AMENDED AND RESTATED CREDIT AGREEMENT


     This AMENDED AND RESTATED  CREDIT  AGREEMENT (the  "Agreement") is made and
entered  into as of April 16,  1999  between  SHOE  CARNIVAL,  INC.,  an Indiana
corporation ("Borrower"),  and MERCANTILE BANK NATIONAL ASSOCIATION,  a national
banking association  ("Mercantile"),  FIRST UNION NATIONAL BANK, a national bank
("First  Union"),  and OLD NATIONAL  BANK, a national bank ("Old  National," and
collectively with Mercantile and First Union referred to herein as "Banks"), and
MERCANTILE BANK NATIONAL ASSOCIATION,  a national banking association,  as agent
for the Banks (in such capacity "Agent"), and amends and restates a prior Credit
Agreement dated as of November 15, 1994 made by and among Borrower,  Mercantile,
Harris Trust and Savings Bank and Firstar Bank Milwaukee, N. A.

     The parties hereto agree as follows:

                             ARTICLE 1 - DEFINITIONS

     SECTION 1.1  Definitions.  The following  terms,  as used herein,  have the
following meanings:

     "Agent" means Mercantile Bank National Association in its capacity as agent
for the Banks hereunder, and its successors and assigns in such capacity.

     "Attorneys'  Fees" shall mean the  reasonable  value of the  services  (and
costs,  charges  and  expenses  related  thereto)  of  the  attorneys  (and  all
paralegals, secretaries, accountants and other staff employed by such attorneys)
employed  by  Agent or  Banks  (including,  without  limitation,  attorneys  and
paralegals  who are  employees  of  Agent  or  Banks)  from  time to time (i) in
connection   with   the   negotiation,    preparation,    execution,   delivery,
administration  and  enforcement  of  this  Agreement  and/or  any of the  other
transaction  documents,  (ii) to  represent  Agent or  Banks in any  litigation,
contest, dispute, suit or proceeding, or to commence, defend or intervene in any
litigation,  contest,  dispute,  suit or  proceeding,  or to file any  petition,
complaint,  answer,  motion or other  pleading or to take any other action in or
with respect to any litigation,  contest,  dispute,  suit or proceeding (whether
instituted  by Agent,  any Bank,  Borrower  or any other  Person and  whether in
bankruptcy or otherwise) in any way or respect relating to this Agreement or any
of the other transaction documents,  Borrower or any other Obligor, and (iii) to
enforce any of Banks' rights to collect any of Borrower's Obligations.

     "Banks" mean  Mercantile  Bank National  Association and its successors and
assigns,  Old National  Bank and its  successors  and  assigns,  and First Union
National Bank and its successors and assigns.

     "Borrower"  means Shoe  Carnival,  Inc.,  an Indiana  corporation,  and its
successors and assigns.

     "Borrowing"  means  a  borrowing  hereunder  consisting  of  Loans  made to
Borrower  pursuant  to the terms  hereof or  Letters  of Credit  issued  for the
account of Borrower pursuant to the terms hereof.

     "Borrower's  Obligations"  shall mean any and all indebtedness  (principal,
interest,  fees and other  amounts),  liabilities and obligations of Borrower to
each of the Banks  under the Notes,  this  Agreement,  any of the  Reimbursement
Agreements,  any of the other  transaction  documents  or any  other  agreement,
document or instrument  heretofore,  now or hereafter  executed and delivered by

<PAGE>

Borrower to any of the Banks,  in each case  whether now  existing or  hereafter
arising,  absolute or contingent,  joint and/or  several,  secured or unsecured,
direct or  indirect,  expressed  or implied  in law,  contractual  or  tortious,
liquidated  or  unliquidated,  at law or in equity,  or  otherwise,  and whether
created  directly or acquired by such Bank by assignment  or otherwise,  and any
and all costs of collection and/or Attorneys' Fees incurred or to be incurred in
connection therewith.


     "Borrowing Base" shall have the meaning ascribed thereto in Section 2.1(b).

     "Borrowing Base  Certificate"  shall have the meaning  ascribed  thereto in
Section 2.1(c).

     "Capital  Expenditure" shall mean any expenditure which, in accordance with
generally accepted accounting  principles  consistently applied, is or should be
capitalized on the balance sheet of the Person making the same.

     "Capitalized  Lease"  shall  mean  any  lease  which,  in  accordance  with
generally accepted accounting  principles  consistently applied, is or should be
capitalized on the balance sheet of the lessee.

     "Code" shall mean the Internal  Revenue Code of 1986,  as amended,  and any
successor statute of similar import,  together with the regulations  thereunder,
in each case as in effect from time to time.  References to sections of the Code
shall be construed to also refer to any successor sections.

     "Commitment"  means Forty-Five Million Dollars  ($45,000,000.00),  and with
respect to each Bank,  the amount  specified as such Bank's  Commitment  and set
forth opposite the name of such Bank on the signature pages hereof.

     "Debt" of any Person means at any date, without duplication,  to the extent
obligations  and  liabilities  of such type are required to be disclosed in such
Person's  financial   statements  according  to  generally  accepted  accounting
principles,  consistently  applied,  (i)  all  obligations  of such  Person  for
borrowed  money,  (ii)  all  obligations  of such  Person  evidenced  by  bonds,
debentures,  notes or other similar  instruments,  (iii) all obligations of such
Person to pay the  deferred  purchase  price of property or  services,  (iv) all
obligations of such Person as lessee under leases  capitalized or required to be
capitalized  in  accordance  with  generally  accepted  accounting   principles,
consistently  applied,  but  excluding  any  obligations  as  lessee  under  any
operating leases,  (v) all Debt of others secured by a Lien on any asset of such
Person,  whether or not such Debt is assumed by such Person  (provided  that for
purposes  of this  clause (v) the amount of any such Debt shall be deemed not to
exceed the higher of the market value or the net book value of such asset), (vi)
obligations under any standby letters of credit, and (vii) all other obligations
and liabilities  required to be disclosed on such Person's financial  statements
according to generally accepted accounting principles, consistently applied.

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

     "Distribution" in respect of any corporation shall mean:

          (i)  Dividends  or  other   distributions  on  capital  stock  of  the
     corporation; and

          (ii) The redemption,  repurchase or other acquisition of such stock or
     of warrants,  rights or other  options to purchase  such stock (except when
     solely in exchange for such stock).



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<PAGE>


     "Domestic  Business  Day" means any day except a Saturday,  Sunday or legal
holiday on which banks are  authorized  to or  required  to close in St.  Louis,
Missouri, Evansville, Indiana or Jacksonville, Florida.

     "Effective Date" means the date on which this Agreement shall
become effective in accordance with Section 9.17.

     "Eligible Inventory" shall mean that portion of Borrower's inventory which:
(a) consists of finished  goods less than one year old; (b) does not violate the
negative  covenants  and  provisions  of this  Agreement  and does  satisfy  the
positive  covenants and provisions of this Agreement;  (c) is not obsolete;  and
(d) Agent has in good faith  determined,  in accordance  with Agent's  customary
business  practices,  is not  unacceptable  due to age,  type,  category  and/or
quantity.  Borrower  represents  and warrants to, and  covenants and agrees with
Agent and Banks that the value  (determined at the lower of cost,  excluding any
capitalized  overhead  cost  allocated  to any such  inventory,  or  market)  of
Eligible  Inventory shall at all times hereafter be at least Two Hundred Percent
(200%) of the then principal  portion of Borrower's  Obligations  represented by
Loans made by Banks to Borrower and Letters of Credit issued by  Mercantile  for
the account of Borrower, pursuant to Section 2.1(a) hereof.

     "Environmental Laws" shall mean the Resource  Conservation and Recovery Act
of 1987, the Comprehensive  Environmental  Response,  Compensation and Liability
Act, any so-called  "Superfund" or "Superlien" law, the Toxic Substances Control
Act and any other Federal,  state or local statute, law, ordinance,  code, rule,
regulation,  order or decree  regulating,  relating to or imposing  liability or
standards of conduct concerning any Hazardous  Materials or any other hazardous,
toxic or dangerous waste,  substance or constituent or other substance,  whether
solid, liquid or gas, as now or at any time hereafter in effect.

     "Environmental  Lien"  shall have the meaning  ascribed  thereto in Section
5.1(i)(vii).

     "ERISA" shall mean the Employee  Retirement Income Security Act of 1974, as
amended,  and any  successor  statute  of  similar  import,  together  with  the
regulations thereunder,  in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.

     "ERISA  Affiliate" shall mean any  corporation,  trade or business that is,
along  with  Borrower,  a member  of a  controlled  group of  corporations  or a
controlled  group of trades or businesses,  as described in Sections  414(b) and
414(c), respectively, of the Code.

     "Eurocurrency  Business  Day"  means  any  Domestic  Business  Day on which
commercial banks are open for international business in London.

     "Eurocurrency  Loans"  means any loans  bearing  interest  at the rates set
forth in Section 2.5(b).

     "Eurocurrency Margin" has the meaning set forth in Section 2.5(b).

     "Event of Default" has the meaning set forth in Section 6.1.

     "First  Union"  means  First Union  National  Bank and its  successors  and
assigns.



                                       3
<PAGE>

     "Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person guaranteeing any Debt of any other Person or in any manner providing
for the  payment of any Debt of any other  Person or  otherwise  protecting  the
holder of such Debt against loss (whether by agreement to keep-well, to purchase
assets, goods, securities or services, or to take-or-pay or otherwise); provided
that the term Guarantee shall not include endorsements for collection or deposit
in the ordinary course of business.  The term  "Guarantee"  used as a verb has a
correlative meaning.

     "Hazardous  Materials"  shall mean any hazardous  substance or pollutant or
contaminant  defined as such in (or for the purposes of) any  Environmental  Law
and shall include,  without  limitation,  petroleum,  including crude oil or any
fraction  thereof  which is liquid at  standard  conditions  of  temperature  or
pressure (60 degrees  Fahrenheit and 14.7 pounds per square inch absolute),  any
radioactive material, including, without limitation, any source, special nuclear
or byproduct  material as defined in 42 U.S.C.  Section 2011 et seq., as amended
or hereafter amended, and asbestos in any form or condition.

     "Interest Period" means with respect to each Eurocurrency Loan;

          (i) Initially, the period commencing on the date of such Borrowing and
     ending  1, 2, 3 or 6  months  thereafter,  as  Borrower  may  elect  in the
     applicable Notice of Borrowing; and

          (ii)  Thereafter,  each period  commencing on the last day of the next
     preceding  Interest Period  applicable to such Borrowing and ending 1, 2, 3
     or 6 months thereafter, as Borrower may elect pursuant to Section 2.4;

     provided that:

          (a)  Subject to clause (b) below,  any  Interest  Period  which  would
     otherwise  end on a day which is not a  Eurocurrency  Business Day shall be
     extended to the next succeeding  Eurocurrency  Business Day, except that if
     the next  succeeding  Eurocurrency  Business  Day falls  within a different
     calendar  month,  the  Interest  Period  shall  end on the  next  preceding
     Eurocurrency Business Day; and

          (b) Any  Interest  Period which  includes  March 31, 2001 shall end on
     such date.

     "Letter(s)  of  Credit"  shall  mean  each  standby  Letter  of  Credit  or
commercial Letter of Credit issued by Agent pursuant to Section 2.1.

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

     "Loan" means a Prime Loan or a  Eurocurrency  Loan and "Loans" means any or
all of the foregoing.

     "London  Interbank  Offered  Rate" has the  meaning  set  forth in  Section
2.5(b).

     "Majority  Banks"  means  Banks  holding  66-2/3%  of  the  then  available
Commitments.



                                       4
<PAGE>


     "Mercantile" means Mercantile Bank National  Association and its successors
and assigns.

     "Multiemployer  Plan"  shall  mean a  "multi-employer  plan" as  defined in
Section 4001(a)(3) of ERISA which is maintained for employees of Borrower or any
ERISA Affiliate.

     "Net Worth" of any Person means, at any date, the  stockholders'  equity of
such  Person  determined  in  accordance  with  generally  accepted   accounting
principles, consistently applied.

     "Notes" mean the amended and restated  promissory  notes of Borrower in the
form of  Exhibits  A, B and C  attached  hereto  evidencing  the  obligation  of
Borrower  to repay the Loans and  amounts  outstanding  under any  Reimbursement
Agreements.

     "Notice of Borrowing" has the meaning set forth in Section 2.2A.

     "Obligor"  shall mean Borrower and each other Person who is or shall at any
time  hereafter  become  primarily or  secondarily  liable on any of  Borrower's
Obligations  or who grants any Bank a Lien upon any of the Property or assets of
such Person as security for any of Borrower's Obligations.

     "Occupational  Safety and Health Laws" shall mean the  Occupational  Safety
and  Health  Act of 1970,  as  amended,  and any other  Federal,  state or local
statute,  law, ordinance,  code, rule,  regulation,  order or decree regulating,
relating to or imposing  liability or standards of conduct  concerning  employee
health and/or safety, as now or at any time hereafter in effect.

     "Old National" means Old National Bank and its successors and assigns.

     "PBGC" shall mean the Pension Benefit  Guaranty  Corporation and any entity
succeeding to any or all of its functions under ERISA.

     "Pension  Plan"  shall  mean a  "pension  plan," as such term is defined in
Section 3(2) of ERISA,  which is  established  or  maintained by Borrower or any
ERISA Affiliate, other than a Multiemployer Plan.

     "Person" means an individual, a corporation, a partnership, an association,
a trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.

     "Prime Loan" means a Loan bearing interest at the Prime Rate minus One-Half
of One Percent (0.50%) per annum pursuant to Section 2.5(a) or Article 7.

     "Prime Rate" shall mean the interest  rate  announced  from time to time by
Agent as its "prime rate" on commercial loans, which rate shall fluctuate as and
when said "prime rate" shall  change,  and which rate may not be Agent's best or
lowest rate or a favored rate, and any statement,  representation or warranty in
that regard or to that respect is expressly disclaimed by Agent and Banks.

     "Pro Rata Share"  shall mean the pro rata share of loans to be made by each
of the Banks  hereunder or of other amounts to be shared  between  Banks,  which
shall be 38.89% for  Mercantile,  22.22% for Old National,  and 38.89% for First
Union.



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<PAGE>


     "Property"  shall  mean any  interest  in any kind of  property  or  asset,
whether real,  personal or mixed,  or tangible or intangible.  Properties  shall
mean the plural of Property.  For purposes of this Agreement,  Borrower shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement,  financing lease or other arrangement  pursuant to
which title to the Property has been  retained by or vested in some other Person
for security purposes.

     "Regulation D" means  Regulation D of the Board of Governors of the Federal
Reserve System, as amended.

     "Reimbursement  Agreement(s)" shall mean each of those certain applications
for standby letter of credit and  reimbursement  agreements and applications for
commercial letters of credit and reimbursement agreements made from time to time
by Borrower as account  party,  with Agent as issuer,  of standby or  commercial
Letters of Credit for the account of Borrower,  which Reimbursement  Agreements,
along with the Notes,  shall evidence  Borrower's  obligation to reimburse Banks
for their  respective Pro Rata Shares of any draws made under any of the Letters
of Credit,  together with any accrued interest, fees and other amounts which may
from time to time be due thereon.

     "Related  Party"  shall mean any Person (i) which  directly  or  indirectly
through one or more  intermediaries  controls,  or is  controlled by or is under
common control with, Borrower, (ii) which beneficially owns or holds twenty-five
percent  (25%) or more of the equity  interest of Borrower or (iii)  twenty-five
percent (25%) or more of the equity interest of which is  beneficially  owned or
held by Borrower.  The term  "control"  shall mean the  possession,  directly or
indirectly,  of the  power  to vote  twenty-five  percent  (25%)  or more of the
capital stock of any Person or the power to direct or cause the direction of the
management  and policies of a Person,  whether  through the  ownership of voting
securities, by contract or otherwise.

     "Reportable Event" shall have the meaning given to such term in ERISA.

     "Reserve Percentage" shall mean for any day, with respect to a Eurocurrency
Loan, the highest percentage (including any supplemental percentage applied on a
marginal  basis or any  other  reserve  requirement  having a  similar  effect),
expressed as a decimal, which is applicable to any of the Banks and is in effect
on such day, as  prescribed  by the Board of  Governors  of the Federal  Reserve
System under Regulation D (or any other then applicable  regulation of the Board
of Governors) with respect to "Eurocurrency Liabilities".

     "Subsidiary" means with respect to any Person any corporation of which more
than 50% of the issued and  outstanding  stock entitled to vote for the election
of directors is at the time owned directly or indirectly by such Person.

     "Term" means the period from the Effective  Date up to and including  March
31, 2001; except that (i) all, but not less than all, of the Banks may, in their
sole discretion,  extend such Term for additional  one-year periods by notifying
Borrower of each such  extension at least 12 months prior to the  expiration  of
the then current Term end of their intention to extend the Term by an additional
year;  and (ii) Agent may  terminate  Banks'  obligations  hereunder at any time
prior to such stated maturity date or any extension  thereof pursuant to Article
6 herein.

     "Year 2000  Compliant"  shall mean,  with  respect to any Person,  that all
software,   embedded   microchips   and/or  other  computer  and/or   processing
capabilities utilized by such Person, and/or included in any software, products,
goods and/or  services sold and/or leased by such Person,  are able to correctly
and properly recognize,  interpret,  process,  calculate,  compare, sequence and



                                       6
<PAGE>

manipulate data and date-sensitive functions on and involving all calendar dates
(including, without limitation, dates in and after the year 2000).

     SECTION  1.2  Accounting  Terms and  Determinations.  Except  as  otherwise
specified  herein,  all accounting  terms used herein shall be interpreted,  all
accounting  determinations hereunder shall be made, and all financial statements
required  to be  delivered  hereunder  shall  be  prepared  in  accordance  with
generally accepted accounting principles as in effect from time to time, applied
on a basis  consistent  (except for changes  approved by Borrower's  independent
public  accountants)  with the  most  recent  audited  financial  statements  of
Borrower delivered to Banks.

                             ARTICLE 2 - THE CREDITS

     SECTION 2.1 Loans and Letters of Credit.

