EXHIBIT 10.49

                                CREDIT AGREEMENT


Dated Effective as of:    February 13, 2004

Parties:                  ALBERTSON'S, INC.                         ("Borrower")

And:                      U.S. BANK NATIONAL ASSOCIATION              ("Lender")


                                    ARTICLE I
                               CERTAIN DEFINITIONS

     As used in this  Agreement,  the  following  terms shall have the following
meanings:

     "Access Laws" means the Americans With  Disabilities  Act of 1990; the Fair
Housing  Amendments  Act of 1988;  all other  federal,  state and local  laws or
ordinances  related to disabled access;  and all statutes,  rules,  regulations,
ordinances, orders of governmental bodies and regulatory agencies and orders and
decrees of any court adopted, enacted or issued with respect thereto; all as now
existing or hereafter amended or adopted.

     "Affiliate"  means, as to any Person,  any other Person which,  directly or
indirectly, is in control of, is controlled by, or is under common control with,
such  Person.  A  Person  shall be  deemed  to  control  another  Person  if the
controlling  Person  possesses,  directly or indirectly,  the power to direct or
cause the direction of the management and policies of the other Person,  whether
through the ownership of voting securities,  membership interests,  by contract,
or otherwise.

     "Agreement" means this Credit Agreement.

     "Attorney  Costs" means and includes all reasonable fees and  disbursements
of any law firm or external counsel.

     "Basis Points" means the mathematical  expression of one percent  expressed
in terms of 100 basis points being equal to one percent.

     "Benefit Arrangement" means at any time an employee benefit plan within the
meaning of Section 3(3) of ERISA which is not a Plan or  Multiemployer  Plan and
which is  maintained  or  otherwise  contributed  to by any  member of the ERISA
Group.

     "Borrower" means Albertson's, Inc. a Delaware corporation.

     "Borrower's  Authorized  Representative"  means  any one of  those  persons
identified  by  Borrower  to Lender on Exhibit F  attached  hereto and made part
hereof and any other persons in writing from time to time.

     "Borrowing  Date" means any date on which a Revolving  Advance occurs under
Article III.

     "Business Day" means a day that  commercial  banks are open for business in
Boise, Idaho.

     "Change  of  Control"  means any  person or group of  persons  (within  the
meaning of Section 13 or 14 of the Exchange Act) shall have acquired  beneficial
ownership  (within the meaning of Rule 13d-3  promulgated  by the SEC under said
Act) of 40% or more of the outstanding  shares of common stock of Borrower;  or,
during any period of twelve  consecutive  calendar months,  individuals who were
directors of Borrower on the first day of such period shall cease to  constitute
a majority of the board of directors of Borrower.

     "Closing Date" means February 13, 2004.

     "Code" means the Internal Revenue Code of 1986.

     "Commitment"  means Lender's  agreement to make loans under Section 3.1 and
the  agreement to issue Letters of Credit in its sole  discretion  under Section
4.1.

     "Compliance  Certificate" means a certificate  substantially in the form of
Exhibit E.

CREDIT AGREEMENT                                                        Page 1
<PAGE>

     "Consolidated Interest Expense" means, as of any date of determination, for
Borrower and its  Subsidiaries on a consolidated  basis,  all interest,  premium
payments, fees, charges and related expenses of Borrower and its Subsidiaries in
connection with borrowed money or in connection with the deferred purchase price
of assets,  to the extent  treated as interest in accordance  with GAAP,  net of
interest  income,  and the portion of rent expense  with respect to  capitalized
lease  obligations  that is treated as interest in accordance with GAAP, and any
construction period interest paid and capitalized; but excluding amortization of
discount and deferred debt expense as determined in accordance with GAAP.

     "Consolidated  Rental Expense" means, as of any date of determination,  for
Borrower and its  Subsidiaries  on a  consolidated  basis the  aggregate  rental
expense  (including  any  contingent or percentage  rental  expense and any rent
offsets, as applicable) of Borrower and its Subsidiaries on a consolidated basis
for such period in respect of all rent  obligations  under all operating  leases
for rent or  personal  property  minus any  rental  income of  Borrower  and its
Subsidiaries on a consolidated basis for such period (including licensee related
income from  licensees  operating  on the store  premises  of  Borrower  and its
Subsidiaries).

     "Consolidated  Subsidiaries"  means  at any date  any  Subsidiary  or other
Person the accounts of which would be consolidated with those of Borrower in its
consolidated financial statements as of such date.

     "Continuing  Reimbursement  Agreement  for  Letters  of  Credit"  means the
agreement  substantially  in the form of Exhibit C attached hereto and made part
hereof.

     "Default"  means any Event of Default or any event which with the giving of
notice or the passage of time, or both, if not cured,  would constitute an Event
of Default.

     "Default Rate" means Lender's Prime Rate.

     "EBITDAR"  means,  for any period,  for Borrower and its  Subsidiaries on a
consolidated  basis,  an amount equal to (i) the sum of (a) net earnings  before
One Time  Charges for such period,  (b) all income  taxes for such  period,  (c)
Consolidated Interest Expense for such period, (d) depreciation and amortization
expense for such period,  and (e)  Consolidated  Rental Expense for such period,
minus (ii) cash One Time Charges for such period.

     "Environmental  Laws"  means  all  local,  state or  federal  laws,  rules,
regulations,  or ordinances pertaining to Hazardous Substances and environmental
regulation, contamination or clean-up including, without limitation, the federal
statutes  commonly  known as CERCLA and RCRA and all other federal or state lien
or environmental  clean-up statutes, all as now existing or hereafter amended or
adopted.

     "ERISA" means the Employee Retirement Income Security Act of 1974.

     "ERISA  Group"  means  Borrower  and all members of a  controlled  group of
corporations and all trades or businesses  (whether or not  incorporated)  under
common control which,  together with Borrower,  are treated as a single employer
under Section 414 of the Code.

     "Exchange Act" means the Securities Exchange Act of 1934.

     "Existing  Credit  Facilities"  means the credit  facilities  described  in
Article II of this Agreement.

     "Fixed Charge Coverage Ratio" means, as of any date of  determination,  for
Borrower and its Subsidiaries on a consolidated  basis, the ratio of (a) EBITDAR
for the period of four  fiscal  quarters  ending on such date to (b) Total Fixed
Charges for the period of four fiscal quarters ending on such date.

     "FRB" means the Board of  Governors of the Federal  Reserve  System and any
Governmental Authority succeeding to any of its principal functions.

     "GAAP" means generally accepted accounting principles consistently applied.
The  definition  of any  accounting  term  used  in this  Agreement  that is not
specifically defined shall be the GAAP definition therefor.

     "Governmental Authority" means any nation or government, any state or other
political  subdivision  thereof,  any  central  bank  (or  similar  monetary  or
regulatory  authority) thereof,  any entity exercising  executive,  legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any  corporation  or other  entity  owned or  controlled,  through  stock or
capital ownership or otherwise, by any of the foregoing.

     "Hazardous  Substances"  means (a) any  substance  or  material  defined or
designated  as  hazardous  or toxic waste,  hazardous  or toxic  material,  or a
hazardous, toxic or radioactive substance (or designated by any similar term) by
or for  purposes of any  applicable  Environmental  Law;  (b)  asbestos  and any
substance or compound containing asbestos; and (c) any other hazardous, toxic or
dangerous waste,  substance or material,  including but not limited to gasoline,
crude oil, fuel oil, diesel oil, and any other related petroleum products.

CREDIT AGREEMENT                                                        Page 2
<PAGE>

     "Indebtedness"  of  any  Person  means,   without   duplication,   (a)  all
indebtedness for borrowed money; (b) all obligations  evidenced by notes, bonds,
debentures or similar  instruments;  (c) all obligations  issued,  undertaken or
assumed  as the  deferred  purchase  price  of  property  or  services;  (d) all
obligations  with respect to capital leases (but not obligations with respect to
operating leases);  (e) all obligations of such Person to purchase securities or
other property which arise out of or in connection  with the sale of the same or
substantially similar securities or property; (f) all non-contingent obligations
(and,  for purposes of Article X and  definition  of Material  Indebtedness  all
contingent  obligations) of such Person to reimburse any bank or other Person in
respect of amounts paid under any Surety  Instrument;  (g) all  indebtedness  of
others of the type  referred  to in clauses (a) through (f) secured by a Lien on
any asset of such Person,  whether or not such  indebtedness  is assumed by such
Person;  (h) all Guaranty  Obligations of such Person in respect of indebtedness
of others of the type  referred  to in  clauses  (a)  through  (f),  and (i) all
preferred stock of such Person redeemable at the option of the holder during the
Facility Period. Insurance reserves, tax reserves and interest thereon, salaries
payable, taxes payable, dividends payable, trade accounts payable arising in the
ordinary  course  of  business,   deferred  investment  tax  credits,   deferred
compensation, deferred rents payable under non-capital leases, benefits payable,
unearned   income   and  other   similar   liabilities   shall  not   constitute
"Indebtedness."

