
Borrower  is  required to provide an amount of cash  collateral  hereunder  as a
result of the occurrence of an Event of Default,  such amount (to the extent not
applied as aforesaid)  shall be returned to Borrower  within three Business Days
after all Events of Default have been cured or waived.

         J.  Indemnification;  Nature of Fronting Bank's Duties.  In addition to
amounts  payable  as  elsewhere   provided  in  this  subsection  2.1,   without
duplication, Borrower hereby agrees to protect, indemnify, pay and save Fronting
Bank  harmless  from  and  against  any and all  claims,  demands,  liabilities,
damages,  losses,  costs, charges and expenses (including  reasonable attorneys'
fees,  other charges and  disbursements  and allocated costs of internal counsel
but  excluding  any taxes) which  Fronting  Bank may incur or be subject to as a
consequence,  direct or indirect,  of (i) the issuance of the Letters of Credit,
other than as a result of the gross negligence or willful misconduct of Fronting
Bank or (ii) the failure of Fronting Bank to honor a drawing under any Letter of
Credit as a result of any act or omission,  whether rightful or wrongful, of any
present or future de jure or de facto government or governmental  authority (all
such acts or omissions herein called "Government Acts").

         As between  Borrower and Fronting Bank,  Borrower  assumes all risks of
the acts and omissions of, or misuse of the Letters of Credit issued by Fronting
Bank by, the respective  beneficiaries of such Letters of Credit. In furtherance
and not in limitation  of the  foregoing,  as between  Borrower and the Fronting
Bank,  Fronting  Bank  shall not be  responsible:  (i) for the  form,  validity,
sufficiency, accuracy, genuineness or legal effects of any document submitted by
any party in connection with the application for and issuance of such Letters of
Credit,  even if it should in fact prove to be in any or all  respects  invalid,
insufficient,  inaccurate,  fraudulent  or  forged;  (ii)  for the  validity  or
sufficiency  of any  instrument  transferring  or  assigning  or  purporting  to
transfer  or  assign  any such  Letter  of  Credit  or the  rights  or  benefits
thereunder  or  proceeds  thereof,  in whole or in part,  which  may prove to be
invalid or ineffective  for any reason;  (iii) for failure of the beneficiary of
any such Letter of Credit to comply fully with  conditions  required in order to
draw upon such Letter of Credit;  (iv) for errors,  omissions,  interruptions or
delays in transmission or delivery of any messages,  by mail, cable,  telegraph,
telex or  otherwise,  whether  or not  they are in  cipher;  (v) for  errors  in
interpretation   of  technical  terms;  (vi)  for  any  loss  or  delay  in  the
transmission  or otherwise  of any document  required in order to make a drawing
under  any such  Letter  of Credit  or of the  proceeds  thereof;  (vii) for the
misapplication  by the  beneficiary of any such Letter of Credit of the proceeds
of any  drawing  under such  Letter of Credit;  and (viii) for any  consequences
arising  from causes  beyond the control of Fronting  Bank,  including,  without
limitation,  any Government  Acts.  None of the above shall affect,  impair,  or
prevent the vesting of any of Fronting Bank's rights or powers hereunder.

         In  furtherance  and  extension  and not in  limitation of the specific
provisions  herein above set forth, any action taken or omitted by Fronting Bank
under or in  connection  with the Letters of Credit  issued by it or the related
certificates,  if taken or omitted in good faith,  shall not put  Fronting  Bank
under any resulting liability to Borrower.

         Notwithstanding  anything to the contrary  contained in this subsection
2.1, Borrower shall have no obligation to indemnify  Fronting Bank in respect of
any  liability  incurred  by  Fronting  Bank  arising  solely  out of the  gross
negligence  or  willful  misconduct  of  Fronting  Bank  or out of the  wrongful
dishonor by Fronting Bank of proper demand for payment made under the Letters of
Credit issued by it.

         2.2      Loans.



<PAGE>


         A.  Commitments.  Subject to the terms and conditions of this Agreement
and in reliance upon the  representations  and warranties of Borrower herein set
forth, each Lender having a Commitment hereby severally agrees to make Revolving
Loans to Borrower  at any time and from time to time on and after the  Effective
Date and until the  earlier  of the  Maturity  Date or the  termination  of such
Lender's  Commitment  in  accordance  with the  terms  hereof,  in an  aggregate
principal amount at any time outstanding not in excess of the Commitment of such
Lender  set  forth on  Schedule  B, as  reduced  from time to time  pursuant  to
subsection  2.7A(iv) or subsection 9.2, less such Lender's Pro Rata Share of the
Letters of Credit Usage at such time,  subject,  however, to the conditions that
(I) at no time  shall  (A) the sum of (x) the  outstanding  aggregate  principal
amount of all Revolving  Loans and Swingline Loans and (y) the Letters of Credit
Usage  exceed  (B) the Total  Commitment  and (II) at all times the  outstanding
aggregate  principal  amount of all  Revolving  Loans made by each Lender  shall
equal the product of (A) the Percentage  that its  Commitment  represents of the
Total  Commitment  times (B) the outstanding  aggregate  principal amount of all
Revolving Loans made pursuant to this subsection 2.2.

         Subject to subsection  2.9D,  all Revolving  Loans under this Agreement
shall be made by Lenders  simultaneously  and  proportionately to their Pro Rata
Shares,  it being understood that no Lender shall be responsible for any default
by any other Lender in that other Lender's  obligation to make  Revolving  Loans
hereunder nor shall any  Commitment of any Lender be increased or decreased as a
result of the default by any other Lender in that other  Lender's  obligation to
make Revolving Loans  hereunder.  Amounts  borrowed by Borrower under subsection
2.2A may, subject to the limitations set forth in subsection 2.7A(i), be paid or
prepaid and,  subject to the other  limitations set forth in this Agreement,  to
but excluding the Maturity Date, reborrowed. Revolving Loans made on any Funding
Date  shall  be in an  aggregate  minimum  amount  of  $5,000,000  and  integral
multiples of  $1,000,000  in excess of that amount or, if less,  the  unutilized
amount of the Commitments then available hereunder.

         B. Notice of Borrowing.  Subject to subsection 2.2A,  whenever Borrower
desires to borrow Revolving Loans under this subsection 2.2, it shall deliver to
Administrative  Agent a Notice of  Borrowing  no later than 12:00 noon (New York
time) at least three  Business  Days in advance of the proposed  Funding Date in
the case of  Eurodollar  Rate  Revolving  Loans and at least one Business Day in
advance  of the  proposed  Funding  Date  in the  case of ABR  Loans;  provided,
however, that the Notice of Borrowing with respect to the initial Loans shall be
delivered to Administrative Agent by 12:00 noon (New York time) one Business Day
in advance of the Effective  Date. The Notice of Borrowing shall specify (i) the
proposed  Funding Date (which shall be a Business  Day),  (ii) the amount of the
proposed  Revolving Loans,  (iii) whether such Loans are initially to consist of
ABR Loans or Eurodollar Rate Revolving Loans or a combination  thereof, and (iv)
if such Loans,  or any portion  thereof,  are  initially to be  Eurodollar  Rate
Revolving Loans, the amounts thereof and the initial Interest Periods  therefor;
provided  that the minimum  amount of  Eurodollar  Rate Loans with a  particular
Interest Period included as a portion of any such combination,  if any, shall be
$10,000,000  and  integral  multiples  of  $1,000,000  in excess of that amount.
Revolving  Loans may be continued as or converted  into ABR Loans and Eurodollar
Rate  Revolving  Loans in the manner  provided is  subsection  2.5D.  In lieu of
delivering  the   above-described   Notice  of  Borrowing,   Borrower  may  give
Administrative  Agent  telephonic  notice by the  required  time of any proposed
borrowing of  Revolving  Loans under this  subsection  2.2;  provided  that such
notice  shall be  promptly  confirmed  in  writing  by  delivery  of a Notice of
Borrowing to Administrative Agent on the date of such notice.

         Neither  Administrative  Agent nor any Lender shall incur any liability
to  Borrower  in acting  upon any  telephonic  notice  referred  to above  which
Administrative  Agent  believes  in good  faith  to have  been  given  by a duly
authorized officer or other person authorized to borrow on behalf of Borrower or
for otherwise  acting in good faith under this subsection 2.2B and, upon funding
of Revolving Loans by Lenders in accordance with this Agreement  pursuant to any
telephonic  notice,  Borrower  shall have effected  Revolving  Loans  hereunder.
Except as provided in  subsection  2.9D, a Notice of Borrowing  for a Eurodollar
Rate Revolving Loan (or telephonic  notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Determination Date, and Borrower shall be
bound to make a borrowing in accordance therewith.



<PAGE>


         C.  Disbursement  of  Funds.  Promptly  after  receipt  of a Notice  of
Borrowing  pursuant to subsection  2.2B (or telephonic  notice in lieu thereof),
Administrative  Agent  shall  notify  each  applicable  Lender  of the  proposed
borrowing.  Each  such  Lender  shall  make the  amount  of its  Revolving  Loan
available  to  Administrative  Agent,  in  same  day  funds,  at the  office  of
Administrative  Agent located at 270 Park Avenue,  New York, New York, not later
than 12:00 Noon (New York time) on the  Funding  Date and  Administrative  Agent
shall by 1:00 P.M.  (New York time) make the  proceeds of such  Revolving  Loans
available  to  Borrower  on such  Funding  Date by causing an amount of same day
funds  equal  to  the  proceeds  of  all  such   Revolving   Loans  received  by
Administrative Agent to be credited to the account of Borrower at such office of
Administrative  Agent or, if such Revolving  Loans shall not he made to Borrower
on such Funding Date because any condition  precedent herein specified shall not
have been met or  waived,  Administrative  Agent  shall  return  the  amounts so
received to the respective Lenders.

         Unless  Administrative  Agent  shall have been  notified  by any Lender
prior to any Funding Date that such Lender does not intend to make  available to
Administrative  Agent  such  Lender's  Revolving  Loan  on  such  Funding  Date,
Administrative  Agent may assume that such Lender has made such amount available
to Administrative  Agent on such Funding Date, and  Administrative  Agent in its
sole discretion may, but shall not be obligated to, make available to Borrower a
corresponding  amount on such Funding Date. If such corresponding  amount is not
in fact made available to  Administrative  Agent by such Lender,  Administrative
Agent shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from such Funding Date until
the date such amount is paid to Administrative Agent at the Alternate Base Rate.
If  such  Lender  does  not  pay  such   corresponding   amount  forthwith  upon
Administrative  Agent's  demand  therefor,  Administrative  Agent shall promptly
notify Borrower and Borrower shall immediately pay such corresponding  amount to
Administrative Agent. Nothing in this subsection 2.2C shall be deemed to relieve
any Lender  from its  obligation  to fulfill  its  Commitments  hereunder  or to
prejudice  any rights which  Borrower may have against any Lender as a result of
any default by such Lender hereunder.

         2.3      Swingline Loans.

         A.  Subject to the terms and  conditions  set forth  herein,  Swingline
Lender agrees to make  Swingline  Loans to Borrower from time to time before the
Commitments terminate,  in an aggregate principal amount at any time outstanding
that  will not  result in (i) the  aggregate  principal  amount  of  outstanding
Swingline  Loans  exceeding  $30,000,000 or (ii) the sum of (x) the  outstanding
aggregate  principal  amount of all Revolving  Loans and Swingline Loans and (y)
the Letters of Credit  Usage  exceeding  the Total  Commitments;  provided  that
Swingline  Lender shall not be required to make a Swingline Loan to refinance an
outstanding Swingline Loan. Within the foregoing limits and subject to the terms
and  conditions  set forth  herein,  Borrower  may borrow,  prepay and  reborrow
Swingline Loans.

         B. To request a Swingline  Loan,  Borrower shall notify  Administrative
Agent of such request by telephone (confirmed by telecopy),  not later than 2:00
P.M.,  New York City time, on the day of a proposed  Swingline  Loan.  Each such
notice shall be irrevocable and shall specify the requested date (which shall be
a Business Day) and amount of the requested  Swingline Loan. Each Swingline Loan
shall be  subject  to the same  Applicable  Rate as an ABR Loan.  Administrative
Agent will promptly  advise  Swingline  Lender of any such notice  received from
Borrower.  Swingline Lender shall make each Swingline Loan available to Borrower
by means of a credit to the general  deposit  account of Borrower with Swingline
Lender (or, in the case of a Swingline Loan made to finance the reimbursement of
a Letter of Credit  drawing as provided in  subsection  2.1E,  by  remittance to
Fronting  Bank) by 3:00 p.m.,  New York City time, on the requested date of such
Swingline Loan.



<PAGE>


         C. Swingline Lender may by written notice given to Administrative Agent
not later than 12:00  noon,  New York City time,  on any  Business  Day  require
Lenders to acquire  participations  on such  Business Day in all or a portion of
Swingline Loans  outstanding.  Such notice shall specify the aggregate amount of
Swingline Loans in which Lenders will participate. Promptly upon receipt of such
notice, Administrative Agent will give notice thereof to each Lender, specifying
in such notice such  Lender's  Pro Rata Share of such  Swingline  Loan or Loans.
Each Lender hereby absolutely and unconditionally agrees, upon receipt of notice
as  provided  above,  to pay to the  Administrative  Agent,  for the  account of
Swingline Lender,  such Lender's Pro Rata Share of such Swingline Loan or Loans.
Each   Lender   acknowledges   and  agrees  that  its   obligation   to  acquire
participations  in Swingline  Loans  pursuant to this  paragraph is absolute and
unconditional  and  shall  not  be  affected  by  any  circumstance  whatsoever,
including the  occurrence  and  continuance  of a Potential  Event of Default or
reduction or termination of the Commitments, and that each such payment shall be
made without any offset,  abatement,  withholding or reduction whatsoever.  Each
Lender shall comply with its obligation under this paragraph by wire transfer of
immediately  available  funds,  in the same manner as provided in subsection 2.2
with  respect to Loans made by such  Lender  (and  subsection  2.2 shall  apply,
mutatis mutandis,  to the payment  obligations of Lenders),  and  Administrative
Agent shall promptly pay to Swingline  Lender the amounts so received by it from
Lenders. Administrative Agent shall notify Borrower of any participations in any
Swingline Loan acquired pursuant to this paragraph,  and thereafter  payments in
respect of such Swingline Loan shall be made to Administrative  Agent and not to
Swingline  Lender.  Any amounts  received by Swingline  Lender from Borrower (or
other party on behalf of Borrower) in respect of a Swingline  Loan after receipt
by Swingline Lender of the proceeds of a sale of participations therein shall be
promptly  remitted  to  Administrative  Agent;  any  such  amounts  received  by
Administrative  Agent shall be  promptly  remitted  by  Administrative  Agent to
Lenders that shall have made their  payments  pursuant to this  paragraph and to
Swingline Lender, as their interests may appear.  The purchase of participations
in a Swingline Loan pursuant to this paragraph shall not relieve Borrower of any
default in the payment thereof.

         2.4  Total  Commitment;   Limitations  on  Outstanding  Revolving  Loan
Amounts.

         The amount of the Total Commitment  hereunder is $600,000,000,  subject
to subsection  2.7A(iv).  Anything  contained in this  Agreement to the contrary
notwithstanding,  (i) the Total Utilization of Commitments shall not at any time
exceed (ii) the Total Commitment then in effect.

         2.5      Interest on the Loans.

         A. Rate of Interest.  The  Revolving  Loans shall bear  interest on the
unpaid principal amount thereof from the date made through maturity  (whether by
acceleration  or otherwise)  at a rate  determined by reference to the Alternate
Base Rate or the Adjusted  Eurodollar  Rate.  If on any day a Revolving  Loan is
outstanding   with   respect  to  which   notice  has  not  been   delivered  to
Administrative  Agent in accordance with the terms of this Agreement  specifying
the  basis for  determining  the rate of  interest,  then for that day that Loan
shall bear interest determined by reference to the Alternate Base Rate.

         Revolving Loans shall bear interest through maturity as follows:

                  (i) if an ABR Loan (including  Swingline  Loans),  then at the
         Alternate Base Rate in effect at such time plus the Applicable Rate; or

                  (ii) if a Eurodollar  Rate Revolving  Loan, then at the sum of
         the Adjusted Eurodollar Rate for the Interest Period in effect plus the
         Applicable Rate.

         B. Interest Periods.  In connection with each Eurodollar Rate Revolving
Loan, Borrower shall elect an interest period (each, an "Interest Period") to be
applicable to such Loan,  which  Interest  Period,  except for Loans made on the
Effective Date,  shall be either a one, two, three or six-month period or a nine
or  twelve-month  period  (but only if  permitted  under  clause  (viii) of this
subsection  2.5B in the case of any Eurodollar  Rate Revolving  Loan);  provided
that:

                  (i)  the  initial  Interest  Period  for any  Eurodollar  Rate
         Revolving  Loan  shall  commence  on the  date  of,  or on the  date of
         conversion   pursuant  to  subsection  2.5D  into,  such  Loan  or,  if
         applicable,  on the  last  day of the  immediately  preceding  Interest
         Period for such Loan;

                  (ii) if an Interest  Period  would  otherwise  expire on a day
         which is not a Business Day,  such Interest  Period shall expire on the
         next succeeding  Business Day;  provided that if any Interest Period in
         respect of a Eurodollar Rate Revolving Loan would otherwise expire on a
         day which is not a Business  Day but is a day of the month  after which
         no further  Business  Day occurs in such month,  such  Interest  Period
         shall expire on the next preceding Business Day;



<PAGE>


                  (iii) any  Interest  Period in  respect of a  Eurodollar  Rate
         Revolving  Loan  which  begins on the last  Business  Day of a calendar
         month (or on a day for which there is no numerically  corresponding day
         in the  calendar  month  at the end of  such  Interest  Period)  shall,
         subject  to  clause  (iv)  below,  end on the  last  Business  Day of a
         calendar month;

                  (iv) no Interest  Period with  respect to any  Revolving  Loan
         shall extend beyond the Maturity  Date  regardless of the date on which
         the Effective Date occurs;

                  (v) no Interest  Period with  respect to any  Eurodollar  Rate
         Loan may extend  beyond a date on which  Borrower is required to make a
         scheduled payment of principal of such Loan;

                  (vi)  the  Interest  Period  for a  Loan  which  is  converted
         pursuant  to  subsection  2.9D  shall  commence  on the  date  of  such
         conversion  and shall expire on the date on which the Interest  Periods
         for the Loans of the other Lenders which were not converted expire;

                  (vii) there shall be no more than 25 Interest Periods relating
         to Eurodollar Rate Revolving Loans outstanding at any time; and

                  (viii)  no  Eurodollar  Rate  Revolving  Loan  shall  have  an
         Interest Period of nine or twelve months unless all Lenders shall agree
         to permit such Interest Period.

                  C. Interest  Payments.  Subject to subsection  2.5E,  interest
         shall be payable on the Loans as follows:

                  (i)  interest  on each ABR Loan  (including  Swingline  Loans)
         shall be payable in arrears on and to each March 31, June 30, September
         30, and December 31 of each year, commencing on the first of such dates
         to occur,  upon any  prepayment  or conversion of any such Loan (to the
         extent  accrued  on the  amount  being  prepaid  or  converted)  and at
         maturity; and

                  (ii) interest on each  Eurodollar Rate Revolving Loan shall be
         payable in arrears on and to each Interest  Payment Date  applicable to
         that Loan,  upon any  prepayment of that Loan (to the extent accrued on
         the amount being prepaid) and at maturity.

         D. Conversion or Continuation.  Subject to the provisions of subsection
2.9,  Borrower  shall  have the  option  (i) to  convert  all or any part of its
outstanding  Revolving  Loans equal to  $5,000,000  and  integral  multiples  of
$1,000,000 in excess of that amount from Revolving  Loans bearing  interest at a
rate determined by reference to one basis to Revolving Loans bearing interest at
a rate  determined  by  reference  to an  alternative  basis  or (ii)  upon  the
expiration  of any Interest  Period  applicable to a Eurodollar  Rate  Revolving
Loan,  to  continue  all or any  portion  of such Loan equal to  $5,000,000  and
integral  multiples of $1,000,000 in excess of that amount as a Eurodollar  Rate
Revolving  Loan and the  succeeding  Interest  Period(s) of such  continued Loan
shall  commence  on the  last  day of the  Interest  Period  of the  Loan  to be
continued;  provided, however, that a Eurodollar Rate Revolving Loan may only be
converted into a Revolving Loan bearing  interest  determined by reference to an
alternative  basis  on the  expiration  date of an  Interest  Period  applicable
thereto;  and  provided,  further,  that no  outstanding  Revolving  Loan may be
continued as, or be converted  into, a Eurodollar  Rate  Revolving Loan when any
Event of Default or Potential  Event of Default has occurred and is  continuing,
unless Requisite Lenders shall otherwise agree.



<PAGE>


         Borrower   shall  deliver  a  Notice  of   Conversion/Continuation   to
Administrative  Agent no later  than  1:00  P.M.  (New  York  time) at least one
Business  Day in advance of the  proposed  conversion/continuation  date (in the
case of a conversion  to, or a  continuation  of, an ABR Loan) or three Business
Days in advance of the proposed  conversion/continuation  date (in the case of a
conversion to, or a continuation of, a Eurodollar Rate Revolving Loan). A Notice
of     Conversion/Continuation     shall     specify     (i)    the     proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount of
the Revolving Loan to be  converted/continued,  (iii) the nature of the proposed
conversion/continuation  and  (iv)  in  the  case  of  a  conversion  to,  or  a
continuation  of, a Eurodollar  Rate  Revolving  Loan,  the  requested  Interest
Period.    In   lieu   of    delivering    the    above-described    Notice   of
Conversion/Continuation,  Borrower  may  give  Administrative  Agent  telephonic
notice by the required time of any proposed  conversion/continuation  under this
subsection  2.5D;  provided  that such  notice  shall be promptly  confirmed  in
writing by delivery  of a Notice of  Conversion/Continuation  to  Administrative
Agent on or before the proposed  conversion/continuation  date.  If Borrower has
failed to timely  deliver  a Notice of  Conversion/Continuation  or to give such
telephonic  notice with respect to a Eurodollar  Rate Revolving  Loan,  Borrower
shall  be  deemed  to  have  delivered  to  Administrative  Agent  a  Notice  of
Conversion/Continuation  to convert such  Eurodollar Rate Revolving Loan into an
ABR Loan.

         Neither  Administrative  Agent nor any Lender shall incur  liability to
Borrower  in  acting  upon  any  telephonic   notice  referred  to  above  which
Administrative  Agent  believes  in good  faith  to have  been  given  by a duly
authorized  officer or other person  authorized  to act on behalf of Borrower or
for  otherwise  acting  in good  faith  under  this  subsection  2.5D  and  upon
conversion/continuation   by  Administrative   Agent  in  accordance  with  this
Agreement  pursuant  to any  telephonic  notice,  Borrower  shall have  effected
Revolving Loans hereunder.

         Except   as    provided    in    subsection    2.9D,    a   Notice   of
Conversion/Continuation for conversion to, or continuation of, a Eurodollar Rate
Revolving  Loan (or  telephonic  notice in lieu thereof) shall be irrevocable on
and after the related  Interest Rate  Determination  Date, and Borrower shall be
bound to convert or continue in accordance therewith.

         E. Default  Interest.  Any  principal of or interest on any Loan or any
fee or other  amount  payable by Borrower  hereunder  that 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 (a) in the  case of  overdue  principal  of any  Loan,  2.0%  plus  the  rate
otherwise applicable to such Loan as provided in subsections 2.5A(i) and (ii) or
(b) in the case of any other amount,  2.0% plus the rate applicable to ABR Loans
as provided in subsection 2.5A(i).

         F. Computation of Interest.  Interest on the Loans shall be computed on
the  basis  of  (i)(a) a 365 or  366-day  year,  as the  case  may be,  when the
Alternate  Base Rate is  determined  by  reference  to the  Prime  Rate or (b) a
360-day  year in all other cases and (ii) the actual  number of days  elapsed in
the period during which it accrues.  In computing interest on any Loan, the date
of the  making  of the Loan or the  first  day of an  Interest  Period  shall be
included and the date of payment or the  expiration of an Interest  Period shall
be  excluded;  provided  that if a Loan is repaid on the same day on which it is
made, one day's interest shall be paid on that Loan.

         2.6.     Fees.

         A. Commitment Fees. Borrower agrees to pay to Administrative  Agent for
the account of each Lender commitment fees (the "Commitment Fees"),  which shall
accrue  at the  Applicable  Rate on the  average  daily  unused  amount  of each
Commitment  of such Lender  during the period from and  including  the Effective
Date to but  excluding  the date on which such  Commitment  terminates.  Accrued
Commitment Fees shall be payable in arrears on (i) March 31, June 30,  September
30 and  December  31 of each  year,  commencing  on the first such date to occur
after the Effective  Date,  and (ii) each of the dates on which the  Commitments
are reduced or expire or  terminate,  calculated  in each case on the basis of a
360-day year and the actual number of days elapsed.

         B. Other Fees. Borrower agrees to pay to Administrative  Agent, for its
own account, fees payable in the amounts and at the times separately agreed upon
between Borrower and Administrative Agent.



<PAGE>


         2.7      Prepayments and Payments; Reductions in Commitments.

         A.       Prepayments; Commitment Reductions.

         (i)  Voluntary  Prepayments.  Borrower  may,  upon not less than  three
Business  Days'  prior  written or  telephonic  notice  confirmed  in writing to
Administrative  Agent (which notice  Administrative Agent will promptly transmit
by telegram, telex or telephone to each applicable Lender), at any time and from
time to time,  without premium or penalty except as otherwise provided herein in
respect of Eurodollar Rate Revolving Loans,  prepay any Revolving Loans in whole
or in part  in an  aggregate  minimum  principal  amount  of  $5,000,000  and in
integral  multiples  of  $1,000,000  in excess of that amount.  Eurodollar  Rate
Revolving  Loans may only be prepaid under this  subsection  2.7A(i) on the last
day of the Interest Period applicable thereto.  Notice of prepayment having been
given as aforesaid,  the principal  amount of the Loans specified in such notice
shall become due and payable on the prepayment date.

         (ii) Mandatory  Prepayments.  (a) In the event that at any time (A) the
Commitments  are  terminated or reduced  pursuant to subsection  2.7A(iv) or (B)
Borrower would  otherwise not be in compliance  with  subsection  2.4,  Borrower
shall at such time  immediately  pay or prepay  so much of the  Revolving  Loans
outstanding  as shall be  necessary  in order  that  the  Total  Utilization  of
Commitments  shall not exceed the Total  Commitment then in effect (after giving
effect to any termination or reduction).

         (b) In the  event  and on  each  occasion  that  any Net  Proceeds  are
received  by or on behalf of the  Borrower or any  Subsidiary  in respect of any
Prepayment  Event,  Borrower  shall,  immediately  after such Net  Proceeds  are
received,  prepay  Revolving Loans  outstanding in an aggregate  amount equal to
such Net Proceeds. Amounts to be applied pursuant to this subsection 2.7A(ii)(b)
to  the  prepayment  of  Revolving  Loans  shall  be  applied  first  to  reduce
outstanding ABR Loans. Any amounts remaining after each such application  shall,
at the option of Borrower,  be applied to prepay Eurodollar Revolving Rate Loans
immediately  and/or  shall be deposited  in the  Prepayment  Account (as defined
below).  Borrower may by telephonic notice (confirmed by telecopy) no later than
12:00 noon,  New York City time,  to  Administrative  Agent on any  Business Day
withdraw  amounts  deposited in the Prepayment  Account no later than 3:00 p.m.,
New York City time, on such Business Day as an alternative to making a Revolving
Loan or Swingline Loan borrowing in order to meet  Borrower's  financing  needs.
Any amounts in the Prepayment Account (after giving effect to such withdrawal or
withdrawals) shall be used to prepay Eurodollar Revolving Rate Loans on the last
day of their Interest Periods (or, at the direction of Borrower,  on any earlier
date) until all the cash on deposit  has been  exhausted.  For  purposes of this
Agreement,  the term "Prepayment  Account" shall mean an account (i) established
by Borrower  with  Administrative  Agent and (ii) having terms  satisfactory  to
Administrative Agent and Borrower.

         (iii)    Application of Prepayments.

                  (a) All  prepayments  shall reduce the  outstanding  Revolving
         Loans of each Lender proportionately to its Pro Rata Share.

                  (b) All  prepayments of Revolving  Loans shall include payment
         of accrued  interest  on the  principal  amount so prepaid and shall be
         applied to payment of interest before application to principal.

         (iv)     Commitment Reductions and Terminations.

                  (a) The Commitments shall be automatically  terminated at 5:00
P.M. (New York time) on the Maturity Date.

                  (b) The Total Commitments shall be automatically  reduced,  to
         the extent  necessary,  to (i)  $525,000,000  on September 30, 2001 and
         (ii) $450,000,000 on September 30, 2002.



<PAGE>


                  (c)  Borrower  may,  upon not less than three  Business  Days'
         prior   written  or   telephonic   notice   confirmed   in  writing  to
         Administrative  Agent (which notice  Administrative Agent will promptly
         transmit by telegram, telex or telephone to each applicable Lender), at
         any time (x) in whole permanently terminate the Commitments or (y) from
         time to time in part permanently reduce the Commitments in an aggregate
         minimum amount of $10,000,000  and in integral  multiples of $5,000,000
         in excess of that amount;  provided that the Total Commitment shall not
         be reduced  at any time  hereby to an amount  less than the  Letters of
         Credit Usage.

                  (d)  Commitments  may be  terminated  from  time  to  time  in
accordance with the provisions of subsection 9.16(b).

         (v) Repayment of Revolving Loans. The outstanding  principal balance of
Revolving Loans shall be payable on the Maturity Date. Each payment of Revolving
Loans shall be accompanied by accrued  interest on the principal  amount paid to
but excluding the date of payment.

         B. Manner and Time of Payments. All payments of principal, interest and
fees hereunder by Borrower shall be made without defense, setoff or counterclaim
and in same day funds and delivered to Administrative  Agent not later than 1:00
P.M.  (New York time) on the date due at its office  located at 270 Park Avenue,
New York, New York for the account of Lenders;  funds received by Administrative
Agent  after that time shall be deemed to have been paid by Borrower on the next
succeeding  Business Day.  Borrower hereby  authorizes  Administrative  Agent to
charge its  account  with Chase in order to cause  timely  payment to be made to
Administrative Agent of all principal,  interest and fees due hereunder (subject
to sufficient funds being available in its account for that purpose).

         C.  Apportionment  of Payments.  Subject to the  immediately  following
sentence,  aggregate  principal  and  interest  payments in respect of Revolving
Loans and payments  (including  commissions  provided for in subsection 2.1F) in
respect of Letters of Credit and Commitment Fees shall be apportioned  among all
outstanding Revolving Loans and Letters of Credit to which such payments relate,
proportionately  to Lenders'  respective Pro Rata Shares.  Administrative  Agent
shall promptly  distribute to each Lender at its primary address set forth below
its name on the  appropriate  signature page hereof or such other address as any
Lender may request  its share of all such  payments  received by  Administrative
Agent and of the  Commitment  Fees and Letter of Credit fees of such Lender when
received  by  Administrative   Agent  pursuant  to  subsections  2.6  and  2.1F,
respectively.  Notwithstanding the foregoing  provisions of this subsection 2.7C
if,  pursuant to the  provisions of subsection  2.9D, any Notice of Borrowing or
Notice of  Conversion/Continuation  is withdrawn as to any Affected Lender or if
any Affected  Lender makes ABR Loans in lieu of its Pro Rata Share of Eurodollar
Rate  Revolving  Loans,  Administrative  Agent  shall  give  effect  thereto  in
apportioning payments received thereafter.

         D.  Payments  on  Non-Business  Days.  Whenever  any payment to be made
hereunder  shall be stated to be due on a day which is not a Business  Day,  the
payment shall be made on the next succeeding  Business Day and such extension of
time shall be included in the  computation of the payment of interest  hereunder
or of the commitment  and other fees  hereunder,  as the case may be;  provided,
however,  that  in the  event  that  the  day on  which  payment  relating  to a
Eurodollar  Rate Revolving Loan is due is not a Business Day but is a day of the
month after  which no further  Business  Day occurs in that month,  then the due
date thereof shall be the next preceding Business Day.

         E. Notice of Transfer. Each Lender agrees that, before disposing of any
Loan or any part thereof (other than by granting  participations  therein), that
Lender will notify Borrower and Administrative  Agent of the name and address of
the transferee of that Loan;  provided that the failure to give  notification to
Borrower  or  Administrative  Agent of the name and  address of such  transferee
shall not limit or otherwise  affect the  obligation of Borrower  hereunder with
respect to any Loan and payments of principal or interest on any such Loan.



<PAGE>


         F.       Taxes.  Borrower agrees that:

                  (i) Any and all payments by Borrower  hereunder shall be made,
         in accordance  with this  subsection 2.7, free and clear of and without
         deduction  for any and all current or future  taxes,  levies,  imposts,
         deductions,  charges or withholdings,  and all liabilities with respect
         thereto,  excluding (1) taxes  imposed on the net income of,  franchise
         taxes imposed on, and taxes (other than  withholding  taxes) imposed on
         the gross receipts or gross income of,  Administrative  Agent, Fronting
         Bank or any  Lender  (or  any  direct  or  indirect  assignee  thereof,
         including a participation  holder or any other  transferee  pursuant to
         the  terms  of  this   Agreement   (any  such  entity  being  called  a
         "Transferee")) by the United States or any jurisdiction  under the laws
         of which  Administrative  Agent,  Fronting  Bank or any such Lender (or
         Transferee) is organized or in which its  applicable  lending office is
         located or any political  subdivision thereof, (2) taxes that would not
         have been imposed if the only connection between  Administrative Agent,
         Fronting  Bank or any  Lender  (or  Transferee)  and  the  jurisdiction
         imposing  such  taxes  were the  activities  of  Administrative  Agent,
         Fronting Bank or such Lender (or Transferee)  pursuant to or in respect
         of  this  Agreement  (including,  without  limitation,  entering  into,
         lending money or extending credit pursuant to, receiving payments under
         or enforcing this  Agreement) and the activities of such party pursuant
         to or in respect of similar agreements, and (3) in the case of a Lender
         other than a Transferee, the amount of withholding taxes imposed by the
         United States or any political  subdivision thereof ("U.S.  Withholding
         Taxes")  on a payment  hereunder  to such  Lender to the  extent of the
         amount of U.S.  Withholding  Taxes that would have been imposed on such
         payment  if such  payment  had been made to such  Lender on the date it
         became a party to this Agreement (all such nonexcluded  taxes,  levies,
         imposts,  deductions,   charges,  withholdings  and  liabilities  being
         hereinafter  referred to as "Taxes").  If Borrower shall be required by
         law to deduct any Taxes from or in respect of any sum payable hereunder
         to any  Lender (or any  Transferee),  Fronting  Bank or  Administrative
         Agent,  (a) the sum payable shall be increased by the amount  necessary
         so that after  making all  required  deductions  (including  deductions
         applicable to additional  amounts payable under this  subsection  2.7F)
         such Lender (or Transferee),  Fronting Bank or Administrative Agent (as
         the case may be) shall receive an amount equal to the sum it would have
         received had no such deductions been made, (b) Borrower shall make such
         deductions and (c) Borrower  shall pay the full amount  deducted to the
         relevant taxing authority or other governmental authority in accordance
         with applicable law;  provided,  however,  that no Transferee  shall be
         entitled to receive any greater  payment under this  paragraph (i) than
         the transferor  would have been entitled to receive with respect to the
         rights assigned,  participated or otherwise transferred pursuant to the
         terms of this Agreement except (A) subject to subsection 9.2E(iii),  to
         the extent that such greater  payment arises as a result of a change in
         applicable law,  regulation or official  interpretation  thereof, or an
         amendment, modification or revocation of any applicable tax treaty or a
         change in official position regarding the application or interpretation
         thereof (a "Change in Law"),  in each case that is  enacted,  executed,
         promulgated  or  otherwise  issued  after the date of such  assignment,
         participation  or  transfer,  or,  in  the  case  of a  Change  in  Law
         promulgated or issued in proposed form prior to such date, that becomes
         effective after such date, or (B) if such assignment,  participation or
         transfer shall have been made at the request of Borrower.

                  (ii)   Borrower   shall  pay  any  current  or  future  stamp,
         documentary  or  recording  taxes  or any  other  excise,  transfer  or
         property taxes,  charges or similar levies which arise from any payment
         made  hereunder  or  from  the  execution,   delivery,  enforcement  or
         registration  of, or otherwise  with respect to, this  Agreement or any
         other Loan  Document (all such taxes,  charges or similar  levies being
         hereinafter referred to as "Other Taxes").



<PAGE>


                  (iii)  Borrower shall  indemnify each Lender (or  Transferee),
         Fronting Bank and Administrative Agent for the full amount of Taxes and
         Other  Taxes paid by such  Lender  (or  Transferee),  Fronting  Bank or
         Administrative  Agent, as the case may be, and any liability (including
         penalties,  interest and  expenses)  arising  therefrom or with respect
         thereto,  whether or not such Taxes or Other  Taxes were  correctly  or
         legally asserted by the relevant taxing authority or other governmental
         authority.  Such indemnification shall be made within 30 days after the
         later of (x) the date any  Lender  (or  Transferee),  Fronting  Bank or
         Administrative  Agent,  as the case may be,  pays  such  Taxes or Other
         Taxes to the relevant taxing authority or other governmental  authority
         and (y) the date on which written demand is made in accordance with the
         following  sentence.  Each  Lender (or  Transferee),  Fronting  Bank or
         Administrative Agent shall make written demand for such indemnification
         no later than 30 days  after the  earlier of (a) the date on which such
         Lender (or  Transferee),  Fronting Bank or  Administrative  Agent makes
         such  payment  of such  Taxes or Other  Taxes and (b) the date on which
         such relevant taxing  authority or other  governmental  authority makes
         written  demand  upon such  Lender (or  Transferee),  Fronting  Bank or
         Administrative Agent for payment of such Taxes or Other Taxes.

                  (iv)  If  a  Lender   (or   Transferee),   Fronting   Bank  or
         Administrative  Agent shall become aware that it is entitled to receive
         a refund or credit in respect of Taxes or Other  Taxes  (including  any
         penalties  or interest  with  respect  thereto) as to which it has been
         indemnified  by Borrower  pursuant to this  subsection  2.7F,  it shall
         promptly notify  Borrower of the  availability of such refund or credit
         and shall, within 30 days after receipt of a request by Borrower, apply
         for such refund or credit at Borrower's expense,  and in the case of an
         application  for such refund or credit by Borrower,  shall,  if legally
         able to do so,  deliver to Borrower such  certificates,  forms or other
         documentation as may be reasonably necessary to assist Borrower in such
         application.   If  any  Lender  (or   Transferee),   Fronting  Bank  or
         Administrative  Agent  receives  a refund or credit in  respect  of any
         Taxes or Other  Taxes as to which it has been  indemnified  by Borrower
         pursuant to this subsection  2.7F, it shall promptly notify Borrower of
         such refund or credit and shall,  within 10 days after  receipt of such
         refund or the benefit of such  credit,  repay the amount of such refund
         or benefit of such  credit to Borrower  (to the extent of amounts  that
         have been paid by Borrower under this  subsection  2.7F with respect to
         Taxes or Other Taxes  giving  rise to such refund or credit),  plus any
         interest  received  with  respect  thereto,  net of  all  out-of-pocket
         expenses  (including taxes imposed with respect to such refund,  credit
         or any  interest  received  with  respect  thereto)  of such Lender (or
         Transferee), Fronting Bank or Administrative Agent and without interest
         (other  than  interest  actually  received  from  the  relevant  taxing
         authority or other  governmental  authority with respect to such refund
         or credit); provided that Borrower, upon the request of such Lender (or
         Transferee),  Fronting Bank or Administrative  Agent,  agrees to return
         the amount of such refund or credit (plus penalties,  interest or other
         charges)   to  such   Lender   (or   Transferee),   Fronting   Bank  or
         Administrative Agent in the event such Lender (or Transferee), Fronting
         Bank or  Administrative  Agent is  required to repay the amount of such
         refund or credit to the relevant taxing authority or other governmental
         authority.  Nothing  contained in this paragraph (iv) shall require any
         Lender (or Transferee),  Fronting Bank or Administrative  Agent to make
         available any of its tax returns (or any other information  relating to
         its taxes which it deems to be confidential).

                  (v) Within 30 days  after the date of any  payment of Taxes or
         Other  Taxes  withheld  by  Borrower  in respect of any  payment to any
         Lender (or Transferee), Fronting Bank or Administrative Agent, Borrower
         will furnish to  Administrative  Agent the original or a certified copy
         of a receipt  evidencing  payment  thereof  (or, if no such  receipt is
         provided  by  the  relevant  taxing  authority  or  other  governmental
         authority,  other satisfactory documentation evidencing payment of such
         Taxes or Other Taxes).

                  (vi) Without  prejudice to the survival of any other agreement
         contained  herein,  the  agreements and  obligations  contained in this
         subsection  2.7F shall  survive the payment in full of the principal of
         and interest on all Loans and all other amounts hereunder.



<PAGE>


                  (vii)  On or  before  the  date it  becomes  a  party  to this
         Agreement  and from time to time  thereafter  as renewals are due, each
         Lender  (or  Transferee)   that  is  organized  under  the  laws  of  a
         jurisdiction outside the United States shall (but, (x) in the case of a
         Transferee or (y) in the case of a Lender other than a Transferee  with
         respect to any  renewal,  if legally able to do so) deliver to Borrower
         such  certificates,  documents  or other  evidence,  as required by the
         Internal Revenue Code or Treasury  Regulations issued pursuant thereto,
         including two original copies of Internal  Revenue Service Form 1001 or
         Form 4224 and any other certificate or statement of exemption  required
         by Treasury  Regulation  Section 1.1441-1,  1.1441-4 or 1. 1441-6(c) or
         any  subsequent  version  thereof  or  successors   thereto,   property
         completed and duly executed by such Lender (or Transferee) establishing
         that payments  hereunder  are (a) not subject to United States  Federal
         withholding  tax under the internal  Revenue Code because such payments
         are  effectively   connected  with  the  conduct  by  such  Lender  (or
         Transferee)  of a trade or  business  in the  United  States or (b) (i)
         totally  exempt  from United  States  Federal  withholding  tax under a
         provision of an applicable tax treaty or (ii) other than in the case of
         a Lender  (other than a Transferee)  on the date such Lender  becomes a
         party to this Agreement,  subject to a reduced rate of such tax under a
         provision of such a treaty.  Unless Borrower and  Administrative  Agent
         have received forms or other documents  satisfactory to them indicating
         that such payments  hereunder are not subject to United States  Federal
         withholding tax, Borrower or Administrative  Agent shall withhold taxes
         from such  payments at the  applicable  statutory or treaty rate.  Each
         Lender (or  Transferee)  that is organized under the laws of the United
         States of America or any jurisdiction thereof shall deliver to Borrower
         an original copy of Internal  Revenue  Service Form W-9 (or  applicable
         successor form) properly completed and duly executed by such Lender (or
         Transferee).   Each   Lender  (or   Transferee),   Fronting   Bank  and
         Administrative  Agent shall, if legally able to do so, and upon written
         reasonable  request  by  Borrower  (or  if a  Lender  (or  Transferee),
         Fronting Bank or Administrative Agent shall otherwise become aware that
         it is legally  able to deliver such forms or  documentation,  within 30
         days after the date it becomes so aware) deliver to Borrower such other
         forms or  documentation  as may be appropriate to minimize any Taxes on
         payments  made  pursuant to this  Agreement or Other  Taxes;  provided,
         however,  that nothing  contained in this paragraph (vii) shall require
         any Lender (or Transferee),  Fronting Bank or  Administrative  Agent to
         make  available any tax returns (or any other  information  relating to
         its taxes that it deems confidential).

                  (viii)  Borrower  shall not be required to pay any  additional
         amounts  to any  Lender (or  Transferee)  in  respect of United  States
         Federal  withholding tax pursuant to this subsection 2.7F to the extent
         that the  obligation  to pay such  additional  amounts  would  not have
         arisen but for a failure by such Lender (or  Transferee) to comply with
         the provisions of paragraph (vii).

                  (ix)  Each  Lender  (or  Transferee)   shall  promptly  notify
         Borrower  and  Administrative  Agent of any  change  in its  applicable
         lending office to an office outside the United States. In the event any
         Lender (or Transferee) so changes its applicable  lending office,  such
         Lender (or  Transferee)  shall not be  entitled  to receive any greater
         payment  under this  subsection  2.7F than such Lender (or  Transferee)
         would have been  entitled  to  receive  had such  change not  occurred,
         unless (A) such greater  payment  arises as a result of a Change in Law
         enacted,  executed,  promulgated or otherwise  issued after the date of
         such change in applicable  lending office,  or, in the case of a Change
         in Law  promulgated or issued in proposal form prior to such date, that
         becomes  effective  after such date,  or (B) such change in  applicable
         leading office shall have been made at the request of Borrower.

                  (x) Any Lender (or Transferee) claiming any additional amounts
         payable  pursuant to this subsection 2.7F shall use reasonable  efforts
         (consistent with legal and regulatory  restrictions) to take any action
         to avoid or  minimize  any  amounts  that  otherwise  may be payable by
         Borrower  pursuant  to  this  subsection  2.7F,  including  filing  any
         certificate or document or changing the  jurisdiction of its applicable
         lending office,  provided that such action would not, in the good faith
         determination   of  such   Lender   (or   Transferee)   be   materially
         disadvantageous to such Lender (or Transferee).

                  (xi)  Notwithstanding  any other  provision in this Agreement,
         except  subsections  2.1G  and  2.9I,  as such  subsections  relate  to
         reserve,  deposit or similar  requirements that take the form of a tax,
         subsections 9.2E(iii),  9.16(b),  9.16(d), 4.7 and 5.3, or in any other
         Loan Document,  this subsection  2.7F provides the exclusive  remedy to
         any Lender,  Transferee,  or other party  hereto with  respect to taxes
         under this Agreement or any other Loan Document.

         2.8      Use of Proceeds.

         A.  Loans.  The  proceeds  of  Loans  shall  be used  for the  purposes
specified in the Recitals to this Agreement.


<PAGE>


         B. Margin  Regulations.  No portion of the  proceeds  of any  borrowing
under this  Agreement  shall be used by Borrower in any manner which might cause
the  borrowing or the  application  of such  proceeds to violate  Regulation  T,
Regulation U or  Regulation X of the Board or any other  regulation of the Board
or to violate the  Exchange  Act, in each case as in effect on the date or dates
of such borrowing and such use of proceeds.

         2.9      Special Provisions Governing Eurodollar Rate Revolving Loans.

         Notwithstanding  other  provisions  of this  Agreement,  the  following
provisions  shall govern with respect to Eurodollar  Rate Revolving  Loans as to
the matters covered:

         A.  Determination of Interest Rate. As soon as practicable  after 10:00
A.M.  (New York time) on an Interest  Rate  Determination  Date,  Administrative
Agent shall  determine  (which  determination  shall,  absent manifest error, be
final,  conclusive  and binding upon all parties) the interest  rate which shall
apply to the Eurodollar  Rate Revolving Loans for which an interest rate is then
being  determined  for the  applicable  Interest  Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Borrower and
to each Lender. In addition,  in the case of each such notice to Borrower,  such
notice shall set forth in reasonable detail the basis for such determination.

