CREDIT AGREEMENT

                                      among

                      FURNITURE BRANDS INTERNATIONAL, INC.,

                      BROYHILL FURNITURE INDUSTRIES, INC.,

                        LANE FURNITURE INDUSTRIES, INC.,

                                       and

                     THOMASVILLE FURNITURE INDUSTRIES, INC.,

                                  as BORROWERS,

                                VARIOUS LENDERS,

                           FIRST UNION NATIONAL BANK,

                             as DOCUMENTATION AGENT,

                             BANK OF AMERICA, N.A.,

                              as SYNDICATION AGENT,

                       DEUTSCHE BANK AG, NEW YORK BRANCH,

                            as ADMINISTRATIVE AGENT,

                                       and

                         DEUTSCHE BANK SECURITIES INC.,

                     as LEAD ARRANGER and SOLE BOOK MANAGER

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

                            Dated as of June 7, 2000

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



<PAGE>


     CREDIT  AGREEMENT,  dated  as of  June  7,  2000,  among  FURNITURE  BRANDS
INTERNATIONAL,  INC.,  a Delaware  corporation  ("Furniture  Brands"),  BROYHILL
FURNITURE  INDUSTRIES,  INC., a North Carolina  corporation  ("Broyhill"),  LANE
FURNITURE  INDUSTRIES,  INC.,  a  Delaware  corporation  ("Lane"),   THOMASVILLE
FURNITURE INDUSTRIES,  INC., a Delaware corporation  ("Thomasville" and together
with Furniture Brands,  Broyhill and Lane, each a "Borrower," and, collectively,
the  "Borrowers"),  the  Lenders  party  hereto  from time to time,  FIRST UNION
NATIONAL  BANK, as  Documentation  Agent (in such capacity,  the  "Documentation
Agent"),  BANK OF AMERICA,  N.A., as Syndication  Agent (in such  capacity,  the
"Syndication Agent"), DEUTSCHE BANK AG, NEW YORK BRANCH, as Administrative Agent
(in such capacity,  the  "Administrative  Agent"),  and DEUTSCHE BANK SECURITIES
INC.,  as Lead  Arranger  and Sole Book Manager (in such  capacities,  the "Lead
Arranger") (all capitalized terms used herein and defined in Section 11 are used
herein as therein defined).

                              W I T N E S S E T H :
                              ---------------------

     WHEREAS,  subject to the terms and conditions set forth herein, the Lenders
are willing to make  available to the  Borrowers  the credit  facility  provided
herein;

     NOW, THEREFORE, IT IS AGREED:

     SECTION 1. Amount and Terms of Credit.

     1.01 The Commitments.  (a) Subject to and upon the terms and conditions set
forth herein (including,  on and after the initial  Additional  Commitment Date,
Section 1.14),  each Lender severally  agrees, at any time and from time to time
on and  after  the  Effective  Date and prior to the  Maturity  Date,  to make a
revolving loan or revolving loans (each, a "Revolving  Loan" and,  collectively,
the "Revolving Loans") to the Borrowers,  which Revolving Loans (i) shall be the
joint  and  several  obligations  of  each  of  the  Borrowers,  (ii)  shall  be
denominated in Dollars,  (iii) shall, at the option of the Borrowers be incurred
and maintained as, and/or  converted into, Base Rate Loans or Eurodollar  Loans,
provided that (A) except as otherwise  specifically provided in Section 1.10(b),
all Revolving  Loans  comprising the same Borrowing shall at all times be of the
same Type and (B) unless the  Administrative  Agent has otherwise  determined in
its sole discretion  that the Syndication  Date has occurred (at which time this
clause (B) shall no longer be  applicable),  prior to the 90th day following the
Effective  Date,  Revolving Loans may only be incurred and maintained as, and/or
converted  into,  Eurodollar  Loans so long as all such  outstanding  Eurodollar
Loans are  subject to an Interest  Period of one month which  begins and ends on
the  same  day,  (iv)  may be  repaid  and  reborrowed  in  accordance  with the
provisions  hereof,  (v) shall not exceed for any Lender at any time outstanding
that  aggregate  principal  amount which,  when added to the product of (x) such
Lender's Percentage and (y) the sum of (I) the aggregate amount of all Letter of
Credit  Outstandings  (exclusive  of Unpaid  Drawings  which are repaid with the
proceeds  of,  and  simultaneously   with  the  incurrence  of,  the  respective
incurrence  of Revolving  Loans) at such time and (II) the  aggregate  principal
amount of all Swingline  Loans  (exclusive  of Swingline  Loans which are repaid
with the proceeds of, and simultaneously  with the incurrence of, the respective
incurrence of Revolving Loans) then  outstanding,  equals the Commitment of such
Lender  at such time and (vi)  shall  not  exceed  for all  Lenders  at any time
outstanding  that  aggregate  principal  amount  which,  when  added  to (x) the
aggregate  amount  of all  Letter of Credit  Outstandings  (exclusive  of Unpaid
Drawings  which are repaid with the  proceeds  of, and  simultaneously  with the
incurrence  of, the respective  incurrence of Revolving  Loans) at such time and
(y)  the  aggregate  principal  amount  of all  Swingline  Loans  (exclusive  of
Swingline Loans which are repaid with the proceeds of, and  simultaneously  with
the  incurrence  of,  the  respective   incurrence  of  Revolving   Loans)  then
outstanding, equals the Total Commitment at such time.

     (b)  Subject to and upon the terms and  conditions  herein  set forth,  the
Swingline  Lender  agrees to make at any time and from time to time on and after
the Effective  Date and prior to the Swingline  Expiry Date, a revolving loan or
revolving  loans (each,  a "Swingline  Loan" and,  collectively,  the "Swingline
Loans") to the Borrowers, which Swingline Loans (i) shall be made and maintained
as Base Rate Loans,  (ii) may be repaid and  reborrowed in  accordance  with the
provisions hereof,  (iii) shall not exceed in aggregate  principal amount at any
time  outstanding,  when  combined with the  aggregate  principal  amount of all
Revolving Loans then  outstanding and the Letter of Credit  Outstandings at such
time,  an amount  equal to the Total  Commitment  at such  time,  (iv) shall not
exceed at any time outstanding the Maximum Swingline Amount and (v) shall be the
joint and several obligations of each of the Borrowers. Notwithstanding anything
to the contrary  contained in this Section  1.01(b),  (i) the  Swingline  Lender
shall  not be  obligated  to make any  Swingline  Loans at a time  when a Lender
Default  exists  unless the  Swingline  Lender  has  entered  into  arrangements
satisfactory  to it and the Borrowers to eliminate  the Swingline  Lender's risk
with  respect to the  Defaulting  Lender's  or  Lenders'  participation  in such
Swingline Loans,  including by cash  collateralizing such Defaulting Lender's or
Lenders'  Percentage of the  outstanding  Swingline Loans and (ii) the Swingline
Lender shall not make any Swingline  Loan after it has received  written  notice
from the Borrowers or the Required Lenders stating that a Default or an Event of
Default exists and is continuing  until such time as the Swingline  Lender shall
have  received  written  notice (A) of  rescission  of all such notices from the
party or  parties  originally  delivering  such  notice or notices or (B) of the
waiver of such Default or Event of Default by the Required Lenders.

     (c) On any Business Day, the Swingline  Lender may, in its sole discretion,
give notice to the Lenders that its outstanding  Swingline Loans shall be funded
with a Borrowing of Revolving  Loans  (provided that such notice shall be deemed
to have been automatically given upon the occurrence of a Default or an Event of
Default under Section 10.05 or upon the exercise of any of the remedies provided
in the last  paragraph  of Section  10), in which case a Borrowing  of Revolving
Loans   constituting  Base  Rate  Loans  (each  such  Borrowing,   a  "Mandatory
Borrowing")  shall be made on the  immediately  succeeding  Business  Day by the
Lenders  (without giving effect to any reductions  thereto  pursuant to the last
paragraph of Section 10) pro rata based on each Lender's Percentage  (determined
before giving effect to any termination of the Commitments  pursuant to the last
paragraph of Section 10) and the proceeds  thereof shall be applied  directly to
the  Swingline  Lender  to repay  the  Swingline  Lender  for  such  outstanding
Swingline Loans. Each Lender hereby  irrevocably  agrees to make Revolving Loans
upon one  Business  Day's  notice  pursuant to each  Mandatory  Borrowing in the
amount and in the manner  specified  in the  preceding  sentence and on the date
specified in writing by the Swingline Lender notwithstanding that (i) the amount
of the  Mandatory  Borrowing  may not comply with the Minimum  Borrowing  Amount
otherwise required hereunder, (ii) whether any conditions specified in Section 6
are then satisfied,  (iii) whether a Default or an Event of Default then exists,
(iv)  the date of such  Mandatory  Borrowing  and (v) the  amount  of the  Total
Commitment at such time. In the event that any  Mandatory  Borrowing  cannot for
any reason be made on the date  otherwise  required  above  (including,  without
limitation, as a result of the commencement of a proceeding under the Bankruptcy
Code with respect to any of the Borrowers),  then each Lender hereby agrees that
it  shall  forthwith  purchase  (as of the date the  Mandatory  Borrowing  would
otherwise  have  occurred,  but  adjusted  for any  payments  received  from the
Borrowers on or after such date and prior to such  purchase)  from the Swingline
Lender  such  participations  in the  outstanding  Swingline  Loans  as shall be
necessary to cause the Lenders to share in such  Swingline  Loans  ratably based
upon  their  respective  Percentages  (determined  before  giving  effect to any
termination  of the  Commitments  pursuant to the last paragraph of Section 10),
provided that (x) all interest  payable on the Swingline  Loans shall be for the
account  of the  Swingline  Lender  until  the date as of which  the  respective
participation is required to be purchased and, to the extent attributable to the
purchased participation, shall be payable to the participant from and after such
date  and (y) at the  time  any  purchase  of  participations  pursuant  to this
sentence is actually made,  the  purchasing  Lender shall be required to pay the
Swingline Lender interest on the principal amount of participation purchased for
each day from and  including the day upon which the  Mandatory  Borrowing  would
otherwise  have  occurred  to  but  excluding  the  date  of  payment  for  such
participation,  at the overnight Federal Funds Rate for the first three days and
at the rate  otherwise  applicable  to Revolving  Loans  maintained as Base Rate
Loans hereunder for each day thereafter.

     1.02 Minimum Amount of Each Borrowing.  The aggregate  principal  amount of
each  Borrowing  of Loans  shall be not less than the Minimum  Borrowing  Amount
applicable thereto and, if greater, shall be in the applicable integral multiple
set forth in the definition of Minimum Borrowing Amount, provided that Mandatory
Borrowings shall be made in the amounts  required by Section 1.01(c).  More than
one  Borrowing  may  occur  on the  same  date,  but at no time  shall  there be
outstanding more than twelve Borrowings of Eurodollar Loans.

     1.03  Notice of  Borrowing.  (a)  Whenever  the  Borrowers  desire to incur
Revolving Loans hereunder (excluding Borrowings of Swingline Loans and Revolving
Loans incurred pursuant to Mandatory Borrowings),  an Authorized  Representative
of the  Borrowers  shall give the  Administrative  Agent at the Notice Office at
least one Business  Day's prior written notice (or  telephonic  notice  promptly
confirmed in writing) of each Base Rate Loan and at least three  Business  Days'
prior written notice (or  telephonic  notice  promptly  confirmed in writing) of
each Eurodollar  Loan to be made hereunder,  provided that any such notice shall
be deemed to have been given on a certain  day only if given  before  11:00 A.M.
(New York time) (or before 12:00 Noon (New York time) in the case of a Borrowing
of  Base  Rate  Loans)  on  such  day.  Each  such  written  notice  or  written
confirmation  of  telephonic  notice (each a "Notice of  Borrowing"),  except as
otherwise  expressly provided in Section 1.10, shall be irrevocable and shall be
given by the  Borrowers  in the form of Exhibit A,  appropriately  completed  to
specify  the  aggregate  principal  amount  of the  Revolving  Loans  to be made
pursuant  to such  Borrowing,  the  date of such  Borrowing  (which  shall  be a
Business  Day) and  whether  the  Revolving  Loans  being made  pursuant to such
Borrowing are to be initially  maintained as Base Rate Loans or Eurodollar Loans
and, if Eurodollar Loans, the initial Interest Period to be applicable  thereto.
The Administrative Agent shall promptly give each Lender notice of such proposed
Borrowing, of such Lender's proportionate share thereof and of the other matters
required by the immediately  preceding sentence to be specified in the Notice of
Borrowing.

     (b) (i)  Whenever  the  Borrowers  desire to make a Borrowing  of Swingline
Loans hereunder,  an Authorized  Representative  of the Borrowers shall give the
Swingline  Lender  not later  than 12:00 Noon (New York time) on the date that a
Swingline  Loan is to be made,  written  notice or  telephonic  notice  promptly
confirmed  in writing of each  Swingline  Loan to be made  hereunder.  Each such
notice shall be  irrevocable  and specify in each case (A) the date of Borrowing
(which shall be a Business  Day) and (B) the aggregate  principal  amount of the
Swingline Loans to be made pursuant to such Borrowing.

     (ii)  Mandatory  Borrowings  shall be made  upon the  notice  specified  in
Section 1.01(c), with the Borrowers irrevocably agreeing, by their incurrence of
any Swingline  Loan,  to the making of the Mandatory  Borrowings as set forth in
Section 1.01(c).

     (c) Without in any way limiting the  obligation of the Borrowers to confirm
in writing any telephonic  notice of any Borrowing,  conversion or prepayment of
Loans, the Administrative Agent or the Swingline Lender, as the case may be, may
act without  liability  upon the basis of telephonic  notice of such  Borrowing,
conversion or prepayment,  believed by the Administrative Agent or the Swingline
Lender,   as  the  case  may  be,  in  good  faith  to  be  from  an  Authorized
Representative of any Borrower prior to receipt of written confirmation. In each
such case, each Borrower  hereby waives the right to dispute the  Administrative
Agent's  record  of the  terms  of such  telephonic  notice  of such  Borrowing,
conversion or prepayment.

     1.04 Disbursement of Funds.  Except as otherwise  specifically  provided in
the immediately succeeding sentence, no later than 12:00 Noon (New York time) on
the date  specified in each Notice of Borrowing (or (x) in the case of Swingline
Loans,  not later than 2:00 P.M. (New York time) on the date specified  pursuant
to Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, not later than
12:00  Noon (New York time) on the date  specified  in  Section  1.01(c)),  each
Lender will make  available its pro rata portion of each Borrowing to be made on
such date (or in the case of Swingline  Loans,  the Swingline  Lender shall make
available the full amount thereof).  All such amounts shall be made available in
Dollars  and in  immediately  available  funds at the  Payment  Office,  and the
Administrative  Agent will make available to the Borrowers at the Payment Office
the  aggregate of the amounts so made  available  by the Lenders  (prior to 1:00
P.M. (New York time)) on such day, to the extent of funds  actually  received by
the Administrative Agent prior to 12:00 Noon (New York time) on such day. Unless
the  Administrative  Agent shall have been  notified by any Lender  prior to the
date of  Borrowing  that such  Lender does not intend to make  available  to the
Administrative  Agent such Lender's  portion of any Borrowing to be made on such
date, the Administrative  Agent may assume that such Lender has made such amount
available  to the  Administrative  Agent  on  such  date  of  Borrowing  and the
Administrative  Agent may, in reliance upon such  assumption,  make available to
the Borrowers a corresponding  amount.  If such  corresponding  amount is not in
fact  made  available  to  the   Administrative   Agent  by  such  Lender,   the
Administrative  Agent shall be entitled to recover such corresponding  amount on
demand from such Lender. If such Lender does not pay such  corresponding  amount
forthwith upon the  Administrative  Agent's demand therefor,  the Administrative
Agent shall promptly notify the Borrowers to immediately pay such  corresponding
amount to the  Administrative  Agent.  The  Administrative  Agent  shall also be
entitled to recover on demand from such Lender or the Borrowers, as the case may
be, interest on such  corresponding  amount in respect of each day from the date
such corresponding  amount was made available by the Administrative Agent to the
Borrowers  until  the  date  such  corresponding  amount  is  recovered  by  the
Administrative  Agent,  at a rate per annum equal to (i) if recovered  from such
Lender,  the  overnight  Federal  Funds Rate for the first three days and at the
interest rate  otherwise  applicable to such Loans for each day  thereafter  and
(ii) if recovered  from the  Borrowers,  the rate of interest  applicable to the
respective  Borrowing,  as determined  pursuant to Section 1.08. Nothing in this
Section 1.04 shall be deemed to relieve any Lender from its  obligation  to make
Loans  hereunder or to prejudice any rights which the Borrowers may have against
any Lender as a result of any failure by such Lender to make Loans hereunder.

     1.05  Notes.  (a)  Subject  to  the  provisions  of  Section  1.05(e),  the
Borrowers'  obligation  to pay the principal of, and interest on, the Loans made
by each Lender shall be evidenced (i) if Revolving  Loans,  by a promissory note
duly  executed  and  delivered  by the  Borrowers  substantially  in the form of
Exhibit B-1, with blanks appropriately  completed in conformity herewith (each a
"Revolving Note" and, collectively, the "Revolving Notes") and (ii) if Swingline
Loans,  by a  promissory  note duly  executed  and  delivered  by the  Borrowers
substantially in the form of Exhibit B-2, with blanks appropriately completed in
conformity herewith (the "Swingline Note").

     (b) The  Revolving  Note issued to each Lender shall (i) be executed by the
Borrowers, (ii) be payable to such Lender or its registered assigns and be dated
the Effective Date (or if issued thereafter,  the date of issuance), (iii) be in
a stated  principal amount equal to the Commitment of such Lender (or, if issued
after the  termination  thereof,  be in a stated  principal  amount equal to the
outstanding  Revolving  Loans of such Lender at such time) and be payable in the
principal  amount of the Revolving Loans evidenced  thereby,  (iv) mature on the
Maturity  Date,  (v) bear  interest  as provided  in the  appropriate  clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby,  (vi) be subject to voluntary  prepayment as provided
in Section 4.01 and mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.

     (c) The Swingline Note issued to the Swingline Lender shall (i) be executed
by the  Borrowers,  (ii) be payable to the  Swingline  Lender or its  registered
assigns and be dated the Effective Date,  (iii) be in a stated  principal amount
equal to the Maximum  Swingline Amount and be payable in the principal amount of
the outstanding Swingline Loans evidenced thereby from time to time, (iv) mature
on the Swingline  Expiry Date, (v) bear interest as provided in the  appropriate
clause of Section 1.08 in respect of the Base Rate Loans evidenced thereby, (vi)
be subject to voluntary  prepayment  as provided in Section  4.01 and  mandatory
repayment  as provided in Section  4.02 and (vii) be entitled to the benefits of
this Agreement and the other Credit Documents.

     (d) Each Lender will note on its  internal  records the amount of each Loan
made by it and each payment in respect thereof and will prior to any transfer of
any of its Notes endorse on the reverse side thereof the  outstanding  principal
amount of Loans  evidenced  thereby.  Failure to make any such  notation  or any
error in any such  notation  or  endorsement  shall not  affect  the  Borrowers'
obligations in respect of such Loans.

     (e)  Notwithstanding  anything to the contrary contained above or elsewhere
in this  Agreement,  Notes shall only be delivered to Lenders  which at any time
(or from time to time)  specifically  request the  delivery  of such  Notes.  No
failure of any Lender to  request or obtain a Note  evidencing  its Loans to the
Borrowers shall affect or in any manner impair the joint and several obligations
of the  Borrowers  to pay the Loans (and all  related  Obligations)  which would
otherwise be  evidenced  thereby in  accordance  with the  requirements  of this
Agreement,  and shall not in any way affect  the  guaranties  therefor  provided
pursuant to the various Credit Documents.  Any Lender which does not have a Note
evidencing  its  outstanding  Loans  shall in no event be  required  to make the
notations  otherwise  described in preceding clause (d) of this Section 1.05. At
any time when any Lender  requests the delivery of a Note to evidence any of its
Loans, the Borrowers shall promptly execute and deliver to the respective Lender
the  requested  Note or Notes in the  appropriate  amount or amounts to evidence
such Loans.

     1.06  Conversions.  The Borrowers shall have the option to convert,  on any
Business Day, all or a portion equal to at least the Minimum Borrowing Amount of
the outstanding principal amount of Revolving Loans made pursuant to one or more
Borrowings  of one or more Types of Revolving  Loans into a Borrowing of another
Type of  Revolving  Loan,  provided  that (i) except as  otherwise  provided  in
Section 1.10(b),  Eurodollar Loans may be converted into Base Rate Loans only on
the last day of an Interest Period applicable  thereto and no partial conversion
of  Eurodollar  Loans  shall  reduce the  outstanding  principal  amount of such
Eurodollar  Loans made  pursuant to a single  Borrowing to less than the Minimum
Borrowing Amount applicable thereto,  (ii) unless the Required Lenders otherwise
agree, Base Rate Loans may only be converted into Eurodollar Loans if no Default
or Event of Default is in existence on the date of the conversion,  (iii) unless
the  Administrative  Agent has otherwise  determined in its sole discretion that
the  Syndication  Date has  occurred  (at which time this clause  (iii) shall no
longer be  applicable),  prior to the 90th day  following  the  Effective  Date,
conversions  of Base Rate Loans into  Eurodollar  Loans  shall be subject to the
provisions  of  clause  (B) of the  proviso  in  Section  1.01(a)(iii),  (iv) no
conversion  pursuant to this Section  1.06 shall  result in a greater  number of
Borrowings  of  Eurodollar  Loans than is permitted  under  Section 1.02 and (v)
Swingline  Loans may not be converted  pursuant to this Section 1.06.  Each such
conversion shall be effected by the Borrowers by giving the Administrative Agent
at the Notice Office prior to 12:00 Noon (New York time) at least three Business
Days' prior  notice (each a "Notice of  Conversion")  specifying  the  Revolving
Loans to be so converted,  the  Borrowing or  Borrowings  pursuant to which such
Revolving  Loans were made and, if to be converted into  Eurodollar  Loans,  the
Interest Period to be initially  applicable  thereto.  The Administrative  Agent
shall give each Lender prompt notice of any such proposed conversion.

     1.07 Pro Rata  Borrowings.  All  Borrowings  of Revolving  Loans under this
Agreement  shall be  incurred  from the  Lenders  pro rata on the basis of their
Commitments.  It is  understood  that no  Lender  shall be  responsible  for any
default by any other Lender of its obligation to make Revolving  Loans hereunder
and that each Lender shall be obligated to make the Revolving  Loans provided to
be made by it  hereunder,  regardless of the failure of any other Lender to make
its Revolving Loans hereunder.

     1.08  Interest.  (a) The  Borrowers  jointly  and  severally  agree  to pay
interest in respect of the unpaid  principal  amount of each Base Rate Loan from
the date the  proceeds  thereof are made  available to the  Borrowers  until the
earlier of (i) the maturity  (whether by acceleration or otherwise) of such Base
Rate Loan and (ii) the  conversion  of such Base Rate Loan to a Eurodollar  Loan
pursuant to Section 1.06, at a rate per annum which shall be equal to the sum of
the Applicable Base Rate Margin plus the Base Rate in effect from time to time.

     (b) The Borrowers jointly and severally agree to pay interest in respect of
the unpaid  principal  amount of each Eurodollar Loan from the date the proceeds
thereof  are made  available  to the  Borrowers  until  the  earlier  of (i) the
maturity (whether by acceleration or otherwise) of such Eurodollar Loan and (ii)
the conversion of such  Eurodollar  Loan to a Base Rate Loan pursuant to Section
1.06, 1.09 or 1.10, as applicable,  at a rate per annum which shall, during each
Interest  Period  applicable  thereto,  be  equal  to the sum of the  Applicable
Eurodollar Margin plus the Eurodollar Rate for such Interest Period.

     (c) Overdue principal and, to the extent permitted by law, overdue interest
in respect of each Loan shall,  in each case,  bear interest at a rate per annum
equal to the  greater  of (x) the rate  which is 2% in  excess  of the rate then
borne by such Loans and (y) the rate which is 2% in excess of the rate otherwise
applicable  to Base Rate Loans from time to time.  Interest  which accrues under
this  Section  1.08(c)  shall be  payable  on a joint and  several  basis by the
Borrowers on demand.

     (d)  Accrued  (and  theretofore  unpaid)  interest  shall be payable (i) in
respect  of each Base Rate  Loan (x)  quarterly  in  arrears  on each  Quarterly
Payment  Date,  (y) in the case of a repayment in full of all  outstanding  Base
Rate Loans,  on the date of such  repayment or  prepayment,  and (z) at maturity
(whether by acceleration or otherwise) and, after such maturity,  on demand, and
(ii) in respect  of each  Eurodollar  Loan (x) on the last day of each  Interest
Period  applicable  thereto and, in the case of an Interest  Period in excess of
three months,  on each date occurring at three month  intervals  after the first
day of such  Interest  Period and (y) on any  repayment  or  prepayment  (on the
amount repaid or prepaid),  at maturity  (whether by  acceleration or otherwise)
and, after such maturity, on demand.

     (e) Upon each Interest  Determination Date, the Administrative  Agent shall
determine the  Eurodollar  Rate for the respective  Interest  Period or Interest
Periods and shall promptly  notify the Borrowers and the Lenders  thereof.  Each
such  determination  shall,  absent  manifest error, be final and conclusive and
binding on all parties hereto.

     1.09  Interest  Periods.  At the time the  Borrowers  give  any  Notice  of
Borrowing  or Notice of  Conversion  in respect of the making of, or  conversion
into, any Eurodollar Loan (in the case of the initial Interest Period applicable
thereto) or on the third  Business  Day prior to the  expiration  of an Interest
Period  applicable  to  such  Eurodollar  Loan  (in the  case of any  subsequent
Interest  Period),  the  Borrowers  shall have the right to elect,  by having an
Authorized  Representative of the Borrowers give the Administrative Agent notice
thereof,  the interest  period (each an "Interest  Period")  applicable  to such
Eurodollar Loan, which Interest Period shall, at the option of the Borrowers, be
a one, two, three or six-month period, provided that:

          (i) all  Eurodollar  Loans  comprising a Borrowing  shall at all times
     have the same Interest Period;

          (ii)  the  initial  Interest  Period  for any  Eurodollar  Loan  shall
     commence on the date of Borrowing of such  Eurodollar  Loan  (including the
     date of any conversion  thereto from a Revolving Loan of a different  Type)
     and each Interest Period occurring thereafter in respect of such Eurodollar
     Loan shall commence on the day on which the next preceding  Interest Period
     applicable thereto expires;

          (iii) if any Interest Period relating to a Eurodollar Loan begins on a
     day for which there is no  numerically  corresponding  day in the  calendar
     month at the end of such Interest Period, such Interest Period shall end on
     the last Business Day of such calendar month;

          (iv) if any 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, however, that if any Interest Period for
     a Eurodollar 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;

          (v) no  Interest  Period may be selected at any time when a Default or
     an Event of Default is then in existence; and

          (vi) no  Interest  Period in respect of any  Borrowing  of  Eurodollar
     Loans shall be selected which extends beyond the Maturity Date.

     If upon the expiration of any Interest Period  applicable to a Borrowing of
Eurodollar  Loans,  the Borrowers have failed to elect,  or are not permitted to
elect,  a new  Interest  Period to be  applicable  to such  Eurodollar  Loans as
provided  above,  the Borrowers  shall be deemed to have elected to convert such
Eurodollar  Loans into Base Rate Loans  effective as of the  expiration  date of
such current Interest Period.

     1.10  Increased  Costs,  Illegality,  etc. (a) In the event that any Lender
shall have  determined  (which  determination  shall,  absent manifest error, be
final and  conclusive  and binding upon all parties  hereto but, with respect to
clause (i) below, may be made only by the Administrative Agent):

          (i) on any Interest  Determination Date that, by reason of any changes
     arising after the Effective Date affecting the interbank Eurodollar market,
     adequate  and fair  means do not  exist  for  ascertaining  the  applicable
     interest  rate on the basis  provided for in the  definition  of Eurodollar
     Rate; or

          (ii) at any time,  that such  Lender  shall incur  increased  costs or
     reductions in the amounts received or receivable  hereunder with respect to
     any  Eurodollar  Loan because of (x) any change since the Effective Date in
     any applicable law or governmental rule,  regulation,  order,  guideline or
     request  (whether or not having the force of law) or in the  interpretation
     or administration  thereof and including the introduction of any new law or
     governmental rule,  regulation,  order,  guideline or request, such as, for
     example,  but not  limited  to:  (A) a change in the basis of  taxation  of
     payment to any Lender of the  principal  of or interest on such  Eurodollar
     Loan or any other amounts payable hereunder (except for changes in the rate
     of tax on, or  determined by reference to, the net income or net profits of
     such Lender, or any franchise tax based on the net income or net profits of
     such Lender,  in either case  pursuant to the laws of the United  States of
     America,  the  jurisdiction  in  which  it is  organized  or in  which  its
     principal office or applicable lending office is located or any subdivision
     thereof or  therein),  but without  duplication  of any amounts  payable in
     respect of Taxes pursuant to Section  4.04(a),  or (B) a change in official
     reserve requirements, but, in all events, excluding reserves required under
     Regulation D to the extent  included in the  computation  of the Eurodollar
     Rate and/or (y) other circumstances since the Effective Date affecting such
     Lender or the interbank Eurodollar market or the position of such Lender in
     such market (except as a result of a deterioration in the  creditworthiness
     of such Lender subsequent to the date hereof); or

          (iii) at any time,  that the making or  continuance  of any Eurodollar
     Loan has been made (x) unlawful by any law or governmental rule, regulation
     or order, (y) impossible by compliance by any Lender in good faith with any
     governmental   request  (whether  or  not  having  force  of  law)  or  (z)
     impracticable  as a result of a contingency  occurring  after the Effective
     Date which  materially  and  adversely  affects  the  interbank  Eurodollar
     market;

then, and in any such event,  such Lender (or the  Administrative  Agent, in the
case of clause (i) above) shall promptly give notice (by telephone  confirmed in
writing) to the Borrowers  and,  except in the case of clause (i) above,  to the
Administrative  Agent of such  determination  (which  notice the  Administrative
Agent shall promptly  transmit to each of the other Lenders).  Thereafter (x) in
the case of clause  (i) above,  Eurodollar  Loans  shall no longer be  available
until such time as the  Administrative  Agent  notifies  the  Borrowers  and the
Lenders that the circumstances  giving rise to such notice by the Administrative
Agent no longer exist, and any Notice of Borrowing or Notice of Conversion given
by the  Borrowers  with  respect  to  Eurodollar  Loans  which have not yet been
incurred  (including  by way of  conversion)  shall be deemed  rescinded  by the
Borrowers,  (y) in the case of clause  (ii)  above,  the  Borrowers  jointly and
severally  agree to,  subject to the  provisions of Section 13.15 (to the extent
applicable),  pay to such 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 such Lender in its sole discretion  shall
determine)  as shall be required to  compensate  such Lender for such  increased
costs or  reductions  in amounts  received or  receivable  hereunder  (a written
notice as to the additional  amounts owed to such Lender,  showing the basis for
the calculation thereof, submitted to the Borrowers by such Lender in good faith
shall,  absent  manifest  error,  be final and conclusive and binding on all the
parties  hereto) and (z) in the case of clause (iii) above,  the Borrowers shall
take one of the  actions  specified  in Section  1.10(b) as promptly as possible
and,  in any  event,  within  the  time  period  required  by  law.  Each of the
Administrative  Agent  and each  Lender  agrees  that if it gives  notice to the
Borrowers of any of the events  described in clause (i) or (iii) above, it shall
promptly  notify  the  Borrowers  and,  in the  case  of any  such  Lender,  the
Administrative Agent, if such event ceases to exist. If any such event described
in clause (iii) above ceases to exist as to a Lender,  the  obligations  of such
Lender to make  Eurodollar  Loans and to convert Base Rate Loans into Eurodollar
Loans on the terms and conditions contained herein shall be reinstated.

     (b) At any time that any Eurodollar  Loan is affected by the  circumstances
described in Section 1.10(a)(ii) or (iii), the Borrowers may (and in the case of
a  Eurodollar   Loan  affected  by  the   circumstances   described  in  Section
1.10(a)(iii)  shall)  either (x) if the affected  Eurodollar  Loan is then being
made initially or pursuant to a conversion,  cancel the respective  Borrowing by
giving the Administrative  Agent telephonic notice (confirmed in writing) on the
same  date  that the  Borrowers  were  notified  by the  affected  Lender or the
Administrative  Agent  pursuant  to Section  1.10(a)(ii)  or (iii) or (y) if the
affected Eurodollar Loan is then outstanding, upon at least three Business Days'
written  notice to the  Administrative  Agent,  require the  affected  Lender to
convert such Eurodollar Loan into a Base Rate Loan,  provided that, if more than
one Lender is affected at any time,  then all  affected  Lenders must be treated
the same pursuant to this Section 1.10(b).

     (c) If at any time after the Effective Date any Lender  determines that the
introduction  of or any  change  in any  applicable  law or  governmental  rule,
regulation,  order,  guideline,  directive or request (whether or not having the
force of law) concerning  capital  adequacy,  or any change in interpretation or
administration thereof by any governmental authority, central bank or comparable
agency,  will have the effect of  increasing  the amount of capital  required or
expected to be maintained  by such Lender or any  corporation  controlling  such
Lender  based on the  existence  of such  Lender's  Commitment  hereunder or its
obligations  hereunder,  then the Borrowers jointly and severally agree, subject
to the  provisions of Section 13.15 (to the extent  applicable),  to pay to such
Lender,  upon its written demand therefor,  such additional  amounts as shall be
required to compensate  such Lender or such other  corporation for the increased
cost to such Lender or such other  corporation  or the  reduction in the rate of
return to such Lender or such other  corporation as a result of such increase of
capital. In determining such additional amounts, each Lender will act reasonably
and in good  faith and will use  averaging  and  attribution  methods  which are
reasonable,  provided that such Lender's  reasonable good faith determination of
compensation  owing under this Section 1.10(c) shall,  absent manifest error, be
final and conclusive and binding on all the parties  hereto.  Each Lender,  upon
determining that any additional amounts will be payable pursuant to this Section
1.10(c),  will give written notice thereof to the Borrowers,  which notice shall
show the basis for calculation of such additional amounts.

