<PAGE>
<PAGE>

===============================================================================

                                  $300,000,000

                                CREDIT AGREEMENT

                                     among

                            THE GRAND UNION COMPANY,
                                  as Borrower,

                              The Several Lenders
                       from Time to Time Parties Hereto,

                            WARBURG DILLON READ LLC,
                         as Co-Advisor and Co-Arranger

                            UBS AG, STAMFORD BRANCH,
                              as Syndication Agent

                             LEHMAN BROTHERS INC.,
                         as Co-Advisor and Co-Arranger

                         LEHMAN COMMERCIAL PAPER INC.,
                            as Administrative Agent

                                      and

                         LEHMAN COMMERCIAL PAPER INC.,
                              as Collateral Agent



                          Dated as of August 17, 1998

===============================================================================

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                         Page
<S>     <C>                                                                              <C>
SECTION 1.  DEFINITIONS...................................................................  2
         1.1  Defined Terms...............................................................  2
         1.2  Other Definitional Provisions............................................... 23

SECTION 2.  AMOUNT AND TERMS OF COMMITMENTS............................................... 23
         2.1  Term Loan Commitments....................................................... 23
         2.2  Procedure for Term Loan Borrowing........................................... 23
         2.3  Repayment of Term Loans..................................................... 24
         2.4  Revolving Credit Commitments................................................ 24
         2.5  Procedure for Revolving Credit Borrowing.................................... 24
         2.6  Swing Line Commitment....................................................... 25
         2.7  Procedure for Swing Line Borrowing; Refunding of Swing Line Loans........... 25
         2.8  Repayment of Loans; Evidence of Debt........................................ 27
         2.9  Commitment Fees, etc. ...................................................... 28
         2.10  Termination or Reduction of Revolving Credit Commitments................... 28
         2.11  Optional Prepayments....................................................... 28
         2.12  Mandatory Prepayments and Commitment Reductions............................ 29
         2.13  Conversion and Continuation Options........................................ 30
         2.14  Minimum Amounts and Maximum Number of Eurodollar Tranches.................. 31
         2.15  Interest Rates and Payment Dates........................................... 31
         2.16  Computation of Interest and Fees........................................... 32
         2.17  Inability to Determine Interest Rate....................................... 32
         2.18  Pro Rata Treatment and Payments............................................ 33
         2.19  Requirements of Law........................................................ 35
         2.20  Taxes  .................................................................... 36
         2.21  Indemnity.................................................................. 38
         2.22  Illegality................................................................. 38
         2.23  Change of Lending Office................................................... 39

SECTION 3.  LETTERS OF CREDIT............................................................. 39
         3.1  L/C Commitment.............................................................. 39
         3.2  Procedure for Issuance of Letter of Credit.................................. 39
         3.3  Fees and Other Charges...................................................... 40
         3.4  L/C Participations.......................................................... 40
         3.5  Reimbursement Obligation of the Borrower.................................... 41
         3.6  Obligations Absolute........................................................ 41
         3.7  Letter of Credit Payments................................................... 42
         3.8  Applications................................................................ 42

SECTION 4.  REPRESENTATIONS AND WARRANTIES................................................ 42
         4.1  Financial Condition......................................................... 42
         4.2  No Change................................................................... 43
         4.3  Corporate Existence; Compliance with Law.................................... 43
         4.4  Corporate Power; Authorization; Enforceable Obligations..................... 43
</TABLE>

                                      -i-

<PAGE>

<TABLE>
<CAPTION>
                                                                                          Page
<S>      <C>                                                                              <C>
         4.5  No Legal Bar................................................................. 43
         4.6  No Material Litigation....................................................... 44
         4.7  No Default................................................................... 44
         4.8  Ownership of Property; Liens................................................. 44
         4.9  Intellectual Property........................................................ 44
         4.10  Taxes  ..................................................................... 44
         4.11  Federal Regulations......................................................... 45
         4.12  Labor Matters............................................................... 45
         4.13  ERISA  ..................................................................... 45
         4.14  Investment Company Act; Other Regulations................................... 45
         4.15  Subsidiaries................................................................ 46
         4.16  Use of Proceeds............................................................. 46
         4.17  Environmental Matters....................................................... 46
         4.18  Accuracy of Information, etc................................................ 47
         4.19  Security Documents.......................................................... 47
         4.20  Solvency.................................................................... 48
         4.21  Regulation H................................................................ 48