     "Indebtedness  Rating" means the  long-term  unsecured  senior,  non-credit
enhanced  debt rating of Borrower by Standard & Poor's  Ratings Group or Moody's
Investor  Service Inc. (in the case of a split  rating,  the higher  rating will
apply,  unless the split  results in a  difference  of more than one rating,  in
which case the rating one rating below the highest rating will apply).

     "Independent Auditor" has the meaning specified in subsection 9.1(a).

     "L/C Agreement" means the Continuing Reimbursement Agreement for Letters of
Credit dated January 7, 2003.

     "L/C Termination Date" means February 11, 2005.

     "Lender" means U.S. Bank National Association.

     "Lender's Authorized  Representative" means any vice president or assistant
relationship manager in the Commercial Banking Department of Lender.

     "LIBOR Rate" means the asking price per annum for U.S.  Dollar  denominated
deposits in the London,  England  interbank market as such price is presented to
Lender by Dow, Jones & Company through its Dow Jones Telerate,  Inc.  subsidiary
or a similar quote reporting service.

     "Lien" means with respect to any asset, any mortgage, lien, pledge, charge,
security  interest or encumbrance of any kind in respect of such asset.  For the
purposes of this  Agreement,  Borrower or any Subsidiary  shall be deemed to own
subject  to a Lien any  asset  which it has  acquired  or holds  subject  to the
interest of a vendor or lessor under any  conditional  sale  agreement,  capital
lease or other title retention agreement relating to such asset.

     "Loan Documents"  means this Agreement,  the Notes, and all other documents
and   instruments   attached   hereto,   referred   to  herein  or   heretofore,
contemporaneously  herewith or hereafter  executed or delivered to Lender by any
Person in connection with the indebtedness of Borrower to Lender hereunder.

     "Loan Party" means each party hereto other than Lender.

     "Loans"  means the  Revolving  Loans  under  Article III and the Letters of
Credit under Article IV.

     "Margin  Stock" means "margin  stock" as such term is defined in Regulation
T, U or X of the FRB.

     "Markus-Stiftung  Stock  Agreement"  means the agreement dated February 15,
1980, among Borrower,  Theo Albrecht Stiftung (now known as Markus-Stiftung) and
Theo Albrecht,  as amended by the First Amendment  thereto dated as of April 11,
1984, the Second Amendment thereto dated as of September 25, 1989, and the Third
Amendment thereto dated as of December 5, 1994 and any successor agreement.

     "Material  Adverse  Effect"  means (a) a material  adverse  change in, or a
material adverse effect upon, the operations,  business,  assets, liabilities or
financial  condition of Borrower and its  Consolidated  Subsidiaries  taken as a
whole; (b) a material impairment of the ability of Borrower to perform under any
Loan  Document  and to avoid any Event of  Default;  or (c) a  material  adverse
effect upon the legality, validity, binding effect or enforceability against
Borrower of any Loan Document.

     "Material  Indebtedness"  means  Indebtedness  (other  than the  Loans)  of
Borrower and/or one or more of its Subsidiaries,  arising in one or more related
or  unrelated  transactions,   in  an  aggregate  outstanding  principal  amount
exceeding $30,000,000.

 CREDIT AGREEMENT                                                        Page 3
<PAGE>


     "Material Plan" means at any time a Plan or Plans having aggregate Unfunded
Liabilities in excess of $30,000,000.

     "Maximum Letter of Credit Amount" means $42,500,000.

     "Maximum Revolving Loan Amount" means $100,000,000.

     "Multiemployer  Plan" means at any time an employee  pension  benefit  plan
within the meaning of Section  4001(a)(3)  of ERISA,  to which any member of the
ERISA Group is then making or accruing an  obligation to make  contributions  or
has within the preceding five plan years made contributions, including for these
purposes  any Person  which ceased to be a member of the ERISA Group during such
five year period.

     "Multi-Year  Credit Agreement" means the Credit Agreement dated as of March
22, 2000,  among Borrower and the other  financial  institutions  party thereto,
including Lender, providing for a five-year revolving credit facility.

     "Note(s)"  means  the  Revolving  Note  and  the  Continuing  Reimbursement
Agreement for Letters of Credit.

     "Notice of Borrowing" means a notice in  substantially  the form of Exhibit
B.

     "Obligation" means all advances, debts, liabilities, obligations, covenants
and duties arising under any Loan  Document,  owing by Borrower to any Bank, any
Designated  Bidder,  the  Agent or any  Indemnified  Person,  whether  direct or
indirect (including those acquired by assignment),  absolute or contingent,  due
or to become due, now existing or hereafter arising.

     "One Time  Charges"  means  unusual  material  charges or  credits  against
earnings which Borrower  separately  discloses in the discussion of the "Results
of  Operations"   (including   but  not  limited  to  merger  related   charges,
restructuring  charges,  gains or losses  from the  disposition  of  assets  and
accounting changes).

     "Overnight  Borrowing"  means a  short-term  loan  that  must be  repaid by
Borrower on the Business Day following the Business Day in which it is borrowed.

     "PBGC" means the Pension Benefit Guaranty Corporation,  or any Governmental
Authority succeeding to any of its principal functions under ERISA.

     "Person"  means an individual  or entity,  including  without  limitation a
corporation,  general or limited partnership,  limited liability company, trust,
unincorporated association, government or government agency.

     "Plan"  means at any time an employee  pension  benefit  plan (other than a
Multiemployer  Plan)  which is  covered  by Title IV of ERISA or  subject to the
minimum  funding  standards  under  Section  412 of the Code and  either  (i) is
maintained, or contributed to, by any member of the ERISA Group for employees of
any member of the ERISA Group or (ii) has at any time within the preceding  five
years been maintained, or contributed to, by any Person which was at such time a
member of the ERISA Group for  employees  of any Person which was at such time a
member of the ERISA Group.

     "Prime Rate" means Lender's rate of interest  publicly  announced from time
to time as its "Prime Rate."

     "Responsible Officer" means, as to any Person, the chief executive officer,
the chief financial  officer,  or the treasurer or the president of such Person,
or any other officer having substantially the same authority and responsibility;
or, with respect to compliance  with financial  covenants,  the chief  financial
officer  or  the  treasurer  of  such  Person,   or  any  other  officer  having
substantially the same authority and responsibility.

     "Revolving Loan  Termination  Date" means the earlier of February 11, 2005,
and the date Lender demands payment in full of the then  outstanding  balance of
the Revolving Note.

     "Revolving  Note"  means the  promissory  note  referred  to in Section 3.3
hereafter.

     "Subsidiary"  of a Person means any corporation or other business entity of
which more than 50% of the voting  stock,  membership  interests or other equity
interests  (in the  case of  Persons  other  than  corporations),  is  owned  or
controlled  directly  or  indirectly  by  the  Person,  or one  or  more  of the
Subsidiaries  of the  Person,  or a  combination  thereof.  Unless  the  context
otherwise  clearly  requires,  references  herein to a  "Subsidiary"  refer to a
Subsidiary of Borrower.

     "Surety  Instruments"  means all letters of credit  (including  standby and
commercial), banker's acceptances, bank guaranties, shipside bonds, surety bonds
and similar instruments.

CREDIT AGREEMENT                                                        Page 4
<PAGE>

     "Swap Contracts" means any agreement,  whether or not in writing,  relating
to any transaction  that is a rate swap, basis swap,  forward rate  transaction,
commodity swap,  commodity option,  equity or equity index swap or option, bond,
note or bill option, interest rate option, forward foreign exchange transaction,
cap,  collar or floor  transaction,  currency  swap,  cross-currency  rate swap,
swaption,  currency  option or any other,  similar  transaction  (including  any
option to enter into any of the foregoing) or any  combination of the foregoing,
and unless the context otherwise clearly requires, any master agreement relating
to or governing any or all of the foregoing.

     "Total  Fixed  Charges"  means,  for  any  period,  for  Borrower  and  its
Subsidiaries on a consolidated basis (a) Consolidated  Interest Expense for such
period and (b) Consolidated Rental Expense for such period.

     "Unfunded Liability" means with respect to any Plan at any time, the amount
(if any) by which (i) the present value of all benefits  under such Plan exceeds
(ii)  the  fair  market  value of all Plan  assets  allocable  to such  benefits
(excluding any accrued by unpaid  contributions),  all determined as of the then
most  recent  valuation  date for such Plan,  but only to the  extent  that such
excess  represents  a potential  liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.

     "USBTS-Hong Kong" means U.S. Bank Trade Services - Hong Kong.

     "Wholly-Owned  Consolidated Subsidiaries" means any Consolidated Subsidiary
all of the shares of capital stock or other ownership interests of which (except
directors'  qualifying  shares) are at the time directly or indirectly  owned by
Borrower.