     1.11  Compensation.  The Borrowers jointly and severally agree,  subject to
the provisions of Section 13.15 (to the extent  applicable),  to compensate each
Lender,  upon its written  request  (which request shall set forth the basis for
requesting  such  compensation),   for  all  reasonable  losses,   expenses  and
liabilities  (including,  without  limitation,  any loss,  expense or  liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Lender to fund its  Eurodollar  Loans but excluding any loss of
anticipated profit) which such Lender may sustain:  (i) if for any reason (other
than a default by such Lender or the  Administrative  Agent) a Borrowing  of, or
conversion  from or into,  Eurodollar  Loans does not occur on a date  specified
therefor  in a Notice  of  Borrowing  or Notice of  Conversion  (whether  or not
withdrawn by the  Borrowers or deemed  withdrawn  pursuant to Section  1.10(a));
(ii) if any repayment  (including any repayment made pursuant to Section 4.02 or
as a  result  of an  acceleration  of  the  Loans  pursuant  to  Section  10) or
conversion of any of its Eurodollar Loans occurs on a date which is not the last
day of an Interest Period with respect  thereto;  (iii) if any prepayment of any
of its  Eurodollar  Loans  is not  made on any date  specified  in a  notice  of
prepayment  given by the  Borrowers;  or (iv) as a consequence  of (x) any other
default by the  Borrowers to repay its Loans when  required by the terms of this
Agreement or any Note held by such Lender or (y) any election  made  pursuant to
Section 1.10(b).

     1.12 Change of Lending Office.  Each Lender agrees that upon the occurrence
of any event  giving  rise to the  operation  of Section  1.10(a)(ii)  or (iii),
Section  1.10(c),  Section 2.06 or Section 4.04 with respect to such Lender,  it
will, if requested by the Borrowers,  use reasonable efforts (subject to overall
policy  considerations  of such Lender) to designate  another lending office for
any Loans or  Letters  of Credit  affected  by such  event,  provided  that such
designation is made on such terms that such Lender and its lending office suffer
no economic, legal or regulatory  disadvantage,  with the object of avoiding the
consequence  of the event giving rise to the operation of such Section.  Nothing
in this  Section 1.12 shall  affect or postpone  any of the  obligations  of the
Borrowers or the rights of any Lender provided in Sections 1.10, 2.06 and 4.04.

     1.13 Replacement of Lenders.  (x) If any Lender becomes a Defaulting Lender
or otherwise  defaults in its obligations to make Loans or fund Unpaid Drawings,
(y) upon the  occurrence  of any event  giving rise to the  operation of Section
1.10(a)(ii) or (iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect
to any Lender which results in such Lender  charging to the Borrowers  increased
costs in excess of those being generally  charged by the other Lenders or (z) as
provided  in Section  13.12(b)  in the case of certain  refusals  by a Lender to
consent to certain proposed  changes,  waivers,  discharges or terminations with
respect to this Agreement which have been approved by the Required Lenders,  the
Borrowers  shall  have the right,  if no Default or Event of Default  will exist
immediately after giving effect to the respective  replacement,  to replace such
Lender (the  "Replaced  Lender") with one or more other  Eligible  Transferee or
Transferees,  none of whom shall  constitute a Defaulting  Lender at the time of
such replacement (collectively,  the "Replacement Lender") reasonably acceptable
to the  Administrative  Agent,  provided that (i) at the time of any replacement
pursuant to this Section 1.13,  the  Replacement  Lender shall enter into one or
more Assignment and Assumption Agreements pursuant to Section 13.04(b) (and with
all fees payable pursuant to said Section 13.04(b) to be paid by the Replacement
Lender)  pursuant  to which the  Replacement  Lender  shall  acquire  all of the
Commitments and outstanding Revolving Loans of, and participations in Letters of
Credit by, the Replaced  Lender and, in connection  therewith,  shall pay to (x)
the  Replaced  Lender in respect  thereof  an amount  equal to the sum of (A) an
amount equal to the principal of, and all accrued  interest on, all  outstanding
Revolving  Loans of the  Replaced  Lender,  (B) an  amount  equal to all  Unpaid
Drawings that have been funded by (and not reimbursed to) such Replaced  Lender,
together with all then unpaid interest with respect thereto at such time and (C)
an amount  equal to all  accrued,  but  theretofore  unpaid,  Fees  owing to the
Replaced  Lender  pursuant to Section  3.01,  (y) each Issuing  Lender an amount
equal to such Replaced Lender's  Percentage of any Unpaid Drawing (which at such
time  remains an Unpaid  Drawing) to the extent such amount was not  theretofore
funded by such  Replaced  Lender to such  Issuing  Lender and (z) the  Swingline
Lender an amount equal to such  Replaced  Lender's  Percentage  of any Mandatory
Borrowing to the extent such amount was not theretofore  funded by such Replaced
Lender to the Swingline Lender,  and (ii) all obligations of the Borrowers owing
to the Replaced  Lender (other than those  specifically  described in clause (i)
above in  respect  of which  the  assignment  purchase  price  has  been,  or is
concurrently  being,  paid)  shall  be paid in  full  to  such  Replaced  Lender
concurrently  with  such  replacement.  Upon  the  execution  of the  respective
Assignment  and  Assumption  Agreements,  the payment of amounts  referred to in
clauses  (i) and (ii) above and,  if so  requested  by the  Replacement  Lender,
delivery to the Replacement  Lender of the appropriate  Revolving Notes executed
by the Borrowers, the Replacement Lender shall become a Lender hereunder and the
Replaced  Lender  shall  cease to  constitute  a Lender  hereunder,  except with
respect to indemnification  provisions under this Agreement (including,  without
limitation,  Sections 1.10,  1.11,  2.06,  4.04,  13.01 and 13.06),  which shall
survive as to such Replaced Lender.

     1.14  Additional  Commitments.  (a) So  long as the  Additional  Commitment
Requirements  are  satisfied at the time of the  delivery of the written  notice
referred to below and on the respective  Additional  Commitment Date,  Furniture
Brands  shall have the right,  at any time and from time to time within one year
following the Effective  Date, and upon at least 15 days prior written notice to
the  Administrative  Agent, to request on one or more occasions that one or more
Lenders  (and/or one or more other Persons which will become Lenders as provided
below) provide  Additional  Commitments and subject to the applicable  terms and
conditions  contained  in this  Agreement  and  consistent  with the  amount  of
Additional  Commitments so provided,  make Revolving  Loans pursuant to Sections
1.01(a) and 1.01(c) and purchase participations in Letters of Credit pursuant to
Section 2.04, it being understood and agreed,  however, that (i) no Lender shall
be obligated to provide an Additional Commitment,  (ii) until such time, if any,
as (x) such Lender has agreed in its sole  discretion  to provide an  Additional
Commitment and executed and delivered to the Administrative  Agent an Additional
Commitment  Agreement in respect  thereof as provided in Section 1.14(b) and (y)
such other  conditions set forth in Section  1.14(b) shall have been  satisfied,
such Lender shall not be obligated to fund any Revolving  Loans,  or participate
in any  Letters  of Credit,  in excess of the  amounts  provided  for in Section
1.01(a),  1.01(c)  and/or  2.01(c),  as the case may be, before giving effect to
such Additional  Commitments  provided  pursuant to this Section 1.14, (iii) any
Lender (or, in the  circumstances  contemplated by clause (vii) below, any other
Person  which  will  qualify  as an  Eligible  Transferee)  may  so  provide  an
Additional  Commitment  without the consent of any other Lender  (other than, in
the circumstances  contemplated by clause (viii) below, the Administrative Agent
and each Issuing  Lender),  (iv) each  provision of Additional  Commitments on a
given date pursuant to this Section 1.14 shall be in integral  multiples (in the
aggregate  for all Lenders  (including,  in the  circumstances  contemplated  by
clause (vii) below,  Eligible  Transferees who will become Lenders)) of at least
$5,000,000,  (v) the aggregate amount of all Additional Commitments permitted to
be provided pursuant to this Section 1.14 shall not exceed $70,000,000, (vi) the
fees payable to any Lender  providing an Additional  Commitment  shall be as set
forth in the relevant Additional Commitment Agreement, (vii) if, after Furniture
Brands has requested the then existing  Lenders (other than Defaulting  Lenders)
to provide Additional  Commitments pursuant to this Section 1.14 on the terms to
be applicable thereto,  Furniture Brands has not received Additional Commitments
in an aggregate amount equal to that amount of the Additional  Commitments which
Furniture Brands desires to obtain pursuant to such request (as set forth in the
notice  provided by  Furniture  Brands to the  Administrative  Agent as provided
above),  then Furniture Brands may request  Additional  Commitments from Persons
which would qualify as Eligible Transferees  hereunder in aggregate amount equal
to such  deficiency  on  terms  which  are no more  favorable  to such  Eligible
Transferee in any respect than the terms  offered to the Lenders,  provided that
any such Additional  Commitments  provided by any such Eligible Transferee which
is not  already a Lender  shall be in  integral  multiples  (for  such  Eligible
Transferee)  of at least  $1,000,000,  (viii) no Person  (including any existing
Lender and any Eligible  Transferee  which was not already a Lender) may provide
an Additional Commitment unless approved by each of the Administrative Agent and
each Issuing  Lender,  provided  that such  approval  shall not be required with
respect  to any  Additional  Commitment  assumed by an  existing  Non-Defaulting
Lender,  (ix) the interest rate  applicable to Revolving  Loans made pursuant to
such Additional Commitments shall be the same as the interest rate applicable at
such time to other  Revolving  Loans made pursuant to this Agreement and (x) all
actions taken by Furniture Brands pursuant to this Section 1.14(a) shall be done
in coordination with the Administrative Agent.

     (b) At the time of any provision of Additional Commitments pursuant to this
Section  1.14,  (i) Furniture  Brands,  the  Administrative  Agent and each such
Lender or other Eligible Transferee (each, an "Additional  Lender") which agrees
to  provide  an  Additional   Commitment   shall  execute  and  deliver  to  the
Administrative  Agent an Additional  Commitment  Agreement  substantially in the
form  of  Exhibit  I,  subject  to such  modifications  in  form  and  substance
satisfactory  to the  Administrative  Agent as may be necessary  or  appropriate
(with the  effectiveness of such Additional  Lender's  Additional  Commitment to
occur  upon   delivery  of  such   Additional   Commitment   Agreement   to  the
Administrative  Agent, the payment of any fees required in connection  therewith
and the  satisfaction  of the other  conditions  in this Section  1.14(b) to the
satisfaction  of the  Administrative  Agent),  (ii)  the  Additional  Commitment
Requirements  shall  have been  satisfied,  (iii)  Furniture  Brands  shall,  in
coordination  with the  Administrative  Agent,  repay all outstanding  Revolving
Loans of the Lenders,  and incur new Revolving  Loans from the Lenders,  in each
case so that the Lenders  participate in each  Borrowing of Revolving  Loans pro
rata on the basis of their  respective  Commitments  (after giving effect to any
increase in the Total  Commitment  pursuant to this  Section  1.14) and with the
Borrowers  being jointly and severally  obligated to pay the respective  Lenders
the costs of the type  referred to in Section 1.11 in  connection  with any such
repayment  and/or  Borrowing  and (iv)  Furniture  Brands  shall  deliver to the
Administrative  Agent an  opinion,  in form and  substance  satisfactory  to the
Administrative  Agent,  from counsel to  Furniture  Brands  satisfactory  to the
Administrative Agent and dated such date, covering such matters similar to those
set forth in the opinion of counsel delivered to the Administrative Agent on the
Effective  Date  pursuant  to  Section  5.03  and  such  other  matters  as  the
Administrative  Agent may reasonably  request.  The  Administrative  Agent shall
promptly notify each Lender as to the occurrence of each  Additional  Commitment
Date,  and (w) on each  such  date,  the  Total  Commitment  under,  and for all
purposes of, this Agreement  shall be increased by the aggregate  amount of such
Additional  Commitments,  (x) on each  such  date  Schedule  I shall  be  deemed
modified to reflect the revised  Commitments of the affected  Lenders,  (y) upon
surrender of any old Revolving  Notes by the  respective  Lender (or, if lost, a
standard  lost note  indemnity),  to the extent  requested by any Lender,  a new
Revolving Note will be issued, at Furniture Brands' expense,  to such Additional
Lender,  to be in  conformity  with  the  requirements  of  Section  1.05  (with
appropriate   modifications)  to  the  extent  needed  to  reflect  the  revised
Commitment  of such Lender and (z) on such date with respect to all  outstanding
Letters of Credit and all Unpaid Drawings with respect  thereto,  there shall be
an automatic  adjustment to the participations by the Lenders in such Letters of
Credit and Unpaid Drawings to reflect the new Percentages of the Lenders.

     SECTION 2. Letters of Credit.

     2.01  Letters of Credit.  (a) Subject to and upon the terms and  conditions
herein set forth,  the Borrowers may request that any Issuing  Lender issue,  at
any time and from time to time on and after the Effective  Date and prior to the
Maturity  Date,  for the joint and several  account of the Borrowers and for the
benefit of (x) any holder (or any trustee, agent or other similar representative
for any such holders) of L/C Supportable  Obligations of the Borrowers or any of
the respective Subsidiaries,  an irrevocable standby letter of credit, in a form
customarily  used by such  Issuing  Lender  or in such  other  form as has  been
approved by such Issuing Lender and (y) sellers of goods to the Borrowers or any
of their respective  Subsidiaries,  an irrevocable  trade letter of credit, in a
form  customarily  used by such Issuing Lender or in such other form as has been
approved  by such  Issuing  Lender  (each such  letter of  credit,  a "Letter of
Credit" and, collectively, the "Letters of Credit"). All Letters of Credit shall
be  denominated  in Dollars or an  Alternate  Currency  and shall be issued on a
sight basis only; provided,  however, trade Letters of Credit may also be issued
on an  acceptance  basis  providing  for  drafts  thereunder  to be drawn on the
relevant  Issuing Lender for any period of no less than 30 days and no more than
six months sight, by which a bankers'  acceptance will be created.  It is hereby
acknowledged  and agreed that each of the  letters of credit  (and any  bankers'
acceptances  created  thereunder)  which were issued under the  Existing  Credit
Agreement  prior to the  Effective  Date and  which  remain  outstanding  on the
Effective Date (in the case of such letters of credit,  the "Existing Letters of
Credit"  and,  in  the  case  of  such  bankers'   acceptances,   the  "Existing
Acceptances") shall, from and after the Effective Date,  constitute a "Letter of
Credit" or an "Acceptance",  as the case may be, for purposes of this Agreement.
Each (x) Existing  Letter of Credit and the Stated  Amount and  Expiration  Date
thereof,  together with the account party and  beneficiary  thereunder,  and (y)
Existing  Acceptance,  and the Stated Amount and Expiration Date thereof, is set
forth on Schedule III.

     (b) Each Issuing Lender may agree, in its sole discretion,  and DBAG hereby
agrees  that in the event a  requested  Letter of Credit is not issued by one of
the  other  Issuing  Lenders,  it will  (subject  to the  terms  and  conditions
contained  herein),  at any time and from time to time on or after the Effective
Date and prior to the Maturity  Date,  following  its receipt of the  respective
Letter of Credit  Request,  issue for the account of the  Borrowers  one or more
Letters of Credit as is permitted to exist  pursuant to this  Agreement  without
giving  rise to a  Default  or Event of  Default  hereunder,  provided  that the
respective  Issuing  Lender shall be under no  obligation to issue any Letter of
Credit of the types described above if at the time of such issuance:

          (i) any order,  judgment or decree of any  governmental  authority  or
     arbitrator  shall  purport by its terms to enjoin or restrain  such Issuing
     Lender  from  issuing  such  Letter  of Credit  or any  requirement  of law
     applicable to such Issuing  Lender or any request or directive  (whether or
     not  having  the  force  of  law)  from  any  governmental  authority  with
     jurisdiction over such Issuing Lender shall prohibit,  or request that such
     Issuing Lender refrain from, the issuance of letters of credit generally or
     such  Letter of Credit in  particular  or shall  impose  upon such  Issuing
     Lender with respect to such Letter of Credit any  restriction or reserve or
     capital  requirement  (for  which  such  Issuing  Lender  is not  otherwise
     compensated) not in effect on the date hereof,  or any  unreimbursed  loss,
     cost or  expense  which  was not  applicable,  in  effect  or known to such
     Issuing  Lender as of the date hereof and which such Issuing Lender in good
     faith deems material to it; or

          (ii) such Issuing  Lender shall have  received  notice from any Lender
     prior to the issuance of such Letter of Credit of the type described in the
     second sentence of Section 2.03(b).

     (c) Notwithstanding the foregoing,  (i) no Letter of Credit shall be issued
the Stated  Amount of which,  when  added to the  Letter of Credit  Outstandings
(exclusive of Unpaid  Drawings which are repaid on the date of, and prior to the
issuance of, the  respective  Letter of Credit) at such time would exceed either
(x)  $150,000,000  or (y) when added to the  aggregate  principal  amount of all
Revolving Loans then outstanding and Swingline Loans then outstanding, an amount
equal to the Total Commitment at such time, (ii) no Letter of Credit denominated
in an Alternate  Currency shall be issued the Stated Amount of which, when added
to the Letter of Credit  Outstandings  (exclusive of Unpaid  Drawings  which are
repaid on the date of, and prior to the  issuance of, the  respective  Letter of
Credit)  at such time in  respect  of all other  outstanding  Letters  of Credit
denominated  in an  Alternate  Currency,  would  exceed  $25,000,000  unless the
Administrative Agent and the respective Issuing Lender consents in writing prior
to the issuance thereof,  (iii) no Acceptance shall be created the Stated Amount
of which,  when added to the Stated  Amounts of all  Acceptances  outstanding at
such time, would exceed  $15,000,000 and (iv) each Letter of Credit shall by its
terms terminate on or before (A) in the case of standby  Letters of Credit,  the
earlier of (x) the date which  occurs 24 months  after the date of the  issuance
thereof  (although  any such Letter of Credit may be extendible  for  successive
periods of up to 24 months,  but not beyond the fifth  Business Day prior to the
Maturity Date, on terms  acceptable to the Issuing  Lender  thereof) and (y) the
fifth  Business  Day  prior  to the  Maturity  Date and (B) in the case of trade
Letters of Credit,  the earlier of (x) the date which occurs 12 months after the
date of the  issuance  thereof  and (y) the date which is thirty  Business  Days
prior to the Maturity Date. Additionally,  no Issuing Lender will issue or amend
any Letter of Credit whereby the Expiration  Date thereof,  or of any Acceptance
to be created  thereunder,  by such Issuing Lender will occur after the Maturity
Date.

     2.02  Minimum  Stated  Amount.  The Stated  Amount of each Letter of Credit
shall not be less than  $10,000 or such lesser  amount as is  acceptable  to the
respective Issuing Lender.

     2.03 Letter of Credit  Requests.  (a) Whenever the Borrowers  desire that a
Letter of Credit be issued by DBAG as Issuing Lender, it shall have (i) executed
and delivered the Letter of Credit Service  Agreement in the form of Exhibit C-1
attached  hereto (as amended,  modified or  supplemented  from time to time, the
"Letter of Credit Service Agreement"),  which Letter of Credit Service Agreement
shall be in full force and effect at the time of the  issuance of such Letter of
Credit  and (ii) made a request  for the  issuance  of such  Letter of Credit in
accordance  with the terms of the Letter of Credit Service  Agreement.  Whenever
any  Borrower  desires  that a Letter of Credit be issued by an  Issuing  Lender
other than DBAG,  it shall have (x)  executed and  delivered  to the  respective
Issuing  Lender (with copies  having been sent to the  Administrative  Agent) at
least five Business Days prior to the issuance  thereof (or such shorter  period
as may be  acceptable  to the  respective  Issuing  Lender),  a Letter of Credit
Request in the form of Exhibit  C-2  attached  hereto  (each a "Letter of Credit
Request")  and (y) in the case of requests for the issuance of trade  Letters of
Credit (and, to the extent requested by the respective  Issuing Lender,  standby
Letters of Credit), completed and executed a letter of credit application in the
form  customarily  used by such Issuing Lender for trade Letters of Credit or in
such  other  form as the  Administrative  Agent  and the  Issuing  Lender  shall
request. Letter of Credit Requests shall be given in writing (including,  to the
extent   consented  to  by  the  respective   Issuing   Lender,   by  electronic
transmission),  or in the  case of  requests  of trade  Letters  of  Credit,  by
telephone,  if promptly confirmed in writing, or, if DBAG is the Issuing Lender,
as otherwise provided in the Letter of Credit Service  Agreement,  provided that
(I) if the express provisions of any letter of credit application  conflict with
the express provisions of this Agreement, the provisions of this Agreement shall
control to the extent of such conflict and (II) no event (other than the failure
to reimburse  any Drawing as provided for in Section  2.05) which  constitutes a
default under any  application  shall  constitute an Event of Default  hereunder
solely by reason of any default provisions contained in such application.

     (b) The  making of each  Letter of Credit  Request  shall be deemed to be a
representation  and warranty by the Borrowers  that such Letter of Credit may be
issued in accordance  with,  and will not violate the  requirements  of, Section
2.01(c).  Unless the  respective  Issuing  Lender has  received  notice from any
Lender  before it issues a Letter of Credit  that one or more of the  conditions
specified in Section 5 or 6 are not then satisfied, or that the issuance of such
Letter of Credit would violate  Section  2.01(c),  then such Issuing  Lender may
issue the  requested  Letter of Credit for the joint and several  account of the
Borrowers  in  accordance  with  such  Issuing   Lender's  usual  and  customary
practices.  Upon its issuance of, or modification or amendment to, any Letter of
Credit,   such  Issuing  Lender  shall  promptly   notify  the  Borrowers,   the
Administrative  Agent  and  each  Lender  of  such  issuance,   modification  or
amendment. Notwithstanding anything to the contrary contained in this Agreement,
in the event that a Lender Default  exists,  no Issuing Lender shall be required
to issue any  Letter of Credit  unless  such  Issuing  Lender has  entered  into
arrangements  satisfactory  to it and the  Borrowers to  eliminate  such Issuing
Lender's  risk with  respect  to the  participation  in Letters of Credit by the
Defaulting Lender or Lenders,  including by cash collateralizing such Defaulting
Lender's  or  Lenders'  Percentage  or  Percentages  of  the  Letter  of  Credit
Outstandings.

     2.04 Letter of Credit Participations.  (a) Immediately upon the issuance by
any Issuing Lender of any Letter of Credit,  such Issuing Lender shall be deemed
to have sold and  transferred  to each Lender,  other than such  Issuing  Lender
(each such Lender,  in its capacity  under this Section 2.04, a  "Participant"),
and each such Participant  shall be deemed  irrevocably and  unconditionally  to
have  purchased  and received  from such  Issuing  Lender,  without  recourse or
warranty,  an  undivided  interest  and  participation,  to the  extent  of such
Participant's Percentage, in such Letter of Credit, each drawing made thereunder
and  Acceptances  created  thereunder and the obligations of the Borrowers under
this  Agreement  with respect  thereto,  and any  security  therefor or guaranty
pertaining  thereto.  Upon any change in the  Commitments  or Percentages of the
Lenders  pursuant to Section 1.13, 1.14 or 13.04, it is hereby agreed that, with
respect to all outstanding Letters of Credit, Acceptances created thereunder and
Unpaid Drawings with respect thereto,  there shall be an automatic adjustment to
the participations  pursuant to this Section 2.04 to reflect the new Percentages
of the assignor and assignee Lender or of all Lenders, as the case may be.

     (b) In determining  whether to pay or create an Acceptance under any Letter
of Credit,  such Issuing  Lender shall have no obligation  relative to the other
Lenders other than to confirm that any documents  required to be delivered under
such  Letter of Credit  appear to have been  delivered  and that they  appear to
substantially  comply on their  face  with the  requirements  of such  Letter of
Credit.  Any action taken or omitted to be taken by any Issuing  Lender under or
in  connection  with any Letter of Credit if taken or omitted in the  absence of
gross  negligence or willful  misconduct,  as determined by a court of competent
jurisdiction in a final and non-appealable proceeding, shall not create for such
Issuing Lender any resulting liability to the Borrowers or any Lender.

     (c) In the event that any Issuing Lender makes any payment under any Letter
of Credit issued by it or any  Acceptance  created  thereunder and the Borrowers
shall not have reimbursed such amount in full to such Issuing Lender pursuant to
Section  2.05(a),  such Issuing Lender shall promptly notify the  Administrative
Agent,  which shall promptly notify each  Participant of such failure,  and each
Participant  shall promptly and  unconditionally  pay to such Issuing Lender the
amount of such Participant's  Percentage of such unreimbursed payment in Dollars
and in same day funds. If the Administrative  Agent so notifies,  prior to 11:00
A.M.  (New York time) on any Business  Day, any  Participant  required to fund a
payment  under a Letter of  Credit or an  Acceptance  created  thereunder,  such
Participant  shall  make  available  to such  Issuing  Lender  in  Dollars  such
Participant's  Percentage  of the  amount  of such  payment  (using  the  Dollar
Equivalent  thereof  in the case of any such  payment  in respect of a Letter of
Credit  denominated  in an Alternate  Currency,  determined  on the date of such
payment)  on such  Business  Day in same day funds.  If and to the  extent  such
Participant  shall not have so made its Percentage of the amount of such payment
available to such Issuing Lender, such Participant agrees to pay to such Issuing
Lender,  forthwith on demand, such amount,  together with interest thereon,  for
each day from such  date  until  the date  such  amount is paid to such  Issuing
Lender at the  overnight  Federal Funds Rate for the first three days and at the
interest rate applicable to Revolving Loans maintained as Base Rate for each day
thereafter.  The failure of any  Participant  to make  available to such Issuing
Lender  its  Percentage  of any  payment  under any  Letter of Credit  shall not
relieve any other  Participant of its obligation  hereunder to make available to
such Issuing  Lender its Percentage of any payment with respect to any Letter of
Credit or  Acceptance  created  thereunder  on the date  required,  as specified
above,  but no  Participant  shall be  responsible  for the failure of any other
Participant to make  available to such Issuing  Lender such other  Participant's
Percentage of any such payment.

     (d)  Whenever  any  Issuing  Lender  receives a payment of a  reimbursement
obligation  as to which  it has  received  any  payments  from the  Participants
pursuant to clause (c) above,  such Issuing Lender shall pay to each Participant
which has paid its  Percentage  thereof,  in Dollars  and in same day funds,  an
amount equal to such Participant's share (based upon the proportionate aggregate
amount  originally  funded by such Participant to the aggregate amount funded by
all Participants) of the principal amount of such  reimbursement  obligation and
interest thereon accruing after the purchase of the respective participations.

     (e) Upon the request of any Participant,  the relevant Issuing Lender shall
deliver to such Participant copies of any Letter of Credit issued by it and such
other documentation as may be reasonably requested by such Participant.

     (f) The  obligations of the  Participants  to make payments to each Issuing
Lender with respect to Letters of Credit and Acceptances issued thereunder shall
be irrevocable and not subject to any qualification or exception whatsoever (the
respective  Issuing Lender's only obligation being to confirm that any documents
required  to be  delivered  under such  Letter of Credit  appeared  to have been
delivered  and that they appear to  substantially  comply on their face with the
requirements  of such Letter of Credit) and shall be made in accordance with the
terms and  conditions  of this  Agreement  under all  circumstances,  including,
without limitation, any of the following circumstances:

          (i) any lack of validity or enforceability of this Agreement or any of
     the other Credit Documents;

          (ii) the existence of any claim, setoff,  defense or other right which
     the Borrowers or any of their  Subsidiaries  may have at any time against a
     beneficiary  named in a Letter of Credit,  any  transferee of any Letter of
     Credit (or any  Person for whom any such  transferee  may be  acting),  any
     holder of an Acceptance, the Administrative Agent, any Participant,  or any
     other Person,  whether in  connection  with this  Agreement,  any Letter of
     Credit,  any  Acceptance,  the  transactions  contemplated  herein  or  any
     unrelated  transactions  (including any underlying  transaction between any
     Borrower and the beneficiary named in any such Letter of Credit);

          (iii) any draft, certificate or any 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;

          (iv) the surrender or  impairment of any security for the  performance
     or observance of any of the terms of any of the Credit Documents; or

          (v) the occurrence of any Default or Event of Default.

     2.05 Agreement to Repay Letter of Credit Drawings and Acceptance  Payments.
(a) The Borrowers hereby jointly and severally agree to reimburse the respective
Issuing  Lender,  by making payment in Dollars (in an amount equal to the Dollar
Equivalent  of any  payments  or  disbursements  in respect of Letters of Credit
denominated in an Alternate  Currency  determined on the date of such payment or
disbursement) to the  Administrative  Agent at the Payment Office in immediately
available  funds for the  account  of such  Issuing  Lender  for any  payment or
disbursement  made  by such  Issuing  Lender  under  any  Letter  of  Credit  or
Acceptance  created thereunder (each such amount (using the Dollar Equivalent of
any payment or  disbursement  with  respect to Letters of Credit or  Acceptances
denominated in an Alternate  Currency  determined on the date of such payment or
disbursement) so paid until reimbursed, an "Unpaid Drawing"), immediately after,
and in any event on the date of such payment or  disbursement,  with interest on
the  amount so paid or  disbursed  by such  Issuing  Lender,  to the  extent not
reimbursed  prior to 12:00 Noon (New York  time) on the date of such  payment or
disbursement, from and including the date paid or disbursed to but excluding the
date such Issuing Lender was reimbursed by the Borrowers  therefor at a rate per
annum  which  shall  be the  Base  Rate in  effect  from  time to time  plus the
Applicable Base Rate Margin,  provided,  however, to the extent such amounts are
not  reimbursed  prior to 12:00 Noon (New York time) on the second  Business Day
following such payment or disbursement,  interest shall thereafter accrue on the
amounts so paid or disbursed by such Issuing Lender (and until reimbursed by the
Borrowers)  at a rate per annum which shall be the Base Rate in effect from time
to time plus the  Applicable  Base Rate Margin plus 2%, in each such case,  with
interest to be payable by the Borrowers on demand. The respective Issuing Lender
shall  give the  Borrowers  prompt  notice of each  Drawing  under any Letter of
Credit or payment under any  Acceptance  created  thereunder,  provided that the
failure to give any such notice  shall in no way affect,  impair or diminish the
Borrowers' obligations hereunder.

     (b) The  obligations of the Borrowers  under this Section 2.05 to reimburse
the respective  Issuing Lender with respect to drawings on Letters of Credit and
payments under any Acceptance created thereunder (each, a "Drawing")  (including
interest  thereon)  shall  be joint  and  several  and  shall  be  absolute  and
unconditional  under any and all  circumstances  and irrespective of any setoff,
counterclaim  or  defense  to payment  which any  Borrower  may have or have had
against any Lender  (including in its capacity as issuer of the Letter of Credit
or as Participant),  or any  nonapplication or misapplication by the beneficiary
of the proceeds of such Drawing, the respective Issuing Lender's only obligation
to the Borrowers  being to confirm that any  documents  required to be delivered
under such Letter of Credit  appear to have been  delivered and that they appear
to  substantially  comply on their face with the  requirements of such Letter of
Credit.  Any action taken or omitted to be taken by any Issuing  Lender under or
in connection with any Letter of Credit or any Acceptance  created thereunder if
taken or omitted in the absence of gross negligence or willful misconduct, shall
not create for such Issuing Lender any resulting liability to the Borrowers.

     2.06 Increased Costs. If at any time after the date of this Agreement,  the
introduction  of or any change in any applicable law, rule,  regulation,  order,
guideline or request or in the  interpretation or administration  thereof by any
governmental   authority  charged  with  the  interpretation  or  administration
thereof, or compliance by any Issuing Lender or any Participant with any request
or directive by any such authority  (whether or not having the force of law), or
any change in  generally  acceptable  accounting  principles,  shall  either (i)
impose,  modify or make  applicable any reserve,  deposit,  capital  adequacy or
similar requirement against Letters of Credit issued, or Acceptances created, by
any Issuing Lender or participated in by any Participant,  or (ii) impose on any
Issuing Lender or any Participant  any other  conditions  relating,  directly or
indirectly,  to this Agreement,  any Letter of Credit or any Acceptance  created
thereunder;  and the result of any of the  foregoing  is to increase the cost to
any Issuing Lender or any Participant of issuing,  maintaining or  participating
in any  Letter of Credit or any  Acceptance  created  thereunder,  or reduce the
amount  of  any  sum  received  or  receivable  by  any  Issuing  Lender  or any
Participant  hereunder  or reduce the rate of return on its capital with respect
to Letters of Credit or Acceptances  created  thereunder  (except for changes in
the rate of tax on, or determined by reference to, the net income or net profits
of such Issuing  Lender or such  Participant,  or any franchise tax based on the
net income or net profits of such Lender or Participant, in either case pursuant
to the laws of the United  States of America,  the  jurisdiction  in which it is
organized  or in which its  principal  office or  applicable  lending  office is
located or any subdivision  thereof or therein),  but without duplication of any
amounts  payable in respect of Taxes  pursuant to Section  4.04(a),  then,  upon
demand to the  Borrowers by such Issuing  Lender or any  Participant  (a copy of
which  demand shall be sent by such Issuing  Lender or such  Participant  to the
Administrative  Agent) and subject to the  provisions  of Section  13.15 (to the
extent  applicable),  the Borrowers  jointly and severally  agree to pay to such
Issuing Lender or such  Participant  such  additional  amount or amounts as will
compensate  such  Lender  for such  increased  cost or  reduction  in the amount
receivable or reduction on the rate of return on its capital. Any Issuing Lender
or any Participant, upon determining that any additional amounts will be payable
pursuant to this Section 2.06,  will give prompt  written  notice thereof to the
Borrowers,  which notice shall include a certificate  submitted to the Borrowers
by such Issuing Lender or such Participant (a copy of which certificate shall be
sent by such Issuing Lender or such  Participant to the  Administrative  Agent),
setting  forth in  reasonable  detail  the  basis  for the  calculation  of such
additional amount or amounts necessary to compensate such Issuing Lender or such
Participant.  The certificate  required to be delivered pursuant to this Section
2.06 shall,  if delivered in good faith and absent  manifest error, be final and
conclusive and binding on the Borrowers.

     SECTION 3. Commitment Commission; Fees; Reductions of Commitment.