     (a) During the Term hereof,  Banks agree,  on the terms and  conditions set
forth in this  Agreement,  to lend to Borrower  from time to time their Pro Rata
Shares of Loans requested by Borrower,  and Agent further agrees, subject to the
terms and  conditions  of this  Agreement  and of the  applicable  Reimbursement
Agreement,  to issue its  Letters of Credit for the  account  of  Borrower  upon
Borrower's  application  therefor,  and  each  Bank  agrees  to  accept  a  risk
participation  in an amount equal to its Pro Rata Share of the from time to time
maximum  outstanding  amount of each such  Letter of Credit  issued  under  this
Section  2.1(a) and in  Borrower's  reimbursement  obligation  therefor  and any
guaranties or other collateral security therefor. The aggregate principal amount
of all Loans at any one time  outstanding  under this  Section  2.1(a) shall not
exceed the lesser of (i) the amount of the  Commitment  minus the face amount of
all Letters of Credit then  outstanding  under this Section 2.1(a),  or (ii) the
Borrowing Base; provided, however, that no Bank shall be required to advance any
Loan and  Agent  shall not issue any  Letter  of Credit  requested  by  Borrower
hereunder  which,  when  added  to the  principal  amount  of such  Bank's  then
outstanding Loans and its risk participation in the then outstanding  Letters of
Credit  under this  Section  2.1(a),  would  exceed  the  amount of such  Bank's
Commitment. Borrower may borrow under this Section, prepay under Section 2.8 and
reborrow at any time during the Term hereof  under this  Section  subject to the
terms of this  Agreement.  The failure of any Bank to advance any requested Loan
under this  Agreement  shall not release any other Bank from its  obligation  to
make any such Loan as provided herein.

     (b) For purposes of computing the amount of availability of Loans under the
Banks'  Commitment,  the  Borrowing  Base  shall  mean an amount  equal to Fifty
Percent  (50%) of the value of Eligible  Inventory of Borrower  (the  "Borrowing
Base").

     (c) Borrower  shall deliver to Agent on the date of execution  hereof (with
respect to the fiscal month ended February 27, 1999) and on the thirtieth (30th)
day following the end of each fiscal month thereafter commencing with the fiscal
month ending March 31, 1999, a borrowing base certificate in the form of Exhibit
E attached  hereto and  incorporated  herein by  reference  (a  "Borrowing  Base
Certificate") setting forth:

          (i)  The  Borrowing  Base  and  its  components  as of the  end of the
     immediately preceding month;

          (ii) The aggregate principal amount of all outstanding Loans; and

          (iii) The  difference,  if any,  between  the  Borrowing  Base and the
     aggregate principal amount of all outstanding Loans.



                                       7
<PAGE>


The Borrowing Base shown in such Borrowing Base Certificate  shall be and remain
the Borrowing  Base  hereunder  until the next  Borrowing  Base  Certificate  is
delivered to Banks,  at which time the Borrowing  Base shall be the amount shown
in such subsequent  Borrowing Base Certificate.  Each Borrowing Base Certificate
shall be  certified  (subject to normal  year-end  adjustments)  as to truth and
accuracy by the President,  principal financial officer or principal  accounting
officer of Borrower.

     (d) If at any time the  Borrowing  Base  should be less than the  aggregate
principal  amount of all Loans  outstanding  under Section 2.1(a),  whether as a
result of a reduction in the  Borrowing  Base or  otherwise,  Borrower  shall be
automatically  required  (without demand or notice of any kind by Banks,  all of
which are hereby expressly waived by Borrower) to immediately repay the Loans in
an  amount  sufficient  to  reduce  such  aggregate  principal  amount  of Loans
outstanding to the amount of the then available Borrowing Base.

     SECTION 2.2 Method of Borrowing.

     A. Loans.

     (a) Borrower  shall give notice (a "Notice of  Borrowing")  to Agent (1) by
12:00 noon (St. Louis time) on the day of each Prime Loan, and (2) by 10:00 a.m.
(St.  Louis  time)  at  least  two   Eurocurrency   Business  Days  before  each
Eurocurrency Loan, specifying:

          (i) The date of such Loan,  which shall be a Domestic  Business Day in
     the case of a Prime Loan or a  Eurocurrency  Business  Day in the case of a
     Eurocurrency Loan,

          (ii) The aggregate  principal amount of such Loan,  provided that if a
     Prime  Loan is  requested  that such Loan  shall be in a minimum  amount of
     $100,000.00 or more with any greater amount being in $25,000.00 increments,
     and if such Loan is a Eurocurrency Loan, it shall be in a minimum amount of
     $1,000,000.00  or more with any such greater  amount  being in  $100,000.00
     increments,

          (iii) Whether such Loan is to be a Prime Loan or a Eurocurrency  Loan,
     and

          (iv) In the case of a  Eurocurrency  Loan, the duration of the initial
     Interest  Period  applicable  thereto,  subject  to the  provisions  of the
     definition of Interest Period.

     (b) A Notice of Borrowing  shall not be required in connection with a Prime
Loan pursuant to Section 7.1. A Notice of Borrowing for Eurocurrency  Loans must
be given in  writing  in a form  substantially  similar  to  Exhibit F  attached
hereto; a Notice of Borrowing for a Prime Loan may be oral or in writing, but if
oral,  shall be  confirmed  in writing to Bank within five (5) days. A Notice of
Borrowing  shall not be  revocable  by  Borrower.  Upon  receipt  of a Notice of
Borrowing,  Agent shall promptly notify each Bank of the contents thereof and of
such Bank's Pro Rata Share of such Loan.

     (c) Not  later  than 3:00 p.m.  (St.  Louis  time) on the date of each Loan
during the Term hereof,  each Bank shall (except as provided in subsections  (d)
or (e) of this  Section)  make  available  its Pro Rata Share of such  Loan,  in
federal or other funds immediately available in St. Louis, Missouri, to Agent at
its address  specified  on the  signature  pages  hereof.  Unless any Bank shall
notify Agent prior to 2:00 p.m.  (St.  Louis time) on the date any Loan is to be
made to Borrower  hereunder  that such Bank shall not advance its Pro Rata Share
of such Loan,  Agent may presume  that each such Bank has  advanced its Pro Rata



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<PAGE>

Share of such Loan as provided  hereunder  and may rely on such  presumption  in
advancing the proceeds of such Loan to Borrower.  Unless Agent  determines  that
any applicable  condition  specified in Article 3 has not been satisfied,  Agent
will make available to Borrower such Loan in federal or other funds  immediately
available in St. Louis,  Missouri,  by crediting  such funds to a demand deposit
account (or such other account mutually agreed upon in writing between Agent and
Borrower)  of  Borrower  with  Mercantile.  In the event any Bank  shall fail to
deliver its Pro Rata Share of the  proceeds of any Loan  requested  hereunder by
Borrower on or before 3:00 p.m. (St.  Louis time) on the date such Loan is to be
made, then such Bank agrees to pay to Agent for its own account interest on such
Bank's Pro Rata Share of such Loan from the date such Loan was made to  Borrower
hereunder  to the date such Bank  actually  delivers  its Pro Rata  Share of the
proceeds  of such Loan to Agent at the then  applicable  federal  funds  rate as
determined by Agent.

     (d) Agent  shall give each Bank prompt  notice of each  payment by Borrower
and each request by Borrower for an advance,  and for payments,  and Agent shall
transfer to each Bank in immediately  available funds such Bank's Pro Rata Share
of such  payment,  or if an  advance,  each  Bank  shall  transfer  to  Agent in
immediately  available  funds its Pro Rata Share of such  advance,  which  funds
shall be received by such party no later than 3:00 p.m. (St.  Louis time) on the
date of such  advance  or payment or two (2) hours  after a Bank  receives  such
notice  from  Agent  (whichever  occurs  later).  In no  event  shall  a Bank be
obligated  to make any such  transfer  to Agent  which,  when added to all other
outstanding  advances funded by such Bank plus such Bank's Pro Rata Share of the
then undrawn amount of all Letters of Credit issued  pursuant to Section 2.1(a),
will exceed such Bank's Commitment.

     (e) If Borrower  requests a Loan  hereunder  on a day on which  Borrower is
required  to or has elected to repay all or any part of an  outstanding  Loan or
repay a draw under any Letter of Credit,  each Bank shall apply the  proceeds of
such  requested  Loan to make such  repayment  and only an  amount  equal to the
difference  (if any)  between the amount  being  borrowed  and the amount  being
repaid  shall be made  available  by Banks to Agent for  delivery to Borrower as
provided in subsection (c) of this Section.

     B. Letters of Credit. Borrower may request Agent to issue either standby or
commercial  Letters of Credit for the account of Borrower  under Section  2.1(a)
above only pursuant to standby Letter of Credit  applications and  reimbursement
agreements  or  commercial  Letter  of  Credit  applications  and  reimbursement
agreements  from time to time executed by Borrower in favor of Agent in the form
of Exhibit G or Exhibit H attached  hereto.  Agent shall from time to time issue
such requested  Letters of Credit in accordance with the terms and provisions of
this Agreement and the applicable Reimbursement Agreement. Such Letter of Credit
Reimbursement  Agreements,  duly executed by an authorized  officer of Borrower,
shall be  delivered  to Agent on the  second  Business  Day prior to the date of
issuance of the requested Letter of Credit. Upon issuance of each such Letter of
Credit, each Bank shall be deemed to have purchased a risk participation in such
Letter of Credit and in Borrower's reimbursement obligations therefor,  together
with any guaranties and collateral security therefor,  in an amount equal to its
Pro Rata Share of the face amount of such Letter of Credit,  and upon payment of
any draw under any such  Letter of Credit by Agent,  each Bank  agrees to pay to
Agent its Pro Rata  Share of such draw to the extent  such draw is not  promptly
reimbursed by the Borrower  pursuant to its obligations under this Agreement and
the applicable Reimbursement Agreement. Borrower's obligation to reimburse Banks
for the face amount of such Letters of Credit shall be evidenced by the relevant
Letter of Credit  Reimbursement  Agreements  as well as by the Notes,  and shall
bear  interest,  payable on demand,  at the interest rate per annum equal to the
Prime Rate minus One-Half of One Percent (0.50%).  Banks shall have the right to
charge  Borrower's  accounts  with  the  amount  of any and all  funds  actually
advanced by Banks in satisfaction of Borrower's reimbursement  obligations.  Any
debit which may exist in Borrower's  account by virtue of the foregoing shall be
deemed to be a Loan by Banks to Borrower  pursuant to the  provisions of Section
2.1(a)  hereof.  No  Letter  of  Credit  issued  hereunder  shall  have a  final



                                       9
<PAGE>

expiration  date of later than  twelve  months  from its date of  issuance,  and
Borrower agrees that upon the expiration of the Term of this Agreement, it shall
pledge and  deliver to Agent for the  benefit of Banks,  cash,  certificates  of
deposit  or other  cash  collateral  acceptable  to Agent and Banks or a standby
letter  of  credit in a form  acceptable  to Agent  and  Banks  and  issued by a
domestic  bank  acceptable  to Agent and  Banks in an  amount  equal to the then
undrawn face amount of all outstanding Letters of Credit, as collateral security
for Borrower's reimbursement obligations for such Letters of Credit.

     In addition to any other fees provided under any  applicable  Reimbursement
Agreement,  Borrower  agrees to pay Agent for the benefit of Banks in respect of
each  commercial  Letter of  Credit  issued by Agent at  Borrower's  request,  a
quarterly  commercial letter of credit fee equal to seven-eighths of one percent
(7/8%) per annum of the sum of the daily undrawn face amounts of all  commercial
Letters of Credit  outstanding during such quarter divided by the number of days
in such  quarter and  multiplied  by a fraction  with a  numerator  equal to the
number of days in such quarter and a denominator of 360. Such commercial  letter
of credit  fee shall be  payable  quarterly  in  arrears on the last day of each
calendar  quarter during the Term hereof.  Agent shall retain  one-fifth of each
such quarterly  commercial letter of credit fee for its own account as issuer of
the  commercial  Letters of Credit,  and the  remainder  of each such  quarterly
commercial  letter of credit fee shall be  distributed  by Agent to the Banks in
accordance with their Pro Rata Shares of the risk  thereunder.  Borrower further
agrees to pay Agent upon  issuance in respect of each  standby  Letter of Credit
issued  by Agent  at  Borrower's  request,  a  nonrefundable  letter  of  credit
commission  equal to one and  one-half  percent  (1-1/2%)  per annum of the face
amount of such standby  Letter of Credit based upon a 360 day year.  Agent shall
retain one-fifth of each such letter of credit commission for its own account as
issuer of the  standby  Letter of Credit,  and the  remainder  of such Letter of
Credit  commission shall be distributed by Agent to the Banks in accordance with
their Pro Rata Shares of the risk thereunder. Subject to any contrary provisions
in any applicable Reimbursement Agreement, Borrower agrees to pay Agent, for its
own account, such additional documentary,  issuance, amendment and other fees in
respect  of each  Letter  of Credit  and any  draft  presented  for  payment  or
acceptance  in  respect  thereof as Agent  customarily  charges in its Letter of
Credit business as from time to time amended by Agent.

     SECTION 2.3 Notes.  The Loans of each Bank to Borrower and advances by each
Bank with respect to its  participation in the draws under any Letters of Credit
issued by Agent hereunder shall be evidenced, respectively, by a Note payable to
the order of such Bank,  which shall be in the form of Exhibit A, B or C hereto.
Each Bank may record, and prior to any transfer of its Note shall endorse on the
schedules forming a part thereof, appropriate notations to evidence the date and
amount of each Loan or its advance of any unreimbursed Letter of Credit draw and
the date and amount of each payment of principal  made by Borrower  with respect
thereto.  Each Bank is hereby  irrevocably  authorized by Borrower so to endorse
its Note and to attach to and make a part of any such Note a continuation of any
such schedule as and when  required;  provided,  however that the  obligation of
Borrower to repay each Loan and to  reimburse  Banks for draws under the Letters
of Credit shall be absolute and  unconditional,  notwithstanding  any failure of
any Bank to endorse or any mistake by any Bank in connection with endorsement on
the  schedules  attached  to its  Note.  The  books  and  records  of the  Banks
(including  without  limitation the schedules attached to the Notes) showing the
account between Banks and Borrower shall be admissible in evidence in any action
or proceeding  and shall  constitute  prima facie proof of the items therein set
forth.

     SECTION 2.4 Duration of Interest Periods and Selection of Interest Rates.

     (a) The duration of the initial Interest Period for each  Eurocurrency Loan
shall be as specified in the  applicable  Notice of  Borrowing.  Borrower  shall
elect  the  duration  of each  subsequent  Interest  Period  applicable  to such
Eurocurrency  Loan and the interest  rate and currency to be  applicable  during
such subsequent Interest Period (and Borrower shall have the option, in the case



                                       10
<PAGE>

of any Prime Loan, to elect that such Loan become a Eurocurrency Loan specifying
the Interest  Period and currency to be applicable  thereto),  by giving written
notice of such  election to Agent (i) by 12:00 noon (St.  Louis time) on the day
of, in the case of the  election  of a Prime  Loan,  or (ii) by 10:00 a.m.  (St.
Louis time) at least two Eurocurrency  Business Days before,  in the case of the
election of a Eurocurrency  Loan, the end of the immediately  preceding Interest
Period applicable thereto, if any.

     (b) If in respect of any Eurocurrency Loan or part thereof,  Borrower fails
to give a notice  in  accordance  with  Section  2.4(a)  prior to the end of any
Interest Period relating  thereto,  such Loan shall be converted to a Prime Loan
at the end of such Interest Period.

     (c)  Notwithstanding  the foregoing,  the duration of each Interest  Period
shall be subject to the provisions of the definition of Interest Period.

     SECTION 2.5 Interest Rates.

     (a) Each Prime Loan shall bear interest on the outstanding principal amount
thereof, for each day from the date such Loan is made until it becomes due or is
repaid,  at a rate per annum equal to the Prime Rate (which rate shall fluctuate
as and when the Prime Rate shall change) minus One-Half of One Percent  (0.50%).
Such  interest  shall be  payable  quarterly  in arrears on the last day of each
calendar  quarter,  commencing  with the quarter ending on June 30, 1999, and at
maturity.  Any overdue principal of and, to the extent permitted by law, overdue
interest on, any Prime Loan shall bear interest, payable on demand, for each day
until  paid at a rate per  annum  equal to the sum of Two and  One-Half  Percent
(2.50%) plus the otherwise applicable rate for such day.

     (b) Each Eurocurrency Loan shall bear interest on the outstanding principal
amount thereof for each Interest Period  applicable  thereto at a rate per annum
equal to the sum of the Eurocurrency Margin plus the applicable London Interbank
Offered Rate.  Except in the case of an  acceleration  of payment by Agent under
Section 6.1 (when  interest  shall be paid with the  principal  amount  repaid),
interest  shall be payable  for each  Interest  Period on the last day  thereof,
unless the duration of the applicable  Interest Period exceeds three months,  in
which case such interest  shall be payable on the last day of the third month of
such Interest Period and on the last day of such Interest Period.

     "Eurocurrency Margin" applicable to any Interest Period means Three-Fourths
of One Percent (0.75%) for any Interest Period commencing prior to the date upon
which Borrower delivers to Agent its fiscal quarter-end  financial statements as
required  under Section  5.1(a)(iii)  for the fiscal quarter ending May 1, 1999,
and for any Interest Period  commencing after delivery of Borrower's May 1, 1999
quarter-end financial statements,  and each subsequent  quarter-end and year-end
financial  statements,  shall be  determined  as follows:  (i) One and  One-Half
Percent (1.50%) for any Interest Period  commencing after delivery of Borrower's
then most recent quarter-end or fiscal year-end financial  statements  delivered
to Banks pursuant to Sections  5.1(a)(i) or (iii),  which  financial  statements
disclose the Borrower's  ratio of Funded Debt to EBITDA (as defined below) as of
the end of the immediately preceding fiscal quarter was greater than or equal to
1.50 to 1.0; (ii) One and  One-Fourth  Percent  (1.25%) for any Interest  Period
commencing  after delivery of Borrower's then most recent  quarter-end or fiscal
year-end financial  statements delivered to Banks pursuant to Sections 5.1(a)(i)
or (iii),  which financial  statements  disclose that Borrower's ratio of Funded
Debt to EBITDA as of the end of the  immediately  preceding  fiscal  quarter was
less  than  1.50 to 1.0 but  greater  than or  equal to 1.25 to 1.0;  (iii)  One
Percent (1.00%) for any Interest Period  commencing after delivery of Borrower's
then most recent quarter-end or fiscal year-end financial  statements  delivered
to Banks pursuant to Sections  5.1(a)(i) or (iii),  which  financial  statements
disclose  that  Borrower's  ratio of Funded  Debt to EBITDA as of the end of the
immediately  preceding fiscal quarter was less than 1.25 to 1.0 but greater than
or equal to 1.00 to 1.0; and (iv)  Three-Fourths  of One Percent (0.75%) for any



                                       11
<PAGE>

Interest  Period  commencing  after  delivery  of  Borrower's  then most  recent
quarter-end or fiscal year-end financial  statements delivered to Banks pursuant
to  Section  5.1(a)(i)  or  (iii),  which  financial  statements  disclose  that
Borrower's  ratio of  Funded  Debt to  EBITDA  as of the end of the  immediately
preceding fiscal quarter was less than 1.00 to 1.0.