         B.  Substituted  Rate of  Borrowing.  In the event that on any Interest
Rate Determination Date any Lender (including  Administrative  Agent) shall have
determined  (which  determination  shall,  absent  manifest  error, be final and
conclusive  and binding  upon all parties  but,  with  respect to the  following
clauses (i) and (ii)(b), shall be made only after consultation with Borrower and
Administrative Agent) that:

                  (i) by reason of any  changes  arising  after the date of this
         Agreement  affecting the Eurodollar market or affecting the position of
         that Lender in such  market,  adequate  and fair means do not exist for
         ascertaining   the  applicable   interest  rate  by  reference  to  the
         Eurodollar  Rate with respect to the Eurodollar Rate Revolving Loans as
         to which an interest rate determination is then being made; or

                  (ii) by reason of (a) any change  after the date hereof in any
         applicable law or any  governmental  rule,  regulation or order (or any
         interpretation thereof and including the introduction of any new law or
         governmental rule, regulation or order) affecting a Loan as a result of
         its  being a  Eurodollar  Rate  Revolving  Loan,  other  than  any law,
         governmental rule,  regulation or order relating to taxes, or (b) other
         circumstances  affecting that Lender as a result of making a Eurodollar
         Rate Revolving  Loan or the  Eurodollar  market or the position of that
         Lender in such  market  (such as,  for  example,  but not  limited  to,
         official  reserve  requirements  required by Regulation D to the extent
         not given effect in the Eurodollar  Rate) the Adjusted  Eurodollar Rate
         shall not  represent  the  effective  pricing to that Lender for Dollar
         deposits of comparable amounts for the relevant period;

then,  and in any such  event,  that Lender  shall be an Affected  Lender and it
shall  promptly (and in any event as soon as possible  after being notified of a
borrowing,  conversion or continuation)  give notice (by telephone  confirmed in
writing) to Borrower and Administrative Agent (which notice Administrative Agent
shall promptly transmit to each other Lender) of such determination. Thereafter,
Borrower shall pay to the Affected Lender,  upon written demand  therefor,  such
additional  amounts (in the form of an increased rate of, or a different  method
of  calculating,  interest  or  otherwise  as the  Affected  Lender  in its sole
discretion  shall  reasonably  determine)  as shall  be  required  to cause  the
Affected  Lender to receive  interest  with  respect to such  Affected  Lender's
Eurodollar Rate Revolving Loans for the Interest Period  following that Interest
Rate  Determination  Date (such  Interest  Period  being an  "Affected  Interest
Period")  at a rate per  annum  equal to the  Applicable  Rate in  excess of the
effective pricing to the Affected Lender for Dollar deposits to make or maintain
its Eurodollar Rate Revolving Loans. A certificate as to additional amounts owed
the Affected Lender,  showing in reasonable detail the basis for the calculation
thereof,  submitted  in good faith to Borrower and  Administrative  Agent by the
Affected  Lender shall,  absent  manifest  error,  be final and  conclusive  and
binding upon all of the parties hereto.



<PAGE>


         C. Required  Termination and Prepayment.  In the event that on any date
any Lender shall,  absent manifest  error,  have  reasonably  determined  (which
determination  shall be final and  conclusive and binding upon all parties) that
the making or  confirmation  of its Eurodollar  Rate Revolving  Loans has become
unlawful by compliance  by that Lender in good faith with any law,  governmental
rule, regulation or order (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful), then, and in any such event,
that Lender shall be an Affected  Lender and it shall  promptly  give notice (by
telephone  confirmed  in writing) to Borrower  and  Administrative  Agent (which
notice  Administrative  Agent shall  promptly  transmit to each  Lender) of that
determination.  Subject to the prior  withdrawal  of a Notice of  Borrowing or a
Notice of Conversion/Continuation or prepayment of the Eurodollar Rate Revolving
Loans of the Affected Lender as contemplated by the following  subsection  2.9D,
the obligation of the Affected  Lender to make or maintain its  Eurodollar  Rate
Revolving Loans during any such period shall be terminated at the earlier of the
termination  of the Interest  Period then in effect or when  required by law and
Borrower shall no later than the termination of the Interest Period in effect at
the time any such  determination  pursuant  to this  subsection  2.9C is made or
earlier,  when required by law, repay their respective Eurodollar Rate Revolving
Loans of the Affected Lender, together with all interest accrued thereon.

         D.  Options of  Borrower.  In lieu of paying an  Affected  Lender  such
additional  moneys as are required by  subsection  2.9B or the  prepayment of an
Affected  Lender required by subsection  2.9C,  Borrower may exercise any one of
the following options:

                  (i) if the determination by an Affected Lender relates only to
         Eurodollar  Rate  Revolving  Loans then  being  requested  by  Borrower
         pursuant    to   a   Notice    of    Borrowing    or   a   Notice    of
         Conversion/Continuation,  Borrower may by giving  notice (by  telephone
         confirmed in writing) to Administrative  Agent (who shall promptly give
         similar notice to each Lender) no later than the date immediately prior
         to the date on which such  Eurodollar  Rate  Revolving  Loans are to be
         made,  withdraw as to the  Affected  Lender that Notice of Borrowing or
         such Notice of Conversion/Continuation; or

                  (ii)  upon  written  notice to  Administrative  Agent and each
         Lender,  Borrower may terminate the  obligations  of Lenders to make or
         maintain Loans as, and to convert Revolving Loans into, Eurodollar Rate
         Revolving Loans and, in such event,  Borrower shall,  prior to the time
         any payment  pursuant to subsection  2.9C is required to be made or, if
         the  provisions of subsection  2.9B are  applicable,  at the end of the
         then  current  Interest  Period,  convert  all of the  Eurodollar  Rate
         Revolving Loans into ABR Loans in the manner contemplated by subsection
         2.5D but without satisfying the advance notice requirements therein; or

                  (iii)  Borrower  may give notice (by  telephone  confirmed  in
         writing) to the  Affected  Lender and  Administrative  Agent (who shall
         promptly  give similar  notice to each Lender) and require the Affected
         Lender to make the Eurodollar  Rate Revolving Loan then being requested
         as an ABR Loan or to continue to maintain its outstanding ABR Loan then
         the subject of a Notice of Conversion/  Continuation  as an ABR Loan or
         to convert its Eurodollar  Rate Revolving Loans then  outstanding  that
         are so affected into ABR Loans at the end of the then current  Interest
         Period (or at such earlier time as prepayment is otherwise  required to
         be made  pursuant to  subsection  2.9C) in the manner  contemplated  by
         subsection 2.5D but without satisfying the advance notice  requirements
         therein,  that  notice to  pertain  only to the  Loans of the  Affected
         Lender and to have no effect on the obligations of the other Lenders to
         make or  maintain  Eurodollar  Rate  Revolving  Loans or to convert ABR
         Loans into Eurodollar Rate Revolving Loans.



<PAGE>


         E.  Compensation.  Borrower shall compensate each Lender,  upon written
request by that Lender (which  request shall set forth in reasonable  detail the
basis for  requesting  such  amounts) for all  reasonable  losses,  expenses and
liabilities (including,  without limitation, any interest paid by that Lender to
lenders of funds borrowed by it to make or carry its  Eurodollar  Rate Revolving
Loans and any loss sustained by that Lender in connection with the  reemployment
of such funds but  excluding  taxes,  which are not  covered by this  subsection
2.9E), which that Lender may sustain with respect to Borrower's  Eurodollar Rate
Revolving  Loans:  (i) if for any reason  (other than a default or error by that
Lender) a borrowing of any  Eurodollar  Rate  Revolving Loan does not occur on a
date   specified   therefor   in  a  Notice   of   Borrowing   or  a  Notice  of
Conversion/Continuation    or   a   telephonic    request   for   borrowing   or
conversion/continuation  or a successive Interest Period does not commence after
notice therefor is given pursuant to subsection  2.5D, (ii) if any prepayment or
conversion,  including,  without limitation,  any prepayment or conversion under
subsection  2.9C or subsection  2.9D, of any of such  Lender's  Eurodollar  Rate
Revolving  Loans  occurs  on a date  which is not the  last day of the  interest
Period  applicable  to that Loan,  (iii) if any  prepayment or conversion of any
such Lender's  Eurodollar Rate Revolving Loans is not made on any date specified
in a notice of prepayment  given by Borrower,  or (iv) as a  consequence  of any
other default by Borrower to repay such Lender's Eurodollar Rate Revolving Loans
when required by the terms of this Agreement.

         F. Affected Lender's  Obligation to Mitigate.  Each Lender agrees that,
as promptly as practicable  after it becomes aware of the occurrence of an event
or the  existence  of a condition  that would cause it to be an Affected  Lender
under subsection 2.9B or 2.9C, it will, to the extent not inconsistent with such
Lender's internal  policies,  use its best efforts to make, fund or maintain the
affected  Eurodollar Rate Revolving Loans of such Lender through another lending
office of such Lender if as a result thereof the  additional  moneys which would
otherwise be required to be paid in respect of such Loans pursuant to subsection
2.9B  would  be   materially   reduced  or  the   illegality  or  other  adverse
circumstances which would otherwise require prepayment of such Loans pursuant to
subsection  2.9C would cease to exist and if, as determined  by such Lender,  in
its sole  discretion,  the making,  funding or maintaining of such Loans through
such other lending office would not otherwise  materially  adversely affect such
Loans or such Lender (it being  understood  that  materiality for these purposes
shall be determined  by reference to the benefits  received by such Lender under
this Agreement).  Borrower hereby agrees to pay all reasonable expenses incurred
by any Lender in utilizing  another  lending  office of such Lender  pursuant to
this subsection 2.9F.

         G. Booking of Eurodollar  Rate  Revolving  Loans.  Any Lender may make,
carry or transfer Eurodollar Rate Revolving Loans at, to, or for the account of,
any of its branch offices or the office of an Affiliate of that Lender.

         H. Increased Costs.  Except as provided in subsection 2.9B with respect
to certain determinations on Interest Rate Determination Dates, if, by reason of
(x) after the date hereof, the introduction of or any change (including, without
limitation, any change by way of imposition or increase of reserve requirements)
in or in the interpretation of any law or regulation, or (y) the compliance with
any guideline or request from any central bank or other  governmental  authority
or  quasi-governmental  authority  exercising  control  over banks or  financial
institutions  generally  (whether  or not having the force of law),  any reserve
(including,  without limitation,  any imposed by the Board),  special deposit or
similar requirement (including a reserve, special deposit or similar requirement
that  takes  the form of a tax)  against  assets  of,  deposits  with or for the
account of, or credit extended by, any Lender's  applicable lending office shall
be imposed or deemed applicable or any other condition  affecting its Eurodollar
Rate Revolving  Loans or its obligation to make  Eurodollar Rate Revolving Loans
shall be imposed on any Lender or its applicable lending office or the interbank
Eurodollar  market,  and as a result  thereof there shall be any increase in the
cost to such  Lender or  agreeing  to make or  making,  funding  or  maintaining
Eurodollar  Rate Revolving  Loans (except to the extent already  included in the
determination of the applicable  Adjusted  Eurodollar Rate), or there shall be a
reduction in the amount  received or receivable by that Lender or its applicable
lending office,  then Borrower shall from time to time, upon written notice from
and  demand  by  that  Lender  (with  a  copy  of  such  notice  and  demand  to
Administrative  Agent),  pay to  Administrative  Agent for the  account  of that
Lender,  within five Business  Days after the date  specified in such notice and
demand,  additional  amounts  sufficient to indemnify  that Lender  against such
increased cost; provided,  however, that this subsection 2.9H shall not apply to
any  additional  cost or reduction  in amounts  received or  receivable  that is
attributable  to taxes  except as  specified  above in this  subsection  2.9H. A
certificate as to the amount of such increased  cost,  submitted to Borrower and
Administrative Agent by that Lender, shall, except for manifest error, be final,
conclusive and binding for all purposes.



<PAGE>


         I. Assumptions  Concerning  Funding of Eurodollar Rate Revolving Loans.
Calculation of all amounts  payable to a Lender under this  subsection 2.9 shall
be made as though that Lender had actually  funded its relevant  Eurodollar Rate
Revolving Loan through the purchase of a Eurodollar  deposit bearing interest at
the  Eurodollar  Rate  applicable to such  Eurodollar  Rate Revolving Loan in an
amount equal to the amount of the  Eurodollar  Rate  Revolving Loan and having a
maturity  comparable to the relevant Interest Period and through the transfer of
such  Eurodollar  deposit  from an offshore  office of that Lender to a domestic
office of that Lender in the United States of America;  provided,  however, that
each Lender may fund each of its Eurodollar  Rate Revolving  Loans in any manner
it sees  fit  and the  foregoing  assumption  shall  be  utilized  only  for the
calculation of amounts payable under this subsection 2.9.

         J.  Eurodollar  Rate Revolving  Loans After Default.  Unless  Requisite
Lenders  shall  otherwise  agree,   after  the  occurrence  of  and  during  the
continuance  of a Potential  Event of Default or Event of Default,  Borrower may
not elect to have a Revolving  Loan be made or maintained as, or converted to, a
Eurodollar  Rate Revolving Loan after the expiration of any Interest Period then
in effect for that Loan.

         2.10     Capital Requirements.

         If while the Commitments are  outstanding,  Fronting Bank or any Lender
(including  Administrative  Agent),  or Fronting Bank's or any Lender's  holding
company,  determines that the adoption of any applicable law, rule or regulation
regarding capital adequacy or capital  maintenance or any change therein, or any
change in the  interpretation  or  administration  thereof  by any  governmental
authority,  central bank or comparable agency charged with the interpretation or
administration  thereof,  or  compliance  by Fronting  Bank or such  Lender,  or
Fronting Bank's or such Lender's holding  company,  as the case may be, with any
request or directive regarding capital adequacy or capital maintenance  (whether
or not  having  the  force  of  law)  of any  such  authority,  central  bank or
comparable  agency,  has or would have the effect of reducing the rate of return
on Fronting Bank's or such Lender's  capital,  or the capital of Fronting Bank's
or such Lender's  holding  company,  as the case may be, as a consequence of its
Commitments  or Loans or Letters of Credit to a level below that which  Fronting
Bank or such Lender, or Fronting Bank's or such Lender's holding company, as the
case may be, could have  achieved but for such  adoption,  change or  compliance
(taking into consideration such Fronting Bank's or such Lender's policies or the
policies of Fronting Bank's or such Lender's  holding  company,  as the case may
be, with respect to capital adequacy) by an amount reasonably deemed by Fronting
Bank or such Lender, or Fronting Bank's or such Lender's holding company, as the
case may be,  to be  material,  then from  time to time,  within  15 days  after
written  demand by Fronting Bank or such Lender,  Borrower shall pay to Fronting
Bank or such Lender,  or Fronting Bank's or such Lender's holding company,  such
additional  amount  or  amounts  as will  compensate  it for such  reduction.  A
certificate as to the amount of any such additional amount or amounts, submitted
to Borrower and  Administrative  Agent by Fronting  Bank or such Lender,  shall,
except for manifest error, be final, conclusive and binding for all purposes.

Section 3         CONDITIONS TO LOANS AND ISSUANCES OF LETTERS OF CREDIT

         The  obligations  of  Lenders  to make  Loans and of  Fronting  Bank to
continue or to issue Letters of Credit hereunder are subject to the satisfaction
or waiver in accordance with subsection 9.6 of all the following conditions:

         3.1      Conditions to the Effective Date and the Initial Loans.

         The   obligation   of  Lenders  to  make  the  initial  Loans  and  the
effectiveness  of this  Agreement  are,  in  addition  to being  subject  to the
conditions precedent specified in subsection 3.2, subject to prior or concurrent
satisfaction or waiver of the following conditions:



<PAGE>


         A. Each Loan Party shall deliver to Lenders (or to Administrative Agent
for distribution to Lenders with sufficient  originally  executed copies,  where
appropriate,  for each Lender) the following  documents (each,  unless otherwise
noted, dated the Effective Date):

                  1.  Certified  copies  of each  Loan  Party's  Certificate  of
         Incorporation,  together  with a good  standing  certificate  from  the
         Secretary of State of the State of Delaware,  each to be dated a recent
         date prior to the Effective Date;

                  2. Copies of each Loan  Party's  Bylaws,  certified  as of the
         Effective  Date by the applicable  corporate  secretary or an assistant
         secretary;

                  3. Resolutions of each Loan Party's Board of Directors in form
         and substance  satisfactory  to  Administrative  Agent and its counsel,
         approving and authorizing  (i) the execution,  delivery and performance
         of this  Agreement and the other Loan  Documents to which it is a party
         and  such  other   documents,   instruments  and  certificates  as  are
         contemplated hereby, (ii) the borrowings and the issuance of Letters of
         Credit  hereunder  and  (iii)  all  the  actions  contemplated  hereby,
         certified  as  of  the  Effective  Date  by  the  applicable  corporate
         secretary or an  assistant  secretary as being in full force and effect
         without modification or amendment;

                  4. Signature and incumbency  certificates of each Loan Party's
         officers  executing  the Loan  Documents  to which  each Loan  Party is
         party;

                  5.  Executed  copies  of this  Agreement  and the  other  Loan
         Documents to which each Loan Party is party; and

                  6. Such other documents as Administrative Agent may reasonably
         request.

         B.  Concurrently with the effectiveness of this Agreement and making of
the initial  loans on the  Effective  Date,  Borrower  shall have  delivered  to
Administrative Agent an Officers' Certificate in form and substance satisfactory
to  Administrative  Agent  to  the  effect  that  (i)  the  representations  and
warranties in Section 4 are true,  correct and accurate in all material respects
on and as of the  Effective  Date to the same extent as though made on and as of
that  date and (ii) no  Event of  Default  or  Potential  Event of  Default  has
occurred and is continuing.

         C.  All  corporate  and  other  proceedings  taken  or to be  taken  in
connection  with  the  transactions   contemplated   hereby  and  all  documents
incidental  thereto not previously  found  acceptable by  Administrative  Agent,
acting  on  behalf  of  Lenders,  and  Cravath,   Swaine  &  Moore,  counsel  to
Administrative Agent, shall be reasonably  satisfactory in form and substance to
Administrative Agent and such counsel, and Administrative Agent and such counsel
shall have received all such  counterpart  originals or certified copies of such
documents as Administrative Agent may reasonably request.

         D. Administrative Agent shall have received a favorable written opinion
(addressed to Administrative  Agent and Lenders and dated the Effective Date) of
each of (i) John D.  Englar,  Senior Vice  President  and Counsel for  Borrower,
substantially  in the  form of  Exhibit  XI,  and  (ii)  local  counsel  in each
jurisdiction where a Mortgaged Property is located, substantially in the form of
Exhibit XII, and, in the case of each such opinion  required by this  paragraph,
covering such other matters relating to Loan Parties,  the Loan Documents or the
Restatement  Transactions  as  Administrative  Agent shall  reasonably  request.
Borrower hereby requests such counsel to deliver such opinions.



<PAGE>


         E. No material  adverse change or prospective  material  adverse change
shall have occurred in the business, operations,  projections, assets, prospects
or conditions  (financial or otherwise) of Borrower and its  Subsidiaries  since
October  1,  1999,   and  there  shall  not  be  any  existing   litigation   or
administrative proceedings or any other legal or regulatory development,  actual
or threatened,  that, in the judgment of  Administrative  Agent,  (i) involves a
reasonable possibility of a material adverse change in the business, operations,
properties,  assets, prospects or condition (financial or otherwise) of Borrower
and its Subsidiaries or on any of the Loan Documents or on the rights,  remedies
and  benefits  available  to  Administrative  Agent and  Lenders  under the Loan
Documents,  or (ii)  would  be  materially  inconsistent  with  the  assumptions
underlying the financial  projections  concerning  Borrower and its Subsidiaries
that  were  prepared  by  Borrower  and  its   Subsidiaries  or  any  authorized
representative thereof and made available to Lenders prior to the date hereof.

         F.  Borrower  shall  have  performed  in  all  material   respects  all
agreements  which this Agreement and the other Loan  Documents  provide shall be
performed on or before the Effective Date, except as otherwise  disclosed to and
agreed to in writing by Lenders.

         G.  Borrower  shall have paid to  Administrative  Agent and Lenders all
fees and  other  amounts  due and  payable  on or  before  the  Effective  Date,
including to the extent invoiced,  reimbursement of all  out-of-pocket  expenses
(including fees, charges and disbursements of counsel) required to be reimbursed
or paid by any Loan Party hereunder or under any other Loan Document.

         H. The consummation of the transactions  contemplated  hereby shall not
(i) violate any provision of law  applicable  to Borrower,  the  Certificate  of
Incorporation  or Bylaws of  Borrower,  or any order,  judgment or decree of any
court or other agency of government  binding on Borrower,  (ii)  conflict  with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of Borrower, (iii) result in or require
the creation or imposition  of any Lien upon any of the  properties or assets of
Borrower or (iv) require any approval of stockholders or any approval or consent
of any Person under any Contractual Obligation of Borrower,  except for (a) such
approvals or consents as have been obtained and are set forth in the  Disclosure
Letter, (b) such violations,  conflicts,  breaches, Liens and defaults, and such
approvals the absence of which will not result in a Material  Adverse Effect and
(c) any Liens incurred pursuant to the Restatement Transactions.

         I.  Substantially  simultaneously  with the making of the initial Loans
hereunder, the loans outstanding under the 1995 Credit Agreement shall have been
repaid  hereunder and all accrued  interest and other amounts  payable under the
1995 Credit Agreement shall have been paid in full.

         J. All loans under the Mexican Credit  Agreement shall have been repaid
in full and the Mexican Credit  Agreement and all obligations  thereunder  shall
have been terminated,  and after giving effect to the Restatement  Transactions,
Borrower  and  its  Subsidiaries  shall  have  outstanding  no  indebtedness  or
preferred  stock other than (a) the loans and other  extensions  of credit under
this Agreement, (b) the Receivables Purchase Program, (c) the Existing Notes and
(d) other indebtedness (as listed on Schedule C attached hereto).  The terms and
conditions of all  Indebtedness to remain  outstanding  after the Effective Date
shall be satisfactory in all respects to Lenders.

         K. The Receivables Purchase Program and the related agreements shall be
in full force and effect.

         L. The Restatement Transactions shall have been approved by each Lender
hereby,  and after  giving  effect  hereto,  the Total  Commitments  under  this
Agreement shall be no less than $600,000,000, subject to subsection 2.7A(iv).

         M. The Collateral and Guarantee Requirement shall have been satisfied.

         N. Lenders shall have received a solvency letter, in form and substance
and from an independent  evaluation firm satisfactory to  Administrative  Agent,
together with such other evidence  reasonably  requested by Lenders,  confirming
the  solvency of Borrower and its  Subsidiaries  on a  consolidated  basis after
giving effect to the Restatement Transactions.



<PAGE>


         O. Lenders shall have received  unaudited  consolidated  balance sheets
and  related  statements  of  income,  stockholders'  equity  and cash  flows of
Borrower for each fiscal  quarter  ended 30 days before the  Effective  Date and
each  fiscal  month  after the most recent  fiscal  quarter for which  financial
statements  were received by Lenders as described above and ended 30 days before
the  Effective  Date,  which  financial   statements  shall  not  be  materially
inconsistent with the financial  statements or forecasts  previously provided to
Lenders.

         P. Lenders shall be reasonably satisfied as to the amount and nature of
any environmental and employee health and safety exposures to which Borrower and
its  Subsidiaries  may  be  subject  after  giving  effect  to  the  Refinancing
Transactions and the other transactions  contemplated hereby, and with the plans
of  Borrower  or such  Subsidiaries  with  respect  thereto,  and, to the extent
requested by  Administrative  Agent,  Lenders shall have received  environmental
assessments  (including,  if  applicable,   Phase  I  reports)  satisfactory  to
Administrative  Agent from an  environmental  consulting  firm  satisfactory  to
Administrative Agent.

         3.2      Conditions to All Loans.

         The  obligations  of Lenders to make all Loans are  subject to prior or
concurrent  satisfaction  or waiver in  accordance  with  subsection  9.6 of the
following further conditions precedent:

         A.  Administrative  Agent shall have received,  in accordance  with the
provisions of subsection 2.2B,  before any Funding Date, an originally  executed
Notice of Borrowing signed by the Chief Executive  Officer,  the Chief Financial
Officer, the Treasurer or Controller of Borrower.

         B. (i) As of that Funding  Date,  the  representations  and  warranties
contained  herein  (other than with respect to the  representation  and warranty
made in  subsection  4.6 which may be updated  pursuant  to  subsection  5.1(x),
except to the extent that the related litigation  involves this Agreement or the
Loan Documents) shall be true,  correct and accurate in all material respects on
and as of that  Funding Date to the same extent as though made on and as of that
date except that the representations and warranties need not be true and correct
to  the  extent  that  changes  in  the  facts  and  conditions  on  which  such
representations  and warranties  are based are required or permitted  under this
Agreement;

         (ii) As of that  Funding  Date,  no event  shall have  occurred  and be
continuing or would result from the  consummation of the borrowing  contemplated
by such Notice of Borrowing  which would  constitute  (a) an Event of Default or
(b) a Potential Event of Default;

         (iii) As of that Funding  Date,  Borrower  shall have  performed in all
material  respects  all  agreements  and  satisfied  all  conditions  which this
Agreement provides shall be performed by it on or before such Funding Date;

         (iv) As of that  Funding  Date,  no  order,  judgment  or decree of any
court,  arbitrator or governmental authority shall purport to enjoin or restrain
any Lender from making that Loan;

         (v) As of that Funding Date, the making of the Loans  requested on such
Funding  Date shall not  violate  Regulation  T or  Regulation  U of the Federal
Reserve Board; and



<PAGE>


         (vi) As of that  Funding  Date,  there  shall not be pending or, to the
knowledge of Borrower  threatened,  any action, suit,  proceeding,  governmental
investigation  or  arbitration  against  or  affecting  Borrower  or  any of its
Subsidiaries or any property of Borrower or any of its  Subsidiaries,  which has
not been  disclosed by Borrower in writing  pursuant to subsection 4.6 or 5.1(x)
prior to the making of the last preceding  Loans (or, in the case of the initial
Loans,  prior to the execution of this  Agreement) and there shall have occurred
no  development  not  so  disclosed  in  any  such  action,  suit,   proceeding,
governmental investigation or arbitration so disclosed,  which, in either event,
in the  reasonable  opinion of  Requisite  Lenders,  except,  in the case of the
initial Loans, in the reasonable opinion of each Lender (as communicated, in the
case of the initial Loans,  by such Lenders and, in the case of other Loans,  by
Requisite Lenders to Administrative Agent and evidenced by a written notice from
Administrative  Agent to Borrower),  would  reasonably be expected to materially
and adversely affect the business,  operations,  properties, assets or condition
(financial or otherwise) of Borrower and its Subsidiaries,  taken as a whole, or
to impair the  ability or  obligation  of  Borrower  to perform or of Lenders to
enforce the  obligations.  No injunction or other  restraining  order shall have
been issued and no hearing to cause an injunction or other  restraining order to
be issued  shall be pending  or noticed  with  respect  to any  action,  suit or
proceeding  seeking to enjoin or otherwise  prevent the  consummation  of, or to
recover  any  damages or obtain  relief as a result of,  this  Agreement  or the
making of Loans hereunder.

         3.3      Conditions to All Issuances of Letters of Credit.

         The obligation of Fronting Bank to issue any Letter of Credit hereunder
(including  the deemed  issuance of an Existing  Letter of Credit) is subject to
prior or concurrent satisfaction of all of the following conditions:

         A. On or before the date of issuance  of the initial  Letter of Credit,
each of the  conditions set forth in subsection 3.1 shall have been satisfied or
waived in accordance with subsection 9.6.

         B. On or before  the date of  issuance  of any such  Letter of  Credit,
Administrative  Agent shall have received in accordance  with the  provisions of
subsection 2.1B, a notice requesting the issuance of such Letter of Credit,  all
other  information  specified in subsection  2.1B,  and such other  documents as
Fronting Bank may  reasonably  require in  connection  with the issuance of such
Letter of Credit.

         C. On the date of issuance of any such Letter of Credit, all conditions
precedent  described in subsection 3.2B shall be satisfied to the same extent as
though the  issuance  of such Letter of Credit were the making of a Loan and the
date of issuance of such Letter of Credit were a Funding Date.

Section 4         REPRESENTATIONS AND WARRANTIES OF BORROWER

         In order to induce Lenders to enter into this Agreement and to make the
Loans  and to  induce  Fronting  Bank  to  issue  Letters  of  Credit,  Borrower
represents  and  warrants to each Lender and  Fronting  Bank that the  following
statements are true, correct and accurate:

         4.1     Organization, Powers, Good Standing, Business and Subsidiaries.

         A.  Organization  and Powers.  Each of Borrower and its Subsidiaries is
duly  organized,  validly  existing and in good  standing  under the laws of its
jurisdiction  of  organization  (which  jurisdiction  is set forth on Schedule A
annexed hereto),  and has all requisite corporate power and authority to own and
operate its  properties,  to carry on its business as now conducted and proposed
to be conducted,  to enter into each Loan Document to which it is a party and to
carry  out the  transactions  contemplated  hereby  and  thereby  and to  borrow
hereunder.

         B. Good Standing.  Borrower is in good standing  wherever  necessary to
carry on its present  business and operations,  except in jurisdictions in which
the failure to be in good standing has not had and will not result in a Material
Adverse Effect.

         C.  Date  of  Incorporation.  Each  of  Borrower  and  the  Receivables
Subsidiary were incorporated on the respective dates listed on Schedule A.



<PAGE>


         D.  Subsidiaries.  All the  Subsidiaries  of Borrower are identified in
Schedule A (all references herein to Schedule A shall be deemed to be, after the
Effective Date,  references to Schedule A as it may be supplemented from time to
time).  The capital  stock of each of Borrower and each of the  Subsidiaries  of
Borrower is duly authorized, validly issued, fully paid and nonassessable and is
not (except in the case of Borrower's Equity Interest) Margin Stock. Each of the
Subsidiaries  of  Borrower  identified  on  Schedule  A  is a  corporation  duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of its
respective  jurisdiction of  incorporation  (which  jurisdiction is set forth on
Schedule  A) and has all  requisite  corporate  power and  authority  to own and
operate  its  properties  and to  carry on its  business  as now  conducted  and
proposed to be conducted,  except where failure to be in good standing or a lack
of corporate  power and  authority has not had and will not result in a Material
Adverse  Effect.  Schedule A  correctly  sets forth the  ownership  interest  of
Borrower in each of its Subsidiaries identified therein.

         4.2      Authorization of Borrowing, etc.

         A. Authorization of Borrowing. The execution,  delivery and performance
of the Loan  Documents,  and the  borrowing  and  payment  of the  Loans and the
issuance  of the Letters of Credit have been duly  authorized  by all  necessary
corporate action by Borrower and the other Loan Parties.

         B. No Conflict. The execution, delivery and performance by Borrower and
each  Subsidiary  Loan Party of each Loan Document to which it is respectively a
party and the issuance, delivery and performance of the Letters of Credit do not
and will not (i) violate any  provision of law  applicable  to Borrower and each
Subsidiary Loan Party,  the Certificate of  Incorporation  or Bylaws of Borrower
and each Subsidiary Loan Party, or any order, judgment or decree of any court or
other agency of government  binding on Borrower and each  Subsidiary Loan Party,
(ii)  conflict  with,  result in a breach of or  constitute  (with due notice or
lapse of time or both) a default  under any  Contractual  Obligation of Borrower
and each  Subsidiary  Loan Party,  (iii)  result in or require  the  creation or
imposition of any Lien upon any of the properties or assets of Borrower and each
Subsidiary  Loan Party or (iv)  require  any  approval  of  stockholders  or any
approval or consent of any Person under any  Contractual  Obligation of Borrower
and each Subsidiary Loan Party,  except for (a) such approvals or consents which
will be  obtained  on or  before  the  Effective  Date and are set  forth in the
Disclosure Letter, (b) such violations,  conflicts, breaches, Liens and defaults
which  would not result in, and such  approvals  the  absence of which would not
result in, a Material Adverse Effect and (c) any Liens incurred  pursuant to the
Restatement Transactions.

         C. Governmental Consents. Except as set forth in the Disclosure Letter,
the  execution,  delivery and  performance  by Borrower of the Loan Documents to
which it is a party and the  application  of the  proceeds  of the Loans and the
issuance,  delivery and performance of the Letters of Credit do not and will not
require any  registration  with,  consent or approval of, or notice to, or other
action to, with or by, any  federal,  state or other  governmental  authority or
regulatory body except for (i) filings,  consents,  notices,  authorizations and
approvals the absence of which would not result in a Material Adverse Effect and
(ii) any filings required pursuant to the Collateral and Guarantee Requirement.

         D. Binding Obligation. This Agreement is, and the other Loan Documents,
when executed and delivered  will be, the legally valid and binding  obligations
of Borrower and each  Subsidiary Loan Party party thereto,  enforceable  against
Borrower and such  Subsidiary  Loan Party in  accordance  with their  respective
terms,  except  as  enforcement  may  be  limited  by  bankruptcy,   insolvency,
reorganization,  moratorium or similar laws  relating to or limiting  creditors'
rights generally or by equitable principles relating to enforceability.

         E. Certain Securities.  No stockholder of Borrower has or will have any
preemptive rights to subscribe for any additional equity securities of Borrower,
except pursuant to the Rights Plan.

         4.3      Financial Condition.



<PAGE>


         Borrower has heretofore  delivered to Lenders the following  materials:
(i) Borrower's Annual Report on Form 10-K for the fiscal year 1999 as filed with
the Securities and Exchange  Commission,  its Annual Report to Stockholders  for
the fiscal year 1999 and the audited  financial  statements  of Borrower for the
fiscal year ended October 1, 1999 and (ii) Borrower's  Quarterly Reports on Form
10-Q for the fiscal  quarters  ended on or prior to July 1, 2000.  All financial
statements  set forth or referred to in the  materials  specified at clauses (i)
and (ii) were prepared is conformity  with GAAP.  All financial  statements  set
forth or referred to in the  materials  specified in clauses (i) and (ii) fairly
present the consolidated  financial position of Borrower and its Subsidiaries as
at the respective dates thereof and the  consolidated  results of operations and
cash flows of Borrower  and its  Subsidiaries  for each of the  periods  covered
thereby,  subject, in the case of any unaudited interim financial statements, to
changes resulting from normal year-end  adjustments.  Except as set forth in the
Disclosure  Letter or on Schedule F annexed hereto,  neither Borrower nor any of
its  Subsidiaries  as  of  the  Effective  Date  has  any  material   Contingent
Obligation,  material  contingent  liability  or material  liability  for taxes,
long-term  lease  or  unusual  forward  or  long-term  commitment,  which is not
reflected in the foregoing  materials or the foregoing  financial  statements or
the notes thereto.

         4.4      No Adverse Material Change.

         Since  October  1,  1999,  there has been no  change  in the  business,
operations, properties, assets or condition (financial or otherwise) of Borrower
and its  Subsidiaries  which has been,  either in any case or in the  aggregate,
materially adverse to Borrower and its Subsidiaries taken as a whole, other than
changes contemplated by or disclosed in this Agreement, filings of Borrower made
with the Securities  and Exchange  Commission  prior to the Effective  Date, the
Schedules attached hereto or the Disclosure Letter.

         4.5      Title to Properties; Liens.

         A. Each of Borrower and its Subsidiaries has good, sufficient and legal
title to, or valid  leasehold  interests in, all its  respective  properties and
assets  reflected in the most recent  consolidated  balance sheet referred to in
subsection 4.3 or in the most recent financial  statements delivered pursuant to
subsection 5.1 of this Agreement,  except for (i) assets acquired or disposed of
in the ordinary course of business since the date of such  consolidated  balance
sheet and (ii) minor  defects in title that in the  aggregate do not  materially
adversely  affect the  business,  operations,  properties,  assets or  condition
(financial or otherwise) of Borrower and its Subsidiaries, in each case taken as
a whole,  and  would not  materially  adversely  affect  Borrower's  ability  or
obligation to perform, or Lenders' ability to enforce,  the Obligations.  Except
as permitted or contemplated by this Agreement or under the Receivables Purchase
Program, all such properties and assets are free and clear of Liens.

         B. Each of Borrower and its  Subsidiaries  owns, or is licensed to use,
all trademarks,  tradenames, copyrights, patents and other intellectual property
material to its business,  and the use thereof by Borrower and its  Subsidiaries
does not  infringe  upon the  rights of any other  Person,  except  for any such
infringements  that,  individually or in the aggregate,  could not reasonably be
expected to result in a Material Adverse Effect.

         C.  Schedule L sets forth the  address  of each real  property  that is
owned or leased by Borrower or any of its  Subsidiaries as of the Effective Date
after giving effect to the Restatement Transactions.

         D.  As  of  the  Effective  Date,  neither  Borrower  nor  any  of  its
Subsidiaries  has  received  notice  of, or has  knowledge  of,  any  pending or
contemplated  condemnation  proceeding  affecting any Mortgaged  Property or any
sale or  disposition  thereof in lieu of  condemnation.  Neither  any  Mortgaged
Property  nor any  interest  therein is  subject to any right of first  refusal,
option  or other  contractual  right to  purchase  such  Mortgaged  Property  or
interest therein.

         4.6      Litigation; Adverse Facts.

         Except  as set  forth  in the  Disclosure  Letter  or in the  documents
referred  to  in  subsection  4.3,  there  is  no  action,   suit,   proceeding,
governmental  investigation  of which  Borrower  has  knowledge  or  arbitration
(whether or not purportedly on behalf of Borrower or any of its Subsidiaries) at
law or in  equity  or  before  or by any  federal,  state,  municipal  or  other
governmental department,  commission,  board, bureau, agency or instrumentality,
domestic  or foreign,  pending  or, to the  knowledge  of  Borrower,  threatened
against or affecting  Borrower or any of its Subsidiaries other than Receivables
Subsidiary  or  any  property  of  Borrower  or  its  Subsidiaries  which  would
reasonably be expected to result in a Material  Adverse  Effect for Borrower and
its  Subsidiaries,  taken  as a  whole,  or would  materially  adversely  affect
Borrower's  ability  or  obligation  to perform  or of any  Lender's  ability to
enforce the Obligations.



<PAGE>


         4.7      Payment of Taxes.

         Except to the extent  permitted  by  subsection  5.3,  all material tax
returns  and  reports of Borrower  and each of its  Subsidiaries  required to be
filed by any of them have been timely filed,  and all taxes,  assessments,  fees
and other  governmental  charges  upon such  Persons  and upon their  respective
properties,  assets,  income and franchises  which are due and payable have been
paid when due and payable.  Borrower knows of no proposed tax assessment against
any such Person that would be material to the condition (financial or otherwise)
of Borrower and its Subsidiaries,  taken as a whole, which is not being actively
contested  in good faith by such  Person to the extent  affected  thereby and by
appropriate  proceedings;  provided  that  such  reserves  or other  appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor.

         4.8      Performance of Agreements.

         Neither  Borrower  nor any of its  Subsidiaries  is in  default  in the
performance,  observance or fulfillment of any of the obligations,  covenants or
conditions  contained in any Contractual  Obligation of any such Person,  and no
condition exists which,  with the giving of notice or the lapse of time or both,
would  constitute  such a  default,  except  where the  consequences,  direct or
indirect,  of such default or defaults,  if any,  would not result in a Material
Adverse Effect.

         4.9      Governmental Regulation.

         Neither  Borrower nor any of its  Subsidiaries is subject to regulation
under the Public Utility Holding  Company Act of 1935 or the Investment  Company
Act of 1940 or to any  federal  or state  statute  or  regulation  limiting  its
ability to incur  Indebtedness  for money borrowed as contemplated  hereby or by
any other Loan Document.

         4.10     Securities Activities.

         Neither Borrower nor any of its Subsidiaries is engaged principally, or
as one of its important activities,  in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.

         4.11     Employee Benefit Plans.

         A.  Borrower,  its  Subsidiaries  and  each of their  respective  ERISA
Affiliates  is in  compliance  in all  material  respects  with  all  applicable
provisions of ERISA and the regulations and published interpretations thereunder
with respect to all Pension Plans and Multiemployer Plans.

         B. No Termination Event has occurred or is reasonably expected to occur
with respect to any Pension Plan.

         C. The sum of the  amount of  unfunded  benefit  liabilities  under all
Pension Plans  (excluding  each Pension Plan with an amount of unfunded  benefit
liabilities of zero or less) is not more than $75,000,000.

         D. None of  Borrower  or any of its ERISA  Affiliates  has  incurred or
reasonably expects to incur any withdrawal  liability under Title IV of ERISA to
any Multiemployer  Plan or Multiemployer  Plans individually or in the aggregate
in excess of $3,000,000.

         E. None of Borrower or any of its ERISA  Affiliates  has  received  any
notification  that  any  Multiemployer  Plan  is  reasonably  expected  to be in
reorganization or to be terminated, where such reorganization or termination has
resulted  or  can  reasonably  be  expected  to  result  in an  increase  in the
contributions  required  to be made to  such  plan  that  would  materially  and
adversely affect the financial  condition of Borrower and the Subsidiaries taken
as whole.



<PAGE>


         As used in this subsection  4.11, the term "amount of unfunded  benefit
liabilities" has the meaning specified in Section 4001(a)(18) of ERISA.

         4.12     Certain Fees.

         Except as set forth in the Disclosure  Letter,  no broker's or finder's
fee or  commission  will be  payable  with  respect  to any of the  transactions
contemplated  hereby, and Borrower hereby indemnifies Lenders against and agrees
that it will hold  Lenders  harmless  from any claim,  demand or  liability  for
broker's or finder's fees alleged to have been  incurred in connection  with any
such offer, issue and sale, or any of the other transactions contemplated hereby
and any expenses,  including  reasonable legal fees,  arising in connection with
any such claim,  demand or liability.  No other similar fees or commissions will
be  payable  by  Borrower  or any of its  Subsidiaries  for any  other  services
rendered to Borrower or any of its  Subsidiaries  ancillary to the  transactions
contemplated hereby.

         4.13     Disclosure.

         A. Except as set forth in the Disclosure  Letter,  no representation or
warranty of Borrower  contained in this Agreement,  any other Loan Document,  or
any other document, certificate or written statement (other than the Information
Memorandum)  furnished  to Lenders by or on behalf of any such Person for use in
connection with the  transactions  contemplated  by this Agreement  contains any
untrue  statement of a material fact or omits to state a material fact (known to
any such person in the case of any  document not  furnished by it)  necessary in
order  to make the  statements  contained  herein  or  therein,  in light of the
circumstances  under which they are made, not misleading.  Any  reaffirmation of
the  foregoing  sentence is subject to (i) any change in the facts and condition
on which such  representations  and  warranties  are based,  which  changes  are
required or  permitted  under this  Agreement  and (ii) any  disclosure  made by
Borrower  pursuant to subsection  3.2B(vi) in  connection  with the funding of a
Loan, which funding occurred prior to a reaffirmation of the  representation and
warranty set forth in the foregoing  sentence;  provided,  however,  that in all
cases no representation or warranty of Borrower contained in this Agreement, any
other Loan Document,  or any other  document,  certificate or written  statement
(other than the Information  Memorandum) furnished to Lenders by or on behalf of
any such Person for use in connection with the transactions contemplated by this
Agreement  contained at the time made any untrue statement of a material fact or
omitted at the time made to state a material  fact  (known to any such Person in
the case of any  document not  furnished  by it)  necessary in order to make the
statement contained herein or therein, in light of the circumstances under which
they are made, not misleading.

         B.  Except  as set  forth  in the  Disclosure  Letter  or as  otherwise
disclosed in the Information  Memorandum or in Borrower's  Annual Report on Form
10-K  for the  fiscal  year  1999 as  filed  with the  Securities  and  Exchange
Commission and Borrower's  reports,  proxy statements or older information filed
with  the  Securities  and  Exchange  Commission  since  July 1,  2000,  (i) the
information  contained  in the  Information  Memorandum  (other  than  financial
statements  and  projections,  which are  referred  to below)  with  respect  to
Borrower and its Subsidiaries, as such information may be supplemented from time
to time, is true and accurate in all material  respects,  taken as a whole,  and
does not contain any untrue  statement  of a material  fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances  under which they are made,  not  misleading,  (ii) the historical
financial  statements  of  Borrower  and  its  Subsidiaries   contained  in  the
Information  Memorandum,  as such financial  statements may be supplemented from
time to time, fairly present their results of operations and financial condition
for the  periods  and as of the  dates  presented  (subject  to  year-end  audit
adjustments) and (iii) all projections relating to Borrower and its Subsidiaries
contained in the Information Memorandum, as such projections may be supplemented
from time to time,  were  prepared  in good  faith on the  basis of  assumptions
believed by Borrower to be reasonable as of the date such projections were made.



<PAGE>


         4.14     Patents, Trademarks, etc.

         Borrower and each of its Subsidiaries  owns, or is licensed to use, all
patents, trademarks, trade names, copyrights, technology, know-how and processes
used in or necessary for the conduct of their respective businesses as currently
conducted which are material to the condition (financial or otherwise), business
or operations  of Borrower and its  Subsidiaries,  taken as a whole.  The use of
such patents,  trademarks,  trade names,  copyrights,  technology,  know-how and
processes  by Borrower and its  Subsidiaries  does not infringe on the rights of
any  Person,  subject  to  such  claims  and  infringements  as do  not,  in the
aggregate,  give  rise  to any  liability  on  the  part  of  Borrower  and  its
Subsidiaries  which is  material  to Borrower  and its  Subsidiaries  taken as a
whole.  To the best  knowledge  of  Borrower,  the  rights of  Borrower  and its
Subsidiaries to so sell,  franchise or license under such brand names then being
used may be  transferred  in connection  with any sale of assets or stock of the
related  business  by  Borrower  or any  of  its  Subsidiaries  with  only  such
exceptions  as are not  material to Borrower  and its  Subsidiaries,  taken as a
whole.

         4.15     Subsidiaries

         Borrower  does not have any  subsidiaries  other than the  subsidiaries
listed on Schedule A, which sets forth the name of, and the  ownership  interest
of the  Borrower  in,  each  Subsidiary  of the  Borrower  and  identifies  each
Subsidiary  that is a Subsidiary  Loan Party,  in each case as of the  Effective
Date.

         4.16     Insurance.

         Schedule P sets forth a description  of all insurance  maintained by or
on behalf of Borrower and its  Subsidiaries  as of the Effective Date. As of the
Effective  Date,  all  premiums  in  respect of such  insurance  have been paid.
Borrower  believes that the  insurance  maintained by or on behalf of it and its
Subsidiaries is adequate.

         4.17     Labor Matters.

         Except  as set forth in the  Disclosure  Letter,  there are no  strikes
pending or threatened against Borrower, or any of Borrower's  Subsidiaries.  The
hours worked and payment  made to  employees of Borrower and each of  Borrower's
Subsidiaries  have not been in  violation  in any  material  respect of the Fair
Labor Standards Act or any other  applicable law dealing with such matters.  All
payments due from Borrower or any of Borrower's  Subsidiaries,  or for which any
claim may be made against Borrower or any of Borrower's Subsidiaries, on account
of wages and employee health and welfare  insurance and other benefits have been
paid or accrued as a liability on the books of Borrower or such Subsidiary.

         4.18     Environmental Matters.

         A. Except as  expressly  disclosed  on Schedule N, each of Borrower and
the  Subsidiaries  has complied in all  material  respects  with all  applicable
Environmental  Laws,  including,  without  limitation,  compliance with permits,
licenses, standards,  schedules and timetables, and is not in violation of, does
not presently have  outstanding any liability  under, has not been notified that
it is or may be liable  under and does not have  knowledge  of any  liability or
potential liability under any applicable  Environmental Law, including,  without
limitation,  the Resource  Conservation  and  Recovery  Act of 1976,  as amended
("RCRA"), the Comprehensive Environmental Response,  Compensation, and Liability
Act of 1980, as amended by the Superfund  Amendments and  Reauthorization Act of
1986 ("CERCLA"),  the Federal Water Pollution Control Act, as amended ("FWCPA"),
the Federal Clean Air Act, as amended ("FCAA"), and the Toxic Substances Control
Act ("TSCA"), which violation, liability or potential liability could reasonably
be expected to have a materially  adverse effect on the condition  (financial or
otherwise), business or operations of Borrower and its Subsidiaries,  taken as a
whole.