     3.01 Fees.  (a) The  Borrowers  jointly and  severally  agree to pay to the
Administrative Agent for distribution to each Non-Defaulting Lender a commitment
commission (the "Commitment  Commission") for the period from the Effective Date
to but excluding the Maturity Date (or such earlier date as the Total Commitment
shall  have  been  terminated),  computed  at a  rate  per  annum  equal  to the
Applicable Commitment Commission Percentage on the Unutilized Commitment of such
Non-Defaulting  Lender  as in  effect  from  time to  time.  Accrued  Commitment
Commission  shall be due and  payable  quarterly  in arrears  on each  Quarterly
Payment Date and on the Maturity  Date or such earlier date upon which the Total
Commitment is terminated.

     (b) The Borrowers jointly and severally agree to pay to the  Administrative
Agent for pro rata distribution to each  Non-Defaulting  Lender a fee in respect
of (x) each Letter of Credit issued  hereunder (the "Letter of Credit Fee"), for
the period from and including the date of issuance of such Letter of Credit (or,
in the case of the Existing  Letters of Credit,  from the Effective Date) to the
Expiration Date of such Letter of Credit,  computed at a rate per annum equal to
the  Applicable  Eurodollar  Margin as in effect from time to time on the Stated
Amount of such  Letter  of  Credit  as in effect  from time to time and (y) each
Acceptance (the "Acceptance  Fee") for the period from and including the date of
creation  of  such  Acceptance  to and  including  the  Expiration  Date of such
Acceptance,  computed  at a rate per annum  equal to the  Applicable  Eurodollar
Margin  as in  effect  from  time to time on the  daily  Stated  Amount  of such
Acceptance.  Accrued Letter of Credit Fees and Acceptance  Fees shall be due and
payable  quarterly in arrears on each Quarterly  Payment Date and upon the first
day on or after the termination of the Total Commitment upon which no Letters of
Credit or Acceptances remain outstanding.

     (c) The  Borrowers  jointly and  severally  agree to pay to the  respective
Issuing Lender, for its own account, a facing fee in respect of (x) each standby
Letter of Credit issued for its account  hereunder (the "Letter of Credit Facing
Fee") for the period from and  including  the date of  issuance of such  standby
Letter of Credit to and including the Expiration  Date of such standby Letter of
Credit,  computed  at a rate  equal to 1/8 of 1% per annum of the  daily  Stated
Amount of such standby  Letter of Credit and (y) each  Acceptance  created by it
(the  "Acceptance  Facing  Fee," and together  with the Letter of Credit  Facing
Fees,  the "Facing Fees") for the period from and including the date of creation
of such  Acceptance  to and including the  Expiration  Date of such  Acceptance,
computed  at a rate equal to 1/8 of 1% per annum of the daily  Stated  Amount of
such  Acceptance.  Accrued  Facing  Fees shall be due and payable  quarterly  in
arrears  on each  Quarterly  Payment  Date and on the date upon  which the Total
Commitment has been terminated and all standby Letters of Credit and Acceptances
have been terminated in accordance with their terms.

     (d) The  Borrowers  jointly and  severally  agree to pay, upon each drawing
under,  issuance of, or amendment  to any Letter of Credit or  Acceptance,  such
amount  as shall at the time of such  event  be the  administrative  charge  and
out-of-pocket expenses which the respective Issuing Lender is generally imposing
in  connection  with  such  occurrence  with  respect  to  letters  of credit or
acceptances, as the case may be.

     (e) The  Borrowers  jointly and severally  agree to pay to the Agents,  for
their own  account,  such  other  fees as have been  agreed to in writing by the
Borrowers and the Agents.

     (f)  Furniture  Brands  agrees  to  pay  to the  Administrative  Agent  for
distribution to each Additional  Lender such fees and other amounts,  if any, as
are specified in the relevant Additional Commitment Agreement, with the fees and
other amounts,  if any, to be payable at the times set forth in such  Additional
Commitment Agreement.

     3.02 Voluntary Termination of Unutilized Commitments. (a) Upon at least two
Business Days' prior notice from an Authorized  Representative  of the Borrowers
to  the   Administrative   Agent  at  the  Notice   Office   (which  notice  the
Administrative  Agent  shall  promptly  transmit  to each of the  Lenders),  the
Borrowers  shall  have  the  right,  at any time or from  time to time,  without
premium or penalty, to terminate the Total Unutilized Commitment, in whole or in
part, in integral multiples of $1,000,000, provided that (i) each such reduction
shall apply proportionately to permanently reduce the Commitment of each Lender,
and (ii) the reduction to the Total Unutilized Commitment shall in no case be in
an amount  which  would  cause the  Commitment  of any Lender to be reduced  (as
required by preceding  clause (i)) by an amount which  exceeds the  remainder of
(x) the  Unutilized  Commitment of such Lender as in effect  immediately  before
giving  effect to such  reduction  minus  (y) such  Lender's  Percentage  of the
aggregate principal amount of Swingline Loans then outstanding.

     (b) In the event of certain  refusals  by a Lender as  provided  in Section
13.12(b)  to  consent  to  certain  proposed  changes,  waivers,  discharges  or
terminations  with  respect to this  Agreement  which have been  approved by the
Required  Lenders,  the  Borrowers  may,  subject to their  compliance  with the
requirements of said Section  13.12(b),  upon five Business Days' written notice
to  the   Administrative   Agent  at  the  Notice   Office   (which  notice  the
Administrative  Agent shall promptly transmit to each of the Lenders)  terminate
the  Commitment  of such Lender so long as all Loans,  together with accrued and
unpaid  interest,  Fees and all other  amounts,  owing to such Lender are repaid
concurrently  with the effectiveness of such termination (at which time Schedule
I shall be deemed modified to reflect such changed  amounts),  and at such time,
such  Lender  shall  no  longer  constitute  a  "Lender"  for  purposes  of this
Agreement,   except  with  respect  to  indemnifications  under  this  Agreement
(including,  without  limitation,  Sections 1.10,  1.11,  2.06,  4.04, 13.01 and
13.06), which shall survive as to such repaid Lender.

     3.03 Mandatory Reduction of Commitments.  (a) The Total Commitment (and the
Commitment  of each  Lender)  shall  terminate  in its entirety on June 30, 2000
unless the Effective Date shall have occurred on or prior to such date.

     (b) In addition to any other mandatory  commitment  reductions  pursuant to
this Section  3.03,  the Total  Commitment  (and the  Commitment of each Lender)
shall terminate in its entirety on the earlier of (i) the date on which a Change
of Control occurs and (ii) the Maturity Date.

     (c) Each  reduction to the Total  Commitment  pursuant to this Section 3.03
shall be applied proportionately to reduce the Commitment of each Lender.

     SECTION 4. Prepayments; Payments; Taxes.

     4.01  Voluntary  Prepayments.  (a) The  Borrowers  shall  have the right to
prepay the Loans,  without  premium or penalty,  in whole or in part at any time
and from time to time on the following terms and  conditions:  (i) an Authorized
Representative  of the Borrowers  shall give the  Administrative  Agent prior to
12:00 Noon (New York time) at the Notice Office (x) at least one Business  Day's
prior written notice (or telephonic notice promptly confirmed in writing) of the
Borrowers'  intent to prepay  Base Rate Loans (or same day notice in the case of
Swingline  Loans  provided  such notice is given  prior to 11:00 A.M.  (New York
time)) and (y) at least three Business Days' prior written notice (or telephonic
notice  promptly  confirmed  in  writing) of their  intent to prepay  Eurodollar
Loans,  whether Revolving Loans or Swingline Loans shall be prepaid,  the amount
of such  prepayment  and the Types of Loans to be  prepaid  and,  in the case of
Eurodollar Loans, the specific  Borrowing or Borrowings  pursuant to which made,
which notice the  Administrative  Agent shall  promptly  transmit to each of the
Lenders;  (ii) each prepayment  shall be in an aggregate  principal amount of at
least $1,000,000 (or $500,000 in the case of Swingline Loans),  provided that if
any partial  prepayment of Eurodollar Loans made pursuant to any Borrowing shall
reduce the  outstanding  Eurodollar  Loans made pursuant to such Borrowing to an
amount less than the Minimum  Borrowing  Amount  applicable  thereto,  then such
Borrowing  may not be  continued  as a  Borrowing  of  Eurodollar  Loans and any
election of an Interest Period with respect thereto given by the Borrowers shall
have no force or effect;  and (iii) each  prepayment in respect of any Revolving
Loans  made  pursuant  to a  Borrowing  shall be  applied  pro rata  among  such
Revolving Loans, provided that at the Borrowers' election in connection with any
prepayment of Revolving Loans pursuant to this Section 4.01(a),  such prepayment
shall not, so long as no Default or Event of Default then exists,  be applied to
the prepayment of Revolving Loans of a Defaulting Lender.

     (b) In the event of certain  refusals  by a Lender as  provided  in Section
13.12(b)  to  consent  to  certain  proposed  changes,  waivers,  discharges  or
terminations  with  respect to this  Agreement  which have been  approved by the
Required Lenders,  the Borrowers may, upon five Business Days' written notice by
an Authorized Representative of the Borrowers to the Administrative Agent at the
Notice Office (which notice the Administrative  Agent shall promptly transmit to
each of the Lenders) repay all Revolving Loans, together with accrued and unpaid
interest,  Fees, and other amounts owing to such Lender in accordance  with, and
subject  to the  requirements  of,  said  Section  13.12(b)  so  long as (A) the
Commitment of such Lender is  terminated  concurrently  with such  repayment (at
which  time  Schedule  I  shall  be  deemed  modified  to  reflect  the  changed
Commitments)  and (B) the consents  required by Section  13.12(b) in  connection
with the repayment pursuant to this clause (b) have been obtained.

     4.02 Mandatory  Repayments and Cash  Collateralizations.  (a) On any day on
which the sum of (I) the aggregate outstanding principal amount of all Revolving
Loans (after giving effect to all other repayments  thereof on such date),  (II)
the aggregate  principal  amount of all Swingline  Loans (after giving effect to
all other repayments thereof on such date) and (III) the aggregate amount of all
Letter of  Credit  Outstandings  (after  giving  effect to all other  repayments
thereof on such date) exceeds Total Commitment as then in effect,  the Borrowers
jointly and  severally  agree to prepay on such day the  principal  of Swingline
Loans and, after the Swingline  Loans have been repaid in full,  Revolving Loans
in an amount equal to such excess.  If, after giving effect to the prepayment of
all outstanding Swingline Loans and Revolving Loans, the aggregate amount of the
Letter of Credit  Outstandings  exceeds the Total  Commitment as then in effect,
the Borrowers jointly and severally agree to pay to the Administrative  Agent at
the Payment Office on such date an amount of cash and/or Cash Equivalents  equal
to the  amount of such  excess  (up to a maximum  amount  equal to the Letter of
Credit  Outstandings at such time), such cash and/or Cash Equivalents to be held
as security for all obligations of the Borrowers to Lenders  hereunder in a cash
collateral  account  to be  established  by the  Administrative  Agent  on terms
reasonably satisfactory to the Administrative Agent.

     (b) With respect to each  repayment of Revolving  Loans required by Section
4.02(a),  the Borrowers may designate the Types of Revolving  Loans which are to
be repaid  and, in the case of  Eurodollar  Loans,  the  specific  Borrowing  or
Borrowings  pursuant to which made,  provided that: (i) repayments of Eurodollar
Loans  pursuant  to  Section  4.02(a)  may  only be made on the  last  day of an
Interest  Period  applicable  thereto unless all Eurodollar  Loans with Interest
Periods  ending on such date of required  repayment and all Base Rate Loans have
been paid in full; (ii) if any repayment of Eurodollar  Loans made pursuant to a
single Borrowing shall reduce the outstanding  Eurodollar Loans made pursuant to
such Borrowing to an amount less than the Minimum  Borrowing  Amount  applicable
thereto,  then such Borrowing  shall be converted at the end of the then current
Interest Period into a Borrowing of Base Rate Loans; and (iii) each repayment of
Revolving Loans required by Section 4.02(a) shall be applied pro rata among such
Revolving  Loans.  In the absence of a designation by the Borrowers as described
in the preceding sentence, the Administrative Agent shall, subject to the above,
make such designation in its sole discretion with a view, but no obligation,  to
minimize breakage costs owing under Section 1.11.

     (c) In addition to any other mandatory repayments required pursuant to this
Section 4.02, (i) all then  outstanding  Revolving Loans shall be repaid in full
on the  Maturity  Date and (ii) all then  outstanding  Swingline  Loans shall be
repaid in full on the Swingline Expiry Date.

     (d) In addition to any other mandatory repayments required pursuant to this
Section  4.02,  all Loans  shall be required to be repaid in full on the date on
which a Change of Control occurs.

     4.03 Method and Place of Payment. Except as otherwise specifically provided
herein,  all  payments  under  this  Agreement  or any Note shall be made to the
Administrative  Agent for the account of the Lender or Lenders  entitled thereto
not later than 12:00 Noon (New York time) on the date when due and shall be made
in Dollars in immediately  available funds at the Payment  Office.  Any payments
received  by the  Administrative  Agent  after such time shall be deemed to have
been  received  on the  next  Business  Day.  Whenever  any  payment  to be made
hereunder  or under  any Note  shall be stated to be due on a day which is not a
Business  Day,  the due date  thereof  shall be extended to the next  succeeding
Business  Day and,  with  respect to payments of  principal,  interest  shall be
payable at the applicable rate during such extension.

     4.04 Net  Payments.  (a) All payments  made by the  Borrowers  hereunder or
under any Note  will be made  without  setoff,  counterclaim  or other  defense.
Except as provided in Section  4.04(b),  all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies,  imposts,  duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political  subdivision or
taxing  authority  thereof  or  therein  with  respect  to  such  payments  (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income or net profits of a Lender pursuant to the laws
of the  jurisdiction  in which it is organized or the  jurisdiction in which the
principal  office or applicable  lending office of such Lender is located or any
subdivision  thereof  or  therein)  and  all  interest,   penalties  or  similar
liabilities with respect thereto (all such non-excluded taxes, levies,  imports,
duties,  fees,  assessments or other charges being referred to  collectively  as
"Taxes").  If any Taxes are so levied or  imposed,  the  Borrowers  jointly  and
severally  agree to pay the  full  amount  of such  Taxes,  and such  additional
amounts as may be necessary so that every  payment of all amounts due under this
Agreement or under any Note, after withholding or deduction for or on account of
any Taxes, will not be less than the amount provided for herein or in such Note.
If any  amounts  are  payable  in  respect of Taxes  pursuant  to the  preceding
sentence, the Borrowers agree to reimburse each Lender, upon the written request
of such  Lender,  for taxes  imposed  on or  measured  by the net  income or net
profits of such Lender  pursuant to the laws of the  jurisdiction  in which such
Lender is  organized  or in which the  principal  office or  applicable  lending
office of such Lender is located or under the laws of any political  subdivision
or taxing  authority of any such  jurisdiction in which such Lender is organized
or in which the principal office or applicable  lending office of such Lender is
located and for any  withholding or similar taxes as such Lender shall determine
are payable by, or withheld from, such Lender in respect of such amounts so paid
to or on behalf of such Lender pursuant to the preceding sentence and in respect
of any amounts  paid to or on behalf of such Lender  pursuant to this  sentence.
The Borrowers will furnish to the Administrative  Agent within 45 days after the
date the payment of any Taxes is due pursuant to applicable law certified copies
of tax receipts evidencing such payment by the Borrowers.  The Borrowers jointly
and severally  agree to indemnify  and hold harmless each Lender,  and reimburse
such Lender upon its written  request,  for the amount of any Taxes so levied or
imposed and paid by such Lender.

     (b) Each Lender that is not a United States person (as such term is defined
in Section  7701(a)(30)  of the Code) agrees to deliver to the Borrowers and the
Administrative  Agent  on or prior to the  Effective  Date,  or in the case of a
Lender that is an assignee or  transferee  of an interest  under this  Agreement
pursuant to Section 1.13 or 13.04  (unless the  respective  Lender was already a
Lender hereunder immediately prior to such assignment or transfer),  on the date
of such  assignment  or transfer to such  Lender,  (i) two accurate and complete
original  signed copies of Internal  Revenue  Service Form W-8ECI or Form W-8BEN
(with respect to a complete  exemption under an income tax treaty) (or successor
forms)  certifying to such Lender's  entitlement  to a complete  exemption  from
United  States  withholding  tax with  respect to payments to be made under this
Agreement  and under any Note,  or (ii) if the Lender is not a "bank" within the
meaning of Section  881(c)(3)(A)  of the Code and cannot deliver either Internal
Revenue Service Form W-8ECI or Form W-8BEN (with respect to a complete exemption
under an income tax  treaty)  pursuant  to clause (i) above,  (x) a  certificate
substantially  in the  form of  Exhibit  D (any  such  certificate,  a  "Section
4.04(b)(ii)  Certificate")  and (y) two accurate and  complete  original  signed
copies of Internal  Revenue  Service Form W-8BEN (with  respect to the portfolio
interest exemption) (or successor form) certifying to such Lender's  entitlement
to a complete  exemption  from United  States  withholding  tax with  respect to
payments  of  interest to be made under this  Agreement  and under any Note.  In
addition,  each Lender agrees that from time to time after the  Effective  Date,
when  a  lapse  in  time  or  change  in  circumstances   renders  the  previous
certification obsolete or inaccurate in any material respect, it will deliver to
the  Borrowers  and the  Administrative  Agent  two new  accurate  and  complete
original  signed  copies of Internal  Revenue  Service Form W-8ECI,  Form W-8BEN
(with  respect to the benefits of any income tax  treaty),  or Form W-8BEN (with
respect  to  the  portfolio  interest   exemption)  and  a  Section  4.04(b)(ii)
Certificate,  as the case may be, and such  other  forms as may be  required  in
order to confirm or  establish  the  entitlement  of such  Lender to a continued
exemption  from or reduction in United  States  withholding  tax with respect to
payments under this Agreement and any Note, or it shall  immediately  notify the
Borrowers and the Administrative Agent of its inability to deliver any such Form
or  Certificate,  in which case such Lender shall not be required to deliver any
such Form or  Certificate  pursuant  to this  Section  4.04(b).  Notwithstanding
anything to the contrary  contained in Section  4.04(a),  but subject to Section
13.04(b) and the  immediately  succeeding  sentence,  (x) the Borrowers shall be
entitled, to the extent they are required to do so by law, to deduct or withhold
income  or  similar  taxes  imposed  by the  United  States  (or  any  political
subdivision or taxing authority thereof or therein) from interest, fees or other
amounts  payable  hereunder  for the account of any Lender which is not a United
States person (as such term is defined in Section  7701(a)(30)  of the Code) for
U.S. Federal income tax purposes to the extent that such Lender has not provided
to the Borrowers U.S.  Internal  Revenue Service Forms that establish a complete
exemption from such deduction or withholding  and (y) the Borrowers shall not be
obligated  pursuant to Section 4.04(a) hereof to gross-up payments to be made to
a Lender in respect of income or similar  taxes  imposed by the United States if
(I) such Lender has not provided to the Borrowers the Internal  Revenue  Service
Forms required to be provided to the Borrowers  pursuant to this Section 4.04(b)
or (II) in the case of a payment,  other than interest, to a Lender described in
clause  (ii) above,  to the extent  that such forms do not  establish a complete
exemption  from  withholding  of such  taxes.  Notwithstanding  anything  to the
contrary  contained in the preceding  sentence or elsewhere in this Section 4.04
and  except  as set  forth  in  Section  13.04(b),  the  Borrowers  agree to pay
additional  amounts  and to  indemnify  each  Lender in the  manner set forth in
Section 4.04(a)  (without regard to the identity of the  jurisdiction  requiring
the deduction or withholding) in respect of any amounts  deducted or withheld by
it as described in the immediately preceding sentence as a result of any changes
that are  effective  after the Effective  Date in any  applicable  law,  treaty,
governmental  rule,  regulation,  guideline or order,  or in the  interpretation
thereof, relating to the deducting or withholding of income or similar Taxes.

     (c) The  provisions  of this Section 4.04 are subject to the  provisions of
Section 13.15 (to the extent applicable).

     SECTION 5.  Conditions  Precedent to the Effective  Date. The occurrence of
the Effective Date pursuant to Section 13.10 is subject to the  satisfaction  of
the following conditions:

     5.01 Execution of Agreement;  Notes.  On or prior to the Effective Date (i)
this  Agreement  shall have been  executed and  delivered as provided in Section
13.10 and (ii) there shall have been delivered to the  Administrative  Agent for
the  account of each of the  Lenders  that has  requested  same the  appropriate
Revolving  Note executed by the Borrowers  and to the Swingline  Lender,  to the
extent the Swingline  Lender has requested  same, the Swingline Note executed by
the Borrowers,  in each case, in the amount,  maturity and as otherwise provided
herein.

     5.02 Officer's Certificate. On the Effective Date, the Administrative Agent
shall have  received a  certificate,  dated the  Effective  Date,  and signed on
behalf  of the  Borrowers  by an  Authorized  Representative,  stating  that all
conditions in Sections  5.05,  5.07,  5.08 and 6.02 have been  satisfied on such
date.

     5.03 Opinions of Counsel.  On the Effective Date, the Administrative  Agent
shall have received from the General Counsel to the Credit  Parties,  an opinion
addressed  to the Agents and each of the  Lenders and dated the  Effective  Date
covering the matters set forth in Exhibit E and such other  matters  incident to
the transactions  contemplated herein as the Administrative Agent may reasonably
request.

     5.04 Corporate Documents;  Proceedings; etc. (a) On the Effective Date, the
Administrative  Agent shall have  received a  certificate,  dated the  Effective
Date, signed by an Authorized  Representative of each Credit Party, and attested
to by another  Authorized  Representative  of such Credit Party,  in the form of
Exhibit F with appropriate  insertions,  together with copies of the certificate
of incorporation  and by-laws (or equivalent  organizational  documents) of such
Credit  Party,  and the  resolutions  of such Credit  Party  referred to in such
certificate,  and the  foregoing  shall  be in  form  and  substance  reasonably
acceptable to the Agents.

     (b)  All  corporate,  partnership,  limited  liability  company  and  legal
proceedings   and  all   instruments  and  agreements  in  connection  with  the
transactions contemplated by this Agreement and the other Credit Documents shall
be  reasonably  satisfactory  in form and substance to the Agents and the Agents
shall have  received all  information  and copies of all  documents  and papers,
including  records of  corporate,  partnership  and  limited  liability  company
proceedings,  governmental approvals,  good standing certificates and bring-down
telegrams,  if any, which the Agents reasonably may have requested in connection
therewith, such documents and papers where appropriate to be certified by proper
corporate or governmental authorities.

     5.05  Existing  Credit   Agreement.   On  the  Effective  Date,  the  total
commitments  in  respect  of the  Existing  Credit  Agreement  shall  have  been
terminated,  and all loans and  notes  (together  with  interest  thereon)  with
respect  thereto  shall  have been  repaid in full,  all  letters  of credit (or
acceptances created thereunder) issued thereunder shall have been terminated (or
either (i)  incorporated  herein as a Letter of Credit or an  Acceptance or (ii)
fully  supported with Letters of Credit issued  hereunder) and all other amounts
(including  premiums) owing pursuant to the Existing Credit Agreement shall have
been  repaid  in full  and all  documents  in  respect  of the  Existing  Credit
Agreement and all  guarantees  with respect  thereto shall have been  terminated
(except as to indemnification and similar  provisions,  which may survive to the
extent provided therein) and be of no further force and effect. In addition, the
creditors in respect of the Existing Credit  Agreement shall have terminated and
released (or shall have delivered  documentation  reasonably satisfactory to the
Administrative  Agent providing for the termination and release of) all security
interests  in and Liens on the  assets  of the  Borrowers  and their  respective
Subsidiaries  created  pursuant to any  security  documentation  relating to the
Existing  Credit  Agreement,  and such  creditors  shall have  returned all such
assets to the Borrowers or such respective Subsidiary.  The Administrative Agent
shall have  received  evidence  that the matters set forth in this  Section 5.05
have been satisfied on such date.

     5.06  Subsidiaries  Guaranty.  On or  prior  to the  Effective  Date,  each
Subsidiary  Guarantor  shall have duly  authorized,  executed and  delivered the
Subsidiaries Guaranty in the form of Exhibit G hereto (as modified, supplemented
or amended from time to time, the "Subsidiaries  Guaranty") and the Subsidiaries
Guaranty shall be in full force and effect.

     5.07 Adverse  Change;  Governmental  Approvals;  etc. (a) On the  Effective
Date,  nothing shall have occurred (and neither the Agents nor the Lenders shall
have become aware of any facts,  conditions or other  information not previously
known)  which any  Agent or the  Required  Lenders  reasonably  determine  could
reasonably  be  expected  to have a  material  adverse  effect on the  rights or
remedies of any Agent or the Lenders, or on the ability of the Credit Parties to
perform their respective  obligations to the Agents and the Lenders or which the
Agents reasonably  determine has had, or could reasonably be expected to have, a
Material Adverse Effect.

     (b) On or prior to the Effective Date, all necessary governmental (domestic
and  foreign)  and  material  third  party  approvals  in  connection  with  the
transactions  contemplated by the Credit  Documents shall have been obtained and
remain in effect,  and all applicable waiting periods shall have expired without
any action being taken by any competent  authority which restrains,  prevents or
imposes  materially adverse conditions upon the consummation of the transactions
contemplated by the Credit  Documents.  Additionally,  there shall not exist any
judgment,  order,  injunction  or other  restraint  issued or filed or a hearing
seeking injunctive relief or other restraint pending or notified  prohibiting or
imposing  materially adverse conditions upon the making of any Loan, issuance of
any Letter of Credit or the consummation of the transactions contemplated by the
Credit Documents.

     5.08  Litigation.  On the  Effective  Date,  no  litigation  by any  entity
(private or  governmental)  shall be pending or threatened  with respect to this
Agreement,  any other  Credit  Document or any other  documentation  executed in
connection  herewith and therewith or the transactions  contemplated  hereby and
thereby,  or which any Agent or the Required Lenders shall reasonably  determine
has had, or could reasonably be expected to have, a Material Adverse Effect.

     5.09 Financial Statements;  Projections. On or prior to the Effective Date,
the  Administrative  Agent shall have  received  true and correct  copies of the
historical financial statements referred to in Section 7.05(a), which historical
financial  statements shall be in form and substance  satisfactory to the Agents
and the Required Lenders.

     5.10  Fees,  etc.  On the  Effective  Date,  all costs,  fees and  expenses
(including,  without limitation,  legal fees and expenses) payable to the Agents
and the Lenders shall have been paid to the extent then due.

     SECTION 6.  Conditions  Precedent to All Credit  Events.  The obligation of
each  Lender to make  Loans  (including  Loans  made on the  Effective  Date but
excluding Mandatory Borrowings made thereafter,  which shall be made as provided
in Section 1.01(c)), and the obligation of an Issuing Lender to issue any Letter
of  Credit,  is  subject,  at the time of each  such  Credit  Event  (except  as
hereinafter indicated), to the satisfaction of the following conditions:

     6.01 Effective Date. The Effective Date shall have occurred.

     6.02 No Default;  Representations and Warranties.  At the time of each such
Credit  Event and also after  giving  effect  thereto  (i) there  shall exist no
Default  or  Event  of  Default  and (ii)  all  representations  and  warranties
contained  herein or in any other Credit  Document  shall be true and correct in
all material  respects with the same effect as though such  representations  and
warranties  had been  made on the date of the  making of such  Credit  Event (it
being  understood  and agreed that any  representation  or warranty which by its
terms is made as of a specified date shall be required to be true and correct in
all material respects only as of such specified date).

     6.03 Notice of Borrowing; Letter of Credit Request. (a) Prior to the making
of each Revolving Loan (excluding  Swingline Loans),  the  Administrative  Agent
shall have received the notice required by Section 1.03(a).  Prior to the making
of each  Swingline  Loan,  the  Swingline  Lender shall have received the notice
required by Section 1.03(b)(i).

     (b) Prior to the  issuance  of each  Letter of Credit,  the  Administrative
Agent and the  respective  Issuing Lender shall have received a Letter of Credit
Request meeting the requirements of Section 2.03.

     The  acceptance  of the benefit of each Credit  Event  shall  constitute  a
representation  and  warranty  by the  Borrowers  to the  Agents and each of the
Lenders  that all the  conditions  specified  in Section 5 and in this Section 6
(with  respect  to Credit  Events to occur on or after the  Effective  Date) and
applicable to such Credit Event exist as of that time (except to the extent that
any of the conditions  specified in Section 5 are required to be satisfactory to
or determined by any Lender,  the Required Lenders and/or any Agent). All of the
Notes,  certificates,  legal opinions and other documents and papers referred to
in  Section  5 and in this  Section  6,  unless  otherwise  specified,  shall be
delivered to the  Administrative  Agent at the Notice  Office for the account of
each of the Lenders and,  except for the Notes,  in sufficient  counterparts  or
copies for each of the  Lenders  and shall be in form and  substance  reasonably
satisfactory to the Lenders.

     SECTION 7. Representations,  Warranties and Agreements.  In order to induce
the Lenders to enter into this  Agreement  and to make the Loans,  and issue (or
participate in) the Letters of Credit as provided herein,  each of the Borrowers
makes the following  representations,  warranties and  agreements,  in each case
after giving effect to the occurrence of the Effective  Date, all of which shall
survive  the  execution  and  delivery of this  Agreement  and the Notes and the
making of the Loans and issuance of the Letters of Credit,  with the  occurrence
of each Credit Event on or after the Effective Date being deemed to constitute a
representation  and  warranty  that the matters  specified in this Section 7 are
true and correct in all material respects on and as of the Effective Date and on
the date of each such  Credit  Event (it being  understood  and agreed  that any
representation  or warranty  which by its terms is made as of a  specified  date
shall be  required to be true and correct in all  material  respects  only as of
such specified date).

     7.01  Corporate   Status.   Each  of  Furniture  Brands  and  each  of  its
Subsidiaries (i) is a duly organized and validly existing  corporation,  limited
liability company or partnership, as the case may be, in good standing under the
laws of the jurisdiction of its  organization,  (ii) has the corporate,  limited
liability company or partnership power and authority, as the case may be, to own
its  property and assets and to transact the business in which it is engaged and
presently proposes to engage and (iii) is duly qualified and is authorized to do
business and is in good standing in each  jurisdiction  where the conduct of its
business  requires such  qualifications,  except for failures to be so qualified
which,  individually  or in the  aggregate,  could not reasonably be expected to
have a Material Adverse Effect.

     7.02 Corporate  Power and  Authority.  Each Credit Party has the corporate,
limited liability  company or partnership  power and authority,  as the case may
be, to execute,  deliver and  perform  the terms and  provisions  of each of the
Credit  Documents  to which it is party and has taken all  necessary  corporate,
limited  liability  company  or  partnership  action,  as the  case  may be,  to
authorize the execution,  delivery and  performance by it of each of such Credit
Documents.  Each Credit Party has duly executed and delivered each of the Credit
Documents to which it is party,  and each of such Credit  Documents  constitutes
the legal,  valid and binding  obligation  of such Credit Party  enforceable  in
accordance with its terms, except to the extent that the enforceability  thereof
may be limited by applicable bankruptcy, insolvency, reorganization,  moratorium
or other similar laws  generally  affecting  creditors'  rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law).

     7.03 No Violation.  Neither the  execution,  delivery or performance by any
Credit Party of the Credit  Documents to which it is a party,  nor compliance by
it with the terms and provisions  thereof,  (i) will contravene any provision of
any applicable law, statute,  rule or regulation or any applicable order,  writ,
injunction  or decree of any court or  governmental  instrumentality,  (ii) will
conflict with or result in any breach of any of the terms, covenants, conditions
or provisions  of, or constitute a default  under,  or result in the creation or
imposition  of (or the  obligation to create or impose) any Lien upon any of the
material  properties  or assets of Furniture  Brands or any of its  Subsidiaries
pursuant  to the  terms  of any  indenture,  mortgage,  deed  of  trust,  credit
agreement  or loan  agreement,  or any other  material  agreement,  contract  or
instrument,  to which Furniture  Brands or any of its Subsidiaries is a party or
by  which it or any of its  property  or  assets  is bound or to which it may be
subject or (iii) will violate any provision of the Certificate of  Incorporation
or By-Laws (or equivalent  organizational  documents) of Furniture Brands or any
of its Subsidiaries.

     7.04  Governmental  Approvals.  No  order,  consent,   approval,   license,
authorization  or validation of, or filing,  recording or  registration  with or
exemption by, any  governmental or public body or authority,  or any subdivision
thereof,  is required to authorize,  or is required in connection  with, (i) the
execution, delivery and performance of any Credit Document or (ii) the legality,
validity, binding effect or enforceability of any such Credit Document.

     7.05 Financial Statements;  Financial Condition;  Undisclosed  Liabilities;
Projections; etc. (a) The consolidated and consolidating statements of financial
condition of Furniture  Brands and its  Subsidiaries  for the Fiscal Years ended
December 31, 1997, 1998 and 1999 and the related  consolidated and consolidating
statements  of income and  consolidated  statements  of cash flow and changes in
shareholders'  equity of Furniture  Brands and its  Subsidiaries  for the Fiscal
Years ended on such dates,  and  furnished to the Lenders prior to the Effective
Date in each case,  present fairly the financial  condition of Furniture  Brands
and its  Subsidiaries  at the date of such balance sheets and the results of the
operations of Furniture Brands and its Subsidiaries for the Fiscal Years covered
thereby.  All of the  foregoing  financial  statements  have  been  prepared  in
accordance  with  generally   accepted   accounting   principles  and  practices
consistently applied.

     (b) Since December 31, 1999 there has been no Material Adverse Effect.

     (c) Except as fully  disclosed in the financial  statements  referred to in
Section  7.05(a),  there  were  as of  the  Effective  Date  no  liabilities  or
obligations  with respect to Furniture  Brands or any of its Subsidiaries of any
nature  whatsoever  (whether  absolute,  accrued,  contingent  or otherwise  and
whether or not due) which, either individually or in aggregate, could reasonably
be expected to have a Material Adverse Effect.

     7.06 Litigation.  There are no actions, suits or proceedings pending or, to
the best knowledge of the  Borrowers,  threatened (i) with respect to any Credit
Document,  (ii) that could  reasonably  be expected  to have a material  adverse
effect on the rights or  remedies of the Agents or the Lenders or on the ability
of any Credit Party to perform its  obligations  to them hereunder and under the
other Credit  Documents to which it is a party or (iii) that could reasonably be
expected to have a Material Adverse Effect.