As used herein,  the term "Funded Debt" at any date shall mean all  Indebtedness
of Borrower for borrowed money as of such date,  including,  but not limited to,
all liabilities of Borrower under any Capitalized  Leases.  As used herein,  the
term "EBITDA" as of any date shall mean Borrower's net income before taxes, plus
interest  expense,  plus  depreciation,  plus  amortization,  as  determined  in
accordance with generally accepted accounting  principles  consistently applied,
for  that  portion  of  Borrower's  fiscal  year  to  date  as the  date of such
calculation,  annualized  for a full  fiscal  year (i.e.  multiplied  by 365 and
divided by the number of days in the fiscal  year to date  period for which such
actual EBITDA amount has been calculated).

     The "London Interbank Offered Rate" applicable to any Interest Period means
a rate per annum determined pursuant to the following formula:

                                              [ LIBOR-BR        ]*
           LIBOR             =                [----------       ]
                                              [ 1.00 - RP       ]

           LIBOR             =                London Interbank Offered Rate
           LIBOR-BR          =                LIBOR Base Rate
           RP                =                Reserve Percentage

     The term  "LIBOR  Base Rate" shall  mean,  with  respect to the  applicable
Interest  Period,  the rate per annum of interest  determined by Agent to be the
arithmetic  average of the respective  average rates per annum at which deposits
in U.S.  dollars  are  offered  to  Agent in the  London  interbank  market  for
Eurocurrency  deposits by two (2) Eurocurrency  dealers of recognized  standing,
selected by Agent in its sole discretion,  at approximately 10:00 a.m. St. Louis
time (or as soon thereafter as practicable),  two (2) Eurocurrency Business Days
before the first day of such Interest  Period for a number of days comparable to
the number of days in such  Interest  Period and in an amount  comparable to the
amount of the applicable Eurocurrency Loan. Any overdue principal of and, to the
extent permitted by law,  overdue interest on, any Eurocurrency  Loan shall bear
interest,  payable on demand, for each day until paid, at a rate per annum equal
to the sum of Two and One-Half Percent (2.50%) plus the rate applicable to Prime
Loans for such day.

     (c) Agent shall  determine  each interest  rate  applicable to the Loans as
provided  above.  Agent  shall give  prompt  notice to  Borrower  by  telephone,
telecopy,  telex  or cable  of each  rate of  interest  so  determined,  and its
determination thereof shall be conclusive in the absence of manifest error.

     SECTION 2.6 Commitment Fee.  Borrower shall pay to Agent for the benefit of
Banks a nonrefundable commitment fee equal to either of the following as elected
by  Borrower  in a written  notice to Agent  delivered  on or before  July 1 and
January 1 of each year for determination of the commitment fee to be paid during
the following six months:

     (a)  Three-Tenths  of One Percent  (.30%) per annum times the average daily
difference  between (i) the  Commitment,  and (ii) the  principal  amount of all



                                       12
<PAGE>

Loans plus the undrawn  face amount of all Letters of Credit  outstanding  as of
each such day under Section 2.1(a) during such period, or

     (b) Fifteen-Hundredths of One Percent (0.15%) per annum times the amount of
the Commitment on each such day during such period.

Said fee, whether  calculated under either clause (a) or clause (b) above, shall
be payable  quarterly  in arrears,  on each March 31, June 30,  September 30 and
December 31 during the Term hereof, and on the last day of the Term hereof. Said
fee shall be  calculated  under clause (b) for the period  ending June 30, 1999.
Upon Agent's receipt of the Commitment Fee payable under this Section 2.6, Agent
shall  promptly  deliver to each Bank its Pro Rata Share of such  Commitment Fee
actually received by Agent.

     SECTION 2.7 Termination or Reduction of Commitment. Borrower may, by thirty
(30) days' prior  written  notice to Agent,  which notice  Agent shall  promptly
deliver to Banks, terminate entirely or proportionately reduce from time to time
by an aggregate amount of $1,000,000.00 or any larger multiple of $1,000,000.00,
the unused portion of the  Commitment;  provided,  however,  that (i) at no time
shall  the  Commitment  be  reduced  to a  figure  less  than  the  total of the
outstanding principal amount of all Loans plus the face amount of all Letters of
Credit,  (ii) at no time shall the  Commitment  be reduced to a figure less than
the total of the outstanding  principal amount of all Loans plus the face amount
of all Letters of Credit  outstanding under Section 2.1(a), and (iii) at no time
shall the  Commitment  be  reduced to a figure  greater  than zero but less than
$1,000,000.00.  The respective Commitments of each of the Banks shall be reduced
by such Bank's Pro Rata Share of the aggregate  reduction made by Borrower.  Any
reduction  of any  Commitment  by  Borrower  under  this  Section  2.7  shall be
irrevocable,  and in the  event  any  such  Commitment  reduction  requires  the
repayment of any Eurocurrency Loan prior to the end of its then current Interest
Period,  Borrower  agrees to pay with respect to such Loan any amounts  required
under Section 2.10  hereunder in addition to the  principal  and interest  being
repaid on such Eurocurrency Loan.

     SECTION 2.8 Payments Prior to Maturity.

     (a) Borrower  may,  upon notice to Agent  specifying  that it is paying its
Prime Loans,  pay without penalty or premium its Prime Loans in whole or in part
at any time, or from time to time.

     (b) Borrower may, upon at least two  Eurocurrency  Business Days' notice to
Agent, in the case of Eurocurrency  Loans, pay without penalty or premium on the
last day of any Interest  Period its  Eurocurrency  Loans to which such Interest
Period applies,  in whole, or in part, by paying the principal amount to be paid
together  with  accrued  interest  thereon to the date of  payment.  A notice of
payment given to Agent  pursuant to this  subsection (b) shall not thereafter be
revocable  by  Borrower.   Borrower   shall  not  be  permitted  to  prepay  any
Eurocurrency  Loan on any day  other  than the last day of an  Interest  Period,
provided,   however,  that  in  the  event  any  payment  of  principal  on  any
Eurocurrency  Loan is made on a day  prior  to the  last  day in the  applicable
Interest  Period,  Borrower  agrees to pay such breakage  amount or funding loss
incurred by any Bank as required under Section 2.10 herein.

     (c) Agent  shall  promptly  notify  each of the Banks of its receipt of any
notice of prepayment under Section 2.8(a) or 2.8(b) above.

     SECTION 2.9 General Provisions as to Payments.

     (a) All payments to be made by Borrower under this Agreement  shall be made
to Agent for  value on the due date and in  immediately  available  funds to the



                                       13
<PAGE>

account of Agent at 721  Locust  Street,  St.  Louis,  Missouri  63101 or to the
account of Agent at such  other  bank as Agent may from time to time  designate.
All payments of interest and principal,  whether voluntary or involuntary,  from
whatever  source,  including  payments by reason of  liquidation  or collateral,
setoff,  bankruptcy  proceedings or otherwise,  and whether received by Agent or
any of the Banks,  shall be shared  between the Banks in  accordance  with their
respective Pro Rata Shares.

     (b) Whenever any payment of principal of, or interest on, Prime Loans or of
fees shall be due on a day which is not a Domestic  Business  Day,  the date for
payment thereof shall be extended to the next succeeding  Domestic Business Day.
Whenever any payment of principal of, or interest on,  Eurocurrency  Loans shall
be due on a day which is not a  Eurocurrency  Business Day, the date for payment
thereof  shall be extended to the next  succeeding  Eurocurrency  Business  Day,
except that if the next  succeeding  Eurocurrency  Business  Day falls  within a
different  calendar  month,  such  payment  shall be made on the next  preceding
Eurocurrency  Business Day. If the date for any payment of principal is extended
by operation of law or otherwise, interest thereon, at the then applicable rate,
shall be payable for such extended time.

     (c) All payments to be made by Borrower under this Agreement  shall be made
without setoff or  counterclaim  and without  deduction for or on account of any
present or future taxes or other charges unless  Borrower is compelled by law to
make  payment  subject  to such tax or  other  charge.  All such  taxes or other
charges shall be paid by Borrower for its own account prior to the date on which
penalties attach thereto. Borrower will indemnify Agent and each of the Banks in
respect of all such taxes and other charges.  Should any such payment be subject
to any tax or other charge,  and the above provisions  either cannot be effected
or do not  result  in  Agent  or the  Banks  actually  receiving  and  remaining
beneficially entitled to and in possession of an amount equal to the full amount
provided  for  hereunder,  Borrower  shall pay to Agent,  for  itself or for the
benefit  of the Banks,  as the case may be,  such  additional  amounts as may be
necessary  to ensure  that  Agent and each of the Banks  receive  and  remain in
possession of and  beneficially  entitled to (free from any liability in respect
of any deduction, withholding or payment other than in respect of any tax on the
overall net income of Agent or the Banks) a net amount  equal to the full amount
which it would have  received  and retained had payment not been subject to such
tax or other charge. Borrower shall send to Agent or the Banks such certificates
or certified copy receipts as Agent or Banks shall  reasonably  require as proof
of the payment by Borrower of any taxes or other charges  payable by Borrower as
a result of the provisions of this Section 2.9(c).

     SECTION 2.10  Funding  Losses.  If Borrower  makes any payment of principal
with respect to any Eurocurrency  Loan (pursuant to Article 6 or 7 or otherwise)
on any day other than the last day of an Interest Period applicable  thereto, or
if Borrower fails to borrow or pay any Eurocurrency  Loans after notice has been
given to Agent in accordance  with Section 2.2, 2.4, or 2.8(b),  Borrower  shall
reimburse  Agent  and each of the  Banks on  demand  for any  resulting  loss or
expense incurred by them,  including  (without  limitation) any loss incurred in
obtaining,  liquidating or employing deposits from third parties,  and including
loss of margin for the period  after any such  payment,  provided  that Agent or
such Bank, as the case may be, shall have delivered to Borrower a certificate as
to the amount and particulars of such loss or expense,  which  certificate shall
be conclusive in the absence of manifest error.

     SECTION 2.11  Computation  of Interest and Fees.  Interest on all Loans and
any fees payable  hereunder,  except as  otherwise  set forth  herein,  shall be
computed  on the basis of a year of 360 days and paid for the  actual  number of
days elapsed.



                                       14
<PAGE>

                      ARTICLE 3 - CONDITIONS TO BORROWINGS

     The obligations of each of the Banks to make Loans and Agent's agreement to
issue Letters of Credit are subject to the performance by Borrower of all of its
obligations  under  this  Agreement  and to the  satisfaction  of the  following
further conditions:

     SECTION 3.1 All Borrowings. In the case of each Borrowing hereunder:

     (a) With  respect  to each  Loan,  Agent  shall  have  received a Notice of
Borrowing as required by Section 2.2A;

     (b) With  respect to each Letter of Credit,  Agent shall have  received the
applicable Reimbursement Agreement as required by Section 2.2B;

     (c) On the date of, and as a result of such Borrowing,  no Default or Event
of Default shall have occurred and be continuing;

     (d) On the date of, and as a result of such Borrowing,  no material adverse
change in the business,  financial position or results of operation, of Borrower
has  occurred  since  the  Effective  Date  and is  continuing,  and no legal or
administrative  proceedings or other regulatory  proceedings have been commenced
or  threatened  against the Borrower  which,  in the sole judgment of the Agent,
would be  likely  to  materially  or  adversely  affect  the  business,  assets,
liabilities (contingent or actual), operations or prospects of the Borrower; and

     (e) The  representations  and  warranties  of  Borrower  contained  in this
Agreement shall be true on and as of the date of such Borrowing.

Each Borrowing by Borrower  hereunder shall be deemed to be a representation and
warranty by Borrower on the date of such Borrowing as to the facts  specified in
clauses (c), (d) and (e) of this Section.

     SECTION  3.2  First  Borrowing.  In the  case of the  first  Borrowing  the
following additional conditions must be met:

     (a) Each Bank  shall  have  received  the duly  executed  Note of  Borrower
payable to the order of such Bank in the amount of such Bank's Commitment, dated
on or before the date of the first Borrowing;

     (b) With  respect  to each  Loan,  Agent  shall  have  received a Notice of
Borrowing as required by Section 2.2A;

     (c) With  respect to each Letter of Credit,  Agent  shall have  received an
application  for Letter of Credit and  reimbursement  agreement  as  required by
Section 2.2B;

     (d) Agent  shall have  received  payment of the  agent's  fee  required  by
Section 8.9 herein; and

     (e) Agent shall have  received  all  documents  it may  reasonably  request
relating to the existence of Borrower  (including without  limitation  certified
copies of the Articles of Incorporation and Bylaws, and any amendments thereto),
the  corporate  authority  for and the validity of this  Agreement and the Notes
(including without limitation  certified copies of corporate  resolutions of the



                                       15
<PAGE>

Board of  Directors  of Borrower  and  incumbency  certificates),  and any other
matters  relevant  hereto,  all in form and substance  satisfactory to Agent and
each of the Banks.

     The documents  and opinions  referred to in this Section shall be delivered
to Agent or the Banks, as applicable, on the date hereof.

                   ARTICLE 4 - REPRESENTATIONS AND WARRANTIES

     SECTION  4.1  Representations  and  Warranties.   Borrower  represents  and
warrants that:

     (a) Corporate  Existence  and Power.  Borrower:  (a) is duly  incorporated,
validly  existing and in good standing under the laws of the jurisdiction of its
incorporation;   (b)  has  all  requisite  corporate  powers  and  all  material
governmental licenses, authorizations,  consents and approvals required to carry
on its  business as now  conducted;  and (c) is  qualified to do business in all
jurisdictions  in which the nature of the  business  conducted  by it makes such
qualification  necessary  and where  failure to so qualify would have a material
adverse effect on its business, financial condition or operations.

     (b) Corporate and Governmental Authorization; Contravention. The execution,
delivery and performance by Borrower of this Agreement,  the Notes and the other
documents contemplated hereby are within the corporate powers of Borrower,  have
been duly authorized by all necessary  corporate action and require no action by
or in respect of, or filing with, any governmental body, agency or official. The
execution,  delivery,  and performance by Borrower of this Agreement,  the Notes
and the other documents contemplated hereby do not conflict with, or result in a
breach of the terms,  conditions or provisions of, or constitute a default under
or result in any  violation  of, and Borrower is not now in default  under or in
violation of, the terms of the Articles of  Incorporation or Bylaws of Borrower,
any applicable law, any rule, regulation, order, writ, judgment or decree of any
court or government agency or instrumentality, or any agreement or instrument to
which Borrower is a party or by which it is bound or to which it is subject.

     (c) Binding Effect. This Agreement has been duly executed and delivered and
constitutes  a legal,  valid and binding  agreement of Borrower  enforceable  in
accordance with its terms,  and the Notes and the other  documents  contemplated
hereby,  when  executed and delivered in accordance  with this  Agreement,  will
constitute  legal,  valid and binding  obligations  of Borrower,  enforceable in
accordance with their terms, except as may be limited by bankruptcy,  insolvency
or other similar laws affecting the enforcement of creditors' rights in general.

     (d) Financial Information.

          (i) The balance  sheet of Borrower  as of January  29,  1998,  and the
     related  statements of income,  retained  earnings and changes in financial
     position  for the fiscal  year then  ended,  audited by  Deloitte & Touche,
     copies of which have been provided to Banks,  fairly present, in conformity
     with generally accepted accounting  principles,  consistently  applied, the
     financial  position  of  Borrower  as of  such  date  and  the  results  of
     operations and changes in financial position for such fiscal year.

          (ii) The unaudited  balance sheet of Borrower as of February 27, 1999,
     and the related unaudited internal statements of income for the period then
     ended, copies of which have been provided to Banks, present,  substantially
     in conformity with generally  accepted  accounting  principles applied on a
     basis  consistent  with the financial  statements  referred to in paragraph
     


                                       16
<PAGE>

     (d)(i) of this Section,  the financial position of Borrower as of such date
     and the results of operations  for such period  (subject to normal year end
     adjustments).

          (iii) Since  February  27,  1999,  there has been no material  adverse
     change in the  business,  financial  position or results of  operations  of
     Borrower on a cumulative basis.

     (e)  Litigation.  Except as  disclosed  in  Schedule  4.1(e),  there are no
actions,  suits or  proceedings  pending  or  threatened  against  or  affecting
Borrower or any of its  Subsidiaries,  at law or in equity,  or before or by any
Federal,  State or  municipal  court or  arbitrator  or any  other  governmental
department,  commission,  board,  bureau,  agency,  official or instrumentality,
domestic or foreign,  which are reasonably likely to result, either individually
or  collectively,  in any material  adverse change in the business,  properties,
operations or condition,  financial or other,  of Borrower and its  Subsidiaries
taken as a whole, or in which there is a reasonable likelihood of recovery of an
amount that exceeds $500,000.00.

     (f)  Pension  and  Welfare  Plans.  Each  Pension  Plan  complies  with all
applicable statutes and governmental rules and regulations;  no Reportable Event
has  occurred  and is  continuing  with  respect to any  Pension  Plan;  neither
Borrower  nor  any  ERISA   Affiliate  of  Borrower  has   withdrawn   from  any
Multiemployer  Plan in a  "complete  withdrawal"  or a "partial  withdrawal"  as
defined in Sections 4203 or 4205 of ERISA, respectively;  no condition exists or
event or  transaction  has  occurred  in  connection  with any  Pension  Plan or
Multiemployer Plan which could result in the incurrence by Borrower or any ERISA
Affiliate of any material liability,  fine or penalty;  and neither Borrower nor
any  ERISA  Affiliate  is  a  "contributing   sponsor"  as  defined  in  Section
4001(a)(13)  of  ERISA  of  a  "single-employer  plan"  as  defined  in  Section
4001(a)(15) of ERISA which has two or more contributing sponsors at least two of
whom are not under  common  control.  Except as  disclosed  on  Schedule  4.1(f)
attached hereto, Borrower does not have any contingent liability with respect to
any "employee  welfare benefit plan", as such term is defined in Section 3(a) of
ERISA, which covers retired employees and their beneficiaries.