<PAGE>


         B.  Except as  expressly  disclosed  on Schedule  N,  Borrower  and the
Subsidiaries have not received a written request for information under CERCLA or
any  comparable  state law or written notice that Borrower or any Subsidiary has
been  identified  as  a  potentially  responsible  party  under  CERCLA  or  any
comparable  state law, nor has Borrower or any  Subsidiary  received any written
notification  that  any  Hazardous  Substance  that it or any of its  respective
predecessors in interest has generated, stored, treated, handled, transported or
disposed  of has been  released or is  threatened  to be released at any site at
which any Person intends to conduct or is conducting a remedial investigation or
other action pursuant to any applicable  Environmental Law, in either case where
such potential  responsibility under CERCLA or such comparable state law or such
remedial investigation or other action pursuant to any applicable  Environmental
Law could  reasonably  be expected to have a  materially  adverse  effect on the
condition  (financial or otherwise),  business or operations of Borrower and its
Subsidiaries, taken as a whole.

         C.  Except  as  expressly  disclosed  on  Schedule  N,  and  except  in
compliance in all material respects with all applicable  Environmental  Laws, to
the  knowledge  of Borrower  there has not been any release  (i.e.,  any past or
present releasing,  spilling,  leaking,  pumping, pouring,  emitting,  emptying,
discharging,  injecting,  escaping,  teaching,  disposing  or  dumping)  or  any
circumstance  or  condition  that  could  reasonably  lead to the  threat of any
release,  of Hazardous  Substances  by Borrower or any of the  Subsidiaries  on,
upon,  under,  into or from any real  property in the  vicinity of any  Borrower
Property that,  through soil,  surface water, air or groundwater  contamination,
could  reasonably  be  expected  to  have a  materially  adverse  effect  on the
condition  (financial or otherwise),  business or operations of Borrower and its
Subsidiaries, taken as a whole.

         D.  To the  best  knowledge  of  Borrower  and the  Subsidiaries  after
reasonable diligence, with respect to all real property that is owned, operated,
used or  controlled  by  Borrower  or any of the  Subsidiaries  (all  such  real
property,  "Borrower  Property") Borrower and the Subsidiaries have obtained all
permits,  licenses  or other  authorizations  required  for the conduct of their
operations under all applicable  Environmental  and Asbestos Laws, and each such
authorization is in full force and effect.

         E. Except as expressly  disclosed on Schedule N, to the best  knowledge
of  Borrower  and the  Subsidiaries  after  reasonable  diligence,  no  Borrower
Property is (i) listed or proposed for listing on the National  Priorities  List
under  CERCLA  or  (ii)  listed  in the  Comprehensive  Environmental  Response,
Compensation,  Liability Information System List promulgated pursuant to CERCLA,
or on any comparable list maintained by any governmental authority.

         F. The matters disclosed on Schedule N are not,  individually or in the
aggregate, reasonably expected to result in a Material Adverse Effect.

         4.19     Solvency.

         A.  Immediately  after the consummation of the transactions to occur on
the Effective Date and immediately following the making of each Loan made on the
Effective  Date and after giving  effect to the  application  of the proceeds of
such Loans, (i) the fair value of the assets of Borrower and its Subsidiaries on
a  consolidated  basis,  at  a  fair  valuation,   will  exceed  the  debts  and
liabilities,   subordinated,  contingent  or  otherwise,  of  Borrower  and  its
Subsidiaries  on a consolidated  basis;  (ii) the present fair saleable value of
the property of Borrower and its  Subsidiaries  on a consolidated  basis will be
greater than the amount that will be required to pay the  probable  liability of
Borrower and its  Subsidiaries on a consolidated  basis on their debts and other
liabilities,  subordinated,  contingent  or  otherwise,  as such debts and other
liabilities become absolute and matured;  (iii) Borrower and its Subsidiaries on
a  consolidated  basis  will  be  able  to  pay  their  debts  and  liabilities,
subordinated,  contingent or  otherwise,  as such debts and  liabilities  become
absolute and matured;  and (iv) Borrower and its  Subsidiaries on a consolidated
basis  will not have  unreasonably  small  capital  with  which to  conduct  the
businesses  in which they are engaged as such  businesses  are now conducted and
are proposed to be conducted following the Effective Date.

         B.  Borrower  does not intend to, or to permit any of its  Subsidiaries
to, and does not believe that it or any of its  Subsidiaries  will,  incur debts
beyond its ability to pay such debts as they  mature,  taking  into  account the
timing of and amounts of cash to be received  by it or any such  Subsidiary  and
the  timing  of the  amounts  of  cash to be  payable  on or in  respect  of its
Indebtedness or the Indebtedness of any such Subsidiary.


<PAGE>


         4.20     Security Documents.

         A. The Pledge  Agreement is effective to create in favor of  Collateral
Agent,  for the  ratable  benefit of the  Secured  Parties,  a legal,  valid and
enforceable  security  interest  in the  Collateral  (as  defined  in the Pledge
Agreement)  and,  when such  Collateral is delivered to  Collateral  Agent,  the
Pledge  Agreement shall constitute a fully perfected first priority Lien on, and
security interest in, all right,  title and interest of each pledgor  thereunder
in such  Collateral,  in each  case  prior  and  superior  in right to any other
Person, except as otherwise recited in such Agreement.

         B. The Security Agreement is effective to create in favor of Collateral
Agent,  for the  ratable  benefit of the  Secured  Parties,  a legal,  valid and
enforceable  security  interest in the  Collateral  (as defined in the  Security
Agreement) and, when financing  statements in appropriate  form are filed in the
offices  specified  on Schedule 6 to the  Perfection  Certificate,  the Security
Agreement shall constitute a fully perfected Lien on, and security  interest in,
all right, title and interest of the grantors thereunder in such Collateral,  to
the extent that a security  interest  can be  perfected  in such  Collateral  by
filing,  recording or registering a financing statement or analogous document in
the United States (or any political subdivision thereof) and its territories and
possessions  pursuant to the Uniform  Commercial Code or other applicable law in
such jurisdiction, in each case prior and superior in right to any other Person,
other than with respect to Liens expressly permitted by subsection 6.2.

         C. When the Security Agreement is filed in the United States Patent and
Trademark Office and the United States Copyright Office,  the Security Agreement
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in the Intellectual  Property (as defined
in the  Security  Agreement)  in which a security  interest  may be perfected by
filing,  recording or registering a security  agreement,  financing statement or
analogous  document  in the United  States  Patent and  Trademark  Office or the
United States Copyright Office,  as applicable,  in each case prior and superior
in right to any other Person other than Liens expressly  permitted by subsection
6.2 (it being understood that subsequent  recordings in the United States Patent
and Trademark  Office and the United States Copyright Office may be necessary to
perfect a Lien on registered  trademarks,  trademark applications and copyrights
acquired by the Loan Parties after the date hereof).

         D. The  Mortgages are  effective to create,  subject to the  exceptions
listed in each  title  insurance  policy  covering  such  Mortgage,  in favor of
Collateral  Agent,  for the benefit of the Secured Parties,  a legal,  valid and
enforceable Lien on all of the applicable  mortgagor's right, title and interest
in and to the Mortgaged Properties thereunder and the proceeds thereof, and when
the Mortgages are filed in the offices specified on Schedule M and Schedule M-1,
the Lien  created by each  Mortgage  shall  constitute  a perfected  Lien on all
right,  title  and  interest  of the  applicable  mortgagor  in  such  Mortgaged
Properties and the proceeds thereof, in each case prior and superior in right to
any other Person,  other than with respect to the rights of Persons  pursuant to
Liens permitted by subsection 6.2.

Section 5         AFFIRMATIVE COVENANTS OF BORROWER

         Borrower covenants and agrees that, on and after the Effective Date, so
long as any of the Commitments hereunder shall be in effect and until payment in
full  of all  principal  of and  interest  on  Loans  and  the  cancellation  or
expiration of all Letters of Credit issued  hereunder and the  reimbursement  in
full of all amounts drawn  thereunder  and all fees payable  hereunder have been
paid in full,  unless  Requisite  Lenders  shall  otherwise  give prior  written
consent,  Borrower  shall perform or cause the  performance  of all covenants in
this Section 5:



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         5.1      Financial Statements and Other Reports.

         Borrower will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting  established  and  administered  in accordance with sound
business practices to permit preparation of consolidated financial statements in
conformity with GAAP. Borrower will deliver to the Administrative Agent:

                  (i) as soon as  practicable  and in any  event  within 45 days
         after the end of each fiscal  quarter of each fiscal year of  Borrower,
         (I) the  consolidated  balance sheet of Borrower and its  Subsidiaries,
         (II) the related consolidated  statements of earnings and cash flows of
         Borrower and its  Subsidiaries and (III) Reporting  Division  financial
         information  for such fiscal quarter as set forth in Schedule K annexed
         hereto  presented,  in each case,  for such fiscal  quarter and for the
         period from the beginning of the then current fiscal year to the end of
         such  fiscal   quarter   setting  forth,   in  comparative   form,  the
         corresponding  dates or periods of the  previous  fiscal  year,  all in
         reasonable  detail  and  certified  by the chief  financial  officer of
         Borrower  (subject  to  year-end  audit  adjustments)  that they fairly
         present the financial  condition of Borrower and its Subsidiaries  (and
         such Reporting  Divisions) as at the dates indicated and the results of
         their  operations and cash flow for the periods  indicated,  subject to
         changes resulting from audit and normal year-end adjustment and insofar
         as relates to Reporting Divisions based on Borrower's normal accounting
         procedures applied on a consistent basis and the absence of footnotes;

                  (ii) (a) as soon as  practicable  and in any  event  within 90
         days  after  the  end  of  each  fiscal  year  of  Borrower,   (I)  the
         consolidated  balance sheet of Borrower and its Subsidiaries,  (II) the
         related   consolidated   statements   of   earnings   and   changes  in
         stockholders'  equity and cash flows of Borrower  and its  Subsidiaries
         and (III) Reporting Division financial information for such fiscal year
         presented,  in each case, for such fiscal year,  and setting forth,  in
         comparative  form, the  corresponding  figures as of the end of and for
         the previous  year,  all in reasonable  detail,  (b)in the case of such
         consolidated  financial statements,  accompanied by a report thereon of
         independent   certified  public  accountants  of  recognized   national
         standing selected by Borrower,  which report shall be unqualified as to
         going concern and scope of audit and shall state that such consolidated
         financial  statements present fairly the financial position of Borrower
         and its Subsidiaries as at the dates indicated and the results of their
         operations and cash flow for the periods  indicated in conformity  with
         GAAP and that the  examination by such  accountants in connection  with
         such consolidated financial statements has been made in accordance with
         generally  accepted  auditing  standards  and  (c) in the  case of such
         financial statements with respect to Reporting Divisions,  certified by
         the chief  financial  officer of Borrower  based on  Borrower's  normal
         accounting procedures applied on a consistent basis;

                  (iii)  commencing  with the first fiscal month  following  the
         Effective Date, as soon as  practicable,  but in no event later than 20
         Business  Days after the end of each fiscal month of Borrower,  monthly
         unaudited  balance sheets of Borrower and its  Subsidiaries and related
         statements of earnings and cash flows of Borrower and its  Subsidiaries
         for the prior  fiscal  month,  each  certified  by the Chief  Financial
         Officer of Borrower;



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                  (iv) together  with each  delivery of financial  statements of
         Borrower  and its  Subsidiaries  pursuant to  subsections  (i) and (ii)
         above,  (a) an  Officers'  Certificate  of  Borrower  stating  that the
         signers have  reviewed the terms of this  Agreement  and the Letters of
         Credit and have made, or caused to be made under their  supervision,  a
         review  in  reasonable  detail of the  transactions  and  condition  of
         Borrower and its Subsidiaries  during the accounting  period covered by
         such  financial  statements  and that such review has not disclosed the
         existence during or at the end of such accounting  period, and that the
         signers do not have  knowledge  of the  existence as at the date of the
         Officers'  Certificate,  of any condition or event which constitutes an
         Event of  Default  or  Potential  Event  of  Default,  or,  if any such
         condition or event existed or exists,  specifying the nature and period
         of existence  thereof and what action Borrower has taken, is taking and
         proposes to take with respect thereto; and (b) a Compliance Certificate
         (I)  demonstrating  in reasonable  detail  compliance (as determined in
         accordance with GAAP) during and at the end of such accounting  periods
         with the restrictions  contained in subsections 6.12, 6.13, 6.14, 6.15,
         6.16 and 6.17; (II) identifying all  Subsidiaries  existing on the date
         of such certificate and indicating,  for each such Subsidiary,  whether
         such Subsidiary is a Subsidiary Loan Party or a Foreign  Subsidiary and
         whether  such  Subsidiary  was formed or acquired  since the end of the
         previous  fiscal  quarter;  and (III)  identifying  any parcels of real
         property or  improvements  thereto or any other  property  with a value
         exceeding  $1,000,000  that have been  acquired by any Loan Party since
         the end of the previous fiscal quarter;

                  (v) together  with each  delivery of financial  statements  of
         Borrower and its  Subsidiaries  pursuant to  subsection  (i) above,  an
         Officers'  Certificate  of Borrower  stating that the signers  made, or
         caused to be made under  their  supervision,  a review of the terms of,
         and the  records  relating  to,  all of the  Intercompany  Indebtedness
         between  Borrower  and its  Subsidiaries  and stating the amount of all
         such Intercompany Indebtedness outstanding;

                  (vi)  together with each  delivery of  consolidated  financial
         statements of Borrower and its Subsidiaries pursuant to subsection (ii)
         above, a written statement by the independent public accountants giving
         the report  thereon  (a)  stating  that  their  audit  examination  has
         included  a review  of the term of this  Agreement  as they  relate  to
         accounting matters, (b) stating whether, in connection with their audit
         examination,  any  condition  or event  which  constitutes  an Event of
         Default or Potential Event of Default has come to their attention, and,
         if such a condition  or event has come to their  attention,  specifying
         the  nature  and  period  of  existence  thereof;  provided  that  such
         accountants  shall not be liable  by  reason of any  failure  to obtain
         knowledge  of any such Event of Default or  Potential  Event of Default
         that would not be disclosed  in the course of their audit  examination,
         and (c) stating that based on their audit examination  nothing has come
         to their  attention  which causes them to believe that the  information
         contained  in either or both of the  certificates  delivered  therewith
         pursuant  to  subsection  (iv) above is not correct or that the matters
         set forth in the Compliance Certificate delivered therewith pursuant to
         clause (b) of such subsection (iv) above for the applicable fiscal year
         are not stated in accordance with the terms of this Agreement;

                  (vii)  promptly  upon receipt  thereof,  copies of all reports
         submitted to Borrower by independent  public  accountants in connection
         with each annual,  interim or special audit of the financial statements
         of Borrower made by such accountants,  including,  without  limitation,
         the comment  letter  submitted by such  accountants  to  management  in
         connection with their annual audit;

                  (viii) within 45 days following the end of each fiscal year of
         Borrower,   a  detailed   consolidated  budget  for  such  fiscal  year
         (including  a  projected   consolidated   balance   sheet  and  related
         statements of projected  operations  and cash flow as of the end of and
         for such  fiscal  year  and  setting  forth  the  assumptions  used for
         purposes of preparing such budget) and,  promptly when  available,  any
         significant  revisions  of such  budget  that  have  been,  or will be,
         presented to Borrower's board of directors;

                  (ix) promptly  upon their  becoming  available,  copies of all
         financial  statements,  reports,  notices and proxy  statements sent or
         made available  generally by Borrower to its security holders or by any
         Subsidiary  of Borrower to its security  holders other than Borrower or
         any of its  Subsidiaries,  and of all regular and periodic  reports and
         all registration statements and prospectuses, if any, filed by Borrower
         or any of its  Subsidiaries  with any  securities  exchange or with the
         Securities and Exchange Commission;



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                  (x) promptly upon any officer of Borrower obtaining  knowledge
         (a) of any condition or event which  constitutes an Event of Default or
         Potential  Event of  Default,  or  becoming  aware  that any  Lender or
         Administrative  Agent has given  any  notice or taken any other  action
         with  respect  to a claimed  Event of  Default  or  Potential  Event of
         Default under this Agreement,  (b) that any Person has given any notice
         to Borrower  or any  Subsidiary  of Borrower or taken any other  action
         with  respect to a claimed  default or event or  condition  of the type
         referred to in  subsection  7.2,  (c) of any  condition  or event which
         would be required to be disclosed in a current report filed by Borrower
         with the  Securities  and Exchange  Commission  on Form 8-K or (d) of a
         material adverse change in the business, operations, properties, assets
         or condition (financial or otherwise) of Borrower and its Subsidiaries,
         taken as a whole,  an Officers'  Certificate  specifying the nature and
         period of existence of any such  condition or event,  or specifying the
         notice given or action taken by such holder or Person and the nature of
         such claimed  default,  Event of Default,  Potential  Event of Default,
         event or condition,  and what action  Borrower has taken, is taking and
         proposes to take with respect thereto;

                  (xi)  promptly  upon  the  chief  legal  officer  of  Borrower
         obtaining knowledge of (a) the institution of, or non-frivolous  threat
         of,  any  action,  suit,  proceeding,   governmental  investigation  or
         arbitration against or affecting Borrower or any of its Subsidiaries or
         any  property  of Borrower or any of its  Subsidiaries  not  previously
         disclosed by Borrower to Lenders or (b) any material development in any
         such  action,   suit,   proceeding,   governmental   investigation   or
         arbitration,  which,  in either case, if adversely  determined  against
         Borrower or any of its  Subsidiaries  might  materially  and  adversely
         affect  the  business,  operations,  properties,  assets  or  condition
         (financial or otherwise) of Borrower and its  Subsidiaries,  taken as a
         whole,  Borrower  shall  promptly  give  notice  thereof to Lenders and
         provide such other  information  as may be  reasonably  available to it
         (without  waiver of any  applicable  evidentiary  privilege)  to enable
         Lenders and their counsel to evaluate such matters;

                  (xii) (a) promptly  upon becoming  aware of the  occurrence of
         any (i) Termination Event or (ii) "prohibited transaction",  within the
         meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue
         Code,  in  connection  with  any  Pension  Plan  or any  trust  created
         thereunder, a written notice specifying the nature thereof, what action
         Borrower  or any of its  ERISA  Affiliates  has  taken,  is  taking  or
         proposes to take with  respect  thereto,  and,  when known,  any action
         taken or  threatened  by the Internal  Revenue  Service,  Department of
         Labor or the Pension Benefit Guaranty Corporation with respect thereto,
         and (b) within 10 days after the due date for filing  with the  Pension
         Benefit Guaranty Corporation pursuant to Section 412(n) of the Internal
         Revenue Code of a notice of failure to make a required  installment  or
         other payment with respect to a Pension Plan, a statement setting forth
         details as to such  failure  and the action that  Borrower  proposes to
         take with  respect  thereto,  together  with a copy of any such  notice
         given to the Pension Benefit Guaranty Corporation;

                  (xiii) with  reasonable  promptness  copies of (a) all notices
         received  by  Borrower  or any of its ERISA  Affiliates  of the Pension
         Benefit Guaranty  Corporation's intent to terminate any Pension Plan or
         to have a trustee  appointed to administer  any Pension Plan;  (b) each
         Schedule B  (Actuarial  Information)  to the annual  report  (Form 5500
         Series)  filed by  Borrower  or any of its  ERISA  Affiliates  with the
         Internal Revenue Service with respect to each Pension Plan; and (c) all
         notices  received by Borrower or any of its respective ERISA Affiliates
         from a Multiemployer  Plan sponsor  concerning the imposition or amount
         of  withdrawal  liability  pursuant  to  Section  4202 of  ERISA or the
         termination or reorganization of a Multiemployer Plan;

                  (xiv) each year,  at the time of delivery of annual  financial
         statements with respect to the preceding fiscal year pursuant to clause
         (ii) of this  subsection  5.1, the items  required  pursuant to Section
         4.02 of the Security Agreement;

                  (xv) the items  required  pursuant  to Section 4 of the Pledge
         Agreement; and

                  (xvi) with reasonable  promptness,  such other information and
         data with respect to Borrower or any of its  Subsidiaries  as from time
         to  time  may  be   reasonably   requested   by  any   Lender   through
         Administrative Agent.

         5.2      Corporate Existence, etc.



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         Subject to subsection 6.3, Borrower will at all times preserve and keep
in full force and  effect  its  corporate  existence  and rights and  franchises
material  to its  business  and those of each of its  Subsidiaries  (other  than
Receivables Subsidiary);  provided, however, that the corporate existence of any
such Subsidiary may be terminated if such termination is in the best interest of
its parent and is not otherwise materially  disadvantageous to the holder of any
Loan;  and  provided  further,  however,  that  neither  Borrower nor any of its
Subsidiaries  shall be required to preserve  any right or franchise if the Board
of  Directors  of Borrower or such  Subsidiary  shall have  determined  that the
preservation  thereof is no longer  desirable  in the conduct of the business of
Borrower  or such  Subsidiary,  as the case may be, and the loss  thereof is not
disadvantageous  in any material  respect to Borrower,  such  Subsidiary  or the
holder of any Loan.

         5.3  Payment  of  Obligations;   Payment  of  Taxes  and  Claims;   Tax
Consolidation.

         A. Borrower will, and will cause each of its  Subsidiaries  to, pay its
Indebtedness and other obligations,  including all taxes,  assessments and other
governmental  charges  imposed upon it or any of its  properties or assets or in
respect  of any of its  franchises,  business,  income or  property  before  any
material penalty accrues thereon, and all claims (including, without limitation,
claims for labor,  services,  materials and supplies) for sums which have become
due and payable and which by law have or may become a material  Lien upon any of
its  properties or assets,  prior to the time when any material  penalty or fine
shall be incurred  with respect  thereto;  provided that no such charge or claim
need  be paid if  being  contested  in good  faith  by  appropriate  proceedings
promptly  instituted  and  diligently  conducted  and if such  reserve  or other
appropriate  provision,  if any, as shall be required  in  conformity  with GAAP
shall have been made therefor.

         B.  Borrower will not, nor will it permit any of its  Subsidiaries  to,
file or  consent to the filing of any  consolidated  income tax return  with any
Person (other than Borrower or any of its Subsidiaries).

         5.4      Maintenance of Properties; Insurance.

         Borrower  will  maintain  or cause  to be  maintained  in good  repair,
working  order and  condition  (ordinary  wear and tear  excepted)  all material
properties used or useful in the business of Borrower and its  Subsidiaries  and
from  time to time  will  make or  cause  to be made  all  appropriate  repairs,
renewals  and  replacements  thereof.  Borrower  will  maintain  or  cause to be
maintained,  with  financially  sound and  reputable  insurers,  insurance  with
respect to its  properties  and business and the  properties and business of its
Subsidiaries  against loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar businesses
and  similarly  situated,  of such types and in such amounts as are  customarily
carried  under  similar   circumstances  by  such  other  corporations  and  may
self-insure to the extent, and only to the extent, reasonably prudent.

         5.5      Books and Records; Inspection and Audit Rights.

         Borrower will, and will cause each of its  Subsidiaries to, keep proper
books of record and account in which full,  true and correct entries are made of
all  dealings  and  transactions  in relation to its  business  and  activities.
Borrower  will,  and  will  cause  each  of  its  Subsidiaries  to,  permit  any
representatives   designated  by  Administrative   Agent  or  any  Lender,  upon
reasonable  prior notice,  to visit and inspect its  properties,  to examine and
make extracts from its books and records,  and to discuss its affairs,  finances
and  condition  with  its  officers  and  independent  accountants,  all at such
reasonable times and as often as reasonably requested.

         5.6      Compliance with Laws, etc.

         Borrower and its Subsidiaries  will comply with the requirements of all
applicable laws,  rules,  regulations and orders of any  governmental  authority
applicable  to it or its  property,  noncompliance  with which would  materially
adversely  affect the  business,  properties,  assets,  operations  or condition
(financial or otherwise) of Borrower and its Subsidiaries, taken as a whole.



<PAGE>


         5.7      Notices of Material Events.

         Borrower  will furnish to  Administrative  Agent and each Lender prompt
written notice of the following:

                  (i) the occurrence of any Event of Default or Potential  Event
         of Default;

                  (ii)  the  filing  or  commencement  of any  action,  suit  or
         proceeding  by or  before  any  arbitrator  or  Governmental  Authority
         against  or  affecting  Borrower  or any  Affiliate  thereof  that,  if
         adversely  determined,  could  reasonably  be  expected  to result in a
         Material Adverse Effect;

                  (iii) the occurrence of any Termination  Event that,  alone or
         together with any other  Termination  Events that have occurred,  could
         reasonably  be expected  to result in  liability  of  Borrower  and its
         Subsidiaries in an aggregate amount exceeding $15,000,000; and

                  (iv) any other  development that results in a Material Adverse
         Effect.

Each  notice  delivered  under this  subsection  5.7 shall be  accompanied  by a
statement of a financial  officer or other executive officer of Borrower setting
forth the  details of the event or  development  requiring  such  notice and any
action taken or proposed to be taken with respect thereto.

         5.8      Information Regarding Collateral.

         A. Borrower will furnish to Administrative  Agent prompt written notice
of any change (i) in any Loan Party's  corporate  name or in any trade name used
to  identify  it in the  conduct  of its  business  or in the  ownership  of its
properties, (ii) in the location of any Loan Party's chief executive office, its
principal  place of business,  any office in which it maintains books or records
relating to Collateral owned by it or any office or facility at which Collateral
owned by it is located  (including the  establishment  of any such new office or
facility),  (iii) in any Loan Party's identity or corporate structure or (iv) in
any Loan Party's Federal Taxpayer Identification Number. The Borrower agrees not
to effect or permit any change referred to in the preceding  sentence unless all
filings have been made under the Uniform  Commercial  Code or otherwise that are
required in order for  Administrative  Agent to continue at all times  following
such change to have a valid,  legal and perfected  security  interest in all the
Collateral.  Borrower also agrees promptly to notify Administrative Agent if any
material portion of the Collateral is damaged or destroyed.

         B. Each year,  at the time of delivery of annual  financial  statements
with respect to the preceding  fiscal year pursuant to clause (ii) of subsection
5.1, Borrower shall deliver to Administrative Agent an Officer's  Certificate of
Borrower (i) setting forth the information  required  pursuant to the Perfection
Certificate  or  confirming  that  there has been no change in such  information
since the date of the Perfection  Certificate delivered on the Effective Date or
the date of the most recent  certificate  delivered  pursuant to this subsection
and (ii)  certifying  that all  Uniform  Commercial  Code  financing  statements
(including  fixture  filings,  as  applicable)  or  other  appropriate  filings,
recordings  or   registrations,   including  all  refilings,   rerecordings  and
reregistrations,  containing a description of the Collateral  have been filed of
record  in each  governmental,  municipal  or other  appropriate  office in each
jurisdiction  identified pursuant to clause (i) above to the extent necessary to
protect and perfect the security interests under the Collateral  Agreement for a
period of not less than 18 months after the date of such certificate  (except as
noted  therein with respect to any  continuation  statements  to be filed within
such period).

         5.9      Casualty and Condemnation.



<PAGE>


         Borrower (a) will furnish to  Administrative  Agent and Lenders  prompt
written notice of any casualty or other insured  damage to any material  portion
of any Collateral or the commencement of any action or proceeding for the taking
of any Collateral or any part thereof or interest therein under power of eminent
domain or by condemnation or similar proceeding and (b) will ensure that the Net
Proceeds  of  any  such  event  (whether  in the  form  of  insurance  proceeds,
condemnation  awards or otherwise) are collected and applied in accordance  with
the applicable provisions of the Loan Documents.

         5.10     Additional Subsidiaries.

         If any additional  Subsidiary is formed or acquired after the Effective
Date,  Borrower will, within three Business Days after such Subsidiary is formed
or  acquired,  notify  Administrative  Agent and  Lenders  thereof and cause the
Collateral  and  Guarantee  Requirement  to be  satisfied  with  respect to such
Subsidiary  (if it is a  Subsidiary  Loan Party) and with  respect to any Equity
Interest in or Indebtedness of such Subsidiary owned by or on behalf of any Loan
Party.

         5.11     Further Assurances.

         A. Borrower will, and will cause each Subsidiary Loan Party to, execute
any and all further documents, financing statements, agreements and instruments,
and take all such  further  actions  (including  the  filing  and  recording  of
financing  statements,  fixture  filings,  mortgages,  deeds of trust  and other
documents),   which  may  be  required  under  any  applicable   law,  or  which
Administrative  Agent or Requisite Lenders may reasonably  request, to cause the
Collateral  and Guarantee  Requirement  to be and remain  satisfied,  all at the
expense of the Loan Parties.  Borrower also agrees to provide to  Administrative
Agent,  from time to time upon  request,  evidence  reasonably  satisfactory  to
Administrative  Agent as to the  perfection and priority of the Liens created or
intended to be created by the Security Documents.

         B. If any material assets  (including any real property or improvements
thereto or any interest therein) are acquired by Borrower or any Subsidiary Loan
Party after the Effective Date (other than assets constituting  Collateral under
the Security Agreement that become subject to the Lien of the Security Agreement
upon acquisition thereof), Borrower will notify Administrative Agent and Lenders
thereof,  and,  if  requested  by  Administrative  Agent or  Requisite  Lenders,
Borrower  will  cause  such  assets  to be  subjected  to a  Lien  securing  the
Obligations  and will take, and cause the Subsidiary  Loan Parties to take, such
actions as shall be necessary or reasonably requested by Administrative Agent to
grant and perfect such Liens,  including actions described in clause (A) of this
subsection, all at the expense of the Loan Parties.

         C.  Borrower  will  provide to  Administrative  Agent a letter from any
financial institution, bank, savings and loan association,  credit union or like
organization,  with which Borrower or any other Loan Party maintains accounts in
which more than $100,000 is deposited, acknowledging Collateral Agent's security
interest  in, on behalf  of the  Secured  Parties,  the cash  contained  in such
accounts.

         D. Within 45 days following the Effective  Date,  Administrative  Agent
shall  have  received  (i)  counterparts  of a  Mortgage  with  respect  to each
Specified  Mortgaged Property duly executed and delivered by the record owner of
such Specified Mortgaged Property,  (ii) a policy or policies of title insurance
issued by a nationally  recognized title insurance  company insuring the Lien of
each such  Mortgage as a valid first Lien on the  Specified  Mortgaged  Property
described  therein,  free of any other Liens  except as  expressly  permitted by
subsection 6. 2, together with such endorsements, coinsurance and reinsurance as
Administrative  Agent or the  Requisite  Lenders  may  request,  and (iii)  such
abstracts,  appraisals,  legal  opinions and other  documents as  Administrative
Agent or  Requisite  Lenders may  reasonably  request  with  respect to any such
Mortgage or Specified Mortgaged Property.

         5.12     Environmental Events.

         A. Borrower shall promptly give to Lenders notice of any  Environmental
Event that relates to any Borrower Property, if such Environmental Event (or the
event, fact,  violation,  inquiry,  proceeding,  investigation,  other action or
release  relating to such  Environmental  Event) could reasonably be expected to
have a materially  adverse  effect on the condition  (financial  or  otherwise),
business or operations of Borrower and its Subsidiaries, taken as a whole.



<PAGE>


         B. In the event of the  presence  at, on,  above or under any  Borrower
Property  of any  Hazardous  Substance  that is in  violation  of or that  could
reasonably be expected to require  remediation or result in liability  under any
applicable  Environmental  or Asbestos  Law,  which  violation,  remediation  or
liability  could  reasonably be expected to have a materially  adverse effect on
the condition  (financial or otherwise),  business or operations of Borrower and
its  Subsidiaries,  taken  as a whole,  Borrower  shall  expeditiously  take all
necessary steps, to the extent required by applicable Environmental and Asbestos
Laws, to correct any such  violation or to abate the  conditions  giving rise to
such liability in compliance with applicable Environmental and Asbestos Laws and
to mitigate any attendant health and environmental risks.

         5.13     Sales of Receivables.

         Borrower shall treat,  and cause  Receivables  Subsidiary to treat, the
sale of receivables to Receivables  Subsidiary  under the  Receivables  Purchase
Program as a sale for accounting purposes.

Section 6         NEGATIVE COVENANTS OF BORROWER

         Borrower covenants and agrees that, on and after the Effective Date, so
long as any of the  Commitments  shall be in effect and until payment in full of
all principal of and interest on Loans and the cancellation or expiration of all
Letters of Credit and the  reimbursement in full of all amounts drawn thereunder
and all fees payable  hereunder have been paid in full, unless Requisite Lenders
shall otherwise give prior written consent,  Borrower will perform all covenants
in this Section 6.

         6.1      Indebtedness; Certain Equity Securities.

         A. Borrower will not, and will not permit any  Subsidiary  to,  create,
incur, assume or permit to exist any Indebtedness, except:

                      (i)  Indebtedness created under the Loan Documents;

                  (ii)  Indebtedness  incurred  under the  Receivables  Purchase
         Program and the Foreign Factoring Program;

                  (iii) Indebtedness incurred pursuant to the Existing Notes and
         the Notes Indenture;

                     (iv) Indebtedness existing on the date hereof and set forth
         in Schedule C and  extensions,  renewals and  replacements  of any such
         Indebtedness  that do not increase  the  outstanding  principal  amount
         thereof or result in an earlier  maturity  date or  decreased  weighted
         average life thereof;

                      (v)  Indebtedness of Borrower to any Subsidiary and of any
         Subsidiary  to  Borrower  or  any  other   Subsidiary;   provided  that
         Indebtedness  of any Subsidiary that is not a Loan Party to Borrower or
         any Subsidiary Loan Party shall be subject to subsection 6.4(f);

                     (vi)   Guarantees  by  Borrower  of   Indebtedness  of  any
         Subsidiary  and by any  Subsidiary of  Indebtedness  of Borrower or any
         other   Subsidiary;   provided  that  Guarantees  by  Borrower  or  any
         Subsidiary  Loan Party of  Indebtedness of any Subsidiary that is not a
         Loan Party shall be subject to subsection 6.4(g);

                  (vii)   Indebtedness  of  Borrower  under  any  Interest  Rate
         Protection Agreement permitted under subsection 6.6;



<PAGE>


                   (viii)  purchase  money  Indebtedness  of  Borrower  and  its
         Subsidiary  Loan Parties  incurred solely to finance the payment of all
         or part of the purchase price of any equipment,  real property or other
         fixed  assets  acquired in the ordinary  course of business,  including
         Indebtedness in respect of Capital Lease Obligations, and any renewals,
         refinancings or replacements thereof (subject to the limitations on the
         principal  amount  thereof set forth in this clause  (viii));  provided
         that (A) such Indebtedness is incurred prior to or within 90 days after
         such  acquisition or the completion of such renewals,  refinancings  or
         replacements and (B) such Indebtedness  shall not exceed $50,000,000 in
         aggregate principal amount outstanding at any time; and

                     (ix) other unsecured Indebtedness in an aggregate principal
         amount not exceeding $10,000,000 at any time outstanding; provided that
         the aggregate  principal  amount of Indebtedness of Borrower's  Foreign
         Subsidiaries  permitted by this clause (ix) shall not exceed $5,000,000
         at any time outstanding.

         B. Borrower will not, and will not permit any  Subsidiary to, issue any
preferred stock or other preferred Equity Interests,  except (i) pursuant to the
Rights Plan, (ii) Qualified Borrower PIK Preferred Stock, and (iii) Intercompany
Preferred Stock.

         6.2      Liens.

         Borrower  will not,  and will not permit  any  Subsidiary  to,  create,
incur,  assume or permit to exist any Lien on any property or asset now owned or
hereafter acquired by it, except:

                  (a) Liens created under the Loan Documents;

                  (b) Permitted Encumbrances;

                  (c) Liens in respect of the Receivables  Purchase  Program and
         the Foreign Factoring Program;

                  (d) any  Lien on any  property  or asset  of  Borrower  or any
         Subsidiary  existing  on the date  hereof and set forth in  Schedule D;
         provided  that (i) such Lien shall not apply to any other  property  or
         asset of Borrower  or any  Subsidiary  and (ii) such Lien shall  secure
         only  those  obligations  which  it  secures  on the  date  hereof  and
         extensions,  renewals and replacements thereof that do not increase the
         outstanding principal amount thereof;

                  (e) any Lien  existing  on any  property or asset prior to the
         acquisition  thereof by Borrower or any  Subsidiary  or existing on any
         property or asset of any Person  that  becomes a  Subsidiary  after the
         date  hereof  prior to the  time  such  Person  becomes  a  Subsidiary;
         provided  that (i) such Lien is not created in  contemplation  of or in
         connection with such  acquisition or such Person becoming a Subsidiary,
         as the case  may be,  (ii)  such  Lien  shall  not  apply to any  other
         property or assets of Borrower  or any  Subsidiary  and (iii) such Lien
         shall  secure  only those  obligations  which it secures on the date of
         such  acquisition or the date such Person becomes a Subsidiary,  as the
         case may be and extensions,  renewals and replacements  thereof that do
         not increase the outstanding principal amount thereof;

                  (f) Liens on fixed or capital assets acquired,  constructed or
         improved by Borrower or any Subsidiary; provided that (i) such security
         interests secure Indebtedness  permitted by clause (viii) of subsection
         6.1A (including renewals,  refinancings or replacements thereof) , (ii)
         such  security  interests  and the  Indebtedness  secured  thereby  are
         incurred  prior to or  within 90 days  after  such  acquisition  or the
         completion of such construction or improvement,  (iii) the Indebtedness
         secured thereby does not exceed the cost of acquiring,  constructing or
         improving such fixed or capital assets and (iv) such security interests
         shall not  apply to any other  property  or assets of  Borrower  or any
         Subsidiary;

                  (g) other Liens securing liabilities permitted hereunder in an
         aggregate amount not to exceed $10,000,000 at any time outstanding.



<PAGE>


provided that,  notwithstanding  the  foregoing,  no Liens shall be permitted in
respect of Borrower's or any Subsidiary's  intellectual property,  including any
Liens  on  the  registered  or  unregistered   trademarks  of  Borrower  or  any
Subsidiary, other than Liens under the Security Agreement and Liens described in
clause (xiii) of the definition of the term Permitted Encumbrance.

         6.3      Fundamental Changes.

         A. Borrower will not, and will not permit any Subsidiary to, merge into
or consolidate  with any other Person,  or permit any other Person to merge into
or  consolidate  with it, or liquidate or dissolve,  except that, if at the time
thereof and  immediately  after giving effect  thereto no Event of Default shall
have occurred and be continuing  (i) any Subsidiary may merge into Borrower in a
transaction in which Borrower is the surviving corporation,  (ii) any Subsidiary
may merge into any Subsidiary in a transaction in which the surviving  entity is
a Subsidiary  and (if any party to such merger is a Subsidiary  Loan Party) is a
Subsidiary  Loan Party and (iii) any  Subsidiary  (other than a Subsidiary  Loan
Party) may liquidate or dissolve if Borrower  determines in good faith that such
liquidation  or  dissolution  is in the best  interests  of Borrower  and is not
materially  disadvantageous  to the  Lenders;  provided  that  any  such  merger
involving a Person that is not a Subsidiary  indirectly or directly wholly-owned
by Borrower  immediately prior to such merger shall not be permitted unless also
permitted by subsection 6.4.

         B. Borrower will not, and will not permit any of its  Subsidiaries  to,
engage to any material  extent in any business other than businesses of the type
conducted  by Borrower  and its  Subsidiaries  on the date of  execution of this
Agreement and businesses reasonably related thereto,  including the licensing of
intellectual  property and the purchase and resale of products similar in nature
to those made by Borrower and its Subsidiaries.

         6.4      Investments, Loans, Advances, Guarantees and Acquisitions.

         Borrower  will not,  and will not  permit any of its  Subsidiaries  to,
purchase, hold or acquire (including pursuant to any merger with any Person that
was not a wholly owned  Subsidiary prior to such merger) any Equity Interests in
or evidences of indebtedness or other securities (including any option,  warrant
or other right to acquire any of the  foregoing) of, make or permit to exist any
loans or advances to,  Guarantee any  obligations of, or make or permit to exist
any  investment  or any other  interest  in, any other  Person,  or  purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except:

                  (a) Permitted Investments;

                  (b) investments,  loans,  advances and Guarantees  existing on
         the date hereof and set forth on Schedule E;

                  (c) (i)  investments  by Borrower or any Subsidiary in (x) the
         capital stock of the Receivables  Subsidiary and (y) other interests in
         the  Receivables  Subsidiary,  in each case to the extent as reasonably
         required  by the terms of the  Receivables  Purchase  Program  and (ii)
         other transactions pursuant to the Receivables Purchase Program;



<PAGE>


                  (d)  investments  by Borrower and its  Subsidiaries  in Equity
         Interests in their respective Subsidiaries that exist immediately prior
         to the  applicable  transaction;  provided  that  (i) any  such  Equity
         Interests held by a Loan Party shall be pledged  pursuant to the Pledge
         Agreement  (subject to the limitations  applicable to common stock of a
         Foreign  Subsidiary)  and (ii) the aggregate  amount of  investments by
         Loan  Parties  in,  and loans and  advances  by Loan  Parties  to,  and
         Guarantees by Loan Parties of Indebtedness  of,  Subsidiaries  that are
         not Loan Parties (excluding all such investments,  loans,  advances and
         Guarantees  existing  on the  Effective  Date)  shall  not  exceed  (A)
         $15,000,000  made or incurred during the period from the Effective Date
         to the date that is one year after the Effective  Date, (B) $15,000,000
         made  or  incurred  during  the  one-year  period  thereafter  and  (C)
         $7,500,000  made or incurred  during the six-month  period  thereafter,
         with such  amounts to be pro rated for any period that is less than the
         periods  specified in (A), (B) or (C) above;  provided further that the
         aggregate  amount  of  investments,   loans,  advances  and  Guarantees
         pursuant  to this clause (d) shall not exceed  $40,000,000  at any time
         outstanding  for the period  from the  Effective  Date to the  Maturity
         Date;

                  (e) investments  consisting of non-cash consideration received
         in respect of sales, transfers,  leases or other dispositions permitted
         by subsection 6.5;

                  (f)  investments  consisting  of  loans  or  advances  made by
         Borrower to any  Subsidiary  and made by any  Subsidiary to Borrower or
         any other  Subsidiary;  provided  that (i) any such loans and  advances
         made by a Loan Party shall be evidenced  by a  promissory  note pledged
         pursuant to the Pledge  Agreement and (ii) the amount of such loans and
         advances made by Loan Parties to Subsidiaries that are not Loan Parties
         shall be subject to the limitation set forth in clause (d) above;

                  (g)   investments   consisting  of   Guarantees   constituting
         Indebtedness  permitted by subsection 6.1;  provided that the aggregate
         principal  amount of  Indebtedness  of  Subsidiaries  that are not Loan
         Parties  that is  Guaranteed  by any Loan Party shall be subject to the
         limitation set forth in clause (d) above;

                  (h) investments  received in connection with the bankruptcy or
         reorganization  of, or settlement  of delinquent  accounts and disputes
         with,  customers and suppliers,  in each case in the ordinary course of
         business;

                  (i)  investments  made  by,  and  other   transactions   with,
         Insuratex in the ordinary course of business and in a manner consistent
         with past practices;

                  (j)  investments  in and loans and advances to (i) Nano-Tex in
         an aggregate amount,  on an annual basis, not exceeding  $5,000,000 and
         (ii) other  Joint  Ventures in an  aggregate  amount,  on a  cumulative
         basis, not exceeding $7,500,000;

                  (k)  in  addition  to  other  investments  permitted  by  this
         subsection,   investments   in  an  aggregate   amount  not   exceeding
         $10,000,000;

                  (l)  investments  consisting  of  purchases  and  acquisitions
         (including  leases and  licenses) of  inventory,  supplies,  materials,
         services, intellectual property and equipment in the ordinary course of
         business;

                  (m) investments  consisting of loans and advances to employees
         not  exceeding  $1,000,000  in the  aggregate,  other  than  loans  and
         advances to employees for  reasonable  travel,  relocation and business
         expenses in the ordinary course of business, extensions of trade credit
         in the ordinary course of business,  and prepaid  expenses  incurred in
         the ordinary course of business;

                  (n) investments of Borrower under any Interest Rate Protection
         Agreement permitted under subsection 6.6;

                  (o) accounts  receivable  of the Loan Parties  incurred in the
         ordinary course of business;

                  (p) investments  consisting of permitted Capital  Expenditures
         permitted under subsection 6.16; and

                  (q) investments  constituting sale and lease back transactions
         permitted under subsection 6.10.



<PAGE>


         6.5      Asset Sales.

         Borrower  will not,  and will not  permit any of its  Subsidiaries  to,
sell,  transfer,  lease or otherwise dispose of any asset,  including any Equity
Interest owned by it, nor will Borrower permit any of its  Subsidiaries to issue
any additional Equity Interest in such Subsidiary, except:

                  (a)  sales  of  inventory,   used  or  surplus  equipment  and
         Permitted Investments in the ordinary course of business;

                  (b) sales of accounts  receivables pursuant to the Receivables
         Purchase Program and the Foreign Factoring Program;

                  (c) the Floor Accents Sale;

                  (d)  sales,  transfers  and  dispositions  to  Borrower  or  a
         Subsidiary;  provided  that any such sales,  transfers or  dispositions
         involving  a  Subsidiary  that  is not a Loan  Party  shall  be made in
         compliance with subsection 6.8;

                  (e) sales,  transfers and other  dispositions of assets (other
         than Equity  Interests in a  Subsidiary)  that are not permitted by any
         other  clause of this  subsection;  provided  that the  aggregate  fair
         market value of all assets sold,  transferred or otherwise  disposed of
         in reliance upon this clause (e) shall not exceed (i)  $25,000,000  for
         the period from the  Effective  Date to the date that is one year after
         the Effective Date, (ii) $25,000,000 for the one-year period thereafter
         and (iii)  $12,500,000 for the six-month period  thereafter,  with such
         amounts  to be pro rated for any period  that is less than the  periods
         specified in (i), (ii) or (iii) above;

                  (f)  transfers  and  dispositions   constituting   investments
         permitted by subsection 6.4;

                  (g) licenses or sublicenses of intellectual property; and

                  (h) sale and leaseback transactions permitted under subsection
         6.10;

provided that (i) all sales, transfers,  leases and other dispositions permitted
hereby  (other than those  permitted by clause (d) above) shall be made for fair
value and (ii) at least 80% of the consideration in respect of sales, transfers,
leases and other dispositions  pursuant to clauses (c) and (e) above shall be in
the form of cash.

         6.6      Interest Rate Protection.

         Borrower  will not,  and will not  permit any of its  Subsidiaries  to,
enter into any Interest  Rate  Protection  Agreement,  other than  Interest Rate
Protection  Agreements  entered into in the ordinary course of business to hedge
or mitigate  risks to which Borrower or any Subsidiary is exposed in the conduct
of its business or the management of its assets or liabilities.