     7.07 True and  Complete  Disclosure.  All factual  information  (taken as a
whole)  furnished by or on behalf of Furniture Brands or any of its Subsidiaries
in  writing  to any Agent or any  Lender  (including,  without  limitation,  all
factual  information  contained in the Credit  Documents)  for purposes of or in
connection  with this Agreement,  the other Credit  Documents or any transaction
contemplated herein or therein is, and all other such factual information (taken
as a whole)  hereafter  furnished by or on behalf of Furniture  Brands or any of
its  Subsidiaries  in  writing  to any  Agent or any  Lender  will be,  true and
accurate in all material  respects on the date as of which such  information  is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information  (taken as a whole) not misleading in any material respect
at such time in light of the  circumstances  under  which such  information  was
provided.

     7.08 Use of  Proceeds;  Margin  Regulations.  (a) All proceeds of the Loans
shall be used (i) to repay  all  outstanding  Indebtedness  under  the  Existing
Credit Agreement, (ii) to pay fees and expenses incurred in connection with this
Agreement and (iii) for the Borrowers' and their  Subsidiaries'  ongoing general
corporate purposes,  including  acquisitions of third Persons (or assets of such
Persons).

     (b) Neither the making of any Loan nor the use of the proceeds  thereof nor
the  occurrence of any other Credit Event will violate or be  inconsistent  with
the  provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System. At the time of each Credit Event and after giving effect thereto
(including  after giving effect to the  application of proceeds  therefrom),  no
more than 25% of the value of the assets of the  Borrowers,  or of the Borrowers
and their Subsidiaries taken as a whole, will constitute Margin Stock.

     7.09 Tax Returns and  Payments.  Each of  Furniture  Brands and each of its
Subsidiaries  has timely  filed or caused to be timely  filed,  on the due dates
thereof  or  within  applicable  grace  periods   (inclusive  of  any  permitted
extensions), with the appropriate taxing authority, all Federal, state and other
material  returns,  statements,  forms and  reports  for taxes  (the  "Returns")
required to be filed by or with respect to the income,  properties or operations
of Furniture Brands and its  Subsidiaries.  Each of Furniture Brands and each of
its  Subsidiaries  has paid all material  taxes payable by them other than taxes
which are not  delinquent,  and other than those contested in good faith and for
which  adequate  reserves have been  established  in accordance  with  generally
accepted accounting principles.  Except as disclosed in the financial statements
referred to in Section 7.05(a) and except as disclosed on Schedule IV, there is,
as of the Effective Date, no material action, suit,  proceeding,  investigation,
audit,  or claim  now  pending  or,  to the  best  knowledge  of the  Borrowers,
threatened by any authority  regarding any taxes relating to Furniture Brands or
its Subsidiaries.

     7.10 Compliance with ERISA. (a) Each Plan is in substantial compliance with
ERISA and the Code; no Reportable  Event has occurred with respect to a Plan; to
the best knowledge of the Borrowers,  no  Multiemployer  Plan is insolvent or in
reorganization;  no Plan  has an  Unfunded  Current  Liability;  no Plan  has an
accumulated or waived funding deficiency, or has applied for an extension of any
amortization  period within the meaning of Section 412 of the Code;  none of the
Borrowers or any of their  respective  Subsidiaries  nor any ERISA Affiliate has
incurred any  liability to or on account of a Plan and/or a  Multiemployer  Plan
pursuant to Section 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA; no
proceedings have been instituted to terminate or appoint a trustee to administer
any Plan; no condition  exists which  presents a risk to the Borrowers or any of
their respective Subsidiaries or any ERISA Affiliate of incurring a liability to
or on account of a Plan and/or a  Multiemployer  Plan  pursuant to the foregoing
provisions of ERISA and the Code;  using  actuarial  assumptions and computation
methods consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate
liabilities of the Borrowers,  their  Subsidiaries and their ERISA Affiliates to
all Multiemployer Plans in the event of a complete withdrawal  therefrom,  as of
the close of the most recent fiscal year of each such  Multiemployer  Plan ended
prior to the date of the most  recent  Credit  Event,  could not  reasonably  be
expected to have a Material Adverse Effect.

     (b) Each Foreign Pension Plan has been maintained in substantial compliance
with its  terms  and  with  the  requirements  of any and all  applicable  laws,
statutes, rules, regulations and orders and has been maintained, where required,
in good standing with applicable regulatory  authorities.  None of the Borrowers
nor  any of  their  respective  Subsidiaries  has  incurred  any  obligation  in
connection  with the termination of or withdrawal from any Foreign Pension Plan.
The present  value of the accrued  benefit  liabilities  (whether or not vested)
under each Foreign  Pension Plan,  determined  as of the end of each  Borrower's
most recently ended fiscal year on the basis of actuarial  assumptions,  each of
which is  reasonable,  did not  exceed the  current  value of the assets of such
Foreign Pension Plan allocable to such benefit liabilities.

     (c)  Notwithstanding  anything to the  contrary in this Section  7.10,  the
representations  made in this Section 7.10 shall only be untrue if the aggregate
effect of all failures and  noncompliances  of the types  described  above could
reasonably be expected to have a Material Adverse Effect.

     7.11 Properties.  Each of Furniture Brands and each of its Subsidiaries has
good and valid title to all material  properties  owned by them,  including  all
property reflected in the balance sheets referred to in Sections 7.05(a) (except
as sold or  otherwise  disposed of since the date of such  balance  sheet in the
ordinary course of business or otherwise as permitted hereunder), free and clear
of all Liens other than Permitted Liens.

     7.12  Subsidiaries.  As of the  Effective  Date,  Furniture  Brands  has no
Subsidiaries  other than those  Subsidiaries  listed on Schedule  V.  Schedule V
correctly sets forth, as of the Effective Date, the percentage ownership (direct
and  indirect)  of Furniture  Brands in each class of  corporate  stock or other
equity of each of its Subsidiaries and also identifies the direct owner thereof.

     7.13  Compliance with Statutes,  etc. Each of Furniture  Brands and each of
its Subsidiaries is in compliance with all applicable statutes,  regulations and
orders of, and all applicable  restrictions imposed by, all governmental bodies,
domestic  or  foreign,  in respect  of the  conduct  of their  business  and the
ownership  of  their  property,   except  such   noncompliances  as  could  not,
individually  or in the  aggregate,  reasonably  be  expected to have a Material
Adverse Effect.

     7.14  Investment  Company  Act.  None of  Furniture  Brands  nor any of its
Subsidiaries  is  an  "investment  company"  or a  company  "controlled"  by  an
"investment  company," within the meaning of the Investment Company Act of 1940,
as amended.

     7.15 Public Utility Holding  Company Act. None of Furniture  Brands nor any
of its  Subsidiaries  is a "holding  company,"  or a  "subsidiary  company" of a
"holding  company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.

     7.16 Environmental Matters.  Except to the extent that any matter described
below in this Section 7.16, either  individually or in the aggregate,  could not
reasonably be expected to have a Material  Adverse Effect,  Furniture Brands and
each of its Subsidiaries is in compliance with all applicable Environmental Laws
and the  requirements of any permits issued under such  Environmental  Laws, and
there  are  no  pending  or,  to the  knowledge  of  the  Borrowers,  threatened
Environmental  Claims against Furniture Brands or any of its Subsidiaries or any
Real  Property  presently  or formerly  owned,  leased or operated by  Furniture
Brands or any of its Subsidiaries.

     7.17 Labor Relations.  None of Furniture Brands nor any of its Subsidiaries
is engaged in any unfair labor  practice  that could  reasonably  be expected to
have a Material Adverse Effect.  There is (i) no unfair labor practice complaint
pending  against  Furniture  Brands or any of its  Subsidiaries  or, to the best
knowledge of the Borrowers,  threatened against any of them, before the National
Labor  Relations  Board,  and no  material  grievance  or  material  arbitration
proceeding  arising out of or under any  collective  bargaining  agreement is so
pending  against  Furniture  Brands or any of its  Subsidiaries  or, to the best
knowledge  of the  Borrowers,  threatened  against any of them,  (ii) no strike,
labor dispute,  slowdown or stoppage pending against  Furniture Brands or any of
its Subsidiaries or, to the best knowledge of the Borrowers,  threatened against
Furniture  Brands or any of its  Subsidiaries and (iii) to the best knowledge of
the Borrowers,  no union  representation  proceeding pending with respect to the
employees of Furniture Brands or any of its  Subsidiaries,  except (with respect
to any matter specified in clause (i), (ii) or (iii) above,  either individually
or in the aggregate) such as could not reasonably be expected to have a Material
Adverse Effect.

     7.18 Patents, Licenses,  Franchises and Formulas.  Furniture Brands and its
Subsidiaries own all material patents, trademarks, permits, service marks, trade
names, copyrights,  licenses, franchises and formulas, or rights with respect to
the foregoing,  and have obtained  assignments of all leases and other rights of
whatever nature, reasonably necessary for the present conduct of their business,
without any known  conflict with the rights of others  which,  or the failure to
obtain  which,  as the case may be, could  reasonably be expected to result in a
Material Adverse Effect.

     7.19 Indebtedness.  Schedule VII sets forth a true and complete list of all
Indebtedness of Furniture  Brands and its  Subsidiaries as of the Effective Date
(excluding  the Loans,  the  Letters of Credit and  Acceptances,  the  "Existing
Indebtedness"),  in each case showing the aggregate principal amount thereof and
the  name  of  the  respective  borrower  and  any  Credit  Party  or any of its
Subsidiaries which directly or indirectly guarantees such Indebtedness.

     7.20  Tax  Sharing  Agreement.  Neither  Furniture  Brands  nor  any of its
Subsidiaries  has any  liabilities  or obligations  arising  pursuant to the Tax
Sharing Agreement which, either  individually or in aggregate,  could reasonably
be expected to have a Material Adverse Effect.

     SECTION 8.  Affirmative  Covenants.  Each of the Borrowers hereby covenants
and agrees that on and after the Effective  Date and until the Total  Commitment
and all Letters of Credit and Acceptances  have terminated and the Loans,  Notes
and Unpaid Drawings (in each case together with interest thereon),  Fees and all
other Obligations incurred hereunder and thereunder, are paid in full:

     8.01   Information   Covenants.   The   Borrowers   will   furnish  to  the
Administrative Agent, and the Administrative Agent will promptly forward to each
Lender:

          (a) Quarterly  Financial  Statements.  As soon as available and in any
     event  within 45 days after the close of each of the first three  quarterly
     accounting periods in each Fiscal Year, (i) the consolidated balance sheets
     of Furniture  Brands and its  Subsidiaries,  in each case, as at the end of
     such quarterly period and the related consolidated statements of income and
     cash flow for such  quarterly  period  and for the  elapsed  portion of the
     Fiscal  Year  ended  with the last day of such  quarterly  period  and (ii)
     management's  discussion  and  analysis of the  important  operational  and
     financial developments during such quarterly period.

          (b)  Annual  Financial  Statements.  Within 95 days after the close of
     each Fiscal Year, (i) the consolidated and consolidating  balance sheets of
     Furniture Brands and its Subsidiaries,  in each case, as at the end of such
     Fiscal Year and the related  consolidated and  consolidating  statements of
     income and consolidated  statements of  shareholders'  equity and cash flow
     for such Fiscal Year setting  forth  comparative  figures for the preceding
     Fiscal Year and certified by KPMG LLP or such other  independent  certified
     public accountants of recognized national standing reasonably acceptable to
     the  Administrative  Agent,  together with a report of such accounting firm
     stating that in the course of its regular audit of the financial statements
     of  Furniture  Brands and its  Subsidiaries,  which audit was  conducted in
     accordance with generally accepted auditing standards, such accounting firm
     obtained no knowledge of any Default or Event of Default which has occurred
     and is  continuing  or, if in the  opinion of such  accounting  firm such a
     Default or Event of Default  with  respect  to the  covenants  set forth in
     Sections 9.01 through 9.11,  inclusive,  has occurred and is continuing,  a
     statement as to the nature  thereof and (ii)  management's  discussion  and
     analysis of the important  operational  and financial  developments  during
     such Fiscal Year.

          (c)  Officer's  Certificates.  At  the  time  of the  delivery  of the
     financial statements provided for in Section 8.01(a) and (b), a certificate
     of an Authorized  Representative of Furniture Brands to the effect that, to
     the best of such Authorized Representative's knowledge, no Default or Event
     of Default has  occurred and is  continuing  or, if any Default or Event of
     Default has occurred and is  continuing,  specifying  the nature and extent
     thereof,  which  certificate  shall set forth the calculations  required to
     establish  whether the Borrowers were in compliance  with the provisions of
     Sections 9.01,  9.02,  9.03,  9.05, 9.06 and 9.07 at the end of such fiscal
     quarter or year, as the case may be.

          (d) Notice of Default or Litigation. Promptly, and in any event within
     three  Business  Days after an executive  officer of any  Borrower  obtains
     knowledge  thereof,  notice  of  (i)  the  occurrence  of any  event  which
     constitutes  a  Default  or  Event  of  Default,  (ii)  any  litigation  or
     governmental  investigation or proceeding  pending against Furniture Brands
     or any of its  Subsidiaries  which could  reasonably  be expected to have a
     Material  Adverse Effect or a material adverse effect on the ability of any
     Credit Party to perform its obligations hereunder or under any other Credit
     Document or (iii) any other  development  that has had, or could reasonably
     be expected to have, a Material Adverse Effect.

          (e) Other  Reports  and  Filings.  Promptly,  copies of all  financial
     information,  proxy materials and other  information  and reports,  if any,
     which  Furniture  Brands  or any of its  Subsidiaries  shall  file with the
     Securities and Exchange  Commission or any successor thereto (the "SEC") or
     deliver to  holders of its  Indebtedness  (or any  trustee,  agent or other
     representative  therefor)  pursuant  to  the  terms  of  the  documentation
     governing such Indebtedness.

          (f) Debt Rating. Promptly upon, and in any event within three Business
     Days after, an Authorized  Representative of any Borrower obtains knowledge
     of any change by Moody's or S&P in the Debt Rating, notice of such change.

          (g) Other  Information.  From time to time, such other  information or
     documents  (financial or otherwise) with respect to Furniture Brands or any
     of its  Subsidiaries  as any  Agent or Lender  may  reasonably  request  in
     writing.

     8.02 Books,  Records and  Inspections.  The Borrowers  will, and will cause
each of their  respective  Subsidiaries  to,  keep  proper  books of record  and
account in which full,  true and correct  entries in conformity  with  generally
accepted accounting  principles and all requirements of law shall be made of all
dealings  and  transactions  in relation to its  business  and  activities.  The
Borrowers will, and will cause each of their respective  Subsidiaries to, permit
officers and designated  representatives of any Agent or the Required Lenders to
visit and inspect,  after  reasonable  notice during regular  business hours and
under  guidance of  officers of the  Borrowers  or such  Subsidiary,  any of the
properties  of the  Borrowers  or such  Subsidiary,  and to examine the books of
account of the Borrowers or such  Subsidiary  and discuss the affairs,  finances
and accounts of the Borrowers or such Subsidiary  with, and be advised as to the
same  by,  its and  their  officers  and  independent  accountants,  all at such
reasonable  times and intervals and to such  reasonable  extent as such Agent or
such Lender may request.

     8.03  Maintenance of Insurance.  The Borrowers will, and will cause each of
their respective  Subsidiaries to, maintain  insurance on all its property in at
least such amounts and against at least such risks and with such  deductibles or
self-insured  retentions  as is  consistent  and  in  accordance  with  industry
practice.

                  8.04 Corporate Franchises.  The Borrowers will, and will cause
each of their  respective  Subsidiaries  to, do or cause to be done,  all things
necessary  to preserve and keep in full force and effect its  existence  and its
material  rights,  franchises,  licenses and patents;  provided,  however,  that
nothing in this Section 8.04 shall prevent (i) sales of assets, mergers or other
transactions  by or  among  Furniture  Brands  or  any of  its  Subsidiaries  in
accordance  with Section 9.02 or (ii) (x) the withdrawal by Furniture  Brands or
any of the  Subsidiaries of its  qualification  as a foreign  corporation or the
failure to  qualify  as a foreign  corporation  in any  jurisdiction  or (y) the
amendment of the Certificate of  Incorporation or By-Laws of Furniture Brands or
any of its Subsidiaries,  in each case which would not in any way materially and
adversely affect the Lenders, and where such withdrawal or failure or amendment,
as the case may be, could not reasonably be expected to have a Material  Adverse
Effect.

     8.05 Compliance with Statutes, etc. The Borrowers will, and will cause each
of their  respective  Subsidiaries  to,  comply  with all  applicable  statutes,
regulations and orders (including,  without limitation,  any Environmental Laws)
of,  and all  applicable  restrictions  imposed  by,  all  governmental  bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property, except such noncompliances as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

     8.06 ERISA. As soon as possible and, in any event, within 20 days after the
Borrowers or any of their  respective  Subsidiaries or any ERISA Affiliate knows
or has reason to know of the occurrence of any of the  following,  the Borrowers
will deliver to the  Administrative  Agent, and the  Administrative  Agent shall
promptly forward to each Lender,  a certificate of an Authorized  Representative
of the Borrowers  setting forth details as to such occurrence and the action, if
any, that the Borrowers,  such Subsidiary or such ERISA Affiliate is required or
proposes to take,  together with any notices required or proposed to be given to
or filed with or by the Borrowers,  such Subsidiary,  the ERISA  Affiliate,  the
PBGC, or a Plan participant or the Plan administrator with respect thereto: that
a Reportable Event has occurred; that an accumulated funding deficiency has been
incurred or an  application is likely to be or has been made to the Secretary of
the  Treasury  for a waiver or  modification  of the  minimum  funding  standard
(including   any  required   installment   payments)  or  an  extension  of  any
amortization  period under Section 412 of the Code with respect to a Plan and/or
a  Multiemployer  Plan;  that a Plan  and/or  Multiemployer  Plan has been or is
reasonably  expected  to be  terminated,  reorganized,  partitioned  or declared
insolvent under Title IV of ERISA;  that a Plan and/or a Multiemployer  Plan has
an  Unfunded  Current  Liability  giving rise to a lien under ERISA or the Code;
that  proceedings  are likely to be or have been  instituted  or notice has been
given  to  terminate  or  appoint  a  trustee  to  administer  a Plan  and/or  a
Multiemployer  Plan; that a proceeding has been  instituted  pursuant to Section
515 of ERISA to collect a delinquent  contribution  to a  Multiemployer  Plan if
material in amount; that the Borrowers,  any of their respective Subsidiaries or
any  ERISA  Affiliate  will or is  reasonably  expected  to incur  any  material
liability  (including any indirect,  contingent or secondary liability) to or on
account of the  termination  of or withdrawal  from a Plan and/or  Multiemployer
Plan under Section 4062,  4063,  4064, 4069, 4201, 4204 or 4212 of ERISA or with
respect to a Plan and/or  Multiemployer  Plan under  Section  401(a)(29)  of the
Code;  or that the Borrowers or any  Subsidiary is reasonably  expected to incur
any  liability  pursuant to any  employee  welfare  benefit  plan (as defined in
Section  3(1) of ERISA) that  provides  benefits to retired  employees  or other
former  employees  (other  than as  required  by  Section  601 of  ERISA) or any
employee  pension  benefit  plan (as  defined  in Section  3(2) of ERISA)  which
liability,  individually  or in the aggregate,  could  reasonably be expected to
have a Material Adverse Effect. Upon request, the Borrowers will deliver to each
of the  Lenders a complete  copy of the annual  report  (Form 5500) of each Plan
required  to be filed with the  Internal  Revenue  Service.  In  addition to any
certificates or notices  delivered to the Lenders pursuant to the first sentence
hereof,  copies of such annual reports and any material  notices received by the
Borrowers or any of their  respective  Subsidiaries  or any ERISA Affiliate with
respect to any Plan and/or  Multiemployer Plan and/or Foreign Pension Plan shall
be delivered to the Lenders no later than 20 days after the date such report has
been requested or such notice has been received by the Borrowers, the Subsidiary
or the ERISA Affiliate, as applicable.

     8.07 End of Fiscal Years; Fiscal Quarters.  Furniture Brands will cause (i)
each of its Fiscal  Years to end on  December  31 of each year,  and each of its
fiscal  quarters to end on each March 31, June 30,  September 30 and December 31
and (ii)  each of its  Subsidiaries'  (x)  fiscal  years to end on the  Saturday
closest to December 31 and (y) fiscal quarters to end on the Saturday closest to
the last day of each March, June, September and December,  provided, that any of
the foregoing may be changed if the Borrowers  shall have first given the Agents
at least 45 days' prior written notice thereof and the Borrowers,  to the extent
requested by the Agents,  shall have entered  into an  appropriate  amendment to
this  Agreement,   in  form  and  substance   reasonably   satisfactory  to  the
Administrative  Agent,  to ensure  that the  financial  covenants  contained  in
Sections  9.05 and 9.06 are  measured  on  substantially  the same basis as such
covenants are measured on the Effective Date.

     8.08 Payment of Taxes.  Each of the Borrowers  will pay and  discharge,  or
cause  to be paid  and  discharged,  and will  cause  each of  their  respective
Subsidiaries  to  pay  and  discharge,   all  material  taxes,  assessments  and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any material  properties  belonging to it, in each case on a timely  basis,
and all lawful claims which,  if unpaid,  might become a lien or charge upon any
properties of Furniture Brands or any of its Subsidiaries; provided that none of
Furniture Brands nor any of its  Subsidiaries  shall be required to pay any such
tax,  assessment,  charge,  levy or claim which is being contested in good faith
and by proper  proceedings if it has maintained  adequate  reserves with respect
thereto in accordance with generally accepted accounting principles.

     8.09  Additional  Subsidiary   Guarantors.   Unless  the  Required  Lenders
otherwise agree, each Borrower agrees to cause each of its Wholly-Owned Domestic
Subsidiaries  that are acquired or created after the Effective  Date to promptly
(and in any event  within 10  Business  Days of such  acquisition  or  creation)
execute and deliver a counterpart of the Subsidiaries Guaranty.

     SECTION 9. Negative Covenants. The Borrowers covenant and agree that on and
after the  Effective  Date and until the Total  Commitment  and all  Letters  of
Credit and Acceptances have terminated and the Loans,  Notes and Unpaid Drawings
(in each case together with interest  thereon),  Fees and all other  Obligations
incurred hereunder and thereunder, are paid in full:

     9.01  Liens.  The  Borrowers  will not,  and will not  permit  any of their
respective  Subsidiaries to, create,  incur,  assume or suffer to exist any Lien
upon or with respect to any  property or assets  (real or personal,  tangible or
intangible) of Furniture Brands or any of its Subsidiaries, whether now owned or
hereafter  acquired,  or  sell  any  such  property  or  assets  subject  to  an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets  (including  sales of accounts  receivable  with recourse to Furniture
Brands or any of its  Subsidiaries),  or assign any right to  receive  income or
permit the filing of any financing  statement under the UCC or any other similar
notice of Lien under any similar recording or notice statute;  provided that the
provisions  of this  Section  9.01 shall not prevent the  creation,  incurrence,
filing,  assumption or existence of the  following  (Liens  described  below are
herein referred to as "Permitted Liens"):

          (i) incipient Liens for taxes,  assessments or governmental charges or
     levies  not yet  due  and  payable  or  Liens  for  taxes,  assessments  or
     governmental  charges  or  levies  being  contested  in good  faith  and by
     appropriate  proceedings for which adequate  reserves have been established
     in accordance with generally accepted  accounting  principles in the United
     States (or the  equivalent  thereof in any country in which a Foreign Sales
     Corporation or a Foreign Subsidiary is doing business, as applicable);

          (ii) Liens in respect of property or assets of the Borrowers or any of
     their  Subsidiaries  imposed by law,  which were  incurred in the  ordinary
     course of business and do not secure  Indebtedness for borrowed money, such
     as carriers', warehousemen's,  materialmen's and mechanics' liens and other
     similar Liens arising in the ordinary course of business,  and (x) which do
     not in the aggregate materially detract from the value of the Borrowers' or
     such  Subsidiary's  property or assets or materially impair the use thereof
     in the operation of the business of the Borrowers or such Subsidiary or (y)
     which are being contested in good faith by appropriate  proceedings,  which
     proceedings  have the effect of  preventing  the  forfeiture or sale of the
     property or assets subject to any such Lien;

          (iii) Liens in existence on the Effective  Date which are listed,  and
     the property subject thereto  described,  in Schedule VI, plus renewals and
     extensions  of such Liens to the extent set forth on Schedule VI,  provided
     that  (x) the  aggregate  principal  amount  of the  Indebtedness,  if any,
     secured by such Liens does not increase from that amount outstanding on the
     Effective  Date or, if less,  at the time of any such  renewal or extension
     and (y) any such  renewal or extension  does not  encumber  any  additional
     assets or properties of Furniture Brands or any of its Subsidiaries;

          (iv) (a) licenses, leases or subleases granted to other Persons in the
     ordinary course of business not materially  interfering with the conduct of
     the business of Furniture Brands and its Subsidiaries taken as a whole, (b)
     Liens  arising  from  precautionary  UCC  financing   statements  regarding
     operating  leases and (c) statutory and common law  landlords'  liens under
     leases to which any of the Borrower and its Subsidiaries is a party;

          (v) Liens upon assets subject to Capitalized  Lease Obligations of the
     Borrowers  and  their  Subsidiaries  to the  extent  permitted  by  Section
     9.03(vi),  provided that (x) such Liens only serve to secure the payment of
     Indebtedness  arising under such  Capitalized  Lease Obligation and (y) the
     Lien encumbering the asset giving rise to the Capitalized  Lease Obligation
     does  not  encumber  any  other  asset  of the  Borrowers  or any of  their
     Subsidiaries;

          (vi) Liens placed upon assets used in the ordinary  course of business
     of the Borrowers or any of their Subsidiaries at the time of acquisition or
     new construction  thereof by the Borrowers or any such Subsidiary or within
     180 days thereafter to secure Indebtedness incurred to pay all or a portion
     of the purchase price and/or  construction costs thereof,  plus renewals or
     extensions  of such  Liens,  provided  that (x) the  aggregate  outstanding
     principal  amount of all  Indebtedness  secured by Liens  permitted by this
     clause  (vi)  shall  not at any time  exceed  the  amount  of  Indebtedness
     permitted  to be  outstanding  pursuant to Section  9.03(vi) and (y) in all
     events,  the Lien  encumbering the assets so acquired or newly  constructed
     does not encumber any other asset of the Borrowers or such Subsidiary;

          (vii) Liens existing on specific  tangible assets at the time acquired
     by Furniture  Brands or any of its Subsidiaries or on assets of a Person at
     the  time  such  Person  is  acquired  by  Furniture  Brands  or any of its
     Subsidiaries  (together  with Liens  securing any  extensions,  renewals or
     refinancings  of  the  Indebtedness  secured  thereby  to  the  extent  not
     increasing  the  outstanding  principal  amount thereof or extending to any
     other asset of Furniture Brands or its Subsidiaries),  provided that (i) no
     such  Liens  were  created  at  the  time  of or in  contemplation  of  the
     acquisition  of such  assets or  Person  by  Furniture  Brands  and/or  its
     Subsidiaries,  (ii) in the case of any such  acquisition  of a Person,  any
     Lien  attaches  only to a specific  tangible  asset of such  Person and not
     assets of such Person generally and (iii) the  Indebtedness  secured by any
     such Lien does not  exceed  100% of the fair  market  value of the asset to
     which such Lien attaches, determined at the time of the acquisition of such
     asset or Person in good faith by the Borrower or the respective Subsidiary;

          (viii)  easements,   rights-of-way,   restrictions  (including  zoning
     restrictions),  encroachments,  protrusions  and other  similar  charges or
     encumbrances,  and minor title  deficiencies,  in each case  whether now or
     hereafter  in  existence,  not  securing  Indebtedness  and not  materially
     interfering  with the conduct of the  business of the  Borrowers  or any of
     their respective Subsidiaries;

          (ix) Liens  arising out of the  existence  of  judgments or awards not
     constituting an Event of Default under Section 10.09, provided that no cash
     or property is deposited or delivered to secure the respective  judgment or
     award (or any appeal bond in respect thereof, except as permitted by clause
     (xii) of this Section 9.01);

          (x) any interest or title of a lessor, sublessor, licensee or licensor
     under any lease or license agreement permitted by this Agreement;

          (xi) Liens  (other  than any Lien  imposed by ERISA)  incurred  in the
     ordinary  course  of  business  of  the  Borrowers  and  their   respective
     Subsidiaries  in  connection  with  workers'   compensation,   unemployment
     insurance and other social security legislation;

          (xii) Liens (x) to secure the  performance  by the Borrowers and their
     respective  Subsidiaries of tenders,  statutory obligations,  surety, stay,
     customs  and  appeal  bonds,  statutory  bonds,  bids,  leases,  government
     contracts, trade contracts, performance and return of money bonds and other
     similar  obligations  (exclusive of obligations for the payment of borrowed
     money)  or  (y) to  secure  the  performance  by the  Borrowers  and  their
     respective  Subsidiaries of leases of Real Property, to the extent incurred
     or made in the ordinary course of business  consistent with past practices,
     provided that the aggregate amount of cash deposits,  and fair market value
     of all other property subject to Liens, at any time pursuant to this clause
     (xii) shall not exceed $12,500,000 in the aggregate;

          (xiii) Liens (x) in favor of customs and revenue  authorities  arising
     as a matter of law to secure the  payment of customs  duties in  connection
     with the  importation  of goods or (y) in respect of  property or assets of
     Thomasville  or any  of its  Subsidiaries  imposed  by law or  governmental
     action   which  arise  out  of  actual  or   potential   claims  under  any
     Environmental  Law disclosed in the  environmental  report furnished to the
     Administrative  Agent prior to November 17,  1994,  in each case so long as
     the Liens  described  in this clause (y) are being  contested in good faith
     (or  Furniture  Brands or its  respective  Subsidiaries  are in good  faith
     pursuing  indemnities in respect  thereof  pursuant to the Armstrong  Stock
     Purchase Agreement) pursuant to appropriate proceedings,  which proceedings
     have the  effect  of  preventing  the  forfeiture  or sale of the  property
     subject to any such Lien and so long as adequate  reserves  (if  necessary)
     have been  established  in accordance  with generally  accepted  accounting
     principles  with respect to the  liability or  liabilities  secured by such
     Liens;

          (xiv)  Liens  arising  out  of  conditional   sale,  title  retention,
     consignment or similar  arrangements  for the sale of goods entered into by
     the  Borrowers  or any of their  Subsidiaries  in the  ordinary  course  of
     business consistent with the past practices; or

          (xv)  Liens not  otherwise  permitted  by the  foregoing  clauses  (i)
     through  (xiv) to the extent  attaching  to  properties  and assets with an
     aggregate  fair  value not in excess of, and  securing  liabilities  not in
     excess of, $20,000,000 in the aggregate at any time outstanding.

     9.02  Fundamental  Changes.  Furniture Brands will not, and will not permit
any of its  Subsidiaries  to,  consolidate  with,  merge  into,  or sell  all or
substantially  all of the assets of Furniture Brands and its Subsidiaries  taken
as  a  whole  (whether  in a  single  transaction  or  in a  series  of  related
transactions) to any other Person or permit any other Person to merge into it or
any of its Subsidiaries, except that the following shall be permitted:

          (i) any Subsidiary of Furniture  Brands may merge or consolidate  with
     another  Subsidiary of Furniture Brands or with Furniture Brands so long as
     (x) in the case of a merger or  consolidation  involving  a  Borrower,  the
     Borrower is the surviving  Person (it being understood and agreed that none
     of the Borrowers may be merged or consolidated out of existence without the
     prior  written  consent of the  Required  Lenders) and (y) in the case of a
     merger or  consolidation  involving  a  Subsidiary  Guarantor  (unless  the
     respective  Subsidiary  Guarantor is merging into or  consolidating  with a
     Borrower which will be the survivor thereof),  the Subsidiary  Guarantor is
     the surviving Person;

          (ii) any Person (not  already a Borrower or  Subsidiary  thereof)  may
     merge or consolidate  with any Subsidiary of Furniture Brands (other than a
     Borrower)  so long as (x) the  surviving  Person is, or as a result of such
     merger or consolidation  becomes, a Subsidiary of Furniture Brands in which
     Furniture  Brands has direct and indirect  ownership  interests at least as
     great as those (in terms of  percentages  of economic  interests and voting
     interests)  held by it in the Subsidiary  with which the respective  Person
     merged or consolidated  immediately  before giving effect to the respective
     merger or  consolidation,  (y) if such  surviving  Person is a Wholly-Owned
     Domestic  Subsidiary  of  Furniture  Brands,  such  Wholly-Owned   Domestic
     Subsidiary takes all action required  pursuant to Section 8.09 and (z) both
     before and immediately after giving effect to such merger or consolidation,
     no Default or Event of Default shall have occurred and be continuing; and

          (iii) any Person (not  already a Borrower or  Subsidiary  thereof) may
     merge or consolidate with a Borrower so long as (x) the respective Borrower
     is the surviving  corporation,  and (y) both before and  immediately  after
     giving  effect to such  merger or  consolidation,  no  Default  or Event of
     Default shall have occurred and be continuing.