                                   ARTICLE II
                           EXISTING CREDIT FACILITIES

     2.1 Documents.  Borrower and Lender are parties to the following  documents
which relate to credit facilities ("Existing Credit Facilities").

          2.1.1 Multi-Year Credit Agreement.

          2.1.2 Continuing  Reimbursement  Agreement for Letters of Credit dated
     January 7, 2003.


                                   ARTICLE III
                                 REVOLVING LOANS

     3.1 Maximum Amount.  Subject to the terms and conditions of this Agreement,
Lender agrees to make loans to Borrower from time to time on a revolving  credit
basis (each a "Revolving Advance",  collectively,  "Revolving Loans"),  provided
that the aggregate  principal amount of outstanding  Revolving Loans shall at no
time exceed the Maximum  Revolving Loan Amount.  The  availability  of Revolving
Advances shall terminate on the Revolving Loan Termination Date.

     3.2 Use of Proceeds. Borrower shall use the proceeds of the Revolving Loans
for  short-term  cash position  management,  working  capital,  and other lawful
purposes.

     3.3 Revolving  Note. The Revolving Loans shall be evidenced by a promissory
note   executed  by  Borrower  in  the  principal   amount  of   $100,000,000.00
substantially  in the  form  attached  as  Exhibit  A  ("Revolving  Note").  The
Revolving  Loans shall be subject to all terms and  conditions  of the Revolving
Note and of this Agreement.

     3.4  Interest.  Interest on the unpaid  principal  balance of the Revolving
Note  shall be due and  payable  at the  times and at the rates set forth in the
Revolving Note.

     3.5 Principal  Payments.  The principal balance of the Revolving Note shall
be due and payable on the date  indicated on the Revolving  Note or if none, the
Revolving Loan Termination Date,  subject to the option of Borrower as set forth
hereafter in Section 3.9.

     3.6 Additional Payments.  In addition to the payments otherwise required on
the Revolving  Note,  if at any time the  outstanding  principal  balance of the
Revolving Note exceeds the Maximum Revolving Loan Amount,  Borrower shall pay to
Lender on demand an amount equal to the amount by which such  principal  balance
exceeds the Maximum Revolving Loan Amount.

     3.7 Requests for Revolving Advances.  Whenever Borrower wishes to request a
Revolving Advance,  Borrower shall give Lender notice thereof in accordance with
the Notice of Borrowing.

CREDIT AGREEMENT                                                        Page 5
<PAGE>

     3.8 Overnight  Borrowing.  Of the Revolving  Loans,  Borrower may request a
Revolving  Advance of up to  $100,000,000  (so long as the amount  requested  is
available  to be  borrowed  at the time of the  request)  for the  purpose of an
Overnight Borrowing.

          3.8.1 Interest Rate for Overnight  Borrowing.  The applicable interest
     rate for Overnight  Borrowing  shall be as set forth in the Revolving Note.

          3.8.2  Requests  for  Overnight  Borrowing.  Borrower  must request an
     Overnight Borrowing between 9 a.m. and 3 p.m., Mountain Time, on a Business
     Day, by either telephonic or facsimile communication to Lender's Authorized
     Representative,    originated   or   signed   by   Borrower's    Authorized
     Representative.

     3.9 Term Loan Option. Not fewer than five (5) days and not more than thirty
(30) days prior to the Revolving  Loan  Termination  Date,  Borrower may provide
written  notice  to  Lender  that  the  Revolving  Loans  outstanding  as of the
Revolving  Loan  Termination  Date shall be converted  into a Term Loan. If such
notice is given,  Lender  agrees,  on the terms and conditions  hereinafter  set
forth,  to make a term loan  ("Term  Loan") to Borrower  on the  Revolving  Loan
Termination  Date, in a principal amount up to but not exceeding the outstanding
Revolving  Loans. Any amount of Lender's Term Loan repaid may not be reborrowed.
Any such term loan will not exceed one year,  and the interest  rate  applicable
thereto  shall be a variable  rate  based upon the LIBOR Rate for one week,  one
month,  three months,  or six months,  at the option of Borrower,  plus 25 Basis
Points, plus a percentage based upon Borrower's then current Indebtedness Rating
as follows:
<TABLE>
<CAPTION>
---------------------------------- ---------------- ---------------- ----------------- ----------------- ------------------
       Indebtedness Ratings             A / A2           A- / A3        BBB+ / Baa1        BBB / Baa2        BBB- / Baa3
---------------------------------- ---------------- ---------------- ----------------- ----------------- ------------------
<S>                                <C>              <C>              <C>               <C>               <C>
---------------------------------- ---------------- ---------------- ----------------- ----------------- ------------------
            Percentage                  .185%             .30%              .40%              .50%              .825%
---------------------------------- ---------------- ---------------- ----------------- ----------------- ------------------
</TABLE>
                                   ARTICLE IV
                                LETTERS OF CREDIT

     4.1 Maximum Amount of Credits.  Subject to the terms and conditions of this
Agreement, Lender in its sole discretion and at its sole option may issue one or
more  standby  and/or  commercial  Letters of Credit for the account of Borrower
(each a "Letter of Credit"), provided that the L/C Outstandings shall not exceed
at any one time the Maximum Letter of Credit Amount.

     4.2 Use of Letters of Credit.  Borrower  shall use the letters of credit to
support performance bonds, to process import  transactions,  or for other lawful
purposes.

     4.3 L/C Agreement.  Borrower has executed or will execute contemporaneously
with this Agreement the L/C Agreement.

     4.4 L/C Applications. Whenever Borrower wishes to request the issuance of a
Letter of Credit,  Borrower  shall execute and deliver to Lender an  application
therefor in Lender's  standard form,  appropriately  completed with all required
information  (an "L/C  Application").  Each Letter of Credit shall be subject to
all  terms  and  conditions  of  this  Agreement,  the  L/C  Agreement,  and the
applicable L/C  Application.  In the event of any express  conflict  between the
terms of this  Agreement and of the L/C Agreement and the L/C  Application,  the
terms of this Agreement shall control.

     4.5 Expiry  Date.  No Letter of Credit  shall be issued on or after the L/C
Termination  Date.  Each Letter of Credit shall have an expiration date no later
than 365 days after the L/C  Termination  Date.  Drafts  drawn under a Letter of
Credit may be sight  drafts or time  drafts;  provided,  however,  that no draft
shall have a maturity date later than 365 days after the L/C Termination Date.

     4.6  Reimbursement.  Borrower  hereby agrees to reimburse  Lender an amount
equal to the face  amount of each draft  drawn  under  each  Letter of Credit in
accordance  with the  terms of such  Letter  of Credit  and the  applicable  L/C
Agreement. Notwithstanding the terms of any L/C Agreement, in the event Borrower
fails to pay Lender in accordance with the terms of any L/C Agreement,  Borrower
agrees to pay to Lender on demand  interest on all amounts due under such Letter
of Credit at the Default Rate.

     4.7 Certain Fees. In addition to any other fees set forth herein,  Borrower
agrees to pay to Lender on demand:

          4.7.1  With  respect to each  Letter of Credit  and each  draft  drawn
     thereunder,  Lender's customary issuance fees, processing fees, negotiation
     commissions and acceptance fees, as applicable.

          4.7.2 With respect to each commercial  Letter of Credit issued through
     USBTS-Hong  Kong,  and each  draft  drawn  thereunder,  Lender's  customary
     issuance fees, negotiation  commissions and acceptance fees, as applicable,
     but no processing fee.

 CREDIT AGREEMENT                                                        Page 6
<PAGE>

          4.7.3  With  respect  to each  Commercial  Letter of Credit not issued
     through  USBTS-Hong  Kong,  and  each  draft  drawn  thereunder,   Lender's
     customary  issuance fees,  negotiation  commissions and acceptance fees, as
     applicable,  and a processing fee of 12.5 Basis Points or $35, whichever is
     more, payable at the time of drawing by the beneficiary.

          4.7.4 With respect to each standby Letter of Credit, an issuing fee of
     50 Basis  Points  per  annum,  calculated  from and  including  the date of
     issuance  (or date of renewal or  extension  if any)  thereof to the expiry
     date thereof on the basis of actual days divided by 360.

                                    ARTICLE V
                                    LOAN FEES

     In  addition  to the  Letter of Credit  fees  payable  under  Section  4.7,
Borrower shall pay to Lender the following fees:

     5.1 A  Facility  Fee,  payable  at the  end of each  of  calendar  quarter,
regardless of usage,  computed by multiplying the Maximum  Revolving Loan Amount
by the following percentages which are based upon Borrower's Indebtedness Rating
at the end of the applicable calendar quarter as follows:
<TABLE>
<CAPTION>
---------------------------------- ---------------- ---------------- ----------------- ----------------- ------------------
      Indebtedness Ratings             A / A2           A- / A3        BBB+ / Baa1        BBB / Baa2        BBB- / Baa3
---------------------------------- ---------------- ---------------- ----------------- ----------------- ------------------
<S>                                <C>              <C>              <C>               <C>               <C>
---------------------------------- ---------------- ---------------- ----------------- ----------------- ------------------
           Percentage                   .065%            .075%            .100%             .125%              .175%
---------------------------------- ---------------- ---------------- ----------------- ----------------- ------------------
</TABLE>
     5.2 A Closing Fee of $100,000, payable on the Closing Date.