     (g) Tax  Returns  and  Payment.  Borrower  has filed all  federal and state
income tax returns and all other  material tax returns  which are required to be
filed and have paid all taxes due  pursuant  to such  returns or pursuant to any
assessment received by Borrower,  except for the filing of such returns, if any,
in respect of which an  extension of time for filing is in effect and except for
such  taxes,  if any,  as are  being  contested  in good  faith  and as to which
adequate reserves have been provided. The charges,  accruals and reserves on the
books of Borrower in respect of any taxes or other governmental  charges are, in
the opinion of Borrower, adequate.

     (h) Investment  Company Act of 1940;  Public Utility Holding Company Act of
1935. Borrower is not an "investment company" as that term is defined in, and is
not otherwise subject to regulation  under, the Investment  Company Act of 1940,
as amended.  Borrower is not a "holding company" as that term is defined in, and
is not otherwise subject to regulation under, the Public Utility Holding Company
Act of 1935, as amended.

     (i) Liens.  At the date of this Agreement no Liens exist on any property of
Borrower other than those described on Schedule 4.1(i).

     (j)  Subsidiaries.  Borrower  has the  Subsidiaries  described  on Schedule
4.1(j) attached hereto.

     (k) Compliance With Other Instruments;  None Burdensome.  Borrower is not a
party to any contract or agreement or subject to any charter or other  corporate



                                       17
<PAGE>

restriction  which  materially and adversely  affects its business,  Property or
financial  condition  and  which  is  not  disclosed  on  Borrower's   financial
statements  heretofore  submitted to Bank; none of the execution and delivery by
Borrower of this Agreement, the Notes, the Reimbursement Agreements or the other
transaction documents, the consummation of the transactions therein contemplated
or the  compliance  with the  provisions  thereof  will  violate any law,  rule,
regulation,  order,  writ,  judgment,  injunction,  decree or award  binding  on
Borrower,  or any of the  provisions  of Borrower's  Certificate  or Articles of
Incorporation  or Bylaws or any of the provisions of any  indenture,  agreement,
document,  instrument or undertaking to which Borrower is a party or subject, or
by which it or its Property is bound,  or conflict  with or constitute a default
thereunder  or result in the creation or  imposition of any Lien pursuant to the
terms of any such indenture,  agreement, document, instrument or undertaking. No
order, consent,  approval,  license,  authorization or validation of, or filing,
recording or registration  with, or exemption by, any governmental,  regulatory,
administrative  or public body or  authority,  or any  subdivision  thereof,  is
required to  authorize,  or is  required  in  connection  with,  the  execution,
delivery  or  performance  of,  or the  legality,  validity,  binding  effect or
enforceability of, any of the transaction documents.

     (l) Other Loans and  Guarantees.  Except as  disclosed  on Schedule  4.1(l)
attached hereto, Borrower is not a party to any loan transaction or Guarantee.

     (m) Labor Matters.  Except as disclosed on Schedule 4.1(m) attached hereto,
(a) no labor contract to which Borrower is subject is scheduled to expire during
the Term of this Agreement and (b) on the date of this  Agreement,  (i) Borrower
is not a party to any labor  dispute  and (ii) there are no strikes or  walkouts
relating to any labor contract to which Borrower is subject.

     (n) Title to Property.  Borrower is the sole and absolute  owner of, or has
the legal  right to use and  occupy,  all  Property it claims to own or which is
necessary  for  Borrower to conduct its  business.  Borrower  has not signed any
financing  statements,  security agreements or chattel mortgages with respect to
any of its Property,  has not granted or permitted any Liens with respect to any
of its  Property or has any  knowledge  of any Liens with  respect to any of its
Property, except as disclosed on Schedule 4.1(n) attached hereto.

     (o)  Regulation  U. Borrower is not engaged  principally,  or as one of its
important  activities,  in the business of  extending  credit for the purpose of
purchasing  or carrying  margin stock (within the meaning of Regulation U of The
Board of Governors of the Federal Reserve System, as amended) and no part of the
proceeds of any Loan will be used,  whether directly or indirectly,  and whether
immediately,  incidentally  or ultimately  (i) to purchase or carry margin stock
(except for  Borrower's  repurchase of its own capital stock pursuant to Section
5.2(e)(ii) below) or to extend credit to others for the purpose of purchasing or
carrying margin stock, or to refund or repay  indebtedness  originally  incurred
for such purpose or (ii) for any purpose  which entails a violation of, or which
is  inconsistent  with, the provisions of any of the Regulations of The Board of
Governors  of  the  Federal  Reserve  System,  including,   without  limitation,
Regulations  U, T or X thereof,  as amended.  If  requested  by the Agent or any
Bank,  Borrower  shall  furnish  to Banks a  statement  in  conformity  with the
requirements of Federal Reserve Form U-1 referred to in Regulation U.

     (p)  Multi-Employer  Pension Plan  Amendments  Act of 1980.  Borrower is in
compliance  with the  Multi-Employer  Pension Plan  Amendments  Act of 1980,  as
amended ("MEPPAA"),  and has no liability for pension contributions  pursuant to
MEPPAA.

     (q) Patents,  Licenses,  Trademarks,  Etc. Borrower possesses all necessary
patents, licenses, trademarks,  trademark rights, trade names, trade name rights
and  copyrights  to conduct  its  business  without  conflict  with any  patent,
license, trademark, trade name or copyright of any other Person.



                                       18
<PAGE>

     (r)  Environmental  and Safety and Health  Matters.  Except as disclosed on
Schedule 4.1(r) attached hereto:  (i) the operations of Borrower comply with (A)
all applicable Environmental Laws and (B) all applicable Occupational Safety and
Health  Laws;  (ii)  none of the  operations  of  Borrower  are  subject  to any
judicial,  governmental,  regulatory or administrative  proceeding  alleging the
violation of any Environmental Law or Occupational  Safety and Health Law; (iii)
none of the  operations  of  Borrower  is the  subject  of any  Federal or state
investigation evaluating whether any remedial action is needed to respond to (A)
any spillage, disposal or release into the environment of any Hazardous Material
or any other hazardous,  toxic or dangerous  waste,  substance or constituent or
other substance,  or (B) any unsafe or unhealthful  condition at any premises of
Borrower;  (iv) Borrower has not filed any notice under any Environmental Law or
Occupational  Safety and  Health Law  indicating  or  reporting  (A) any past or
present  spillage,  disposal or release into the  environment  of, or treatment,
storage or disposal of, any Hazardous Material or any other hazardous,  toxic or
dangerous  waste,  substance or constituent or other substance or (B) any unsafe
or unhealthful condition at any premises of Borrower;  and (v) Borrower does not
have any  known  contingent  liability  in  connection  with  (A) any  spillage,
disposal or release into the  environment  of, or otherwise with respect to, any
Hazardous Material or any other hazardous,  toxic or dangerous waste,  substance
or constituent or other substance or (B) any unsafe or unhealthful  condition at
any premises of Borrower.

     (s) Year 2000  Compliance  Borrower  and each of its  Subsidiaries  has (a)
undertaken a detailed  inventory,  review and assessment of all areas within its
business  and  operations  that could be  adversely  affected  by the failure of
Borrower or such Subsidiary,  as the case may be, to be Year 2000 Compliant on a
timely basis,  (b) developed a detailed plan and timeline for becoming Year 2000
Compliant on a timely basis and (c) to date, implemented such plan in accordance
with such timetable in all material respects.  Borrower  reasonably  anticipates
that it and each of its  Subsidiaries  will be Year 2000  Compliant  on a timely
basis,  except to the extent such noncompliance could not reasonably be expected
to have a  material  adverse  effect  on the  Properties,  assets,  liabilities,
business, operations, prospects, income or condition (financial or otherwise) of
Borrower or any such Subsidiary. Neither Borrower nor any Subsidiary of Borrower
is aware that any of its key  suppliers,  vendors or  customers  will not,  on a
timely basis,  be Year 2000 Compliant,  except to the extent such  noncompliance
could not  reasonably  be  expected  to have a  material  adverse  effect on the
Properties,  assets,  liabilities,  business,  operations,  prospects, income or
condition  (financial or otherwise) of such Person. For purposes of this Section
4.1(s),  "key  suppliers,  vendors  and  customers"  refers to those  suppliers,
vendors and customers of Borrower or of any such Subsidiary, as the case may be,
whose business  failure could  reasonably be expected to have a material adverse
effect on the Properties, assets, liabilities,  business, operations, prospects,
income or condition (financial or otherwise) of Borrower or any such Subsidiary.

                              ARTICLE 5 - COVENANTS

     SECTION 5.1  Covenants of Borrower.  Borrower  agrees that,  so long as any
Bank has any  Commitment  hereunder  or any  amount  payable  under  any Note or
Reimbursement   Agreement  remains  unpaid  or  any  Letter  of  Credit  remains
outstanding, unless the prior written consent of the Majority Banks is obtained:

     (a) Information. Borrower will deliver to the Agent:

          (i) As soon as available and in any event within 90 days after the end
     of each fiscal year of Borrower,  a consolidated  balance sheet of Borrower
     as of the end of such fiscal year and the related  consolidated  statements
     of income,  retained earnings and cash flow for such fiscal year,  prepared
     in accordance with generally accepted accounting  principles,  consistently
     applied, setting



                                       19
<PAGE>

     forth in each case in comparative  form the figures for the previous fiscal
     year,  all reported on by and  accompanied  by the  unqualified  opinion of
     Deloitte  & Touche  or other  firm of  independent  public  accountants  of
     nationally recognized standing acceptable to Banks;

          (ii) As soon as  available  and in any event  within 30 days after the
     end of each fiscal month,  a  consolidated  balance sheet of Borrower as of
     the end of such fiscal  month and the related  consolidated  statements  of
     income,  retained  earnings and cash flow for such fiscal month and for the
     portion of  Borrower's  fiscal year ended at the end of such fiscal  month,
     setting  forth  in each  case in  comparative  form,  the  figures  for the
     corresponding  fiscal  month and the  corresponding  portion of  Borrower's
     previous   fiscal  year,   all  certified   (subject  to  normal   year-end
     adjustments) as to fairness of presentation,  generally accepted accounting
     principles  and  consistency  by the chief  financial  officer or principal
     accounting officer of Borrower;

          (iii) As soon as  available  and in any event within 30 days after the
     end of each fiscal quarter, a Compliance Certificate of the chief financial
     officer or principal  accounting officer of Borrower,  in the form attached
     hereto  and made a part  hereof as  Exhibit D,  accompanied  by  supporting
     financial work sheets where  appropriate,  and stating whether there exists
     on the date of such certificate any Default or Event of Default and, if any
     Default or Event of Default then exists,  setting forth the details thereof
     and the action  which  Borrower is taking or proposes to take with  respect
     thereto;

          (iv) As soon as  available  and in any event  within 30 days after the
     end of each fiscal month, a Borrowing Base Certificate, dated as of the end
     of the preceding  fiscal month,  in the form of Exhibit E attached  hereto,
     all certified  (subject to normal  year-end  adjustments) as to fairness of
     presentation,  generally accepted accounting  principles and consistency by
     the chief financial officer or principal accounting officer of Borrower;

          (v) As soon as available and in any event within 30 days after the end
     of each fiscal  month,  a statement  in  reasonable  detail  setting  forth
     Borrower's  profit  and  loss on a store  by  store  basis,  determined  in
     accordance  with  generally  accepted  accounting  principles  consistently
     applied and certified as to fairness of presentation by the chief financial
     officer or principal accounting officer of Borrower;

          (vi)  Within 30 days  after the end of each  fiscal  year of  Borrower
     during the Term hereof, a financial  budget for Borrower's  upcoming fiscal
     year prepared in reasonable detail;

          (vii)  Forthwith  upon  the  occurrence  of any  Default  or  Event of
     Default,  and in any  event  within  five  days  after  knowledge  of  such
     occurrence,  a  certificate  of an officer of  Borrower  setting  forth the
     details thereof and the action which Borrower is taking or proposes to take
     with respect thereto;

          (viii)  Promptly  upon the  mailing  thereof  to the  shareholders  of
     Borrower  generally,  and in any event within ten days after such  mailing,
     copies of all financial  statements,  reports,  proxy  statements and other
     material information so mailed;

          (ix)  From  time to  time,  with  reasonable  promptness,  upon  being
     informed by Banks of the purpose of the inquiry,  such further  information
     regarding the business,  affairs and financial position of Borrower as Bank
     may reasonably request.



                                       20
<PAGE>

     Agent  agrees to  promptly  furnish  to each of the  Banks the  information
     provided to Agent by Borrower under this Section 5.1(a).

     (b)  Payment  of  Debt.  Borrower  will  pay any and all  Debt  payable  or
Guaranteed by Borrower,  and any interest or premium thereon,  when due (whether
by scheduled maturity, required prepayment,  acceleration,  demand or otherwise)
in  accordance  with  the  agreement  or  instrument  relating  to such  Debt or
Guarantee,  except that Borrower may pay up to twenty-five  percent (25%) of its
Debt owed to trade suppliers or trade vendors at any point in time within ninety
(90) days after the date such trade Debt is due and payable.

     (c)  Consultations  and  Inspections.  Solely for the purpose of permitting
Agent  and Banks to  determine  compliance  by  Borrower  with  this  Agreement,
Borrower will permit Agent and/or any of the Banks (and any Person  appointed by
Agent or any Bank to whom  Borrower does not  reasonably  object) to discuss the
affairs,  finances  and  accounts of  Borrower  with the  executive  officers of
Borrower,  all at such  reasonable  times  and as  often  as may  reasonably  be
requested.  Borrower will also permit  inspection of its  properties,  books and
records by Agent and Banks during normal  business hours or at other  reasonable
times.

     (d)  Payment of Taxes;  Corporate  Existence;  Maintenance  of  Properties;
Insurance. Borrower will:

          (i) Pay and  discharge  promptly  all  taxes,  assessments  and  other
     governmental  charges  imposed  upon it or any of its  property;  provided,
     however,  that  Borrower  shall  not be  required  to  pay  any  such  tax,
     assessment  or other  governmental  charge  the  payment  of which is being
     contested  in good  faith  and by  appropriate  proceedings  and for  which
     adequate  reserves  have been  provided,  except that  Borrower will pay or
     cause to be paid all  such  taxes,  assessments  and  governmental  charges
     forthwith upon the  commencement of proceedings to foreclose any Lien which
     is attached as security therefor,  unless such foreclosure is stayed by the
     filing of an appropriate bond;

          (ii) Do all things  necessary  to preserve  and keep in full force and
     effect  its  corporate  existence,  rights  and  franchise  and to be  duly
     qualified  to do  business  in all  jurisdictions  where the  nature of its
     business requires such qualification;

          (iii)  Maintain  and keep its  properties  as a whole in good  repair,
     working  order and  condition;  provided,  however,  that  nothing  in this
     subsection  (iii) shall prevent any  abandonment  of any of its  properties
     which is not disadvantageous in any material respect to Banks and which, in
     the opinion of the  management  of  Borrower,  is in the best  interests of
     Borrower; and

          (iv) Insure with  responsible  and reputable  insurance  companies its
     assets and business in such manner and to such extent as is customary  with
     similar  business  enterprises of comparable size and subject to comparable
     hazards.

     (e) Financial Covenants. Borrower will:

          (i) Have a Net Worth of not less than  $82,668,000.00 as of the end of
     each fiscal  quarter during the Term hereof,  less the aggregate  amount of
     Distributions  made  by  Borrower  after  the  date of  this  Agreement  to
     repurchase  its capital  stock as permitted  under Section  5.2(e)  herein,
     


                                       21
<PAGE>

     provided that any such  reduction in the minimum Net Worth  requirement  of
     this Section  5.1(e)(i) for any such aggregate stock  repurchases shall not
     exceed $10,000,000.00.

          (ii)  Have a ratio of (A) the sum of  Funded  Debt  plus  three  times
     Borrower's Rental Expense,  to (B) the sum of EBITDA plus Borrower's Rental
     Expense of not more than 2.5 to 1.0 at each fiscal  quarter-end  during the
     Term hereof.  As used herein,  the term "EBITDA" shall mean  Borrower's net
     income  before  taxes,  plus  interest  expense,  plus  depreciation,  plus
     amortization,   as  determined  in  accordance   with  generally   accepted
     accounting  principles  consistently  applied,  for the four fiscal quarter
     period  ending on the date of such  calculation.  As used herein,  the term
     "Funded Debt" shall mean all  Indebtedness  of Borrower for borrowed money,
     including,  but not  limited  to, all  liabilities  of  Borrower  under any
     Capitalized  Leases.  As used herein,  the term "Rental Expense" shall mean
     Borrower's  base minimum rental expense under all real property  leases for
     the four fiscal  quarter  period ending on the date of such  calculation as
     determined in accordance  with  generally  accepted  accounting  principles
     consistently applied.

          (iii)  Deliver  a  certificate  of  the  chief  financial  officer  or
     principal  accounting  officer of Borrower,  containing the financial ratio
     calculations  required  in  clauses  5.1(e)(i)  and (ii)  above  and of the
     Distributions paid under Section 5.2(e), simultaneously with the Compliance
     Certificate referred to in Section 5.1(a)(iii).

     (f) Maintenance of Books and Records.  Borrower will maintain its books and
records  in  accordance   with   generally   accepted   accounting   principles,
consistently applied.

     (g)  Compliance  with  Law.  Borrower  will  comply  with any and all laws,
ordinances  and  governmental  rules and  regulations to which it is subject and
obtain  any  and  all  licenses,  permits,  franchises  and  other  governmental
authorizations necessary to the ownership of its properties or to the conduct of
its business,  which violation or failure to obtain might  materially  adversely
affect the condition or operation, financial or otherwise, of Borrower.

     (h) ERISA  Compliance.  If Borrower  shall have any Pension Plan,  Borrower
shall  comply with all  requirements  of ERISA  relating  to such plan.  Without
limiting the generality of the foregoing, Borrower will not:

          (i)  permit  any  Pension  Plan  maintained  by it to  engage  in  any
     nonexempt "prohibited transaction," as such term is defined in Section 4975
     of the Code;

          (ii)  permit  any  Pension  Plan   maintained   by  it  to  incur  any
     "accumulated funding deficiency", as such term is defined in Section 302 of
     ERISA, 29 U.S.C. ss. 1082, whether or not waived;

          (iii)  terminate  any such Pension Plan in a manner which could result
     in the imposition of a Lien on any Property of Borrower pursuant to Section
     4068 of ERISA, 29 U.S.C. ss.1368; or

          (iv) take any action  which  would  constitute  a complete  or partial
     withdrawal  from a  Multiemployer  Plan within the meaning of Sections 4203
     and 4205 of Title IV of ERISA.