     9.03  Indebtedness.  Furniture  Brands will not, and will not permit any of
its  Subsidiaries  to, contract,  create,  incur,  assume or suffer to exist any
Indebtedness, except:

          (i)  Indebtedness  incurred  pursuant to this  Agreement and the other
     Credit Documents;

          (ii) so long as no Default or Event of  Default  then  exists or would
     result therefrom,  Permitted  Indebtedness  shall be permitted on terms and
     conditions set forth in the definition of Permitted Indebtedness;

          (iii)  Indebtedness   outstanding  on  the  Effective  Date  shall  be
     permitted to the extent the same is listed on Schedule  VII,  together with
     any refinancings or renewals thereof, in each case so long as no additional
     obligors or  guarantors,  or security,  is provided in connection  with the
     respective such renewal or refinancing and so long as the principal  amount
     is not increased as a result thereof;

          (iv) accrued  expenses and current trade accounts  payable incurred in
     the ordinary course of business;

          (v)  Indebtedness  under Interest Rate Protection  Agreements  entered
     into with respect to other  Indebtedness  permitted under this Section 9.03
     so long as the entering into of such Interest  Rate  Protection  Agreements
     are bona fide hedging activities and are not for speculative purposes;

          (vi) Indebtedness of the Borrowers and their Subsidiaries evidenced by
     Capitalized Lease  Obligations to the extent permitted  pursuant to Section
     9.01(v),   and  Indebtedness  secured  by  Liens  permitted  under  Section
     9.01(vi); provided that in no event shall the aggregate principal amount of
     Capitalized  Lease  Obligations  and other  Indebtedness  permitted by this
     clause (vi) exceed $20,000,000;

          (vii)  Indebtedness  under Currency Hedging  Agreements so long as (i)
     any such Currency  Hedging  Agreement is  reasonably  related to income (in
     currencies  other than  Dollars)  derived  from foreign  operations  of the
     Borrowers or any Subsidiary (or any Foreign Sales Corporation) or otherwise
     related to purchases (in currencies other than Dollars) permitted hereunder
     from foreign  suppliers  and (ii) such Currency  Hedging  Agreements do not
     exceed a notional  amount equal to  $15,000,000 in the aggregate at any one
     time;

          (viii)  intercompany   Indebtedness  among  the  Borrowers  and  their
     Subsidiaries;

          (ix) Indebtedness of a Subsidiary  existing at the time of acquisition
     thereof  by  Furniture  Brands or a  Subsidiary  thereof  (or  Indebtedness
     assumed  at the  time of such an  acquisition  of an  asset  securing  such
     Indebtedness),  provided  that (a) such  Indebtedness  was not  incurred in
     connection with, or in contemplation  of, such acquisition and (b) any Lien
     securing such Indebtedness is permitted under Section 9.01(vii);

          (x)  Indebtedness in respect of bid,  performance,  advance payment or
     surety bonds  entered into in the  ordinary  course of business  consistent
     with past practices;

          (xi)  Contingent  Obligations  (a) of the  Borrowers  or any of  their
     Subsidiaries as a guarantor of the lessee under any lease pursuant to which
     the  Borrowers  or a  Subsidiary  is the  lessee  so long as such  lease is
     otherwise  permitted  hereunder,   (b)  of  Furniture  Brands  constituting
     guarantees by Furniture  Brands of trade payables owing by its Subsidiaries
     in their  ordinary  course of  business,  (c) of  Furniture  Brands  and/or
     Thomasville consisting of guarantees (with the maximum amount guaranteed at
     any time  pursuant  to this  clause  (c) not to  exceed  $7,500,000  in the
     aggregate) of actual or potential claims under  Environmental Laws referred
     to in Section 9.01(xiii)(y) and (d) of the Borrowers or any Subsidiary as a
     guarantor of the lessee under any lease  pursuant to which a third party is
     the lessee in an aggregate amount not to exceed $135,000,000; and

          (xii)  Contingent  Obligations of Furniture Brands pursuant to the Tax
     Sharing Agreements.

     9.04  Transactions  with  Affiliates.  The Borrowers will not, and will not
permit any of their  respective  Subsidiaries  to, enter into any transaction or
series of related  transactions with any Affiliate of Furniture Brands or any of
its Subsidiaries, other than in the ordinary course of business and on terms and
conditions  substantially  as favorable to the  Borrowers or such  Subsidiary as
would reasonably be obtained by the Borrowers or such Subsidiary at that time in
a comparable  arm's-length  transaction  with a Person other than an  Affiliate,
except:

          (i)  transactions  between or among the  Borrowers  and/or one or more
     Subsidiaries  of Furniture  Brands and not involving any other Affiliate of
     Furniture Brands shall be permitted;

          (ii)  customary  fees  may be paid  to  non-officer  directors  of the
     Borrowers and their Subsidiaries;

          (iii) Furniture  Brands and its Subsidiaries may enter into employment
     arrangements  with  respect  to the  procurement  of  services  with  their
     respective officers and employees in the ordinary course of business;

          (iv) Furniture  Brands may sell or issue Furniture Brands Common Stock
     and  Qualified   Preferred   Stock  to  its  Affiliates   (other  than  its
     Subsidiaries); and

          (v) Furniture Brands may modify the Tax Sharing  Agreement as provided
     in Section 9.08(b).

     9.05 Maximum  Leverage  Ratio.  The Borrowers  will not permit the Leverage
Ratio at any time to be greater than 2.75:1.00.

     9.06  Minimum  Consolidated  Net  Worth.  The  Borrowers  will  not  permit
Consolidated  Net Worth at any time  during a period set forth  below to be less
than the amount set forth opposite such period:

                  Period                                          Amount
                  ------                                          ------

                  From September 30, 2000 to
                  December 30, 2000                            $450,000,000

                  From December 31, 2000 to
                  March 30, 2001                               $465,000,000

                  From March 31, 2001
                  to June 29, 2001                             $480,000,000

                  From June 30, 2001
                  to September 29, 2001                        $495,000,000

                  From September 30, 2001 to
                  December 30, 2001                            $515,000,000

                  From December 31, 2001
                  to March 30, 2002                            $540,000,000

                  From March 31, 2002
                  to June 29, 2002                             $560,000,000

                  From June 30, 2002
                  to September 29, 2002                        $580,000,000

                  From September 30, 2002
                  to December 30, 2002                         $610,000,000

                  From December 31, 2002
                  to March 30, 2003                            $640,000,000

                  From March 31, 2003
                  to June 29, 2003                             $660,000,000

                  From June 30, 2003
                  to September 29, 2003                        $680,000,000

                  From September 30, 2003
                  to December 30, 2003                         $715,000,000

                  From December 31, 2003
                  to March 30, 2004                            $750,000,000

                  From March 31, 2004
                  to June 29, 2004                             $770,000,000

                  From June 30, 2004
                  to September 29, 2004                        $790,000,000

                  From September 30, 2004
                  to December 30, 2004                         $820,000,000

                  From December 31, 2004
                  to March 30, 2005                            $850,000,000

                  Thereafter                                   $880,000,000

     9.07  Ownership of Assets by the Borrowers and the  Subsidiary  Guarantors.
The  Borrowers  will not at any time  allow  the  assets  directly  owned by the
Borrowers  and the  Subsidiary  Guarantors  to  constitute  less than 80% of the
aggregate fair market value (as determined in good faith by Furniture Brands) of
the consolidated assets of Furniture Brands and all of its Subsidiaries.

     9.08 Limitation on Modifications of Certificate of  Incorporation,  By-Laws
and Certain  Other  Agreements;  etc. (a) The  Borrowers  will not, and will not
permit any of their respective  Subsidiaries to, amend or modify its Certificate
of Incorporation  (including,  without limitation, by the filing or modification
of any  certificate of  designation)  or By-Laws (or  equivalent  organizational
documents),  or any  agreement  entered  into by it, with respect to its capital
stock or enter into any new  agreement  with respect to its capital stock if the
foregoing would in any way materially and adversely affect the Lenders.

     (b) The  Borrowers  will not,  and will not permit any of their  respective
Subsidiaries  to,  amend,  modify or change  any  provision  of any Tax  Sharing
Agreement   other  than  any   amendments,   modifications   and  changes  which
(individually  and in  the  aggregate)  would  not in  any  way  materially  and
adversely  affect the  Lenders or are  consented  to in writing by the  Required
Lenders.

     9.09  Business.  The  Borrowers  will not, and will not permit any of their
Subsidiaries,  to engage  (directly or  indirectly)  in any business  other than
substantially  the same  lines of  business  in which  they are  engaged  on the
Effective Date and reasonable  extensions  thereof and other businesses that are
complimentary or reasonably related thereto.

     9.10 Limitation on Certain Restrictions on Subsidiaries. The Borrowers will
not, and will not permit any of their  respective  Subsidiaries  to, directly or
indirectly,  create or otherwise  cause or suffer to exist or become  effective,
except as set forth on Schedule  VIII,  any  encumbrance  or  restriction on the
ability  of  any  such  Subsidiary  to (x)  pay  dividends  or  make  any  other
distributions on its capital stock or any other interest or participation in its
profits  owned  by  any  Borrower  or  any  of  its  Subsidiaries,  or  pay  any
Indebtedness owed to any Borrower or any of its Subsidiaries,  (y) make loans or
advances to any Borrower or any of its  Subsidiaries  or (z) transfer any of its
properties or assets to any Borrower or any of its Subsidiaries, except for such
encumbrances or restrictions  existing under or by reason of (i) applicable law,
(ii) this  Agreement and the other Credit  Documents,  (iii) other  Indebtedness
permitted pursuant to Section 9.03, in each case so long as the encumbrances and
restrictions  contained therein are not more restrictive than those contained in
this Agreement, (iv) holders of Permitted Liens may restrict the transfer of any
assets  subject  thereto,  (v) customary  provisions  restricting  subletting or
assignment  of any lease  governing a leasehold  interest of the Borrowers or of
any  Subsidiary of the  Borrowers,  and (vi)  customary  provisions  restricting
assignment  of any licensing  agreement  entered into by the Borrowers or any of
their Subsidiaries in the ordinary course of business.

     9.11 Limitation on Issuance of Capital Stock. (a) Furniture Brands will not
issue (i) any Preferred  Stock other than Qualified  Preferred Stock (so long as
no Event of Default pursuant to Section 10.09 will result therefrom) or (ii) any
redeemable  common stock other than common stock that is  redeemable at the sole
option of Furniture  Brands;  it being understood that Furniture Brands may from
time to time issue  Furniture  Brands  Common Stock  pursuant to the exercise of
options therefor.

     (b) Furniture Brands shall not permit any of its Subsidiaries to issue, any
capital stock  (including  by way of sales of treasury  stock) or any options or
warrants to purchase, or securities  convertible into, capital stock, except (i)
for transfers and replacements of then outstanding shares of capital stock, (ii)
for stock splits, stock dividends and additional issuances which do not decrease
the percentage  ownership of Furniture  Brands or any of its Subsidiaries in any
class of the capital stock of such  Subsidiaries,  (iii) to qualify directors to
the extent  required by applicable  law, and (iv) for issuances by newly created
or acquired Subsidiaries in accordance with the terms of this Agreement.

     SECTION 10. Events of Default.  Upon the occurrence of any of the following
specified events (each an "Event of Default"):

     10.01 Payments.  The Borrowers shall (i) default in the payment when due of
any  principal of any Loan or any Note or (ii)  default,  and such default shall
continue  unremedied for three or more Business Days, in the payment when due of
any Unpaid  Drawings or  interest on any Loan or Note,  or any Fees or any other
amounts owing hereunder or thereunder; or

     10.02 Representations, etc. Any representation,  warranty or statement made
by any Credit Party herein or in any other Credit Document or in any certificate
delivered  pursuant  hereto or thereto  shall prove to be untrue in any material
respect on the date as of which made or deemed made; or

     10.03 Covenants.  The Borrowers shall (i) default in the due performance or
observance  by it of any  term,  covenant  or  agreement  contained  in  Section
8.01(d)(i),  8.07,  8.09 or Section 9 or (ii) default in the due  performance or
observance  by it of any other term,  covenant or  agreement  contained  in this
Agreement and such default  shall  continue  unremedied  for a period of 30 days
after written notice to the Borrowers by the Administrative Agent or any Lender;
or

     10.04  Default  Under  Other  Agreements.  The  Borrowers  or any of  their
respective  Subsidiaries  shall (i) default in any  payment of any  Indebtedness
(other than the Obligations) beyond the period of grace, if any, provided in the
instrument  or  agreement  under  which such  Indebtedness  was  created or (ii)
default in the observance or performance of any agreement or condition  relating
to any Indebtedness  (other than the Obligations) or contained in any instrument
or agreement evidencing,  securing or relating thereto, or any other event shall
occur or  condition  exist,  the  effect  of  which  default  or other  event or
condition is to cause,  or to permit the holder or holders of such  Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause (determined
without  regard to whether any notice is  required),  any such  Indebtedness  to
become due prior to its stated maturity,  or (iii) any Indebtedness  (other than
the Obligations) of the Borrowers or any of their respective  Subsidiaries shall
be declared  to be due and  payable,  or required to be prepaid  other than by a
regularly scheduled required  prepayment,  prior to the stated maturity thereof,
provided  that (x) it shall  not be a Default  or Event of  Default  under  this
Section  10.04 unless the  aggregate  principal  amount of all  Indebtedness  as
described  in  preceding  clauses  (i)  through  (iii),  inclusive,  is at least
$10,000,000; or

     10.05   Bankruptcy,   etc.  The  Borrowers  or  any  of  their   respective
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled  "Bankruptcy" as now or hereafter in effect,  or
any  successor  thereto  (the  "Bankruptcy  Code");  or an  involuntary  case is
commenced against the Borrowers or any of their respective  Subsidiaries and the
petition is not controverted within 30 days, or is not dismissed within 60 days,
after  commencement  of the case; or a custodian  (as defined in the  Bankruptcy
Code) is  appointed  for, or takes  charge of, all or  substantially  all of the
property  of the  Borrowers  or any of  their  respective  Subsidiaries,  or the
Borrowers or any of their respective Subsidiaries commences any other proceeding
under any  reorganization,  arrangement,  adjustment of debt, relief of debtors,
dissolution,  insolvency  or  liquidation  or  similar  law of any  jurisdiction
whether now or  hereafter  in effect  relating to the  Borrowers or any of their
respective  Subsidiaries,  or there is commenced against the Borrowers or any of
their respective  Subsidiaries any such proceeding which remains undismissed for
a period of 60 days, or the Borrowers or any of their respective Subsidiaries is
adjudicated  insolvent  or  bankrupt;  or any  order of  relief  or other  order
approving  any such case or  proceeding  is entered;  or the Borrowers or any of
their  respective  Subsidiaries  suffers any appointment of any custodian or the
like for it or any substantial part of its property to continue  undischarged or
unstayed for a period of 60 days;  or the  Borrowers or any of their  respective
Subsidiaries  makes a general  assignment  for the benefit of creditors;  or any
corporate  action  is  taken  by  the  Borrowers  or  any  of  their  respective
Subsidiaries for the purpose of effecting any of the foregoing; or

     10.06 ERISA. (a) Any Plan and/or  Multiemployer  Plan shall fail to satisfy
the minimum  funding  standard  required  for any plan year or part thereof or a
waiver of such  standard or  extension of any  amortization  period is sought or
granted under Section 412 of the Code, any Plan and/or  Multiemployer Plan shall
have had or is likely to have a trustee appointed to administer such Plan and/or
Multiemployer   Plan  pursuant  to  Section  4042  of  ERISA,  any  Plan  and/or
Multiemployer Plan shall have been or is reasonably expected to be terminated or
to be the subject of termination  proceedings  under Section 4042 of ERISA,  any
Plan and/or  Multiemployer  Plan shall have an  Unfunded  Current  Liability,  a
contribution  required to be made to a Plan,  Multiemployer  Plan and/or Foreign
Pension Plan has not been timely made, the Borrowers or any of their  respective
Subsidiaries or any ERISA  Affiliate have incurred or is reasonably  expected to
incur a  liability  to or on account of a Plan and/or  Multiemployer  Plan under
Section 409, 502(i),  502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code, or the Borrowers or
any of their respective Subsidiaries have incurred or are reasonably expected to
incur  liabilities  pursuant to one or more employee  welfare  benefit plans (as
defined in Section 3(1) of ERISA) which provide benefits to retired employees or
other  former  employees  (other  than as  required  by Section 601 of ERISA) or
employee  pension benefit plans (as defined in Section 3(2) of ERISA) or Foreign
Pension  Plans;  (b)  there  shall  result  from any such  event or  events  the
imposition of a lien, the granting of a security  interest,  or a liability or a
material risk of incurring a liability;  (c) and in each case in clauses (a) and
(b) above, such lien,  security interest or liability,  individually,  or in the
aggregate,  has had or could  reasonably be expected to have a Material  Adverse
Effect; or

     10.07  Subsidiaries  Guaranty.  The Subsidiaries  Guaranty or any provision
thereof  shall  cease  to be in  full  force  or  effect  as to  any  Subsidiary
Guarantor,  or any Subsidiary Guarantor or Person acting by or on behalf of such
Subsidiary  Guarantor  shall  deny  or  disaffirm  such  Subsidiary  Guarantor's
obligations under the Subsidiaries  Guaranty,  or any Subsidiary Guarantor shall
default in the due performance or observance of any term,  covenant or agreement
on its part to be performed or observed  pursuant to the Subsidiaries  Guaranty;
or

     10.08 Judgments.  One or more judgments or decrees shall be entered against
the Borrowers or any of their respective Subsidiaries involving in the aggregate
for the Borrowers and their  respective  Subsidiaries  a liability  (not paid or
fully covered by a reputable and solvent  insurance  company) and such judgments
and decrees  either shall be final and  non-appealable  or shall not be vacated,
discharged or stayed or bonded  pending  appeal for any period of 60 consecutive
days, and the aggregate amount of all such judgments exceeds $10,000,000;

     10.09 Change of Control. A Change of Control shall occur; or

     10.10 Tax Sharing Agreement. One or more parties to a Tax Sharing Agreement
(other  than  Borrowers  or any of their  respective  Subsidiaries)  shall  have
defaulted in its or their payment obligations in an aggregate amount equal to or
greater than  $5,000,000  thereunder  and such default or defaults  shall remain
unremedied for a period in excess of ten consecutive Business Days;

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing,  the Administrative Agent, upon the written request of
the Required Lenders, shall by written notice to the Borrowers,  take any or all
of the  following  actions,  without  prejudice to the rights of any Agent,  any
Lender or the holder of any Note to enforce its claims  against any Credit Party
(provided  that,  if an Event of Default  specified in Section 10.05 shall occur
with respect to the  Borrowers,  the result of which would occur upon the giving
of written notice by the  Administrative  Agent to the Borrowers as specified in
clauses (i) and (ii) below shall occur  automatically  without the giving of any
such  notice):  (i)  declare  the Total  Commitment  terminated,  whereupon  the
Commitment  of  each  Lender  shall  forthwith  terminate  immediately  and  any
Commitment  Commission  and other Fees shall  forthwith  become due and  payable
without any other  notice of any kind;  (ii)  declare the  principal  of and any
accrued interest in respect of all Loans and the Notes and all Obligations owing
hereunder and thereunder to be,  whereupon the same shall become,  forthwith due
and payable without  presentment,  demand,  protest or other notice of any kind,
all of which are hereby waived by each Credit Party;  (iii) terminate any Letter
of Credit which may be terminated in accordance with its terms;  (iv) direct the
Borrowers to pay (and the Borrowers  agree that upon receipt of such notice,  or
upon the  occurrence  of an Event of Default  specified  in  Section  10.05 with
respect  to the  Borrowers,  they will pay) to the  Administrative  Agent at the
Payment  Office such  additional  amount of cash,  to be held as security by the
Administrative  Agent, as is equal to the aggregate Stated Amount of all Letters
of Credit  issued for the  account of the  Borrowers  and all  Acceptances  then
outstanding;  and (v)  apply any cash  collateral  held for the  benefit  of the
Lenders pursuant to Section 4.02 to repay outstanding Obligations.

     SECTION 11. Definitions and Accounting Terms.

     11.01 Defined Terms. As used in this  Agreement,  the following terms shall
have the following  meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):

     "Acceptance"  shall  mean a draft  under a Letter  of  Credit  drawn on and
accepted by the relevant  Issuing  Lender  unconditionally  ordering  payment in
Dollars  or  any  Alternate  Currency  of a sum  certain  to  the  order  of the
beneficiary with respect to such Letter of Credit at a specified future time.

     "Acceptance  Facing  Fee" shall  having  the  meaning  provided  in Section
3.01(c).

     "Acceptance Fee" shall have the meaning provided in Section 3.01(b).

     "Additional  Commitment"  shall mean, for each Lender (or such other Person
who will become a Lender as  contemplated  in clause (vii) of Section  1.14(a)),
any commitment to make Revolving  Loans pursuant to Section 1.14, in such amount
as agreed to by such Lender (or such other Person) in the respective  Additional
Commitment Agreement; provided that on the Additional Commitment Date upon which
an  Additional  Commitment  of any Lender  becomes  effective,  such  Additional
Commitment  of such Lender shall be added to (and  thereafter  become a part of)
the Commitment of such Lender for all purposes of this Agreement as contemplated
by Section 1.14.

     "Additional  Commitment  Agreement"  shall  mean an  Additional  Commitment
Agreement substantially in the form of Exhibit I (appropriately completed).

     "Additional  Commitment Date" shall mean each date upon which an Additional
Commitment  under  an  Additional  Commitment  Agreement  becomes  effective  as
provided in Section 1.14(b)(i).

     "Additional  Commitment  Requirements"  shall  mean,  with  respect  to any
request  for an  Additional  Commitment  made  pursuant  to Section  1.14 or any
provision of an Additional  Commitment on any  Additional  Commitment  Date, the
satisfaction  of each of the  following  conditions:  (i) no Default or Event of
Default  then  exists  or  would  result   therefrom   (for   purposes  of  such
determination,  assuming the relevant Revolving Loans in an aggregate  principal
amount  equal to the full amount of  Additional  Commitments  then  requested or
provided had been  incurred,  on such date of request or  Additional  Commitment
Date,  as the case may  be),  (ii)  calculations  are made by  Furniture  Brands
demonstrating  compliance with the covenants contained in Sections 9.05 and 9.06
for the Reference Period most recently ended prior to the date of the respective
request for Additional  Commitments or the relevant Additional  Commitment Date,
as the case may be, on a Pro Forma Basis, (iii) Furniture Brands certifies (and,
if requested by the Administrative  Agent,  delivers to it satisfactory opinions
of counsel (including in-house counsel) and such other supporting information as
may be  reasonably  requested)  to  the  Administrative  Agent  that  the  Total
Commitment  (as increased by the Additional  Commitments)  may be fully utilized
through the  incurrence of loans pursuant to this  Agreement  without  causing a
violation of any then  existing  Indebtedness  or other  material  agreements of
Furniture  Brands and its Subsidiaries and (iv) the delivery by Furniture Brands
of  officer's   certificates  to  the  Administrative  Agent  certifying  as  to
compliance  with  preceding  clauses  (i),  (ii) and  (iii) and  containing  the
calculations required by clause (ii).

     "Additional Lender" shall have the meaning provided in Section 1.14(b).

     "Administrative  Agent" shall mean DBAG, in its capacity as  Administrative
Agent  for the  Lenders  hereunder,  and  shall  include  any  successor  to the
Administrative Agent appointed pursuant to Section 12.09.

     "Affiliate"  shall  mean,  with  respect to any  Person,  any other  Person
(including,  for  purposes of Section  9.04 only,  all  directors,  officers and
partners of such Person) directly or indirectly  controlling,  controlled by, or
under direct or indirect  common control with, such Person;  provided,  however,
that for  purposes of Section  9.04,  an  Affiliate  of  Furniture  Brands shall
include any Person that directly or indirectly owns more than 5% of any class of
the capital  stock of Furniture  Brands and any officer or director of Furniture
Brands or any such Person. A Person shall be deemed to control another Person if
such Person possesses,  directly or indirectly, the power to direct or cause the
direction of the management and policies of such other Person,  whether  through
the ownership of voting securities, by contract or otherwise.

     "Agents" shall mean and include the Administrative Agent, the Documentation
Agent and the Syndication  Agent and, for purposes of Sections 12, 13.01,  13.12
and 13.16 only, the Lead Arranger.

     "Agreement"  shall mean this Credit Agreement,  as modified,  supplemented,
amended, restated, extended, renewed or replaced from time to time.

     "Alternate  Currency" shall mean each of Euros,  Deutsche  Marks,  Japanese
Yen, Canadian Dollars,  French Francs and British Pounds Sterling and such other
currencies which are readily convertible into Dollars.

     "Applicable   Base  Rate   Margin",   "Applicable   Commitment   Commission
Percentage"  and "Applicable  Eurodollar  Margin" shall mean (i) with respect to
Commitment Commission, the respective percentage per annum set forth below under
the column  "Applicable  Commitment  Commission  Percentage"  and  opposite  the
respective Level (i.e.,  Level 1, Level 2, Level 3, Level 4, Level 5 or Level 6,
as the case may be) that is  currently  then in effect based on the Debt Rating,
and (ii) with respect to Loans,  the  respective  percentage per annum set forth
below  under  the  column  for the  respective  Type of Loans and  opposite  the
respective Level (i.e.,  Level 1, Level 2, Level 3, Level 4, Level 5 or Level 6,
as the case may be) that is currently then in effect based on the Debt Rating:

<TABLE>
<CAPTION>

                           Higher Debt Rating
                          (or, in the case of                                                      Applicable
                           Level 4 Pricing,          Applicable             Applicable             Commitment
        Pricing             required Debt             Base Rate             Eurodollar             Commission
         Level                 Ratings)                Margin                 Margin               Percentage
         -----                 --------                ------                 ------               ----------

<S>        <C>                  <C>                  <C>                    <C>                     <C>
           1             A- or A3 or higher          0.000%                 0.500%                  0.100%
           2             BBB+ or Baa1                0.000%                 0.625%                  0.125%
           3             BBB or Baa2                 0.000%                 0.750%                  0.150%
           4             both BBB- and Baa3          0.000%                 1.000%                  0.200%
           5             BBB- or Baa3, but           0.125%                 1.125%                  0.250%
                         not both
           6             BB+ or Ba1 or below         0.300%                 1.300%                  0.300%
                         or unrated
</TABLE>

;  provided  that (A) Level 6 pricing  shall apply at all times when (i) no Debt
Rating is available or (ii) any Default or Event of Default is in existence  and
(B) in making the foregoing  determinations,  in the case of a split Debt Rating
where the higher Debt Rating is two or more Debt Rating levels (treating pluses,
non-pluses,  minuses and non-minuses as different  levels and treating a failure
to be rated by either  Moody's  or S&P (but not  both) as if the Debt  Rating so
provided  by Moody's or S&P,  as the case may be, is the higher  Debt Rating for
the purpose of the table  above)  above the lower Debt  Rating,  the higher Debt
Rating for purposes of determining  the Pricing Levels as described  above shall
be  deemed  to  be  one  Debt  Rating  level  below  the  Debt  Rating  actually
constituting  the higher Debt  Rating.  Any change in the  Applicable  Base Rate
Margin, the Applicable Commitment Commission or the Applicable Eurodollar Margin
due to a change in the Debt Rating shall be effective on the  effective  date of
such change in the applicable Debt Rating.

     "Armstrong  Stock  Purchase   Agreement"  shall  mean  the  Stock  Purchase
Agreement,  dated  as of  November  18,  1995,  by  and  among  Armstrong  World
Industries, Inc., Armstrong Enterprises, Inc. and Furniture Brands.

     "Assignment  and  Assumption  Agreement"  shall  mean  the  Assignment  and
Assumption  Agreement  substantially  in the form of  Exhibit  H  (appropriately
completed).

     "Authorized  Representative"  shall mean,  with  respect to (i)  delivering
Notices of  Borrowing,  Notices of  Conversion,  Letter of Credit  Requests  and
similar  notices,  any person or persons that has or have been authorized by the
respective  boards of the  Borrowers to deliver  such  notices  pursuant to this
Agreement  and that has or have  appropriate  signature  cards on file  with the
Administrative  Agent,  the  Swingline  Lender  and each  Issuing  Lender;  (ii)
delivering  financial  information and officer's  certificates  pursuant to this
Agreement,  any financial officer of Furniture Brands and (iii) any other matter
in connection with this Agreement or any other Credit Document,  any officer (or
a person or persons so designated by any two officers) of Furniture Brands.

     "Bank of America" means Bank of America, N.A. in its individual capacity.

     "Bankruptcy Code" shall have the meaning provided in Section 10.05.

     "Base Rate" at any time shall mean the higher of (i) 1/2 of 1% in excess of
the overnight Federal Funds Rate and (ii) the Prime Lending Rate.

     "Base Rate Loan" shall mean (i) each Swingline Loan and (ii) each Revolving
Loan designated or deemed designated as such by the Borrowers at the time of the
incurrence thereof or conversion thereto.

     "Borrowers"  shall have the meaning provided in the first paragraph of this
Agreement.

     "Borrowing"  shall  mean  the  incurrence  of (i)  Swingline  Loans  by the
Borrowers  from  the  Swingline  Lender  on a given  date or  (ii)  one  Type of
Revolving Loan by the Borrowers from all of the Lenders on a pro rata basis on a
given date (or resulting from  conversions on a given date),  having in the case
of  Eurodollar  Loans the same  Interest  Period;  provided that Base Rate Loans
incurred  pursuant to Section  1.10(b) shall be  considered  part of any related
Borrowing of Eurodollar Loans.

     "Broyhill"  shall have the meaning  provided in the first paragraph of this
Agreement.

     "Business  Day"  shall mean (i) for all  purposes  other than as covered by
clause (ii) below, any day except Saturday, Sunday and any day which shall be in
New  York  City a legal  holiday  or a day on  which  banking  institutions  are
authorized or required by law or other government  action to close and (ii) with
respect to all notices and  determinations  in connection  with, and payments of
principal  and interest on,  Eurodollar  Loans,  any day which is a Business Day
described in clause (i) above and which is also a day for trading by and between
banks in the New York interbank Eurodollar market.

     "Capitalized  Lease  Obligations"  of any  Person  shall  mean  all  rental
obligations which, under generally accepted accounting  principles,  are or will
be required to be capitalized on the books of such Person, in each case taken at
the  amount  thereof  accounted  for as  indebtedness  in  accordance  with such
principles.

     "Cash  Equivalents"  shall mean, as to any Person, (i) securities issued or
directly and fully  guaranteed  or insured by the United States or any agency or
instrumentality  thereof  (provided that the full faith and credit of the United
States is pledged in support  thereof)  having  maturities  of not more than one
year  from the date of  acquisition,  (ii) time  deposits  and  certificates  of
deposit  of any  commercial  bank  having,  or  which is the  principal  banking
subsidiary  of a bank  holding  company  organized  under the laws of the United
States, any State thereof,  the District of Columbia or any foreign jurisdiction
having  capital,   surplus  and  undivided  profits  aggregating  in  excess  of
$200,000,000,  with  maturities  of not  more  than  one  year  from the date of
acquisition by such Person, (iii) repurchase obligations with a term of not more
than 90 days for  underlying  securities  of the types  described  in clause (i)
above entered into with any bank meeting the qualifications  specified in clause
(ii) above,  (iv)  commercial  paper  issued by any Person  incorporated  in the
United  States rated at least A-1 or the  equivalent  thereof by S&P or at least
P-1 or the equivalent thereof by Moody's and in each case maturing not more than
one year after the date of acquisition by such Person,  (v) investments in money
market funds  substantially  all of whose assets are  comprised of securities of
the types  described in clauses (i) through  (iv) above and (vi) demand  deposit
accounts maintained in the ordinary course of business not in excess of $100,000
in the aggregate.

     "CERCLA" shall mean the Comprehensive Environmental Response, Compensation,
and  Liability  Act of 1980,  as the same may be amended  from time to time,  42
U.S.C. ss. 9601 et seq.

     "Change of Control" shall mean the occurrence of any of the following:  (i)
Furniture Brands shall at any time cease to own 100% of the capital stock of any
of Broyhill,  Lane or Thomasville,  (ii) the first date upon which a majority of
the Persons on the board of  directors of  Furniture  Brands are not  Continuing
Directors  or (iii) any  Person,  entity or "group"  (as such term is defined in
Section  13(d)(3)  of the  Securities  Exchange  Act of 1934,  as amended) is or
becomes  the  beneficial  owner of an  amount  of  outstanding  Voting  Stock of
Furniture Brands in excess of 25% of the total amount of fully diluted shares of
outstanding Voting Stock of Furniture Brands.

     "Code" shall mean the Internal  Revenue Code of 1986,  as amended from time
to time, and the  regulations  promulgated  and the rulings  issued  thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement,  and to any  subsequent  provision of the Code,  amendatory  thereof,
supplemental thereto or substituted therefor.

     "Commitment"  shall mean,  for each Lender,  the amount set forth  opposite
such  Lender's  name in  Schedule I hereto  directly  below the column  entitled
"Commitment,"  as same may be (x) reduced from time to time pursuant to Sections
3.02,  3.03 and/or 10, (y) adjusted from time to time as a result of assignments
to or from such  Lender  pursuant to Section  1.13 or  13.04(b) or (z)  adjusted
pursuant to Section 1.14, it being understood that on each Additional Commitment
Date, the Additional  Commitment of any Lender  becoming  effective on such date
shall be added to (and  thereafter  become all or a part of) the  Commitment  of
such Lender for all purposes of this Agreement as contemplated by Section 1.14.

     "Commitment Commission" shall have the meaning provided in Section 3.01(a).

     "Consolidated  Current  Liabilities"  shall mean, at any time,  the amounts
that would be classified as consolidated current liabilities of Furniture Brands
and  its  Subsidiaries  at such  time  in  accordance  with  generally  accepted
accounting principles in a consolidated balance sheet, but excluding the current
portion of any  Indebtedness  under this  Agreement  and any other  Indebtedness
which would otherwise be included therein.

     "Consolidated  Debt"  shall mean,  at any time,  the  remainder  of (i) all
Indebtedness of Furniture Brands and its Subsidiaries at such time determined on
a consolidated basis with respect to borrowed money or other obligations of such
Persons  which at such time would appear on the balance sheet of such Persons as
indebtedness  (including  unreimbursed  drawings  under  Letters  of Credit  and
unreimbursed  payments under  Acceptances,  but excluding  Consolidated  Current
Liabilities  and deferred tax and pension  liabilities)  less (ii) the amount of
cash in  excess  of  $5,000,000  shown  on the  consolidated  balance  sheet  of
Furniture Brands and its Subsidiaries at such time.

     "Consolidated EBIT" shall mean, for any period, the Consolidated Net Income
of Furniture Brands and its  Subsidiaries,  determined on a consolidated  basis,
before  Consolidated Net Interest Expense (to the extent deducted in arriving at
Consolidated  Net Income) and  provision for taxes or gains or losses from sales
of assets other than inventory sold in the ordinary course of business,  in each
case that were included in arriving at Consolidated Net Income.

     "Consolidated  EBITDA"  shall  mean,  for any  period,  Consolidated  EBIT,
adjusted by (i) adding thereto the amount of all amortization of intangibles and
depreciation,  in each case that were deducted in arriving at Consolidated  EBIT
for such period and (ii) giving  effect on a Pro Forma Basis to any  Significant
Acquisition or Significant Divestiture during such period.