         6.7      Restricted Payments; Certain Payments of Indebtedness.

         A. Borrower will not, and will not permit any Subsidiary to, declare or
make, or agree to pay or make,  directly or indirectly,  any Restricted Payment,
or incur any obligation (contingent or otherwise) to do so, except:

                  (i) Borrower may declare and pay dividends with respect to its
         capital stock payable solely in additional shares of its common stock;



<PAGE>


                  (ii)  Borrower  may make  Restricted  Payments  not  exceeding
         $3,000,000  during any fiscal year,  pursuant to and in accordance with
         stock option plans or other benefit  plans for  management or employees
         of Borrower and its Subsidiaries; and

                  (iii)  Subsidiaries may declare and pay dividends ratably with
respect to their capital stock.

         B.  Borrower will not, and will not permit any  Subsidiary  to, make or
agree to pay or make, directly or indirectly,  any payment or other distribution
(whether in cash, securities or other property) of or in respect of principal of
or interest on any Indebtedness,  or any payment or other distribution  (whether
in cash,  securities or other  property),  including any sinking fund or similar
deposit,  on  account  of the  purchase,  redemption,  retirement,  acquisition,
cancellation or termination of any Indebtedness, except:

                  (i) payment of Indebtedness created under the Loan Documents;

                  (ii) payment of  regularly  scheduled  interest and  principal
         payments and other  payment  obligations  as and when due or during any
         applicable cure period in respect of any Indebtedness;

                  (iii)  refinancings of Indebtedness to the extent permitted by
         subsection 6.1;

                  (iv)  payment of secured  Indebtedness  that  becomes due as a
         result of the  voluntary  sale or  transfer  of the  property or assets
         securing such Indebtedness; and

                  (v) payment of any  Indebtedness to be paid in connection with
         the Restatement Transactions.

         6.8      Transactions with Affiliates.

         Borrower will not, and will not permit any Subsidiary  to, sell,  lease
or otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire  any  property  or  assets  from,  or  otherwise  engage  in  any  other
transactions  with, any of its Affiliates,  except (a) transactions  that are at
prices  and on terms and  conditions  not less  favorable  to  Borrower  or such
Subsidiary than could be obtained on an arm's-length  basis from unrelated third
parties,  (b)  transactions  between or among Borrower and the  Subsidiary  Loan
Parties not involving any other Affiliate,  (c) any Restricted Payment permitted
by subsection 6.7 and (d)  transactions  pursuant to agreements in effect on the
Effective Date and listed on Schedule I (provided that this clause (d) shall not
apply to any extension,  or renewal of, or any amendment or modification of such
agreements).

         6.9      Restrictive Agreements.

         Borrower will not, and will not permit any Subsidiary  to,  directly or
indirectly,  enter  into,  incur or  permit  to  exist  any  agreement  or other
arrangement  that  prohibits,  restricts or imposes any  condition  upon (a) the
ability of Borrower or any  Subsidiary  to create,  incur or permit to exist any
Lien upon any of its property or assets, or (b) the ability of any Subsidiary to
pay dividends or other  distributions  with respect to any shares of its capital
stock or to make or repay loans or advances to Borrower or any other  Subsidiary
or to Guarantee Indebtedness of Borrower or any other Subsidiary;  provided that
(i) the foregoing shall not apply to restrictions and conditions  imposed by law
or by any Loan Document,  (ii) the foregoing shall not apply to restrictions and
conditions  existing  on the  date  hereof  identified  on  Schedule  G (and any
extension or renewal of, or any  amendment or  modification  not  expanding  the
scope of, any such  restriction  or  condition),  (iii) the foregoing  shall not
apply to customary  restrictions and conditions contained in agreements relating
to the sale of a Subsidiary  pending such sale,  provided such  restrictions and
conditions  apply  only to the  Subsidiary  that is to be sold and such  sale is
permitted  hereunder,  (iv)  clause  (a) of the  foregoing  shall  not  apply to
restrictions  or  conditions  imposed  by any  agreement  relating  to any  Lien
permitted by this  Agreement  but only to the extent that such  restrictions  or
conditions  apply only to the property or assets to which such Lien attaches and
(v) clause  (a) of the  foregoing  shall not apply to  customary  provisions  in
leases and other contracts restricting the assignment thereof.



<PAGE>


         6.10     Sale and Lease-Back Transactions.

         Borrower will not, nor will it permit any Subsidiary to, enter into any
arrangement,  directly or  indirectly,  with any Person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter  acquired,  and thereafter rent or lease such property or
other  property  that it intends to use for  substantially  the same  purpose or
purposes as the property  sold or  transferred,  except for any such sale of any
fixed or capital  assets  that is made for cash  consideration  in an amount not
less than the cost of such fixed or capital asset and is consummated  within 180
days  after  the  Borrower  or  such   Subsidiary   acquires  or  completes  the
construction of such fixed or capital asset;  provided that no such  transaction
shall be permitted if the proceeds  received by Borrower or any Subsidiary  from
such  transaction,  when  aggregated  with  the  proceeds  of  each  other  such
transaction  previously  consummated  pursuant to this  subsection  6.10,  would
exceed $10,000,000.

         6.11     Amendment of Material Documents.

         Borrower will not, and will not permit any Subsidiary to, amend, modify
or waive any of its rights under (a) its certificate of  incorporation,  by-laws
or other organizational documents, (b) the Receivables Purchase Program, (c) any
other Indebtedness having an aggregate principal amount in excess of $15,000,000
and (d) any agreements governing Joint Ventures, in each case to the extent that
such  amendment,  modification  or waiver is reasonably  likely to be materially
adverse to the Lenders.

         6.12     Interest Expense Coverage Ratio.

         Borrower  will not permit the ratio of (a)  Consolidated  EBITDA to (b)
Consolidated  Cash  Interest  Expense,  in each  case as of the  last day of any
fiscal quarter during any period set forth below,  to be less than the ratio set
forth below opposite such period:

                      Period                                  Ratio

Effective Date to September 28, 2001                      1.35 to 1.00
September 29, 2001 to September 27, 2002                  1.75 to 1.00
September 28, 2002 to Maturity Date                       2.00 to 1.00

         6.13     Leverage Ratio.

         Borrower  will not permit the Leverage  Ratio as of the last day of any
fiscal  quarter  during any period set forth below to exceed the ratio set forth
below opposite such period:

                      Period                                  Ratio

Effective Date to March 31, 2001                          8.75 to 1.00
April 1, 2001 to September 28, 2001                       8.50 to 1.00
September 29, 2001 to September 27, 2002                  6.00 to 1.00
September 28, 2002 to Maturity Date                       5.00 to 1.00



<PAGE>


         6.14     Senior Secured Leverage Ratio.

         Borrower will not permit the Senior  Secured  Leverage  Ratio as of the
last day of any fiscal  quarter  during any period set forth below to exceed the
ratio set forth below opposite such period:

                      Period                                  Ratio

Effective Date to March 31, 2001                          6.00 to 1.00
April 1, 2001 to September 28, 2001                       5.75 to 1.00
September 29, 2001 to September 27, 2002                  4.00 to 1.00
September 28, 2002 to Maturity Date                       3.25 to 1.00

         6.15     Net Worth.

         Borrower will not permit  Consolidated  Net Worth as of the last day of
any  fiscal  quarter  to be less than the sum of (a)  $85,000,000,  (b) 50.0% of
Consolidated  Net Income for each fiscal quarter with positive  Consolidated Net
Income ending on or after the  Effective  Date and on or prior to the date as to
which  compliance  with this  subsection  6.15 is being  determined  and (c) the
amount of any increase in Consolidated Net Worth attributable to the issuance by
Borrower or any Subsidiary of its capital stock, or any capital  contribution to
Borrower, after the Effective Date.

         6.16.    Capital Expenditures.

         A.  Borrower   will  not  permit  the   aggregate   amount  of  Capital
Expenditures  (i) during the term of this  Agreement to exceed  $80,000,000  and
(ii) for any fiscal  year of  Borrower  set forth below to exceed the amount set
forth in the table below opposite such date:

               Date of Fiscal Year End                      Amount

                 September 29, 2001                       $35,000,000
                 September 28, 2002                       $35,000,000

         B. Notwithstanding the foregoing, Borrower may in respect of the fiscal
year ending on September 30, 2002, and each fiscal year thereafter, increase the
amount of Capital  Expenditures  permitted  to be made  during  such fiscal year
pursuant to  subsection  6.16A by an amount equal to the total unused  amount of
permitted  Capital  Expenditures  for  the  immediately  preceding  fiscal  year
(without  giving  effect  to  the  amount  of  any  unused   permitted   Capital
Expenditures that were carried forward to such preceding fiscal year).

         6.17     Consolidated Lease Expense.

         Borrower will not permit Consolidated Lease Expense for any fiscal year
of  Borrower  to exceed  $25,000,000,  with such  amount to be pro rated for any
period that is less than one year.

Section 7         EVENTS OF DEFAULT

         If any of the  following  conditions  or events  ("Events of  Default")
shall occur and be continuing:

         7.1      Failure to Make Payments When Due.

         Failure  to  pay  any  installment  of  principal  of any  Loan  or any
reimbursement  obligation  in  respect  of any  payment  made by  Fronting  Bank
pursuant  to a  Letter  of  Credit  when and as the same  shall  become  due and
payable, whether at stated maturity, by acceleration, by notice of prepayment or
otherwise;  or failure to pay any  interest  on any Loan or any other fee or any
other amount payable under this Agreement or any other Loan Document within five
days after the date due; or


<PAGE>


         7.2      Default in Other Agreements.

         (a)  Failure  of  Borrower  or  any  of its  Subsidiaries  (other  than
Receivables  Subsidiary)  to pay when due any  principal  or interest on (i) any
Indebtedness (other than Indebtedness  consisting of Contingent  Obligations and
Indebtedness  referred to in subsection  7.1) or items of  Indebtedness  with an
aggregate  principal  amount  of  $15,000,000  or more or  (ii)  any  Contingent
Obligation in an amount of or Contingent Obligations with an aggregate principal
amount of $15,000,000 or more;

         (b) Any breach or default of Borrower or any of its Subsidiaries (other
than Receivables  Subsidiary) with respect to any other term of (i) any evidence
of  any  Indebtedness   (other  than   Indebtedness   consisting  of  Contingent
Obligations)  or items of  Indebtedness  with an aggregate  principal  amount of
$15,000,000 or more or any Contingent Obligation or Contingent  Obligations with
an  aggregate  principal  amount  of  $15,000,000  or  more;  or (ii)  any  loan
agreement,  mortgage,  indenture or other agreement  relating to Indebtedness or
Contingent  Obligations  described in  subclause  (i) of this clause (b), if the
effect of such default or breach is to cause, or to permit the holder or holders
of that  Indebtedness  or Contingent  Obligation (or a trustee on behalf of such
holder or holders) then to cause that  Indebtedness or Contingent  Obligation to
become or be declared due prior to its stated  maturity (or the stated  maturity
of any underlying obligation, as the case may be); provided that such default or
breach  has not been  waived by such  holder or  holders or trustee on behalf of
such holder or holders or such default or breach has not been  remedied or cured
within the time period  permitted,  if any, by the  instruments  evidencing  the
Indebtedness or Contingent Obligation; or

         (c) (i) An Amortization Event (as defined in the documents establishing
the Receivables  Purchase Program) shall have occurred and be continuing or (ii)
any other default under the Receivables Purchase Program shall have occurred and
be continuing, if the effect of such default is to permit the termination of the
Receivables Purchase Program without the agreement of the Receivables Subsidiary
to such termination; or

         7.3      Breach of Certain Covenants.

         Failure of  Borrower  to perform or comply  with any term or  condition
contained  in  subsections  2.7,  2.8,  5.2 (with  respect to the  existence  of
Borrower), 5.7, or Section 6 of this Agreement; or

         7.4      Breach of Warranty.

         Any  representation  or warranty made or deemed made by or on behalf of
Borrower or any  Subsidiary  in or in  connection  with any Loan Document or any
amendment or modification  thereof or waiver thereunder or in any certificate at
any time  given by such  Person in  writing  pursuant  hereto or  thereto  or in
connection  herewith or therewith shall be false in any material  respect on the
date as of which made; or

         7.5      Other Defaults Under Agreement or Loan Documents.

         Borrower  shall default in the  performance  of or compliance  with any
term contained in this  Agreement or the other Loan Documents  (other than those
referred to above in  subsections  7.1, 7.2 or 7.3) and such  default  shall not
have  been  remedied  or waived  within 30 days  after  receipt  of notice  from
Administrative Agent or any Lender of such default; or

         7.6      Involuntary Bankruptcy; Appointment of Receiver, etc.



<PAGE>


         (A) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Borrower or any Subsidiary in an involuntary case
under the  Bankruptcy  Code or any  applicable  bankruptcy,  insolvency or other
similar law now or hereafter in effect,  which decree or order is not stayed; or
any other similar relief shall be granted under any applicable  federal or state
law; or (B) an involuntary case is commenced  against Borrower or any Subsidiary
under  any  applicable  bankruptcy,  insolvency  or  other  similar  law  now or
hereafter in effect; or a decree or order of a court having  jurisdiction in the
premises for the appointment of a receiver, liquidator,  sequestrator,  trustee,
custodian  or  other  officer   having  similar  powers  over  Borrower  or  any
Subsidiary,  or over all or a substantial part of its property,  shall have been
entered;  or an interim receiver,  trustee or other custodian of Borrower or any
Subsidiary  for all or a  substantial  part of the  property  of Borrower or any
Subsidiary is involuntarily appointed; or a warrant of attachment,  execution or
similar  process is issued  against  any  substantial  part of the  property  of
Borrower or any  Subsidiary,  and the  continuance of any such events in subpart
(B) for 60 days unless dismissed, bonded or discharged; or

         7.7      Voluntary Bankruptcy, Appointment of Receiver, etc.

         Borrower or any Subsidiary  shall have an order for relief entered with
respect to it or  commence a  voluntary  case under the  Bankruptcy  Code or any
applicable  bankruptcy,  insolvency  or other  similar law now or  hereafter  in
effect,  or shall consent to the entry of an order for relief in an  involuntary
case, or to the conversion of an involuntary case to a voluntary case, under any
such law,  or shall  consent to the  appointment  of or taking  possession  by a
receiver,  trustee  or  other  custodian  for all or a  substantial  part of its
property;  the making by Borrower or any  Subsidiary of any  assignment  for the
benefit of creditors; or the inability or failure of Borrower or any Subsidiary,
or the  admission by Borrower or any  Subsidiary  in writing of its inability to
pay its debts as such debts become due; or the Board of Directors of Borrower or
any  Subsidiary  (or any committee  thereof)  adopts any resolution or otherwise
authorizes action to approve any of the foregoing; or

         7.8      Ability to Pay Debts.

         Borrower or any Subsidiary  shall become  unable,  admit in writing its
inability, or fail generally to pay its debts as they become due; or

         7.9      Judgments and Attachments.

         Any money  judgments,  writs or  warrants  of  attachment,  or  similar
processes involving an aggregate amount in excess of $15,000,000 (not adequately
covered  by  insurance  as to  which  the  insurance  company  has  acknowledged
coverage) shall be entered or filed against Borrower or any Subsidiary or any of
their respective assets and shall remain  undischarged,  unvacated,  unbonded or
unstayed  for a period of 30 days or in any event later than three days prior to
the date of any proposed sale thereunder, or

         7.10     Dissolution.

         Any order,  judgment or decree shall be entered against Borrower or any
Subsidiary  decreeing the dissolution or split up of Borrower or that Subsidiary
and such order shall remain  undischarged  or unstayed for a period in excess of
30 days; or

         7.11     Liens.

         Any Lien  purported  to be created  under any Security  Document  shall
cease to be,  or shall be  asserted  by any Loan  Party  not to be, a valid  and
perfected Lien on any Collateral having a fair value of greater than $3,000,000,
with the priority required by the applicable Security Document,  except (i) as a
result  of the sale or  other  disposition  of the  applicable  Collateral  in a
transaction  permitted  under  the  Loan  Documents  or  (ii)  as  a  result  of
Administrative Agent's failure to maintain possession of any stock certificates,
promissory  notes  or  other  instruments  delivered  to  it  under  the  Pledge
Agreement; or

         7.12     Guarantees.

         Any Loan  Party,  or any Person  acting with  authority  on its behalf,
shall  deny or  disaffirm  such Loan  Party's  obligations  under the  Guarantee
Agreement; or



<PAGE>


         7.13     Unfunded ERISA Liabilities.

                  (i) A notice of intent to terminate  any Pension Plan shall be
         filed under Section 4041 of ERISA; or

                  (ii) a trustee  shall be  appointed by an  appropriate  United
         States district court to administer any Pension Plan; or

                  (iii)  the  Pension  Benefit  Guaranty   Corporation  (or  any
         successor thereto) shall institute proceedings to terminate any Pension
         Plan or to appoint a trustee to administer any Pension Plan; or

                  (iv) Borrower or any of its ERISA  Affiliates  shall  withdraw
         (under Section 4063 of ERISA) from a Pension Plan; or

                  (v) any other  Termination  Event shall occur with  respect to
         any Pension Plan; or

                  (vi) a failure to make a required installment or other payment
         (within the meaning of Section  412(n)(1) of the Internal Revenue Code)
         shall occur with respect to any Pension Plan;

and the Requisite Lenders shall determine in good faith after  consultation with
Borrower that as of the date thereof or any subsequent  date, the sum of each of
Borrower's and its ERISA  Affiliates'  various  liabilities (such liabilities to
include,  without  limitation,  any  liability to the Pension  Benefit  Guaranty
Corporation  (or any  successor  thereto),  to any Pension  Plan or to any other
party under Sections 4062,  4063 or 4064 of ERISA or any other  provision of law
and to be  calculated  after  giving  effect  to the tax  consequences  thereof)
resulting  from or  otherwise  associated  with such  event or events  listed in
subclauses (i)-(vi) above could reasonably be expected to exceed $15,000,000; or

         7.14     Liability Under Multiemployer Plans.

         (a)  Borrower or any of its  respective  ERISA  Affiliates  as employer
under a multiemployer Plan shall have made a complete or partial withdrawal from
such  Multiemployer  Plan and the plan sponsor of such  Multiemployer Plan shall
have  notified  such  withdrawing  employer  that such  employer  has incurred a
withdrawal  liability  requiring annual payments in an amount individually or in
the aggregate exceeding $3,000,000;  unless (x) prior to the time any payment of
such withdrawal liability is due in accordance with Section 4219(c)(2) of ERISA,
the plan sponsor agrees in writing that the correct amount of the annual payment
is less than $3,000,000, or (y) prior to the time any payment of such withdrawal
liability is due in  accordance  with Section  4219(c)(2)  of ERISA,  a court of
competent  jurisdiction  has enjoined and continues to enjoin the  collection of
such  payment,  or (z) Section  4219 of ERISA has been  amended to provide  that
notification that such withdrawing  employer has incurred a withdrawal liability
would  not,  in the  ordinary  course  or with the  lapse of time,  require  the
payment;  provided that in the event of such an  amendment,  an Event of Default
shall be deemed to occur when any payment of such withdrawal  liability  becomes
due or would, in the ordinary course or with the lapse of time, become due; or

         (b) Borrower or any of its ERISA Affiliates shall have been notified by
the  sponsor  of a  Multiemployer  Plan  that  such  Multiemployer  Plan  is  in
reorganization or is being terminated,  within the meaning of Title IV of ERISA,
if as a result  of such  reorganization  or  termination  the  aggregate  annual
contributions  of Borrower  and its ERISA  Affiliates  with respect to such plan
will exceed $3,000,000; or

         7.15     Change in Control.

         (i) Any  person  or group  (within  the  meaning  of Rule  13d-5 of the
Securities and Exchange Commission as in effect on the date hereof) shall become
the owner,  beneficially or of record,  of shares  representing more than 50% of
the aggregate  ordinary  voting power  represented by the issued and outstanding
capital stock of Borrower; or


<PAGE>


         (ii) Any  person or group  (within  the  meaning  of Rule  13d-5 of the
Securities  and  Exchange  Commission  as in effect on the date  hereof)  shall,
pursuant to one or more  transactions  for which the prior approval of the board
of directors of Borrower has been obtained, become the owner, beneficially or of
record, of shares  representing  more than 30% of the aggregate  ordinary voting
power represented by the issued and outstanding capital stock of Borrower; or

         (iii) Any  person or group  (within  the  meaning  of Rule 13d-5 of the
Securities  and Exchange  Commission  as in effect on the date hereof) shall (a)
other than pursuant to one or more  transactions for which the prior approval of
the  board of  directors  of  Borrower  has been  obtained,  become  the  owner,
beneficially or of record, of shares representing more than 30% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of
Borrower  (the date on which  Borrower  becomes  aware that such person or group
owns shares  representing  more than 30% of such  aggregate  voting  power,  the
"Trigger Date") and (b) continue to be the owner,  beneficially or of record, of
shares  representing more than 30% of such aggregate voting power on the earlier
of (x) the date,  if any, on which the board of directors  of Borrower  approves
the  transaction or  transactions  pursuant to which such person or group became
the owner,  beneficially or of record,  of shares  representing more than 30% of
such  aggregate  voting  power  and (y) the date that is 30 days  following  the
Trigger Date; or

         (iv)  There  shall  occur  during  any  period a change in the board of
directors of Borrower  pursuant to which the  individuals  who  constituted  the
board of directors of Borrower at the  beginning of such period  (together  with
any other  director  whose  election by the board of  directors  of Borrower (or
whose nomination for election by the stockholders of Borrower) was approved by a
vote of at least  two-thirds  of the  directors  then in office who either  were
directors at the beginning of such period or whose  election or  nomination  for
election  was  previously  so  approved)  cease for any reason to  constitute  a
majority of the directors of Borrower in office at the end of such period.

         THEN (i) upon the  occurrence of any Event of Default  described in the
foregoing subsections 7.6 or 7.7, each of (a) the unpaid principal amount of and
accrued  interest  on the Loans and (b) an amount  equal to the  maximum  amount
which may at any time be drawn  under all  Letters  of Credit  then  outstanding
(whether or not any beneficiary under any Letter of Credit shall have presented,
or shall be  entitled  at such time to  present,  the drafts of other  documents
required  to draw  order  such  Letter of  Credit)  shall  automatically  become
immediately  due and  payable,  without  presentment,  demand,  protest or other
requirements of any kind, all of which are hereby  expressly waived by Borrower,
and the  obligation  of each  Lender  to make  any Loan  and the  obligation  of
Fronting Bank to issue any Letter of Credit hereunder shall thereupon terminate,
and (ii) upon the occurrence of any other Event of Default, Administrative Agent
may,  and at the  request of  Requisite  Lenders  shall,  by  written  notice to
Borrower,  declare all of the Loans and an amount equal to the amounts described
in  clauses  (a) and (b) to be,  and the same shall  forthwith  become,  due and
payable,  together with accrued  interest  thereon,  and the  obligation of each
Lender to make any Loan and the  obligation of Fronting Bank to issue any Letter
of Credit hereunder shall hereupon terminate;  provided that the foregoing shall
not affect in any way the obligations of Lenders having  Commitments to purchase
from Fronting Bank  participations  in the  unreimbursed  amount of any drawings
under any Letters of Credit as provided in subsection 2.1E. Nevertheless,  if at
any time within 60 days after acceleration of the maturity of any Loan, Borrower
shall pay all arrears of interest and all  payments on account of the  principal
which shall have become due otherwise  than by  acceleration  (with  interest on
principal and, to the extent permitted by law, on overdue interest, at the rates
specified in this  Agreement) and all Events of Default and Potential  Events of
Default  (other than  non-payment  of principal  of and accrued  interest on the
Loans and the Notes, and payments of amounts referred to in clause (b) above, in
each case due and payable solely by virtue of acceleration) shall be remedied or
waived  pursuant to subsection 9.6 then  Requisite  Lenders by written notice to
Borrower may rescind and annul the acceleration and its  consequences;  but such
action shall not affect any  subsequent  Event of Default or Potential  Event of
Default or impair any right consequent thereon.



<PAGE>


Section 8         THE ADMINISTRATIVE AGENT

         8.1      Appointment.

         Each  of  Lenders  and  Fronting  Bank  hereby   irrevocably   appoints
Administrative  Agent as its agent.  The bank  serving as  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  Administrative
Agent,  and such bank and its Affiliates may accept deposits from, lend money to
and generally  engage in any kind of business with Borrower or any Subsidiary or
other  Affiliate  thereof  as if it were  not  Administrative  Agent  hereunder.
Administrative Agent agrees to act as such upon the express conditions contained
in this Section 8. The  provisions  of this Section 8 are solely for the benefit
of Administrative Agent, and Borrower shall not have any rights as a third party
beneficiary  of any of the  provisions  hereof.  In performing its functions and
duties after this Agreement,  Administrative Agent, shall act solely as agent of
Lenders  and does not  assume  and  shall  not be  deemed  to have  assumed  any
obligation towards or relationship of agency or trust with or for Borrower.

         8.2      Powers; General Immunity.

         A. Duties Specified.  Each Lender irrevocably authorizes Administrative
Agent,  to take such action on such Lender's  behalf and to exercise such powers
hereunder and under the other  instruments and agreements  referred to herein as
are  specifically  delegated to  Administrative  Agent,  by the terms hereof and
thereof,  together  with  such  powers  as are  reasonably  incidental  thereto.
Administrative  Agent, shall have only those duties and  responsibilities  which
are expressly  specified in this  Agreement and it may perform such duties by or
through its agents or employees.  The duties of each Administrative  Agent shall
be mechanical and administrative in nature;  and Administrative  Agent shall not
have by reason of this  Agreement  a  fiduciary  relationship  in respect of any
Lender; and nothing in this Agreement,  expressed or implied,  is intended to or
shall be so construed as to impose upon Administrative  Agent any obligations in
respect of this Agreement or the other  instruments  and agreements  referred to
herein except as expressly set forth herein or therein.

         B. No Responsibility  for Certain Matters.  Administrative  Agent shall
not be responsible to any Lender for the execution, effectiveness,  genuineness,
validity,  enforceability,  collectibility or sufficiency of this Agreement,  or
for  the  issuance  of  Letters  of  Credit  and  such   Lender's   purchase  of
participations  therein,  or for any  representations,  warranties,  recitals or
statements made herein or therein or made in any written or oral statement or in
any financial or other  statements,  instruments,  reports,  certificates or any
other  documents  in  connection  herewith  or  therewith  furnished  or made by
Administrative Agent to Lenders or by or on behalf of Borrower to Administrative
Agent  or  any  Lender,  or be  required  to  ascertain  or  inquire  as to  the
performance or observance of any of the terms, conditions, provisions, covenants
or  agreements  contained  herein or therein or as to the use of the proceeds of
the Loans or of the  existence or possible  existence of any Event of Default or
Potential Event of Default.



<PAGE>


         C. Exculpatory Provisions. Administrative Agent or any of its officers,
directors,  employees  or agents  shall not be liable to Lenders  for any action
taken or omitted  hereunder or in  connection  herewith  unless caused by its or
their gross  negligence or willful  misconduct.  If  Administrative  Agent shall
request  instructions  from Lenders with respect to any act or action (including
the failure to take an action) in connection with this Agreement, Administrative
Agent shall be entitled  to refrain  from such act or taking such action  unless
and until Administrative  Agent shall have received  instructions from Requisite
Lenders.   Without   prejudice  to  the   generality  of  the   foregoing,   (i)
Administrative  Agent shall be entitled to rely, and shall be fully protected in
relying,  upon any  communication,  instrument or document  believed by it to be
genuine  and  correct  and to have been  signed or sent by the proper  person or
persons,  and shall be  entitled  to rely and shall be  protected  in relying on
opinions  and  judgments  of  attorneys  (who  may be  attorneys  for  Borrower)
accountants, experts and other professional advisors selected by it; and (ii) no
Lender shall have any right of action whatsoever against Administrative Agent as
a result of Administrative Agent acting or (where so instructed) refraining from
acting under this Agreement or the other instruments and agreements  referred to
herein in accordance with the instructions of Requisite Lenders.  Administrative
Agent shall be entitled to refrain  from  exercising  any power,  discretion  or
authority  vested  in it under  this  Agreement  or the  other  instruments  and
agreements  referred to herein unless and until it has obtained the instructions
of Requisite Lenders

         D.  Administrative  Agent Entitled to Act as Lender.  The agency hereby
created  shall in no way  impair or affect  any of the  rights and powers of, or
impose any duties or obligations  upon,  Administrative  Agent in its individual
capacity as a Lender  hereunder.  With respect to its participation in the Loans
or any Letter of Credit,  Administrative  Agent  shall have the same  rights and
powers hereunder as any other Lender and may exercise the same as though it were
not performing the duties and functions delegated to it hereunder,  and the term
"Lender" or  "Lenders"  or any similar  term shall,  unless the content  clearly
otherwise  indicates,  include  Administrative Agent in its individual capacity.
Administrative  Agent and its respective  Affiliates  may accept  deposits from,
lend money to and  generally  engage in any kind of  banking,  trust,  financial
advisory or other  business  with Borrower or any Affiliate of Borrower as if it
were not performing the duties specified  herein,  and may accept fees and other
consideration  from Borrower for services in connection  with this Agreement and
otherwise without having to account for the same to Lenders.

         8.3 Representations and Warranties;  No Responsibility for Appraisal of
Creditworthiness.

         Each  Lender   represents  and  warrants  that  it  has  made  its  own
independent  investigation of the financial condition and affairs of Borrower in
connection  with the making of the Loans and the  issuance  of Letters of Credit
hereunder  and has made and  shall  continue  to make its own  appraisal  of the
creditworthiness  of Borrower.  Administrative  Agent shall not have any duty or
responsibility  either  initially  or on a  continuing  basis  to make  any such
investigation  or any such  appraisal  on behalf of Lenders  or to  provide  any
Lender with any credit or other  information with respect thereto whether coming
into  its  possession  before  the  making  of the  Loans  or any  time or times
thereafter,  and Administrative  Agent shall not further have any responsibility
with respect to the accuracy of or the completeness of the information  provided
to Lenders.

         8.4      Right to Indemnity.

         Each  Lender  severally  agrees  to  indemnify   Administrative   Agent
proportionately  to its Pro Rata Share at the time the  obligation  to indemnify
arises of the aggregate of the Loans  outstanding  and the  Commitments,  to the
extent Administrative Agent shall not have been reimbursed by Borrower,  for and
against  any and  all  liabilities,  obligations,  losses,  damages,  penalties,
actions,  judgments,  suits,  costs,  expenses  (including,  without limitation,
reasonable  counsel  fees and  disbursements)  or  disbursements  of any kind or
nature  whatsoever  which may be imposed on,  incurred  by or  asserted  against
Administrative  Agent in performing its duties  hereunder or in any way relating
to or arising out of this Agreement; provided that no Lender shall be liable for
any  portion  of such  liabilities,  obligations,  losses,  damages,  penalties,
actions,  judgments,  suits,  costs,  expenses or  disbursements  resulting from
Administrative Agent's gross negligence or willful misconduct.  If any indemnity
furnished to  Administrative  Agent,  for any purpose  shall,  in the opinion of
Administrative  Agent be insufficient or become impaired,  Administrative  Agent
may call for  additional  indemnity and cease,  or not commence,  to do the acts
indemnified against until such additional indemnity is furnished.

         8.5      Successor Administrative Agent.



<PAGE>


         Administrative  Agent may  resign  at any time by giving 30 days  prior
written notice thereof to Lenders and Borrower,  and Administrative Agent may be
removed  at any time  with or  without  cause  by an  instrument  or  concurrent
instruments in writing delivered to Borrower and Administrative Agent and signed
by Requisite  Lenders.  Upon any such notice of resignation or any such removal,
Requisite  Lenders shall have the right,  upon five days notice to Borrower,  to
appoint a successor Administrative Agent. Upon the acceptance of any appointment
as  Administrative  Agent hereunder by a successor  Administrative  Agent,  that
successor Administrative Agent shall thereupon succeed to and become vested with
all the  rights,  powers,  privileges  and  duties of the  retiring  or  removed
Administrative Agent, and the retiring or removed  Administrative Agent shall be
discharged  from its duties and obligations as  Administrative  Agent under this
Agreement.  After any retiring or removed  Administrative Agent's resignation or
removal hereunder as Administrative Agent the provisions of this Section 8 shall
inure to its benefit as to any actions  taken or omitted to be taken by it while
it was Administrative Agent under this Agreement.

Section 9         MISCELLANEOUS

         9.1      Representation of Lenders.

         Each  Lender  hereby  represents  that  it is a  commercial  lender  or
financial  institution  which makes loans in the ordinary course of its business
and that it will hold each Loan  hereunder as a loan in the  ordinary  course of
such  business;   provided,  however,  that,  subject  to  subsection  9.2,  the
disposition  of any Loan or other evidence of  Indebtedness  held by that Lender
shall at all times be within its exclusive control.

         9.2      Assignments and Participations in Loans.

         A. Each Lender may assign to one or more  assignees all or a portion of
its interests,  rights and obligations under this Agreement  (including all or a
portion  of any of its  commitments  and the  Loans  at the  time  owing to it);
provided,  however,  that (i) except in the case of an assignment to a Lender or
an Affiliate of a Lender,  each of  Administrative  Agent and Borrower must give
its  prior  written  consent  to such  assignment  (which  consent  shall not be
unreasonably  withheld),  (ii) in the case of any assignment of any  Commitment,
Fronting  Bank must give its prior  written  consent to such  assignment  (which
consent  shall not be  unreasonably  withheld),  (iii)  except in the case of an
assignment  to a  Lender  or  an  Affiliate  of a  Lender,  the  amount  of  the
commitments, in the case of an assignment of Commitments 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 Agent) shall not
be less than $5,000,000 or the entirety of the Commitment,  as applicable,  (iv)
the parties to each such assignment shall execute and deliver to  Administrative
Agent an Assignment and  Acceptance  and, a processing  and  recordation  fee of
$3,500  and (v) the  assignee,  if it shall not be a Lender,  shall  deliver  to
Administrative Agent an Administrative Questionnaire;  and provided further that
any consent  otherwise  required under this paragraph shall not be required if a
Potential  Event  of  Default  or an  Event  of  Default  has  occurred  and  is
continuing.  Upon acceptance and recording pursuant to subsection 9.2D, from and
after the effective date  specified in each  Assignment  and  Acceptance,  which
effective date shall be at least five Business Days after the execution  thereof
unless  Administrative  Agent shall otherwise agree, (A) 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
this Agreement and (B) the assigning Lender  thereunder  shall, to the extent of
the interest  assigned by such Assignment and  Acceptance,  be released from its
obligations  under  this  Agreement  (and,  in the  case  of an  Assignment  and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement,  such Lender shall cease be a party hereto
but shall  continue to be entitled to the benefits of  subsections  2.1H,  2.1J,
2.7F,  2.9,  2.10, and 9.4, as well as to any fees accrued for its account under
subsections 2.1F and 2.6 and not yet paid).



<PAGE>


         B. By executing  and  delivering  an  Assignment  and  Acceptance,  the
assigning  Lender  thereunder  and the  assignee  thereunder  shall be deemed to
confirm to and agree with each other and the other  parties  hereto as  follows:
(i) such assigning  Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its  Commitments,  and the outstanding  balance of its Revolving  Loans, in each
case  without  giving  effect  to  assignments  thereof  which  have not  become
effective,  are as set forth in such Assignment and  Acceptance,  (ii) except as
set  forth in (i)  above,  such  assigning  Lender  makes no  representation  or
warranty  and  assumes  no  responsibility   with  respect  to  any  statements,
warranties or representations  made in or in connection with this Agreement,  or
the execution, legality, validity, enforceability,  genuineness,  sufficiency or
value of this  Agreement,  any other Loan  Document or any other  instrument  or
document  furnished  pursuant hereto, or the financial  condition of Borrower or
any of its  Subsidiaries  or the performance or observance by Borrower of any of
its  obligations  under this  Agreement,  any other Loan  Document  or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants  that it is legally  authorized to enter into such  Assignment  and
Acceptance;  (iv) such  assignee  confirms  that it has  received a copy of this
Agreement,  together  with  copies  of  the  most  recent  financial  statements
delivered pursuant to subsection 5.1 and such other documents and information as
it has deemed  appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance;  (v) such assignee will  independently  and
without reliance upon  Administrative  Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall deem  appropriate
at the time,  continue to make its own credit  decisions in taking or not taking
action  under  this  Agreement;  (vi)  such  assignee  appoints  and  authorizes
Administrative  Agent to take such action as agent on its behalf and to exercise
such powers under this  Agreement and the other Loan  Documents as are delegated
to such  agents by the terms of this  Agreement  and the other  Loan  Documents,
together with such powers as are reasonably  incidental thereto;  and (vii) such
assignee  agrees  that it will  perform in  accordance  with their terms all the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.

         C.  Administrative  Agent  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
Commitments 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 in the absence of manifest error and Administrative
Agent and the  Lenders  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.  The Register shall be available for inspection by Borrower and
any Lender,  at any reasonable time and from time to time upon reasonable  prior
notice.

         D. Upon its  receipt  of a duly  completed  Assignment  and  Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee  (unless the  assignee  shall  already be a
Lender hereunder),  the processing and recordation fee referred to in subsection
9.2A and, if required,  the written consent of  Administrative  Agent,  Fronting
Bank or  Swingline  Lender to such  assignment,  Administrative  Agent shall (i)
accept such  Assignment and Acceptance,  (ii) record the  information  contained
therein in the Register and (iii) give prompt notice thereof to the Lenders.

         E. Each Lender may  without  the consent of Borrower or  Administrative
Agent sell  participations  to one or more banks or other  entities  in all or a
portion of its rights and/or obligations under this Agreement  (including all or
a portion of its Commitments and the Loans owing to it); provided, however, that
(i) such Lender's obligations under this Agreement shall remain unchanged,  (ii)
such lender shall remain solely  responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other entities
shall be entitled to the benefit of the cost protection  provisions contained in
subsections  2.1H,  2.1J,  2.7F, 2.9 and 2.10 to the same extent as if they were
Lenders,  provided  that  Borrower  shall  not  be  required  to  reimburse  any
participating bank or other entity pursuant to subsections 2.1H, 2.1J, 2.7F, 2.9
or 2.10 in an amount that would  exceed the amount that would have been  payable
thereunder to such Lender had such Lender not sold such participation, (iv) each
such  participating  bank or other entity shall deliver all forms required under
subsection  2.7F(vii)  and (v)  Borrower,  Administrative  Agent  and the  other
Lenders  shall  continue  to deal  solely  and  directly  with  such  Lender  in
connection with such Lender's rights and obligations  under this Agreement,  and
such Lender shall retain the sole right to enforce the  obligations  of Borrower
relating to the Loans and to approve any  amendment,  modification  or waiver of
any  provision  of this  Agreement  (other than  amendments,  modifications  are
waivers  decreasing any fees payable  hereunder or the amount of principal of or
the rate at which  interest  is payable on the Loans,  extending  any  scheduled
principal  payment  date or date fixed for the payment of interest on the Loans,
releasing all or  substantially  all  collateral or extending any scheduled date
for reduction or termination of the Commitments).



<PAGE>


         F. Any Lender or participant  may, in connection with any assignment or
participation or proposed  assignment or participation  pursuant to this Section
9.2, disclose to the assignee or participant or proposed assignee or participant
any information relating to Borrower furnished to such Lender by or on behalf of
Borrower,  provided  that  (i)  prior  to any  such  disclosure  of  information
designated by Borrower as  confidential,  each such assignee or  participant  or
proposed  assignee  or  participant  shall  execute an  agreement  whereby  such
assignee  or  participant  shall  agree  (subject to  customary  exceptions)  to
preserve  the  confidentiality  of such  confidential  information  and (ii) the
related   Lender  or  participant   shall  promptly   deliver  a  copy  of  such
confidentiality  agreement  to  Borrower,  provided  that,  in the  ease  of any
participation,  delivery of such confidentiality agreement shall not be required
until after the  consummation of such  participation or until after the proposed
participant or the applicable  Lender shall have  determined not to proceed with
the proposed participation.

         G. Any Lender may at any time  assign all or any  portion of its rights
under this Agreement to a Federal Reserve Bank; provided that no such assignment
shall release a Lender from any of its obligations  hereunder.  Upon the request
of any  Lender,  Borrower  shall  promptly  execute and deliver to such Lender a
note, in a form reasonably  acceptable to Administrative  Agent, such Lender and
Borrower, evidencing the Loans made to Borrower by such Lender hereunder.

         9.3      Expenses; Indemnity; Damage Waiver.

         A.  Borrower  shall  pay  (i)  all  reasonable  out-of-pocket  expenses
incurred by  Administrative  Agent and its Affiliates,  including the reasonable
fees,  charges  and  disbursements  of  counsel  for  Administrative  Agent,  in
connection  with the syndication of the credit  facilities  provided for herein,
the  preparation  and  administration  of the Loan Documents or any  amendments,
modifications  or  waivers  of  the  provisions  thereof  (whether  or  not  the
transactions  contemplated  hereby or thereby  shall be  consummated),  (ii) all
reasonable  out-of-pocket  expenses incurred by Fronting Bank in connection with
the  issuance,  amendment,  renewal or  extension of any Letter of Credit or any
demand for payment  thereunder and (iii) all out-of-pocket  expenses incurred by
Administrative Agent,  Fronting Bank or any Lender,  including the fees, charges
and disbursements of any counsel for Administrative  Agent, Fronting Bank or any
Lender,  in  connection  with the  enforcement  or  protection  of its rights in
connection with the Loan Documents,  including its rights under this subsection,
or in  connection  with the Loans made or Letters  of Credit  issued  hereunder,
including  all  such   out-of-pocket   expenses  incurred  during  any  workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.

         B. Borrower shall  indemnify  Administrative  Agent,  Fronting Bank and
each Lender,  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 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 other agreement or instrument  contemplated  hereby,  the performance by the
parties to the Loan Documents of their respective  obligations thereunder or the
consummation  of  the  Restatement   Transactions  or  any  other   transactions
contemplated  hereby,  (ii)  any  Loan or  Letter  of  Credit  or the use of the
proceeds therefrom (including any refusal by Fronting Bank to honor a demand for
payment under a Letter of Credit if the documents  presented in connection  with
such  demand do not  strictly  comply  with the terms of such Letter of Credit),
(iii) any actual or alleged  presence or release of Hazardous  Substances  on or
from any Mortgaged Property or any other property currently or formerly owned or
operated by the Borrower or any of its Subsidiaries,  or any Environmental Event
related in any way to Borrower or any of its 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 are determined by a
court of  competent  jurisdiction  by final and  nonappealable  judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.

         C. To the extent that Borrower  fails to pay any amount  required to be
paid by it to Administrative Agent, Fronting Bank or Swingline Lender under A or
B of this  subsection,  each Lender  severally  agrees to pay to  Administrative
Agent, the Fronting Bank or Swingline  Lender, as the case may be, such Lender's
Pro Rata  Share  (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  Administrative
Agent, Fronting Bank or Swingline Lender in its capacity as such.



<PAGE>


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

         E. All  amounts  due under this  subsection  shall be payable  promptly
after written demand therefor.

         9.4      Setoff.

         In addition to any rights now or hereafter granted under applicable law
and not by way of  limitation  of any such rights,  upon the  occurrence  of any
Event of Default,  each Lender and each subsequent  holder of any Loan is hereby
authorized  by  Borrower  at any time or from  time to time,  without  notice to
Borrower, or to any other Person, any such notice being hereby expressly waived,
to set off and to  appropriate  and to apply any and all  deposits  (general  or
special,  including,  but not limited to, Indebtedness evidenced by certificates
of deposit,  whether  matured or unmatured but not including trust accounts) and
any  other  indebtedness  at any  time  held or  owing  by that  Lender  or that
subsequent holder to or for the credit or the account of Borrower against and on
account of the  obligations  and  liabilities of Borrower to that Lender or that
subsequent holder under this Agreement and the Letters of Credit, including, but
not  limited  to,  all  claims of any nature or  description  arising  out of or
connected with this Agreement, irrespective of whether or not (i) that Lender or
that subsequent  holder shall have made any demand hereunder or (ii) that Lender
or that  subsequent  holder shall have declared the principal or the interest on
the Loans,  any obligation of Borrower with respect to the Letters of Credit and
other  amounts due hereunder to be due and payable as permitted by Section 7 and
although said obligations and liabilities,  or any of them, may be contingent or
unmatured.

         9.5      Ratable Sharing.



<PAGE>


         Each  Lender  and  each  subsequent  holder  of any  Loan  agree  among
themselves  that (i) with  respect  to all  amounts  received  by them which are
applicable to the payment of principal of or interest on the Revolving Loans and
amounts payable in respect of Letters of Credit and Commitment Fees with respect
to the Commitments,  equitable  adjustment will be made so that, in effect,  all
such amounts will be shared among Lenders  proportionately  to their  respective
Pro  Rata  Shares  of the  applicable  Revolving  Loans or  Commitments  whether
received  by  voluntary  payment,  by the  exercise  of the  right of  setoff or
banker's lien, by  counterclaim  or cross action or by the enforcement of any or
all of the  Revolving  Loans,  (ii) if any of them shall  exercise  any right of
counterclaim,  setoff,  banker's  lien or similar  right with respect to amounts
owed by Borrower  hereunder  or under the  Revolving  Loans or in respect of the
Letters of Credit that Lender or holder, as the case may be, shall apportion the
amount  recovered  as a  result  of the  exercise  of  such  right  pro  rata in
accordance with all amounts outstanding at such time owed by Borrower to it, and
(iii)  if any of them  shall  thereby  through  the  exercise  of any  right  of
counterclaim,  setoff, banker's lien or otherwise or as adequate protection of a
deposit treated as cash collateral under the Bankruptcy Code, receive payment or
reduction of a proportion of the aggregate  amount of principal and interest due
with respect to the Revolving Loans held by the Lender or holder,  the amount of
any  Letter  of  Credit  or any  participation  therein  or any  amount  payable
hereunder,  as the case may be, which is greater than the proportion received by
any other holder of the Revolving  Loans in respect to the  aggregate  amount of
principal and interest due with respect to the  Revolving  Loans held by it, the
amount  of any  Letter  of Credit or any  participation  therein  or any  amount
payable  hereunder that Lender or that holder of the Revolving  Loans  receiving
such  proportionately  greater  payments  shall (a) notify each other Lender and
Administrative Agent of such receipt and (b) purchase  participations  (which it
shall be deemed to have done simultaneously upon the receipt of such payment) in
the  Revolving  Loans held by the other  holders or Letters of Credit  issued by
other Lenders so that all such recoveries of principal and interest with respect
to the Revolving Loans and  reimbursement of amounts drawn under or payable with
respect  to  Letters  of  Credit  shall be  proportionate  to  their  respective
applicable Pro Rata Shares; provided that if all or part of such proportionately
greater payment received by such purchasing holder is thereafter  recovered from
such holder, those purchases shall be rescinded and the purchase prices paid for
such  participations  shall be  returned  to that  holder to the  extent of such
recovery,  but without interest.  Borrower  expressly  consents to the foregoing
arrangement and agrees that any holder of a participation  in any such Revolving
Loan or  Letter  of  Credit,  as the case may be,  so  purchased  and any  other
subsequent  holder of a participation  in any Revolving Loan otherwise  acquired
may exercise any and all rights of banker's lien,  setoff or  counterclaim  with
respect to any and all monies  owing by  Borrower  to that holder as fully as if
that  holder  were a  holder  of  such a  Revolving  Loan in the  amount  of the
participation held by that holder.