                                       22
<PAGE>


     Notwithstanding  any  provision  contained  in this  Section  5.1(h) to the
contrary,  an act by Borrower  shall not be deemed to  constitute a violation of
subparagraphs  (i) through (iv) hereof  unless the Majority  Banks  determine in
good faith that said action,  individually  or  cumulatively  with other acts of
Borrower, does have or is likely to cause a significant adverse financial effect
upon Borrower.

     Borrower shall have the affirmative obligation hereunder to report to Banks
any  of  those  acts  identified  in  subparagraphs  (i)  through  (iv)  hereof,
regardless of whether said act does or is likely to cause a significant  adverse
financial  effect  upon  Borrower,  and  failure by  Borrower to report such act
promptly  upon  Borrower's   becoming  aware  of  the  existence  thereof  shall
constitute an Event of Default hereunder.

     (i) Notices.  Borrower will notify Agent and Banks in writing of any of the
following  immediately upon learning of the occurrence  thereof,  describing the
same and, if  applicable,  the steps being taken by the Person(s)  affected with
respect thereto:

          (i) Default.  The  occurrence of any Default or Event of Default under
     this  Agreement or any default or event of default by Borrower or any other
     Obligor under any note, indenture, loan agreement, mortgage, deed of trust,
     security  agreement,   lease  or  other  similar  agreement,   document  or
     instrument to which Borrower or any other Obligor, as the case may be, is a
     party or by which it is bound or to which it is subject;

          (ii)  Litigation.  The  institution  of  any  litigation,  arbitration
     proceeding or governmental or regulatory  proceeding  affecting Borrower or
     any other  Obligor,  whether or not  considered to be covered by insurance,
     unless the prayer for relief in the complaint or petition  concerning  such
     proceeding is in an aggregate amount of less than $500,000.00;

          (iii) Judgment.  The entry of any judgment or decree against  Borrower
     or any other Obligor in an aggregate amount in excess of $500,000.00;

          (iv) Pension Plans.  The occurrence of a Reportable Event with respect
     to any  Pension  Plan;  the  filing of a notice of  intent to  terminate  a
     Pension  Plan by  Borrower  or any  ERISA  Affiliate;  the  institution  of
     proceedings  to terminate a Pension  Plan by the PBGC or any other  Person;
     the  withdrawal in a "complete  withdrawal"  or a "partial  withdrawal"  as
     defined in Sections  4203 and 4205,  respectively,  of ERISA by Borrower or
     any ERISA Affiliate from any  Multiemployer  Plan; or the incurrence of any
     material  increase in the contingent  liability of Borrower with respect to
     any  "employee  welfare  benefit  plan" as defined in Section 3(1) of ERISA
     which covers retired employees and their beneficiaries;

          (v) Change of Name.  Any change in the name of  Borrower  or any other
     Obligor;

          (vi) Change in Place(s) of  Business.  Any  opening,  closing or other
     change  of  Borrower's  corporate   headquarters  or  of  any  distribution
     facility;

          (vii) Environmental Matters. Receipt of any notice that the operations
     of Borrower or any other Obligor are not in full compliance with any of the
     requirements of any applicable Environmental Law or Occupational Safety and
     Health Law; receipt of notice that Borrower or any other Obligor is subject
     to any  Federal,  state  or  local  investigation  evaluating  whether  any
     remedial  action is needed  to  respond  to the  release  of any  Hazardous
     


                                       23
<PAGE>

     Materials or any other  hazardous or toxic waste,  substance or constituent
     or other substance into the  environment;  or receipt of notice that any of
     the Properties or assets of Borrower or any other Obligor are subject to an
     "Environmental   Lien."  For   purposes   of  this   Section   5.1(i)(vii),
     "Environmental  Lien"  shall  mean a Lien in favor of any  governmental  or
     regulatory  agency,  entity,  authority or official  for (1) any  liability
     under  Environmental  Laws or (2) damages arising from or costs incurred by
     any such governmental or regulatory agency,  entity,  authority or official
     in response to a release of any Hazardous  Materials or any other hazardous
     or toxic  waste,  substance  or  constituent  or other  substance  into the
     environment;

          (viii) Material Adverse Change. The occurrence of any material adverse
     change in the business, operations or condition, financial or otherwise, of
     Borrower or any other Obligor;

          (ix) Change in Line(s) of Business.  Any material change in Borrower's
     line(s) of business; and

          (x) Other  Notices.  Any notices  required to be provided  pursuant to
     other  provisions of this  Agreement  and notice of the  occurrence of such
     other events as Bank may from time to time reasonably specify.

     (j) Year 2000  Compliance.  Borrower  will,  and it will  cause each of its
Subsidiaries to, take any and all actions  necessary to assure that Borrower and
each of its  Subsidiaries  will be Year  2000  Compliant  as soon as  reasonably
practical.  Borrower and each of its Subsidiaries will be Year 2000 Compliant by
October 1, 1999, except to the extent such noncompliance could not reasonably be
expected  to  have  a  material  adverse  effect  on  the  Properties,   assets,
liabilities,  business operations,  prospects, income or condition (financial or
otherwise)  of Borrower or such  Subsidiary.  At the request of Agent,  Borrower
will from time to time  provide  Agent with  written  reports in form and detail
reasonably  satisfactory  to Agent on the status of the efforts of Borrower  and
its Subsidiaries to be Year 2000 Compliant.

     SECTION 5.2 Negative  Covenants of Borrower.  Borrower covenants and agrees
that, so long as any Bank has any  obligation  to make any Loan  hereunder or to
issue  any  Letter of Credit or any of  Borrower's  Obligations  remain  unpaid,
unless the prior written consent of the Majority Banks is obtained:

     (a) Limitation on Indebtedness.  Borrower will not incur or be obligated on
any Debt,  either  directly or  indirectly,  by way of Guarantee,  suretyship or
otherwise, other than:

          (i) Debt evidenced by the Notes and the Reimbursement Agreements;

          (ii) Unsecured trade accounts  payable incurred in the ordinary course
     of business;

          (iii) Debt  representing  loans  against  life  insurance  policies of
     Borrower in an amount not to exceed the aggregate cash  surrender  value of
     such life insurance policies;

          (iv) Other unsecured Debt exclusive of capitalized leases in an amount
     not to exceed $3,000,000.00 in the aggregate at any one time outstanding;



                                       24
<PAGE>

          (v) Other purchase money Debt in an amount not to exceed $5,000,000.00
     in the aggregate at any one time outstanding; and

          (vi)  Capitalized  leases in an amount not to exceed  $3,000,000.00 in
     the aggregate at any one time outstanding.

     (b) Limitations on Liens. Borrower will not create, incur, assume or suffer
to exist any Lien on any of its Property, assets or revenues other than:

          (i) Liens  presently  in  existence  which are  described  on Schedule
     4.1(n) attached hereto;

          (ii)  Pledges or deposits in  connection  with or to secure  workmen's
     compensation, unemployment insurance, pension or other employee benefits;

          (iii) Subject to Section  5.1(d)(i),  Liens for taxes,  assessments or
     governmental  charges or levies on  Property  of  Borrower  if the same are
     being  contested in good faith and by  appropriate  proceedings  diligently
     conducted and for which adequate  reserves in form and amount  satisfactory
     to Banks are provided on Borrower's financial statements;

          (iv)  Liens  provided  by  statute  for  unpaid  rent in  favor of any
     landlord of the Borrower under real property leases;

          (v) Liens  filed  for  purchase  money  security  interests  to secure
     purchase  money  indebtedness  permitted  under  Section  5.2(a)(v)  above,
     provided  that the Lien shall secure only the purchase  money  indebtedness
     incurred  which  shall not exceed  the  purchase  price of the asset  being
     acquired and shall attach only to the asset  purchased with the proceeds of
     such purchase money indebtedness; and

          (vi) Liens filed for any  equipment  leases  permitted  under  Section
     5.2(a)(vi)  above,  provided  that  such  Liens  shall  attach  only to the
     equipment  being  leased and shall secure only the  obligations  under such
     leases.

     (c) Sale of Property.  Borrower will not sell, lease, transfer or otherwise
dispose of any Property or assets of Borrower  except for sales of assets in the
ordinary  course of business during any fiscal year which have an aggregate book
value of not more than $500,000.00;

     (d) Mergers,  Consolidations and Acquisitions.  Borrower will not, and will
not permit any  Subsidiary  to,  merge or  consolidate  with any other Person or
acquire any other Person, except that:

          (i) Borrower may  consolidate  with or merge into any Person or permit
     any other  Person to merge into,  provided  that  immediately  after giving
     effect  thereto:  (1)  Borrower  shall be the  successor  corporation;  (2)
     Borrower shall be in compliance with all provisions of this Agreement;  and
     (3) Borrower and the acquired Person, on a consolidated basis as determined
     after giving effect to said acquisition,  have a net worth of not less than
     100%  of  Borrower's  net  worth  determined   immediately  prior  to  said
     acquisition;



                                       25
<PAGE>

          (ii)  Any   Subsidiary   may  (A)  merge  into   Borrower  or  another
     wholly-owned  Subsidiary or (B) sell,  transfer or lease all or any part of
     its assets to Borrower or to another wholly-owned Subsidiary or (iii) merge
     into any Person which,  as a result of such merger,  concurrently  become a
     wholly-owned Subsidiary; and

          (iii)  Borrower may make  acquisitions  of any Persons or their assets
     during any 12-month  period during the Term of this Agreement  which in the
     aggregate do not exceed $5,000,000.00, provided that after giving effect to
     any  such  acquisition,  Borrower  shall be in  compliance  with all of the
     provisions of this Agreement.

     (e) Stock Redemptions and Distributions. With respect to its capital stock,
Borrower  will not  declare or make any  dividend or other  Distribution  to its
shareholders  (excluding any stock split or stock dividend) unless,  immediately
after  giving  effect to the proposed  Distribution,  (i) no Default or Event of
Default is existing or would occur as a result of such dividend or Distribution,
and (ii) such proposed  Distribution,  if made for the  repurchase of Borrower's
common  stock  after the date of this  Agreement,  shall not exceed Ten  Million
Dollars ($10,000,000.00) in the aggregate.

     (f)  Transactions  with Related  Parties.  Borrower  will not engage in any
material  transaction  with any  affiliated,  related  or parent  company or any
Subsidiary (except any wholly-owned  Subsidiary of Borrower) or any shareholder,
director,  officer,  or beneficiary of a trust that is a shareholder of Borrower
unless such transaction is upon fair market terms and is not  disadvantageous in
any material respect to Banks.

     (g) Fiscal Year.  Borrower  will not change its fiscal year  without  prior
notice to Banks;  provided,  however, that Borrower,  Agent and Banks agree that
prior to the  effective  date of any such  change  in  Borrower's  fiscal  year,
Borrower,  Agent and Banks  shall  agree to amend this  Agreement  to adjust the
financial covenants set forth herein in accordance with such new fiscal year.

     (h) Loans and Investments.  Borrower will not make any loans or advances or
extensions of credit to (other than  extensions of credit in the ordinary course
of business or otherwise  permitted under this Agreement),  purchase any stocks,
bonds, notes, debentures or other securities of, make any expenditures on behalf
of, or in any manner assume liability (direct,  contingent or otherwise) for the
Debt of any Person, except that:

          (i)  Borrower  may acquire and own stock,  obligations  or  securities
     received  in  settlement  of  debts  (created  in the  ordinary  course  of
     business) owing to Borrower,

          (ii) Borrower may make loans,  advances or extensions of credit to its
     1993 stock option and  incentive  plan not to exceed  $1,000,000.00  in any
     fiscal year,

          (iii) Borrower may make other loans,  advances or extensions of credit
     not to exceed $200,000.00 in the aggregate at any one time outstanding,

          (iv)  Borrower may make  investments  of its excess cash in repurchase
     agreements  with maturities not greater than seven days,  which  repurchase
     agreements  may be made only  with any of the Banks or any other  financial
     institution  satisfying the  requirements of subparts (v) or (viii) of this
     Section 5.2(h),



                                       26
<PAGE>

          (v)  Borrower  may make  investments  of its excess cash in  municipal
     bonds or other securities rated "AAA" or better by either Standard & Poor's
     Corporation or Moody's Investor Service, Inc.,

          (vi) Borrower may make  investments of its excess cash in money market
     mutual funds having assets in excess of $1,000,000,000.00,

          (vii)  Borrower  may invest its excess cash in any readily  marketable
     direct  obligations  of the United States  government or any agency thereof
     which are backed by the full faith and credit of the United States,

          (viii)  Borrower may invest its excess cash in  preferred  stock or in
     any commercial  paper of any  corporation  which at the time of acquisition
     has the highest  commercial paper rating  obtainable from either Standard &
     Poor's Corporation or Moody's Investor Service, Inc.; and

          (ix) Borrower may repurchase its own stock up to an aggregate purchase
     price of $10,000,000.00 pursuant to Section 5.2(e)(ii).

     (i)  Dissolution  or  Liquidation.  Borrower  will not seek or  permit  the
dissolution or liquidation of Borrower in whole or in part.

     (j)  Change in  Nature of  Business.  Borrower  will not make any  material
change in the nature of its  business  and  Borrower  will not make any material
change in or discontinue its present line(s) of business.

     (k) Pension Plans.  Borrower shall not (a) permit any condition to exist in
connection with any Pension Plan which might constitute  grounds for the PBGC to
institute  proceedings  to  have  such  Pension  Plan  terminated  or a  trustee
appointed to  administer  such Pension Plan or (b) engage in, or permit to exist
or occur, any other condition,  event or transaction with respect to any Pension
Plan which could result in the incurrence by Borrower of any material liability,
fine or  penalty.  Borrower  shall not become  obligated  to  contribute  to any
Pension  Plan or  Multiemployer  Plan  other  than  any  such  plan or  plans in
existence on the date hereof.

     (l) Subsidiaries.  Borrower shall not have,  obtain,  acquire or create any
Subsidiary  during  the  Term of this  Agreement  to the  extent  that  any such
Subsidiary or Subsidiaries shall in the aggregate own more than 20% of the total
assets of Borrower determined on a consolidated basis.

     SECTION 5.3 Use of  Proceeds.  Borrower  agrees that none of such  proceeds
will be used in violation of any  applicable  law or  regulation;  and except as
permitted in Section 5.2(e)(ii) herein, Borrower will not engage principally, or
as one of its important activities,  in the business of extending credit for the
purpose  of  purchasing  or  carrying  "margin  stock"  within  the  meaning  of
Regulation U of the Board of Governors of the Federal Reserve System, as amended
from time to time.

                              ARTICLE 6 - DEFAULTS

     SECTION 6.1 Events of Default. If:

     (a) Borrower shall fail to pay any principal of or interest on the Notes or
any  other  amount  payable  by  Borrower  hereunder,  under  any  Reimbursement
Agreement or under the Notes when due;



                                       27
<PAGE>

     (b)  Borrower  shall  violate or fail to perform  any of its  covenants  or
agreements contained in Sections 5.1(b) through (j) or Section 5.2;

     (c) Borrower  shall fail to deliver to the Agent any of the  information or
financial statements required under Section 5.1(a) herein and such failure shall
continue for 15 days after the date such  information  or  financial  statements
were required to be delivered under the terms of such Section;

     (d) Borrower shall fail to perform any term,  covenant or agreement  herein
contained  (other than those  specified  in clause (a) or (b)) for 30 days after
the  earlier of (i)  written  notice of Default is given to Borrower by Agent or
any  Bank,  or (ii) the date the  chief  executive  officer  or chief  financial
officer of Borrower has knowledge of such Default;

     (e) Borrower shall have made any  representation or warranty in or pursuant
to this Agreement,  or in any certificate or document delivered pursuant hereto,
which shall have been materially incorrect, false or misleading when made;

     (f)  Borrower  shall  fail (and such  failure  shall not have been cured or
waived) to: (i) make any payment of principal of or premium, if any, or interest
on any Debt owed to a trade  supplier or trade  creditor  which causes more than
twenty-five percent (25%) of Borrower's aggregate trade Debt then outstanding to
be more  than 90 days  past  due,  or to make any  payment  of  principal  of or
premium,  if any, or  interest  on any other Debt when due  (whether at schedule
maturity or by required prepayment,  acceleration, demand or otherwise) and such
failure shall continue after the applicable grace period,  if any,  specified in
the  agreement or  instrument  relating to such Debt, or (ii) perform or observe
any other  provision,  term or condition  of, or any other  default  shall occur
under, any agreement or instrument  relating to any Debt outstanding;  in either
case if the effect of such failure or default is to cause or permit such Debt to
be declared to be due and payable or otherwise accelerated, or to be required to
be prepaid (other than by a regularly scheduled required  prepayment),  prior to
the stated maturity thereof;

     (g) Borrower shall have entered  against it by a court having  jurisdiction
in the premises a judgment in excess of $500,000.00, and Borrower (or an insurer
on behalf of Borrower) shall not appeal or satisfy such judgment within the time
permitted by law for an appeal of such judgment;

     (h)  Borrower  shall have filed  against it an  involuntary  case under any
applicable  bankruptcy,  insolvency  or other  similar law now or  hereafter  in
effect, or for the appointment of a receiver,  liquidator,  assignee, custodian,
trustee,  sequestrator (or similar official) of Borrower, or for any substantial
part of its property,  or for the  winding-up or  liquidation of its affairs and
such  involuntary  case or proceeding  shall remain unstayed and in effect for a
period of 60 consecutive days, or if any order for relief is entered in any such
case;

     (i)  Borrower   shall  commence  a  voluntary  case  under  any  applicable
bankruptcy,  insolvency  or other  similar law now or  hereafter  in effect,  or
consent  to the entry of an order for  relief in an  involuntary  case under any
such law, or consent to the  appointment of or taking  possession by a receiver,
liquidator, assignee, trustee, custodian,  sequestrator (or similar official) of
Borrower,  or for any  substantial  part of its  property,  or make any  general
assignment for the benefit of any of the foregoing;



                                       28
<PAGE>

     (j) The occurrence of a Reportable  Event with respect to any Pension Plan;
the  institution  of  proceedings to terminate a Pension Plan by the PBGC or any
other  Person;  the  withdrawal  in  a  "complete   withdrawal"  or  a  "partial
withdrawal"  as defined in  Sections  4203 and 4205,  respectively,  of ERISA by
Borrower or any ERISA Affiliate from any  Multiemployer  Plan; or the incurrence
of any material increase in the contingent liability of Borrower with respect to
any  "employee  welfare  benefit plan" as defined in Section 3(1) of ERISA which
covers retired employees and their beneficiaries;

     (k) The  institution  by  Borrower  or any  ERISA  Affiliate  of  steps  to
terminate any Pension Plan if, in order to effectuate such termination, Borrower
or such  ERISA  Affiliate,  as the case  may be,  would  be  required  to make a
contribution  to such Pension  Plan, or would incur a liability or obligation to
such Pension Plan, in excess of Five Hundred Thousand Dollars ($500,000.00);  or
the institution by the PBGC of steps to terminate any Pension Plan;

Then,  and in every such event (an "Event of  Default") if such Event of Default
still  exists,  Agent may, or upon  direction  of the Majority  Banks shall,  by
notice in writing to Borrower terminate the Commitments of each of the Banks and
declare each of the Notes to be and they shall  thereupon  forthwith  become due
and payable without  presentment,  demand,  protest or other notice of any kind,
all of which are hereby expressly waived; provided, however, that in the case of
the occurrence of any Event of Default  described in the foregoing clause (h) or
(i) the Notes shall become due and payable  forthwith without the requirement of
any such notice, and without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived.