     "Consolidated  Net Income"  shall mean,  for any period,  the net after tax
income of Furniture  Brands and its  Subsidiaries  determined on a  consolidated
basis, without giving effect to any extraordinary gains or losses; provided that
(without  duplication of exclusions) (i) the net income (to the extent positive)
of any Person that is not a Subsidiary of Furniture  Brands or that is accounted
for by the equity method of  accounting  shall be included only to the extent of
the amount of dividends or  distributions  paid in cash to Furniture Brands or a
Wholly-Owned  Subsidiary  thereof,  (ii) to the extent  Consolidated  Net Income
reflects amounts attributable to minority interests in Subsidiaries that are not
Wholly-Owned Subsidiaries of Furniture Brands,  Consolidated Net Income shall be
reduced by the amounts  attributable to such minority  interests,  (iii) the net
income of any Subsidiary shall be excluded to the extent that the declaration or
payment of dividends and  distributions  by that Subsidiary of net income is not
at the date of determination  permitted without any prior governmental  approval
(that has not been  obtained) or,  directly or  indirectly,  by operation of the
terms of its charter or any  agreement,  instrument,  judgment,  decree,  order,
statute,  rule or governmental  regulation  applicable to that Subsidiary or its
stockholders,  (iv) the net  income  of any  Person  acquired  in a  pooling  of
interests transaction for any period prior to the date of such acquisition shall
be excluded and (v) the cumulative  effect of a change in accounting  principles
shall be excluded.

     "Consolidated Net Worth" shall mean, as at any date of  determination,  the
stockholders' equity of Furniture Brands determined in accordance with generally
accepted  accounting  principles  and as would be  reflected  on a  consolidated
balance sheet of Furniture Brands prepared as of such date.

     "Contingent  Obligation"  shall mean, as to any Person,  any  obligation of
such Person  guaranteeing  or intended to guarantee  any  Indebtedness,  leases,
dividends or other obligations ("primary  obligations") of any other Person (the
"primary  obligor") in any manner,  whether  directly or indirectly,  including,
without  limitation,  any obligation of such Person,  whether or not contingent,
(i) to purchase any such primary obligation or any property  constituting direct
or  indirect  security  therefor,  (ii) to advance  or supply  funds (x) for the
purchase or payment of any such primary  obligation  or (y) to maintain  working
capital or equity  capital of the primary  obligor or  otherwise to maintain the
net worth or  solvency  of the  primary  obligor,  (iii) to  purchase  property,
securities  or services  primarily  for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary  obligation or (iv) otherwise to assure or hold harmless the holder
of such primary obligation against loss in respect thereof;  provided,  however,
that  the  term  Contingent   Obligation  shall  not  include   endorsements  of
instruments  for deposit or collection in the ordinary  course of business.  The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent  Obligation is made (or, if less,  the maximum amount of such primary
obligation  for which  such  Person may be liable  pursuant  to the terms of the
instrument  evidencing  such  Contingent   Obligation)  or,  if  not  stated  or
determinable,  the maximum reasonably  anticipated  liability in respect thereof
(assuming  such Person is required to perform  thereunder) as determined by such
Person in good faith.

     "Continuing  Directors" shall mean the directors of Furniture Brands on the
Effective  Date  and each  other  director  if such  director's  nomination  for
election to the board of  directors  of  Furniture  Brands is  recommended  by a
majority of the then Continuing Directors.

     "Credit  Documents"  shall mean this Agreement and, after the execution and
delivery thereof  pursuant to the terms of this Agreement,  each Revolving Note,
the Swingline  Note and the  Subsidiaries  Guaranty and, after the execution and
delivery thereof, each additional guaranty executed pursuant to Section 8.09.

     "Credit  Event"  shall mean the making of any Loan or the  issuance  of any
Letter of Credit.

     "Credit Party" shall mean each Borrower and each Subsidiary Guarantor.

     "Currency Hedging  Agreements"  shall mean any foreign exchange  contracts,
currency swap agreements or other similar agreements or arrangements designed to
protect against the fluctuations in currency values.

     "DBAG"  shall mean  Deutsche  Bank AG, New York Branch,  in its  individual
capacity.

     "Debt Rating" shall mean and include,  on any date,  each of the ratings of
Furniture  Brands'  (or the  Borrowers'  joint  and  several)  senior  unsecured
long-term Indebtedness, as most recently publicly announced by Moody's and S&P.

     "Default" shall mean any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.

     "Defaulting  Lender"  shall mean any Lender with  respect to which a Lender
Default is in effect.

     "Documentation  Agent"  shall  have  the  meaning  provided  in  the  first
paragraph of this Agreement.

                  "Dollar  Equivalent"  shall mean, with respect to any currency
other than  Dollars,  the amount of Dollars  into which such  currency  could be
converted at the Exchange Rate.

     "Dollars" and the sign "$" shall each mean freely transferable lawful money
of the United States.

     "Domestic  Subsidiary"  shall mean each Subsidiary of Furniture Brands that
is incorporated under the laws of the United States or any State thereof.

     "Drawing" shall have the meaning provided in Section 2.05(b).

     "Effective Date" shall have the meaning provided in Section 13.10.

     "Eligible  Transferee"  shall mean and include a  commercial  bank,  mutual
fund,  financial  institution  or other  "accredited  investor"  (as  defined in
Regulation D of the Securities Act) but in any event excluding  Furniture Brands
and its Subsidiaries.

     "Environmental  Claims"  means any and all  administrative,  regulatory  or
judicial actions,  suits, demands,  demand letters,  directives,  claims, liens,
notices of noncompliance or violation, investigations or proceedings relating in
any way to any  Environmental  Law or any permit issued,  or any approval given,
under any such  Environmental  Law  (hereafter,  "Claims"),  including,  without
limitation, (a) any and all Claims by governmental or regulatory authorities for
enforcement,  cleanup, removal,  response,  remedial or other actions or damages
pursuant to any applicable  Environmental Law, and (b) any and all Claims by any
third party  seeking  damages,  contribution,  indemnification,  cost  recovery,
compensation or injunctive relief in connection with alleged injury or threat of
injury to health,  safety or the  environment  due to the  presence of Hazardous
Materials.

     "Environmental Law" means any applicable Federal,  state,  foreign or local
statute,  law,  rule,  regulation,  ordinance,  code,  binding  and  enforceable
guideline,  binding and enforceable written policy and rule of common law now or
hereafter  in  effect  and  in  each  case  as  amended,  and  any  judicial  or
administrative  interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on the Borrowers or any
of their respective Subsidiaries,  relating to the environment,  employee health
and safety or Hazardous Materials,  including, without limitation, CERCLA; RCRA;
the Federal Water Pollution  Control Act, 33 U.S.C.  ss. 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. ss. 2601 et seq.; the Clean Air Act, 42 U.S.C.
ss. 7401 et seq.; the Safe Drinking  Water Act, 42 U.S.C.  ss. 3803 et seq.; the
Oil Pollution Act of 1990, 33 U.S.C.  ss. 2701 et seq.;  the Emergency  Planning
and the Community  Right-to-Know  Act of 1986, 42 U.S.C.  ss. 11001 et seq.; the
Hazardous  Material  Transportation  Act,  49  U.S.C.  ss.  1801  et  seq.;  the
Occupational  Safety and Health Act, 29 U.S.C. ss. 651 et seq. (to the extent it
regulates occupational exposure to Hazardous Materials); and any state and local
or foreign  counterparts  or  equivalents,  in each case as amended from time to
time.

     "ERISA" shall mean the Employee  Retirement Income Security Act of 1974, as
amended from time to time, and the  regulations  promulgated  and rulings issued
thereunder.  Section  references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent  provisions of ERISA,  amendatory  thereof,
supplemental thereto or substituted therefor.

     "ERISA  Affiliate"  shall mean each person (as  defined in Section  3(9) of
ERISA) which  together  with the  Borrowers or any  Subsidiary  of the Borrowers
would be deemed to be a "single  employer"  (i)  within  the  meaning of Section
414(b),  (c), (m) or (o) of the Code or (ii) as a result of the Borrowers or any
Subsidiary  of the  Borrowers  being or having  been a general  partner  of such
person.

     "Eurodollar  Loan" shall mean each Loan designated as such by the Borrowers
at the time of the incurrence thereof or conversion thereto.

     "Eurodollar  Rate"  shall  mean for any  Interest  Determination  Date with
respect to an Interest Period for a Eurodollar Loan, the rate per annum obtained
by  dividing  (i)(a) the per annum  rate for  deposits  in Dollars  for a period
corresponding  to the duration of the relevant  Interest Period which appears on
Telerate Page 3750 at  approximately  11:00 A.M.  (London time) on such Interest
Determination  Date or (b) if such rate does not appear on Telerate Page 3750 on
such Interest  Determination  Date,  the per annum rate  (rounded  upward to the
nearest 1/16 of one percent) at which deposits in Dollars are offered by DBAG to
first-class banks in the New York interbank market, in the approximate amount of
DBAG's  relevant  Eurodollar Loan and having a maturity  approximately  equal to
such  Interest  Period,  at  approximately  11:00  A.M.  (New York time) on such
Interest  Determination  Date by (ii) a percentage  equal to 100% minus the then
stated maximum rate of all reserve requirements (including,  without limitation,
any marginal,  emergency,  supplemental,  special or other reserves  required by
applicable  law)  applicable to any member bank of the Federal Reserve System in
respect of  Eurocurrency  funding or  liabilities as defined in Regulation D (or
any successor  category of  liabilities  under  Regulation  D). The reference to
Telerate  Page 3750 in this  definition  shall be construed to be a reference to
the  relevant  page or any other page that may replace such page on the Telerate
service or any other  service  that may be  nominated  by the  British  Bankers'
Association  as the  information  vendor for the purpose of  displaying  British
Bankers' Association Interest Settlement Rates for deposits in Dollars.

     "Event of Default" shall have the meaning provided in Section 10.

     "Exchange  Rate" shall mean,  when  converting any amount  denominated in a
currency other than Dollars into Dollars,  the rate  determined in good faith by
DBAG  at  the  opening  of  business  (or  close  of  business  in the  case  of
determinations of reimbursement obligations with respect to Letters of Credit or
Acceptances) in New York, on the date as to which any  determination  thereof is
to be made,  as the spot rate at which such currency is offered for sale to DBAG
against delivery of Dollars by DBAG. If for any reason the Exchange Rate for any
currency  cannot be  calculated  as provided  above,  DBAG shall  calculate  the
Exchange Rate on such basis as it deems fair and equitable.  In determining  the
Stated  Amount of any Letter of Credit (A) for  purposes  of  Sections  1.01(a),
1.01(b),  2.01(c) and 4.02(a),  the Exchange Rate shall be calculated (x) on the
Effective Date, (y) on the first Business Day of each calendar month  thereafter
and  (z) on such  other  day as  DBAG  may,  in its  sole  discretion,  consider
appropriate  and (B) for purposes of Section  3.01,  the Exchange  Rate shall be
calculated  on the  Effective  Date and the first  Business Day of each calendar
month  thereafter.  The Exchange  Rate for all  reimbursement  obligations  with
respect to Letters of Credit and  Acceptances  (including,  without  limitation,
pursuant to Sections  2.04 and 2.05) shall be  determined  by using the Exchange
Rate as in effect on the date the  respective  Unpaid  Drawing  was paid by such
Issuing Lender.

     "Existing Acceptances" shall have the meaning provided in Section 2.01(a).

     "Existing Credit  Agreement" shall mean the Credit  Agreement,  dated as of
November 17, 1994, as amended and restated as of December 29, 1995,  and further
amended and restated as of September 6, 1996,  and further  amended and restated
as of June 27, 1997, and further amended and restated as of July 14, 1998, among
the  Borrowers,  the Banks  party  thereto  from time to time,  Credit  Lyonnais
Chicago Branch, as Documentation Agent, NationsBank, N.A., as Syndication Agent,
and Bankers Trust Company, as Administrative Agent.

     "Existing  Letters of Credit"  shall have the  meaning  provided in Section
2.01(a).

     "Expiration Date" shall mean (x) with respect to each Letter of Credit, the
final stated  expiration  date thereof or such earlier date on which such Letter
of Credit was canceled  and returned to the Issuing  Lender and (y) with respect
to each Acceptance, the date on which such Acceptance matures as provided by the
terms of the draft under the Letter of Credit related thereto.

     "Facing Fee" shall have the meaning provided in Section 3.01(c).

     "Federal Funds Rate" shall mean for any period, a fluctuating interest rate
equal for each day during  such period to the  weighted  average of the rates on
overnight Federal Funds  transactions with members of the Federal Reserve System
arranged by Federal Funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding  Business Day) by the Federal Reserve
Bank of New York,  or, if such rate is not so  published  for any day which is a
Business Day, the average of the  quotations  for such day on such  transactions
received  by the  Administrative  Agent  from  three  Federal  Funds  brokers of
recognized standing selected by the Administrative Agent.

     "Fees" shall mean all amounts payable pursuant to or referred to in Section
3.01.

     "First  Union"  shall  mean First  Union  National  Bank in its  individual
capacity.

     "Fiscal  Year" shall mean each fiscal year of  Furniture  Brands  ending on
December 31 of each calendar year.

     "Foreign Pension Plan" means any plan, fund (including, without limitation,
any  superannuation  fund) or other similar  program  established  or maintained
outside the United States by any Borrower or any one or more of their respective
Subsidiaries  primarily  for the benefit of employees  of such  Borrower or such
Subsidiary residing outside the United States, which plan, fund or other similar
program  provides,  or results in,  retirement  income,  a deferral of income in
contemplation  of  retirement  or  payments  to  be  made  upon  termination  of
employment, and which plan is not subject to ERISA or the Code.

     "Foreign Sales Corporation" shall mean a Wholly-Owned Foreign Subsidiary of
Furniture  Brands and/or its  Subsidiaries  created for the purpose of effecting
sales of goods and/or services in foreign countries.

     "Foreign  Subsidiary" shall mean, as to any Person, each Subsidiary of such
Person which is not a Domestic Subsidiary.

     "Furniture  Brands" shall have the meaning  provided in the first paragraph
of this Agreement.

     "Furniture  Brands  Common  Stock" shall mean the common stock of Furniture
Brands.

     "Hazardous  Materials"  means  (a) any  petroleum  or  petroleum  products,
radioactive  materials,  asbestos in any form that is or could  become  friable,
urea formaldehyde foam insulation,  transformers or other equipment that contain
dielectric fluid containing any level of  polychlorinated  biphenyls,  and radon
gas; (b) any  chemicals,  materials or substances  defined as or included in the
definition of "hazardous  substances," "hazardous waste," "hazardous materials,"
"extremely   hazardous   substances,"   "restricted   hazardous  waste,"  "toxic
substances,"  "toxic  pollutants,"  "contaminants," or "pollutants," or words of
similar  import,  under  any  applicable  Environmental  Law;  and (c) any other
chemical,  material or substance,  exposure to which is  prohibited,  limited or
regulated by any governmental authority under Environmental Laws.

     "Indebtedness" shall mean, as to any Person,  without duplication,  (i) all
indebtedness  (including principal,  interest,  fees and charges) of such Person
for borrowed  money or for the deferred  purchase price of property or services,
(ii) the maximum amount available to be drawn under all letters of credit issued
for the  account  of such  Person  and all  unpaid  drawings  in respect of such
letters of credit,  (iii) all Indebtedness of the types described in clause (i),
(ii),  (iv),  (v), (vi) or (vii) of this  definition  secured by any Lien on any
property owned by such Person, whether or not such Indebtedness has been assumed
by such Person (to the extent of the value of the respective property), (iv) the
aggregate amount required to be capitalized under leases under which such Person
is the lessee,  (v) all  obligations of such person to pay a specified  purchase
price for  goods or  services,  whether  or not  delivered  or  accepted,  i.e.,
take-or-pay  and similar  obligations,  (vi) all Contingent  Obligations of such
Person and (vii) all obligations  under any Interest Rate Protection  Agreement,
Currency Hedging Agreement or under any similar type of agreement.

     "Interest  Determination  Date" shall mean,  with respect to any Eurodollar
Loan, the second  Business Day prior to the  commencement of any Interest Period
relating to such Eurodollar Loan.

     "Interest Period" shall have the meaning provided in Section 1.09.

     "Interest  Rate  Protection  Agreement"  shall mean any interest  rate swap
agreement, interest rate cap agreement, interest collar agreement, interest rate
hedging  agreement,  interest rate floor agreement or other similar agreement or
arrangement.

     "Issuing  Lender"  shall mean DBAG (which for  purposes of this  definition
also  shall  include  any  banking  affiliate  of DBAG which has agreed to issue
Letters  of Credit  under  this  Agreement)  and any other  Lender  which at the
request of the Borrowers and with the consent of the Administrative Agent (which
shall not be  unreasonably  withheld or delayed)  agrees,  in such Lender's sole
discretion,  to become an Issuing  Lender for the purpose of issuing  Letters of
Credit  pursuant to Section 2. On the Effective  Date the sole Issuing Lender is
DBAG.

     "Judgment Currency" shall have the meaning provided in Section 13.18.

     "Judgment  Currency  Conversion  Date" shall have the  meaning  provided in
Section 13.18.

     "Lane"  shall have the  meaning  provided  in the first  paragraph  of this
Agreement.

     "L/C Supportable Obligations" shall mean obligations of Furniture Brands or
its  Subsidiaries  incurred in the ordinary  course of business  with respect to
insurance obligations and workers' compensation,  surety bonds and other similar
statutory  obligations,  and all other obligations  otherwise permitted to exist
pursuant to the terms of this  Agreement,  customarily  supported  by Letters of
Credit and satisfactory to the Administrative Agent.

     "Lead Arranger"  shall have the meaning  provided in the first paragraph of
this Agreement.

     "Leaseholds" of any Person means all the right,  title and interest of such
Person as lessee or  licensee  in,  to and  under  leases or  licenses  of land,
improvements and/or fixtures.

     "Lender"  shall mean each  financial  institution  listed on Schedule I, as
well as any Person which becomes a "Lender"  hereunder pursuant to Section 1.13,
1.14 or 13.04(b).

     "Lender  Default" shall mean (i) the refusal (which has not been retracted)
of a Lender,  in violation of this  Agreement,  to make available its portion of
any Borrowing  (including any Mandatory Borrowing) or to fund its portion of any
unreimbursed  payment under Section  2.04(c) or (ii) a Lender having notified in
writing the Borrowers and/or the Administrative Agent that it does not intend to
comply  with its  obligations  under  Section  1.01 or  Section 2 in the case of
either  clause  (i) or (ii),  as a result  of any  takeover  of such bank by any
regulatory authority or agency.

     "Letter of Credit" shall have the meaning provided in Section 2.01(a).

     "Letter of Credit  Facing Fee" shall have the  meaning  provided in Section
3.01(c).

     "Letter of Credit Fee" shall have the meaning provided in Section 3.01(b).

     "Letter of Credit Outstandings" shall mean, at any time, the sum of (i) the
aggregate  Stated  Amount of all  outstanding  Letters of Credit  which have not
terminated and  Acceptances  which have not matured or been prepaid and (ii) the
amount of all Unpaid Drawings.

     "Letter of Credit  Request"  shall mean any request  for the  issuance of a
Letter of Credit made by the Borrowers pursuant to Section 2.03(a).

     "Letter of Credit  Service  Agreement"  shall have the meaning  provided in
Section 2.03(a).

     "Leverage Ratio" shall mean on any date the ratio of (i) Consolidated  Debt
on such date to (ii)  Consolidated  EBITDA  for the  period of four  consecutive
fiscal quarters most recently ended on or prior to such date.

     "Lien" shall mean any mortgage, pledge, hypothecation,  assignment, deposit
arrangement,  encumbrance,  lien (statutory or other),  preference,  priority or
other security  agreement of any kind or nature whatsoever  (including,  without
limitation,  any  conditional  sale or  other  title  retention  agreement,  any
financing  or  similar  statement  or  notice  filed  under the UCC or any other
similar recording or notice statute, and any lease having substantially the same
effect as any of the foregoing).

     "Loan" shall mean each Revolving Loan and each Swingline Loan.

     "Mandatory Borrowing" shall have the meaning provided in Section 1.01(c).

     "Margin Stock" shall have the meaning provided in Regulation U.

     "Material  Adverse  Effect"  shall  mean a material  adverse  effect on the
business,  operations,  property, assets,  liabilities,  condition (financial or
otherwise) or prospects of the  Borrowers  taken as a whole or the Borrowers and
their  Subsidiaries taken as a whole, it being understood that any determination
of whether a Material Adverse Effect has occurred shall take into account, inter
alia,  any  available  indemnities  and the timing and  likelihood  of  payments
thereunder.

     "Maturity Date" shall mean June 7, 2005.

     "Maximum Swingline Amount" shall mean $50,000,000.

     "Minimum  Borrowing  Amount" shall mean (i) for Revolving Loans  $1,000,000
and, if greater,  in an integral  multiple of $500,000;  and (ii) for  Swingline
Loans, $500,000 and, if greater, in an integral multiple of $100,000.

     "Moody's" shall mean Moody's Investors Service, Inc.

     "Multiemployer  Plan" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA, which is maintained or contributed to by (or to which there
is an  obligation  to  contribute  of)  the  Borrowers  or a  Subsidiary  of the
Borrowers  or an ERISA  Affiliate  and each such  plan for the five year  period
immediately  following the latest date on which the Borrowers,  any Subsidiaries
of the Borrowers or any ERISA  Affiliates  maintained,  contributed to or had an
obligation to contribute to such plan.

     "Non-Defaulting  Lender"  shall mean and include  each Lender  other than a
Defaulting Lender.

     "Note" shall mean each Revolving Note and the Swingline Note.

     "Notice of Borrowing" shall have the meaning provided in Section 1.03.

     "Notice of Conversion" shall have the meaning provided in Section 1.06.

     "Notice Office" shall mean the office of the  Administrative  Agent located
at 31 West  52nd  Street,  New  York,  New York  10019,  Attention:  Christopher
Dibiase,  or  such  other  office  as the  Administrative  Agent  may  hereafter
designate in writing as such to the other parties hereto.

     "Obligations" shall mean all amounts owing to any Agent, any Issuing Lender
or any  Lender  pursuant  to the terms of this  Agreement  or any  other  Credit
Document.

     "Participant" shall have the meaning provided in Section 2.04(a).

     "Pay-In-Kind Preferred Stock" means any Preferred Stock where all dividends
with respect thereto may, at the option of the issuer  thereof,  be paid through
the issuance of additional shares of preferred stock of the same series.

     "Payment Office" shall mean the office of the Administrative  Agent located
at 31 West 52nd Street,  New York,  New York 10019,  or such other office as the
Administrative  Agent may  hereafter  designate  in writing as such to the other
parties hereto.

     "PBGC"  shall mean the Pension  Benefit  Guaranty  Corporation  established
pursuant to Section 4002 of ERISA, or any successor thereto.

     "Percentage" of any Lender at any time shall mean a fraction  (expressed as
a percentage)  the  numerator of which is the  Commitment of such Lender at such
time and the denominator of which is the Total Commitment at such time, provided
that if the  Percentage  of any  Lender  is to be  determined  after  the  Total
Commitment  has been  terminated,  then the  Percentages of the Lenders shall be
determined immediately prior (and without giving effect) to such termination.

     "Permitted Indebtedness" shall mean any unsecured Indebtedness for borrowed
money  incurred by the  Borrowers  (which may,  but shall not be required to be,
guaranteed  on an  unsecured  basis by one or more  Guarantors),  so long as (i)
based on  calculations  made by the  Borrowers on a Pro Forma Basis after giving
effect to the  incurrence of such  Indebtedness,  no Default or Event of Default
will exist under, or would have existed during the respective  Reference  Period
under,  the  financial  covenants  contained  in Sections  9.05 and 9.06 of this
Agreement,  (ii) based on good faith  projections  prepared by the Borrowers for
the period  from the date of the  incurrence  of such  Indebtedness  to the date
which is one year thereafter, the level of financial performance measured by the
covenants  set forth in Sections  9.05 and 9.06 shall be better than or equal to
such level as would be required  to provide  that no Default or Event of Default
would exist under the financial covenants contained in Sections 9.05 and 9.06 of
this Agreement as compliance with such covenants  would be required  through the
date  which is one year from the date of the  incurrence  of such  Indebtedness,
(iii)  Furniture   Brands  shall  furnish  to  the   Administrative   Agent  for
distribution  to each of the  Lenders an  officer's  certificate  from the chief
financial  officer or treasurer of Furniture  Brands  certifying  to the best of
such officer's knowledge as to compliance with the requirements of the preceding
clauses (i) and (ii) and containing the pro forma  calculations  required by the
preceding  clauses (i) and (ii),  (iv) the maturity of such  Indebtedness at the
time of the  incurrence  thereof  shall be at least one year beyond the Maturity
Date and (v) such  Indebtedness  (and any  guarantees  thereof)  shall rank pari
passu  or  junior  to the  Obligations  hereunder  and  under  the  Subsidiaries
Guaranty, as the case may be.

     "Permitted Liens" shall have the meaning provided in Section 9.01.

     "Person"  shall mean any  individual,  partnership,  joint  venture,  firm,
corporation,  association,  trust  or  other  enterprise  or any  government  or
political subdivision or any agency, department or instrumentality thereof.

     "Plan" shall mean any  single-employer  plan, as defined in Section 4001 of
ERISA,  which  is  maintained  or  contributed  to by (or to  which  there is an
obligation to contribute  of), the Borrowers or a Subsidiary of the Borrowers or
an ERISA  Affiliate  and each  such plan for the five  year  period  immediately
following the latest date on which the Borrowers,  a Subsidiary of the Borrowers
or an ERISA Affiliate maintained, contributed or had an obligation to contribute
to such plan.

     "Preferred  Stock," as applied to the capital  stock of any  Person,  means
capital  stock of such Person  (other than common  stock of such  Person) of any
class or classes  (however  designed)  that ranks  prior,  as to the  payment of
dividends or as to the  distribution of assets upon any voluntary or involuntary
liquidation,  dissolution  or  winding up of such  Person,  to shares of capital
stock of any  other  class of such  Person,  and  shall  include  any  Qualified
Preferred Stock.

     "Prime  Lending Rate" shall mean the rate which DBAG announces from time to
time as its prime  lending  rate,  the Prime  Lending Rate to change when and as
such prime lending rate changes.  The Prime Lending Rate is a reference rate and
does not necessarily  represent the lowest or best rate actually  charged to any
customer. DBAG may make commercial loans or other loans at rates of interest at,
above or below the Prime Lending Rate.

     "Pro Forma Basis" shall mean,  as to any Person,  for any of the  following
events  which occur  subsequent  to the  commencement  of a period for which the
financial  effect of such event is being  calculated,  and giving  effect to the
event for which such  calculation is being made,  such  calculation as will give
pro forma effect to such event as if same had occurred at the  beginning of such
period of calculation, and

          (i) for purposes of the foregoing calculation,  the transaction giving
     rise to the need to calculate  the pro forma effect to any of the following
     events  shall be  assumed  to have  occurred  on the  first day of the four
     fiscal  quarter  period last ended before the  occurrence of the respective
     event for which such pro forma effect is being  determined  (the "Reference
     Period"), and

          (ii) in making any  determination  with respect to the  incurrence  or
     assumption of any Indebtedness during the Reference Period or subsequent to
     the  Reference  Period  and on or  prior  to the  date  of the  transaction
     referenced in clause (i) above (the "Transaction  Date"),  all Indebtedness
     (including the Indebtedness incurred or assumed and for which the financial
     effect is being  calculated)  incurred  or  permanently  repaid  during the
     Reference  Period  shall be deemed to have been  incurred  or repaid at the
     beginning of such period, and

          (iii) in making  any  determination  of  Consolidated  EBITDA on a Pro
     Forma Basis, pro forma effect shall be given to any Significant Acquisition
     or Significant Divestiture which occurred during the Reference Period, with
     such   Consolidated   EBITDA  to  be  determined  as  if  such  Significant
     Acquisition  or  Significant  Divestiture  occurred on the first day of the
     Reference Period, taking into account cost savings and expenses which would
     otherwise  be  accounted  for as an  adjustment  pursuant  to Article 11 of
     Regulation  S-X under  the  Securities  Act,  as if such  cost  savings  or
     expenses were realized on the first day of the Reference Period.

     "Qualified  Preferred  Stock"  means  any  Pay-In-Kind  Preferred  Stock of
Furniture Brands, or any other Preferred Stock of Furniture Brands,  the express
terms of which shall provide that dividends  thereon shall not be required to be
paid in cash at any time that such cash payment would be prohibited by the terms
of this Agreement or result in a Default or Event of Default  hereunder,  and in
either case which,  by its terms (or by the terms of any security  into which it
is  convertible or for which it is  exchangeable),  or upon the happening of any
event  (including an event which would  constitute a Change of Control),  cannot
mature  (excluding  any maturity as the result of an optional  redemption by the
issuer  thereof) and is not mandatorily  redeemable,  pursuant to a sinking fund
obligation or otherwise,  and is not redeemable,  or required to be repurchased,
at the sole option of the holder thereof (including,  without  limitation,  upon
the occurrence of an event which would constitute a Change of Control), in whole
or in part, on or prior to the first anniversary of the Maturity Date.

     "Quarterly  Payment  Date" shall mean the last  Business  Day of each June,
September, December and March, occurring after the Effective Date.

     "RCRA" shall mean the Resource  Conservation  and Recovery Act, as the same
may be amended from time to time, 42 U.S.C.ss. 6901 et seq.

     "Real Property" of any Person shall mean all the right,  title and interest
of such Person in and to land, improvements and fixtures, including Leaseholds.

     "Reference  Period"  shall have the meaning  provided in the  definition of
"Pro Forma Basis" appearing in this Section 11.01.

     "Register" shall have the meaning provided in Section 13.17.

     "Regulation  D" shall mean  Regulation  D of the Board of  Governors of the
Federal  Reserve  System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.

     "Regulation  T" shall mean  Regulation  T of the Board of  Governors of the
Federal  Reserve  System as from time to time in effect and any successor to all
or a portion thereof.

     "Regulation  U" shall mean  Regulation  U of the Board of  Governors of the
Federal  Reserve  System as from time to time in effect and any successor to all
or a portion thereof.

     "Regulation  X" shall mean  Regulation  X of the Board of  Governors of the
Federal  Reserve  System as from time to time in effect and any successor to all
or a portion thereof.

     "Release"  means  any  spilling,   leaking,  pumping,  pouring,   emitting,
emptying,  discharging,  injecting,  escaping,  leaching,  dumping, disposing or
migration into the environment.

     "Replaced Lender" shall have the meaning provided in Section 1.13.

     "Replacement Lender" shall have the meaning provided in Section 1.13.

     "Reportable  Event"  shall mean an event  described  in Section  4043(c) of
ERISA with  respect  to a Plan  other  than those  events as to which the 30-day
notice period is waived under  subsection .13, .14, .16, .18, .19 or .20 of PBGC
Regulation Section 2615.

     "Required  Lenders"  shall mean  Non-Defaulting  Lenders,  the sum of whose
outstanding Commitments (or after the termination thereof, outstanding Revolving
Loans and  Percentage  of  Swingline  Loans and  Letter of Credit  Outstandings)
represent  greater  than 50% of the Total  Commitment  less the  Revolving  Loan
Commitments of all Defaulting Lenders (or after the termination thereof, the sum
of the then total outstanding Revolving Loans of Non-Defaulting  Lenders and the
aggregate  Percentages of all  Non-Defaulting  Lenders of the total  outstanding
Swingline Loans and Letter of Credit Outstandings at such time).

     "Returns" shall have the meaning provided in Section 7.09.

     "Revolving Loan" shall have the meaning provided in Section 1.01(a).

     "Revolving Note" shall have the meaning provided in Section 1.05(a).

     "S&P" shall mean Standard & Poor's Rating Services.

     "SEC" shall have the meaning provided in Section 8.01(e).

     "Section  4.04(b)(ii)  Certificate"  shall  have the  meaning  provided  in
Section 4.04(b)(ii).

     "Securities Act" shall mean the Securities Act of 1933, as amended.

     "Significant Acquisition" shall mean any acquisition by Furniture Brands or
any of  its  Subsidiaries  of  another  Person  (not  already  a  Borrower  or a
Subsidiary thereof), or the assets constituting a business,  division or product
line of any such  Person,  the fair market  value  (determined  in good faith by
Furniture  Brands) of which exceeds  $10,000,000  for any such  transaction  (or
series of related transactions).

     "Significant  Divestiture"  shall  mean any sale or  other  disposition  of
assets by Furniture  Brands or any of its  Subsidiaries to any other Person (not
already a Borrower or a Subsidiary  thereof),  the fair market value (determined
in good faith by Furniture  Brands) of which  exceeds  $10,000,000  for any such
transaction (or series of related transactions).

     "Stated  Amount" of (x) each Letter of Credit shall,  at any time, mean the
maximum amount available to be drawn thereunder (in each case determined without
regard to whether any  conditions to drawing  could then be met);  provided that
the  "Stated  Amount"  of each  Letter of  Credit  denominated  in an  Alternate
Currency  shall be, on any date of  calculation,  the Dollar  Equivalent  of the
maximum  amount  available  to be drawn in such  Alternate  Currency  thereunder
(determined  without  regard to whether any  conditions to drawing could then be
met) and (y) each  Acceptance  shall  mean the  amount of each such  Acceptance;
provided that the "Stated Amount" of any Acceptance  denominated in an Alternate
Currency shall be, on any date of calculation, the Dollar Equivalent thereof.

     "Subsidiaries Guaranty" shall have the meaning provided in Section 5.06.

     "Subsidiary"  shall mean, as to any Person,  (i) any corporation  more than
50% of whose stock of any class or classes having by the terms thereof  ordinary
voting  power  to  elect  a  majority  of  the  directors  of  such  corporation
(irrespective  of  whether  or not at the time  stock of any class or classes of
such  corporation  shall  have or  might  have  voting  power by  reason  of the
happening of any  contingency) is at the time owned by such Person and/or one or
more  Subsidiaries of such Person and (ii) any partnership,  association,  joint
venture or other entity in which such Person and/or one or more  Subsidiaries of
such Person has more than a 50% equity interest at the time.

     "Subsidiary  Guarantor" shall mean each Wholly-Owned Domestic Subsidiary of
Furniture Brands.

     "Supermajority Lenders" shall mean those Non-Defaulting Lenders which would
constitute the Required  Lenders under, and as defined in, this Agreement if the
percentage "50%" contained therein were changed to "66-2/3%".

     "Swingline  Expiry  Date"  shall mean the date which is two  Business  Days
prior to the Maturity Date.

     "Swingline Lender" shall mean DBAG.

     "Swingline Loan" shall have the meaning provided in Section 1.01(b).

     "Swingline Note" shall have the meaning provided in Section 1.05(a).

     "Syndication  Agent" shall have the meaning provided in the first paragraph
of this Agreement.