         9.6      Amendments and Waivers.

         Except as provided in  subsection  4.1D with  respect to  supplementing
Schedule A, no amendment,  modification,  termination or waiver of any provision
of this Agreement or Letters of Credit,  or consent to any departure by Borrower
therefrom,  shall in any event be effective  without the written  concurrence of
Requisite Lenders;  except that (i) no amendment,  modification,  termination or
waiver shall (a) reduce the principal  amount of, or subordinate  the principal,
or extend the scheduled maturity of or any date for the scheduled payment of any
principal of or interest on, any Loan (it being  understood  that the amendment,
modification  or waiver of a prepayment  provision  shall not constitute such an
extension),  or forgive any such payment or any part thereof, or reduce the rate
of  interest  on any Loan,  without  the prior  written  consent of each  Lender
affected  thereby or (b)  increase  the  Commitments  of any Lender,  reduce the
Commitment Fees or other fees payable to any Lender,  or amend or modify the Pro
Rata Share of any Lender without the prior written consent of such Lender,  (ii)
any  amendment,  modification,  termination  or  waiver  of  the  definition  of
"Requisite   Lenders",   any  provision  expressly  requiring  the  approval  or
concurrence  of all Lenders or any provision  contained in this  subsection  9.6
shall be effective  only if evidenced by a writing signed by or on behalf of all
Lenders,  (iii) the release of all or any significant  portion of the Collateral
from the Liens of the Security  Documents  (except as provided in such  Security
Documents)  shall be effective  only if  evidenced by a writing  signed by or on
behalf of all Lenders,  (iv) the release of any  Subsidiary  Guarantor  from its
guarantee  under the Guarantee  Agreement  (except as provided in such Guarantee
Agreement)  shall be effective  only if  evidenced by a writing  signed by or on
behalf of all Lenders and (v) any amendment, modification, termination or waiver
of any of the provisions  contained in Section 3 or 8 shall be effective only if
evidenced by a writing signed by or on behalf of  Administrative  Agent and with
the consent of Requisite  Lenders.  Administrative  Agent may, but shall have no
obligation  to,  with  the  concurrence  of  any  Lender,   execute  amendments,
modifications,  waivers  or  consents  on behalf of that  Lender.  Any waiver or
consent  shall be effective  only in the specific  instance and for the specific
purpose  for which it was given.  No notice to or demand on Borrower in any case
shall  entitle  Borrower  to any  further  notice or demand in  similar or other
circumstances.  Any  amendment,  modification,  termination,  waiver or  consent
effected  in  accordance  with this  subsection  9.6 shall be binding  upon each
holder of the Loans at the time  outstanding,  each future  holder of the Loans,
and, if signed by Borrower, on Borrower.

         9.7      Independence of Covenants.

         All covenants  hereunder shall be given independent effect so that if a
particular  action or condition is not permitted by any of such  covenants,  the
fact that it would be permitted by an exception  to, or be otherwise  within the
limitation  of,  another  covenant shall not avoid the occurrence of an Event of
Default  or  Potential  Event of Default  if such  action is taken or  condition
exists.

         9.8      Change in Accounting Principles, Fiscal Year or Tax Laws.

         If (i) any  preparation  of the  financial  statements  referred  to in
subsection 4.3 hereafter  occasioned by the promulgation of rules,  regulations,
pronouncements and opinions by or required by the Financial Accounting Standards
Board or the American  Institute of Certified Public  Accountants (or successors
thereto or agencies with similar functions) results in a change in the method of
calculation  of financial  covenants,  standards or terms found in Sections 1, 5
and 6 hereof,  (ii)  there is any  change in  Borrower's  fiscal  quarter or the
fiscal  year,  or (iii)  there is a material  change in  federal  tax laws which
materially affects  Borrower's  ability to comply with the financial  covenants,
standards or terms found in Section 1, 5 or 6 hereof,  the parties  hereto agree
to enter into  negotiations in order to amend such provisions so as to equitably
reflect such changes  with the desired  result that the criteria for  evaluating
Borrower's  financial  condition shall be the same after such changes as if such
changes had not been made.



<PAGE>


         9.9      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  Borrower,  to it at  3330  West  Friendly  Avenue,
         Greensboro,  North Carolina 27410, Attention of Treasurer (Telecopy No.
         (336) 379-2245);

                  (b) if to  Administrative  Agent, to The Chase Manhattan Bank,
         Loan and Agency Services Group,  One Chase Manhattan  Plaza, 8th Floor,
         New York, New York 10081,  Attention of Sharon Hamboussi  (Telecopy No.
         (212)  552-5662),  with a copy to The Chase  Manhattan  Bank,  270 Park
         Avenue, New York, New York 10017, Attention of Randolph Cates (Telecopy
         No. (212) 270-1403);

                  (c) if to Fronting  Bank, to it at Chase  Manhattan  Bank USA,
         N.A.,  Letter of Credit  Syndication Unit, 8th Floor, 1201 North Market
         Street,  Wilmington,  Delaware  19801,  Attention  of  Michael  Handago
         (Telecopy No. (302-984-4904);

                  (d) if to Swingline  Lender, to The Chase Manhattan Bank, Loan
         and Agency Services Group,  One Chase Manhattan  Plaza,  8th Floor, New
         York, New York 10081, Attention of Sharon Hamboussi (Telecopy No. (212)
         552-5662),  with a copy to The Chase  Manhattan  Bank, 270 Park Avenue,
         New York,  New York 10017,  Attention of Randolph  Cates  (Telecopy No.
         (212) 270-1403); and

                  (e) if to any other Lender,  to it at its address (or telecopy
         number) set forth in its Administrative Questionnaire.

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.

         9.10     Survival of Warranties and Certain Agreements.

         A. All  agreements,  representations  and warranties  made herein shall
survive the  execution and delivery of this  Agreement,  the making of the Loans
hereunder and the issuance of the Letters of Credit (it being understood that no
representation  or  warranty  shall be  deemed to have been made on or as of any
date other than dates referred to in subsections 3.1D, 3.2B or 3.3C).

         B. Notwithstanding  anything in this Agreement or implied by law to the
contrary,  the agreements of Borrower set forth in subsections 2.1H, 2.1J, 2.7F,
2.9E, 2.9H and 9.3 and the agreements of Lenders set forth in subsections  8.2C,
8.4 and 9.5  shall  survive  the  payment  of the  Loans,  the  cancellation  or
expiration  of the Letters of Credit and the  reimbursement  of any amount drawn
thereunder and the termination of this Agreement.

         9.11     Failure or Indulgence Not Waiver; Remedies Cumulative.

         No failure or delay on the part of any Lender or any holder of any Loan
in the  exercise of any power,  right or privilege  hereunder  shall impair such
power,  right or  privilege  or be  construed  to be a waiver of any  default or
acquiescence  therein,  nor shall any  single or  partial  exercise  of any such
power,  right or privilege  preclude other or further exercise thereof or of any
other right,  power or privilege.  All rights and remedies  existing  under this
Agreement  are  cumulative  to and not  exclusive  of,  any  rights or  remedies
otherwise available.



<PAGE>


         9.12     Severability.

         In case any provision in or obligation  under this  Agreement  shall be
invalid,  illegal or unenforceable in any jurisdiction,  the validity,  legality
and  enforceability  of the  remaining  provisions  or  obligations,  or of such
provision  or  obligation  in any  other  jurisdiction,  shall not in any way be
affected or impaired thereby,

         9.13     Obligations Several; Independent Nature of Lenders' Rights.

         The obligation of each Lender hereunder is several, and no Lender shall
be responsible  for the obligation or commitment of any other Lender  hereunder.
Nothing  contained in this  Agreement  and no action  taken by Lenders  pursuant
hereto  shall  be  deemed  to  constitute  Lenders  to  be  a  partnership,   an
association, a joint venture or any other kind of entity. The amounts payable at
any time hereunder to each Lender shall be a separate and independent  debt, and
each Lender  shall be entitled to protect and enforce its rights  arising out of
this  Agreement  and it shall not be necessary for any other Lender to be joined
as an additional party in any proceeding for such purpose.

         9.14     Headings.

         Section and subsection  headings in this Agreement are included  herein
for  convenience  of  reference  only and  shall not  constitute  a part of this
Agreement for any other purpose or be given any substantive effect.

         9.15     Applicable Law.

         THIS  AGREEMENT  SHALL BE  GOVERNED  BY,  AND  SHALL BE  CONSTRUED  AND
ENFORCED IN ACCORDANCE  WITH, THE LAWS OF THE STATE OF NEW YORK.  EACH LETTER OF
CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED  AND ENFORCED IN  ACCORDANCE
WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT,  OR IF NO SUCH LAWS
OR RULES ARE  DESIGNATED,  THE UNIFORM  CUSTOMS  AND  PRACTICE  FOR  DOCUMENTARY
CREDITS (1993 REVISION),  INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500
(THE "UNIFORM  CUSTOMS") AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS,
THE LAWS OF THE STATE OF NEW YORK.

         9.16     Successors and Assigns, Subsequent Holders of Loans.

         (a) This  Agreement  shall be binding upon the parties hereto and their
respective  successors and assigns and shall inure to the benefit of the parties
hereto and the  successors  and assigns of Lenders.  The terms and provisions of
this  Agreement  shall inure to the benefit of any assignee or transferee of the
Loans,  and,  in the  event of such  transfer  or  assignment,  the  rights  and
privileges  herein conferred upon Lenders shall  automatically  extend to and be
vested in such  transferee or assignee,  all subject to the terms and conditions
hereof.  Borrower's rights or any interest therein hereunder may not be assigned
without the written  consent of all Lenders.  Lenders'  rights of assignment are
subject to subsection 9.2.

         (b)  In the event that:

                  (i)  any  Lender  shall  have  refused  (and  shall  not  have
         retracted  such refusal) to make available any Revolving Loan or Letter
         of Credit on its part to be made available hereunder, other than solely
         as a result of the failure of any  condition  set forth in Section 3 to
         be satisfied  (such  condition  not having been  effectively  waived in
         accordance with the terms hereof);

                  (ii) any Lender shall have  notified  Administrative  Agent or
         Borrower (and shall not have restricted such notification) that it does
         not intend to comply with any of its obligations hereunder,  other than
         solely as a result of the failure of any condition set forth in Section
         3 to be satisfied (such condition not having been effectively waived in
         accordance with the terms hereof);



<PAGE>


                  (iii) (A) a receiver, trustee,  conservator or other custodian
         shall have been appointed with respect to any Lender or its property at
         the direction or request of any  regulatory  agency or authority or (B)
         an order,  action,  process or proceeding of the type  contemplated  by
         subsection  7.6 or 7.7 shall be commenced by or against such Lender (or
         such Lender shall have consented to any such order, action,  process or
         proceeding); or

                  (iv) Borrower is required (A) pursuant to  subsection  2.1H or
         subsection 2.1J to make any additional  payment in respect of Letter of
         Credits to any  Lender,  (B)  pursuant to  subsection  2.7F to make any
         payment to or on behalf of any Lender (or  Transferee,  as such term is
         defined in subsection  2.7F(i) with respect to Taxes or Other Taxes (or
         would be so required on or prior to the next  following date on which a
         payment  hereunder (other than pursuant to subsection 2.7F) is required
         to be made or for any such Lender),  (C) pursuant to subsection 2.9B to
         make any additional  payments to an Affected  Lender or (D) pursuant to
         subsection 2.9H to make any additional  payment in respect of increased
         costs to any Lender;

then  Borrower  shall have the right,  at its own  expense,  upon notice to such
Lender and  Administrative  Agent,  (x) to require such Lender,  and such Lender
hereby agrees,  to use its best efforts to transfer and assign without  recourse
(in accordance  with and subject to restrictions  contained in subsection  9.2A)
all the  interests,  rights  and  obligations  of  such  Lender  to an  Eligible
Assignee; provided, however, that (1) no such assignment shall conflict with any
law, rule or regulation or order of any governmental  authority and (2) Borrower
or such Eligible Assignee,  as the case may be, shall pay to such Lender in same
day funds on the date of such  assignment the principal of and interest  accrued
to the date of payment on the Loans made by such Lender  hereunder and all other
amounts  accrued for such Lender's  account or owed to it  hereunder;  or (y) to
replace  such Lender with one or more  Eligible  Assignees  (including,  without
limitation, by prepaying the Loans made by such Lender and reborrowing from such
Eligible Assignees corresponding Loans up to the respective amounts of the Loans
so prepaid); provided, in the case of this clause (y), (1) that the Lender being
replaced  has been  paid in full all  Loans  made by such  Lender  and all other
amounts accrued or due to such Lender hereunder, (2) that the full amount of the
Total  Commitment  remains  unchanged and (3) that the  percentages of the Total
Commitments allocated to the other Lenders remain unchanged unless prior written
consent  from such Lenders has been  obtained.  Upon any such  assignment,  such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of subsections  2.7F, 2.9, 2.10 and 9.3, as well as to any fees accrued
for its account under subsections 2.1F and 2.6 and not yet paid.

         (c) In the event that S&P and  Moody's  shall,  after the date that any
Lender becomes a Lender,  downgrade the long-term certificate of deposit ratings
of such  Lender,  and the  resulting  ratings  shall  be below  BBB-  and  Baa3,
respectively,  or the equivalent,  then each of Fronting Bank and Borrower shall
have the right, but not the obligation,  at its own expense, upon notice to such
Lender  and  Administrative  Agent,  to replace  such  Lender  with an  Eligible
Assignee,  and such Lender hereby agrees to transfer and assign without recourse
(in  accordance  with and subject to the  restrictions  contained in  subsection
9.2A) all the interests,  rights and obligations in respect of its Commitment to
an Eligible  Assignee;  provided,  however,  that (x) no such  assignment  shall
conflict with any law, rule or regulation or order of any governmental authority
and (b) Fronting Bank,  Borrower or such Eligible Assignee,  as the case may be,
shall pay to such  Lender in same day funds on the date of such  assignment  the
principal  of and  interest  accrued to the date of payment on the Loans made by
such Lender hereunder and all other amounts accrued for such Lender's account or
owed to it hereunder. Upon any such termination or assignment, such Lender shall
cease to be a party hereto but shall  continue to be entitled to the benefits of
subsections  2.7F,  2.9,  2.10 and 9.3,  as well as to any fees  accrued for its
account under subsections 2.1F and 2.6 and not yet paid.



<PAGE>


         (d) Borrower may, with the prior written consent of the  Administrative
Agent,  replace  any  of  the  Lenders  with  one  or  more  Eligible  Assignees
(including,  without  limitation,  by prepaying the Revolving Loans made by such
Lender and reborrowing from such Eligible  Assignees  corresponding  Loans up to
the  respective  amounts of the Loans so prepaid);  provided (i) that the Lender
being replaced has been paid in full all Loans made by such Lender and all other
amounts  accrued or due to such Lender  hereunder,  (ii) that the full amount of
the Total  Commitment  remains  unchanged and (iii) that the  percentages of the
total  commitments  allocated to the other Lenders remain unchanged unless prior
written consent from such Lenders has been obtained.  Upon any such replacement,
such Lender shall cease to be a party  hereto but shall  continue to be entitled
to the benefits of subsections  2.7F,  2.9, 2.10 and 9.3, as well as to any fees
accrued for its account under subsections 2.1F and 2.6 and not yet paid.

         9.17  Consent to  Jurisdiction  and Service of Process;  Waiver of Jury
Trial.

         ALL JUDICIAL  PROCEEDINGS BROUGHT AGAINST BORROWER WITH RESPECT TO THIS
AGREEMENT  OR ANY LETTER OF CREDIT MAY BE BROUGHT IN ANY STATE OR (TO THE EXTENT
PERMITTED BY LAW) FEDERAL  COURT OF COMPETENT  JURISDICTION  IN THE STATE OF NEW
YORK AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT BORROWER ACCEPTS FOR ITSELF
AND IN  CONNECTION  WITH ITS  PROPERTIES,  GENERALLY  AND  UNCONDITIONALLY,  THE
NONEXCLUSIVE  JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE
BOUND BY ANY  JUDGMENT  RENDERED  THEREBY  IN  CONNECTION  WITH THIS  AGREEMENT.
BORROWER DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, 1633 BROADWAY, NEW YORK,
NEW YORK 10019,  AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY BORROWER
IRREVOCABLY  AGREEING IN WRITING TO SERVE, AS ITS AGENT TO RECEIVE ON ITS BEHALF
SERVICE OF ALL PROCESS IN ANY SUCH  PROCEEDINGS IN ANY SUCH COURT,  SUCH SERVICE
BEING HEREBY  ACKNOWLEDGED  BY BORROWER TO BE EFFECTIVE  AND BINDING  SERVICE IN
EVERY  RESPECT;  PROVIDED,  HOWEVER,  THAT,  SO LONG  AS  BORROWER  MAINTAINS  A
PRINCIPAL  PLACE OF BUSINESS IN NEW YORK,  NEW YORK,  SUCH SERVICE OF PROCESS IN
ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE AT BURLINGTON INDUSTRIES INC.,
1345 AVENUE OF THE AMERICAS,  NEW YORK,  NEW YORK 10105,  ATTENTION:  TREASURER,
SUCH SERVICE BEING HEREBY  ACKNOWLEDGED  BY BORROWER TO BE EFFECTIVE AND BINDING
SERVICE IN EVERY  RESPECT.  A COPY OF SUCH  PROCESS SO SERVED SHALL BE MAILED BY
REGISTERED MAIL TO BORROWER SO SERVED AT ITS ADDRESS  PROVIDED IN THE APPLICABLE
SIGNATURE PAGE HERETO, EXCEPT THAT, UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW,
ANY  FAILURE  TO MAIL SUCH COPY  SHALL NOT  AFFECT  THE  VALIDITY  OF SERVICE OF
PROCESS. IF ANY AGENT APPOINTED BY BORROWER REFUSES TO ACCEPT SERVICE,  BORROWER
HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE  SUFFICIENT  NOTICE.
NOTHING  HEREIN  SHALL  AFFECT THE RIGHT TO SERVE  PROCESS  IN ANY OTHER  MANNER
PERMITTED  BY LAW OR SHALL  LIMIT THE RIGHT OF ANY  LENDER TO BRING  PROCEEDINGS
AGAINST BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.

         EACH PARTY HERETO HEREBY  WAIVES,  TO THE FULLEST  EXTENT  PERMITTED BY
APPLICABLE  LAW,  ANY  RIGHT IT MAY HAVE TO A TRIAL  BY JURY IN  RESPECT  OF ANY
LITIGATION  DIRECTLY OR INDIRECTLY  ARISING OUT OF, UNDER OR IN CONNECTION  WITH
THIS  AGREEMENT  OR ANY OF THE OTHER  LOAN  DOCUMENTS.  EACH  PARTY  HERETO  (i)
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 (ii) 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 9.18.

         9.18     Confidentiality.



<PAGE>


         Subject  to  subsection   9.2F,   Lenders  shall  hold  all  non-public
information  obtained  pursuant to the  requirements of this Agreement which has
been  identified  as  such  by  Borrower  in  accordance  with  their  customary
procedures  for  handling  confidential   information  of  this  nature  and  in
accordance  with safe and sound banking  practices and in any event,  subject to
subsection  9.2F,  may make  disclosure  reasonably  required  by any bona  fide
transferee or participant in connection  with the  contemplated  transfer of any
Loan or  participation  therein or as required or requested by any  governmental
agency or representative  thereof or as otherwise required by law or pursuant to
legal process;  provided that, unless specifically  prohibited by applicable law
or court  order,  each  Lender  shall  notify  Borrower  of any  request  by any
governmental  agency of  representative  thereof (other than any such request in
connection with an examination of the financial condition of such Lender by such
governmental agency) for disclosure of any such non-public  information prior to
disclosure  of such  information  so that  either  or both of them  may  seek an
appropriate protective order; and provided,  further, that in no event shall any
Lender be obligated or required to return any materials furnished by Borrower.

         9.19     Counterparts.

         This Agreement and any amendments, waivers, consents or supplements may
be executed in any number of  counterparts  and by different  parties  hereto in
separate  counterparts,  each of which when so executed and  delivered  shall be
deemed an original,  but all such counterparts together shall constitute but one
and the same instrument. Delivery of an executed counterpart of a signature page
to this Agreement by facsimile  transmission shall be effective as delivery of a
manually executed counterpart of this Agreement.

         9.20     No Third Party Beneficiaries.

         No  entity or  person,  other  than the  parties  (and,  in the case of
Lenders,  their permitted  successors and assigns  hereunder) to this Agreement,
has been given or shall be deemed to have been given any rights as a third party
beneficiary  hereunder  or  under  any of the  other  Loan  Documents  or  other
instruments and documents executed in connection herewith and therewith.


<PAGE>


         WITNESS the due  execution  hereof by the  respective  duly  authorized
officers of the undersigned as of the date first written above.

                            BURLINGTON INDUSTRIES, INC.,

                               by
                                 /s/ John D. Englar
                                 -----------------------------------------------
     Name: John D. Englar
                                 Title: Senior Vice President


                            THE CHASE MANHATTAN BANK,  individually and as
                            Administrative  Agent,  Collateral
                            Agent and Swingline Bank,

                               by
                                 /s/ D. Davey
                                 -----------------------------------------------
        Name: D. Davey
   Title: Managing Director


                            CHASE MANHATTAN BANK USA, N.A., as Fronting Bank,

                               by
                                 /s/ Michael P. Handago
                                 -----------------------------------------------
   Name: Michael P. Handago
     Title: Vice President


                            BANK OF AMERICA, N.A.,

                              by
                                 /s/ E. Phifer Helms
                                 -----------------------------------------------
     Name: E. Phifer Helms
   Title: Managing Director


                            WACHOVIA BANK, N.A.,

                              by
                                 /s/ Haywood Edmundson, V
                                 -----------------------------------------------
                                 Name: Haywood Edmundson, V
                                 Title: Senior Vice President


                            SUNTRUST BANK

                            by
                              /s/ Bradley J. Staples
                              --------------------------------------------------
   Name: Bradley J. Staples
                              Title: Director




<PAGE>


                             FIRST UNION NATIONAL BANK,

                               by
                                  /s/ Roger Pelz
                                  ----------------------------------------------
        Name: Roger Pelz
                                  Title: Senior Vice President


                             BNP PARIBAS,

                               by
                                  /s/ Henry F. Setina
                                  ----------------------------------------------
      Name: Henry F. Setina
      Title: Vice President

                               by
                                  /s/ Lloyd G. Cox
                                  ----------------------------------------------
       Name: Lloyd G. Cox
    Title: Managing Director


                             THE BANK OF NOVA SCOTIA,

                               by
                                  /s/ William E. Zarrett
                                  ----------------------------------------------
    Name: William E. Zarrett
    Title: Managing Director


                             CANADIAN IMPERIAL BANK OF COMMERCE,

                               by
                                  /s/ Stephanie E. DeVane
                                  ----------------------------------------------
                                  Name: Stephanie E. DeVane
                                  Title: Executive Director, CIBC World Markets
         Corp., as Agent


                             BANK OF TOKYO-MITSUBISHI, LTD.

                               by
                                  /s/ R. Glass
                                  ----------------------------------------------
         Name: R. Glass
      Title: Vice President


   THE SUMITOMO BANK, LIMITED

                             by
                               /s/ C. Michael Garrido
                               -------------------------------------------------
    Name: C. Michael Garrido
  Title: Senior Vice President




<PAGE>


                           THE BANK OF NEW YORK,

                             by
                                /s/ Edward J. DeSalvio
                                ------------------------------------------------
  Name: Edward J. DeSalvio
    Title: Vice President


                           US BANK - NATIONAL ASSOCIATION,

                             by
                                /s/ Thomas W. Cherry
                                ------------------------------------------------
   Name: Thomas W. Cherry
    Title: Vice President


                           FLEET NATIONAL BANK,

                             by
                                /s/ Virginia Dennett
                                ------------------------------------------------
   Name: Virginia Dennett
       Title: Director


                           SOCIETE GENERALE,

                             by
                                /s/ Jay Sands
                                ------------------------------------------------
       Name: Jay Sands
  Title: Managing Director


                           PNC BANK, NATIONAL ASSOCIATION,

                             by
                                /s/ Mark Stasenko
                                ------------------------------------------------
     Name: Mark Stasenko
    Title: Vice President


                           HSBC BANK USA,

                             by
                                /s/ Christopher Casey
                                ------------------------------------------------
   Name: Christopher Casey
    Title: Vice President


                           THE FUJI BANK, LTD.,

                             by
                                /s/ Yuji Tanaka
                                ------------------------------------------------
      Name: Yuji Tanaka
    Title: V.P. & Manager


<PAGE>


                          CREDIT LYONNAIS NEW YORK BRANCH,

                            by
                               /s/ Thierry Vincent
                               -------------------------------------------------
   Name: Thierry Vincent
                               Title: Senior Vice President


                          THE TOKAI BANK, LTD.,

                            by
                               /s/ Shinichi Nakatani
                               -------------------------------------------------
  Name: Shinichi Nakatani
                               Title: Assistant General Manager


<PAGE>

                                                                     EXHIBIT VI


                                    INDEMNITY,   SUBROGATION  and   CONTRIBUTION
                           AGREEMENT  dated  as  of  December  __,  2000,  among
                           BURLINGTON  INDUSTRIES,  INC., a Delaware corporation
                           ("Borrower"),  each  Subsidiary of Borrower listed on
                           Schedule   I   hereto    (each    such    subsidiary,
                           individually,    a   "Subsidiary    Guarantor"    and
                           collectively,  "Subsidiary Guarantors") and THE CHASE
                           MANHATTAN  BANK,  a  New  York  banking   corporation
                           ("Chase"),  as  collateral  agent (in such  capacity,
                           "Collateral  Agent")  for  the  Secured  Parties  (as
                           defined in the Credit Agreement referred to below).


         Reference is made to (a) the Credit Agreement dated as of September 30,
1988,  as amended and restated as of December 5, 2000 (as amended,  supplemented
or  otherwise  modified  from  time to  time,  the  "Credit  Agreement"),  among
Borrower,  the lenders from time to time party thereto  ("Lenders"),  Chase,  as
administrative  agent for Lenders (in such  capacity,  "Administrative  Agent"),
Collateral  Agent and as swingline  lender and Chase Manhattan Bank USA, N.A. as
fronting  bank  (in  such  capacity,  "Fronting  Bank")  and (b)  the  Guarantee
Agreement  dated as of  December  __, 2000  between  Subsidiary  Guarantors  and
Collateral Agent (the "Guarantee Agreement").  Capitalized terms used herein and
not defined herein shall have the meanings  assigned to such terms in the Credit
Agreement.

         Lenders  have agreed to make Loans to Borrower,  and Fronting  Bank has
agreed to issue Letters of Credit for the account of Borrower,  pursuant to, and
upon the terms and subject to the conditions specified in, the Credit Agreement.
Each Subsidiary  Guarantor is guaranteeing  such Loans and the other Obligations
(as defined in the Guarantee  Agreement) of Borrower under the Credit  Agreement
pursuant to the Guarantee  Agreement.  Pursuant to the Security Documents,  each
Subsidiary  Guarantor is granting Liens on and security  interests in certain of
its assets to secure the  Obligations.  The obligations of Lenders to make Loans
and of Fronting Bank to issue Letters of Credit are  conditioned on, among other
things,  the execution and delivery by Borrower and Subsidiary  Guarantors of an
agreement in the form hereof.

         Accordingly,  Borrower,  each Subsidiary Guarantor and Collateral Agent
agree as follows:

         SECTION 1. Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as Subsidiary Guarantors may have under applicable law
(but  subject to Section  3),  Borrower  agrees  that (a) in the event a payment
shall  be  made by any  Subsidiary  Guarantor  under  the  Guarantee  Agreement,
Borrower shall indemnify such  Subsidiary  Guarantor for the full amount of such
payment and such  Subsidiary  Guarantor shall be subrogated to the rights of the
Person to whom such  payment  shall have been made to the extent of such payment
and (b) in the  event  any  assets  of any  Subsidiary  Guarantor  shall be sold
pursuant  to any  Security  Document  to satisfy a claim of any  Secured  Party,
Borrower  shall  indemnify such  Subsidiary  Guarantor in an amount equal to the
greater of the book value or the fair market value of the assets so sold.



<PAGE>



         SECTION 2. Contribution and Subrogation.  Each Subsidiary  Guarantor (a
"Contributing  Subsidiary Guarantor") agrees (subject to Section 3) that, in the
event a  payment  shall be made by any  other  Subsidiary  Guarantor  under  the
Guarantee  Agreement or assets of any other  Subsidiary  Guarantor shall be sold
pursuant to any  Security  Document to satisfy a claim of any Secured  Party and
such other Subsidiary Guarantor (the "Claiming Subsidiary  Guarantor") shall not
have  been  fully  indemnified  by  Borrower  as  provided  in  Section  1,  the
Contributing  Subsidiary  Guarantor  shall  indemnify  the  Claiming  Subsidiary
Guarantor in an amount equal to the amount of such payment or the greater of the
book value or the fair market value of such assets,  as the case may be, in each
case  multiplied by a fraction of which the numerator  shall be the net worth of
the  Contributing  Subsidiary  Guarantor on the date hereof and the  denominator
shall be the aggregate net worth of all Subsidiary Guarantors on the date hereof
(or, in the case of any Subsidiary Guarantor becoming a party hereto pursuant to
Section 12, the date of the  Supplement  hereto  executed and  delivered by such
Subsidiary Guarantor).  Any Contributing Subsidiary Guarantor making any payment
to a  Claiming  Subsidiary  Guarantor  pursuant  to  this  Section  2  shall  be
subrogated to the rights of such Claiming  Subsidiary  Guarantor under Section 1
to the extent of such payment.

         SECTION  3.  Subordination.   Notwithstanding  any  provision  of  this
Agreement to the contrary,  all rights of Subsidiary Guarantors under Sections 1
and 2 and all other  rights of  indemnity,  contribution  or  subrogation  under
applicable  law or otherwise  shall be fully  subordinated  to the  indefeasible
payment in full in cash of the  Obligations.  No failure on the part of Borrower
or any  Subsidiary  Guarantor to make the payments  required by Sections 1 and 2
(or any other payments  required under applicable law or otherwise) shall in any
respect limit the obligations  and liabilities of any Subsidiary  Guarantor with
respect to its obligations hereunder, and each Subsidiary Guarantor shall remain
liable  for the full  amount of the  obligations  of such  Subsidiary  Guarantor
hereunder.

         SECTION 4.  Termination.  This  Agreement  shall survive and be in full
force  and  effect so long as any  Obligation  is  outstanding  and has not been
indefeasibly  paid in full in  cash,  and so  long as the  aggregate  amount  of
outstanding  Letters  of  Credit  has  not  been  reduced  to zero or any of the
Commitments  under the  Credit  Agreement  have not been  terminated,  and shall
continue to be  effective or be  reinstated,  as the case may be, if at any time
payment,  or any part thereof,  of any Obligation is rescinded or must otherwise
be restored by any Secured Party or any Subsidiary Guarantor upon the bankruptcy
or reorganization of Borrower, any Subsidiary Guarantor or otherwise.

         SECTION 5.  Governing  Law.  THIS  AGREEMENT  SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

         SECTION 6. Waivers; Amendment. (a) No failure on the part of Collateral
Agent or any Subsidiary Guarantor to exercise,  and no delay in exercising,  any
right,  power or remedy  hereunder shall operate as a waiver thereof,  nor shall
any single or partial exercise of any such right,  power or remedy by Collateral
Agent or any Subsidiary Guarantor preclude any other or further exercise thereof
or the exercise of any other right,  power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies  provided by law. None of
Collateral Agent or any of Subsidiary  Guarantors shall be deemed to have waived
any rights  hereunder  unless such waiver shall be in writing and signed by such
parties.

         (b) Neither  this  Agreement  nor any  provision  hereof may be waived,
amended or modified  except  pursuant to an agreement or  agreements  in writing
entered into among  Borrower,  the Subsidiary  Guarantors and Collateral  Agent,
subject to any consents required in accordance with subsection 9.2 of the Credit
Agreement.

         SECTION 7. Notices.  All  communications and notices hereunder shall be
in writing and given as provided in the  Guarantee  Agreement,  and addressed as
specified therein.



<PAGE>


         SECTION 8.  Successors  and Assigns;  Binding  Agreement;  Assignments;
Several  Agreement.  Whenever in this  Agreement  any of the  parties  hereto is
referred  to,  such  reference  shall be deemed to include  the  successors  and
assigns of such party;  and all  covenants,  promises  and  agreements  by or on
behalf of the parties that are contained in this Agreement  shall bind and inure
to the benefit of their respective successors and assigns.  Neither Borrower nor
any Subsidiary Guarantor may assign or transfer any of its rights or obligations
hereunder (and any such attempted  assignment or transfer shall be void) without
the prior written consent of Requisite Lenders.  Notwithstanding  the foregoing,
at the time any Subsidiary  Guarantor is released from its obligations under the
Guarantee  Agreement in accordance  with the Guarantee  Agreement and the Credit
Agreement,   such  Subsidiary  Guarantor  will  cease  to  have  any  rights  or
obligations under this Agreement.

         SECTION 9. Survival of Agreement;  Severability.  (a) All covenants and
agreements  made by Borrower  and each  Subsidiary  Guarantor  herein and in the
certificates  or other  instruments  prepared or delivered in connection with or
pursuant to this  Agreement or the other Loan  Documents  shall be considered to
have been relied upon by Collateral  Agent,  the other Secured  Parties and each
Subsidiary  Guarantor  and shall  survive the making by Lenders of the Loans and
the issuance of the Letters of Credit by Fronting  Bank,  and shall  continue in
full force and effect as long as the principal of or any accrued interest on any
Loans or any other fee or amount  payable  under the  Credit  Agreement  or this
Agreement or under any of the other Loan Documents is outstanding  and unpaid or
the aggregate  amount of outstanding  Letters of Credit exceeds zero and as long
as the Commitments have not been terminated.

         (b) 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 he
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  10.   Counterparts.   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  shall be effective  with
respect to any Subsidiary  Guarantor when a counterpart bearing the signature of
such  Subsidiary  Guarantor  shall  have been  delivered  to  Collateral  Agent.
Delivery  of  an  executed   signature  page  to  this  Agreement  by  facsimile
transmission  shall be as effective as delivery of a manually signed counterpart
of this Agreement.

         SECTION  11.  Rules of  Interpretation.  The  rules  of  interpretation
specified in Section 1.03 of the Credit  Agreement  shall be  applicable to this
Agreement.

         SECTION 12. Additional  Subsidiary  Guarantors.  Pursuant to subsection
5.10 of Credit Agreement, Borrower is required to cause each Subsidiary that was
not in existence or not such a Subsidiary on the date of the Credit Agreement to
enter into the  Guarantee  Agreement as a Subsidiary  Guarantor  upon becoming a
Subsidiary that is a Subsidiary Loan Party.  Upon execution and delivery,  after
the date hereof,  by Collateral  Agent and such a Subsidiary of an instrument in
the form of Annex 1 hereto, such Subsidiary shall become a Subsidiary  Guarantor
hereunder with the same force and effect as if originally  named as a Subsidiary
Guarantor  hereunder.  The  execution and delivery of any  instrument  adding an
additional  Subsidiary  Guarantor as a party to this Agreement shall not require
the  consent  of any  other  Subsidiary  Guarantor  hereunder.  The  rights  and
obligations of each  Subsidiary  Guarantor  hereunder shall remain in full force
and effect  notwithstanding  the addition of any new  Subsidiary  Guarantor as a
party to this Agreement.




<PAGE>


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






                 BURLINGTON INDUSTRIES, INC.,

                    by


                       Name:
                       Title:






                 EACH OF THE SUBSIDIARIES LISTED ON SCHEDULE I
                 HERETO,

                    by


                       Name:
                       Title:







                 THE CHASE MANHATTAN BANK, as Collateral Agent,

                    by


                       Name:
                       Title:







                                   SCHEDULE I
                to the Indemnity, Subrogation
                   and Contribution Agreement

                              Subsidiary Guarantors


Name






                                                                  Annex 1 to
                                              the Indemnity, Subrogation and
                                                      Contribution Agreement

                                    SUPPLEMENT   NO.   dated  as  of  ,  to  the
                           Indemnity,  Subrogation  and  Contribution  Agreement
                           dated as of  December  __,  2000 (as may be  amended,
                           supplemented or otherwise modified from time to time,
                           the   "Indemnity,    Subrogation   and   Contribution
                           Agreement"),  among  BURLINGTON  INDUSTRIES,  INC., a
                           Delaware corporation ("Borrower"), each Subsidiary of
                           Borrower  listed on  Schedule  I thereto  (each  such
                           subsidiary,  individually,  a "Subsidiary  Guarantor"
                           and collectively,  "Subsidiary Guarantors"),  and THE
                           CHASE MANHATTAN BANK, a New York banking  corporation
                           ("Chase"),  as  collateral  agent (in such  capacity,
                           "Collateral  Agent")  for  the  Secured  Parties  (as
                           defined in the Credit Agreement referred to below).

         A. Reference is made to (a) the Credit  Agreement dated as of September
30,  1988,  as  amended  and  restated  as of  December  5,  2000  (as  amended,
supplemented or otherwise  modified from time to time, the "Credit  Agreement"),
among Borrower, the lenders from time to time party thereto ("Lenders"),  Chase,
as administrative agent for Lenders (in such capacity,  "Administrative Agent"),
Collateral  Agent and as swingline  lender and Chase Manhattan Bank USA, N.A. as
fronting  bank  (in  such  capacity,  "Fronting  Bank")  and (b)  the  Guarantee
Agreement  dated as of  December  __, 2000  between  Subsidiary  Guarantors  and
Collateral Agent (the "Guarantee Agreement").

         B. Capitalized terms used herein and not otherwise defined herein shall
have the  meanings  assigned  to such terms in the  Indemnity,  Subrogation  and
Contribution Agreement and the Credit Agreement.

         C. Borrower and Subsidiary  Guarantors have entered into the Indemnity,
Subrogation and Contribution  Agreement in order to induce Lenders to make Loans
and Fronting Bank to issue Letters of Credit. Pursuant to subsection 5.10 of the
Credit Agreement,  Borrower is required to cause each Subsidiary that was not in
existence or not a Subsidiary on the date of the Credit  Agreement to enter into
the  Guarantee  Agreement as a Subsidiary  Guarantor  upon becoming a Subsidiary
that is a Subsidiary  Loan Party.  Section 12 of the Indemnity,  Subrogation and
Contribution  Agreement  provides that  additional  Subsidiaries of Borrower may
become Subsidiary  Guarantors under the Indemnity,  Subrogation and Contribution
Agreement  by  execution  and  delivery  of an  instrument  in the  form of this
Supplement. The undersigned Subsidiary ("New Subsidiary Guarantor") is executing
this Supplement in accordance with the  requirements of the Credit  Agreement to
become a Subsidiary Guarantor under the Indemnity,  Subrogation and Contribution
Agreement in order to induce Lenders to make additional  Loans and Fronting Bank
to issue additional  Letters of Credit and as consideration for Loans previously
made and Letters of Credit previously issued.

         Accordingly,  Collateral  Agent and New Subsidiary  Guarantor  agree as
follows:

         SECTION 1. In accordance with Section 12 of the Indemnity,  Subrogation
and  Contribution  Agreement,  New Subsidiary  Guarantor by its signature  below
becomes a Subsidiary Guarantor under the Indemnity, Subrogation and Contribution
Agreement  with the same force and effect as if  originally  named  therein as a
Subsidiary Guarantor and New Subsidiary Guarantor hereby agrees to all the terms
and  provisions  of  the  Indemnity,   Subrogation  and  Contribution  Agreement
applicable  to it as a  Subsidiary  Guarantor  thereunder.  Each  reference to a
"Subsidiary Guarantor" in the Indemnity,  Subrogation and Contribution Agreement
shall be deemed to include New Subsidiary Guarantor. The Indemnity,  Subrogation
and Contribution Agreement is hereby incorporated herein by reference.



<PAGE>




         SECTION  2.  New  Subsidiary   Guarantor  represents  and  warrants  to
Collateral  Agent and the other Secured  Parties that this  Supplement  has been
duly authorized,  executed and delivered by it and constitutes its legal,  valid
and binding  obligation,  enforceable  against it in accordance  with its terms,
except as enforcement may be limited by bankruptcy, insolvency,  reorganization,
moratorium or similar laws relating to or limiting  creditors'  rights generally
or by equitable principles relating to enforceability.

         SECTION 3. This  Supplement  may be executed in  counterparts,  each of
which shall  constitute an original,  but all of which when taken together shall
constitute  a single  contract.  This  Supplement  shall become  effective  when
Collateral Agent shall have received  counterparts of this Supplement that, when
taken together,  bear the signatures of New Subsidiary  Guarantor and Collateral
Agent.  Delivery of an executed  signature page to this  Supplement by facsimile
transmission  shall be as effective as delivery of a manually signed counterpart
of this Supplement.

         SECTION 4. Except as  expressly  supplemented  hereby,  the  Indemnity,
Subrogation and Contribution Agreement shall remain in full force and effect.

         SECTION 5. THIS  SUPPLEMENT  SHALL BE  GOVERNED  BY, AND  CONSTRUED  IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

         SECTION 6. In the event any one or more of the provisions  contained in
this Supplement should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions hereof and
in the Indemnity, Subrogation and Contribution Agreement shall not in any way be
affected or impaired (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 7. All communications and notices hereunder shall be in writing
and  given  as  provided  in  Section  7  of  the  Indemnity,   Subrogation  and
Contribution Agreement.


<PAGE>



         IN WITNESS WHEREOF,  New Subsidiary Guarantor and Collateral Agent have
duly executed this  Supplement to the Indemnity,  Subrogation  and  Contribution
Agreement as of the day and year first above written.







                            [NAME OF NEW SUBSIDIARY GUARANTOR],

                               by

                                  Name:
                                  Title:
                                  Address:


                            THE CHASE MANHATTAN BANK, as Collateral Agent,

                               by

                                  Name:
                                  Title:






<PAGE>




                                                                     EXHIBIT VII


                        GUARANTEE AGREEMENT dated as of December __, 2000, among
                  each of the  subsidiaries  listed on  Schedule I hereto  (each
                  such subsidiary,  individually,  a "Subsidiary Guarantor", and
                  collectively,    "Subsidiary    Guarantors")   of   BURLINGTON
                  INDUSTRIES, INC., a Delaware corporation ("Borrower"), and THE
                  CHASE   MANHATTAN   BANK,  a  New  York  banking   corporation
                  ("Chase"), as collateral agent (in such capacity,  "Collateral
                  Agent")  for the  Secured  Parties  (as  defined in the Credit
                  Agreement referred to below).

         Reference is made to the Credit  Agreement  dated as of  September  30,
1988,  as amended and restated as of December 5, 2000 (as amended,  supplemented
or  otherwise  modified  from  time to  time,  the  "Credit  Agreement"),  among
Borrower,  the lenders from time to time party thereto  ("Lenders"),  Chase,  as
administrative  agent for Lenders (in such  capacity,  "Administrative  Agent"),
Collateral  Agent and as swingline  lender and Chase Manhattan Bank USA, N.A. as
fronting bank (in such capacity, "Fronting Bank"). Capitalized terms used herein
and not defined  herein  shall have the  meanings  assigned to such terms in the
Credit Agreement.

         Lenders  have agreed to make Loans to Borrower,  and Fronting  Bank has
agreed to issue Letters of Credit for the account of Borrower,  pursuant to, and
upon the terms and subject to the conditions specified in, the Credit Agreement.
Each Subsidiary  Guarantor is a direct or indirect Subsidiary of Borrower and it
acknowledges  that it will  derive  substantial  benefit  from the making of the
Loans by Lenders,  and the  issuance of the Letters of Credit by Fronting  Bank.
Borrower has elected that each  Subsidiary  Guarantor  guarantee the Obligations
(as defined below) by entering into this  Agreement.  The obligations of Lenders
to make Loans and of Fronting  Bank to issue  Letters of Credit are  conditioned
on, among other things, the execution and delivery by each Subsidiary  Guarantor
of a guarantee  agreement in the form hereof.  As consideration  therefor and in
order to induce  Lenders to make  Loans and  Fronting  Bank to issue  Letters of
Credit, each Subsidiary Guarantor is willing to execute this Agreement.

         Accordingly,  each Subsidiary  Guarantor and Administrative  Agent (and
each of their respective successors and assigns) agree as follows:


         SECTION  1.  Guarantee.   Each  Subsidiary  Guarantor   unconditionally
guarantees,  jointly with the other  Subsidiary  Guarantors and severally,  as a
primary obligor and not merely as a surety,  (a) the due and punctual payment of
(i) the  principal of and premium,  if any,  and  interest  (including  interest
accruing  during the pendency of any  bankruptcy,  insolvency,  receivership  or
other similar  proceeding,  regardless  of whether  allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by acceleration,
upon one or more  dates set for  prepayment  or  otherwise,  (ii)  each  payment
required  to be made  under the  Credit  Agreement  in  respect of any Letter of
Credit,  when and as due,  including  payments  in respect of  reimbursement  of
disbursements,  interest  thereon and obligations to provide cash collateral and
(iii) all other  monetary  obligations,  including  fees,  costs,  expenses  and
indemnities,  whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary  obligations incurred during the pendency of any bankruptcy,
insolvency,  receivership  or other  similar  proceeding,  regardless of whether
allowed or  allowable  in such  proceeding),  of the Loan Parties to the Secured
Parties under the Credit Agreement and the other Loan Documents, (b) the due and
punctual payment and performance of all covenants,  agreements,  obligations and
liabilities  of the Loan Parties  under or pursuant to the Credit  Agreement and
the other Loan  Documents,  (c) unless  otherwise  agreed upon in writing by the
applicable Lender party thereto, the due and punctual payment and performance of
all obligations of each Loan Party,  monetary or otherwise,  under each Interest
Rate  Protection  Agreement  or  Commodities   Agreement  entered  into  with  a
counterparty  that was a  Lender  (or an  Affiliate  thereof)  at the time  such
Interest Rate Protection Agreement or Commodities Agreement was entered into and
(d) the due and punctual  payment and  performance of all obligations in respect
of overdrafts and related liabilities owed to Administrative Agent or Collateral
Agent or any of their Affiliates and arising from treasury,  depositary and cash
management services or in connection with any automated clearing house transfers
of funds (all the monetary and other  obligations  referred to in the  preceding
clauses (a) through (d) being referred to  collectively  as the  "Obligations").
Each Subsidiary Guarantor further agrees that the Obligations may be extended or
renewed,  in whole or in part,  without notice to or further assent from it, and
that it will remain bound upon its  guarantee  notwithstanding  any extension or
renewal of any Obligation.

         SECTION 2.  Obligations Not Waived.  To the fullest extent permitted by
applicable  law, each  Subsidiary  Guarantor  waives  presentment  to, demand of
payment  from and  protest  to  Borrower  or any other  Loan Party of any of the
Obligations, and also waives notice of acceptance of its guarantee and notice of
protest for nonpayment.  To the fullest extent  permitted by applicable law, the
obligations of each Subsidiary  Guarantor hereunder shall not be affected by (a)
the failure of  Collateral  Agent or any other Secured Party to assert any claim
or demand or to enforce or exercise any right or remedy against  Borrower or any
other Loan Party under the  provisions of the Credit  Agreement,  any other Loan
Document or otherwise, (b) any rescission, waiver, amendment or modification of,
or any release from any of the terms or provisions of this Agreement,  any other
Loan Document or any other  agreement or (c) the failure to perfect any security
interest  in, or the  release  of, any of the  security  held by or on behalf of
Collateral Agent or any other Secured Party.

         SECTION 3. Security.  Each Subsidiary Guarantor  authorizes  Collateral
Agent on behalf of itself and each of the other Secured  Parties to (a) take and
hold  security  pursuant  to the  Security  Documents,  for the  payment of this
guarantee and the Obligations and exchange,  enforce, waive and release any such
security, (b) apply such security and direct the order or manner of sale thereof
as the  Collateral  Agent in its  reasonable  discretion  may  determine and (c)
release or  substitute  any one or more  endorsees,  other  guarantors  or other
obligors.