        ARTICLE 7 - CHANGE IN CIRCUMSTANCES AFFECTING EUROCURRENCY LOANS

     SECTION 7.1 Basis for Determining  Interest Rate  Inadequate or Unfair.  If
with respect to any Interest Period:

     (a) By reason of circumstances  affecting the London interbank Eurocurrency
market,  adequate  and fair  means do not  exist  for  ascertaining  the rate of
interest payable pursuant to Section 2.5(b) in respect of such Eurocurrency Loan
for such Interest Period; or

     (b) Agent  determines that deposits in Dollars (in the applicable  amounts)
are not being offered to any Bank in the relevant London interbank  Eurocurrency
market for such Interest Period, or

     (c)  Agent  determines  that the  London  Interbank  Offered  Rate will not
adequately and fairly reflect the cost to any Bank of maintaining or funding the
Eurocurrency Loans for such Interest Period,

Agent shall  forthwith  give notice thereof to Borrower,  whereupon  until Agent
notifies  Borrower  that the  circumstances  giving rise to such  suspension  no
longer exist, (a) the obligations of Banks to make  Eurocurrency  Loans shall be
suspended,  and (b)  Borrower  shall  repay in full then  outstanding  principal
amount  of  each of its  Eurocurrency  Loans,  together  with  accrued  interest
thereon,  on the last day of then current  Interest  Period  applicable  to such
Loan.  Concurrently  with repaying each such  Eurocurrency Loan pursuant to this
Section,  Borrower shall borrow a Prime Loan in an equal  principal  amount from
Banks, and Banks shall make such a Prime Loan, unless Borrower notifies Agent at
least one Domestic Business Day before the date of such repayment that it elects
not to borrow any Prime Loans on such date.



                                       29
<PAGE>

     SECTION 7.2  Illegality.  If the adoption of any  applicable  law,  rule or
regulation,  or any  change  therein,  or any  change in the  interpretation  or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration  thereof, or compliance
by any Bank with any  request or  directive  (whether or not having the force of
law) of any such  authority,  central  bank or  comparable  agency shall make it
unlawful or impossible for any Bank to make,  maintain or fund its  Eurocurrency
Loans to Borrower,  such Bank shall  forthwith  give notice thereof to Agent and
Agent  shall give  notice  thereof to  Borrower.  Upon  receipt of such  notice,
Borrower shall repay in full then  outstanding  principal  amount of each of its
Eurocurrency  Loans,  together with accrued interest thereon,  on either (a) the
last day of then current Interest Period applicable to such Eurocurrency Loan if
such Bank may lawfully  continue to maintain and fund such  Eurocurrency Loan to
such day or (b)  immediately if such Bank may not lawfully  continue to fund and
maintain such  Eurocurrency  Loan to such day.  Concurrently  with repaying each
Eurocurrency  Loan of  Bank,  Borrower  shall  borrow  a Prime  Loan in an equal
principal amount from Banks, and Banks shall make such a Prime Loan.

     SECTION 7.3 Increased Cost.

     (a) If (i) Regulation D or (ii) after the date hereof,  the adoption of any
applicable law, rule or regulation,  or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,  central
bank or comparable  agency  charged with the  interpretation  or  administration
thereof, or compliance by any Bank with any request or directive (whether or not
having  the  force of law) of any such  authority,  central  bank or  comparable
agency (a "Regulatory Change"):

          (A)  shall  subject  any Bank to any tax,  duty or other  charge  with
     respect  to its  Eurocurrency  Loans,  its Note or its  obligation  to make
     Eurocurrency Loans or shall change the basis of taxation of payments to any
     Bank of the principal of or interest on its Eurocurrency Loans or any other
     amounts due under this  Agreement in respect of its  Eurocurrency  Loans or
     its obligation to make  Eurocurrency  Loans (except for changes in the rate
     of  tax  on  the  overall  net  income  of any  such  Bank  imposed  by the
     jurisdiction in which such Bank's  principal  executive office is located);
     or

          (B) shall impose,  modify or deem  applicable any reserve  (including,
     without  limitation,  any imposed by the Board of  Governors of the Federal
     Reserve System),  special deposit,  capital or similar  requirement against
     assets of,  deposits  with or for the  account  of, or credit  extended  or
     committed to be extended by, any Bank or shall impose on any Bank or on the
     United States market for  certificates  of deposit or the interbank  market
     for Eurocurrency  deposits any other condition  affecting any Bank's Loans,
     its Note or its obligation to make Loans;

and the result of any of the  foregoing  is to  increase  the cost to (or in the
case of Regulation D, to impose a cost on) any Bank of making or maintaining any
Eurocurrency  Loan or to reduce the amount of any sum received or  receivable by
any Bank under this  Agreement  or under its Note with  respect  thereto,  by an
amount  deemed by such Bank to be  material,  and if such Bank is not  otherwise
fully  compensated  for such cost or reduction by virtue of the inclusion of the
reference  to "Reserve  Percentage"  in the  calculation  of the  interest  rate
applicable  to  Eurocurrency  Loans,  then,  within 15 days after demand by such
Bank,  Borrower  shall pay for the account of such Bank as additional  interest,
such  additional  amount  or  amounts  as will  compensate  such  Bank  for such
increased cost or reduction.  Any Bank will promptly  notify Agent,  who in turn
shall promptly notify Borrower of any event of which it has knowledge, occurring
after the date hereof, which will entitle such Bank to compensation  pursuant to
this  Section.  A  certificate  of such Bank  claiming  compensation  under this



                                       30
<PAGE>

Section  and  setting  forth the  additional  amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error.  Upon reasonable
request of  Borrower,  each Bank  claiming  additional  compensation  under this
Section shall  provide to Borrower  additional  information  with respect to the
determination of such additional  amount or amounts.  In determining such amount
or amounts, Bank may use any reasonable averaging and attribution methods.

     (b) If any Bank demands  compensation  under this Section,  Borrower may at
any time, upon at least two  Eurocurrency  Business Days' prior notice to Agent,
repay in full its then outstanding  Eurocurrency Loans from such Bank,  together
with accrued  interest  thereon to the date of prepayment  and any other amounts
due under Section 2.10.  Concurrently  with  repaying such  Eurocurrency  Loans,
Borrower may borrow a Prime Loan in an amount equal to the  aggregate  principal
amount of such Eurocurrency Loans, and such Bank shall make such a Prime Loan.

     SECTION 7.4 Prime Loans  Substituted  for Affected  Eurocurrency  Loans. If
notice  has been  given by any  Bank  pursuant  to  Section  7.2 or by  Borrower
pursuant to Section 7.3 requiring  Eurocurrency Loans to be repaid, then, unless
and until such Bank or Agent  notifies  Borrower that the  circumstances  giving
rise to such repayment no longer apply:

     (a) All Loans which would otherwise be made as Eurocurrency  Loans shall be
made instead as Prime Loans, and

     (b) After each of the  Eurocurrency  Loans to Borrower  has been so repaid,
all payments and  prepayments of principal  which would  otherwise be applied to
repay such Eurocurrency Loans shall be applied to repay its Prime Loans instead.

Agent shall notify  Borrower if and when the  circumstances  giving rise to such
repayment no longer apply.

                              ARTICLE 8 - THE AGENT

     SECTION 8.1 Appointment and Authorization.  Each Bank irrevocably  appoints
and  authorizes  the Agent to take such  action  as agent on its  behalf  and to
exercise  such  powers  under  this  Agreement,  the  Notes,  the  Reimbursement
Agreements and the other transaction  documents as are delegated to the Agent by
the terms  hereof or thereof,  together  with all such powers as are  reasonably
incidental thereto.

     SECTION 8.2 Agent and Affiliates. Mercantile shall have the same rights and
powers  under this  Agreement as any other Bank and may exercise or refrain from
exercising  the same as though it were not the  Agent,  and  Mercantile  and its
affiliates may accept deposits from, lend money to, and generally  engage in any
kind of business with Borrower or any of its Subsidiaries or affiliates as if it
were not the Agent hereunder.

     SECTION 8.3 Action by Agent.  The  obligations  of the Agent  hereunder are
only those  expressly set forth herein.  Without  limiting the generality of the
foregoing,  the Agent shall not be  required to take any action with  respect to
any Default or Event of Default, except as expressly provided in Article 6.

     SECTION 8.4  Consultation  with  Experts.  The Agent may consult with legal
counsel,  independent  public  accountants and other experts  selected by it and
shall not be liable  for any  action  taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.



                                       31
<PAGE>

     SECTION 8.5 Liability of Agent. Neither the Agent nor any of its directors,
officers,  agents or employees shall be liable for any action taken or not taken
by it in  connection  herewith (i) with the consent or at the request of each of
the  Banks,  or (ii) in the  absence  of its own  gross  negligence  or  willful
misconduct.  Neither  the Agent nor any of its  directors,  officers,  agents or
employees shall be responsible  for or have any duty to ascertain,  inquire into
or verify (i) any statement,  warranty or representation made in connection with
this Agreement or any borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of Borrower;  (iii) the  satisfaction  of any
condition  specified  in  Article 3,  except  receipt  of items  required  to be
delivered to the Agent;  or (iv) the validity,  effectiveness  or genuineness of
this Agreement, the Notes, the Reimbursement Agreements or any other transaction
document. The Agent shall not incur any liability by acting in reliance upon any
notice, consent,  certificate,  statement, or other writing (which may be a bank
wire,  telecopy or similar writing) believed by it to be genuine or to be signed
by the proper party or parties.

     SECTION 8.6  Indemnification.  Each Bank shall,  ratably in accordance with
its  Commitment,  indemnify the Agent (to the extent not reimbursed by Borrower)
against any cost,  expense (including  counsel fees and  disbursements),  claim,
demand,  action, loss or liability (except such as result from the Agent's gross
negligence  or  willful  misconduct)  that  the  Agent  may  suffer  or incur in
connection  with this  Agreement  or any  action  taken or  omitted by the Agent
hereunder.

     SECTION  8.7  Credit  Decision.   Each  Bank   acknowledges  that  it  has,
independently  and without  reliance upon the Agent or any other Bank, and based
on such  documents and  information as it has deemed  appropriate,  made its own
credit  analysis  and  decision  to enter  into this  Agreement.  Each Bank also
acknowledges that it will,  independently and without reliance upon the Agent or
any other Bank,  and based on such  documents and  information  as it shall deem
appropriate at the time,  continue to make its own credit decisions in taking or
not taking any action under this Agreement.

     SECTION  8.8  Resignation  of Agent.  The  Agent may  resign at any time by
giving  written  notice  thereof  to the  Banks  and  Borrower.  Upon  any  such
resignation,  Borrower,  with the consent of the Banks,  shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed by
Borrower,  and shall have  accepted  such  appointment,  within thirty (30) days
after the retiring  Agent's giving of notice of  resignation,  then the retiring
Agent may, on behalf of the Banks,  appoint a successor Agent,  which shall be a
commercial  bank organized  under the laws of the United States of America or of
any  State  thereof  and  having a  combined  capital  and  surplus  of at least
$200,000,000.00.  Upon the acceptance of any appointment as Agent hereunder by a
successor  Agent,  such successor  Agent shall  thereupon  succeed to and become
vested  with all the  rights,  powers,  privileges,  and duties of the  retiring
Agent,  and  the  retiring  Agent  shall  be  discharged  from  its  duties  and
obligations  under this  Agreement.  After any retiring  Agent's  resignation as
Agent,  the  provisions  of this  Article 8 shall inure to its benefit as to any
actions  taken or  omitted  to be taken by it  while  it was  Agent  under  this
Agreement.

     SECTION 8.9  Agent's  Fee. In  consideration  of the  services of the Agent
hereunder,  Borrower shall pay to the Agent,  solely for its account,  an annual
fee in an amount to be agreed upon  between  Borrower  and the Agent,  which fee
shall be due and  payable on the date  hereof and on the first (1st) day of each
March hereafter during the Term hereof commencing with March 1, 2000.

                            ARTICLE 9 - MISCELLANEOUS

     SECTION 9.1 Notices. All notices,  requests and other communications to any
party  hereunder shall be in writing  (including bank wire,  telecopy or similar
writing) and shall be given to such party at its address or telecopy  number set
forth on the signature  pages hereof or such other address or telecopy number as
such party may hereafter  specify for the purpose by notice to Agent or Borrower



                                       32
<PAGE>

as the case may be. Each such notice,  request or other  communication  shall be
effective  (a) if given by telecopy,  when such telecopy is  transmitted  to the
telecopy number specified in this Section,  (b) if given by mail, 72 hours after
such  communication  is  deposited  in the mails with  appropriate  first class,
certified or registered postage prepaid, addressed as aforesaid, or (c) if given
by any other means,  when  delivered at the address  specified in this  Section;
provided that notices to the Agent and/or the Banks under Section 2.2, 2.4, 2.7,
2.8 or Article 7 shall not be effective until received.

     SECTION  9.2 No  Waivers.  No  failure  or delay by the Agent or any of the
Banks in exercising  any right,  power or privilege  hereunder or under any Note
shall  operate as a waiver  thereof  nor shall any  single or  partial  exercise
thereof  preclude any other right,  power or privilege.  The rights and remedies
provided  herein  and  in the  other  documents  contemplated  hereby  shall  be
cumulative and not exclusive of any rights or remedies provided by law.

     SECTION 9.3 Expenses;  Documentary Taxes.  Borrower agrees,  whether or not
any Loan is made or Letter of Credit issued hereunder, to pay Banks upon demand:
(i) all  out-of-pocket  costs and expenses and all  Attorneys'  Fees of Banks in
connection with the preparation,  negotiation,  execution and  administration of
this  Agreement,   the  Notes,  any  Reimbursement   Agreements  and  the  other
transaction  documents,  (ii)  all  out-of-pocket  costs  and  expenses  and all
Attorneys'  Fees of Banks in connection  with the  preparation  of any waiver or
consent  hereunder  or any  amendment  hereof or any Event of Default or alleged
Event  of  Default  hereunder,   (iii)  if  an  Event  of  Default  occurs,  all
out-of-pocket costs and expenses and all Attorneys' Fees incurred by any Bank in
connection  with such  Event of Default  and  collection  and other  enforcement
proceedings  resulting  therefrom and (iv) all other Attorneys' Fees incurred by
Bank relating to or arising out of or in connection  with this  Agreement or any
of the other transaction documents.  Borrower further agrees to pay or reimburse
Banks for any stamp or other  taxes  which may be  payable  with  respect to the
execution,  delivery,  recording and/or filing of this Agreement, the Notes, the
Reimbursement  Agreements or any of the other transaction documents.  All of the
obligations  of Borrower  under this Section 9.3 shall survive the  satisfaction
and payment of Borrower's Obligations and the termination of this Agreement.

     SECTION 9.4  Environmental  Indemnity.  Borrower hereby agrees to indemnify
Agent and Banks and hold Agent and Banks  harmless  from and against any and all
losses,  liabilities,  damages,  injuries, costs, expenses and claims of any and
every kind whatsoever (including, without limitation, court costs and Attorneys'
Fees)  which at any time or from time to time may be paid,  incurred or suffered
by, or asserted  against,  Agent or any Bank for, with respect to or as a direct
or indirect  result of the violation by Borrower of any  Environmental  Laws; or
with respect to, or as a direct or indirect  result of the presence on or under,
or the escape, seepage, leakage, spillage,  discharge, emission or release from,
properties  utilized by Borrower in the conduct of its respective  business into
or upon any land, the atmosphere or any  watercourse,  body of water or wetland,
of any Hazardous  Materials or any other hazardous or toxic waste,  substance or
constituent  or other  substance  (including,  without  limitation,  any losses,
liabilities,  damages,  injuries,  costs, expenses or claims asserted or arising
under the  Environmental  Laws);  and the  provisions  of and  undertakings  and
indemnification  set out in this Section 9.4 shall survive the  satisfaction and
payment of Borrower's Obligations and the termination of this Agreement.

     SECTION  9.5  General  Indemnity.  In  addition  to the payment of expenses
pursuant to Section 9.3,  whether or not the  transactions  contemplated  hereby
shall be consummated,  Borrower  hereby agrees to indemnify,  pay and hold Agent
and  Banks  and  any  holder(s)  of the  Notes,  and  the  officers,  directors,
employees,   agents  and   affiliates  of  Agent,   Banks  and  such   holder(s)
(collectively,  the  "Indemnitees")  harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims,  costs,  expenses  and  disbursements  of any kind or nature  whatsoever
(including, without limitation, the reasonable fees and disbursements of counsel
for such  Indemnitees in connection with any  investigative,  administrative  or
judicial  proceeding  commenced or threatened,  whether or not such  Indemnitees



                                       33
<PAGE>

shall be  designated a party  thereto),  that may be imposed on,  incurred by or
asserted  against the  Indemnitees,  in any manner relating to or arising out of
this  Agreement  or any other  agreement,  document or  instrument  executed and
delivered  by  Borrower  or  any  other  Obligor  in  connection  herewith,  the
statements  contained in any commitment  letters delivered by Agent or any Bank,
Banks' agreements to make the Loans and issue Letters of Credit hereunder or the
use or  intended  use of any  Letter of Credit  or of the  proceeds  of any Loan
hereunder (collectively, the "indemnified liabilities");  provided that Borrower
shall have no obligation to an Indemnitee  hereunder with respect to indemnified
liabilities  arising from the gross  negligence  or willful  misconduct  of that
Indemnitee  as determined  by a court of competent  jurisdiction.  To the extent
that the  undertaking  to  indemnify,  pay and hold  harmless  set  forth in the
preceding  sentence may be  unenforceable  because it is violative of any law or
public  policy,  Borrower  shall  contribute  the  maximum  portion  that  it is
permitted  to  pay  and  satisfy  under   applicable  law  to  the  payment  and
satisfaction of all indemnified  liabilities  incurred by the Indemnitees or any
of them. The provisions of the undertakings and  indemnification set out in this
Section 9.5 shall survive satisfaction and payment of Borrower's Obligations and
the termination of this Agreement.