                                   ARTICLE VI
            ADDITIONAL TERMS APPLICABLE TO CERTAIN CREDIT FACILITIES


     6.1  Representation  and Warranty of Credit  Availability.  Each request by
Borrower  for a Revolving  Advance or Letter of Credit shall be deemed to be its
representation  and warranty that (a) such Revolving Advance may be made or such
Letter  of  Credit  issued  without  exceeding  the  applicable  maximum  amount
determined in accordance with the provisions of this  Agreement,  (b) no Default
has  occurred,  or will occur as a result of making  such  Revolving  Advance or
issuing such Letter of Credit,  and (c) all  representations  and warranties set
forth in this  Agreement are true,  accurate and complete as of the date of such
request  (except to the extent such  representations  and  warranties  expressly
refer to an earlier  date,  in which  case they shall be true and  correct as of
such earlier date).

                                   ARTICLE VII
                              CONDITIONS PRECEDENT

     7.1  Conditions of Initial  Loans.  The  obligations  of Lender to make its
initial  Revolving Advance or issue any Letter of Credit hereunder is subject to
the condition  that Lender shall have received on or before the Closing Date all
of the following, in form and substance satisfactory to Lender:

          (a)  Credit Agreement and Notes. This Agreement and the Notes executed
               by Borrower;

          (b)  Resolutions; Incumbency.

               1.   Copies  of the  resolutions  of the  board of  directors  of
                    Borrower  authorizing the transactions  contemplated hereby,
                    certified  as of the  Closing  Date by the  Secretary  or an
                    Assistant Secretary of Borrower; and

               2.   A  Certificate  of the  Secretary or Assistant  Secretary of
                    Borrower,  dated the  Closing  Date,  certifying  the names,
                    titles  and true  signatures  of the  officers  of  Borrower
                    authorized to execute,  deliver and perform,  as applicable,
                    this Agreement, and all other Loan Documents to be delivered
                    by it hereunder;

          (c)  Organization  Documents;  Good  Standing.  Each of the  following
               documents:

               1.   the articles or certificate of incorporation  and the bylaws
                    of Borrower as in effect on the Closing  Date,  certified by
                    the  Secretary or Assistant  Secretary of Borrower as of the
                    Closing Date; and

               2.   good standing  certificates  for Borrower from the Secretary
                    of State (or similar applicable  governmental  authority) of
                    its state of  incorporation  and the state of its  principal
                    offices;

CREDIT AGREEMENT                                                        Page 7
<PAGE>

          (d) Legal Opinions.

               1.   an  opinion  of the  Executive  Vice-President  and  General
                    Counsel  to  Borrower,  dated  as of the  Closing  Date  and
                    addressed to Lender, substantially in the form of Exhibit D;
                    and

          (e)  Payment of Fees.  Evidence  of payment by Borrower of all accrued
               and unpaid  fees,  costs and  expenses to the extent then due and
               payable on the Closing  Date,  together with  Borrower's  promise
               under this subsection (e) to pay Attorney Costs incurred or to be
               incurred by it through the closing proceedings including any such
               costs,  fees and expenses  arising under or referenced in Section
               12.5;

          (f)  Certificate. A certificate signed by a Responsible Officer, dated
               as of the Closing Date, stating that:

               1.   the representations and warranties contained in Article VIII
                    are true and correct on and as of such date,  as though made
                    on  and  as  of  such  date   (except  to  the  extent  such
                    representations and warranties expressly refer to an earlier
                    date,  in which  case they  shall be true and  correct as of
                    such earlier date;  and except that the  representation  and
                    warranty shall be deemed instead to refer to the last day of
                    the  most  recent  quarter  and  year  for  which  financial
                    statements have then been delivered,  and to the most recent
                    Form 10-K or 10-Q filed by Borrower with the SEC, in respect
                    of the  representations  and warranties made in Article VIII
                    Sections 8.5 and 8.10);

               2.   no Default or Event of Default  exists or would  result from
                    the initial Borrowing; and

               3.   there has  occurred  since the date of the most  recent Form
                    10-K or other public disclosure  documents filed by Borrower
                    with the SEC prior to the  Closing  Date (to the  extent any
                    such event or  circumstance  is disclosed in such document),
                    no  event  or  circumstance   that  has  resulted  or  could
                    reasonably  be  expected  to  result in a  Material  Adverse
                    Effect;

          (g)  Documents  and  Actions   Relating  to  the   Multi-Year   Credit
               Agreement.  A certificate  of a  Responsible  Officer of Borrower
               certifying  that there are no defaults in payment and performance
               of the Multi-Year  Credit  Agreement in accordance with the terms
               and conditions thereof; and

          (h)  Other  Documents.  Such other approvals,  opinions,  documents or
               materials as Lender may reasonably request.

     7.2  Conditions  to All  Borrowings.  The  obligation of Lender to make any
Revolving Loan or issue any Letter of Credit is subject to the  satisfaction  of
the following conditions precedent on the relevant Borrowing Date:

          (a)  Notice of Borrowing. As to any Loan, Lender shall have received a
               Notice of Borrowing;

          (b)  Continuation   of    Representations    and    Warranties.    The
               representations  and warranties in Article VIII shall be true and
               correct on and as of such  Borrowing Date with the same effect as
               if made on and as of such  Borrowing  Date  (except to the extent
               such representations and warranties expressly refer to an earlier
               date,  in which  case they  shall be true and  correct as of such
               earlier date; and except that this subsection (b) shall be deemed
               instead to refer to the last day of the most  recent  quarter and
               year for which financial statements have then been delivered, and
               to the most recent  Form 10-K or 10-Q filed by Borrower  with the
               SEC, in respect of the  representations  and  warranties  made in
               Section VIII Sections 8.5 and 8.10);

          (c)  No Material Adverse Effect.  There has occurred since the date of
               the most recent  Form 10-K or other  public  disclosure  document
               filed by Borrower  with the SEC prior to the Closing Date (to the
               extent  any  such  event or  circumstance  is  disclosed  in such
               document),  no event or  circumstance  that has resulted or could
               reasonably  be expected to result in a Material  Adverse  Effect;
               and

          (d)  No Existing  Default.  No default or Event of Default shall exist
               or shall result from such Borrowing.

     Each Notice of Borrowing submitted by Borrower hereunder shall constitute a
representation and warranty by Borrower  hereunder,  as of the date of each such
notice or request and as of each  Borrowing  Date,  that the  conditions in this
Section 7.2 are satisfied.

CREDIT AGREEMENT                                                        Page 8
<PAGE>
                                  ARTICLE VIII
                         REPRESENTATIONS AND WARRANTIES

     Borrower hereby represents and warrants:

     8.1 Corporate  Existence and Power. It is a corporation duly  incorporated,
validly  existing and in good standing  under the laws of Delaware,  and has all
corporate  powers  and  all  material  governmental  licenses,   authorizations,
consents and approvals required to carry on its business as now conducted.

     8.2  Subsidiaries.   Each  of  Borrower's   corporate   Subsidiaries  is  a
corporation duly  incorporated,  validly existing and in good standing under the
laws of its jurisdiction of incorporation,  and has all corporate powers and all
material governmental licenses, authorizations,  consents and approvals required
to carry on its business as now conducted.

     8.3  Corporate  and  Governmental  Authorization;  No  Contravention.   The
execution, delivery and performance by Borrower of the Loan Documents are within
Borrower's  corporate  powers,  have  been  duly  authorized  by  all  necessary
corporate  action,  require no action by or in respect of, or filing  with,  any
Governmental Authority and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of incorporation
or by-laws of Borrower or of any agreement,  judgment, injunction, order, decree
or  other  instrument  binding  upon  Borrower  or  result  in the  creation  or
imposition of any Lien on any asset of Borrower or any of its Subsidiaries.

     8.4 Binding  Effect.  This  Agreement and each other Loan Document to which
Borrower is a party constitutes a valid and binding  agreement of Borrower,  and
each Note and Loan Document, when executed and delivered in accordance with this
Agreement,   will  constitute  a  valid  and  binding  obligation  of  Borrower,
enforceable against Borrower in accordance with its respective terms.

     8.5 Litigation.  Except as disclosed in Borrower's most recent Form 10-K or
other public disclosure, there is no action, suit or proceeding pending against,
or to the knowledge of Borrower threatened against or affecting, Borrower or any
of its Subsidiaries before any court or arbitrator or any Governmental Authority
in which there is a reasonable  possibility  of an adverse  decision which could
have a Material Adverse Effect.