         SECTION 4.  Guarantee of Payment.  Each  Subsidiary  Guarantor  further
agrees that its guarantee hereunder  constitutes a guarantee of payment when due
and not of collection, and waives any right to require that any resort be had by
Collateral  Agent or any other  Secured  Party to any of the  security  held for
payment of the Obligations or to any balance of any deposit account or credit on
the books of  Collateral  Agent or any other Secured Party in favor of Borrower,
any other Loan Party or any other Person.

         SECTION 5. No Discharge or Diminishment  of Guarantee.  The obligations
of each  Subsidiary  Guarantor  hereunder shall not be subject to any reduction,
limitation,  impairment or termination for any reason (other than the payment in
full in cash of all the  Obligations),  including any claim of waiver,  release,
surrender,  alteration or compromise of any of the Obligations, and shall not be
subject  to any  defense  (other  than a defense  of  payment  or  performance),
set-off,  counterclaim,  recoupment or  termination  whatsoever by reason of the
invalidity,  illegality or  unenforceability  of the  Obligations  or otherwise.
Without  limiting the  generality  of the  foregoing,  the  obligations  of each
Subsidiary  Guarantor hereunder shall not be discharged or impaired or otherwise
affected by the failure of Administrative  Agent,  Collateral Agent or any other
Secured  Party to assert any claim or demand or to enforce any remedy  under the
Credit Agreement,  any other Loan Document or any other agreement, by any waiver
or  modification  of any  provision of any thereof,  by any default,  failure or
delay,  wilful or otherwise,  in the performance of the  Obligations,  or by any
other act or omission  that may or might in any manner or to any extent vary the
risk of each Subsidiary Guarantor or that would otherwise operate as a discharge
of each  Subsidiary  Guarantor  as a matter  of law or  equity  (other  than the
indefeasible payment in full in cash of all the Obligations).


         SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted
by applicable  law,  each  Subsidiary  Guarantor  waives any defense based on or
arising  out of  any  defense  of  Borrower  or  any  other  Loan  Party  or the
unenforceability  of the  Obligations or any part thereof from any cause, or the
cessation  from any cause of the  liability of Borrower or any other Loan Party,
other than the final payment in full in cash of all the Obligations.  Collateral
Agent and the other  Secured  Parties may, at their  election,  foreclose on any
security  held by one or more of  them by one or more  judicial  or  nonjudicial
sales,  accept  an  assignment  of any  such  security  in lieu of  foreclosure,
compromise or adjust any part of the Obligations,  make any other  accommodation
with  Borrower or any other Loan Party or  guarantor or exercise any other right
or  remedy  available  to them  against  Borrower  or any  other  Loan  Party or
guarantor,  without  affecting  or  impairing  in any way the  liability  of any
Subsidiary  Guarantor  hereunder  except to the extent the Obligations have been
fully and finally paid in cash.  To the fullest  extent  permitted by applicable
law,  each  Subsidiary  Guarantor  waives any  defense  arising  out of any such
election even though such  election  operates,  pursuant to  applicable  law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such Subsidiary  Guarantor against Borrower or any other Loan Party
or guarantor, as the case may be, or any security.

         SECTION 7.  Agreement  to Pay;  Subordination.  In  furtherance  of the
foregoing and not in limitation of any other right that Collateral  Agent or any
other Secured Party has at law or in equity against any Subsidiary  Guarantor by
virtue  hereof,  upon the failure of Borrower or any other Loan Party to pay any
Obligation  when and as the same  shall  become  due,  whether at  maturity,  by
acceleration, after notice of prepayment or otherwise, each Subsidiary Guarantor
hereby  promises to and will  forthwith  pay, or cause to be paid, to Collateral
Agent or such other Secured  Party as  designated  thereby in cash the amount of
such unpaid Obligations. Upon payment by any Subsidiary Guarantor of any sums to
Collateral  Agent or any  Secured  Party as provided  above,  all rights of such
Subsidiary  Guarantor against Borrower or the applicable Loan Party arising as a
result  thereof  by way of right of  subrogation,  contribution,  reimbursement,
indemnity or otherwise  shall in all respects be subordinate and junior in right
of  payment  to the prior  payment  in full in cash of all the  Obligations.  In
addition,  any  indebtedness of Borrower now or hereafter held by any Subsidiary
Guarantor  is hereby  subordinated  in right of payment to the prior  payment in
full  of the  Obligations.  If any  amount  shall  erroneously  be  paid  to any
Subsidiary   Guarantor  on  account  of  (i)  such  subrogation,   contribution,
reimbursement,  indemnity  or  similar  right or (ii) any such  indebtedness  of
Borrower,  such  amount  shall be held in trust for the  benefit of the  Secured
Parties and shall forthwith be paid to Collateral  Agent to be credited  against
the payment of the Obligations, whether matured or unmatured, in accordance with
the terms of the Loan Documents.

         SECTION  8.   Information.   Each  Subsidiary   Guarantor  assumes  all
responsibility  for being and keeping  itself  informed of Borrower's  financial
condition and assets,  and of all other  circumstances  bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks that
such Subsidiary Guarantor assumes and incurs hereunder,  and agrees that none of
Collateral  Agent or the  other  Secured  Parties  will  have any duty to advise
Subsidiary  Guarantor of  information  known to it or any of them regarding such
circumstances or risks.

         SECTION 9.  Representations and Warranties.  Each Subsidiary  Guarantor
represents and warrants that all  representations  and warranties relating to it
contained in the Credit Agreement are true and correct.

         SECTION  10.  Termination.  The  guarantees  made  hereunder  (a) shall
terminate  when all the  Obligations  have been paid in full in cash and Lenders
have no further  commitment  to lend under the Credit  Agreement,  the aggregate
amount of  outstanding  Letters of Credit has been  reduced to zero and Fronting
Bank has no  further  obligation  to issue  Letters  of Credit  under the Credit
Agreement and (b) shall continue to be effective or be  reinstated,  as the case
may be,  if at any time  payment,  or any part  thereof,  of any  Obligation  is
rescinded or must  otherwise be restored by any Secured Party or any  Subsidiary
Guarantor  upon the  bankruptcy or  reorganization  of Borrower,  any Subsidiary
Guarantor or otherwise.

         SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors  and assigns of such party;  and all covenants,
promises and  agreements by or on behalf of any  Subsidiary  Guarantor  that are
contained  in this  Agreement  shall bind and inure to the benefit of each party
hereto and their respective  successors and assigns. This Agreement shall become
effective as to any Subsidiary  Guarantor when a counterpart  hereof executed on
behalf of such  Subsidiary  Guarantor  shall have been  delivered to  Collateral
Agent, and a counterpart hereof shall have been executed on behalf of Collateral
Agent,  and  thereafter  shall be binding  upon such  Subsidiary  Guarantor  and
Collateral Agent and their respective successors and assigns, and shall inure to
the benefit of such Subsidiary Guarantor, Collateral Agent and the other Secured
Parties, and their respective successors and assigns,  except that no Subsidiary
Guarantor shall have the right to assign its rights or obligations  hereunder or
any interest herein (and any such attempted assignment shall be void). If all of
the  Equity  Interests  of a  Subsidiary  Guarantor  are  sold,  transferred  or
otherwise  disposed of (other than to Borrower or an Affiliate thereof) pursuant
to a  transaction  permitted by the Credit  Agreement,  or if the existence of a
Subsidiary  Guarantor is  terminated  pursuant to  subsection  5.2 of the Credit
Agreement,  such  Subsidiary  Guarantor  shall be released from its  obligations
under this Agreement  without further action.  This Agreement shall be construed
as a separate  agreement  with respect to each  Subsidiary  Guarantor and may be
amended,  modified,  supplemented,  waived  or  released  with  respect  to  any
Subsidiary  Guarantor without the approval of any other Subsidiary Guarantor and
without affecting the obligations of any other Subsidiary Guarantor hereunder.

         SECTION 12. Waivers;  Amendment.  (a) No failure or delay of Collateral
Agent in  exercising  any power or right  hereunder  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 Collateral  Agent  hereunder and the
other Secured  Parties under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this  Agreement or consent to any  departure by any  Subsidiary
Guarantor  therefrom  shall in any event be  effective  unless the same shall be
permitted  by  paragraph  (b) below,  and then such  waiver or consent  shall be
effective only in the specific  instance and for the purpose for which given. No
notice or demand on any  Subsidiary  Guarantor  in any case shall  entitle  such
Subsidiary  Guarantor  to any other or  further  notice or demand in  similar or
other circumstances.

         (b) Neither  this  Agreement  nor any  provision  hereof may be waived,
amended or modified  except  pursuant to an agreement or  agreements  in writing
entered  into  between  the  Subsidiary  Guarantors  with  respect to which such
waiver,  amendment or modification  relates and Collateral Agent, subject to any
consents required in accordance with subsection 9.6 of the Credit Agreement.

         SECTION 13.  Governing  Law. THIS  AGREEMENT  SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

         SECTION 14. Notices.  All communications and notices hereunder shall be
in writing and given and shall become effective as provided in subsection 9.9 of
the  Credit  Agreement.   All  communications  and  notices  hereunder  to  each
Subsidiary Guarantor shall be given to it in such manner and in its name in care
of Borrower at  Borrower's  address  set forth in  subsection  9.9 of the Credit
Agreement.

         SECTION 15.  Survival of Agreement;  Severability.  (a) All  covenants,
agreements,  representations  and warranties made by each  Subsidiary  Guarantor
herein and in the  certificates  or other  instruments  prepared or delivered in
connection  with or pursuant to this  Agreement or any other Loan Document shall
be considered to have been relied upon by Collateral Agent and the other Secured
Parties and shall survive the making by Lenders of the Loans and the issuance of
the Letters of Credit by Fronting Bank regardless of any  investigation  made by
the Secured  Parties or on their  behalf,  and shall  continue in full force and
effect until this Agreement shall terminate as provided in Section 10.

         (b) In the event that any provision of this Agreement should be held to
be invalid,  illegal or unenforceable  in any  jurisdiction in any respect,  the
validity,  legality and enforceability of the remaining  provisions hereof shall
not in any way be affected or impaired (it being  understood that the invalidity
of a particular provision in a particular jurisdiction shall not invalidate 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  16.   Counterparts.   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,  and shall become effective as provided in
Section 11. Delivery of an executed signature page to this Agreement by telecopy
shall be as effective  as delivery of a manually  executed  counterpart  of this
Agreement.

         SECTION  17.  Rules of  Interpretation.  The  rules  of  interpretation
specified in subsection 1.3 of the Credit  Agreement shall be applicable to this
Agreement.  Section  headings 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  18.  Jurisdiction;  Consent to Service  of  Process.  (a) Each
Subsidiary Guarantor hereby irrevocably and unconditionally  submits, for itself
and its property,  to the nonexclusive  jurisdiction of any New York State court
or Federal court of the United States of America  sitting in New York City,  and
any appellate court from any thereof, in any action or proceeding arising out of
or relating to this 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
Collateral  Agent or any other  Secured  Party may  otherwise  have to bring any
action or  proceeding  relating to this  Agreement  or the other Loan  Documents
against  any  Subsidiary  Guarantor  or  its  properties  in the  courts  of any
jurisdiction.

         (b) Each Subsidiary  Guarantor hereby  irrevocably and  unconditionally
waives,  to the  fullest  extent  it may  legally  and  effectively  do so,  any
objection  that it may now or hereafter have to the laying of venue of any suit,
action or proceeding  arising out of or relating to this  Agreement or the other
Loan  Documents in any court  referred to in  paragraph  (a) of this Section 18.
Each of the parties  hereto hereby  irrevocably  waives,  to the fullest  extent
permitted by law, the defense of an  inconvenient  forum to the  maintenance  of
such action or proceeding in any such court.

         (c) Each party to this  Agreement  irrevocably  consents  to service of
process in the manner  provided  for  notices  in  Section  14.  Nothing in this
Agreement  will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

         SECTION 19. 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 RESPECT OF ANY  LITIGATION  DIRECTLY  OR  INDIRECTLY  ARISING OUT OF,
UNDER OR IN CONNECTION  WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN  DOCUMENTS.
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 19.

         SECTION 20.  Additional  Guarantors.  Pursuant  to Section  5.10 of the
Credit  Agreement,  each  Subsidiary Loan Party that was not in existence on the
date of the Credit  Agreement  is  required  to enter into this  Agreement  as a
Subsidiary  Guarantor upon becoming a Subsidiary Loan Party.  Upon execution and
delivery  after the date hereof by Collateral  Agent and such a Subsidiary of an
instrument  in the form of Annex 1, such  Subsidiary  shall  become a Subsidiary
Guarantor  hereunder with the same force and effect as if originally  named as a
Subsidiary Guarantor herein. The execution and delivery of any instrument adding
an  additional  Subsidiary  Guarantor  as a party to this  Agreement  shall  not
require the consent of any other Subsidiary Guarantor hereunder.  The rights and
obligations of each  Subsidiary  Guarantor  hereunder shall remain in full force
and effect  notwithstanding  the addition of any new  Subsidiary  Guarantor as a
party to this Agreement.

         SECTION  21.  Right  of  Set-off.  If an Event of  Default  shall  have
occurred and be continuing,  each Secured Party is hereby authorized at any time
and from time to time,  to the fullest  extent  permitted by law, to set-off and
apply any and all deposits (general or special,  time or demand,  provisional or
final) at any time held and other Indebtedness at any time owing by such Secured
Party to or for the credit or the account of Subsidiary Guarantor against any or
all the obligations of Subsidiary Guarantor now or hereafter existing under this
Agreement and the other Loan Documents held by such Secured Party,  irrespective
of  whether or not such  Secured  Party  shall  have made any demand  under this
Agreement or any other Loan Document,  to the extent such  obligations  are then
due and payable (by acceleration or otherwise). The rights of each Secured Party
under this Section 21 are in addition to other  rights and  remedies  (including
other rights of set-off) which such Secured Party may have.






<PAGE>


         IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed  this
Agreement as of the day and year first above written.


EACH OF THE SUBSIDIARIES LISTED ON SCHEDULE I HERETO,

  by
    -----------------------
    Name:
    Title:


THE CHASE MANHATTAN BANK, as Collateral Agent,

  by
    -----------------------
    Name:
    Title:


         Schedule I to the
         Guarantee Agreement



Subsidiary Guarantors






<PAGE>


                                                               Annex 1 to the
                                                          Guarantee Agreement

                  SUPPLEMENT NO. dated as of , to the Guarantee  Agreement dated
                  as of December __, 2000, among each of the subsidiaries listed
                  on Schedule I thereto (each such subsidiary,  individually,  a
                  "Subsidiary    Guarantor"   and   collectively,    "Subsidiary
                  Guarantors")  of  BURLINGTON   INDUSTRIES,   INC.  a  Delaware
                  corporation  ("Borrower"),  and THE CHASE  MANHATTAN  BANK, as
                  collateral  agent (in such capacity,  "Collateral  Agent") for
                  the  Secured  Parties  (as  defined  in the  Credit  Agreement
                  referred to below).

         A. Reference is made to the Credit  Agreement dated as of September 30,
1988,  as amended and restated as of December 5, 2000 (as amended,  supplemented
or  otherwise  modified  from  time to  time,  the  "Credit  Agreement"),  among
Borrower,  the lenders from time to time party thereto  ("Lenders"),  Chase,  as
administrative  agent for Lenders (in such  capacity,  "Administrative  Agent"),
Collateral  Agent and as swingline  lender and Chase Manhattan Bank USA, N.A. as
fronting bank (in such capacity, "Fronting Bank").

         B. Capitalized terms used herein and not otherwise defined herein shall
have the  meanings  assigned to such terms in the  Guarantee  Agreement  and the
Credit Agreement.

         C. Subsidiary  Guarantors have entered into the Guarantee  Agreement in
order to induce  Lenders to make  Loans and  Fronting  Bank to issue  Letters of
Credit.  Pursuant  to  subsection  5.10 of the  Credit  Agreement,  Borrower  is
required to cause each  Subsidiary that was not in existence or not a Subsidiary
on the date of the Credit  Agreement to enter into the Guarantee  Agreement as a
Subsidiary Guarantor upon becoming a Subsidiary that is a Subsidiary Loan Party.
Section 20 of the Guarantee  Agreement provides that additional  Subsidiaries of
Borrower  may become  Subsidiary  Guarantors  under the  Guarantee  Agreement by
execution  and delivery of an  instrument  in the form of this  Supplement.  The
undersigned Subsidiary ("New Subsidiary Guarantor") is executing this Supplement
in  accordance  with  the  requirements  of the  Credit  Agreement  to  become a
Subsidiary Guarantor under the Guarantee Agreement in order to induce Lenders to
make additional  Loans and Fronting Bank to issue  additional  Letters of Credit
and as consideration  for Loans previously made and Letters of Credit previously
issued.

         Accordingly,  Collateral  Agent and New Subsidiary  Guarantor  agree as
follows:

         SECTION 1. In accordance  with Section 20 of the  Guarantee  Agreement,
New Subsidiary  Guarantor by its signature below becomes a Subsidiary  Guarantor
under the  Guarantee  Agreement  with the same force and effect as if originally
named therein as a Subsidiary  Guarantor and New Subsidiary Guarantor hereby (a)
agrees to all the terms and provisions of the Guarantee Agreement  applicable to
it as a Subsidiary Guarantor thereunder and (b) represents and warrants that the
representations and warranties made by it as a Subsidiary  Guarantor  thereunder
are  true  and  correct  on and as of  the  date  hereof.  Each  reference  to a
"Subsidiary Guarantor" in the Guarantee Agreement shall be deemed to include New
Subsidiary  Guarantor.  The Guarantee Agreement is hereby incorporated herein by
reference.

         SECTION  2.  New  Subsidiary   Guarantor  represents  and  warrants  to
Collateral  Agent and the other Secured  Parties that this  Supplement  has been
duly authorized,  executed and delivered by it and constitutes its legal,  valid
and binding  obligation,  enforceable  against it in accordance  with its terms,
except as enforcement may be limited by bankruptcy  insolvency,  reorganization,
moratorium or similar laws relating to or limiting  creditors'  rights generally
or by equitable principles relating to enforceability.


         SECTION 3. This  Supplement  may be executed in  counterparts,  each of
which shall  constitute an original,  but all of which when taken together shall
constitute  a single  contract.  This  Supplement  shall become  effective  when
Collateral Agent shall have received  counterparts of this Supplement that, when
taken together,  bear the signatures of New Subsidiary  Guarantor and Collateral
Agent.  Delivery of an executed  signature page to this  Supplement by facsimile
transmission   shall  be  as  effective  as  delivery  of  a  manually  executed
counterpart of this Supplement.

         SECTION 4.  Except as  expressly  supplemented  hereby,  the  Guarantee
Agreement shall remain in full force and effect.

         SECTION 5. THIS  SUPPLEMENT  SHALL BE  GOVERNED  BY, AND  CONSTRUED  IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

         SECTION 6. In case any one or more of the provisions  contained in this
Supplement should be held invalid,  illegal or unenforceable in any respect, the
validity,  legality and  enforceability  of the remaining  provisions  contained
herein  and in the  Guarantee  Agreement  shall  not in any way be  affected  or
impaired  thereby  (it being  understood  that the  invalidity  of a  particular
provision hereof in a particular  jurisdiction shall not in and of itself affect
the validity of such  provision in any other  jurisdiction).  The parties hereto
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 7. All communications and notices hereunder shall be in writing
and given and shall become  effective as provided in Section 14 of the Guarantee
Agreement.  All communications and notices hereunder to New Subsidiary Guarantor
shall be given in such manner and in its name in care of Borrower, at Borrower's
address set forth in subsection 9.9 of the Credit Agreement.

         SECTION 8. New  Subsidiary  Guarantor  agrees to  reimburse  Collateral
Agent  for its  out-of-pocket  expenses  in  connection  with  this  Supplement,
including  the  reasonable  fees,  disbursements  and other  charges  of counsel
Collateral Agent.




<PAGE>


         IN WITNESS WHEREOF,  New Subsidiary Guarantor and Collateral Agent have
duly executed this Supplement to the Guarantee  Agreement as of the day and year
first above written.





[NAME OF NEW SUBSIDIARY GUARANTOR],

by

Name:
Title:








THE CHASE MANHATTAN BANK, as Collateral Agent,

by

Name:
Title:





<PAGE>


                                                                  EXHIBIT VIII



                                    PLEDGE  AGREEMENT  dated as of December  __,
                           2000, among BURLINGTON  INDUSTRIES,  INC., a Delaware
                           corporation ("Borrower"), each Subsidiary of Borrower
                           listed on  Schedule I hereto  (each such  Subsidiary,
                           individually,     a    "Subsidiary    Pledgor"    and
                           collectively,  "Subsidiary  Pledgors";  Borrower  and
                           Subsidiary  Pledgors  are  referred  to  collectively
                           herein as "Pledgors") and THE CHASE MANHATTAN BANK, a
                           New York banking corporation ("Chase"), as collateral
                           agent (in such capacity,  "Collateral Agent") for the
                           Secured  Parties (as defined in the Credit  Agreement
                           referred to below).

         Reference is made to (a) the Credit Agreement dated as of September 30,
1988,  as amended and restated as of December 5, 2000 (as amended,  supplemented
or  otherwise  modified  from  time to  time,  the  "Credit  Agreement"),  among
Borrower,  the lenders from time to time party thereto  ("Lenders"),  Chase,  as
administrative agent for the Lenders (in such capacity, "Administrative Agent"),
Collateral  Agent and as swingline  lender and Chase Manhattan Bank USA, N.A. as
fronting  bank  (in  such  capacity,  "Fronting  Bank")  and (b)  the  Guarantee
Agreement  dated as of December __, 2000 (as amended,  supplemented or otherwise
modified  from time to time,  the  "Guarantee  Agreement"),  between  Subsidiary
Pledgors and  Collateral  Agent.  Capitalized  terms used herein and not defined
herein shall have meanings assigned to such terms in the Credit Agreement.

         Lenders  have agreed to make Loans to Borrower  and  Fronting  Bank has
agreed to issue Letters of Credit for the account of Borrower,  pursuant to, and
upon the terms and subject to the conditions specified in, the Credit Agreement.
Subsidiary  Guarantors  (as defined in the  Security  Agreement)  have agreed to
guarantee,  among other things, all the obligations of Borrower under the Credit
Agreement.  The  obligations  of Lenders to make Loans and of  Fronting  Bank to
issue Letters of Credit are conditioned upon, among other things,  the execution
and delivery by Pledgors of a Pledge  Agreement in the form hereof to secure (a)
the due and punctual payment by Borrower of (i) the principal of and premium, if
any,  and  interest  (including  interest  accruing  during the  pendency of any
bankruptcy, insolvency,  receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans,  when and as due,
whether at maturity, by acceleration,  upon one or more dates set for prepayment
or otherwise, (ii) each payment required to be made by Borrower under the Credit
Agreement  in  respect  of any  Letter  of  Credit,  when and as due,  including
payments in respect of  reimbursement  of  disbursements,  interest  thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including fees,  costs,  expenses and indemnities,  whether primary,  secondary,
direct, contingent,  fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding,  regardless of whether allowed or allowable in such proceeding),  of
Borrower to the Secured  Parties  under the Credit  Agreement and the other Loan
Documents,  (b) the due and punctual  payment and  performance of all covenants,
agreements, obligations and liabilities of the Loan Parties under or pursuant to
the Credit  Agreement and the other Loan Documents,  (c) unless otherwise agreed
upon in writing by the  applicable  Lender party  thereto,  the due and punctual
payment and  performance  of all  obligations  of each Loan  Party,  monetary or
otherwise, under each Interest Rate Protection Agreement,  Commodities Agreement
or Currency  Agreement  entered into with any counterparty that was a Lender (or
an  Affiliate  thereof) at the time such  Interest  Rate  Protection  Agreement,
Commodities Agreement or Currency Agreement was entered into and (d) the due and
punctual payment and performance of all obligations in respect of overdrafts and
related liabilities owed to Administrative Agent, Collateral Agent or any Lender
or any of their  Affiliates  and  arising  from  treasury,  depositary  and cash
management services in connection with any automated clearing house transfers of
funds (all the  monetary  and other  obligations  referred  to in the  preceding
clauses (a) through (d) being referred to collectively as the "Obligations").



<PAGE>



         Accordingly,  Pledgors and  Collateral  Agent,  on behalf of itself and
each Secured Party (and each of their respective successors or assigns),  hereby
agree as follows:

         SECTION 1. Pledge. As security for the payment and performance,  as the
case may be, in full of the Obligations,  each Pledgor hereby transfers, grants,
bargains,  sells,  conveys,  hypothecates,  pledges, sets over and delivers unto
Collateral  Agent,  its successors and assigns,  and hereby grants to Collateral
Agent,  its  successors  and  assigns,  for the  ratable  benefit of the Secured
Parties,  a security interest in all of Pledgor's right,  title and interest in,
to and under (a) the shares of capital  stock owned by it and listed on Schedule
II hereto and any  shares of capital  stock of any  Subsidiary  obtained  in the
future  by  Pledgor  and the  certificates  representing  all such  shares  (the
"Pledged  Stock");  provided  that the Pledged  Stock shall not include (i) more
than  65%  of the  issued  and  outstanding  shares  of  stock  of  any  Foreign
Subsidiary,  (ii) any stock of any Immaterial Subsidiary and (iii) to the extent
that  applicable  law requires  that a Subsidiary  of Pledgor  issue  directors'
qualifying  shares,  such qualifying  shares;  (b)(i) the debt securities listed
opposite the name of Pledgor on Schedule II hereto,  (ii) any debt securities in
the  future  issued to  Pledgor  and (iii)  the  promissory  notes and any other
instruments evidencing such debt securities (the "Pledged Debt Securities"); (c)
all  other  property  that  may be  delivered  to and held by  Collateral  Agent
pursuant  to the terms  hereof;  (d)  subject  to  Section  5, all  payments  of
principal or interest, dividends, cash, instruments and other property from time
to time  received,  receivable  or  otherwise  distributed,  in  respect  of, in
exchange for or upon the conversion of the securities referred to in clauses (a)
and (b) above;  (e) subject to Section 5, all rights and  privileges  of Pledgor
with respect to the securities  and other  property  referred to in clauses (a),
(b), (c) and (d) above;  and (f) all proceeds of any of the foregoing (the items
referred to in clauses (a) through (f) above being  collectively  referred to as
the   "Collateral").   Upon  delivery  to  Collateral   Agent,   (a)  any  stock
certificates,  notes  or  other  securities  now or  hereafter  included  in the
Collateral (the "Pledged  Securities") shall be accompanied by stock powers duly
executed in blank or other  instruments of transfer  satisfactory  to Collateral
Agent and by such  other  instruments  and  documents  as  Collateral  Agent may
reasonably request and (b) all other property  comprising part of the Collateral
shall be  accompanied by proper  instruments of assignment  duly executed by the
applicable  Pledgor and such other  instruments or documents as Collateral Agent
may reasonably request. Each delivery of Pledged Securities shall be accompanied
by a schedule  describing  the  securities  theretofore  and then being  pledged
hereunder,  which  schedule  shall be attached  hereto as Schedule II and made a
part hereof.  Each schedule so delivered  shall supersede any prior schedules so
delivered.

         TO HAVE AND TO HOLD the  Collateral,  together  with all right,  title,
interest,  powers,  privileges and preferences pertaining or incidental thereto,
unto Collateral  Agent,  its successors and assigns,  for the ratable benefit of
the Secured Parties,  forever;  subject,  however,  to the terms,  covenants and
conditions hereinafter set forth.

         SECTION 2. Delivery of the Collateral. (a) Each Pledgor agrees promptly
to deliver or cause to be  delivered  to  Collateral  Agent any and all  Pledged
Securities,  and any and all  certificates  or other  instruments  or  documents
representing the Collateral.

         (b) Each Pledgor will cause any  Indebtedness  for borrowed money in an
amount of at least  $100,000  owed to Pledgor by any person to be evidenced by a
duly executed  promissory note that is pledged and delivered to Collateral Agent
pursuant to the terms thereof.

         SECTION 3.  Representations,  Warranties  and  Covenants.  Each Pledgor
hereby  represents,  warrants  and  covenants,  as to itself and the  Collateral
pledged by it hereunder, to and with Collateral Agent that:

                  (a) the Pledged Stock  represents that percentage as set forth
         on  Schedule II of the issued and  outstanding  shares of each class of
         the capital stock of the issuer with respect thereto;



<PAGE>


                  (b) except for the security  interest granted  hereunder,  and
         except as permitted pursuant to subsection 6.5 of the Credit Agreement,
         Pledgor (i) is and will at all times  continue to be the direct  owner,
         beneficially  and of record,  of the Pledged  Securities  indicated  on
         Schedule  II,  (ii) holds the same free and clear of all  Liens,  other
         than Liens permitted pursuant to the Credit Agreement,  (iii) will make
         no  assignment,  pledge,  hypothecation  or  transfer  of, or create or
         permit  to  exist  any  security  interest  in or other  Lien  on,  the
         Collateral,  other than pursuant hereto, and (iv) subject to Section 5,
         will cause any and all Collateral, whether for value paid by Pledgor or
         otherwise,  to be forthwith deposited with Collateral Agent and pledged
         or assigned hereunder;

                  (c)  Pledgor  (i) has the power and  authority  to pledge  the
         Collateral  in the manner  hereby  done or  contemplated  and (ii) will
         defend its title or  interest  thereto or therein  against  any and all
         Liens  (other  than  the  Lien  created  by this  Agreement  and  Liens
         permitted  pursuant to the Credit Agreement),  however arising,  of all
         persons whomsoever;

                  (d) no consent of any other person (including  stockholders or
         creditors   of  any   Pledgor)  and  no  consent  or  approval  of  any
         Governmental  Authority or any securities  exchange was or is necessary
         to the validity of the pledge effected hereby;

                  (e) by virtue of the  execution  and  delivery  by Pledgors of
         this  Agreement,  when the Pledged  Securities,  certificates  or other
         documents  representing  or evidencing  the Collateral are delivered to
         Collateral  Agent in accordance with this Agreement,  Collateral  Agent
         will obtain a valid and perfected first lien upon and security interest
         in such Pledged  Securities as security for the payment and performance
         of the Obligations;

                  (f)  the  pledge  effected  hereby  is  effective  to  vest in
         Collateral  Agent,  on behalf of the  Secured  Parties,  the  rights of
         Collateral Agent in the Collateral as set forth herein;

                  (g) all of the  Pledged  Stock  has been duly  authorized  and
         validly issued and is fully paid and nonassessable;

                  (h) all  information  set forth herein relating to the Pledged
         Stock is accurate and complete in all material  respects as of the date
         hereof; and

                  (i) the pledge of the Pledged Stock pursuant to this Agreement
         does not violate  Regulation T, U or X of the Federal  Reserve Board or
         any successor thereto as of the date hereof.

         SECTION 4.  Registration  in Nominee  Name;  Denominations.  Collateral
Agent, on behalf of the Secured  Parties,  shall have the right (in its sole and
absolute  discretion) to hold the Pledged Securities in its own name as pledgee,
the name of its nominee (as pledgee or as  sub-agent)  or the name of  Pledgors,
endorsed or assigned in blank or in favor of Collateral Agent. Each Pledgor will
promptly  give to  Collateral  Agent  copies of any  material  notices  or other
material  communications  received  by it with  respect  to  Pledged  Securities
registered in the name of such Pledgor. Collateral Agent shall at all times have
the right to exchange  the  certificates  representing  Pledged  Securities  for
certificates of smaller or larger  denominations for any purpose consistent with
this Agreement.

         SECTION 5. Voting Rights;  Dividends and Interest,  etc. (a) Unless and
until an Event of Default shall have occurred and be continuing:



<PAGE>


                  (i) Each  Pledgor  shall be entitled  to exercise  any and all
         voting and/or other consensual rights and powers inuring to an owner of
         Pledged  Securities or any part thereof for any purpose consistent with
         the terms of this  Agreement,  the Credit  Agreement and the other Loan
         Documents; provided, however, that such Pledgor will not be entitled to
         exercise  any such right if the result  thereof  could  materially  and
         adversely  affect  the  rights  inuring  to a  holder  of  the  Pledged
         Securities  or the rights and  remedies of any of the  Secured  Parties
         under this Agreement or the Credit Agreement or any other Loan Document
         or the ability of the Secured Parties to exercise the same.

                  (ii)  Collateral  Agent  shall  execute  and  deliver  to each
         Pledgor,  or cause to be executed and  delivered to each  Pledgor,  all
         such proxies,  powers of attorney and other instruments as such Pledgor
         may  reasonably  request for the purpose of  enabling  such  Pledgor to
         exercise the voting and/or  consensual rights and powers it is entitled
         to exercise  pursuant to subparagraph (i) above and to receive the cash
         dividends  it is entitled to receive  pursuant  to  subparagraph  (iii)
         below.

                  (iii) Each Pledgor shall be entitled to receive and retain any
         and all cash  dividends,  interest  and  principal  paid on the Pledged
         Securities  to the  extent  and  only  to the  extent  that  such  cash
         dividends,  interest and principal are permitted by, and otherwise paid
         in accordance  with, the terms and conditions of the Credit  Agreement,
         the other Loan  Documents and applicable  laws. All noncash  dividends,
         interest and principal, and all dividends,  interest and principal paid
         or payable in cash or otherwise in  connection  with a partial or total
         liquidation  or  dissolution,  return of  capital,  capital  surplus or
         paid-in surplus,  and all other distributions (other than distributions
         referred  to in the  preceding  sentence)  made on or in respect of the
         Pledged  Securities,  whether  paid or  payable  in cash or  otherwise,
         whether resulting from a subdivision,  combination or  reclassification
         of  the  outstanding  capital  stock  of  the  issuer  of  any  Pledged
         Securities  or received in exchange for Pledged  Securities or any part
         thereof,  or in  redemption  thereof,  or as a  result  of any  merger,
         consolidation,  acquisition  or other  exchange of assets to which such
         issuer may be a party or otherwise, shall, to the extent the same shall
         be "Collateral" as that term is defined in the Security  Agreement,  be
         and become part of the  Collateral,  and,  if received by any  Pledgor,
         shall not be  commingled by such Pledgor with any of its other funds or
         property but shall be held separate and apart therefrom,  shall be held
         in trust for the  benefit of  Collateral  Agent and shall be  forthwith
         delivered to Collateral Agent in the same form as so received (with any
         necessary endorsement).

         (b) Upon the  occurrence  and  during  the  continuance  of an Event of
Default, all rights of any Pledgor to dividends, interest or principal that such
Pledgor is  authorized  to receive  pursuant to paragraph  (a)(iii)  above shall
cease,  and all such rights shall thereupon  become vested in Collateral  Agent,
which  shall have the sole and  exclusive  right and  authority  to receive  and
retain  such  dividends,  interest  or  principal.  All  dividends,  interest or
principal received by Pledgor contrary to the provisions of this Section 5 shall
be held in trust for the benefit of Collateral  Agent,  shall be segregated from
other  property or funds of such  Pledgor and shall be  forthwith  delivered  to
Collateral Agent upon demand in the same form as so received (with any necessary
endorsement).  Any and all money and other  property paid over to or received by
Collateral  Agent  pursuant to the  provisions  of this  paragraph  (b) shall be
retained by Collateral Agent in an account to be established by Collateral Agent
upon receipt of such money or other  property and shall be applied in accordance
with the provisions of Section 7. After all Events of Default have been cured or
waived,  Collateral Agent shall, within five Business Days after all such Events
of Default have been cured or waived,  repay to each Pledgor all cash dividends,
interest or principal (without  interest),  that such Pledgor would otherwise be
permitted to retain pursuant to the terms of paragraph  (a)(iii) above and which
remain in such account.



<PAGE>


         (c) Upon the  occurrence  and  during  the  continuance  of an Event of
Default,  all rights of any Pledgor to exercise the voting and consensual rights
and powers it is  entitled  to exercise  pursuant  to  paragraph  (a)(i) of this
Section 5, and the obligations of Collateral  Agent under  paragraph  (a)(ii) of
this Section 5, shall cease,  and all such rights shall thereupon  become vested
in Collateral Agent, which shall have the sole and exclusive right and authority
to exercise such voting and consensual rights and powers,  provided that, unless
otherwise  directed by the Requisite  Lenders,  Collateral  Agent shall have the
right from time to time  following  and during  the  continuance  of an Event of
Default to permit Pledgors to exercise such rights.  After all Events of Default
have been cured or waived,  such  Pledgor  will have the right to  exercise  the
voting and consensual  rights and powers that it would  otherwise be entitled to
exercise pursuant to the terms of paragraph (a)(i) above.

         SECTION 6. Remedies upon Default.  Upon the  occurrence  and during the
continuance of an Event of Default,  subject to applicable  regulatory and legal
requirements,  Collateral Agent may sell the Collateral, or any part thereof, at
public or private sale or at any broker's board or on any  securities  exchange,
for cash,  upon  credit or for future  delivery as  Collateral  Agent shall deem
appropriate.  Collateral Agent shall be authorized at any such sale (if it deems
it advisable  to do so) to restrict the  prospective  bidders or  purchasers  to
persons who will represent and agree that they are purchasing the Collateral for
their own account for investment and not with a view to the distribution or sale
thereof,  and upon consummation of any such sale Collateral Agent shall have the
right to assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely free from any claim or right on the part of any Pledgor, and, to
the extent  permitted by  applicable  law,  Pledgors  hereby waive all rights of
redemption, stay, valuation and appraisal any Pledgor now has or may at any time
in the future  have under any rule of law or statute now  existing or  hereafter
enacted.

         Collateral  Agent  shall give a Pledgor 10 days' prior  written  notice
(which each Pledgor  agrees is  reasonable  notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other  jurisdictions) of Collateral  Agent's intention to make
any sale of such  Pledgor's  Collateral.  Such  notice,  in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale at
a broker's board or on a securities exchange (subject to compliance with Section
11 of this  Agreement),  shall state the board or exchange at which such sale is
to be made and the day on which the Collateral,  or portion thereof,  will first
be offered  for sale at such board or  exchange.  Any such  public sale shall be
held at such time or times within  ordinary  business hours and at such place or
places as Collateral  Agent may fix and state in the notice of such sale. At any
such sale, the Collateral, or portion thereof, to be sold may be sold in one lot
as an entirety or in separate parcels,  as Collateral Agent may (in its sole and
absolute discretion) determine.  Collateral Agent shall not be obligated to make
any sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such  Collateral  shall have been given.  Collateral
Agent may, without notice or publication,  adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice,  be made at the
time and  place to which the same was so  adjourned.  In case any sale of all or
any  part of the  Collateral  is made on  credit  or for  future  delivery,  the
Collateral so sold may be retained by  Collateral  Agent until the sale price is
paid in full by the purchaser or purchasers thereof,  but Collateral Agent shall
not incur any liability in case any such  purchaser or purchasers  shall fail to
take up and pay for the  Collateral  so sold and,  in case of any such  failure,
such  Collateral  may be sold again upon like notice.  At any public (or, to the
extent permitted by applicable law,  private) sale made pursuant to this Section
6, any Secured Party may bid for or purchase, free from any right of redemption,
stay or  appraisal on the part of any Pledgor (all said rights being also hereby
waived and released),  the  Collateral or any part thereof  offered for sale and
may make  payment on account  thereof by using any claim then due and payable to
it from such Pledgor as a credit  against the purchase  price,  and it may, upon
compliance  with the terms of sale,  hold,  retain and dispose of such  property
without further  accountability to such Pledgor  therefor.  For purposes hereof,
(a) a written  agreement to purchase the Collateral or any portion thereof shall
be treated as a sale thereof,  (b)  Collateral  Agent shall be free to carry out
such sale pursuant to such  agreement and (c) such Pledgor shall not be entitled
to the  return  of  the  Collateral  or any  portion  thereof  subject  thereto,
notwithstanding  the fact that after  Collateral  Agent shall have  entered into
such an  agreement  all  Events of  Default  shall  have been  remedied  and the
Obligations  paid in full. As an  alternative  to  exercising  the power of sale
herein conferred upon it, Collateral Agent may proceed by a suit or suits at law
or in equity to foreclose  upon the Collateral and to sell the Collateral or any
portion  thereof  pursuant to a judgment  or decree of a court or courts  having
competent  jurisdiction  or  pursuant  to  a  proceeding  by  a  court-appointed
receiver.  Any sale pursuant to the provisions of this Section 6 shall be deemed
to conform to the  commercially  reasonable  standards  as  provided  in Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions.


<PAGE>


         SECTION 7. Application of Proceeds of Sale. The proceeds of any sale of
Collateral pursuant to Section 6, as well as any Collateral  consisting of cash,
shall be applied by Collateral Agent as follows:

                  FIRST,  to the payment of all costs and  expenses  incurred by
         Collateral   Agent  in  connection  with  such  sale  or  otherwise  in
         connection with this  Agreement,  any other Loan Document or any of the
         Obligations,  including  all court  costs and the  reasonable  fees and
         expenses of its agents and legal counsel, the repayment of all advances
         made by Collateral  Agent hereunder or under any other Loan Document on
         behalf  of any  Pledgor  and any  other  costs or  expenses  reasonably
         incurred  in  connection  with the  exercise  of any  right  or  remedy
         hereunder or under any other Loan Document;

                  SECOND, to the payment in full of the Obligations (the amounts
         so applied to be  distributed  among the  Secured  Parties  pro rata in
         accordance with the amounts of the Obligations owed to them on the date
         of any such distribution); and

                  THIRD, to Pledgors, their successors or assigns, or as a court
         of competent jurisdiction may otherwise direct.

         Collateral  Agent  shall  have  absolute  discretion  as to the time of
application  of any such  proceeds,  moneys or balances in accordance  with this
Agreement.  Upon any  sale of the  Collateral  by  Collateral  Agent  (including
pursuant to a power of sale granted by statute or under a judicial  proceeding),
the receipt of the purchase  money by Collateral  Agent or of the officer making
the sale shall be a sufficient  discharge to the  purchaser or purchasers of the
Collateral so sold and such  purchaser or  purchasers  shall not be obligated to
see to the application of any part of the purchase money paid over to Collateral
Agent  or such  officer  or be  answerable  in any  way  for the  misapplication
thereof.

         SECTION 8.  Reimbursement of Collateral  Agent. (a) Each Pledgor agrees
to pay upon  demand to  Collateral  Agent the  amount of any and all  reasonable
expenses,  including the reasonable fees, other charges and disbursements of its
counsel  and of any  experts  or  agents,  that  Collateral  Agent  may incur in
connection with (i) the  administration  of this Agreement,  (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the  Collateral,  (iii) the exercise or  enforcement  of any of the rights of
Collateral  Agent  hereunder  or (iv) the failure by such  Pledgor to perform or
observe any of the provisions hereof.

         (b) Without  limitation of its  indemnification  obligations  under the
other Loan Documents,  each Pledgor agrees to indemnify Collateral Agent and the
Indemnitees (as defined in subsection 9.3 of the Credit Agreement) against,  and
hold  each  Indemnitee  harmless  from,  any and all  losses,  claims,  damages,
liabilities and related expenses, including reasonable fees, disbursements,  and
other charges of counsel incurred by or asserted against any Indemnitee  arising
out of,  in any way  connected  with,  or as a result  of (i) the  execution  or
delivery  of this  Agreement  or any other Loan  Document  or any  agreement  or
instrument contemplated hereby or thereby, the performance by the parties hereto
of  their  respective   obligations   thereunder  or  the  consummation  of  the
Restatement Transactions and the other transactions contemplated thereby or (ii)
any  claim,  litigation,  investigation  or  proceeding  relating  to any of the
foregoing,  whether or not 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 are determined by a
court of  competent  jurisdiction  by final and  nonappealable  judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.



<PAGE>


         (c) Any  amounts  payable as  provided  hereunder  shall be  additional
Obligations secured hereby and by the other Security  Documents.  The provisions
of this Section 8 shall remain operative and in full force and effect regardless
of the  termination of this  Agreement,  the  consummation  of the  transactions
contemplated hereby, the repayment of any of the Obligations,  the invalidity or
unenforceability  of any term or provision  of this  Agreement or any other Loan
Document or any  investigation  made by or on behalf of Collateral  Agent or any
other  Secured  Party.  All amounts due under this Section 8 shall be payable on
receipt of written demand therefor and shall bear interest at the rate specified
in subsection 2.5 of the Credit Agreement.

         SECTION 9. Collateral  Agent Appointed  Attorney-in-Fact.  Each Pledgor
hereby appoints  Collateral Agent the  attorney-in-fact  of such Pledgor for the
purpose of carrying out the  provisions of this  Agreement and taking any action
and  executing  any  instrument  that  Collateral  Agent may deem  necessary  or
advisable to accomplish the purposes  hereof,  which  appointment is irrevocable
and coupled with an interest.  Without limiting the generality of the foregoing,
Collateral  Agent  shall  have the  right,  upon the  occurrence  and during the
continuance of an Event of Default,  with full power of  substitution  either in
Collateral Agent's name or in the name of such Pledgor,  to ask for, demand, sue
for,  collect,  receive  and give  acquittance  for any and all moneys due or to
become due under and by virtue of any  Collateral,  to endorse  checks,  drafts,
orders  and other  instruments  for the  payment  of money  payable  to  Pledgor
representing any interest or dividend or other  distribution  payable in respect
of the  Collateral  or any part  thereof or on account  thereof and to give full
discharge for the same, to settle,  compromise,  prosecute or defend any action,
claim or proceeding with respect thereto, and to sell, assign, endorse,  pledge,
transfer and to make any agreement respecting, or otherwise deal with, the same;
provided, however, that nothing herein contained shall be construed as requiring
or obligating  Collateral Agent to make any commitment or to make any inquiry as
to the nature or sufficiency of any payment received by Collateral  Agent, or to
present or file any claim or notice,  or to take any action with  respect to the
Collateral  or any part  thereof  or the  moneys due or to become due in respect
thereof or any property covered thereby.  Collateral Agent and the other Secured
Parties shall be accountable only for amounts  actually  received as a result of
the exercise of the powers  granted to them  herein,  and neither they nor their
officers, directors, employees or agents shall be responsible to any Pledgor for
any act or failure to act  hereunder,  except for their own gross  negligence or
wilful misconduct.

         SECTION 10. Waivers;  Amendment.  (a) No failure or delay of Collateral
Agent in  exercising  any power or right  hereunder  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 Collateral Agent hereunder and of the
other Secured  Parties under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any  provisions  of this  Agreement  or consent to any  departure by any Pledgor
therefrom shall in any event be effective  unless the same shall be permitted by
paragraph (b) below,  and then such waiver or consent shall be effective only in
the specific  instance and for the purpose for which given.  No notice or demand
on any Pledgor in any case shall  entitle  such  Pledgor to any other or further
notice or demand in similar or other circumstances.

         (b) Neither  this  Agreement  nor any  provision  hereof may be waived,
amended or modified except pursuant to a written  agreement entered into between
Collateral  Agent and Pledgor or  Pledgors  with  respect to which such  waiver,
amendment  or  modification  is to apply,  subject to any  consent  required  in
accordance with subsection 9.6 of the Credit Agreement.