     SECTION 9.6 Participations. Each Bank may sell to one or more other Persons
a participation  in all or any part of its Commitment and any Loan and Letter of
Credit risk held by it, in which event each such  participant  shall be entitled
to the rights and benefits of this Agreement to the extent of its  participation
in such Loan and Letter of Credit  risk or such Bank's  Commitment,  as the case
may be, as if (and  Borrower  shall be directly  obligated  to such  participant
under such  provision as if) such  participant  were a "Bank" except only to the
extent provided under the Participation  Agreement between such selling Bank and
such  participant(s),  but such  participant  shall not have any other rights or
benefits under this Agreement or the Notes.  The Banks agree to notify  Borrower
of any participations sold by delivering a copy of such Participation  Agreement
to  Borrower.  In the  event  any Bank  sells a  participation,  it shall not be
obligated  to the  participant  under  the  Participation  Agreement  to take or
refrain from taking any action  hereunder  or under the Notes,  except that such
Bank may agree in the  Participation  Agreement,  that it will not,  without the
consent of the participant,  agree to (i) the increase or extension of the Term,
or the extension of the time or waiver of any  requirement  for the reduction or
termination, of such Bank's Commitment, (ii) the extension of any date fixed for
the payment of principal of or interest on the related Loan or Loans, any Letter
of Credit  reimbursement  obligation or fee, or of the commitment fee, (iii) the
reduction of any payment of principal thereof, or (iv) the reduction of the rate
at which either  interest is payable  thereon or (if the participant is entitled
to any part thereof) the  commitment  fee is payable  hereunder to a level below
the rate at which the  participant  is entitled to receive  interest or such fee
(as the case may be) in respect of such participation.

     SECTION 9.7 Assignment Agreements.  Each Bank may, upon prior notice to and
consent of  Borrower  and the Agent,  which  consent  shall not be  unreasonably
withheld or delayed and which  consent of Borrower  shall not be required  after
the occurrence of a Default or an Event of Default hereunder,  from time to time
sell and assign a pro rata part of all of the indebtedness evidenced by the Note
then owned by it together  with an equivalent  proportion  of its  obligation to
make Loans  hereunder  and the credit risk  incidental  to the Letters of Credit
pursuant  to an  Assignment  Agreement  substantially  in the form of  Exhibit I
attached  hereto,  executed by the  assignor,  the  assignee,  the Agent and the
Borrower (each an  "Assignment  Agreement");  provided that no assignment  under
this Section 9.7 shall be made by any Bank to the Borrower or to any Subsidiary,
Related Party or other affiliate of the Borrower. The Assignment Agreement shall
specify in each  instance  the  portion  of the  indebtedness  evidenced  by the
assignor's Note which is to be assigned to each such assignee and the portion of
the Commitment of the assignor and the credit risk  incidental to the Letters of
Credit  (which  portions  shall be  equivalent)  to be assumed by the  assignee,
provided that nothing herein  contained shall restrict,  or be deemed to require
any consent as a condition to, or require payment of any fee in connection with,
any  sale,  discount  or  pledge  by any Bank of any  Note or  other  obligation



                                       34
<PAGE>

hereunder  to a federal  reserve  bank.  Any such  portion  of the  indebtedness
assigned  by any Bank  pursuant  to this  Section  9.7  shall  not be less  than
$5,000,000.00.  Upon the execution of each Assignment Agreement by the assignor,
the assignee and the Borrower and consent thereto by the Agent (i) such assignee
shall  thereupon  become a "Bank"  for all  purposes  of this  Agreement  with a
Commitment in the amount set forth in such Assignment Agreement and with all the
rights,  powers and  obligations  afforded a Bank  hereunder,  (ii) the assignor
shall  have no further  liability  for  funding  the  portion of its  Commitment
assumed by such other Bank, (iii) the address for notices to such new Bank shall
be as specified in the Assignment  Agreement,  and (iv) the Borrowers  shall, in
exchange for the cancellation of the Note held by the assignor Bank, execute and
deliver a Note to the assignee Bank in the amount of its Commitment and new Note
to the assignor Bank in the amount of its Commitment  after giving effect to the
reduction  occasioned by such assignment,  all such Notes to constitute  "Notes"
for all  purposes  of this  Agreement.  There  shall be paid to the Agent,  as a
condition  to such  assignment,  an  administration  fee of  $3,500.00  plus any
out-of-pocket  costs and expenses  incurred by it in effecting such  assignment,
such fee to be paid by the assignor or the assignee as they may mutually  agree,
but  under no  circumstances  shall any  portion  of such fee be  payable  by or
charged to the Borrower.  The Agent and each of the Banks are hereby  authorized
to deliver a copy of any financial statement or other information made available
by the Borrower to any proposed  assignee or  participant  in any portion of any
Bank's Loans and Commitment hereunder.

     SECTION 9.8 Right of Setoff. Upon the occurrence and during the continuance
of any Event of  Default,  each Bank is hereby  authorized  at any time and from
time to time, without notice to Borrower (any such notice being expressly waived
by Borrower) and to the fullest extent permitted by law, to setoff and apply any
and all deposits (general or special,  time or demand,  provisional or final) at
any time held by such Bank and any and all other  indebtedness at any time owing
by such Bank to or for the credit or account of Borrower  against any and all of
Borrower's Obligations  irrespective of whether or not such Bank shall have made
any  demand  hereunder  or under  any of the  other  transaction  documents  and
although such  obligations may be contingent or unmatured.  Each offsetting Bank
agrees to promptly notify Borrower after any such setoff and application made by
such Bank,  provided,  however,  that the failure to give such notice  shall not
affect the  validity of such setoff and  application.  The rights of Banks under
this Section 9.8 are in addition to any other  rights and  remedies  (including,
without  limitation,  other  rights of setoff)  which  Banks may have.  As among
themselves,  each of the Banks hereby agrees that in the event any Bank shall at
any time  receive  payments  against  Borrower's  Obligations  from any  source,
whether by setoff or otherwise, and the effect of such payments is to cause such
Bank to  receive  more than its Pro Rata Share of the total  principal  payments
made to all Banks in the  aggregate,  then such Bank agrees to purchase from the
other  Bank  or  Banks  participating  in  Borrower's  Obligations  hereunder  a
participating  interest in such Bank's loans to the extent  necessary to restore
each Bank to its Pro Rata Share of Borrower's Obligations hereunder.

     SECTION 9.9 Amendments and Waivers.  Any provision of this  Agreement,  the
Notes or any of the other Transaction Documents may be amended or waived if, but
only if, such  amendment  or waiver is in writing and is signed by Borrower  and
Agent, which amendment or waiver Agent shall sign only upon the direction of the
Majority Banks;  provided that no such amendment or waiver shall,  unless signed
by all of the Banks,  (i) increase the  Commitment of any Bank,  (ii) change the
Pro Rata  Share of any of the Banks as to the  Commitments  or of the  aggregate
unpaid  principal  amount of any Loan,  (iii) reduce the principal of or rate of
interest on any Loan  hereunder  or any other  amount  payable  hereunder,  (iv)
postpone  the date fixed for any  payment of  principal  or interest on any Loan
hereunder,  (v) amend  Section 9.8 or this Section 9.9,  (vi) make any change in
the Borrowing Base or its calculation,  (vii) waive compliance with or otherwise
amend the  financial  covenants  contained in Sections  5.1(e)(i)  and (ii),  or
(viii) amend the definition of Majority Banks.

     NOTICE:  ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY,  EXTEND CREDIT OR TO
FOREBEAR FROM  ENFORCING  REPAYMENT OF A DEBT,  INCLUDING  PROMISES TO EXTEND OR



                                       35
<PAGE>

RENEW SUCH DEBT, ARE NOT  ENFORCEABLE.  TO PROTECT  BORROWER,  THE AGENT AND THE
BANKS FROM  MISUNDERSTANDING  OR DISAPPOINTMENT,  ANY AGREEMENTS  BORROWER,  THE
AGENT AND THE BANKS REACH  COVERING  SUCH MATTERS ARE CONTAINED IN THIS WRITING,
WHICH  IS  THE  COMPLETE  AND  EXCLUSIVE  STATEMENT  OF THE  AGREEMENTS  BETWEEN
BORROWER,  THE AGENT AND THE BANKS, EXCEPT AS BORROWER,  THE AGENT AND THE BANKS
MAY LATER AGREE IN WRITING TO MODIFY SUCH AGREEMENT.

     SECTION 9.10 Successors and Assigns. The provisions of this Agreement shall
be  binding  upon and  inure to the  benefit  of the  parties  hereto  and their
respective  successors  and  assigns,  except  that  Borrower  may not assign or
otherwise  transfer any of its rights or obligations under this Agreement or the
Notes.

     SECTION  9.11  Severability.  In case  any  one or  more of the  provisions
contained in this Agreement  should be invalid,  illegal or unenforceable in any
respect,  the validity,  legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.

     SECTION 9.12 Missouri  Law. This  Agreement and the Notes are submitted for
acceptance at Agent's  principal  place of business in St.  Louis,  Missouri and
shall not be  binding  upon the Agent or the  Banks or  become  effective  until
executed  by the  Agent  and/or  the  Banks,  as  applicable,  at said  place of
business. When so executed, this Agreement and the Notes shall be deemed to have
been made at said place of  business.  This  Agreement,  the Notes and any other
document delivered  hereunder shall be construed in accordance with and governed
by the internal laws of the State of Missouri.

     SECTION 9.13 Authority to Act. The Agent and the Banks shall be entitled to
act on any notices and instructions (telephonic or written) believed by Agent or
such Bank to have been  delivered by any person  authorized  to act on behalf of
Borrower  pursuant hereto,  regardless of whether such notice or instruction was
in fact  delivered  by a person  authorized  to act on behalf of  Borrower,  and
Borrower  hereby agrees to indemnify Agent and each Bank and hold Agent and each
Bank harmless from and against any and all losses and expenses,  if any, ensuing
from any such action.

     SECTION  9.14  Banks'  Books and  Records.  Each  Bank's  books and records
showing  the  account  between  Borrower  and such Bank shall be  admissible  in
evidence  in any action or  proceeding  and shall  constitute  prima facie proof
thereof.

     SECTION 9.15 CHOICE OF FORUM; WAIVER OF JURY TRIAL. TO INDUCE THE AGENT AND
THE BANKS TO ACCEPT  THIS  AGREEMENT,  BORROWER,  IRREVOCABLY,  AGREES  THAT ANY
ACTIONS OR PROCEEDINGS IN ANY WAY,  MANNER OR RESPECT  ARISING OUT OF OR FROM OR
RELATED TO THIS  AGREEMENT  AND THE NOTE MAY BE LITIGATED IN COURTS HAVING SITUS
WITHIN THE CITY OF ST. LOUIS,  STATE OF MISSOURI.  BORROWER  HEREBY CONSENTS AND
SUBMITS TO THE JURISDICTION OF ANY LOCAL,  STATE OR FEDERAL COURT LOCATED WITHIN
SAID CITY AND STATE. BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR
CHANGE THE VENUE OF ANY  LITIGATION  BROUGHT IN  ACCORDANCE  WITH THIS  SECTION.
BORROWER AND BANK  IRREVOCABLY  WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO
ANY ACTION IN WHICH BORROWER, THE AGENT OR ANY OF THE BANKS ARE PARTIES.

     SECTION  9.16  Resurrection  of  Obligations.  To the extent  that any Bank
receives  any  payment  on  account  of  Borrower's  liabilities,  and any  such
payment(s)  or any part  thereof are  subsequently  invalidated,  declared to be



                                       36
<PAGE>

fraudulent or preferential, set aside, subordinated and/or required to be repaid
to a trustee,  receiver or any other party under any  bankruptcy  act,  state or
federal  law,  common  law or  equitable  cause,  then,  to the  extent  of such
payment(s)  received,  Borrower's  liabilities,  or part thereof  intended to be
satisfied,  shall be revived and  continue in full force and effect,  as if such
payment(s)  had not  been  received  by such  Bank and  applied  on  account  of
Borrower's liabilities.

     SECTION 9.17 Counterparts;  Effectiveness.  This Agreement may be signed in
any number of  counterparts,  each of which shall be an original,  with the same
effect as if the  signatures  thereto and hereto were upon the same  instrument.
This  Agreement  shall  become  effective  when the Agent  shall  have  received
counterparts hereof signed by each of the parties hereto.

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


                                  SHOE CARNIVAL, INC.



                                  By: /s/ W. Kerry Jackson                      
                                      W. Kerry Jackson, Vice President,
                                      Chief Financial Officer and Treasurer
                                      8233 Baumgart Road
                                      Evansville, Indiana  47711
                                      Telecopy Number:  (812) 867-4261


Commitment:                       MERCANTILE BANK
                                  NATIONAL ASSOCIATION
 $17,500,000.00 (38.89%)


                                  By: /s/ Eric Hartman                          
                                      Eric Hartman, Assistant Vice President
                                      721 Locust Street
                                      St. Louis, Missouri 63101
                                      Telecopy Number: (314) 418-3859


Commitment:                       OLD NATIONAL BANK

 $10,000,000.00 (22.22%)

                                  By: /s/ John Lamb                             
                                      John Lamb, Vice President
                                      420 Main Street
                                      Evansville, Indiana 47708
                                      Telecopy Number: (812) 464-1262





                                       37
<PAGE>

Commitment:                       FIRST UNION NATIONAL BANK

 $17,500,000.00 (38.89%)

                                  By: /s/ Richard P. Silva                      
                                      Richard P. Silva, Senior Vice President
                                      225 Water Street
                                      Jacksonville, Florida 32202
                                      Telecopy Number: (904) 361-3526

                                  MERCANTILE BANK
                                  NATIONAL ASSOCIATION, AS AGENT



                                  By: /s/ Eric Hartman                          
                                      Eric Hartman, Assistant Vice President
                                      721 Locust Street
                                      St. Louis, Missouri 63101
                                      Telecopy Number: (314) 418-3859



                                       38
<PAGE>



                                 Promissory Note


$17,500,000.00                                               St. Louis, Missouri
                                                                  April 16, 1999


     FOR  VALUE   RECEIVED,   SHOE  CARNIVAL,   INC.,  an  Indiana   corporation
("Borrower"),  hereby  promises to pay to the order of Mercantile  Bank National
Association,  a national  banking  association  ("Bank") on March 31, 2001,  the
lesser of (a) Seventeen Million Five Hundred Thousand Dollars  ($17,500,000.00),
or (b) the  aggregate  unpaid  principal  amount  of all  Loans  made by Bank to
Borrower in accordance with the terms and conditions  hereof and of that certain
Amended and Restated  Credit  Agreement  dated as of April 16, 1999, made by and
between Borrower,  Mercantile Bank National Association,  as Agent (the "Agent")
and the Banks  named  therein,  as from time to time  amended (as  amended,  the
"Credit  Agreement") and the unreimbursed  amount of any draws under any Letters
of Credit  issued for the account of Borrower in  accordance  with the terms and
conditions of the Credit Agreement and the Reimbursement  Agreements (as defined
in the Credit  Agreement).  The aggregate  principal  amount which Bank may have
outstanding  hereunder at any one time for all Loans shall not exceed the lesser
of (i) Seventeen  Million Five Hundred Thousand Dollars  ($17,500,000.00)  minus
the face amount of all Letters of Credit then  outstanding  under Section 2.1(a)
of the Credit Agreement,  or (ii) Thirty-Eight and Eighty-Nine Hundredths of One
Percent  (38.89%)  of the then  current  Borrowing  Base,  which  amounts may be
borrowed,  paid,  reborrowed and repaid,  in full or in part, prior to March 31,
2001 subject to the terms and conditions hereof and of the Credit Agreement.  If
at any time the aggregate  principal amount of all Loans  outstanding under this
Note should exceed the amount set forth in the preceding sentence,  whether as a
result of a reduction in the  Borrowing  Base or  otherwise,  Borrower  shall be
automatically  required  (without  demand or notice of any kind by Bank,  all of
which are hereby expressly waived by Borrower),  to immediately  repay the Loans
in an amount  sufficient  to reduce  such  aggregate  principal  amount of Loans
outstanding under this Note to the amount set forth in the preceding sentence.

     Additionally,  Borrower  promises  to pay to the order of Bank all  accrued
interest owing on the principal amount of all Loan advances and Letter of Credit
reimbursement  obligations outstanding hereunder.  Advances hereunder shall bear
interest at the rate per annum equal to such of the  following as  Borrower,  at
its option, shall select:

     (a) the interest  rate equal to the interest  rate  announced  from time to
time by Agent as its "Prime  Rate" on  commercial  loans  minus  One-Half of One
Percent  (0.50%),  which rate shall  fluctuate as and when said Prime Rate shall
change, or

     (b) the London Interbank Offered Rate plus Eurocurrency  Margin (as defined
in the Credit Agreement) for the applicable Interest Period,

determined in each case as of the date of a Prime Rate Loan made  hereunder,  or
the  commencement of a Interest Period for  Eurocurrency  Loans, as the case may
be.  Said  interest  shall  be  payable  on the  dates  provided  in the  Credit
Agreement.  After maturity, the unpaid principal hereof shall bear interest at a
rate per  annum  equal to two and  one-half  percent  (2.50%)  in  excess of the
interest  rate  announced  from  time to time by  Agent as its  "Prime  Rate" on
commercial  loans,  which rate shall fluctuate as and when said Prime Rate shall
change.



                                       39
<PAGE>

     Interest  shall be computed  on the basis of a 360-day  year for the actual
number of days  elapsed for all Loans made  hereunder.  Payments  of  principal,
interest and fees shall be made in lawful money of the United  States of America
in  immediately  available  funds at the office of Agent  situated at 721 Locust
Street,  St. Louis,  Missouri 63101 or at such other place as the holder of this
Note may  designate,  and such  payments  shall be  applied  to the  payment  of
interest or principal (or any  combination of the foregoing)  owing on this Note
in such order as Bank (or such holder) shall determine.

     All advances and all  principal  payments  made  hereunder and all Interest
Periods and interest rates  applicable to Eurocurrency  Loans may be endorsed by
the Bank on its records or the sheet attached to this Note, which information so
endorsed or recorded shall  constitute prima facie evidence  thereof;  provided,
however that the  obligation  of Borrower to repay each  advance made  hereunder
shall be  absolute  and  unconditional,  notwithstanding  any failure of Bank to
endorse or record or any mistake by Bank in connection  with any  recordation or
with any  endorsement  on the sheet attached to this Note or to give to Borrower
or receive from Borrower any notice or confirmation of each advance.