     8.6 ERISA  Compliance.  Each  member of the ERISA Group has  fulfilled  its
obligations  under  the  minimum  funding  standards  of ERISA and the Code with
respect to each Plan and is in  compliance  in all  material  respects  with the
presently applicable provisions of ERISA and the Code with respect to each Plan.

     8.7 Use of Proceeds;  Margin Regulations.  The proceeds of the Loans are to
be used solely for the  purposes  set forth in and  permitted by Section 3.2 and
Section 4.2.

     8.8 Title to  Properties;  Liens.  Borrower and each  Subsidiary  have good
record and marketable  title in fee simple to, or valid leasehold  interests in,
all real property  necessary or used in the ordinary conduct of their respective
businesses,  except for such defects in title as could not,  individually  or in
the aggregate,  have a Material Adverse Effect. The property of Borrower and its
Subsidiaries  is subject to no Liens,  other than Liens  permitted under Section
10.1.

     8.9 Taxes.  Borrower  and its  Subsidiaries  have  filed all United  States
federal income tax returns and all other material tax returns which are required
to be filed by them and have paid all  taxes due  pursuant  to such  returns  or
pursuant to any assessment  received by Borrower or any  Subsidiary,  other than
any such taxes being contested in good faith and for which appropriate  reserves
have been  established  on the books and records of Borrower in accordance  with
GAAP.  The  charges,  accruals  and  reserves on the books of  Borrower  and its
Subsidiaries  in  respect of taxes or other  governmental  charges  are,  in the
opinion of Borrower, adequate.

     8.10 Financial  Information.  The most recent consolidated balance sheet of
Borrower  and  its  Consolidated   Subsidiaries  and  the  related  consolidated
statements of earnings,  cash flows and stockholders' equity for the fiscal year
then ended, reported on by Deloitte & Touche and set forth or as incorporated by
reference  in  Borrower's  most  recent  Form  10-K,  a copy of  which  has been
delivered to Lender, fairly represent, in conformity with GAAP, the consolidated
financial position of Borrower and its Consolidated Subsidiaries as of such date
and their  consolidated  results of  operations  and cash flows for such  fiscal
year.

     8.11  Environmental  Matters.  In the  ordinary  course  of  its  business,
Borrower considers the effect of Environmental Laws on the business,  operations
and properties of Borrower and its Subsidiaries as such business, operations and
properties exist at the time. On this basis,  Borrower has reasonably  concluded
that  Environmental  Laws at the time in effect are  unlikely to have a Material
Adverse Effect.

     8.12 Regulated Entities. Borrower is not an "Investment Company" within the
meaning  of the  Investment  Company  Act of 1940.  Borrower  is not  subject to
regulation  under the Public  Utility  Holding  Company Act of 1935, the Federal
Power Act, the Interstate  Commerce Act, any state public utilities code, or any
other  Federal or state  statute or  regulation  limiting  its  ability to incur
Indebtedness.

CREDIT AGREEMENT                                                        Page 9
<PAGE>


     8.13   Insurance.   The   properties  of  Borrower  and  its   Consolidated
Subsidiaries  are  insured  with  financially  sound  and  reputable   insurance
companies not  Affiliates of Borrower,  in such amounts,  with such  deductibles
(and  with such risk  retention)  and  covering  such  risks as are  customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where Borrower or such Subsidiary operates.

     8.14 Access Laws.  Borrower and its  Consolidated  Subsidiaries  are to the
best of  Borrower's  knowledge  and belief,  not in violation of any Access Laws
applicable  to  their  operations  to the  extent  that  there  is a  reasonable
possibility  of an adverse  decision or decisions  which  separately or together
could have a Material Adverse Effect.

     8.15 Disclosure. All information heretofore furnished by Borrower to Lender
for  purposes  of or in  connection  with  this  Agreement  or  any  transaction
contemplated hereby is, and all such information hereafter furnished by Borrower
to Lender will be, true and accurate in all material  respects on the date as of
which such information is stated or certified.

                                   ARTICLE IX
                              AFFIRMATIVE COVENANTS

     Until payment and  performance in full of all obligations of Borrower under
the Loan  Documents,  Borrower  agrees  that so long as  Lender  shall  have any
Commitment  hereunder,  or any Loan or other  Obligation  shall remain unpaid or
unsatisfied, unless Lender waives compliance in writing:

     9.1 Information. Borrower will deliver to Lender:

          (a) as soon as  available  and in any event  within 120 days after the
     end of each  fiscal  year of  Borrower,  a  consolidated  balance  sheet of
     Borrower and its  Consolidated  Subsidiaries as of the end such fiscal year
     and the  related  consolidated  statements  of  earnings,  cash  flows  and
     stockholder's  equity for such fiscal year,  setting  forth in each case in
     comparative  form the figures for the previous fiscal year, all reported on
     in a manner acceptable to the SEC by Deloitte & Touche or other independent
     public  accounts  of  nationally   recognized  standing  (the  "Independent
     Auditor").  Such report shall not be  qualified as to (i) going  concern or
     (ii) any limitation in the scope of the audit.

          (b) as soon as available and in any event within 60 days after the end
     of each of the first three  quarters of each  fiscal  year of  Borrower,  a
     consolidated balance sheet of Borrower and its Consolidated Subsidiaries as
     of the end of such  quarter  and the  related  consolidated  statements  of
     earnings  for such  quarter and for the portion of  Borrower's  fiscal year
     ended at the end of such  quarter and the  consolidated  statement  of cash
     flows for the portion of Borrower's fiscal year, all certified  (subject to
     normal  year-end  adjustments)  as to  fairness of  presentation,  GAAP and
     consistency by the chief financial officer or the chief accounting  officer
     of Borrower;

          (c)  simultaneously  with  the  delivery  of  each  set  of  financial
     statements  referred  to  in  clauses  (a)  and  (b)  above,  a  Compliance
     Certificate of the chief financial officer or the chief accounting  officer
     of Borrower;

          (d)  simultaneously  with  the  delivery  of  each  set  of  financial
     statements  referred to in subsection  (a), a statement of the  Independent
     Auditor which reported on such statements (i) whether  anything has come to
     their  attention to cause them to believe  that any Default  existed on the
     date of such statements and (ii) confirming the  calculations  set forth in
     the Compliance Certificate delivered  simultaneously  therewith pursuant to
     subsection (c);

          (e) forthwith upon the occurrence of any Default, a certificate of the
     chief financial officer or the chief accounting officer of Borrower setting
     forth the  details  thereof  and the  action  which  Borrower  is taking or
     proposes to take with respect thereto;

          (f) promptly upon the mailing thereof to the  shareholders of Borrower
     generally, copies of all financial statements, reports and proxy statements
     so mailed and not previously  delivered to Lender  pursuant to this Section
     9.1;

          (g)  promptly  upon the  filing  thereof,  copies of all  registration
     statements (other than the exhibits thereto and any registration statements
     on Form S-8 or its  equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
     their  equivalents)  which  Borrower  shall have filed with the SEC and not
     previously delivered to Lender pursuant to this Section 9.1;

          (h) if and when any member of the ERISA Group (i) gives or is required
     to give notice to the PBGC of any "reportable event" (as defined in Section
     4043 of ERISA) with respect to any Plan which might constitute  grounds for
     a termination of such Plan under Title IV of ERISA,  or knows that the plan
     administrator  of any Plan has given or is  required  to give notice of any

CREDIT AGREEMENT                                                        Page 10
<PAGE>
     such reportable  event, a copy of the notice of such reportable event given
     or required to be given to the PBGC;  (ii)  receives  notice of complete or
     partial  withdrawal  liability  under Title IV of ERISA, or notice that any
     Multiemployer  Plan  is  in  reorganization,   is  insolvent  or  has  been
     terminated,  a copy of such  notice;  (iii)  receives  notice from the PBGC
     under Title IV of ERISA of an intent to terminate,  impose liability (other
     than for premiums  under Section 4007 of ERISA) in respect of, or appoint a
     trustee to administer  any Plan, a copy of such notice;  (iv) applies for a
     waiver of the minimum  funding  standard  under  Section 412 of the Code, a
     copy of such application;  (v) gives notice of intent to terminate any Plan
     under Section 4041(c) of ERISA, a copy of such notice and other information
     filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant
     to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any
     payment or contribution to any Plan or Multiemployer  Plan or in respect of
     any  Benefit  Arrangement  or makes any  amendment  to any Plan or  Benefit
     Arrangement  which has resulted or could result in the imposition of a Lien
     or the  posting of a bond or other  security,  a  certificate  of the chief
     financial officer or the chief accounting officer of Borrower setting forth
     details  as to such  occurrence  and  action,  if any,  which  Borrower  or
     applicable member of the ERISA Group is required or proposes to take; and

         (i)  from  time to time  such  additional  information  regarding  the
     consolidated  financial  position  of  Borrower  as Lender  may  reasonably
     request.