<PAGE>


         SECTION 11. Securities Act, etc. In view of the position of Pledgors in
relation  to the  Pledged  Securities,  or  because  of other  current or future
circumstances,  a question may arise under the Securities Act of 1933, as now or
hereafter  in effect,  or any similar  statute  hereafter  enacted  analogous in
purpose or effect (such Act and any such similar statute as from time to time in
effect  being  called  the  "Federal  Securities  Laws")  with  respect  to  any
disposition  of  the  Pledged  Securities  permitted  hereunder.   Each  Pledgor
understands  that  compliance  with the Federal  Securities  Laws and applicable
State laws might very strictly  limit the course of conduct of Collateral  Agent
if Collateral Agent were to attempt to dispose of all or any part of the Pledged
Securities,  and might also limit the extent to which or the manner in which any
subsequent  transferee  of any  Pledged  Securities  could  dispose of the same.
Similarly,  there  may be other  legal  restrictions  or  limitations  affecting
Collateral  Agent  in any  attempt  to  dispose  of all or part  of the  Pledged
Securities  under  applicable Blue Sky or other state securities laws or similar
laws analogous in purpose or effect.  Each Pledgor  recognizes  that in light of
such restrictions and limitations Collateral Agent may, with respect to any sale
of the Pledged  Securities,  limit the purchasers to those who will agree, among
other  things,  to acquire such Pledged  Securities  for their own account,  for
investment,  and not with a view to the  distribution  or resale  thereof.  Each
Pledgor  acknowledges  and  agrees  that  in  light  of  such  restrictions  and
limitations,  Collateral Agent, in its reasonable discretion, (a) may proceed to
make such a sale  whether or not a  registration  statement  for the  purpose of
registering such Pledged  Securities or part thereof shall have been filed under
the Federal  Securities  Laws or applicable  State  securities  laws and (b) may
approach and negotiate  with a single  potential  purchaser to effect such sale.
Each Pledgor  acknowledges  and agrees that any such sale might result in prices
and other  terms less  favorable  to the seller  than if such sale were a public
sale without such restrictions.  In the event of any such sale, Collateral Agent
shall incur no  responsibility  or liability  for selling all or any part of the
Pledged  Securities  at  a  price  that  Collateral  Agent,  in  its  reasonable
discretion,   may  in  good  faith  deem  reasonable  under  the  circumstances,
notwithstanding  the possibility  that a  substantially  higher price might have
been realized if the sale were deferred until after registration as aforesaid or
if more than a single purchaser were approached.  The provisions of this Section
11 will apply  notwithstanding  the existence of a public or private market upon
which the quotations or sales prices may exceed substantially the price at which
Collateral Agent sells.

         SECTION 12.  Registration,  etc.  Each Pledgor  agrees  that,  upon the
occurrence and during the continuance of an Event of Default  hereunder,  if for
any reason  Collateral  Agent  desires to sell any of the Pledged  Securities of
Borrower at a public sale, it will, at any time and from time to time,  upon the
written  request of Collateral  Agent,  use its best efforts to take or to cause
the  issuer  of  such  Pledged  Securities  to take  such  action  and  prepare,
distribute  and/or file such  documents,  as are  required or  advisable  in the
reasonable  opinion of counsel for Collateral Agent to permit the public sale of
such Pledged  Securities.  Each Pledgor further agrees to indemnify,  defend and
hold harmless  Collateral  Agent,  each other Secured Party, any underwriter and
their respective  officers,  directors,  affiliates and controlling persons from
and against all loss, liability,  expenses, costs of counsel (including, without
limitation,  reasonable fees and expenses to Collateral Agent of legal counsel),
and claims (including the costs of investigation) that they may incur insofar as
such  loss,  liability,  expense  or claim  arises  out of or is based  upon any
alleged untrue  statement of a material fact contained in any prospectus (or any
amendment or supplement thereto) or in any notification or offering circular, or
arises out of or is based upon any  alleged  omission  to state a material  fact
required to be stated therein or necessary to make the statements in any thereof
not  misleading,  except  insofar as the same may have been caused by any untrue
statement  or  omission  based  upon  information  furnished  in writing to such
Pledgor or the issuer of such  Pledged  Securities  by  Collateral  Agent or any
other Secured Party expressly for use therein. Each Pledgor further agrees, upon
such written request referred to above, to use its best efforts to qualify, file
or register,  or cause the issuer of such Pledged Securities to qualify, file or
register,  any of the Pledged  Securities under the Blue Sky or other securities
laws of such states as may be requested by Collateral  Agent and keep effective,
or  cause  to  be  kept   effective,   all  such   qualifications,   filings  or
registrations. Each Pledgor will bear all costs and expenses of carrying out its
obligations  under this Section 12. Each Pledgor  acknowledges  that there is no
adequate  remedy at law for failure by it to comply with the  provisions of this
Section 12 and that such failure would not be adequately compensable in damages,
and  therefore  agrees that its  agreements  contained in this Section 12 may be
specifically enforced.



<PAGE>


         SECTION 13. Security Interest Absolute.  All rights of Collateral Agent
hereunder,  the  grant  of  a  security  interest  in  the  Collateral  and  all
obligations  of each  Pledgor  hereunder,  shall be absolute  and  unconditional
irrespective  of (a) any  lack  of  validity  or  enforceability  of the  Credit
Agreement,  any other Loan  Document,  any agreement  with respect to any of the
Obligations  or  any  other  agreement  or  instrument  relating  to  any of the
foregoing,  (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the  Obligations,  or any other amendment or waiver
of or any consent to any  departure  from the Credit  Agreement,  any other Loan
Document or any other agreement or instrument  relating to any of the foregoing,
(c) any  exchange,  release or  nonperfection  of any other  collateral,  or any
release or amendment or waiver of or consent to or departure  from any guaranty,
for all or any of the  Obligations  or (d) any  other  circumstance  that  might
otherwise  constitute a defense  available to, or a discharge of, any Pledgor in
respect  of the  Obligations  or in respect of this  Agreement  (other  than the
indefeasible payment in full of all the Obligations).

         SECTION 14. Termination or Release. (a) This Agreement and the security
interests  granted  hereby shall  terminate when all the  Obligations  have been
indefeasibly  paid in full and Lenders have no further  commitment to lend under
the Credit Agreement,  the aggregate amount of outstanding Letters of Credit has
been reduced to zero and the Fronting  Bank has no further  obligation  to issue
Letters of Credit under the Credit Agreement.

         (b)  Upon  (i)  any  sale  or  other  transfer  by any  Pledgor  of any
Collateral  that is permitted  under the Credit  Agreement to any person that is
not a Pledgor,  (ii) the termination of the existence of a Subsidiary  Guarantor
or of an issuer of Pledged Stock pledged hereunder pursuant to subsection 5.2 of
the Credit  Agreement or (iii) the  effectiveness  of any written consent to the
release of the security  interest  granted hereby in any Collateral  pursuant to
subsection 9.6 of the Credit Agreement, the security interest in such Collateral
shall be automatically released.

         (c) In connection with any termination or release pursuant to paragraph
(a) or  (b),  Collateral  Agent  shall  (i)  promptly  deliver  to  Pledgor  all
Collateral  pledged to the Collateral  Agent herein and (ii) execute and deliver
to any Pledgor, at such Pledgor's expense, all documents that such Pledgor shall
reasonably  request to evidence such  termination or release.  Any execution and
delivery of documents  pursuant to this Section 14 shall be without  recourse to
or warranty by Collateral Agent.

         (d) Without any further  action on the part of any party  hereto or any
party to the Credit  Agreement,  the Security Interest in any Collateral that is
sold,  assigned,  transferred  or otherwise  disposed of in accordance  with the
Credit  Agreement shall be  automatically  and fully  terminated upon such sale,
assignment,  transfer or disposal. Upon the termination of any Security Interest
hereunder  or  under  any  other  Loan  Documents  or upon  the  release  of any
Subsidiary  Guarantor  hereunder,  Collateral  Agent shall promptly  execute and
deliver such termination statements,  releases and other instruments as Pledgors
shall reasonably request to evidence such termination or release.

         SECTION 15. Notices.  All communications and notices hereunder shall be
in writing and given and shall become effective as provided in subsection 9.9 of
the Credit Agreement. All communications and notices hereunder to any Subsidiary
Pledgor shall be given to it in such manner and in its name in care of Borrower,
at Borrower's address set forth in subsection 9.9 of the Credit Agreement.

         SECTION 16. Further Assurances.  Each Pledgor agrees to do such further
acts and  things,  and to  execute  and  deliver  such  additional  conveyances,
assignments,  agreements and  instruments,  as Collateral  Agent may at any time
reasonably request in connection with the administration and enforcement of this
Agreement  or with  respect to the  Collateral  or any part  thereof or in order
better to assure and  confirm  unto  Collateral  Agent its  rights and  remedies
hereunder.



<PAGE>


         SECTION 17. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors  and assigns of such party;  and all covenants,
promises and  agreements  by or on behalf of any Pledgor  that are  contained in
this  Agreement  shall  bind and  inure to the  benefit  of its  successors  and
assigns.  This  Agreement  shall  become  effective  as to  any  Pledgor  when a
counterpart  hereof executed on behalf of such Pledgor shall have been delivered
to Collateral Agent and a counterpart  hereof shall have been executed on behalf
of  Collateral  Agent,  and  thereafter  shall be binding  upon such Pledgor and
Collateral Agent and their respective successors and assigns, and shall inure to
the benefit of such Pledgor, Collateral Agent and the other Secured Parties, and
their respective  successors and assigns,  except that no Pledgor shall have the
right to assign its rights hereunder or any interest herein or in the Collateral
(and  any  such  attempted  assignment  shall  be  void),  except  as  expressly
contemplated by this Agreement or the other Loan Documents. If all of the Equity
Interests of a Pledgor are sold,  transferred  or  otherwise  disposed of (other
than to Borrower or an Affiliate thereof) pursuant to a transaction permitted by
the Credit Agreement,  such Pledgor shall be released from its obligations under
this Agreement  without further  action.  This Agreement shall be construed as a
separate  agreement  with respect to each Pledgor and may be amended,  modified,
supplemented,  waived or  released  with  respect  to any  Pledgor  without  the
approval of any other Pledgor and without affecting the obligations of any other
Pledgor hereunder.

         SECTION 18.  Survival of Agreement;  Severability.  (a) All  covenants,
agreements,  representations  and warranties  made by each Pledgor herein and in
the certificates or other  instruments  prepared or delivered in connection with
or pursuant to this  Agreement or any other Loan Document shall be considered to
have been  relied upon by  Collateral  Agent and the other  Secured  Parties and
shall survive the making by Lenders of the Loans and the issuance of the Letters
of Credit by the Fronting  Bank,  regardless  of any  investigation  made by the
Secured Parties or on their behalf,  and shall continue in full force and effect
until this Agreement shall terminate as provided in Section 14(a).

         (b) In the event any one or more of the  provisions  contained  in this
Agreement should be held invalid,  illegal or unenforceable in any respect,  the
validity,  legality and  enforceability  of the remaining  provisions  contained
herein 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 19.  Governing  Law. THIS  AGREEMENT  SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

         SECTION 20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together,  shall constitute a single contract,  and shall become effective
as provided in Section 17.  Delivery of an executed  counterpart  of a signature
page to this  Agreement  by  facsimile  transmission  shall be as  effective  as
delivery of a manually executed counterpart of this Agreement.

         SECTION  21.  Rules of  Interpretation.  The  rules  of  interpretation
specified in subsection 1.3 of the Credit  Agreement shall be applicable to this
Agreement.  Section  headings used herein are for convenience of reference only,
are not part of this Agreement and are not to affect the  construction of, or to
be taken into consideration in interpreting, this Agreement.

         SECTION  22.  Jurisdiction;  Consent to Service  of  Process.  (a) Each
Pledgor  hereby  irrevocably  and  unconditionally  submits,  for itself and its
property,  to the  nonexclusive  jurisdiction  of any New  York  State  court or
Federal court of the United States of America  sitting in New York City, and any
appellate court from any thereof,  in any action or proceeding arising out of or
relating to this Agreement or the other Loan  Documents,  or for  recognition or
enforcement of any judgment,  and each of the parties hereto hereby  irrevocably
and unconditionally  agrees that, to the extent permitted by applicable law, 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  Collateral  Agent or any
other  Secured  Party  may  otherwise  have to bring any  action  or  proceeding
relating to this  Agreement or the other Loan  Documents  against any Pledgor or
its properties in the courts of any jurisdiction.



<PAGE>


         (b) Each Pledgor hereby irrevocably and unconditionally  waives, to the
fullest  extent it may legally and  effectively do so, any objection that it may
now or hereafter  have to the laying of venue of any suit,  action or proceeding
arising out of or relating to this  Agreement or the other Loan Documents in any
court  referred  to in  paragraph  (a) of this  Section  22. Each of the parties
hereto hereby  irrevocably  waives,  to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.

         (c) Each party to this  Agreement  irrevocably  consents  to service of
process in the manner  provided  for  notices  in  Section  15.  Nothing in this
Agreement  will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

         SECTION 23. 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 RESPECT OF ANY  LITIGATION  DIRECTLY  OR  INDIRECTLY  ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT. 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 23.

         SECTION 24.  Additional  Pledgors.  Pursuant to subsection  5.10 of the
Credit Agreement, each Subsidiary of Borrower that was not in existence or not a
Subsidiary  on the date of the Credit  Agreement  is  required  to enter in this
Agreement as a Subsidiary  Pledgor upon becoming a Subsidiary Loan Party if such
Subsidiary  Loan  Party  owns or  possesses  property  of a type  that  would be
considered Collateral hereunder. Upon execution and delivery by Collateral Agent
and a Subsidiary of an instrument in the form of Annex 1, such Subsidiary  shall
become a  Subsidiary  Pledgor  hereunder  with the same  force and  effect as if
originally named as a Subsidiary  Pledgor herein.  The execution and delivery of
such  instrument  shall not require the  consent of any Pledgor  hereunder.  The
rights and obligations of each Pledgor  hereunder shall remain in full force and
effect  notwithstanding the addition of any new Subsidiary Pledgor as a party to
this Agreement.

         SECTION 25.  Execution  of  Financing  Statements.  Pursuant to Section
9-402 of the  Uniform  Commercial  Code as in effect in the State of New York or
its equivalent in other jurisdictions,  each Pledgor authorizes Collateral Agent
to file financing  statements with respect to the Collateral owned by it without
the  signature  of such  Pledgor  in such  form and in such  filing  offices  as
Collateral  Agent  reasonably  determines  appropriate  to perfect the  security
interests of Collateral  Agent under this Agreement.  A carbon,  photographic or
other  reproduction  of  this  Agreement  shall  be  sufficient  as a  financing
statement for filing in any jurisdiction.




<PAGE>


         IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed  this
Agreement as of the day and year first above written.


                        BURLINGTON INDUSTRIES, INC.,

                            by


                               Name:
                               Title:


                        EACH OF THE SUBSIDIARY PLEDGORS LISTED ON SCHEDULE
                        I HERETO,

                            by


                               Name:
                               Title:     Authorized Officer


                        THE CHASE MANHATTAN BANK, as Collateral Agent,

                            by


                               Name:
                               Title:



<PAGE>



                                                      Schedule I to the
                                                       Pledge Agreement

                               SUBSIDIARY PLEDGORS




<PAGE>



Name



<PAGE>








                                                       Schedule II to the
                                                         Pledge Agreement

                                  CAPITAL STOCK



<PAGE>




          Number of   Registered Owner   Number and Class   Percentage of Shares
Issuer   Certificate                        of Shares



<PAGE>






                                 DEBT SECURITIES




<PAGE>


          Principal
Issuer    Amount         Date of Note                Maturity Date




<PAGE>








                                                             Annex 1 to the
                                                           Pledge Agreement

                                    SUPPLEMENT  NO.  dated as of , to the PLEDGE
                           AGREEMENT  dated  as  of  December  __,  2000,  among
                           BURLINGTON  INDUSTRIES,  INC., a Delaware corporation
                           ("Borrower"),  each  subsidiary of Borrower listed on
                           Schedule   I   thereto    (each   such    subsidiary,
                           individually,     a    "Subsidiary    Pledgor"    and
                           collectively,  "Subsidiary  Pledgors";  Borrower  and
                           Subsidiary  Pledgors  are  referred  to  collectively
                           herein as "Pledgors") and THE CHASE MANHATTAN BANK, a
                           New York banking corporation ("Chase"), as collateral
                           agent (in such capacity,  "Collateral Agent") for the
                           Secured  Parties (as defined in the Credit  Agreement
                           referred to below).

         A. Reference is made to (a) the Credit  Agreement dated as of September
30,  1988,  as  amended  and  restated  as of  December  5,  2000  (as  amended,
supplemented or otherwise  modified from time to time, the "Credit  Agreement"),
among the  Borrower,  the lenders from time to time party  thereto  ("Lenders"),
Chase,   as   administrative   agent  for  the   Lenders   (in  such   capacity,
"Administrative  Agent"),  Collateral  Agent and as  swingline  lender and Chase
Manhattan  Bank USA, N.A. as fronting bank (in such capacity,  "Fronting  Bank")
and (b) the  Guarantee  Agreement  dated as of December  __,  2000 (as  amended,
supplemented or otherwise modified from time to time, the "Guarantee Agreement")
among Subsidiary Pledgors and Collateral Agent.

         B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.

         C. Pledgors  have entered into the Pledge  Agreement in order to induce
Lenders to make Loans and Fronting Bank to issue Letters of Credit.  Pursuant to
subsection  5.10 of the Credit  Agreement,  each Subsidiary of the Borrower that
was not in existence or not a Subsidiary on the date of the Credit  Agreement is
required  to enter  into the  Pledge  Agreement  as a  Subsidiary  Pledgor  upon
becoming a Subsidiary Loan Party if such Subsidiary Loan Party owns or possesses
property  of a type  that  would  be  considered  Collateral  under  the  Pledge
Agreement.  Section 24 of the Pledge Agreement  provides that such  Subsidiaries
may become  Subsidiary  Pledgors  under the Pledge  Agreement by  execution  and
delivery  of an  instrument  in the  form of this  Supplement.  The  undersigned
Subsidiary ( "New Pledgor") is executing this  Supplement in accordance with the
requirements  of the Credit  Agreement to become a Subsidiary  Pledgor under the
Pledge  Agreement in order to induce  Lenders to make  additional  Loans and the
Fronting Bank to issue  additional  Letters of Credit and as  consideration  for
Loans previously made and Letters of Credit previously issued.

         Accordingly, Collateral Agent and New Pledgor agree as follows:

         SECTION 1. In accordance with Section 24 of the Pledge  Agreement,  New
Pledgor by its signature below becomes a Pledgor under the Pledge Agreement with
the same force and effect as if  originally  named  therein as a Pledgor and New
Pledgor  hereby  agrees  (a) to all  the  terms  and  provisions  of the  Pledge
Agreement  applicable  to it as a  Pledgor  thereunder  and (b)  represents  and
warrants  that  the  representations  and  warranties  made  by it as a  Pledgor
thereunder are true and correct on and as of the date hereof.  In furtherance of
the foregoing,  New Pledgor, as security for the payment and performance in full
of the Obligations (as defined in the Pledge Agreement),  does hereby create and
grant to Collateral  Agent,  its successors and assigns,  for the benefit of the
Secured Parties,  their successors and assigns,  a security interest in and lien
on all of New Pledgor's  right,  title and interest in and to the Collateral (as
defined in the Pledge Agreement) of New Pledgor. Each reference to a "Subsidiary
Pledgor" or a "Pledgor" in the Pledge  Agreement  shall be deemed to include New
Pledgor. The Pledge Agreement is hereby incorporated herein by reference.



<PAGE>




         SECTION 2. New Pledgor  represents and warrants to Collateral Agent and
the other  Secured  Parties  that  this  Supplement  has been  duly  authorized,
executed  and  delivered  by it and  constitutes  its legal,  valid and  binding
obligation,  enforceable  against it in  accordance  with its  terms,  except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar  laws  relating  to or limiting  creditors'  rights  generally  or by
equitable principles relating to enforceability.

         SECTION 3. This  Supplement  may be executed in  counterparts,  each of
which shall  constitute an original,  but all of which when taken together shall
constitute  a single  contract.  This  Supplement  shall become  effective  when
Collateral Agent shall have received  counterparts of this Supplement that, when
taken  together,  bear the  signatures  of New  Pledgor  and  Collateral  Agent.
Delivery  of  an  executed  signature  page  to  this  Supplement  by  facsimile
transmission  shall be as effective as delivery of a manually signed counterpart
of this Supplement.

         SECTION 4. New Pledgor hereby represents and warrants that set forth on
Schedule I attached  hereto is a true and  correct  schedule  of all its Pledged
Securities.

         SECTION  5.  Except  as  expressly   supplemented  hereby,  the  Pledge
Agreement shall remain in full force and effect.

         SECTION 6. THIS  SUPPLEMENT  SHALL BE  GOVERNED  BY, AND  CONSTRUED  IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

         SECTION 7. In case any one or more of the provisions  contained in this
Supplement  should be held  invalid,  illegal or  unenforceable  in any respect,
neither party hereto shall be required to comply with such provision for so long
as such  provision  is held to be  invalid,  illegal or  unenforceable,  but the
validity,  legality and  enforceability  of the remaining  provisions  contained
herein and in the Pledge Agreement shall not in any way be affected or impaired.
The parties  hereto 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 8. All communications and notices hereunder shall be in writing
and given and shall  become  effective  as  provided in Section 15 of the Pledge
Agreement.  All  communications  and notices  hereunder to New Pledgor  shall be
given to it in such manner and in its name in care of  Borrower,  at  Borrower's
address set forth in subsection 9.9 of the Credit Agreement.

         SECTION 9. New Pledgor  agrees to  reimburse  Collateral  Agent for its
reasonable out-of-pocket expenses in connection with this Supplement,  including
the reasonable fees,  other charges and  disbursements of counsel for Collateral
Agent.




<PAGE>


         IN WITNESS WHEREOF, New Pledgor and Collateral Agent have duly executed
this  Supplement  to the Pledge  Agreement  as of the day and year  first  above
written.


                          [NAME OF NEW PLEDGOR],

                             by

                               Name:
                               Title:



                          THE CHASE MANHATTAN BANK, as Collateral Agent,

                             by

                               Name:
                               Title:





<PAGE>



                                                                  Schedule I to
                                                                Supplement No.
                                                       to the Pledge Agreement

                      Pledged Securities of the New Pledgor


                                  CAPITAL STOCK



<PAGE>



           Number of      Registered   Number and Class     Percentage of Shares
Issuer     Certificate    Owner        of Shares



<PAGE>






                                 DEBT SECURITIES




<PAGE>


             Principal
Issuer       Amount            Date of Note                Maturity Date



<PAGE>



                                                                 EXHIBIT IX


                                    SECURITY  AGREEMENT dated as of December __,
                           2000, among BURLINGTON  INDUSTRIES,  INC., a Delaware
                           corporation ("Borrower"), each subsidiary of Borrower
                           listed on  Schedule I hereto  (each such  subsidiary,
                           individually,    a   "Subsidiary    Guarantor"    and
                           collectively,   "Subsidiary  Guarantors";  Subsidiary
                           Guarantors and Borrower are referred to  collectively
                           herein as "Grantors") and THE CHASE MANHATTAN BANK, a
                           New York banking corporation ("Chase"), as collateral
                           agent (in such capacity,  "Collateral Agent") for the
                           Secured Parties (as defined herein).

         Reference is made to (a) the Credit Agreement dated as of September 30,
1998,  as amended and restated as of December 5, 2000 (as amended,  supplemented
or  otherwise  modified  from  time to  time,  the  "Credit  Agreement"),  among
Borrower,  the lenders from time to time party thereto  ("Lenders"),  Chase,  as
administrative  agent for Lenders (in such  capacity,  "Administrative  Agent"),
Collateral  Agent and as swingline lender and Chase Manhattan Bank USA, N.A., as
fronting  bank  (in  such  capacity,  "Fronting  Bank")  and (b)  the  Guarantee
Agreement  dated as of December __, 2000 (as amended,  supplemented or otherwise
modified  from  time to  time,  the  "Guarantee  Agreement"),  among  Subsidiary
Guarantors and Collateral Agent.

         Lenders  have agreed to make Loans to Borrower,  and Fronting  Bank has
agreed to issue Letters of Credit for the account of Borrower,  pursuant to, and
upon the terms and subject to the conditions specified in, the Credit Agreement.
Each Subsidiary  Guarantor has agreed to guarantee,  among other things, all the
obligations of Borrower under the Credit  Agreement.  The obligations of Lenders
to make Loans and of Fronting  Bank to issue  Letters of Credit are  conditioned
upon, among other things, the execution and delivery by Grantors of an agreement
in the form hereof to secure (a) the due and punctual payment by Borrower of (i)
the principal of and premium,  if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding,  regardless of whether  allowed or allowable in such  proceeding) on
the Loans,  when and as due, whether at maturity,  by acceleration,  upon one or
more dates set for  prepayment  or otherwise,  (ii) each payment  required to be
made under the Credit Agreement in respect of any Letter of Credit,  when and as
due, including  payments in respect of reimbursement of disbursements,  interest
thereon and  obligations to provide cash collateral and (iii) all other monetary
obligations,  including fees, costs, expenses and indemnities,  whether primary,
secondary,   direct,   contingent,   fixed  or  otherwise   (including  monetary
obligations  incurred  during  the  pendency  of  any  bankruptcy,   insolvency,
receivership  or other  similar  proceeding,  regardless  of whether  allowed or
allowable  in such  proceeding),  of Borrower to the Secured  Parties  under the
Credit Agreement and the other Loan Documents,  (b) the due and punctual payment
and performance of all covenants, agreements, obligations and liabilities of the
Loan  Parties  under or  pursuant  to the  Credit  Agreement  and the other Loan
Documents,  (c) unless otherwise agreed upon in writing by the applicable Lender
party thereto,  the due and punctual  payment and performance of all obligations
of each Loan Party,  monetary or otherwise,  under each Interest Rate Protection
Agreement,  Commodities  Agreement or Currency  Agreement  entered into with any
counterparty  that was a  Lender  (or an  Affiliate  thereof)  at the time  such
Interest Rate Protection Agreement,  Commodities Agreement or Currency Agreement
was entered into and (d) the due and  punctual  payment and  performance  of all
obligations   in  respect  of  overdrafts  and  related   liabilities   owed  to
Administrative Agent,  Collateral Agent or any Lender or any of their Affiliates
and  arising  from  treasury,  depositary  and cash  management  services  or in
connection  with any  automated  clearing  house  transfers  of  funds  (all the
monetary and other  obligations  described in the preceding  clauses (a) through
(d) being referred to collectively as the "Obligations").



<PAGE>




         Accordingly,  Grantors and  Collateral  Agent,  on behalf of itself and
each Secured Party (and each of their respective successors or assigns),  hereby
agree as follows:


                                    ARTICLE I

                                   Definitions

         SECTION  1.01.  Definition  of Terms Used  Herein.  Unless the  context
otherwise requires, all capitalized terms used but not defined herein shall have
the meanings set forth in the Credit Agreement and all references to the Uniform
Commercial Code shall mean the Uniform Commercial Code in effect in the State of
New York as of the date hereof.

         SECTION 1.02.  Definition of Certain Terms Used Herein. As used herein,
the following terms shall have the following meanings:

         "Account  Debtor"  shall  mean  any  person  who is or who  may  become
obligated to any Grantor under, with respect to or on account of an Account.

         "Accounts"  shall mean any and all  right,  title and  interest  of any
Grantor to payment for goods and  services  sold or leased,  including  any such
right evidenced by chattel paper,  whether due or to become due,  whether or not
it has been earned by  performance,  and whether  now or  hereafter  acquired or
arising  in  the  future,  including  accounts  receivable  from  Affiliates  of
Grantors.

         "Accounts  Receivable" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities and
guarantees  with respect  thereto,  including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary,  in each case whether now existing or
owned or hereafter arising or acquired.

         "Collateral" shall mean all (a) Accounts Receivable, (b) Documents, (c)
Equipment,  (d) General Intangibles,  (e) Inventory, (f) cash and cash accounts,
(g) Investment  Property and (h) Proceeds;  provided that the term  "Collateral"
shall not include (i)  Excluded  Assets and (ii) more than 65% of the issued and
outstanding voting stock of any Foreign Subsidiary.

         "Commodity  Account"  shall mean an account  maintained  by a Commodity
Intermediary  in which a  Commodity  Contract  is  carried  out for a  Commodity
Customer.

         "Commodity Contract" shall mean a commodity futures contract, an option
on a commodity futures contract,  a commodity option or any other contract that,
in each case,  is (a) traded on or subject to the rules of a board of trade that
has been  designated  as a contract  market for such a contract  pursuant to the
federal  commodities  laws or (b) traded on a foreign  commodity board of trade,
exchange or market, and is carried on the books of a Commodity  Intermediary for
a Commodity Customer.

         "Commodity   Customer"  shall  mean  a  person  for  whom  a  Commodity
Intermediary carries a Commodity Contract on its books.

         "Commodity Intermediary" shall mean (a) a person who is registered as a
futures commission  merchant under the federal  commodities laws or (b) a person
who in the ordinary  course of its  business  provides  clearance or  settlement
services  for a board of trade that has been  designated  as a  contract  market
pursuant to federal commodities laws.



<PAGE>


         "Copyright License" shall mean any written agreement,  now or hereafter
in effect,  granting  any right to any third  party under any  Copyright  now or
hereafter owned by any Grantor or which such Grantor  otherwise has the right to
license,  or  granting  any right to such  Grantor  under any  Copyright  now or
hereafter  owned by any third party,  and all rights of such  Grantor  under any
such agreement.

         "Copyrights"  shall mean all of the  following  now owned or  hereafter
acquired by any Grantor  reasonably  determined  by  Administrative  Agent to be
material  to the  business of  Borrower:  (a) all  copyright  rights in any work
subject to the copyright laws of the United States, whether as author, assignee,
transferee  or  otherwise,  and  (b)  all  registrations  and  applications  for
registration   of  any  such   copyright   in  the  United   States,   including
registrations,  recordings,  supplemental registrations and pending applications
for registration in the United States Copyright  Office,  including those listed
on Schedule II.

         "Credit  Agreement" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.

         "Documents" shall mean all instruments,  files, records,  ledger sheets
and documents covering or relating to any of the Collateral.

         "Entitlement Holder" shall mean a person identified in the records of a
Securities  Intermediary as the person having a Security Entitlement against the
Securities  Intermediary.  If a person acquires a Security Entitlement by virtue
of Section 8-501(b)(2) or (3) of the Uniform Commercial Code, such person is the
Entitlement Holder.

         "Equipment"  shall mean all equipment,  furniture and furnishings,  and
all tangible personal property similar to any of the foregoing, including tools,
parts  and  supplies  of  every  kind  and  description,  and all  improvements,
accessions  or  appurtenances  thereto,  that are now or hereafter  owned by any
Grantor and  located in the United  States.  The term  Equipment  shall  include
Fixtures.

         "Excluded  Assets"  shall  mean  (a)  any  asset,  including,   without
limitation,  Accounts  Receivable of any kind, to the extent that (i) such asset
is sold (or intended to be sold) to the Receivables  Subsidiary  pursuant to the
Receivables Purchase Program or is sold (or intended to be sold) pursuant to the
Foreign  Factoring  Program and (ii) such sale or intended  sale is permitted by
subsection 6.5(b) of the Credit Agreement,  (b) any lease, contract or agreement
that by the terms thereof,  or by applicable law, cannot be assigned or in which
a security  interest can not be granted and (c) collateral held in sales offices
and showrooms in the ordinary course of business in amounts consistent with past
business practices;  provided that, for any period of time during which there is
no  Receivables  Purchase  Program in effect,  the assets  referred  to above in
clause (a) shall not be deemed to be  Excluded  Assets for the  purposes of this
Agreement.

         "Financial  Asset" shall mean (a) a Security,  (b) an  obligation  of a
person or a share, participation or other interest in a person or in property or
an enterprise of a person, which is, or is of a type, dealt with in or traded on
financial  markets,  or which is recognized in any area in which it is issued or
dealt  in as a  medium  for  investment  or (c) any  property  that is held by a
Securities  Intermediary  for  another  person in a  Securities  Account  if the
Securities  Intermediary  has  expressly  agreed with the other  person that the
property  is to be treated as a Financial  Asset under  Article 8 of the Uniform
Commercial  Code. As the context  requires,  the term Financial Asset shall mean
either  the  interest  itself  or the means by which a  person's  claim to it is
evidenced,  including a certificated or uncertificated  Security,  a certificate
representing a Security or a Security Entitlement.

         "Fixtures"  shall  mean all items of  Equipment,  whether  now owned or
hereafter  acquired,  of any Grantor that become so related to  particular  real
estate  owned by such  Grantor  and upon  which a Mortgage  has been  secured by
Collateral  Agent on behalf of Lenders that an interest in such Equipment arises
under any real estate law applicable thereto.



<PAGE>


         "General  Intangibles"  shall  mean all  choses in action and causes of
action and all other assignable  intangible  personal property of any Grantor of
every kind and nature  (other than Accounts  Receivable)  now owned or hereafter
acquired by any Grantor,  including  all rights and  interests in  partnerships,
limited  partnerships,  limited  liability  companies  and other  unincorporated
entities  that  are   Subsidiaries,   corporate  or  other   business   records,
indemnification  claims, contract rights (including rights under leases, whether
entered  into  as  lessor  or  lessee,   Interest  Rate  Protection  Agreements,
Commodities Agreements, Currency Agreements and other agreements),  Intellectual
Property   (subject   to  the   limitations   of  this   Agreement),   goodwill,
registrations,   franchises,  tax  refund  claims  and  any  letter  of  credit,
guarantee,  claim, security interest or other security held by or granted to any
Grantor  to  secure  payment  by an  Account  Debtor  of  any  of  the  Accounts
Receivable.

         "Intellectual Property" shall mean all Patents, Copyrights,  Trademarks
or  Licenses  relative  thereto  and related  documentation,  registrations  and
franchises,  and all  additions,  improvements  and accessions to, and books and
records  describing or used in connection  with, any of the  foregoing,  in each
case, only to the extent any such Intellectual Property creates a property right
of any such Grantor in the United States.

         "Inventory"  shall mean all goods of any Grantor  located in the United
States,  whether now owned or  hereafter  acquired,  held for sale or lease,  or
furnished  or to be  furnished by any Grantor  under  contracts  of service,  or
consumed in any Grantor's business, including raw materials, intermediates, work
in process, packaging materials,  finished goods, semi-finished inventory, scrap
inventory,  manufacturing supplies and spare parts, and all such goods that have
been returned to or repossessed by or on behalf of any Grantor.

         "Investment  Property" shall mean all Securities (whether  certificated
or  uncertificated),   Security  Entitlements,  Securities  Accounts,  Commodity
Contracts and Commodity Accounts of any Grantor,  whether now owned or hereafter
acquired by any Grantor and not otherwise  pledged to Collateral  Agent pursuant
to the Pledge  Agreement  or which are  excluded  under the terms of such Pledge
Agreement or are not required to be pledged  pursuant to the terms of the Credit
Agreement.

         "License" shall mean any Patent License, Trademark License or Copyright
License,  including  those  listed on  Schedule  III (other  than those  license
agreements  in existence on the date hereof and listed on Schedule III and those
license  agreements  entered  into after the date  hereof  which by their  terms
prohibit  assignment  or a grant  of a  security  interest  by such  Grantor  as
licensee thereunder).

         "Obligations"  shall  have the  meaning  assigned  to such  term in the
preliminary statement of this Agreement.

         "Patent License" shall mean any written agreement,  now or hereafter in
effect, granting to any third party any right to make, use or sell any invention
on which a Patent,  now or  hereafter  owned by any Grantor or which any Grantor
otherwise has the right to license, is in existence,  or granting to any Grantor
any right to make, use or sell any invention on which a Patent, now or hereafter
owned by any third party,  is in existence,  and all rights of any Grantor under
any such agreement.

         "Patents"  shall  mean all of the  following  now  owned  or  hereafter
acquired by any Grantor  reasonably  determined  by  Administrative  Agent to be
material to the  business  of  Borrower:  (a) all  letters  patent of the United
States,  all  registrations  and recordings  thereof,  and all  applications for
letters patent of the United  States,  including  registrations,  recordings and
pending applications in the United States Patent and Trademark Office, including
those listed on Schedule  IV, and (b) all  reissues,  continuations,  divisions,
continuations-in-part,  renewals  or  extensions  thereof,  and  the  inventions
disclosed or claimed  therein,  including the right to make, use and/or sell the
inventions disclosed or claimed therein.



<PAGE>


         "Perfection Certificate" shall mean a certificate  substantially in the
form of Annex 1  hereto,  completed  and  supplemented  with the  schedules  and
attachments  contemplated  thereby, and duly executed by a financial officer and
the chief legal officer of Borrower.

         "Proceeds"  shall  mean  any  consideration  received  from  the  sale,
exchange,  license,  lease or other  disposition  of any asset or property  that
constitutes Collateral, any value received as a consequence of the possession of
any  Collateral  and any payment  received  from any insurer or other  person or
entity as a result of the destruction,  loss, theft, damage or other involuntary
conversion  of  whatever  nature  of any  asset or  property  which  constitutes
Collateral,  and shall include (a) all cash and  negotiable  instruments  of any
Grantor received by or held on behalf of Collateral  Agent, (b) any claim of any
Grantor  against  any third  party for (and the right to sue and recover for and
the rights to damages or profits due or accrued  arising out of or in connection
with) (i) past,  present or future  infringement  of any Patent now or hereafter
owned by any Grantor, or licensed under a Patent License,  (ii) past, present or
future  infringement  or dilution of any Trademark now or hereafter owned by any
Grantor  or  licensed  under a  Trademark  License  or  injury  to the  goodwill
associated  with or symbolized  by any  Trademark now or hereafter  owned by any
Grantor,  (iii)  past,  present or future  breach of any  License and (iv) past,
present or future  infringement  of any Copyright now or hereafter  owned by any
Grantor or licensed under a Copyright  License and (c) any and all other amounts
from  time to time  paid or  payable  under  or in  connection  with  any of the
Collateral.

         "Secured Parties" shall mean (a) Lenders, (b) Administrative Agent, (c)
Collateral  Agent, (d) Fronting Bank, (e) each  counterparty to an Interest Rate
Protection  Agreement  entered  into with  Borrower if such  counterparty  was a
Lender at the time the Interest Rate Protection  Agreement was entered into, (f)
the beneficiaries of each indemnification  obligation  undertaken by any Grantor
under any Loan  Document , (g)  Administrative  Agent,  Collateral  Agent or any
Lender in respect of obligations owed to Administrative Agent , Collateral Agent
or any Lender arising from treasury,  depository and cash management services or
in  connection  with any automated  clearinghouse  transfer of funds and (h) the
successors and assigns of each of the foregoing.

         "Securities"  shall mean any  obligations  of an issuer or any  shares,
participations  or other  interests in an issuer or in property or an enterprise
of an issuer which (a) are represented by a certificate  representing a security
in bearer or registered  form,  or the transfer of which may be registered  upon
books maintained for that purpose by or on behalf of the issuer,  (b) are one of
a class or series or by its terms is divisible into a class or series of shares,
participations, interests or obligations and (c)(i) are, or are of a type, dealt
with or traded on  securities  exchanges  or  securities  markets  or (ii) are a
medium for  investment  and by their  terms  expressly  provide  that they are a
security governed by Article 8 of the Uniform Commercial Code.

         "Securities  Account" shall mean an account to which a Financial  Asset
is or may be credited in  accordance  with an  agreement  under which the person
maintaining  the account  undertakes to treat the person for whom the account is
maintained as entitled to exercise rights that comprise the Financial Asset.

         "Security Entitlements" shall mean the rights and property interests of
an Entitlement Holder with respect to a Financial Asset.

         "Security  Interest"  shall have the  meaning  assigned to such term in
Section 2.01.

         "Securities  Intermediary" shall mean (a) a clearing corporation or (b)
a  person,  including  a bank or  broker,  that in the  ordinary  course  of its
business  maintains  securities  accounts  for  others  and is  acting  in  that
capacity.



<PAGE>


         "Trademark License" shall mean any written agreement,  now or hereafter
in effect,  granting  to any third party any right to use any  Trademark  now or
hereafter  owned by any Grantor or which any Grantor  otherwise has the right to
license,  or  granting  to any  Grantor  any right to use any  Trademark  now or
hereafter owned by any third party, and all rights of any Grantor under any such
agreement.

         "Trademarks"  shall mean all of the  following  now owned or  hereafter
acquired by any Grantor  reasonably  determined  by  Administrative  Agent to be
material to the business of Borrower:  (a) all trademarks,  service marks, trade
names,  corporate  names,  company names,  business names,  fictitious  business
names, trade styles,  trade dress, logos, other source or business  identifiers,
designs  and general  intangibles  of like  nature,  now  existing or  hereafter
adopted  or  acquired,   all  registrations  and  recordings  thereof,  and  all
registration  and recording  applications  filed in connection  therewith in the
United States Patent and Trademark Office,  any State of the United States,  and
all extensions or renewals  thereof,  including  those listed on Schedule V, (b)
all  goodwill  associated  therewith  or  symbolized  thereby  and (c) all other
assets, rights and interests that uniquely reflect or embody such goodwill.

         SECTION  1.03.  Rules of  Interpretation.  The rules of  interpretation
specified in subsection 1.3 of the Credit  Agreement shall be applicable to this
Agreement.


                                   ARTICLE II

                                Security Interest

         SECTION  2.01.  Security  Interest.  As  security  for the  payment  or
performance, as the case may be, in full of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages,  pledges,  hypothecates
and transfers to Collateral  Agent, its successors and assigns,  for the ratable
benefit of the Secured  Parties,  and hereby  grants to  Collateral  Agent,  its
successors  and  assigns,  for the  ratable  benefit of the Secured  Parties,  a
security interest in, all of such Grantor's right, title and interest in, to and
under the Collateral (the "Security Interest").  Without limiting the foregoing,
Collateral Agent is hereby  authorized to file one or more financing  statements
(including fixture filings),  continuation  statements,  filings with the United
States Patent and Trademark  Office or United  States  Copyright  Office (or any
successor  office or any similar office in the United States) or other documents
for the purpose of perfecting,  confirming,  continuing, enforcing or protecting
the Security  Interest  granted by each  Grantor,  without the  signature of any
Grantor,  and naming any Grantor or Grantors as debtors and Collateral  Agent as
secured party.

         SECTION 2.02. No  Assumption  of  Liability.  The Security  Interest is
granted as  security  only and shall not subject  Collateral  Agent or any other
Secured Party to, or in any way alter or modify,  any obligation or liability of
any Grantor with respect to or arising out of the Collateral.


                                   ARTICLE III

                         Representations and Warranties

         Grantors  jointly and  severally  represent  and warrant to  Collateral
Agent and the Secured Parties that:

         SECTION  3.01.  Title and  Authority.  Each  Grantor has good and valid
rights in and title to the Collateral  with respect to which it has purported to
grant a Security Interest hereunder and has full power and authority to grant to
Collateral Agent the Security Interest in such Collateral pursuant hereto and to
execute,  deliver and perform its  obligations  in accordance  with the terms of
this  Agreement,  without the consent or approval of any other person other than
any consent or approval which has been obtained.



<PAGE>


         SECTION 3.02.  Filings.  (a) The Perfection  Certificate  has been duly
prepared,  completed  and  executed  and the  information  set forth  therein is
correct  and  complete.   Fully  executed  Uniform   Commercial  Code  financing
statements  (including  fixture  filings  in those  filing  jurisdictions  where
Mortgages have been  recorded,  as  applicable)  or other  appropriate  filings,
recordings or registrations containing a description of the Collateral have been
delivered  to  Collateral  Agent for filing in each  governmental,  municipal or
other office  specified in Schedule 6 to the Perfection  Certificate,  which are
all the  filings,  recordings  and  registrations  in such  offices  (other than
filings required to be made in the United States Patent and Trademark Office and
the United States Copyright Office in order to perfect the Security  Interest in
Collateral consisting of United States Patents,  Trademarks and Copyrights) that
are necessary to publish  notice of and protect the validity of and to establish
a legal, valid and perfected security interest in favor of Collateral Agent (for
the ratable  benefit of the Secured  Parties)  in respect of all  Collateral  in
which  the  Security   Interest  may  be  perfected  by  filing,   recording  or
registration in the United States (or any political subdivision thereof) and its
territories  and  possessions,  and no further or subsequent  filing,  refiling,
recording, rerecording,  registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.

         (b) Each Grantor  represents and warrants that fully executed  security
agreements  in the form hereof and  containing a description  of all  Collateral
consisting of Intellectual Property shall have been received and recorded within
three months after the execution of this Agreement with respect to United States
Patents and United States registered Trademarks (and Trademarks for which United
States  registration  applications  are  pending) and within one month after the
execution of this Agreement with respect to United States registered  Copyrights
shall have been delivered to Collateral Agent for recording by the United States
Patent and Trademark  Office and the United States  Copyright Office pursuant to
35 U.S.C.  ss. 261, 15 U.S.C.  ss. 1060 or 17 U.S.C. ss. 205 and the regulations
thereunder, as applicable, and otherwise as may be required pursuant to the laws
of any state of the United States, to protect the validity of and to establish a
legal,  valid and perfected  security interest in favor of Collateral Agent (for
the  ratable  benefit of the  Secured  Parties)  in  respect  of all  Collateral
consisting of Patents,  Trademarks and  Copyrights in which a security  interest
may be perfected by filing,  recording or  registration in the United States (or
any political  subdivision thereof) and its territories and possessions,  and no
further or subsequent filing, refiling, recording, rerecording,  registration or
reregistration is necessary (other than such actions as are necessary to perfect
the Security  Interest  with respect to any  Collateral  consisting  of Patents,
Trademarks and  Copyrights (or  registration  or  application  for  registration
thereof) acquired or developed after the date hereof).

         SECTION  3.03.  Validity of Security  Interest.  The Security  Interest
constitutes  (a) a legal  and  valid  security  interest  in all the  Collateral
securing  the payment and  performance  of the  Obligations,  (b) subject to the
filings  described in Section 3.02 above, a perfected  security  interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political  subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable law in such jurisdictions and
(c) a security  interest  that shall be perfected in all  Collateral  in which a
security  interest  may be  perfected  upon the  receipt and  recording  of this
Agreement  with the United  States  Patent and  Trademark  Office and the United
States  Copyright  Office,   as  applicable,   within  the  three  month  period
(commencing  as of the date hereof)  pursuant to 35 U.S.C.  ss. 261 or 15 U.S.C.
ss. 1060 or the one month period  (commencing as of the date hereof) pursuant to
17 U.S.C. ss. 205. The Security Interest is and shall be prior to any other Lien
on any of the Collateral,  other than Liens  expressly  permitted to be prior to
the Security Interest pursuant to subsection 6.2 of the Credit Agreement.



<PAGE>


         SECTION  3.04.  Absence  of Other  Liens.  The  Collateral  is owned by
Grantors  free and  clear of any Lien,  except  for  Liens  expressly  permitted
pursuant to  subsection  6.2 of the Credit  Agreement.  Grantor has not filed or
consented to the filing of (a) any  financing  statement  or analogous  document
under the Uniform  Commercial  Code or any other  applicable  laws  covering any
Collateral or (b) any assignment in which any Grantor  assigns any Collateral or
any security  agreement or similar  instrument  covering any Collateral with the
United States Patent and Trademark Office or the United States Copyright Office,
except, in each case, for Liens expressly  permitted  pursuant to subsection 6.2
of the Credit Agreement.