     "Syndication Date" shall mean that date upon which the Administrative Agent
determines in its sole  discretion  (and notifies the Borrower) that the primary
syndication  (and resultant  addition of Persons as Lenders  pursuant to Section
13.04(b)) has been completed.

     "Tax  Sharing  Agreement"  shall mean that  certain tax  sharing  agreement
entered into among the  Borrowers  and certain  other  Persons,  and  previously
delivered to the Administrative Agent.

     "Taxes" shall have the meaning provided in Section 4.04(a).

     "Thomasville"  shall have the meaning  provided in the first  paragraph  of
this Agreement.

     "Total  Commitment"  shall mean, at any time, the sum of the Commitments of
each of the Lenders.

     "Total  Unutilized  Commitment" shall mean, at any time, an amount equal to
the  remainder  of (i) the  then  Total  Commitment,  less  (ii)  the sum of the
aggregate  principal  amount of Revolving Loans and Swingline Loans  outstanding
plus the then aggregate amount of Letter of Credit Outstandings.

     "Type" shall mean the type of Loan  determined  with regard to the interest
option applicable thereto, i.e., whether a Base Rate Loan or a Eurodollar Loan.

     "UCC" shall mean the Uniform Commercial Code as from time to time in effect
in the relevant jurisdiction.

     "Unfunded Current Liability" of any Plan means the amount, if any, by which
the actuarial present value of the accumulated benefits under the Plan as of the
close of its most  recent plan year each  exceeds  the fair market  value of the
assets  allocable  thereto,  each  determined  in accordance  with  Statement of
Financial Accounting Standards No. 87, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan.

     "United States" and "U.S." shall each mean the United States of America.

     "Unpaid Drawing" shall have the meaning provided for in Section 2.05(a).

     "Unutilized Commitment" with respect to any Lender, at any time, shall mean
such  Lender's  Commitment  at such  time  less  the  sum of (i)  the  aggregate
outstanding  principal  amount of  Revolving  Loans made by such Lender and (ii)
such Lender's Percentage of the Letter of Credit Outstandings at such time.

     "Voting  Stock"  shall  mean,  as to any  Person,  any class or  classes of
capital  stock of such Person  pursuant to which the  holders  thereof  have the
general voting power under ordinary  circumstances  to elect at least a majority
of the Board of Directors of such Person.

     "Wholly-Owned   Domestic   Subsidiary"   of  any  Person  shall  mean  each
Wholly-Owned Subsidiary of such Person which is also a Domestic Subsidiary.

     "Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any corporation
100% of whose capital stock (other than director's  qualifying shares) is at the
time owned by such Person and/or one or more  Wholly-Owned  Subsidiaries of such
Person and (ii) any partnership,  association,  joint venture or other entity in
which such Person and/or one or more  Wholly-Owned  Subsidiaries  of such Person
has a 100% equity interest at such time.

     SECTION 12. The Agents.

     12.01  Appointment.  The Lenders hereby  designate  DBAG as  Administrative
Agent, First Union as Documentation  Agent, Bank of America as Syndication Agent
and Deutsche  Bank  Securities  Inc., as Lead  Arranger,  in each case to act as
specified  herein  and  in  the  other  Credit  Documents.  Each  Lender  hereby
irrevocably  authorizes,  and each holder of any Note by the  acceptance of such
Note shall be deemed irrevocably to authorize, each Agent to take such action on
its behalf under the provisions of this  Agreement,  the other Credit  Documents
and any other  instruments  and agreements  referred to herein or therein and to
exercise such powers and to perform such duties  hereunder and thereunder as are
specifically  delegated  to or  required  of such Agent by the terms  hereof and
thereof and such other powers as are reasonably  incidental thereto.  Each Agent
may perform any of its duties  hereunder by or through its respective  officers,
directors, agents, employees or affiliates.

     12.02 Nature of Duties. No Agent shall have any duties or  responsibilities
except  those  expressly  set forth in this  Agreement  and in the other  Credit
Documents.  No Agent nor any of its officers,  directors,  agents,  employees or
affiliates  shall  be  liable  for any  action  taken or  omitted  by it or them
hereunder  or under any other  Credit  Document  or in  connection  herewith  or
therewith, unless caused by its or their gross negligence or willful misconduct.
The duties of each Agent shall be mechanical and  administrative  in nature;  no
Agent  shall have by reason of this  Agreement  or any other  Credit  Document a
fiduciary  relationship  in respect of any Lender or the holder of any Note; and
nothing in this Agreement or any other Credit Document, expressed or implied, is
intended to or shall be so construed as to impose upon any Agent any obligations
in respect of this  Agreement or any other Credit  Document  except as expressly
set forth herein or therein.

     12.03 Lack of Reliance on the Agents.  Independently  and without  reliance
upon any Agent,  each Lender and the holder of each Note, to the extent it deems
appropriate,  has  made  and  shall  continue  to make  (i) its own  independent
investigation of the financial condition and affairs of Furniture Brands and its
Subsidiaries  in connection with the making and the continuance of the Loans and
the taking or not taking of any action in  connection  herewith and (ii) its own
appraisal of the  creditworthiness of Furniture Brands and its Subsidiaries and,
except as expressly provided in this Agreement,  no Agent shall have any duty or
responsibility, either initially or on a continuing basis, to provide any Lender
or the  holder of any Note with any  credit or other  information  with  respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times  thereafter.  No Agent nor any of its affiliates or any of its
officers,  directors, agents, or employees shall be responsible to any Lender or
the   holder   of  any  Note   for  any   recitals,   statements,   information,
representations  or warranties  herein or in any document,  certificate or other
writing  delivered in connection  herewith or for the execution,  effectiveness,
genuineness, validity, enforceability,  perfection, collectibility,  priority or
sufficiency  of this  Agreement  or any other Credit  Document or the  financial
condition of Furniture  Brands and its  Subsidiaries  or be required to make any
inquiry  concerning  either the  performance  or observance of any of the terms,
provisions or conditions of this Agreement or any other Credit Document,  or the
financial condition of Furniture Brands and its Subsidiaries or the existence or
possible existence of any Default or Event of Default.

     12.04 Certain Rights of the Agents. If any Agent shall request instructions
from the Required Lenders with respect to any act or action  (including  failure
to act) in connection  with this  Agreement or any other Credit  Document,  such
Agent shall be entitled  to refrain  from such act or taking such action  unless
and until such Agent shall have received instructions from the Required Lenders;
and such  Agent  shall  not  incur  liability  to any  Person  by  reason  of so
refraining.  Without  limiting  the  foregoing,  no Lender or holder of any Note
shall have any right of action whatsoever  against any Agent as a result of such
Agent  acting or  refraining  from acting  hereunder  or under any other  Credit
Document in accordance with the instructions of the Required Lenders.

     12.05  Reliance.  Each Agent shall be entitled to rely,  and shall be fully
protected in relying,  upon any note, writing,  resolution,  notice,  statement,
certificate,  telex, teletype or telecopier message, cablegram, radiogram, order
or other document or telephone  message signed,  sent or made by any Person that
such Agent  believed to be the proper  Person,  and,  with  respect to all legal
matters  pertaining  to this  Agreement  and any other  Credit  Document and its
duties  hereunder and thereunder,  upon advice of counsel selected by such Agent
(which may be counsel for the Credit Parties).

     12.06  Indemnification.  To the  extent  any  Agent is not  reimbursed  and
indemnified  by the  Borrowers,  the Lenders will  reimburse and indemnify  such
Agent, in proportion to their  respective  "percentages"  as used in determining
the Required Lenders  (determined as if there were no Defaulting  Lenders),  for
and against any and all liabilities,  obligations,  losses, damages,  penalties,
claims, actions,  judgments, costs, expenses or disbursements of whatsoever kind
or nature which may be imposed on, asserted against or incurred by such Agent in
performing its duties hereunder or under any other Credit  Document,  in any way
relating  to or arising  out of this  Agreement  or any other  Credit  Document;
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 such  Agent's  gross  negligence  or
willful  misconduct  (as  determined by a court of competent  jurisdiction  in a
final and non-appealable decision).

     12.07 The Agent in its Individual Capacity.  With respect to its obligation
to make Loans and  participate in Letters of Credit under this  Agreement,  each
Agent shall have the rights and powers  specified  herein for a "Lender" and may
exercise the same rights and powers as though it were not  performing the duties
specified herein;  and the term "Lenders,"  "Required  Lenders,"  "Supermajority
Lenders,"  "holders of Notes" or any  similar  terms  shall,  unless the context
clearly otherwise indicates, include such Agent in its individual capacity. Each
Agent may accept deposits from, lend money to, and generally  engage in any kind
of banking,  trust or other  business  with any Credit Party or any Affiliate of
any Credit Party as if they were not performing the duties specified herein, and
may accept fees and other  consideration  from the Borrowers or any other Credit
Party for services in  connection  with this  Agreement  and  otherwise  without
having to account for the same to the Lenders.

     12.08 Holders. The Administrative Agent may deem and treat the payee of any
Note as the owner  thereof for all  purposes  hereof  unless and until a written
notice of the assignment,  transfer or endorsement  thereof, as the case may be,
shall have been filed with the Administrative  Agent. Any request,  authority or
consent of any Person  who,  at the time of making  such  request or giving such
authority or consent,  is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee,  assignee or endorsee, as the case may be,
of such Note or of any Note or Notes issued in exchange therefor.

     12.09 Resignation by the Agents.  (a) The  Administrative  Agent may resign
from the performance of all its functions and duties  hereunder and/or under the
other  Credit  Documents at any time by giving 15 Business  Days' prior  written
notice to the Borrowers and the Lenders. Such resignation shall take effect upon
the appointment of a successor  Administrative Agent pursuant to clauses (b) and
(c) below or as otherwise provided below.

     (b) Upon any such notice of resignation, the Required Lenders shall appoint
a  successor  Administrative  Agent  hereunder  or  thereunder  who  shall  be a
commercial bank or trust company reasonably acceptable to the Borrowers.

     (c) If a successor  Administrative  Agent shall not have been so  appointed
within such 15 Business Day period, the  Administrative  Agent, with the consent
of the  Borrowers,  shall then appoint a commercial  bank or trust  company with
capital and surplus of not less than $500  million as  successor  Administrative
Agent who shall serve as Administrative Agent hereunder or thereunder until such
time, if any, as the Required Lenders appoint a successor  Administrative  Agent
as provided above.

     (d) If no successor  Administrative  Agent has been  appointed  pursuant to
clause (b) or (c) above by the 20th  Business  Day after the date such notice of
resignation was given by the Administrative  Agent, the  Administrative  Agent's
resignation shall become effective and the Lenders shall thereafter  perform all
the duties of the  Administrative  Agent hereunder and/or under any other Credit
Document  until such time, if any, as the Required  Lenders  appoint a successor
Administrative Agent as provided above.

     (e) Each of the Syndication  Agent,  the  Documentation  Agent and the Lead
Arranger  may resign at any time by giving five  Business  Days'  prior  written
notice  to the  Borrowers,  the  Administrative  Agent  and  the  Lenders.  Such
resignation shall be effective five days after such notice.

     12.10 Documentation Agent, Syndication Agent and Arranger.  Notwithstanding
anything to the  contrary  contained  herein,  nothing in this  Agreement  shall
impose on the  Documentation  Agent, the Syndication  Agent or the Arranger,  in
each case in such capacity, any duties or obligations.

     SECTION 13. Miscellaneous.

     13.01 Payment of Expenses,  etc. The Borrowers jointly and severally shall:
(i) whether or not the transactions herein contemplated are consummated, pay all
reasonable  out-of-pocket  costs and expenses of each Agent (including,  without
limitation,  the  reasonable  fees and  disbursements  of  White & Case  LLP) in
connection  with the  preparation,  execution and delivery of this Agreement and
the other Credit Documents and the documents and instruments  referred to herein
and therein and any amendment,  waiver or consent relating hereto or thereto, of
each Agent in  connection  with its  syndication  efforts  with  respect to this
Agreement  and of each Agent and,  following and during the  continuation  of an
Event of Default, each of the Lenders in connection with the enforcement of this
Agreement  and the other Credit  Documents  and the  documents  and  instruments
referred to herein and therein (including,  without  limitation,  the reasonable
fees and  disbursements of counsel for each Agent and,  following and during the
continuation of an Event of Default, for each of the Lenders); (ii) pay and hold
each of the  Lenders  harmless  from and  against any and all present and future
stamp,  excise and other similar taxes with respect to the foregoing matters and
hold each of the Lenders  harmless from and against any and all liabilities with
respect to or  resulting  from any delay or  omission  (other than to the extent
attributable  to such Lender) to pay such taxes;  and (iii) indemnify each Agent
and each Lender  (including in its capacity as an Issuing  Lender),  and each of
their respective officers, directors, employees, representatives, affiliates and
agents  from and hold each of them  harmless  against  any and all  liabilities,
obligations (including removal or remedial actions), losses, damages, penalties,
claims, actions,  judgments, suits, costs, expenses and disbursements (including
reasonable  attorneys' and  consultants'  fees and  disbursements)  incurred by,
imposed on or assessed against any of them as a result of, or arising out of, or
in any way related  to, or by reason of, (a) any  investigation,  litigation  or
other  proceeding  (whether  or not any Agent or any Lender is a party  thereto)
related to the entering into and/or  performance  of this Agreement or any other
Credit  Document or the use of any Letter of Credit or the proceeds of any Loans
hereunder or the consummation of any transactions  contemplated herein or in any
other  Credit  Document  or the  exercise  of any of their  rights  or  remedies
provided herein or in the other Credit  Documents,  or (b) the actual or alleged
presence of Hazardous  Materials in the air,  surface water or groundwater or on
the surface or subsurface of any Real Property  owned or at any time operated by
Furniture  Brands  or  any  of  its  Subsidiaries,   the  generation,   storage,
transportation,  handling or disposal of Hazardous  Materials  at any  location,
whether or not owned or operated by Furniture Brands or any of its Subsidiaries,
the non-compliance of any Real Property with foreign,  federal,  state and local
laws,  regulations,  and ordinances  (including  applicable permits  thereunder)
applicable to any Real Property,  or any  Environmental  Claim asserted  against
Furniture Brands, any of its Subsidiaries,  or any Real Property owned or at any
time operated by Furniture Brands or any of its Subsidiaries, including, in each
case, without  limitation,  the reasonable fees and disbursements of counsel and
other consultants incurred in connection with any such investigation, litigation
or other proceeding (but excluding any losses,  liabilities,  claims, damages or
expenses  to the extent  incurred by reason of the gross  negligence  or willful
misconduct  of the  Person  to be  indemnified  (as  determined  by a  court  of
competent jurisdiction in a final and non-appealable  decision)).  To the extent
that the undertaking to indemnify,  pay or hold harmless any Agent or any Lender
set forth in the preceding sentence may be unenforceable because it is violative
of any law or public policy,  the Borrowers shall make the maximum  contribution
to the payment and satisfaction of each of the indemnified  liabilities which is
permissible under applicable law.

     13.02 Right of Setoff.  In addition to any rights now or hereafter  granted
under  applicable  law or  otherwise,  and not by way of  limitation of any such
rights,  upon the occurrence and during the  continuance of an Event of Default,
each  Lender is  hereby  authorized  at any time or from  time to time,  without
presentment,  demand, protest or other notice of any kind to the Borrowers or to
any other Person,  any such notice being hereby expressly waived, to set off and
to appropriate and apply any and all deposits (general or special) and any other
Indebtedness  at any  time  held or  owing by such  Lender  (including,  without
limitation,  by branches and agencies of such Lender wherever located) to or for
the  credit or the  account of any Credit  Party  against  and on account of the
Obligations  and  liabilities  of all Credit  Parties to such Lender  under this
Agreement  or  under  any of the  other  Credit  Documents,  including,  without
limitation,  all interests in Obligations  purchased by such Lender  pursuant to
Section 13.06(b),  and all other claims of any nature or description arising out
of or connected with this Agreement or any other Credit  Document,  irrespective
of whether or not such Lender shall have made any demand  hereunder and although
said Obligations,  liabilities or claims, or any of them, shall be contingent or
unmatured.

     13.03 Notices.  Except as otherwise  expressly provided herein, all notices
and other  communications  provided for hereunder shall be in writing (including
telegraphic,  telex, telecopier or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered: if to the Borrowers, at the Borrowers'
address specified  opposite their signature below; if to any other Credit Party,
at such  Credit  Party's  address  set forth in any Credit  Document;  if to any
Lender,  at  its  address  specified  on  Schedule  II  below;  and  if  to  the
Administrative  Agent,  at the Notice Office;  or, as to any Credit Party or the
Administrative Agent, at such other address as shall be designated by such party
in a written notice to the other parties hereto and, as to each Lender,  at such
other address as shall be  designated by such Lender in a written  notice to the
Borrowers  and the  Administrative  Agent.  All such notices and  communications
shall,  when  mailed,  telegraphed,  telexed,  telecopied,  or cabled or sent by
overnight  courier,  be effective when deposited in the mails,  delivered to the
telegraph company,  cable company or overnight  courier,  as the case may be, or
sent by telex or  telecopier,  except  that  notices and  communications  to the
Administrative  Agent and the Borrowers shall not be effective until received by
the Administrative Agent or the Borrowers, as the case may be.

     13.04 Benefit of Agreement.  (a) This  Agreement  shall be binding upon and
inure to the benefit of and be  enforceable  by the  respective  successors  and
assigns of the parties  hereto;  provided,  however,  no Borrower  may assign or
transfer any of its rights, obligations or interest hereunder or under any other
Credit  Document  without the prior  written  consent of all of the Lenders and,
provided  further,  that  although  any  Lender  may  transfer,  assign or grant
participations in its rights hereunder,  such Lender shall remain a "Lender" for
all purposes hereunder (and may not transfer or assign all or any portion of its
Commitment hereunder except as provided in Section 13.04(b)) and the transferee,
assignee or  participant,  as the case may be,  shall not  constitute a "Lender"
hereunder  and,  provided  further,  that no Lender shall  transfer or grant any
participation  under  which the  participant  shall have  rights to approve  any
amendment to or waiver of this Agreement or any other Credit  Document except to
the  extent  such  amendment  or waiver  would (i)  extend  the final  scheduled
maturity of any  Revolving  Loan or Note or extend the expiry date of any Letter
of Credit  beyond the  Maturity  Date,  or reduce the rate or extend the time of
payment of  interest  or Fees  thereon  (except in  connection  with a waiver of
applicability  of any  post-default  increase in  interest  rates) or reduce the
principal  amount  thereof,   or  increase  the  amount  of  the   participant's
participation  over the amount thereof then in effect (it being  understood that
waivers or modifications of conditions precedent,  covenants, Defaults or Events
of  Default  or of a  mandatory  reduction  in the  Total  Commitment  shall not
constitute a change in the terms of such participation,  and that an increase in
any Commitment shall be permitted  without the consent of any participant if the
participant's  participation  is not  increased  as a  result  thereof)  or (ii)
consent to the  assignment  or transfer by the  Borrowers of any of their rights
and obligations under this Agreement. In the case of any such participation, the
participant  shall not have any rights under this  Agreement or any of the other
Credit  Documents  (the  participant's  rights against such Lender in respect of
such  participation  to be those set  forth in the  agreement  executed  by such
Lender in favor of the participant  relating thereto) and all amounts payable by
the Borrowers  hereunder shall be determined as if such Lender had not sold such
participation.

     (b) Notwithstanding the foregoing,  any Lender (or any Lender together with
one or more other Lenders) may (x) assign all or a portion of its Commitment and
related  outstanding   Obligations   hereunder  (or,  if  the  Commitments  have
terminated,  its  outstanding  Obligations) to (i) its parent company and/or any
affiliate  of such  Lender  which is at least  50%  owned by such  Lender or its
parent company or to one or more other Lenders or (ii) in the case of any Lender
that is a fund that  invests in bank loans,  any other fund that invests in bank
loans and is managed  by the same  investment  advisor  of such  Lender or by an
Affiliate  of such  investment  advisor  or (y)  after  providing  at least  two
Business Days' prior notice to (but without  requiring the consent of) Furniture
Brands  (except that no such notice shall be required if any Default or Event of
Default then exists pursuant to Section 10.05), assign all, or if less than all,
a portion equal to at least $5,000,000 in the aggregate for the assigning Lender
or assigning Lenders,  of such Commitments and related  outstanding  Obligations
hereunder (or, if the Commitments have terminated,  its outstanding Obligations)
to one or more  Eligible  Transferees,  each of which  assignees  shall become a
party to this Agreement as a Lender by execution of an Assignment and Assumption
Agreement,  provided that, (i) at such time Schedule I shall be deemed  modified
to reflect the Commitment of such new Lender and of the existing  Lenders,  (ii)
at the request of the assignee Lender,  and upon surrender of the respective old
Revolving Notes (if theretofore  issued) or the provision of a typical lost note
indemnification  agreement  (in respect of the  respective  Revolving  Note,  if
theretofore  issued and  subsequently  lost or  misplaced)  from the assignor or
assignee Lender, new Revolving Notes will be issued, at the Borrowers'  expense,
to such new Lender and to the assigning  Lender,  such new Revolving Notes to be
in  conformity  with  the   requirements  of  Section  1.05  (with   appropriate
modifications)  to the extent needed to reflect the revised  Commitments,  (iii)
the consent of the Administrative Agent and any Issuing Lender shall be required
in connection  with any such assignment  pursuant to clause (y) above,  and (iv)
the  Administrative  Agent  shall  receive  at the time of each such  assignment
(other than in connection  with an assignment by a Lender to its parent  company
and/or an affiliate of such Lender),  from the assigning or assignee Lender, the
payment of a  non-refundable  fee of $3,500  and,  provided  further,  that such
transfer  or   assignment   will  not  be  effective   until   recorded  by  the
Administrative  Agent on the Register  pursuant to Section 13.17 hereof.  To the
extent of any assignment pursuant to this Section 13.04(b), the assigning Lender
shall be relieved of its  obligations  hereunder  with  respect to its  assigned
Commitments. At the time of each assignment pursuant to this Section 13.04(b) to
a Person  which is not  already  a Lender  hereunder  and  which is not a United
States person (as such term is defined in Section  7701(a)(30)  of the Code) for
Federal income tax purposes, the respective assignee Lender shall provide to the
Borrowers and the Administrative  Agent the appropriate Internal Revenue Service
Forms (and,  if  applicable  a Section  4.04(b)(ii)  Certificate)  described  in
Section  4.04(b).  To the extent that an  assignment  of all or any portion of a
Lender's  Commitments and related  outstanding  Obligations  pursuant to Section
1.13 or this Section 13.04(b) would, at the time of such  assignment,  result in
increased  costs  under  Section  1.10,  1.11 or 4.04  greater  than those being
charged by the respective  assigning Lender prior to such  assignment,  then the
Borrowers  shall not be obligated to pay such greater  increased costs (although
the Borrowers  shall be obligated to pay any other  increased  costs of the type
described  above  resulting  from  changes  after  the  date  of the  respective
assignment).

     (c) Nothing in this  Agreement  shall  prevent or prohibit  any Lender from
pledging its Loans and Notes  hereunder to a Federal  Reserve Bank in support of
borrowings  made by such Lender from such  Federal  Reserve  Bank and,  with the
consent of the  Administrative  Agent, any Lender which is a fund may pledge all
or any  portion  of  its  Notes  or  Loans  to its  trustee  in  support  of its
obligations to its trustee.  No pledge pursuant to this clause (c) shall release
the transferor Lender from any of its obligations hereunder.

     13.05 No Waiver;  Remedies  Cumulative.  No failure or delay on the part of
any Agent or any Lender or any holder of any Note in exercising any right, power
or  privilege  hereunder  or under any other  Credit  Document  and no course of
dealing  between the  Borrowers  or any other  Credit Party and any Agent or any
Lender or the holder of any Note shall  operate as a waiver  thereof;  nor shall
any single or partial  exercise of any right,  power or  privilege  hereunder or
under any other Credit Document  preclude any other or further  exercise thereof
or the exercise of any other right, power or privilege  hereunder or thereunder.
The rights, powers and remedies herein or in any other Credit Document expressly
provided are  cumulative  and not  exclusive  of any rights,  powers or remedies
which any Agent or any Lender or the holder of any Note would otherwise have. No
notice to or demand on any  Credit  Party in any case shall  entitle  any Credit
Party to any other or further notice or demand in similar or other circumstances
or constitute a waiver of the rights of any Agent or any Lender or the holder of
any Note to any other or further action in any  circumstances  without notice or
demand.

     13.06  Payments  Pro  Rata.  (a)  Except  as  otherwise  provided  in  this
Agreement,  the  Administrative  Agent agrees that promptly after its receipt of
each  payment from or on behalf of the  Borrowers in respect of any  Obligations
hereunder,  it shall  distribute  such  payment to the  Lenders  (other than any
Lender  that has  consented  in  writing to waive its pro rata share of any such
payment) pro rata based upon their respective shares, if any, of the Obligations
with respect to which such payment was received.

     (b) Each of the  Lenders  agrees  that,  if it should  receive  any  amount
hereunder  (whether by voluntary payment,  by realization upon security,  by the
exercise  of the right of setoff or  banker's  lien,  by  counterclaim  or cross
action,  by  the  enforcement  of any  right  under  the  Credit  Documents,  or
otherwise),  which is applicable to the payment of the principal of, or interest
on, the Loans,  Unpaid Drawings,  Commitment  Commission or other Fees, of a sum
which with respect to the related sum or sums  received by other Lenders is in a
greater  proportion  than the total of such Obligation then owed and due to such
Lender  bears to the  total of such  Obligation  then owed and due to all of the
Lenders  immediately  prior to such  receipt,  then such Lender  receiving  such
excess  payment  shall  purchase for cash without  recourse or warranty from the
other Lenders an interest in the  Obligations of the respective  Credit Party to
such Lenders in such amount as shall result in a proportional  participation  by
all the  Lenders in such  amount;  provided  that if all or any  portion of such
excess amount is thereafter  recovered from such Lender,  such purchase shall be
rescinded and the purchase price  restored to the extent of such  recovery,  but
without interest.

     (c)  Notwithstanding   anything  to  the  contrary  contained  herein,  the
provisions  of the preceding  Sections  13.06(a) and (b) shall be subject to the
express  provisions  of this  Agreement  which  require,  or  permit,  differing
payments to be made to Non-Defaulting Lenders as opposed to Defaulting Lenders.

     13.07  Calculations;  Computations.  (a)  The  financial  statements  to be
furnished  to the  Lenders  pursuant  hereto  shall  be  made  and  prepared  in
accordance with generally  accepted  accounting  principles in the United States
(or the equivalent  thereof in any country in which a Foreign Sales  Corporation
is doing business,  as applicable)  consistently  applied throughout the periods
involved,  provided that, except as otherwise  specifically provided herein, all
computations  determining compliance with Sections 9.02 through 9.06, inclusive,
shall utilize  accounting  principles and policies in conformity with those used
to prepare the historical financial statements delivered to the Lenders pursuant
to Sections 7.05(a).

     (b) All  computations of interest and other Fees hereunder shall be made on
the basis of a year of 360 days (or 365/366 days in the case of interest on Base
Rate Loans and Commitment  Commission)  for the actual number of days (including
the first day but excluding the last day) occurring in the period for which such
interest or other Fees are payable.

     13.08  GOVERNING LAW;  SUBMISSION TO  JURISDICTION;  VENUE;  WAIVER OF JURY
TRIAL.  (a) THIS  AGREEMENT  AND THE OTHER CREDIT  DOCUMENTS  AND THE RIGHTS AND
OBLIGATIONS  OF THE PARTIES  HEREUNDER  AND  THEREUNDER  SHALL BE  CONSTRUED  IN
ACCORDANCE  WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.  ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT
MAY BE BROUGHT  IN THE  COURTS OF THE STATE OF NEW YORK OR OF THE UNITED  STATES
FOR THE  SOUTHERN  DISTRICT  OF NEW YORK,  IN EACH CASE WHICH ARE LOCATED IN THE
CITY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,  EACH OF THE
BORROWERS HEREBY IRREVOCABLY  ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF
THE BORROWERS HEREBY FURTHER  IRREVOCABLY  WAIVES ANY CLAIM THAT ANY SUCH COURTS
LACK  PERSONAL  JURISDICTION  OVER IT, AND AGREES NOT TO PLEAD OR CLAIM,  IN ANY
LEGAL ACTION OR  PROCEEDING  WITH RESPECT TO THIS  AGREEMENT OR ANY OTHER CREDIT
DOCUMENTS  BROUGHT IN ANY OF THE  AFOREMENTIONED  COURTS,  THAT SUCH COURTS LACK
PERSONAL JURISDICTION OVER IT. EACH OF THE BORROWERS FURTHER IRREVOCABLY CONSENT
TO THE  SERVICE OF PROCESS OUT OF ANY OF THE  AFOREMENTIONED  COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL,  POSTAGE  PREPAID,  TO THE BORROWERS AT THEIR  ADDRESS SET FORTH  OPPOSITE
THEIR  SIGNATURE  BELOW,  SUCH  SERVICE TO BECOME  EFFECTIVE  30 DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT UNDER
THIS  AGREEMENT,  ANY LENDER OR THE  HOLDER OF ANY NOTE TO SERVE  PROCESS IN ANY
OTHER MANNER  PERMITTED  BY LAW OR TO COMMENCE  LEGAL  PROCEEDINGS  OR OTHERWISE
PROCEED AGAINST ANY BORROWER IN ANY OTHER JURISDICTION.

     (b) EACH OF THE BORROWERS HEREBY  IRREVOCABLY WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS
OR PROCEEDINGS  ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER  IRREVOCABLY  WAIVES  AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.

     (c) EACH OF THE PARTIES TO THIS  AGREEMENT  HEREBY  IRREVOCABLY  WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION,  PROCEEDING OR COUNTERCLAIM  ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

     13.09  Counterparts.  This  Agreement  may be  executed  in any  number  of
counterparts and by the different parties hereto on separate counterparts,  each
of which when so executed and delivered  shall be an original,  but all of which
shall together  constitute one and the same  instrument.  A set of  counterparts
executed by all the parties  hereto shall be lodged with the  Borrowers  and the
Administrative Agent.

     13.10 Effectiveness. This Agreement shall become effective on the date (the
"Effective  Date") on which (i) each Borrower,  each Lender,  each Agent and the
Lead  Arranger  shall have  signed a  counterpart  hereof  (whether  the same or
different  counterparts) and shall have delivered (including by way of facsimile
device)  the same to the  Administrative  Agent at the Notice  Office or, in the
case of the  Lenders,  shall  have  given the  Administrative  Agent  telephonic
(confirmed  in  writing),  written or telex notice  (actually  received) at such
office  that  same has been  signed  and  mailed  to it and (ii) the  conditions
contained  in  Section  5 are  met to the  satisfaction  of the  Agents  and the
Required  Lenders.  Unless the  Administrative  Agent has received actual notice
from any Lender that the conditions  contained in Section 5 have not been met to
its reasonable satisfaction, upon the satisfaction of the condition described in
clause (i) of the  immediately  preceding  sentence and upon the  Administrative
Agent's good faith determination that the conditions described in clause (ii) of
the immediately  preceding sentence have been met, then the Effective Date shall
have been deemed to have occurred,  regardless of any  subsequent  determination
that  one or more of the  conditions  thereto  had not been  met  (although  the
occurrence  of the  Effective  Date  shall not  release  any  Borrower  from any
liability  for  failure  to  satisfy  one or more of the  applicable  conditions
contained in Section 5). The  Administrative  Agent will give the  Borrowers and
each Lender prompt written notice of the occurrence of the Effective Date.

     13.11  Headings  Descriptive.  The  headings  of the several  sections  and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.

     13.12  Amendment or Waiver;  etc. (a) Neither this  Agreement nor any other
Credit  Document  nor any  terms  hereof  or  thereof  may be  changed,  waived,
discharged or terminated unless such change, waiver, discharge or termination is
in  writing  signed by the  respective  Credit  Parties  party  thereto  and the
Required Lenders, provided that no such change, waiver, discharge or termination
shall, without the consent of each Lender (other than a Defaulting Lender) (with
Obligations  being  directly  affected  thereby in the case of following  clause
(i)), (i) extend the final scheduled maturity of any Loan or Note, or extend the
stated maturity of, or any reimbursement  obligation under, any Letter of Credit
beyond the  Maturity  Date,  or reduce the rate or extend the time of payment of
interest or Fees, or reduce the principal  amount thereof  (except to the extent
repaid in cash),  or reduce any  reimbursement  obligations  under any Letter of
Credit, (ii) release all or substantially all of the Subsidiary  Guarantors from
the  Subsidiaries  Guaranty (except in connection with a sale of such Subsidiary
Guarantor in accordance with the terms of this Agreement),  (iii) amend,  modify
or waive any provision of this Section  13.12  (except for technical  amendments
with respect to additional extensions of credit under this Agreement of the type
which afford the protections to such additional extensions of credit provided to
the Commitments on the Effective Date), (iv) reduce the percentage  specified in
the definition of Required  Lenders (it being  understood that, with the consent
of the  Required  Lenders,  additional  extensions  of credit  pursuant  to this
Agreement  may be  included  in the  determination  of the  Required  Lenders on
substantially  the same basis as the extensions of  Commitments  are included on
the Effective Date) or (v) consent to the assignment or transfer by any Borrower
of any of its rights and obligations under this Agreement, except mergers and/or
consolidations involving one or more Borrowers and another Person (not already a
Borrower or a  Subsidiary  thereof)  shall be permitted  with the prior  written
consent of the Required  Lenders,  provided  that the survivor of such merger or
consolidation  (to the extent not a Borrower) is organized under the laws of the
United States or a State thereof and executes and delivers to the Administrative
Agent agreements in form and substance  satisfactory to the Agents and providing
for the assumption by such Person of the obligations of the respective  Borrower
or Borrowers under this Agreement and the Notes;  provided further, that no such
change,  waiver,  discharge or termination  shall (1) increase the Commitment of
any Lender over the amount  thereof  then in effect  without the consent of such
Lender  (it  being  understood  that  waivers  or  modifications  of  conditions
precedent,  covenants, Defaults or Events of Default or of a mandatory reduction
in the Total  Commitments  shall not constitute an increase of the Commitment of
any Lender,  and that an increase in the available  portion of any Commitment of
any Lender shall not  constitute an increase in the  Commitment of such Lender),
(2) without the consent of the  Supermajority  Lenders,  decrease the percentage
set forth in  Section  9.07 (as in effect  on the  Effective  Date) or amend the
definition  of  Supermajority  Lenders (it being  understood  that,  pursuant to
Section  1.14 or with the consent of the Required  Lenders,  as the case may be,
additional  extensions of credit  pursuant to this  Agreement may be included in
the determination of the  Supermajority  Lenders on substantially the same basis
as Revolving Loan  Commitments  are included on the Effective  Date) without the
consent of the Supermajority  Lenders, (3) without the consent of the respective
Issuing  Lender or Issuing  Lenders,  amend,  modify or waive any  provision  of
Section 2 with respect to Letters of Credit issued by it (or Acceptances created
thereunder) or alter its rights or obligations with respect to Letters of Credit
or Acceptances,  (4) without the consent of the Swingline Lender,  amend, modify
or waive any  provision  of  Sections  1.01(b)  and (c) or alter its  rights and
obligations  with respect to Swingline  Loans or (5) without the consent of each
Agent affected  thereby,  amend,  modify or waive any provision of Section 12 as
same applies to such Agent or any other  provision as same relates to the rights
or obligations of such Agent.