As to any information  contained in materials  furnished  pursuant to subsection
9.1(g),  Borrower shall not be separately  required to furnish such  information
under  subsection (a) or (b) above, but the foregoing shall not be in derogation
of the obligation of Borrower to furnish the information and materials described
in subsection 9.1(a) and (b) above at the times specified therein.

     9.2  Conduct of  Business  and  Maintenance  of  Existence.  Borrower  will
continue,  and will cause each Subsidiary to continue,  to engage in business of
the same general type as now  conducted  by Borrower and its  Subsidiaries,  and
will  preserve,  renew and keep in full  force and  effect,  and will cause each
Subsidiary to preserve, renew and keep in full force and effect their respective
corporate  existence and their  respective  rights,  privileges  and  franchises
necessary or desirable in the normal conduct of business; provided that Borrower
may (a)  discontinue  operations or dispose of property in the normal conduct of
its business and (b) cause the  dissolution of  Subsidiaries  or the merger of a
Subsidiary into Borrower or into another  Subsidiary as it may from time to time
reasonably deem necessary or desirable in the conduct of its business.

     9.3  Maintenance  of  Property.  Borrower  will  keep,  and will cause each
Subsidiary  to keep,  all property  useful and necessary in its business in good
working  order and  condition,  ordinary wear and tear  excepted;  provided that
Borrower and each of its Subsidiaries may discontinue  operations and dispose of
property in the normal conduct of its business.

     9.4 Insurance.  Borrower will maintain,  and will cause each  Subsidiary to
maintain with financially sound and reputable insurance companies,  insurance on
all their real and  personal  property  in at least such  amounts and against at
least such risks (and with such risk  retention) as are usually  insured against
by companies of established  repute  engaged in the same or similar  business as
Borrower or such  Subsidiary,  and Borrower will promptly furnish to Lender such
information as to insurance carried as may be reasonably requested in writing by
Lender.

     9.5 Payment of Obligations. Borrower will pay and discharge, and will cause
each  Subsidiary  to  pay  and  discharge,  at or  before  maturity,  all  their
respective  material  obligations and  liabilities,  including tax  liabilities,
except where the same may be contested in good faith by appropriate proceedings,
and will  maintain,  and will cause each  Subsidiary to maintain,  in accordance
with the GAAP, appropriate reserves for the accrual of any of the same.

     9.6 Compliance With Laws.  Borrower will comply,  and cause each Subsidiary
to comply, in all material respects with all applicable laws, ordinances, rules,
regulations,   and   requirements   of   Governmental   Authorities   (including
Environmental  Laws  and  ERISA),  except  where  the  necessity  of  compliance
therewith   is  contested  in  good  faith  by   appropriate   proceedings   and
non-compliance  during  the  period  of such  contest  could not  reasonably  be
expected to have a Material Adverse Effect.

     9.7 Inspection of Property, Books and Records. Borrower will keep, and will
cause each Subsidiary to keep, proper books of record and account in which full,
true and correct  entries  shall be made of all  dealings  and  transactions  in
relation to its  business and  activities.  Upon the  occurrence  and during the
continuance of a Default,  Borrower will permit,  and will cause each Subsidiary
to permit, representative of Lender at Lender's expense, to examine any of their
respective  books and records (except as they relate to Borrower's trade secrets
or other proprietary information of Borrower other than any information required
to be delivered to Lender by Borrower  under  Section 9.1) and to discuss  their
respective finances and accounts with their respective  officers,  employees and
independent public accountants, all at such reasonable times and as often as may
reasonably be desired.

     9.8 Use of Proceeds.  The  proceeds of the Loans made under this  Agreement
will be used by Borrower  for the purposes set forth in Sections 3.2 and 4.2 and
other lawful corporate purposes.

CREDIT AGREEMENT                                                        Page 11
<PAGE>

         9.9 Further Assurances. Promptly upon request by Lender, Borrower shall
do, execute, acknowledge, and deliver, any and all such further acts,
certificates, assurances and other instruments Lender may reasonably request
from time to time in order to carry out more effectively the purposes of this
Agreement or any other Loan Document.

                                    ARTICLE X
                               NEGATIVE COVENANTS

     So long as Lender shall have any Commitment hereunder, or any Loan or other
Obligation shall remain unpaid or unsatisfied,  unless Lender waives  compliance
in writing:

     10.1 Limitation on Liens. Neither Borrower nor any Consolidated  Subsidiary
will  create,  assume  or  suffer  to exist  any Lien on any  asset now owned or
hereafter acquired by it, except:

          (a)  Liens  existing  on the  date  of  this  Agreement  securing  the
     Indebtedness  outstanding  on the date of this  Agreement  in an  aggregate
     principal amount not exceeding $500,000,000;

          (b) any Lien existing on any specific  tangible asset or assets of any
     Person at the time such Person  becomes a  Consolidated  Subsidiary and not
     created in contemplation of such event, subject to subsection (e);

          (c) any Lien on any asset  securing  Indebtedness  incurred or assumed
     for the purpose of financing all or any part of the cost of acquiring  such
     asset,  provided  that (i) in the case of land  acquired for the purpose of
     constructing new business or operating  facilities  thereon,  (A) such Lien
     attaches to such land within 24 months  after the  acquisition  thereof and
     (B)  construction of such new business or operating  facilities  thereon is
     substantially  complete within 24 months after the acquisition of such land
     and (ii) in the case of any asset other than an asset of the type described
     in the preceding clause (i), such Lien attaches to such asset  concurrently
     with or within 180 days after the acquisition thereof;

          (d) any Lien on any  specific  tangible  asset or assets of any Person
     existing  at the time such  Person is merged or  consolidated  with or into
     Borrower or a Consolidated  Subsidiary and not created in  contemplation of
     such event, subject to subsection (e);

          (e) any Lien existing on any specific  tangible  asset or assets prior
     to the acquisition thereof by Borrower or a Consolidated Subsidiary and not
     created in contemplation of such acquisition;  provided that in the case of
     any Lien permitted under this  subsection (e) or under  subsections (b) and
     (d),  any such Lien does not by its terms  cover any such  tangible  assets
     after the time Borrower  directly or indirectly  acquires such assets which
     were not covered  immediately prior thereto,  and any such Lien does not by
     its  terms  secure  any  Indebtedness  other  than  Indebtedness   existing
     immediately prior to the time of acquisition of such assets;

          (f) any Lien  arising out of the  refinancing,  extension,  renewal or
     refunding of any  Indebtedness  secured by any Lien permitted by any of the
     foregoing  clauses of this Section,  provided that such Indebtedness is not
     increased and is not secured by any additional assets;

          (g) Liens arising in the ordinary  course of its business which (i) do
     not secure Indebtedness and (ii) do not in the aggregate materially detract
     from the value of its assets or  materially  impair the use  thereof in the
     operation of its business;

          (h) Liens  arising  from  Borrower's  or a  Subsidiary's  pledging  of
     equipment,  not  otherwise  permitted  by the  foregoing  clauses  of  this
     Section, securing Indebtedness in an aggregate principal amount at any time
     outstanding not to exceed $500,000,000; and

          (i) Liens on real property;  provided that the aggregate value of real
     property  owned by Borrower (not including for purposes of this proviso any
     real  property  acquired or held by Borrower  subject to the  interest of a
     lessor under a capital lease relating to such real property), as determined
     on a lower of cost or Fair Market Value basis (as defined  below),  exceeds
     the aggregate  principal  amount of  Indebtedness  secured by Liens on such
     real property in an amount not less than $250,000,000.

     For purposes of Section 10.1 ("Fair  Market  Value")  means with respect to
any real property of Borrower or any Subsidiary at any date the open market cash
purchase  price that an informed and willing  purchaser  would pay for such real
property in an arm's-length transaction to a willing and informed owner under no
compulsion  to sell,  all as  determined  (i) if no Default has  occurred and is
continuing,  at the  option of Lender  either  (A) in good faith by the Board of
Directors  of  Borrower  or  (B) by an  appraisal  conducted  by an  independent
appraiser  satisfactory to the Agent and Borrower, the cost of such appraisal to
be shared equally by Borrower and Lender, and (ii) if a Default has occurred and
is  continuing,   by  an  appraisal   conducted  by  an  independent   appraiser
satisfactory  to Lender and  Borrower,  the cost of such  appraisal  to be borne
solely by Borrower.

CREDIT AGREEMENT                                                        Page 12
<PAGE>


     10.2 Disposition of Assets. Borrower will not (i) consolidate or merge with
or into any other Person or (ii) directly or indirectly sell, lease or otherwise
transfer  all or any  substantial  part  of  the  assets  of  Borrower  and  its
Consolidated Subsidiaries,  considered as a whole, to any other Person; provided
that  Borrower  may merge  with  another  Person if (A)  Borrower  is the Person
surviving such merger and (B) immediately after giving effect to such merger, no
Default shall have occurred or be continuing.