     Borrower  shall be  privileged  to prepay in whole or in part the principal
outstanding hereunder;  provided, however, that (subject to the right of Bank to
accelerate  payment  hereunder) any Eurocurrency Loan may be prepaid only at the
expiration of the applicable  Interest Period;  and provided  further,  however,
that on any such prepayment, Borrower shall also pay all interest accrued on the
principal amount being prepaid to and including the date of such prepayment. Any
payment of a  Eurocurrency  Loan  other  than on the last day of the  applicable
Interest Period in  contravention  of this paragraph shall obligate  Borrower to
pay to Bank the amount of any funding  losses or other  breakage costs which may
be incurred by Bank as set forth in Section 2.10 of the Credit Agreement.

     Consistent  with the terms of this Note,  the Agent  shall  determine  each
interest rate applicable to the advances hereunder, which determination shall be
conclusive in the absence of manifest error.

     This Note is one of the Notes  referred to in the Credit  Agreement,  which
Credit Agreement,  among other things,  contains  provisions for acceleration of
the maturity  hereof upon the  occurrence of certain  stated events and also for
prepayments  on account of  principal  hereof and  interest  hereon prior to the
maturity hereof upon the terms and conditions  specified therein.  Terms defined
in the Credit Agreement are used herein with the same meanings.

     In the event that any  payment  due  hereunder  shall not be paid when due,
whether by reason of demand or  otherwise,  and this Note shall be placed in the
hands of an attorney for collection  hereof,  Borrower agrees to pay in addition
to all other amounts due hereon the costs and expenses of collection,  including
reasonable attorneys' fees and expenses,  whether or not litigation is commenced
in aid thereof.  Borrower hereby waives presentment,  demand, protest, notice of
protest and notice of dishonor.

     This  Note  shall be  governed  by and  construed  in  accordance  with the
internal laws of the State of Missouri.



                                       40
<PAGE>

     This Note is a renewal, restatement and continuation of the obligations due
Bank as evidenced by a prior  Amended and Restated  Promissory  Note dated March
31, 1998 from  Borrower to Bank,  and is not a novation  thereof.  All  interest
evidenced by the prior Note being renewed by this  instrument  shall continue to
be due and payable until paid.

                                  SHOE CARNIVAL, INC.



                                  By:/s/ W. Kerry Jackson                       
                                     W. Kerry Jackson, Vice President,
                                     Chief Financial Officer and Treasurer


STATE OF INDIANA                    )
                                    )  SS.
COUNTY OF VANDERBURGH               )

     On this 16th day of April, 1999, before me appeared W. Kerry Jackson, to me
personally  known,  who  being  by me duly  sworn,  did say  that he is the Vice
President,  Chief  Financial  Officer and Treasurer of Shoe  Carnival,  Inc., an
Indiana  corporation,  and that  said  instrument  was  signed in behalf of said
corporation  by authority of its Board of  Directors;  and said W. Kerry Jackson
acknowledged said instrument to be the free act and deed of said corporation.

     IN TESTIMONY  WHEREOF,  I have hereunto set my hand and affixed my official
seal in the County and State aforesaid, the day and year first above written.

(Seal)



                                  Notary Public /s/ Molly A. Graham

My Commission Expires: 6/23/01




                                       41
<PAGE>


                                 Promissory Note


$10,000,000.00                                               St. Louis, Missouri
                                                                  April 16, 1999


     FOR  VALUE   RECEIVED,   SHOE  CARNIVAL,   INC.,  an  Indiana   corporation
("Borrower"),  hereby  promises  to pay to the  order of Old  National  Bank,  a
national bank ("Bank") on March 31, 2001, the lesser of (a) Ten Million  Dollars
($10,000,000.00), or (b) the aggregate unpaid principal amount of all Loans made
by Bank to Borrower in accordance  with the terms and  conditions  hereof and of
that certain  Amended and Restated  Credit  Agreement dated as of April 16, 1999
made by and between  Borrower,  Mercantile Bank National  Association,  as Agent
(the  "Agent")  and the Banks named  therein,  as from time to time  amended (as
amended,  the "Credit Agreement") and the unreimbursed amount of any draws under
any Letters of Credit issued for the account of Borrower in accordance  with the
terms and conditions of the Credit  Agreement and the  Reimbursement  Agreements
(as defined in the Credit Agreement).  The aggregate principal amount which Bank
may have  outstanding  hereunder  at any one time for all Loans shall not exceed
the lesser of (i) Ten Million Dollars  ($10,000,000.00) minus the face amount of
all  Letters  of Credit  then  outstanding  under  Section  2.1(a) of the Credit
Agreement,  or (ii) Twenty-Two and Twenty-Two Hundredths of One Percent (22.22%)
of the then  current  Borrowing  Base,  which  amounts  may be  borrowed,  paid,
reborrowed and repaid,  in whole or in part,  prior to March 31, 2001 subject to
the terms and conditions hereof and of the Credit Agreement.  If at any time the
aggregate  principal  amount of all Loans  outstanding  under  this Note  should
exceed the amount set forth in the preceding sentence,  whether as a result of a
reduction in the Borrowing Base or otherwise,  Borrower  shall be  automatically
required  (without demand or notice of any kind by Bank, all of which are hereby
expressly  waived  by  Borrower),  to  immediately  repay the Loans in an amount
sufficient to reduce such aggregate  principal amount of Loans outstanding under
this Note to the amount set forth in the preceding sentence.

                  Additionally,  Borrower  promises  to pay to the order of Bank
all accrued  interest  owing on the  principal  amount of all Loan  advances and
Letter of  Credit  reimbursement  obligations  outstanding  hereunder.  Advances
hereunder  shall  bear  interest  at the  rate  per  annum  equal to such of the
following as Borrower, at its option, shall select:

     (a) the interest  rate equal to the interest  rate  announced  from time to
time by Agent as its "Prime  Rate" on  commercial  loans  minus  One-Half of One
Percent  (0.50%),  which rate shall  fluctuate as and when said Prime Rate shall
change, or

     (b) the London Interbank Offered Rate plus Eurocurrency  Margin (as defined
in the Credit Agreement) for the applicable Interest Period,

determined in each case as of the date of a Prime Rate Loan made  hereunder,  or
the  commencement of a Interest Period for  Eurocurrency  Loans, as the case may
be.  Said  interest  shall  be  payable  on the  dates  provided  in the  Credit
Agreement.  After maturity, the unpaid principal hereof shall bear interest at a
rate per  annum  equal to two and  one-half  percent  (2.50%)  in  excess of the
interest  rate  announced  from  time to time by  Agent as its  "Prime  Rate" on
commercial  loans,  which rate shall fluctuate as and when said Prime Rate shall
change.



                                       42
<PAGE>

     Interest  shall be computed  on the basis of a 360-day  year for the actual
number of days  elapsed for all Loans made  hereunder.  Payments  of  principal,
interest and fees shall be made in lawful money of the United  States of America
in  immediately  available  funds at the office of Agent  situated at 721 Locust
Street,  St. Louis,  Missouri 63101 or at such other place as the holder of this
Note may  designate,  and such  payments  shall be  applied  to the  payment  of
interest or principal (or any  combination of the foregoing)  owing on this Note
in such order as Bank (or such holder) shall determine.

     All advances and all  principal  payments  made  hereunder and all Interest
Periods and interest rates  applicable to Eurocurrency  Loans may be endorsed by
the Bank on its records or the sheet attached to this Note, which information so
endorsed or recorded shall  constitute prima facie evidence  thereof;  provided,
however that the  obligation  of Borrower to repay each  advance made  hereunder
shall be  absolute  and  unconditional,  notwithstanding  any failure of Bank to
endorse or record or any mistake by Bank in connection  with any  recordation or
with any  endorsement  on the sheet attached to this Note or to give to Borrower
or receive from Borrower any notice or confirmation of each advance.

     Borrower  shall be  privileged  to prepay in whole or in part the principal
outstanding hereunder;  provided, however, that (subject to the right of Bank to
accelerate  payment  hereunder) any Eurocurrency Loan may be prepaid only at the
expiration of the applicable  Interest Period;  and provided  further,  however,
that on any such prepayment, Borrower shall also pay all interest accrued on the
principal amount being prepaid to and including the date of such prepayment. Any
payment of a  Eurocurrency  Loan  other  than on the last day of the  applicable
Interest Period in  contravention  of this paragraph shall obligate  Borrower to
pay to Bank the amount of any funding  losses or other  breakage costs which may
be incurred by Bank as set forth in Section 2.10 of the Credit Agreement.

     Consistent  with the terms of this Note,  the Agent  shall  determine  each
interest rate applicable to the advances hereunder, which determination shall be
conclusive in the absence of manifest error.

     This Note is one of the Notes  referred to in the Credit  Agreement,  which
Credit Agreement,  among other things,  contains  provisions for acceleration of
the maturity  hereof upon the  occurrence of certain  stated events and also for
prepayments  on account of  principal  hereof and  interest  hereon prior to the
maturity hereof upon the terms and conditions  specified therein.  Terms defined
in the Credit Agreement are used herein with the same meanings.

     In the event that any  payment  due  hereunder  shall not be paid when due,
whether by reason of demand or  otherwise,  and this Note shall be placed in the
hands of an attorney for collection  hereof,  Borrower agrees to pay in addition
to all other amounts due hereon the costs and expenses of collection,  including
reasonable attorneys' fees and expenses,  whether or not litigation is commenced
in aid thereof.  Borrower hereby waives presentment,  demand, protest, notice of
protest and notice of dishonor.

     This  Note  shall be  governed  by and  construed  in  accordance  with the
internal laws of the State of Missouri.



                                  SHOE CARNIVAL, INC.



                                  By:/s/ W. Kerry Jackson                       
                                     W. Kerry Jackson, Vice President,
                                     Chief Financial Officer and Treasurer




                                       43
<PAGE>

STATE OF INDIANA                    )
                                    )  SS.
COUNTY OF VANDERBURGH               )

     On this 16th day of April, 1999, before me appeared W. Kerry Jackson, to me
personally  known,  who  being  by me duly  sworn,  did say  that he is the Vice
President,  Chief  Financial  Officer and Treasurer of Shoe  Carnival,  Inc., an
Indiana  corporation,  and that  said  instrument  was  signed in behalf of said
corporation  by authority of its Board of  Directors;  and said W. Kerry Jackson
acknowledged said instrument to be the free act and deed of said corporation.

     IN TESTIMONY  WHEREOF,  I have hereunto set my hand and affixed my official
seal in the County and State aforesaid, the day and year first above written.

(Seal)



                                  Notary Public /s/ Molly A. Graham

My Commission Expires: 6/23/01



                                       44
<PAGE>

                                 Promissory Note


$17,500,000.00                                               St. Louis, Missouri
                                                                  April 16, 1999


     FOR  VALUE   RECEIVED,   SHOE  CARNIVAL,   INC.,  an  Indiana   corporation
("Borrower"),  hereby promises to pay to the order of First Union National Bank,
a national bank ("Bank") on March 31, 2001, the lesser of (a) Seventeen  Million
Five Hundred  Thousand  Dollars  ($17,500,000.00),  or (b) the aggregate  unpaid
principal  amount of all Loans made by Bank to Borrower in  accordance  with the
terms and  conditions  hereof and of that certain  Amended and  Restated  Credit
Agreement  dated as of April 16, 1999 made by and between  Borrower,  Mercantile
Bank National  Association,  as Agent (the "Agent") and the Banks named therein,
as  amended  from time to time (as  amended,  the  "Credit  Agreement")  and the
unreimbursed  amount of any draws  under any  Letters  of Credit  issued for the
account of Borrower in  accordance  with the terms and  conditions of the Credit
Agreement and the Reimbursement Agreements (as defined in the Credit Agreement).
The aggregate principal amount which Bank may have outstanding  hereunder at any
one time for all Loans shall not exceed the lesser of (i) Seventeen Million Five
Hundred Thousand Dollars  ($17,500,000.00)  minus the face amount of all Letters
of Credit then outstanding under Section 2.1(a) of the Credit Agreement, or (ii)
Thirty-Eight  and  Eighty-Nine  Hundredths  of One Percent  (38.89%) of the then
current  Borrowing  Base,  which amounts may be borrowed,  paid,  reborrowed and
repaid,  in whole or in part,  prior to March 31, 2001  subject to the terms and
conditions  hereof and of the  Credit  Agreement.  If at any time the  aggregate
principal  amount of all Loans  outstanding  under this Note  should  exceed the
amount set forth in the preceding  sentence,  whether as a result of a reduction
in the Borrowing  Base or otherwise,  Borrower shall be  automatically  required
(without demand or notice of any kind by Bank, all of which are hereby expressly
waived by Borrower),  to immediately  repay the Loans in an amount sufficient to
reduce such aggregate  principal amount of Loans  outstanding under this Note to
the amount set forth in the preceding sentence.

     Additionally,  Borrower  promises  to pay to the order of Bank all  accrued
interest owing on the principal amount of all Loan advances and Letter of Credit
reimbursement  obligations outstanding hereunder.  Advances hereunder shall bear
interest at the rate per annum equal to such of the  following as  Borrower,  at
its option, shall select:

     (a) the interest  rate equal to the interest  rate  announced  from time to
time by Agent as its "Prime  Rate" on  commercial  loans  minus  One-Half of One
Percent  (0.50%),  which rate shall  fluctuate as and when said Prime Rate shall
change, or

     (b) the London Interbank Offered Rate plus Eurocurrency  Margin (as defined
in the Credit Agreement) for the applicable Interest Period,

determined in each case as of the date of a Prime Rate Loan made  hereunder,  or
the  commencement of a Interest Period for  Eurocurrency  Loans, as the case may
be.  Said  interest  shall  be  payable  on the  dates  provided  in the  Credit
Agreement.  After maturity, the unpaid principal hereof shall bear interest at a
rate per  annum  equal to two and  one-half  percent  (2.50%)  in  excess of the
interest  rate  announced  from  time to time by  Agent as its  "Prime  Rate" on
commercial  loans,  which rate shall fluctuate as and when said Prime Rate shall
change.



                                       45
<PAGE>

     Interest  shall be computed  on the basis of a 360-day  year for the actual
number of days  elapsed for all Loans made  hereunder.  Payments  of  principal,
interest and fees shall be made in lawful money of the United  States of America
in  immediately  available  funds at the office of Agent  situated at 721 Locust
Street,  St. Louis,  Missouri 63101 or at such other place as the holder of this
Note may  designate,  and such  payments  shall be  applied  to the  payment  of
interest or principal (or any  combination of the foregoing)  owing on this Note
in such order as Bank (or such holder) shall determine.

     All advances and all  principal  payments  made  hereunder and all Interest
Periods and interest rates  applicable to Eurocurrency  Loans may be endorsed by
the Bank on its records or the sheet attached to this Note, which information so
endorsed or recorded shall  constitute prima facie evidence  thereof;  provided,
however that the  obligation  of Borrower to repay each  advance made  hereunder
shall be  absolute  and  unconditional,  notwithstanding  any failure of Bank to
endorse or record or any mistake by Bank in connection  with any  recordation or
with any  endorsement  on the sheet attached to this Note or to give to Borrower
or receive from Borrower any notice or confirmation of each advance.

     Borrower  shall be  privileged  to prepay in whole or in part the principal
outstanding hereunder;  provided, however, that (subject to the right of Bank to
accelerate  payment  hereunder) any Eurocurrency Loan may be prepaid only at the
expiration of the applicable  Interest Period;  and provided  further,  however,
that on any such prepayment, Borrower shall also pay all interest accrued on the
principal amount being prepaid to and including the date of such prepayment. Any
payment of a  Eurocurrency  Loan  other  than on the last day of the  applicable
Interest Period in  contravention  of this paragraph shall obligate  Borrower to
pay to Bank the amount of any funding  losses or other  breakage costs which may
be incurred by Bank as set forth in Section 2.10 of the Credit Agreement.

     Consistent  with the terms of this Note,  the Agent  shall  determine  each
interest rate applicable to the advances hereunder, which determination shall be
conclusive in the absence of manifest error.

     This Note is one of the Notes  referred to in the Credit  Agreement,  which
Credit Agreement,  among other things,  contains  provisions for acceleration of
the maturity  hereof upon the  occurrence of certain  stated events and also for
prepayments  on account of  principal  hereof and  interest  hereon prior to the
maturity hereof upon the terms and conditions  specified therein.  Terms defined
in the Credit Agreement are used herein with the same meanings.

     In the event that any  payment  due  hereunder  shall not be paid when due,
whether by reason of demand or  otherwise,  and this Note shall be placed in the
hands of an attorney for collection  hereof,  Borrower agrees to pay in addition
to all other amounts due hereon the costs and expenses of collection,  including
reasonable attorneys' fees and expenses,  whether or not litigation is commenced
in aid thereof.  Borrower hereby waives presentment,  demand, protest, notice of
protest and notice of dishonor.

     This  Note  shall be  governed  by and  construed  in  accordance  with the
internal laws of the State of Missouri.



                                       46
<PAGE>

     This Note is a renewal, restatement and continuation of the obligations due
Bank as evidenced by a prior  Amended and Restated  Promissory  Note dated March
31, 1998 from  Borrower to Bank,  and is not a novation  thereof.  All  interest
evidenced by the prior Note being renewed by this  instrument  shall continue to
be due and payable until paid.

                                  SHOE CARNIVAL, INC.



                                  By:/s/ W. Kerry Jackson                       
                                     W. Kerry Jackson, Vice President,
                                     Chief Financial Officer and Treasurer


STATE OF INDIANA                    )
                                    )  SS.
COUNTY OF VANDERBURGH               )

     On this 16th day of April, 1999, before me appeared W. Kerry Jackson, to me
personally  known,  who  being  by me duly  sworn,  did say  that he is the Vice
President,  Chief  Financial  Officer and Treasurer of Shoe  Carnival,  Inc., an
Indiana  corporation,  and that  said  instrument  was  signed in behalf of said
corporation  by authority of its Board of  Directors;  and said W. Kerry Jackson
acknowledged said instrument to be the free act and deed of said corporation.

     IN TESTIMONY  WHEREOF,  I have hereunto set my hand and affixed my official
seal in the County and State aforesaid, the day and year first above written.

(Seal)



                                  Notary Public /s/ Molly A. Graham

My Commission Expires: 06/23/01



                                       47
<PAGE>