     (b) If, in  connection  with any  proposed  change,  waiver,  discharge  or
termination  to any of the  provisions  of this  Agreement  as  contemplated  by
clauses (i) through (v),  inclusive,  of the first proviso to Section  13.12(a),
the consent of the  Required  Lenders is obtained but the consent of one or more
of such other  Lenders  whose  consent is  required  is not  obtained,  then the
Borrowers  shall have the right,  so long as all  non-consenting  Lenders  whose
individual consent is required are treated as described in either clauses (A) or
(B) below, to either (A) replace each such non-consenting Lender or Lenders with
one or more Replacement  Lenders pursuant to Section 1.13 so long as at the time
of such  replacement,  each such  Replacement  Lender  consents to the  proposed
change,  waiver,  discharge or termination or (B) terminate such  non-consenting
Lender's Commitment in accordance with Sections 3.02(b) and/or 4.01(b), provided
that, unless the Commitments are terminated,  and Loans repaid,  pursuant to the
preceding  clause (B) are immediately  replaced in full at such time through the
addition of new Lenders or the increase of the  Commitments  and/or  outstanding
Loans of existing Lenders (who in each case must specifically  consent thereto),
then in the case of any action  pursuant to  preceding  clause (B) the  Required
Lenders   (determined  before  giving  effect  to  the  proposed  action)  shall
specifically consent thereto,  provided further, that in any event the Borrowers
shall not have the right to replace a Lender,  terminate its Commitment or repay
its Loans  solely as a result of the exercise of such  Lender's  rights (and the
withholding  of any  required  consent by such  Lender)  pursuant  to the second
proviso to Section 13.12(a).

     13.13  Survival.  All  indemnities  set  forth  herein  including,  without
limitation,  in Sections 1.10, 1.11, 2.06, 4.04, 13.01 and 13.06 shall,  subject
to Section 13.15 (to the extent applicable), survive the execution, delivery and
termination  of this Agreement and the Notes and the making and repayment of the
Loans.

     13.14  Domicile of Loans.  Each Lender may transfer and carry its Loans at,
to or for the account of any office,  Subsidiary  or  Affiliate  of such Lender.
Notwithstanding  anything to the contrary contained herein, to the extent that a
transfer of Loans  pursuant to this  Section  13.14  would,  at the time of such
transfer,  result in increased costs under Section 1.10, 1.11, 2.06 or 4.04 from
those being charged by the respective  Lender prior to such  transfer,  then the
Borrowers  shall not be  obligated to pay such  increased  costs  (although  the
Borrowers  shall  be  obligated  to pay any  other  increased  costs of the type
described  above  resulting  from  changes  after  the  date  of the  respective
transfer).

     13.15 Limitation on Additional Amounts,  etc.  Notwithstanding  anything to
the contrary  contained in Sections 1.10,  1.11, 2.06 or 4.04 of this Agreement,
unless a Lender  gives  notice to the  Borrowers  that it is obligated to pay an
amount  under any such  Section  within one year after the later of (x) the date
the Lender  incurs the  respective  increased  costs,  Taxes,  loss,  expense or
liability, reduction in amounts received or receivable or reduction in return on
capital or (y) the date such Lender has actual  knowledge of its  incurrence  of
the respective increased costs, Taxes, loss, expense or liability, reductions in
amounts  received or  receivable  or reduction  in return on capital,  then such
Lender  shall only be entitled  to be  compensated  for such amount  jointly and
severally by the Borrowers pursuant to said Section 1.10, 1.11, 2.06 or 4.04, as
the case may be, to the extent the costs,  Taxes,  loss,  expense or  liability,
reduction in amounts  received or  receivable  or reduction in return on capital
are  incurred or  suffered  on or after the date which  occurs one year prior to
such Lender  giving  notice to the  Borrowers  that it is  obligated  to pay the
respective  amounts  pursuant to said Section 1.10,  1.11,  2.06 or 4.04, as the
case may be. This Section  13.15 shall have no  applicability  to any Section of
this Agreement other than said Sections 1.10, 1.11, 2.06 and 4.04.

     13.16 Confidentiality.  (a) Subject to the provisions of clause (b) of this
Section  13.16,  each  Lender  agrees  that it will use its best  efforts not to
disclose  without  the  prior  consent  of  the  Borrowers  (other  than  to its
employees,  auditors,  advisors or counsel or to another Lender if the Lender or
such Lender's  holding or parent company in its sole discretion  determines that
any such party  should have access to such  information,  provided  such Persons
shall be subject to the  provisions  of this Section 13.16 to the same extent as
such Lender) any  information  with  respect to  Furniture  Brands or any of its
Subsidiaries  which is now or in the future furnished pursuant to this Agreement
or any other Credit Document and which is designated by Furniture  Brands to the
Lenders in writing as  confidential,  provided  that any Lender may disclose any
such information (a) as has become generally available to the public, (b) as may
be required or  appropriate in any report,  statement or testimony  submitted to
any  municipal,  state or Federal  regulatory  body  having or  claiming to have
jurisdiction  over such  Lender or to the Federal  Reserve  Board or the Federal
Deposit Insurance  Corporation or similar  organizations  (whether in the United
States or elsewhere) or their successors,  (c) as may be required or appropriate
in respect to any summons or subpoena or in connection with any litigation,  (d)
in order to comply with any law, order,  regulation or ruling applicable to such
Lender,  (e) to any  Agent,  (f) to any  prospective  or  actual  transferee  or
participant in connection with any contemplated transfer or participation of any
of the Notes or  Commitments or any interest  therein by such Lender,  provided,
that  such  prospective   transferee  agrees  to  maintain  the  confidentiality
contained  in this  Section and (g) to the  National  Association  of  Insurance
Commissioners or any similar  organization or any nationally  recognized  rating
agency  that  requires  access to  information  about such  Lender's  investment
portfolio in connection with ratings issued to such Lender.

     (b) Each of the Borrowers  hereby  acknowledges and agrees that each Lender
may share with any of its Affiliates any information related to Furniture Brands
or  any  of its  Subsidiaries  (including,  without  limitation,  any  nonpublic
customer information  regarding the creditworthiness of Furniture Brands and its
Subsidiaries),  provided such Persons shall be subject to the provisions of this
Section 13.16 to the same extent as such Lender.

     13.17 Register.  The Borrowers hereby designate the Administrative Agent to
serve as the Borrowers'  agent,  solely for purposes of this Section  13.17,  to
maintain a register  (the  "Register")  on which it will record the  Commitments
from time to time of each of the Lenders,  the Loans made by each of the Lenders
and each  repayment  in  respect  of the  principal  amount of the Loans of each
Lender.  Failure to make any such recordation,  or any error in such recordation
shall not affect the  Borrowers'  obligations  in  respect of such  Loans.  With
respect to any Lender,  the transfer of the  Commitments  of such Lender and the
rights to the principal of, and interest on, any Revolving Loan made pursuant to
such  Commitments  shall not be effective until such transfer is recorded on the
Register  maintained  by the  Administrative  Agent with respect to ownership of
such  Commitments and Revolving Loans and prior to such  recordation all amounts
owing to the transferor  with respect to such  Commitments  and Revolving  Loans
shall remain owing to the transferor. The registration of assignment or transfer
of all or part of any  Commitments  and Revolving Loans shall be recorded by the
Administrative   Agent  on  the  Register  only  upon  the   acceptance  by  the
Administrative  Agent  of a  properly  executed  and  delivered  Assignment  and
Assumption Agreement pursuant to Section 13.04(b).  Coincident with the delivery
of such an Assignment and Assumption  Agreement to the Administrative  Agent for
acceptance  and  registration  of  assignment  or  transfer  of all or part of a
Revolving  Loan,  or  as  soon  thereafter  as  practicable,  the  assigning  or
transferor  Lender shall  surrender the Note evidencing such Revolving Loan, and
thereupon one or more new Revolving Notes in the same aggregate principal amount
shall be issued to the assigning or transferor Lender and/or the new Lender. The
Borrowers jointly and severally agree to indemnify the Administrative Agent from
and against any and all losses,  claims,  damages and  liabilities of whatsoever
nature  which  may  be  imposed  on,   asserted   against  or  incurred  by  the
Administrative Agent in performing its duties under this Section 13.17, provided
that the Borrowers  shall have no  obligation  to indemnify  the  Administrative
Agent for any loss, claim, damage, liability or expense which resulted primarily
from the gross negligence or willful misconduct of the Administrative  Agent (as
determined by a court of competent  jurisdiction  in a final and  non-appealable
decision).

     13.18 Judgment Currency.  (a) The Credit Parties' obligations hereunder and
under the other  Credit  Documents  to make  payments  in  Dollars  shall not be
discharged  or  satisfied  by any tender or recovery  pursuant  to any  judgment
expressed in or converted  into any currency  other than Dollars,  except to the
extent  that such  tender or recovery  results in the  effective  receipt by the
Administrative  Agent or the  respective  Lender of the full  amount of  Dollars
expressed  to be payable to the  Administrative  Agent or such Lender under this
Agreement  or the other  Credit  Documents.  If for the purpose of  obtaining or
enforcing judgment against any Credit Party in any court or in any jurisdiction,
it becomes  necessary to convert  into or from any  currency  other than Dollars
(such other currency being hereinafter  referred to as the "Judgment  Currency")
an amount due in Dollars, the conversion shall be made, at the Dollar Equivalent
thereof  determined,  in each case,  on the day on which the  judgment  is given
(such  Business  Day being  hereinafter  referred to as the  "Judgment  Currency
Conversion Date").

     (b) If there is a change in the rate of  exchange  prevailing  between  the
Judgment  Currency  Conversion Date and the date of actual payment of the amount
due, the Borrowers jointly and severally  covenant and agree to pay, or cause to
be paid, such additional  amounts, if any (but in any event not a lesser amount)
as may be  necessary  to ensure that the amount paid in the  Judgment  Currency,
when converted at the rate of exchange  prevailing on the date of payment,  will
produce the amount of Dollars which could have been purchased with the amount of
Judgment  Currency  stipulated in the judgment or judicial  award at the rate or
exchange prevailing on the Judgment Currency Conversion Date.

     (c) For purposes of determining the Dollar  Equivalent or any other rate of
exchange  for this  Section,  such amounts  shall  include any premium and costs
payable in connection with the purchase of Dollars.

     SECTION 14. Nature of Borrowers' Obligations.

     14.01  Nature of  Obligations.  Notwithstanding  anything  to the  contrary
contained  elsewhere  in this  Agreement,  it is  understood  and  agreed by the
various  parties to this Agreement that all  Obligations to repay  principal of,
interest  on,  and all other  amounts  with  respect  to, all  Revolving  Loans,
Swingline  Loans and  Letter of Credit  Outstandings  and all other  Obligations
pursuant to this Agreement and under any Note  (including,  without  limitation,
all fees, indemnities, taxes and other Obligations in connection therewith or in
connection with the related  Commitments) shall constitute the joint and several
obligations of Furniture Brands, Broyhill, Lane and Thomasville.  In addition to
the direct (and joint and several)  obligations of the Borrowers with respect to
Obligations  as  described  above,  all such  Obligations  shall  be  guaranteed
pursuant to, and in accordance with the terms of, the Subsidiaries Guaranty.

     14.02 Independent Obligation. The obligations of each Borrower with respect
to the  Obligations  are independent of the obligations of the other Borrower or
any  guarantor,  and a separate  action or actions may be brought and prosecuted
against each  Borrower,  whether or not any other  Borrower or any  guarantor is
joined in any such  action or  actions.  Each  Borrower  waives,  to the fullest
extent permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement  thereof.  Any payment by any Borrower or
other  circumstance  which operates to toll any statute of limitations as to any
Borrower  shall,  to the fullest  extent  permitted by law,  operate to toll the
statute of limitations as to each Borrower.

     14.03  Authorization.  Each of the Borrowers  authorizes the Administrative
Agent and the Lenders  without  notice or demand (except as shall be required by
applicable statute and cannot be waived), and without affecting or impairing its
liability hereunder, from time to time to:

          (a) exercise or refrain from  exercising  any rights against any other
     Borrower  or any  guarantor  or others or  otherwise  act or  refrain  from
     acting;

          (b) release or substitute any other Borrower, endorsers, guarantors or
     other obligors;

          (c) settle or compromise any of the  Obligations of any other Borrower
     or  any  other  Credit  Party,  any  security  therefor  or  any  liability
     (including  any of those  hereunder)  incurred  directly or  indirectly  in
     respect  thereof or hereof,  and may  subordinate the payment of all or any
     part  thereof to the payment of any  liability  (whether due or not) of any
     Borrower to its creditors other than the Lenders;

          (d) apply any sums paid by any  other  Borrower  or any other  Person,
     howsoever  realized to any liability or  liabilities of such other Borrower
     or other Person  regardless of what  liability or liabilities of such other
     Borrower or other Person remain unpaid; and/or

          (e)  consent to or waive any breach  of, or act,  omission  or default
     under,  this Agreement or any of the instruments or agreements  referred to
     herein, or otherwise, by any other Borrower or any other Person.

     14.04  Reliance.  It is not necessary for the  Administrative  Agent or any
other  Lender to inquire  into the  capacity or powers of any Borrower or any of
its Subsidiaries or the officers,  directors, members, partners or agents acting
or  purporting  to act on its  behalf,  and any  Obligations  made or created in
reliance upon the professed  exercise of such powers shall  constitute the joint
and several obligations of the Borrowers hereunder.

     14.05  Contribution;  Subrogation.  No  Borrower  shall  have any rights of
contribution  or  subrogation  with respect to any other Borrower as a result of
payments  made  by it  hereunder,  in each  case  unless  and  until  the  Total
Commitment has been terminated and all Obligations have been paid in full.

     14.06 Waiver.  Each Borrower waives any right to require the Administrative
Agent or the other  Lenders  to (i)  proceed  against  any other  Borrower,  any
guarantor or any other party,  (ii) proceed against or exhaust any security held
from any  Borrower,  any  guarantor or any other party or (iii) pursue any other
remedy in the  Administrative  Agent's or the Lenders'  power  whatsoever.  Each
Borrower  waives  any  defense  based on or  arising  out of  suretyship  or any
impairment of security held from any Borrower,  any guarantor or any other party
or on or arising out of any defense of any other Borrower,  any guarantor or any
other party other than  payment in full in cash of the  Obligations,  including,
without limitation, any defense based on or arising out of the disability of any
other Borrower, any guarantor or any other party, or the unenforceability of the
Obligations or any part thereof from any cause,  or the cessation from any cause
of the liability of any other  Borrower,  in each case other than as a result of
the payment in full in cash of the Obligations.


<PAGE>


     IN WITNESS  WHEREOF,  the parties hereto have caused their duly  authorized
officers  to execute  and  deliver  this  Agreement  as of the date first  above
written.

Address:
--------

c/o Furniture Brands International, Inc.  FURNITURE BRANDS INTERNATIONAL, INC.
101 South Hanley Road                     BROYHILL FURNITURE INDUSTRIES, INC.
St. Louis, MO  63105                      LANE FURNITURE INDUSTRIES, INC.
Tel: (314) 863-1100                       THOMASVILLE FURNITURE INDUSTRIES, INC.
Fax: (314) 863-5306
Attention:  David P. Howard
Vice President, Treasurer
and Chief Financial Officer

                                           By /s/ David Howard
                                           -------------------
                                           Title:   Vice President

                                           DEUTSCHE BANK AG, NEW YORK BRANCH,
                                           as Administrative Agent

                                           By:/s/ Alexander Karow
                                           ----------------------
                                           Title: Vice President

                                           By:/s/ Mathias Pulster
                                           ----------------------
                                           Title: Vice President

                                           BANK OF AMERICA, N.A., Individually
                                           and as Syndication Agent

                                           By:/s/ Gretchen Spoo
                                           --------------------
                                           Title: Vice President

                                           FIRST UNION NATIONAL BANK,
                                           Individually and as Documentation
                                             Agent

                                           By:/s/ Stephen R. B. Rixham
                                           ---------------------------
                                           Title: Assistant Vice President

                                           DEUTSCHE BANK SECURITIES INC.,
                                           as Lead Arranger

                                           By:/s/ Alexander Karow
                                           ----------------------
                                           Title: Vice President

                                           By:/s/ Thoams A. Foley
                                           ----------------------
                                           Title: Vice President

                                           DEUTSCHE BANK AG, NEW YORK BRANCH
                                           AND/OR CAYMAN ISLANDS BRANCH

                                           By:/s/ Alexander Karow
                                           ----------------------
                                           Title: Vice President

                                           By:/s/ Mathias Pulster
                                           ----------------------
                                           Title: Vice President

                                           Banca Nazionale Del Lavoro S.P.A. -
                                           New York Branch

                                           By:/s/ Giulio Giovine
                                           ---------------------
                                           Title: Vice President

                                           By:/s/ Leonardo Valentini
                                           -------------------------
                                           Title: First Vice President

                                           Allied Irish Banks PLC.,
                                            New York Branch

                                           By:/s/ William J. Strickland
                                           ----------------------------
                                           Title: Executive Vice President

                                           By:/s/ Germaine Reusch
                                           ----------------------
                                           Title: Vice President

                                           Bank Austria Creditanstalt Corporate
                                             Finance, Inc.

                                           By:/s/ John T. Murphy
                                           ---------------------
                                           Title: Senior Vice President

                                           By:/s/ Diane B. Vaccaro
                                           -----------------------
                                           Title: Vice President

                                           The Bank of New York

                                           By:/s/ David Shedd
                                           ------------------
                                           Title:  Vice President

                                           The Bank of Tokyo-Mitsubishi, Ltd.,
                                             Chicago Branch

                                           By:/s/ Hisashi Miyashiro
                                           ------------------------
                                           Title: Deputy General Manager

                                           Bank One, N.A.

                                           By:/s/ Nathan L. Bloch
                                           ----------------------
                                           Title: First Vice President

                                           Branch Banking and Trust Company

                                           By:/s/ Cory Boyte
                                           -----------------
                                           Title: Vice President

                                           The Dai-Ichi Kangyo Bank, Ltd.

                                           By:/s/ Nobuyasu Fukatsu
                                           -----------------------
                                           Title: General Manager

                                           Firstar Bank, N.A.

                                           By:/s/ Amanda Smith
                                           -------------------
                                           Title: Banking Officer

                                           The Fuji Bank, Limited

                                           By:/s/ Peter L. Chinnici
                                           ------------------------
                                           Title: Senior Vice President

                                           The Industrial Bank of Japan, Limited

                                           By:/s/ Walter R. Wolff
                                           ----------------------
                                           Title: Joint General Manager

                                           Michigan National Bank

                                           By:/s/ Draga Palincas
                                           ---------------------
                                           Title: Vice President

                                          The Mitsubishi Trust and
                                             Banking Corporation

                                          By:/s/ Nobuo Tominaga
                                          ---------------------
                                          Title:  Chief Manager

                                          The Sanwa Bank, Limited

                                          By:/s/ Lee E. Prewitt
                                          ---------------------
                                          Title: Vice President

                                          The Sumitomo Bank, Ltd.

                                          By:/s/ John H. Kemper
                                          ---------------------
                                          Title: Senior Vice President

                                          SunTrust Bank

                                          By:/s/ Jeff Howard
                                          -------------------
                                          Title:  Director

                                          Wachovia Bank, N.A.

                                          By:/s/ Walter R. Gillikin
                                          -------------------------
                                          Title: Senior Vice President


<PAGE>
<TABLE>
<CAPTION>
                                                                                Schedule I
                                                                                ----------
                                   COMMITMENTS
                                   -----------

Bank                                                                        Commitment
----                                                                        ----------

<S>                                                                         <C>
Deutsche Bank AG, New York Branch and/or                                    $90,000,000
Cayman Islands Branch
Bank of America, N.A.                                                       $62,500,000
First Union National Bank                                                   $62,500,000
The Bank of Tokyo-Mitsubishi, Ltd.,                                         $40,000,000
Chicago Branch
The Dai-Ichi Kangyo Bank, Ltd.                                              $40,000,000
The Industrial Bank of Japan, Limited                                       $40,000,000
SunTrust Bank                                                               $40,000,000
Bank Austria Creditanstalt                                                  $25,000,000
Corporate Finance, Inc.

The Bank of New York                                                        $25,000,000
Bank One, N.A.                                                              $25,000,000
The Fuji Bank, Limited                                                      $25,000,000
The Mitsubishi Trust and Banking Corporation                                $25,000,000
The Sanwa Bank, Limited                                                     $25,000,000
The Sumitomo Bank, Ltd.                                                     $25,000,000
Wachovia Bank, N.A.                                                         $25,000,000
Michigan National Bank                                                      $15,000,000
Allied Irish Banks Plc., New York Branch                                    $10,000,000
Banca Nazionale del Lavoro S.p.A. -                                         $10,000,000
New York Branch
Branch Banking and Trust Company                                            $10,000,000
Firstar Bank, N.A.                                                          $10,000,000
                                                                            -----------

Total                                                                       $630,000,000
                                                                            ============
</TABLE>


<PAGE>




                                                                     SCHEDULE II
                                                                     -----------

                                LENDER ADDRESSES
                                ----------------

DEUTSCHE BANK AG, NEW YORK BRANCH
31 West 52nd Street
New York, NY  10019
Tel: (212) 469-8215
Fax: (212) 469-8212

Attention: Frederick Laird

BANK OF AMERICA, N.A.
231 South LaSalle Street
Chicago, IL 60697
Tel: (312) 828-6654
Fax: (312) 987-0303
Attention: Gretchen Spoo

FIRST UNION NATIONAL BANK
301 S. College Street
Charlotte, NC  28288-0737
Tel: (704) 715-1040
Fax (704) 374-3300
Attention: Stephen R. B. Rixham

ALLIED IRISH BANKS PLC.,
NEW YORK BRANCH
405 Park Avenue
New York, NY 10022
Tel: (212) 339-8913
Fax (212) 339-8007/8
Attention: Germaine Reusch

BANCA NAZIONALE DEL LAVORO S.P.A. - NEW YORK BRANCH
25 West 51st Street
New York, NY 10019
Tel: (212) 314-0239
Fax: (212) 765-2978

Attention: Giulio Giovine

BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC.
Two Greenwich Plaza
Greenwich, CT 06830
Tel: (203) 861-1502
Fax: (203) 861-1532
Attention: Diane Vaccaro

THE BANK OF NEW YORK
48 Wall Street
New York, NY  10005
Tel: (212) 635-8448
Fax: (212) 635-1208
Attention: David G. Shedd

THE BANK OF TOKYO-MITSUBISHI, LTD.,
CHICAGO BRANCH
227 West Monroe Street, Suite 2300
Chicago, IL
Tel: (312) 696-4662
Fax: (312) 696-4530
Attention: Alex Lam

BANCO NACIONAL ULTRAMARINO
22 e 38, Av, Almeida Ribeiro
P.O. Box 465
Macau
Tel: (853) 712752
Fax" (853) 710136

Attention: Teresa M. Jesus dos Santos

BANK ONE, N.A.
1 Bank One Plaza
Mail Code IL1-0173
Chicago, IL  60670
Tel:  (312) 732-2243
Fax: (312) 732-1117

Attention: Nathan L. Bloch

BRANCH BANKING AND TRUST COMPANY
Corporate Accounting Division
P.O. Box 15008
Winston-Salem, NC  27118-5008
Tel:  (336) 733-3259
Fax: (336) 733-3254

Attention: Cory Boyte

THE DAI-ICHI KANGYO BANK, LTD.
Chicago Branch
10 South Wacker Drive
Chicago, IL  60606
Tel: (312) 715-6364
Fax: (312) 876-2011
Attention: Brian Riley

FIRSTAR BANK, N.A.
1 Firstar Plaza
St. Louis, MO  63160
Tel:  (314) 418-3638
Fax: (314) 418-1963

Attention: Amanda Smith

THE FUJI BANK, LIMITED
Chicago Branch
225 West Wacker Drive, Suite 3000
Chicago, IL  60606
Tel:  (312) 621-0534
Fax: (312) 621-0583
Attention: Takeyuki Kuroki

THE  INDUSTRIAL  BANK OF JAPAN,  LIMITED
Chicago Branch
227 West Monroe Street, Suite 2600
Chicago, IL  60606
Tel: (312) 855-8254
Fax: (312) 855-8200

Attention: Koichi Zaiki

MICHIGAN NATIONAL BANK
27777 Inksler Road
P.O. Box 9065
Farmington Hills, Michigan 48333-9065
Tel: (248) 473-4330
Fax: (248) 473-4345

Attention: Draga B. Palincas

THE  MITSUBISHI  TRUST AND BANKING  CORPORATION
Chicago Branch
311 South Wacker Drive, Suite 0300
Chicago, IL  60606-6622
Tel:  (312) 408-5000
Fax: (312) 663-0863

Attention: John Pastore

THE SANWA BANK, LIMITED
Chicago Branch
10 Wacker Drive, Suite 1825
Chicago, IL  60606
Tel:  (312) 368-3020
Fax: (312) 848-8677

Attention: Lee E. Prewitt

THE SUMITOMO BANK, LTD.
Chicago Branch
233 South Wacker Drive, Suite 4010
Chicago, IL  60606-6378
Tel:  (312) 876-7797
Fax: (312) 876-6436
Attention: John H. Kemper

SUNTRUST BANK
303 Peachtree Street
Mail Code 1904, 3rd Floor
Atlanta, Georgia 30308
Tel:  (404) 658-4226
Fax: (404) 575-2594

Attention: Jeffrey A. Howard

WACHOVIA BANK, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia  80803
Tel:  (404) 332-5747
Fax: (404) 332-6898
Attention: Walter R. Gillikin


<PAGE>




                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----

SECTION 1.  Amount and Terms of Credit.........................................2
         1.01  The Commitments.................................................2
         1.02  Minimum Amount of Each Borrowing................................3
         1.03  Notice of Borrowing.............................................3
         1.04  Disbursement of Funds...........................................4
         1.05  Notes...........................................................5
         1.06  Conversions.....................................................6
         1.07  Pro Rata Borrowings.............................................6
         1.08  Interest........................................................7
         1.09  Interest Periods................................................7
         1.10  Increased Costs, Illegality, etc................................8
         1.11  Compensation...................................................10
         1.12  Change of Lending Office.......................................11
         1.13  Replacement of Lenders.........................................11
         1.14  Additional Commitments.........................................12

SECTION 2.  Letters of Credit.................................................14

         2.01  Letters of Credit..............................................14
         2.02  Minimum Stated Amount..........................................15
         2.03  Letter of Credit Requests......................................15
         2.04  Letter of Credit Participations................................16
         2.05  Agreement to Repay Letter of Credit Drawings and Acceptance
                  Payments....................................................18
         2.06  Increased Costs................................................19

SECTION 3.  Commitment Commission; Fees; Reductions of Commitment.............20

         3.01  Fees...........................................................20
         3.02  Voluntary Termination of Unutilized Commitments................21
         3.03  Mandatory Reduction of Commitments.............................22

SECTION 4.  Prepayments; Payments; Taxes......................................22

         4.01  Voluntary Prepayments..........................................22
         4.02  Mandatory Repayments and Cash Collateralizations...............23
         4.03  Method and Place of Payment....................................24
         4.04  Net Payments...................................................24

SECTION 5.  Conditions Precedent to the Effective Date........................26

         5.01  Execution of Agreement; Notes..................................26
         5.02  Officer's Certificate..........................................26
         5.03  Opinions of Counsel............................................26
         5.04  Corporate Documents; Proceedings; etc..........................26
         5.05  Existing Credit Agreement......................................27
         5.06  Subsidiaries Guaranty..........................................27
         5.07  Adverse Change; Governmental Approvals; etc....................27
         5.08  Litigation.....................................................28
         5.09  Financial Statements; Projections..............................28
         5.10  Fees, etc......................................................28

SECTION 6.  Conditions Precedent to All Credit Events.........................28

         6.01  Effective Date.................................................28
         6.02  No Default; Representations and Warranties.....................28
         6.03  Notice of Borrowing; Letter of Credit Request..................28

SECTION 7.  Representations, Warranties and Agreements........................29

         7.01  Corporate Status...............................................29
         7.02  Corporate Power and Authority..................................29
         7.03  No Violation...................................................29
         7.04  Governmental Approvals.........................................30
         7.05  Financial Statements; Financial Condition; Undisclosed
                 Liabilities; Projections; etc................................30
         7.06  Litigation.....................................................30
         7.07  True and Complete Disclosure...................................30
         7.08  Use of Proceeds; Margin Regulations............................31
         7.09  Tax Returns and Payments.......................................31
         7.10  Compliance with ERISA..........................................31
         7.11  Properties.....................................................32
         7.12  Subsidiaries...................................................32
         7.13  Compliance with Statutes, etc..................................32
         7.14  Investment Company Act.........................................32
         7.15  Public Utility Holding Company Act.............................32
         7.16  Environmental Matters..........................................33
         7.17  Labor Relations................................................33
         7.18  Patents, Licenses, Franchises and Formulas.....................33
         7.19  Indebtedness...................................................33
         7.20  Tax Sharing Agreement..........................................33

SECTION 8.  Affirmative Covenants.............................................34

         8.01  Information Covenants..........................................34
         8.02  Books, Records and Inspections.................................35
         8.03  Maintenance of Insurance.......................................35
         8.04  Corporate Franchises...........................................35
         8.05  Compliance with Statutes, etc..................................36
         8.06  ERISA..........................................................36
         8.07  End of Fiscal Years; Fiscal Quarters...........................37
         8.08  Payment of Taxes...............................................37
         8.09  Additional Subsidiary Guarantors...............................37

SECTION 9.  Negative Covenants................................................37

         9.01  Liens..........................................................37
         9.02  Fundamental Changes............................................40
         9.03  Indebtedness...................................................41
         9.04  Transactions with Affiliates...................................42
         9.05  Maximum Leverage Ratio.........................................43
         9.06  Minimum Consolidated Net Worth.................................43

9.07  Ownership of Assets by the Borrowers and the Subsidiary Guarantors......44

         9.08  Limitation on Modifications of Certificate of Incorporation,
                By-Laws and Certain Other Agreements; etc.....................44
         9.09  Business.......................................................45
         9.10  Limitation on Certain Restrictions on Subsidiaries.............45
         9.11  Limitation on Issuance of Capital Stock........................45

SECTION 10.  Events of Default................................................45

         10.01  Payments......................................................45
         10.02  Representations, etc..........................................46
         10.03  Covenants.....................................................46
         10.04  Default Under Other Agreements................................46
         10.05  Bankruptcy, etc...............................................46
         10.06  ERISA.........................................................47
         10.07  Subsidiaries Guaranty.........................................47
         10.08  Judgments.....................................................47
         10.09  Change of Control.............................................47
         10.10  Tax Sharing Agreement.........................................47

SECTION 11.  Definitions and Accounting Terms.................................48

         11.01  Defined Terms.................................................48

SECTION 12.  The Agents.......................................................67

         12.01  Appointment...................................................67
         12.02  Nature of Duties..............................................68
         12.03  Lack of Reliance on the Agents................................68
         12.04  Certain Rights of the Agents..................................68
         12.05  Reliance......................................................69
         12.06  Indemnification...............................................69
         12.07  The Agent in its Individual Capacity..........................69
         12.08  Holders.......................................................69
         12.09  Resignation by the Agents.....................................70
         12.10  Documentation Agent, Syndication Agent and Arranger...........70

SECTION 13.  Miscellaneous....................................................70

         13.01  Payment of Expenses, etc......................................70
         13.02  Right of Setoff...............................................71
         13.03  Notices.......................................................72
         13.04  Benefit of Agreement..........................................72
         13.05  No Waiver; Remedies Cumulative................................74
         13.06  Payments Pro Rata.............................................74
         13.07  Calculations; Computations....................................75
         13.08  GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
                  WAIVER OF JURY TRIAL........................................75
         13.09  Counterparts..................................................76
         13.10  Effectiveness.................................................76
         13.11  Headings Descriptive..........................................76
         13.12  Amendment or Waiver; etc......................................77
         13.13  Survival......................................................78
         13.14  Domicile of Loans.............................................78
         13.15  Limitation on Additional Amounts, etc.........................78
         13.16  Confidentiality...............................................79
         13.17  Register......................................................79
         13.18  Judgment Currency.............................................80

SECTION 14.  Nature of Borrowers'Obligations..................................80

         14.01  Nature of Obligations.........................................81
         14.02  Independent Obligation........................................81
         14.03  Authorization.................................................81
         14.04  Reliance......................................................82
         14.05  Contribution; Subrogation.....................................82
         14.06  Waiver........................................................82




<PAGE>




SCHEDULE I                 Commitments
SCHEDULE II                Lender Addresses
SCHEDULE III               Existing Letters of Credit and Existing Acceptances
SCHEDULE IV                Tax Matters
SCHEDULE V                 Subsidiaries
SCHEDULE VI                Existing Liens
SCHEDULE VII               Existing Indebtedness
SCHEDULE VIII              Certain Restrictions on Subsidiaries

EXHIBIT A                  Notice of Borrowing
EXHIBIT B-1                Revolving Note
EXHIBIT B-2                Swingline Note

EXHIBIT C-1                Letter of Credit Service Agreement
EXHIBIT C-2                Letter of Credit Request
EXHIBIT D                  Section 4.04(b)(ii) Certificate
EXHIBIT E                  Opinion of General Counsel of Credit Parties
EXHIBIT F                  Officers' Certificate
EXHIBIT G                  Subsidiaries Guaranty
EXHIBIT H                  Assignment and Assumption Agreement
EXHIBIT I                  Additional Commitment Agreement