                                   ARTICLE IV

                                    Covenants

         SECTION 4.01. Change of Name; Location of Collateral; Records; Place of
Business. (a) Each Grantor agrees promptly to notify Collateral Agent in writing
of any change (i) in its corporate name or in any trade name used to identify it
in the conduct of its business or in the  ownership of its  properties,  (ii) in
the location of its chief executive office, its principal place of business, any
office in which it maintains books or records relating to Collateral owned by it
or any office or facility at which Collateral owned by it is located  (including
the establishment of any such new office or facility),  (iii) in its identity or
corporate structure or (iv) in its Federal Taxpayer  Identification Number. Each
Grantor  agrees not to effect or permit any change  referred to in the preceding
sentence unless all filings have been made under the Uniform  Commercial Code or
otherwise  that are  required in order for  Collateral  Agent to continue at all
times following such change to have a valid,  legal and perfected first priority
security interest in all the Collateral (subject to the Liens permitted pursuant
to subsection  6.2 of the Credit  Agreement).  Each Grantor  agrees  promptly to
notify  Collateral Agent if any material portion of the Collateral owned or held
by such Grantor is damaged or destroyed.

         (b) Each Grantor agrees to maintain,  at its own cost and expense, such
complete and accurate  records with respect to the Collateral  owned by it as is
consistent  with its current  practices and in accordance  with such prudent and
standard  practices used in industries  that are the same as or similar to those
in  which  such  Grantor  is  engaged,  but in any  event  to  include  complete
accounting records indicating all payments and proceeds received with respect to
any part of the Collateral,  and, at such time or times as Collateral  Agent may
reasonably  request,  promptly to prepare and deliver to Collateral Agent a duly
certified  schedule or schedules in form and detail  satisfactory  to Collateral
Agent showing the identity, amount and location of any and all Collateral.

         SECTION  4.02.  Periodic  Certification.  Each  year,  at the  time  of
delivery of annual  financial  statements  with respect to the preceding  fiscal
year pursuant to subsection 5.1 of the Credit Agreement,  Borrower shall deliver
to Collateral Agent a certificate executed by an officer of Borrower (a) setting
forth  the  information  required  pursuant  to  Section  2  of  the  Perfection
Certificate  or  confirming  that  there has been no change in such  information
since the date of such  certificate  or the date of the most recent  certificate
delivered  pursuant to this  Section  4.02 and (b)  certifying  that all Uniform
Commercial Code financing statements  (including fixture filings, as applicable)
or  other  appropriate  filings,  recordings  or  registrations,  including  all
refilings,  rerecordings  and  reregistrations,  containing a description of the
Collateral  have been filed of record in each  governmental,  municipal or other
appropriate office in each jurisdiction  identified pursuant to clause (a) above
to the extent  necessary  to protect  and perfect the  Security  Interest  for a
period of not less than 18 months after the date of such certificate  (except as
noted  therein with respect to any  continuation  statements  to be filed within
such period).  Each  certificate  delivered  pursuant to this Section 4.02 shall
identify  in the  format  of  Schedule  II,  III,  IV or V, as  applicable,  all
Intellectual  Property of any Grantor in  existence  on the date thereof and not
then listed on such Schedules or previously so identified to Collateral Agent.

         SECTION 4.03.  Protection of Security.  Each Grantor shall,  at its own
cost and  expense,  take any and all actions  necessary  to defend  title to the
Collateral against all persons and to defend the Security Interest of Collateral
Agent in the Collateral and the priority  thereof against any Lien not expressly
permitted pursuant to subsection 6.2 of the Credit Agreement.


<PAGE>


         SECTION  4.04.  Further  Assurances.  Each Grantor  agrees,  at its own
expense,  to execute,  acknowledge,  deliver and cause to be duly filed all such
further  instruments and documents and take all such actions as Collateral Agent
may from time to time request to better  assure,  preserve,  protect and perfect
the Security Interest and the rights and remedies created hereby,  including the
payment of any fees and taxes  required in  connection  with the  execution  and
delivery of this Agreement, the granting of the Security Interest and the filing
of any financing  statements  (including  fixture filings) or other documents in
connection  herewith or therewith.  If any amount payable under or in connection
with any of the Collateral  shall be or become  evidenced by any promissory note
or other  instrument,  such note or instrument shall be immediately  pledged and
delivered  to  Collateral  Agent,  duly  endorsed  in a manner  satisfactory  to
Collateral Agent.

         SECTION 4.05.  Inspection and  Verification.  Collateral Agent and such
persons as Collateral  Agent may reasonably  designate  shall have the right, at
Grantors' own cost and expense,  during  Grantor's  normal business hours, on at
least two  Business  Days'  notice to Grantor and in no event more than one time
per fiscal quarter, to inspect the Collateral,  all records related thereto (and
to make  extracts and copies from such records,  subject to the  confidentiality
provisions  of the  Credit  Agreement)  and the  premises  upon which any of the
Collateral  is  located,  to discuss  Grantors'  affairs  with the  officers  of
Grantors  and  their  independent  accountants  and to verify  under  reasonable
procedures,  in accordance  with  subsection  5.5 of the Credit  Agreement,  the
validity,  quantity,  value,  condition  and  status  of,  or any  other  matter
reasonably  relating to, the Collateral,  including,  in the case of Accounts or
Collateral in the possession of any third person, by contacting  Account Debtors
or the third person  possessing such Collateral for the purpose of making such a
verification;  provided  that no notice  shall be required and there shall be no
limitation on the frequency of inspection if a Potential  Event of Default or an
Event of Default has occurred and is continuing. Collateral Agent shall have the
absolute  right to share  any  information  it gains  from  such  inspection  or
verification  with any  Secured  Party and  their  agents  and  representatives,
subject to subsection 9.18 of the Credit Agreement.

         SECTION 4.06. Taxes; Encumbrances.  At its option, Collateral Agent may
discharge past due taxes, assessments,  charges, fees, Liens, security interests
or other  encumbrances  at any time levied or placed on the  Collateral  and not
permitted  pursuant to subsection 6.2 of the Credit  Agreement,  and may pay for
the  maintenance  and  preservation  of the Collateral to the extent any Grantor
fails to do so as required by the Credit Agreement or this Agreement,  following
notice to Grantor by  Collateral  Agent of the  failure to  discharge  or pay on
Grantor's  continuing failure for at least five (5) Business Days (provided that
no such notice shall be required if a Potential  Event of Default or an Event of
Default has occurred and is continuing)  and each Grantor  jointly and severally
agrees to  reimburse  Collateral  Agent on demand  for any  payment  made or any
expense  incurred by Collateral  Agent pursuant to the foregoing  authorization;
provided,  however,  that nothing in this Section 4.06 shall be  interpreted  as
excusing any Grantor from the  performance  of, or imposing  any  obligation  on
Collateral Agent or any Secured Party to cure or perform, any covenants or other
promises of any  Grantor  with  respect to taxes,  assessments,  charges,  fees,
liens,  security  interests or other  encumbrances  and maintenance as set forth
herein or in the other Loan Documents.

         SECTION  4.07.  Assignment  of  Security  Interest.  If at any time any
Grantor shall take a security  interest in any property of an Account  Debtor or
any other person to secure payment and  performance of an Account,  such Grantor
shall  be  deemed  to have  collaterally  assigned  such  security  interest  to
Collateral  Agent to the extent  such  security  interest  is  assignable.  Such
assignment  need not be filed of public record unless  necessary to continue the
perfected status of the security  interest against  creditors of and transferees
from the Account Debtor or other person granting the security interest.



<PAGE>


         SECTION 4.08.  Continuing  Obligations of Grantors.  Each Grantor shall
remain liable to observe and perform all the  conditions  and  obligations to be
observed  and  performed  by it under each  contract,  agreement  or  instrument
relating to the  Collateral,  all in  accordance  with the terms and  conditions
thereof,  and each Grantor  jointly and  severally  agrees to indemnify and hold
harmless  Collateral  Agent and the Secured Parties from and against any and all
liability for such performance.

         SECTION 4.09. Use and Disposition of Collateral. None of Grantors shall
make  or  permit  to be made  an  assignment,  pledge  or  hypothecation  of the
Collateral or shall grant any other Lien in respect of the Collateral, except as
expressly permitted by subsection 6.2 of the Credit Agreement.  None of Grantors
shall make or permit to be made any transfer of the  Collateral and each Grantor
shall remain at all times in  possession of the  Collateral  owned by it, except
that (a)  Collateral  may be  sold,  disposed  of or  otherwise  transferred  as
permitted  pursuant to subsection 6.5 of the Credit Agreement and (b) unless and
until Collateral Agent shall notify Grantors that an Event of Default shall have
occurred and be  continuing  and that during the  continuance  thereof  Grantors
shall not sell,  convey,  lease,  assign,  transfer or otherwise  dispose of any
Collateral  (which  notice may be given by  telephone  if promptly  confirmed in
writing),  Grantors may use and dispose of the  Collateral  in any lawful manner
not inconsistent with the provisions of this Agreement,  the Credit Agreement or
any other Loan Document.

         SECTION 4.10. Limitation on Modification of Accounts.  None of Grantors
will, without  Collateral Agent's prior written consent,  grant any extension of
the time of  payment  of any of the  Accounts  Receivable  (when  such  Accounts
Receivable are deemed not to be Excluded Assets), compromise, compound or settle
the same for less than the full amount thereof,  release,  wholly or partly, any
person liable for the payment thereof or allow any credit or discount whatsoever
thereon, other than extensions,  credits, discounts,  compromises or settlements
granted or made in the  ordinary  course of  business  and  consistent  with its
current  practices  and in accordance  with such prudent and standard  practices
used in  industries  that are the  same as or  similar  to  those in which  such
Grantor is engaged.

         SECTION 4.11. Insurance. Grantors, at their own expense, shall maintain
or cause to be  maintained  insurance  covering  physical  loss or damage to the
Inventory  and  Equipment  in  accordance  with  subsection  5.4 of  the  Credit
Agreement.  Each Grantor irrevocably makes,  constitutes and appoints Collateral
Agent (and all officers,  employees or agents designated by Collateral Agent) as
such  Grantor's  true and lawful agent (and  attorney-in-fact)  for the purpose,
during the continuance of an Event of Default, of making, settling and adjusting
claims in respect of Collateral under policies of insurance,  endorsing the name
of such Grantor on any check, draft, instrument or other item of payment for the
proceeds of such  policies of insurance  and for making all  determinations  and
decisions  with  respect  thereto.  In the event that any Grantor at any time or
times shall fail to obtain or maintain any of the policies of insurance required
hereby or to pay any premium in whole or part relating thereto, Collateral Agent
may,  without  waiving or  releasing  any  obligation  or  liability of Grantors
hereunder or any Event of Default,  in its sole discretion,  obtain and maintain
such  policies of insurance and pay such premium and take any other actions with
respect  thereto as  Collateral  Agent deems  advisable.  All sums  disbursed by
Collateral  Agent in  connection  with this Section 4.11,  including  reasonable
attorneys' fees, court costs, expenses and other charges relating thereto, shall
be payable, upon demand, by Grantors to Collateral Agent and shall be additional
Obligations secured hereby.

         SECTION 4.12.  Legend.  Except for Excluded Assets,  each Grantor shall
legend,  in form and manner  satisfactory  to  Collateral  Agent,  its  Accounts
Receivable and its books, records and documents evidencing or pertaining thereto
with an  appropriate  reference to the fact that such Accounts  Receivable  have
been  assigned to  Collateral  Agent for the benefit of the Secured  Parties and
that Collateral Agent has a security interest therein.



<PAGE>


         SECTION  4.13.  Covenants  Regarding  Patent,  Trademark  and Copyright
Collateral.  (a) Each Grantor agrees that it will not, nor will it permit any of
its licensees to, do any act, or omit to do any act, whereby any Patent which is
material to the conduct of such  Grantor's  business may become  invalidated  or
dedicated to the public,  and agrees that it shall continue to mark any products
covered by a Patent with the relevant  patent number as necessary and sufficient
to establish and preserve its maximum rights under applicable patent laws.

         (b) B.I.  Properties  I, Inc.  (either  itself or through  its  Grantor
licensees or its sublicensees)  will, for each Trademark material to the conduct
of such Grantor's business,  (i) maintain such Trademark in full force free from
any claim of abandonment or invalidity for non-use, (ii) maintain the quality of
products and services offered under such Trademark, (iii) display such Trademark
with  notice of Federal  or foreign  registration  to the extent  necessary  and
sufficient to establish and preserve its maximum rights under applicable  United
States  law and (iv)  not  knowingly  use or  knowingly  permit  the use of such
Trademark in violation of any third party rights.

         (c) Each Grantor  (either itself or through  licensees)  will, for each
work covered by a material Copyright,  continue to publish, reproduce,  display,
adopt and distribute the work with appropriate copyright notice as necessary and
sufficient  to  establish  and  preserve  its maximum  rights  under  applicable
copyright laws.

         (d) Each Grantor shall notify  Collateral Agent immediately if it knows
or has reason to know that any Patent,  Trademark or  Copyright  material to the
conduct of its business may become  abandoned,  lost or dedicated to the public,
or of any adverse determination or development (including the institution of, or
any such  determination  or development  in, any proceeding in the United States
Patent and Trademark Office,  United States Copyright Office or any court of the
United States)  regarding such Grantor's  ownership of any Patent,  Trademark or
Copyright, its right to register the same, or to keep and maintain the same.

         (e) In no event shall any Grantor,  either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark or
Copyright  (or for the  registration  of any  Trademark or  Copyright)  with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political  subdivision of the United  States,  unless it
promptly  informs  Collateral  Agent,  and,  upon request of  Collateral  Agent,
executes and delivers any and all agreements,  instruments, documents and papers
as Collateral Agent may request to evidence Collateral Agent's security interest
in such  Patent,  Trademark  or  Copyright,  and each  Grantor  hereby  appoints
Collateral Agent as its  attorney-in-fact  to execute and file such writings for
the  foregoing  purposes,  all acts of such attorney  being hereby  ratified and
confirmed; such power, being coupled with an interest, is irrevocable.

         (f) Each Grantor will take all necessary steps that are consistent with
the practice in any  proceeding  before the United  States  Patent and Trademark
Office,  United States Copyright Office or any office or agency in any political
subdivision  of  the  United  States,  to  maintain  and  pursue  each  material
application relating to the Patents, Trademarks and/or Copyrights (and to obtain
the relevant grant or registration)  and to maintain each issued Patent and each
registration of the Trademarks and Copyrights that is material to the conduct of
any Grantor's  business,  including  timely filings of applications for renewal,
affidavits of use,  affidavits of  incontestability  and payment of  maintenance
fees, and, if consistent with good business  judgment,  to initiate  opposition,
interference and cancelation proceedings against third parties.

         (g) In the  event  that any  Grantor  has  reason to  believe  that any
Collateral  consisting  of a Patent,  Trademark  or  Copyright  material  to the
conduct  of any  Grantor's  business  has  been  or is  about  to be  infringed,
misappropriated  or diluted by a third party, such Grantor promptly shall notify
Collateral Agent and shall, if consistent with good business judgment,  promptly
sue for  infringement,  misappropriation  or dilution and to seek to recover any
and all damages for such infringement,  misappropriation  or dilution,  and take
such other actions as Grantors determine are appropriate under the circumstances
to protect such Collateral.



<PAGE>


         (h) Upon and  during  the  continuance  of an  Event of  Default,  each
Grantor shall use its best efforts to obtain all requisite consents or approvals
by the licensor of each Copyright  License,  Patent License or Trademark License
to effect the  assignment  of all of such  Grantor's  right,  title and interest
thereunder  to  Collateral  Agent or its  designee,  to the  extent the same are
assignable by their terms.


                                    ARTICLE V

                                    Remedies

         SECTION 5.01. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default,  each Grantor agrees to deliver each item of
Collateral to Collateral Agent on demand, and it is agreed that Collateral Agent
shall  thereupon  and  thereafter  have  the  right  to  take  any of or all the
following  actions  at the same or  different  times:  (a) with  respect  to any
Collateral consisting of Intellectual Property, on demand, to cause the Security
Interest to become an assignment,  transfer and conveyance of any of or all such
Collateral  by the  applicable  Grantors to Collateral  Agent,  or to license or
sublicense,  whether general,  special or otherwise, and whether on an exclusive
or non-exclusive  basis, any such Collateral on such terms and conditions and in
such manner as Collateral  Agent shall determine (other than in violation of any
then-existing  licensing  arrangements  to the  extent  that  waivers  cannot be
obtained),  and (b) with or without  legal  process  and with or  without  prior
notice or demand for  performance,  to take  possession  of the  Collateral  and
without  liability  for  trespass  to enter  peaceably  any  premises  where the
Collateral  may be located for the purpose of taking  possession  of or removing
the  Collateral  and,  generally,  to exercise any and all rights  afforded to a
secured party under the Uniform Commercial Code or other applicable law. Without
limiting the  generality of the foregoing,  each Grantor agrees that  Collateral
Agent shall have the right, subject to the mandatory regulatory requirements and
requirements of applicable law, to sell or otherwise  dispose of all or any part
of the Collateral,  at public or private sale or at any broker's board or on any
securities  exchange  (subject to compliance with the rules of such exchange and
applicable  federal and state  securities  laws),  for cash,  upon credit or for
future delivery as Collateral  Agent shall deem  appropriate.  Collateral  Agent
shall be  authorized  at any such  sale (if it deems it  advisable  to do so) to
restrict the prospective bidders or purchasers to persons who will represent and
agree  that  they are  purchasing  the  Collateral  for their  own  account  for
investment  and not with a view to the  distribution  or sale thereof,  and upon
consummation of any such sale  Collateral  Agent shall have the right to assign,
transfer and deliver to the  purchaser or purchasers  thereof the  Collateral so
sold.  Each  such  purchaser  at any such  sale  shall  hold the  property  sold
absolutely,  free from any claim or right on the part of any  Grantor,  and each
Grantor hereby waives (to the extent permitted by law) all rights of redemption,
stay and  appraisal  which such Grantor now has or may at any time in the future
have under any rule of law or statute now existing or hereafter enacted.



<PAGE>


         Collateral  Agent shall give  Grantors 10 days'  written  notice (which
each Grantor agrees is reasonable  notice within the meaning of Section 9-504(3)
of the  Uniform  Commercial  Code as in  effect  in the State of New York or its
equivalent in other  jurisdictions) of Collateral  Agent's intention to make any
sale of Collateral.  Such notice,  in the case of a public sale, shall state the
time and place for such sale and,  in the case of a sale at a broker's  board or
on a securities  exchange,  shall state the board or exchange at which such sale
is to be made and the day on which the  Collateral,  or  portion  thereof,  will
first be offered for sale at such board or exchange.  Any such public sale shall
be held at such time or times within  ordinary  business hours and at such place
or places as  Collateral  Agent may fix and state in the notice (if any) of such
sale. At any such sale, the Collateral,  or portion  thereof,  to be sold may be
sold in one lot as an entirety or in separate  parcels,  as Collateral Agent may
(in its sole and absolute discretion) determine.  The Collateral Agent shall not
be obligated to make any sale of any Collateral if it shall  determine not to do
so,  regardless  of the fact that notice of sale of such  Collateral  shall have
been given.  Collateral  Agent may,  without notice or publication,  adjourn any
public or private  sale or cause the same to be  adjourned  from time to time by
announcement  at the time and place fixed for sale,  and such sale may,  without
further  notice,  be made at the  time  and  place  to  which  the  same  was so
adjourned.  In case  any sale of all or any  part of the  Collateral  is made on
credit  or for  future  delivery,  the  Collateral  so sold may be  retained  by
Collateral  Agent until the sale price is paid by the  purchaser  or  purchasers
thereof,  but  Collateral  Agent shall not incur any  liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure,  such  Collateral  may be sold again upon like
notice.  At any public (or, to the extent  permitted by law,  private) sale made
pursuant to this Section,  any Secured  Party may bid for or purchase,  free (to
the extent  permitted by law) from any right of redemption,  stay,  valuation or
appraisal on the part of any Grantor  (all said rights being also hereby  waived
and released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any claim then
due and payable to such Secured  Party from any Grantor as a credit  against the
purchase  price,  and such Secured Party may, upon  compliance with the terms of
sale, hold,  retain and dispose of such property without further  accountability
to any Grantor  therefor.  For purposes hereof, a written  agreement to purchase
the  Collateral  or any  portion  thereof  shall be treated  as a sale  thereof;
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and no Grantor shall be entitled to the return of the  Collateral or any portion
thereof subject  thereto,  notwithstanding  the fact that after Collateral Agent
shall have entered into such an agreement  all Events of Default shall have been
remedied and the  Obligations  paid in full. As an alternative to exercising the
power of sale herein  conferred upon it,  Collateral Agent may proceed by a suit
or  suits  at law or in  equity  to  foreclose  this  Agreement  and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts  having  competent   jurisdiction  or  pursuant  to  a  proceeding  by  a
court-appointed receiver.

         SECTION 5.02. Application of Proceeds. Collateral Agent shall apply the
proceeds of any collection or sale of the Collateral,  as well as any Collateral
consisting of cash, as follows:

                  FIRST,  to the payment of all costs and  expenses  incurred by
         Administrative  Agent or  Collateral  Agent  (in its  capacity  as such
         hereunder  or under any other Loan  Document) in  connection  with such
         collection  or sale or otherwise in connection  with this  Agreement or
         any of the  Obligations,  including all court costs and the  reasonable
         fees and expenses of its agents and legal counsel, the repayment of all
         advances  made by  Collateral  Agent  hereunder or under any other Loan
         Document  on behalf of any  Grantor  and any  other  costs or  expenses
         reasonably  incurred in  connection  with the  exercise of any right or
         remedy hereunder or under any other Loan Document;

                  SECOND, to the payment in full of the Obligations (the amounts
         so applied to be  distributed  among the  Secured  Parties  pro rata in
         accordance with the amounts of the Obligations owed to them on the date
         of any such distribution); and

                  THIRD, to Grantors, their successors or assigns, or as a court
         of competent jurisdiction may otherwise direct.

Collateral Agent shall have absolute discretion as to the time of application of
any such proceeds,  moneys or balances in accordance with this  Agreement.  Upon
any sale of the Collateral by Collateral Agent (including pursuant to a power of
sale  granted  by  statute  or under a  judicial  proceeding),  the  receipt  of
Collateral  Agent  or of the  officer  making  the sale  shall  be a  sufficient
discharge to the  purchaser or  purchasers  of the  Collateral  so sold and such
purchaser or purchasers  shall not be obligated to see to the application of any
part of the purchase  money paid over to Collateral  Agent or such officer or be
answerable in any way for the misapplication thereof.



<PAGE>


         SECTION 5.03.  Grant of License to Use Intellectual  Property.  For the
purpose of enabling  Collateral Agent to exercise rights and remedies under this
Article at such time as Collateral Agent shall be lawfully  entitled to exercise
such rights and remedies,  each Grantor  hereby  grants to  Collateral  Agent an
irrevocable,  non-exclusive  license  (exercisable without payment of royalty or
other  compensation  to  Grantors)  to use,  license or  sub-license  any of the
Collateral  consisting of Intellectual  Property now owned or hereafter acquired
by such  Grantor,  and wherever the same may be located,  and  including in such
license reasonable access to all media in which any of the licensed items may be
recorded  or stored  and to all  computer  software  and  programs  used for the
compilation  or printout  thereof.  The use of such license by Collateral  Agent
shall be exercised,  at the option of Collateral  Agent, upon the occurrence and
during the  continuation  of an Event of  Default;  provided  that any  license,
sub-license or other transaction  entered into by Collateral Agent in accordance
herewith shall be binding upon Grantors  notwithstanding  any subsequent cure of
an Event of Default.


                                   ARTICLE VI

                                  Miscellaneous

         SECTION 6.01.  Notices.  All communications and notices hereunder shall
be in writing and given and shall become effective as provided in subsection 9.9
of the  Credit  Agreement.  All  communications  and  notices  hereunder  to any
Subsidiary Guarantor shall be given to it in such manner and in its name in care
of Borrower,  at Borrower's  address set forth in  subsection  9.9 of the Credit
Agreement.

         SECTION  6.02.  Security  Interest  Absolute.  All rights of Collateral
Agent hereunder, the Security Interest and all obligations of Grantors hereunder
shall be absolute and unconditional  irrespective of (a) any lack of validity or
enforceability of the Credit Agreement,  any other Loan Document,  any agreement
with respect to any of the  Obligations  or any other  agreement  or  instrument
relating to any of the foregoing, (b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations, or any other
amendment  or  waiver  of or  any  consent  to any  departure  from  the  Credit
Agreement, any other Loan Document or any other agreement or instrument, (c) any
exchange,  release or  non-perfection  of any Lien on other  collateral,  or any
release  or  amendment  or  waiver of or  consent  under or  departure  from any
guarantee,  securing or guaranteeing all or any of the  Obligations,  or (d) any
other circumstance that might otherwise  constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.

         SECTION  6.03.  Survival  of  Agreement.  All  covenants,   agreements,
representations   and  warranties   made  by  any  Grantor  herein  and  in  the
certificates  or other  instruments  prepared or delivered in connection with or
pursuant to this  Agreement  shall be considered to have been relied upon by the
Secured  Parties  and shall  survive  the  making by the of the  Loans,  and the
execution and delivery to Lenders of any notes evidencing such Loans, regardless
of any investigation  made by the Lenders or on their behalf, and shall continue
in full force and effect  until this  Agreement  shall  terminate as provided in
Section 6.14.

         SECTION 6.04. Binding Effect;  Several Agreement.  This Agreement shall
become effective as to any Grantor when a counterpart  hereof executed on behalf
of such Grantor shall have been delivered to Collateral  Agent and a counterpart
hereof shall have been executed on behalf of Collateral  Agent,  and  thereafter
shall be binding upon such  Grantor and  Collateral  Agent and their  respective
successors  and  assigns,  and  shall  inure  to the  benefit  of such  Grantor,
Collateral Agent and the other Secured Parties and their  respective  successors
and assigns,  except that no Grantor  shall have the right to assign or transfer
its rights or obligations  hereunder or any interest herein or in the Collateral
(and  any such  assignment  or  transfer  shall be  void)  except  as  expressly
contemplated  by this  Agreement or the Credit  Agreement.  If all of the Equity
Interests of a Grantor are sold,  transferred  or  otherwise  disposed of (other
than to Borrower or an Affiliate thereof) pursuant to a transaction permitted by
the Credit Agreement or if the existence of a Grantor is terminated  pursuant to
subsection 5.2 of the Credit Agreement,  such Grantor shall be released from its
obligations under this Agreement without further action. This Agreement shall be
construed  as a  separate  agreement  with  respect to each  Grantor  and may be
amended, modified, supplemented,  waived or released with respect to any Grantor
without the approval of any other Grantor and without  affecting the obligations
of any other Grantor hereunder.


<PAGE>


         SECTION 6.05. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Grantor or  Collateral  Agent that are  contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns.

         SECTION 6.06.  Collateral  Agent's Fees and Expenses;  Indemnification.
(a) Each Grantor  jointly and severally  agrees to pay upon demand to Collateral
Agent the amount of any and all  reasonable  expenses,  including the reasonable
fees,  disbursements  and other  charges of its  counsel  and of any  experts or
agents,   which   Collateral   Agent  may  incur  in  connection  with  (I)  the
administration  of this  Agreement  (including the customary fees and charges of
Collateral  Agent for any audits  conducted by it or on its behalf in accordance
with the terms of Section 4.05 hereof),  (ii) the custody or preservation of, or
the sale of,  collection from or other  realization  upon any of the Collateral,
(iii) the exercise, enforcement or protection of any of the rights of Collateral
Agent  hereunder or (iv) the failure of any Grantor to perform or observe any of
the  provisions  hereof  following  Grantor's  continuing  failure to perform or
observe after notice thereof from Collateral Agent.

         (b) Without  limitation of its  indemnification  obligations  under the
other Loan  Documents,  each Grantor  jointly and severally  agrees to indemnify
Collateral  Agent  and the  other  Indemnitees  against,  and hold  each of them
harmless  from, any and all losses,  claims,  damages,  liabilities  and related
expenses, including reasonable fees, disbursements and other charges of counsel,
incurred by or asserted against any of them arising out of, in any way connected
with,  or as a  result  of,  the  execution,  delivery  or  performance  of this
Agreement or any claim, litigation,  investigation or proceeding relating hereto
or to the Collateral, whether or not 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  are
determined  by a court of  competent  jurisdiction  by final  and  nonappealable
judgment to have  resulted from the gross  negligence  or willful  misconduct of
such Indemnitee.

         (c) Any such amounts payable as provided  hereunder shall be additional
Obligations secured hereby and by the other Security  Documents.  The provisions
of this  Section  6.06  shall  remain  operative  and in full  force and  effect
regardless of the termination of this Agreement or any other Loan Document,  the
consummation of the transactions  contemplated  hereby,  the repayment of any of
the Loans, the invalidity or  unenforceability  of any term or provision of this
Agreement or any other Loan Document,  or any investigation made by or on behalf
of Collateral Agent or any Lender. All amounts due under this Section 6.06 shall
be payable on receipt of written demand therefor.

         SECTION  6.07.  GOVERNING  LAW.  THIS  AGREEMENT  SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.



<PAGE>


         SECTION 6.08. Waivers; Amendment. (a) No failure or delay of Collateral
Agent in  exercising  any power or right  hereunder  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  Collateral  Agent  hereunder and of
Collateral  Agent,  Fronting  Bank,  Administrative  Agent and Lenders under the
other Loan  Documents  are  cumulative  and are not  exclusive  of any rights or
remedies that they would  otherwise  have.  No waiver of any  provisions of this
Agreement or any other Loan  Document or consent to any departure by any Grantor
therefrom shall in any event be effective  unless the same shall be permitted by
paragraph (b) below,  and then such waiver or consent shall be effective only in
the  specific  instance  and for the  purpose for which  given.  No notice to or
demand on any  Grantor  in any case  shall  entitle  such  Grantor  or any other
Grantor  to  any  other  or  further  notice  or  demand  in  similar  or  other
circumstances.

         (b) Neither  this  Agreement  nor any  provision  hereof may be waived,
amended or modified  except  pursuant to an agreement or  agreements  in writing
entered into by  Collateral  Agent and Grantor or Grantors with respect to which
such  waiver,  amendment  or  modification  is to apply,  subject to any consent
required in accordance with subsection 9.6 of the Credit Agreement.

         SECTION 6.09. 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 RESPECT OF ANY  LITIGATION  DIRECTLY  OR  INDIRECTLY  ARISING OUT OF,
UNDER OR IN CONNECTION  WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN  DOCUMENTS.
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 6.09.

         SECTION  6.10.  Severability.  In the  event  any  one or  more  of the
provisions  contained  in this  Agreement  should be held  invalid,  illegal  or
unenforceable in any respect,  the validity,  legality and enforceability of the
remaining  provisions  contained  herein  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 6.11  Counterparts.  This  Agreement  may be executed in two or
more  counterparts,  each of which shall constitute an original but all of which
when taken together shall constitute but one contract (subject to Section 6.04),
and shall become effective as provided in Section 6.04.  Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.

         SECTION  6.12.  Rules of  Interpretation.  The rules of  interpretation
specified in subsection 1.3 of the Credit  Agreement shall be applicable to this
Agreement.  Section  headings used herein are for convenience of reference only,
and are not part of this Agreement and are not to affect the construction of, or
to be taken into consideration in interpreting, this Agreement.

         SECTION  6.13.  Jurisdiction;  Consent to Service of Process.  (a) Each
Grantor  hereby  irrevocably  and  unconditionally  submits,  for itself and its
property,  to the  nonexclusive  jurisdiction  of any New  York  State  court or
Federal court of the United States of America  sitting in New York City, and any
appellate court from any thereof,  in any action or proceeding arising out of or
relating to this Agreement or the 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
Collateral  Agent,  Administrative  Agent,  Fronting  Bank  or  any  Lender  may
otherwise  have to bring any action or proceeding  relating to this Agreement or
the other Loan Documents  against any Grantor or its properties in the courts of
any jurisdiction.



<PAGE>


         (b) Each Grantor 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  (a) of this Section  6.13.  Each of the parties
hereto hereby  irrevocably  waives,  to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.

         (c) Each party to this  Agreement  irrevocably  consents  to service of
process in the manner  provided  for  notices in Section  6.01.  Nothing in this
Agreement  will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

         SECTION 6.14.  Termination.  This  Agreement and the Security  Interest
shall terminate when all the Obligations  have been  indefeasibly  paid in full,
the  Lenders  have no  further  commitment  to lend,  the  aggregate  amount  of
outstanding  Letters of Credit has been reduced to zero and Fronting Bank has no
further  commitment  to issue Letters of Credit under the Credit  Agreement,  at
which time Collateral Agent shall execute and deliver to Grantors,  at Grantors'
expense,  all  Uniform  Commercial  Code  termination   statements  and  similar
documents which Grantors shall reasonably  request to evidence such termination.
Any execution and delivery of  termination  statements or documents  pursuant to
this Section 6.14 shall be without recourse to or warranty by Collateral  Agent.
A Subsidiary  Guarantor  shall  automatically  be released from its  obligations
hereunder  and the  Security  Interest  in the  Collateral  of  such  Subsidiary
Guarantor shall be  automatically  released (i) in the event that all the Equity
Interests of such Subsidiary  Guarantor shall be sold,  transferred or otherwise
disposed of to a person that is not an Affiliate of Borrower in accordance  with
the terms of the  Credit  Agreement  or (ii) if the  existence  of a  Subsidiary
Guarantor is  terminated  pursuant to  subsection  5.2 of the Credit  Agreement;
provided that Requisite  Lenders shall have consented to such sale,  transfer or
other disposition referred to in clause (i) above (to the extent required by the
Credit  Agreement)  and the terms of such  consent  did not  provide  otherwise.
Without any further  action on the part of any party  hereto or any party to the
Credit  Agreement,  the  Security  Interest  in any  Collateral  that  is  sold,
assigned,  transferred  or otherwise  disposed of in accordance  with the Credit
Agreement  shall  be   automatically   and  fully  terminated  upon  such  sale,
assignment,  transfer or disposal. Upon the termination of any Security Interest
hereunder  or  under  any  other  Loan  Documents  or upon  the  release  of any
Subsidiary  Guarantor  hereunder,  Collateral  Agent shall promptly  execute and
deliver such termination statements,  releases and other instruments as Grantors
shall reasonably request to evidence such termination or release.

         SECTION  6.15.  Additional  Grantors.  Upon  execution  and delivery by
Collateral  Agent and a Subsidiary  Loan Party of an  instrument  in the form of
Annex 2 hereto,  such Subsidiary shall become a Grantor  hereunder with the same
force and effect as if originally  named as a Grantor herein.  The execution and
delivery  of any such  instrument  shall not  require the consent of any Grantor
hereunder.  The rights and obligations of each Grantor hereunder shall remain in
full force and effect notwithstanding the addition of any new Grantor as a party
to this Agreement.




<PAGE>


         IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed  this
Agreement as of the day and year first above written.

               BURLINGTON INDUSTRIES, INC.,


                  by
                  -------------------------------------------------------

                    Name:
                    Title:


               EACH OF SUBSIDIARY GUARANTORS LISTED ON SCHEDULE I
               HERETO,


                  by
                  -------------------------------------------------------

                    Name:


               THE CHASE MANHATTAN BANK, as Collateral Agent,


                  by
                  -------------------------------------------------------

                    Name:
                    Title:





<PAGE>



                                                     SCHEDULE I

                              SUBSIDIARY GUARANTORS


<PAGE>



                                                     SCHEDULE II

                                   COPYRIGHTS

                                      None.


<PAGE>



                                                    SCHEDULE III

                                    LICENSES




<PAGE>



                                                    SCHEDULE IV

                                     PATENTS


<PAGE>



                                                    SCHEDULE V

                                   TRADEMARKS

                                      None.


<PAGE>



                                                           Annex 1 to the
                                                       Security Agreement

                                     Form Of
                             PERFECTION CERTIFICATE


         Reference is made to (a) the Credit Agreement dated as of September 30,
1988,  as amended and restated as of December 5, 2000 (as amended,  supplemented
or  otherwise  modified  from  time to  time,  the  "Credit  Agreement"),  among
Borrower,  the lenders from time to time party thereto  ("Lenders"),  Chase,  as
administrative agent for the Lenders (in such capacity, "Administrative Agent"),
Collateral Agent and as swingline lender, and Chase Manhattan Bank USA, N.A., as
fronting  bank  (in  such  capacity,  "Fronting  Bank")  and (b)  the  Guarantee
Agreement  dated as of December __, 2000 (as amended,  supplemented or otherwise
modified  from  time to  time,  the  "Guarantee  Agreement"),  among  Subsidiary
Guarantors and Collateral Agent.

         The undersigned, a financial officer and a legal officer, respectively,
of Borrower  hereby certify to Collateral  Agent and each other Secured Party as
follows:

         1. Names.  (a) The exact  corporate name of each Grantor,  as such name
appears in its respective certificate of incorporation, is as follows:

         (b) Set forth below is each other  corporate  name each Grantor has had
in the past five years, together with the date of the relevant change:

         (c) Except as set forth in  Schedule 1 hereto,  no Grantor  has changed
its  identity  or  corporate  structure  in any way within the past five  years.
Changes in identity or corporate structure would include mergers, consolidations
and  acquisitions,  as well as any change in the form, nature or jurisdiction of
corporate organization.  If any such change has occurred,  include in Schedule 1
the  information  required  by Sections 1 and 2 of this  certificate  as to each
acquiree or constituent party to a merger or consolidation.

         (d) The following is a list of all other names  (including  trade names
or similar  appellations)  used by each Grantor or any of its divisions or other
business  units in connection  with the conduct of its business or the ownership
of its properties at any time during the past five years:

         (e) Set forth below is the Federal  Taxpayer  Identification  Number of
each Grantor:



<PAGE>




         2. Current Locations. (a) The chief executive office of each Grantor is
located at the address set forth opposite its name below:

Grantor           Mailing Address           County            State



         (b) Set forth below opposite the name of each Grantor are all locations
where such  Grantor  maintains  any books or records  relating  to any  Accounts
Receivable  (with each  location at which chattel  paper,  if any, is kept being
indicated by an "*"):

Grantor           Mailing Address           County            State



         (c) Set  forth  below  opposite  the name of each  Grantor  are all the
places of business of such Grantor not identified in paragraph (a) or (b) above:

Grantor           Mailing Address           County            State



         (d) Set  forth  below  opposite  the name of each  Grantor  are all the
locations where such Grantor maintains any Collateral not identified above:

Grantor           Mailing Address           County            State



         (e) Set forth below opposite the name of each Grantor are the names and
addresses of all persons other than such Grantor that have  possession of any of
the Collateral of such Grantor:

Grantor           Mailing Address           County            State



         3. Unusual  Transactions.  All Accounts Receivable have been originated
by Grantors  and all  Inventory  has been  acquired by Grantors in the  ordinary
course of business.

         4. File  Search  Reports.  Attached  hereto as  Schedule  4(A) are true
copies of file search  reports from the Uniform  Commercial  Code filing offices
where filings  described in Section 3.19 of the Credit Agreement are to be made.
Attached  hereto as Schedule 4(B) is a true copy of each financing  statement or
other filing identified in such file search reports.

         5. UCC  Filings.  Duly  signed  financing  statements  on Form UCC-1 in
substantially the form of Schedule 5 hereto have been prepared for filing in the
Uniform  Commercial Code filing office in each jurisdiction  where a Grantor has
Collateral as identified in Section 2 hereof.

         6.  Schedule  of Filings.  Attached  hereto as Schedule 6 is a schedule
setting forth,  with respect to the filings  described in Section 5 above,  each
filing and the filing office in which such filing is to be made.

         7. Filing Fees.  All filing fees and taxes payable in  connection  with
the filings described in Section 5 above have been paid.



<PAGE>


         8. Stock Ownership. Attached hereto as Schedule 8 is a true and correct
list of all the duly authorized, issued and outstanding stock of each Subsidiary
and the record and beneficial owners of such stock. Also set forth on Schedule 8
is each equity Investment of Borrower and each Subsidiary that represents 50% or
less of the equity of the entity in which such investment was made.

         9. Notes.  Attached  hereto as Schedule 9 is a true and correct list of
all notes  held by  Borrower  and each  Subsidiary  and all  intercompany  notes
between  Borrower and each Subsidiary of Borrower and between each Subsidiary of
Borrower and each other such Subsidiary.

         10. Advances.  Attached hereto as Schedule 10 is (a) a true and correct
list of all advances  made by Borrower to any  Subsidiary of Borrower or made by
any  Subsidiary  of Borrower to Borrower or any other  Subsidiary  of  Borrower,
which  advances  will be on and after the date hereof  evidenced  by one or more
intercompany  notes pledged to Collateral Agent under the Pledge Agreement,  and
(b) a true and correct list of all unpaid  intercompany  transfers of goods sold
and delivered by or to Borrower or any Subsidiary of Borrower.

         11.  Mortgage  Filings.  Attached  hereto as  Schedule 11 is a schedule
setting forth, with respect to each Mortgaged Property,  (i) the exact corporate
name of the  corporation  that owns such  property  as such name  appears in its
certificate  of  incorporation,  (ii) if  different  from  the  name  identified
pursuant  to clause  (i),  the exact name of the  current  record  owner of such
property  reflected  in the  records  of the  filing  office  for such  property
identified pursuant to the following clause and (iii) the filing office in which
a Mortgage  with respect to such property must be filed or recorded in order for
Collateral Agent to obtain a perfected security interest therein.
































<PAGE>


         IN WITNESS WHEREOF, the undersigned have duly executed this certificate
on this __th day of December, 2000.

               BURLINGTON INDUSTRIES, INC.,


                   by
                   -------------------------------------------------------

                      Name:
                      Title:


<PAGE>



                                                               Annex 2 to the
                                                           Security Agreement

                                    SUPPLEMENT  NO.  __  dated  as of ,  to  the
                           Security  Agreement  dated as of  December  __,  2000
                           among   BURLINGTON   INDUSTRIES,   INC.,  a  Delaware
                           corporation ("Borrower"), each subsidiary of Borrower
                           listed on Schedule I thereto  (each such  subsidiary,
                           individually,    a   "Subsidiary    Guarantor"    and
                           collectively,"Subsidiary    Guarantors";   Subsidiary
                           Guarantors and Borrower are referred to  collectively
                           herein as "Grantors") and THE CHASE MANHATTAN BANK, a
                           New York banking corporation ("Chase"), as collateral
                           agent (in such capacity,  "Collateral Agent") for the
                           Secured   Parties   (as   defined  in  the   Security
                           Agreement).

         A. Reference is made to (a) the Credit  Agreement dated as of September
30,  1988,  as  amended  and  restated  as of  December  5,  2000  (as  amended,
supplemented or otherwise  modified from time to time, the "Credit  Agreement"),
among Borrower, the lenders from time to time party thereto ("Lenders"),  Chase,
as administrative agent for Lenders (in such capacity,  "Administrative Agent"),
Collateral  Agent and swingline  lender and Chase  Manhattan  Bank USA, N.A., as
fronting  bank  (in  such  capacity,  "Fronting  Bank")  and (b)  the  Guarantee
Agreement  dated as of December __, 2000 (as amended,  supplemented or otherwise
modified  from  time to  time,  the  "Subsidiary  Guarantee  Agreement"),  among
Subsidiary Guarantors and Collateral Agent.

         B. Capitalized terms used herein and not otherwise defined herein shall
have the  meanings  assigned  to such terms in the  Security  Agreement  and the
Credit Agreement.

         C. Grantors have entered into the Security Agreement in order to induce
Lenders to make Loans and Fronting Bank to issue Letters of Credit. Section 6.15
of Security Agreement provides that additional Subsidiaries of Borrower that are
Loan Parties may become  Grantors under the Security  Agreement by execution and
delivery  of an  instrument  in the  form of this  Supplement.  The  undersigned
Subsidiary Loan Party ("New Grantor") is executing this Supplement in accordance
with the  requirements  of the Credit  Agreement  to become a Grantor  under the
Security  Agreement  in order to induce  Lenders  to make  additional  Loans and
Fronting Bank to issue  additional  Letters of Credit and as  consideration  for
Loans previously made and Letters of Credit previously issued.

         Accordingly, Collateral Agent and New Grantor agree as follows:

         SECTION 1. In accordance  with Section 6.15 of the Security  Agreement,
New  Grantor  by its  signature  below  becomes  a Grantor  under  the  Security
Agreement  with the same force and effect as if  originally  named  therein as a
Grantor and New Grantor hereby (a) agrees to all the terms and provisions of the
Security  Agreement  applicable to it as a Grantor thereunder and (b) represents
and warrants that the  representations  and  warranties  made by it as a Grantor
thereunder are true and correct on and as of the date hereof.  In furtherance of
the foregoing,  New Grantor, as security for the payment and performance in full
of the  Obligations (as defined in the Security  Agreement),  does hereby create
and grant to Collateral  Agent,  its successors and assigns,  for the benefit of
the Secured Parties,  their successors and assigns,  a security  interest in and
lien on all of New Grantor's right,  title and interest in and to the Collateral
(as defined in the  Security  Agreement)  of New  Grantor.  Each  reference to a
"Grantor" in the Security Agreement shall be deemed to include New Grantor.  The
Security Agreement is hereby incorporated herein by reference.

         SECTION 2. The New Grantor  represents and warrants to Collateral Agent
and the other Secured  Parties that this  Supplement  has been duly  authorized,
executed  and  delivered  by it and  constitutes  its legal,  valid and  binding
obligation,  enforceable  against it in  accordance  with its  terms,  except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar  laws  relating  to or limiting  creditors'  rights  generally  or by
equitable principles relating to enforceability.



<PAGE>




         SECTION 3. This  Supplement  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 Supplement  shall become effective when Collateral Agent
shall have received  counterparts of this Supplement  that, when taken together,
bear the signatures of New Grantor and Collateral Agent. Delivery of an executed
signature  page  to  this  Supplement  by  facsimile  transmission  shall  be as
effective as delivery of a manually signed counterpart of this Supplement.

         SECTION 4. New Grantor  hereby  represents  and  warrants  that (a) set
forth on  Schedule  I  attached  hereto is a true and  correct  schedule  of the
location  of any and all  Collateral  of New Grantor and (b) set forth under its
signature hereto, is the true and correct location of the chief executive office
of New Grantor.

         SECTION  5.  Except as  expressly  supplemented  hereby,  the  Security
Agreement shall remain in full force and effect.

         SECTION 6. THIS  SUPPLEMENT  SHALL BE  GOVERNED  BY, AND  CONSTRUED  IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

         SECTION 7. In case any one or more of the provisions  contained in this
Supplement should be held invalid,  illegal or unenforceable in any respect, the
validity,  legality and  enforceability  of the remaining  provisions  contained
herein  and in the  Security  Agreement  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 hereto 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 8. All communications and notices hereunder shall be in writing
and given and shall become effective as provided in Section 6.01 of the Security
Agreement.  All  communications  and notices  hereunder to New Grantor  shall be
given  in such  manner  and in its  name at  Borrower's  address  set  forth  in
subsection 9.9 of the Credit Agreement.

         SECTION 9. New Grantor  agrees to  reimburse  Collateral  Agent for its
reasonable out-of-pocket expenses in connection with this Supplement,  including
the reasonable fees,  other charges and  disbursements of counsel for Collateral
Agent.



<PAGE>


         IN WITNESS WHEREOF, New Grantor and Collateral Agent have duly executed
this  Supplement  to the  Security  Agreement as of the day and year first above
written.


              [Name Of New Grantor],


                  by
                  -------------------------------------------------------

                     Name:
                     Title:


              THE CHASE MANHATTAN BANK, as Collateral Agent,


                  by
                  -------------------------------------------------------

                     Name:
                     Title:




<PAGE>



                                                                      SCHEDULE I
                                                     to Supplement No.___ to the
                                                              Security Agreement

                             LOCATION OF COLLATERAL



Description                                                   Location