     10.3 Limitation on Subsidiary  Indebtedness  and Swap  Contracts.  Borrower
shall not permit any Subsidiary to create,  incur,  assume,  suffer to exist, or
otherwise  become or remain  directly or indirectly  liable with respect to, any
Indebtedness or Swap Contracts, except:

          (a) Indebtedness incurred pursuant to this Agreement;

          (b)  endorsements  for collection or deposit in the ordinary course of
               business;

          (c)  Swap Contracts outstanding as of the Closing Date or entered into
               thereafter in the ordinary course of business;

          (d)  Surety Instruments in the ordinary course of business;

          (e)  Indebtedness  existing  on the  Closing  Date in an amount not to
               exceed $3,200,000;

          (f)  Indebtedness  secured by Liens permitted by subsections  10.1(b),
               (c), (d), (e) and (i);

          (g)  capital leases  entered into by any Subsidiary  after the Closing
               Date to finance the acquisition of equipment;

          (h)  Indebtedness   of  Wholly-Owned   Consolidated   Subsidiaries  of
               Borrower  to  Borrower  or  to  other  Wholly-Owned  Consolidated
               Subsidiaries of Borrower; and

          (i)  additional  Indebtedness  incurred  after  the  Closing  Date not
               exceeding  $500,000,000 in aggregate principal amount at any time
               outstanding.

     10.4 Use of  Proceeds.  Borrower  shall not, and shall not suffer or permit
any Subsidiary to, use any portion of the Loan proceeds, directly or indirectly,
(i) to purchase or carry  Margin  Stock,  (ii) to repay or  otherwise  refinance
Indebtedness  of Borrower or others  incurred to purchase or carry Margin Stock,
(iii) to extend  credit for the purpose of  purchasing  or  carrying  any Margin
Stock or (iv) for any other purpose which violates  Regulations T, U or X of the
FRB.

     10.5 Minimum Consolidated Tangible Net Worth. Borrower shall not permit its
Consolidated  Tangible  Net  Worth at any time to be less  than  $3,000,000,000;
provided  that  upon  (a) the  purchase  from  time to time of  common  stock of
Borrower  by  Borrower  from  one or  more of the  J.A.  and  Kathryn  Albertson
Foundation,  Inc.,  or  donees  pursuant  to the terms of the  Foundation  Stock
Agreement,  or (b) the purchase from time to time of common stock of Borrower by
Borrower from Theo Albrecht or from Markus-Stiftung pursuant to the terms of the
Markus-Stiftung  Stock  Agreement,  Consolidated  Tangible  Net  Worth  shall be
increased,  for purposes of subsequent calculations hereunder, by an amount (the
"CTNW  Adjustment")  equal to the excess (if any) of (i) the amount by which the
purchase price of such common stock reduces Consolidated Tangible Net Worth over
(ii) the  amount by which  Consolidated  Tangible  Net Worth has been  increased
through  the sale of  common  stock  subsequent  to the  date of such  purchase,
excluding  the  effect  of  the  exercise  of  employee  stock  options,  all as
determined in accordance with GAAP.

     10.6  Fixed  Charge  Coverage  Ratio.  Borrower  shall not permit its Fixed
Charge  Coverage Ratio as determined as of the last day of any fiscal quarter to
be less than 2.70 to 1.00.

                                   ARTICLE XI
                                EVENTS OF DEFAULT

     11.1 Events of Default.  Any of the following shall constitute an "Event of
Default":

               (a) Non-Payment.  Borrower fails to make (i) when and as required
          to made herein,  payments of any amount of  principal of any Loan,  or
          (ii) within five Business Days after the same becomes due,  payment of
          any interest,  fee or any other amount payable  hereunder or under any
          other Loan Document; or

               (b)  Representation or Warranty.  Any  representation,  warranty,
          certification,  or statement  made by Borrower in this Agreement or in
          any  certificate,  financial  statement  or other  document  delivered
          pursuant to this  Agreement  shall prove to have been incorrect in any
          material respect on or as of the date made (or deemed made); or

 CREDIT AGREEMENT                                                       Page 13
<PAGE>

               (c) Specific Defaults.  Borrower shall fail to observe or perform
          any covenant contained in Sections 10.1 through 10.5, inclusive; or

               (d) Other Defaults. Borrower shall fail to observe or perform any
          covenant or agreement  contained in this  Agreement  (other than those
          covered by clause (a),  (b) or (c) above) for 15  Business  Days after
          the  earlier of (i) the date upon which the chief  financial  officer,
          chief  accounting  officer or other senior officer of Borrower knew or
          reasonably  should have known of such failure;  or (ii) notice thereof
          has been given to Borrower by Lender; or

               (e)  Cross-Default.  Borrower or any Subsidiary (A) fails to make
          any  payment in respect of any  Material  Indebtedness  (other than in
          respect of Swap Contracts),  when due (whether by scheduled  maturity,
          required  prepayment,  acceleration,  demand,  or otherwise)  and such
          failure continues after the applicable grace or notice period, if any,
          specified in the relevant document on the date of such failure; or (B)
          fails to perform or observe any other  condition or  covenant,  or any
          other event shall occur or  condition  exist,  under any  agreement or
          instrument  relating to any  Material  Indebtedness,  and such failure
          continues  after  the  applicable  grace  or  notice  period,  if any,
          specified in the relevant  document on the date of such failure if the
          effect of such failure,  event or condition is to cause,  or to permit
          the holder or holders of such Material  Indebtedness or beneficiary or
          beneficiaries of such Material  Indebtedness (or a trustee or agent on
          behalf of such holder or holders or beneficiary or  beneficiaries)  to
          cause such Material Indebtedness to be declared to be due and payable,
          or to be prepaid prior to its stated  maturity,  or to become payable,
          or cash  collateral in respect  thereof to be demanded;  or (ii) there
          occurs under any Swap Contract an Early  Termination  Date (as defined
          in such Swap  Contract)  resulting from (1) any event of default under
          such Swap  Contract  as to which  Borrower  or any  Subsidiary  is the
          Defaulting  Party  (as  defined  in  such  Swap  Contract)  or (2) any
          Termination  Event  (as  so  defined)  as to  which  Borrower  or  any
          Subsidiary is an Affected Party (as so defined), and, in either event,
          the Swap  Termination  Value owed by Borrower or such  Subsidiary as a
          result thereof is greater than $30,000,000; or

               (f) Insolvency; Voluntary Proceedings. Borrower or any Subsidiary
          (i)  ceases or fails to be  solvent,  or  generally  fails to pay,  or
          admits in writing its  inability to pay, its debts as they become due,
          subject  to  applicable  grace  periods,  if any,  whether  at  stated
          maturity or otherwise; (ii) voluntarily ceases to conduct its business
          in the  ordinary  course;  (iii)  consents to or commences a voluntary
          Insolvency  Proceeding  with  respect  to  itself;  or (iv)  takes any
          corporate action to authorize any of the foregoing; or

               (g)  Involuntary  Proceedings.   (i)  An  involuntary  Insolvency
          Proceeding  shall  be  commenced  or  filed  against  Borrower  or any
          Subsidiary, or any writ, judgment, warrant of attachment, execution or
          similar  process,  is issued or levied  against a substantial  part of
          Borrower's or any Subsidiary's properties,  and any such proceeding or
          petition shall not be released, vacated or fully bonded within 60 days
          after commencement, filing or levy; (ii) the Insolvency Proceeding, or
          an order for relief (or similar order under  non-U.S.  law) is ordered
          in  appointment  of  a  receiver,  trustee,  custodian,   conservator,
          liquidator,  mortgagee in  possession  (or agent  therefor),  or other
          similar Person for itself or a substantial  portion of its property or
          business; or

               (h) ERISA.  Any member of the ERISA  Group shall fail to pay when
          due an amount or amounts aggregating in excess of $30,000,000 which it
          shall have become liable to pay under Title IV of ERISA;  or notice of
          intent to  terminate a Material  Plan shall be filed under Title IV of
          ERISA by any member of the ERISA Group, any plan  administrator or any
          combination of the foregoing;  or the PBGC shall institute proceedings
          under Title IV or ERISA to terminate,  to impose liability (other than
          for premiums  under Section 4007 of ERISA) in respect of or to cause a
          trustee  to  be  appointed  to  administer  any  Material  Plan;  or a
          condition shall exist by reason of which the PBGC would be entitled to
          obtain  a  decree   adjudicating   that  any  Material  Plan  must  be
          terminated;  or there  shall  occur a complete  or partial  withdrawal
          from, or a default, within the meaning of Section 4219(c)(5) of ERISA,
          with respect to, one or more Multiemployer Plans which could cause one
          or  more  members  of the  ERISA  Group  to  incur a  current  payment
          obligation in excess of $30,000,000; or

               (i)  Monetary  Judgments.  A judgment or order for the payment of
          money in excess of $30,000,000  shall be rendered  against Borrower or
          any Subsidiary  and such judgment or order shall continue  unsatisfied
          and unstayed for a period of 30 days; or

               (j) Change of Control. There occurs any Change of Control.

     11.2  Remedies.  If any Event of Default  occurs,  then,  and in every such
event, Lender shall (i) have no further obligation to make Loans, (ii) by notice
to Borrower  declare the Loans (together with accrued  interest  thereon and all

CREDIT AGREEMENT                                                        Page 14

<PAGE>


other  amounts  owing under the Loan  Documents)  to be, and the Loans (and such
interest and other amounts) shall thereupon become,  immediately due and payable
without presentment,  demand,  protest or other notice of any kind, all of which
are hereby  waived by  Borrower  and (iii)  exercise  all  rights  and  remedies
available to it under the Loan Documents or applicable law; provided that in the
case of any of the Events of Default specified in subsections (f) or (g) (in the
case of clause (i) of  subsection  (g) upon the  expiration of the 60-day period
mentioned  therein),  without any notice to Borrower or any other act by Lender,
the obligation to make Loans shall  thereupon  terminate and the Loans (together
with  accrued  interest  thereon  and all  other  amounts  owing  under the Loan
Documents) shall become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by Borrower.

     11.3 Rights Not  Exclusive.  The rights  provided for in this Agreement and
the other Loan  Documents  are  cumulative  and are not  exclusive  of any other
rights,  powers,  privileges or remedies  provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.


                                   ARTICLE XII
                                  MISCELLANEOUS

     12.1 No Waiver by Lender.  No failure or delay of Lender in exercising  any
right,  power or remedy under this  Agreement or any Loan Document shall operate
as a waiver of such right,  power or remedy of Lender or of any other  right.  A
waiver of any provision of any Loan Document shall not constitute a waiver of or
prejudice  Lender's  right  otherwise  to  demand  strict  compliance  with that
provision or any other provision. Any waiver, permit, consent or approval of any
kind or  character  on the  part of  Lender  must be in  writing  and  shall  be
effective only to the extent specifically set forth in such writing.

     12.2  Costs  and  Fees.  Without  limiting  any  other  provisions  of this
Agreement, Borrower hereby agrees to pay Lender on demand an amount equal to all
costs  and  expenses  incurred  by Lender in  connection  with the  negotiation,
preparation,  execution,  administration  and enforcement of the Loan Documents,
including without limitation all fees of outside counsel.

     12.3 Agreements  Enforceable.  Borrower reaffirms the  representations  and
warranties in each of the existing Loan Documents and  acknowledges  that except
as amended  previously or herein,  each such Loan Document remains in full force
and effect and is and shall remain valid and  enforceable in accordance with its
terms.

     12.4  Notices.  Except  as  otherwise  specifically  set  forth in any Loan
Document,  all notices,  requests and demands hereunder shall be in writing, and
shall be deemed to have been given when  hand-delivered,  when  deposited in the
mail as first class, registered or certified mail, postage prepaid, or when sent
by telecopier, addressed as set forth below; provided, however, that any notice,
request or demand by Borrower to Lender shall not be effective until received by
Lender.  Any party may at any time  change  its  address  for  notices by giving
notice of such change to the other parties.

           If to Borrower:           Albertson's, Inc.
                                     250 Parkcenter Boulevard
                                     Boise, ID  83706
                                     Facsimile (208) 395-5407 and 395-6021

           If to Lender:             U.S. Bank National Association
                                     National Corporate Banking
                                     P.O. Box 8247
                                     Boise, Idaho 83733
                                     Facsimile (208) 383-7574

     12.5  Collection  Costs and Attorney  Fees.  Whether or not  litigation  is
commenced,  Borrower  promises to pay all costs of collecting  any amounts which
may become due to Lender under any of the Loan Documents.  Without  limiting the
foregoing,  if litigation is commenced to enforce or construe any term of any of
the Loan Documents,  the prevailing  party shall be entitled to recover from the
other  party all costs  thereof,  including  but not limited to such sums as the
court  may  adjudge  reasonable  as  attorney  fees at trial,  in any  appellate
proceeding,   proceeding   under  the  bankruptcy  code  or   receivership   and
post-judgment attorney fees incurred in enforcing any judgment.

     12.6 Integration; Conflicting Terms. This Agreement together with the other
Loan  Documents  comprises  the entire  agreement  of the parties on the subject
matter  hereof  and  supersedes  and  replaces  all prior  agreements,  oral and
written,  on such subject matter. If any term of any of the other Loan Documents
expressly  conflicts  with the provisions of this  Agreement,  the provisions of
this  Agreement  shall  control;  provided,   however,  that  the  inclusion  of
supplemental  rights and  remedies of Lender in any of the other Loan  Documents
shall not be deemed a conflict with this Agreement.

     12.7 Governing Law and Jurisdiction.

          12.7.1  THIS  AGREEMENT  AND THE  NOTES  SHALL  BE  GOVERNED  BY,  AND
     CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF IDAHO;  PROVIDED THAT
     BORROWER AND LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

          12.7.2 ANY LEGAL ACTION OR PROCEEDING  WITH RESPECT TO THIS  AGREEMENT
     OR ANY OTHER  LOAN  DOCUMENT  MAY BE  BROUGHT IN THE COURTS OF THE STATE OF
     IDAHO OR OF THE UNITED  STATES FOR THE DISTRICT OF IDAHO,  AND BY EXECUTION
     AND  DELIVERY  OF THIS  AGREEMENT,  BORROWER  AND  LENDER  CONSENT,  TO THE
     NON-EXCLUSIVE  JURISDICTION  OF THOSE  COURTS,  AND  IRREVOCABLY  WAIVE ANY

CREDIT AGREEMENT                                                        Page 15
<PAGE>

     OBJECTION,  INCLUDING  ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
     GROUNDS OF FORUM NON CONVENIENS,  WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
     BRINGING OF ANY ACTION OR  PROCEEDING  IN SUCH  JURISDICTION  IN RESPECT OF
     THIS  AGREEMENT OR ANY DOCUMENT  RELATED  HERETO.  BORROWER AND LENDER EACH
     WAIVES PERSONAL SERVICE OF ANY SUMMONS,  COMPLAINT OR OTHER PROCESS,  WHICH
     MAY BE MADE BY ANY OTHER MEANS PERMITTED BY IDAHO LAW.

     12.8 Additional  Acts.  Upon request by Lender,  Borrower will from time to
time provide such  information,  execute such  documents and do such acts as may
reasonably  be  required  by  Lender  in  connection  with any  indebtedness  or
obligations of any of them to Lender.

     12.9  Documents  Satisfactory  to Lender.  All  information,  documents and
instruments required to be executed or delivered to Lender shall be in form and
substance satisfactory to Lender.

     12.10 Waiver of Jury Trial. BORROWER AND LENDER EACH WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION  BASED UPON OR ARISING
OUT  OF OR  RELATED  TO  THIS  AGREEMENT,  THE  OTHER  LOAN  DOCUMENTS,  OR  THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION  OF ANY TYPE  BROUGHT  BY EITHER OF THE  PARTIES  AGAINST  THE OTHER,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.  EACH AGREES
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY.  WITHOUT  LIMITING THE  FOREGOING,  THE PARTIES  FURTHER  AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION,  COUNTERCLAIM OR OTHER  PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR  ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS  OR ANY  PROVISION  HEREOF OR THEREOF.  THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS,  RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.

     12.11  Exhibits.  All Exhibits  referred to herein are attached  hereto and
hereby incorporated by reference as if fully set forth herein.

     12.12 Computations. All interest rates and fees referred to herein shall be
computed on the basis of a 360-day year and applied to the actual number of days
elapsed.

     12.13 References.

     12.13.1  References to any Loan  Document  shall mean such Loan Document as
amended, modified,  supplemented or extended from time to time and any number of
substitutions, renewals and replacements thereof or therefor.

     12.13.2 References to governmental laws,  statutes,  ordinances,  rules and
regulations shall be construed as including all amendments,  consolidations  and
replacements thereof or therefor.

     12.14  Counterparts.  This  Agreement  may be  executed  in any  number  of
counterparts.  Each signed  counterpart shall be deemed an original,  and all of
said  counterparts  taken together shall be deemed to constitute but one and the
same instrument.


BORROWER:                                      LENDER:
ALBERTSON'S, INC.                              U.S. BANK NATIONAL ASSOCIATION


By  /s/ John F. Boyd                           By   /s/ James Henken
    --------------------------------                ---------------------------
    Group Vice President & Treasurer                Vice President


CREDIT AGREEMENT                                                        Page 16