SECTION 5.  CONDITIONS PRECEDENT........................................................... 48
         5.1  Conditions to Initial Extension of Credit.................................... 48
         5.2  Conditions to Each Extension of Credit....................................... 52

SECTION 6.  AFFIRMATIVE COVENANTS.......................................................... 53
         6.1  Financial Statements......................................................... 53
         6.2  Certificates; Other Information.............................................. 54
         6.3  Payment of Obligations....................................................... 55
         6.4  Conduct of Business and Maintenance of Existence, etc. ...................... 55
         6.5  Maintenance of Property; Insurance........................................... 55
         6.6  Inspection of Property; Books and Records; Discussions; Collateral Audit..... 55
         6.7  Notices ..................................................................... 56
         6.8  Environmental Laws........................................................... 56
         6.9  Interest Rate Protection..................................................... 57
         6.10  Additional Collateral, etc.................................................. 57
         6.11  Further Assurances.......................................................... 58
         6.12  Survey, etc................................................................. 59

SECTION 7.  NEGATIVE COVENANTS............................................................. 60
         7.1  Financial Condition Covenants................................................ 61
         7.2  Limitation on Indebtedness................................................... 62
         7.3  Limitation on Liens.......................................................... 62
         7.4  Limitation on Fundamental Changes............................................ 64
         7.5  Limitation on Disposition of Property........................................ 64
         7.6  Limitation on Restricted Payments............................................ 64
         7.7  Limitation on Capital Expenditures........................................... 65
         7.8  Limitation on Investments.................................................... 65
         7.9  Limitation on Optional Payments and Modifications of Debt Instruments, etc... 66
         7.10  Limitation on Transactions with Affiliates.................................. 66
         7.11  Limitation on Sales and Leasebacks.......................................... 67
         7.12  Limitation on Changes in Fiscal Periods..................................... 67
         7.13  Limitation on Negative Pledge Clauses....................................... 67
</TABLE>

                                      -ii-

<PAGE>

<TABLE>
<CAPTION>
                                                                                          Page
<S>      <C>                                                                              <C>
         7.14  Limitation on Restrictions on Subsidiary Distributions...................... 67
         7.15  Limitation on Lines of Business............................................. 68

SECTION 8.  EVENTS OF DEFAULT.............................................................. 68

SECTION 9.  THE AGENTS..................................................................... 71
         9.1  Appointment.................................................................. 71
         9.2  Delegation of Duties......................................................... 71
         9.3  Exculpatory Provisions....................................................... 71
         9.4  Reliance by Administrative Agent............................................. 72
         9.5  Notice of Default............................................................ 72
         9.6  Non-Reliance on Agents and Other Lenders..................................... 73
         9.7  Indemnification.............................................................. 73
         9.8  Agent in Its Individual Capacity............................................. 73
         9.9  Successor Administrative Agent............................................... 74
         9.10  Authorization to Release Liens.............................................. 74
         9.11  The Arranger................................................................ 74

SECTION 10.  MISCELLANEOUS................................................................. 74
         10.1  Amendments and Waivers...................................................... 74
         10.2  Notices..................................................................... 75
         10.3  No Waiver; Cumulative Remedies.............................................. 76
         10.4  Survival of Representations and Warranties.................................. 77
         10.5  Payment of Expenses......................................................... 77
         10.6  Successors and Assigns; Participations and Assignments...................... 78
         10.7  Adjustments; Set-off........................................................ 80
         10.8  Counterparts................................................................ 80
         10.9  Severability................................................................ 81
         10.10  Integration................................................................ 81
         10.11  GOVERNING LAW.............................................................. 81
         10.12  Submission To Jurisdiction; Waivers........................................ 81
         10.13  Acknowledgements........................................................... 82
         10.14  Confidentiality............................................................ 82
         10.15  WAIVERS OF JURY TRIAL...................................................... 82
         10.16  Delivery of Lender Addenda................................................. 82
</TABLE>


                                     -iii-

<PAGE>

ANNEX:

A                     Pricing Grid


SCHEDULES:

1.1                   Mortgaged Property
4.15                  Subsidiaries
4.19(b)               Mortgage Filing Jurisdictions
7.2(d)                Existing Indebtedness
7.3(f)                Existing Liens
7.8(h)                Existing Investments


EXHIBITS:

A                     Form of Guarantee and Collateral Agreement
B                     Form of Compliance Certificate
C                     Form of Closing Certificate
D                     Form of Mortgage
E                     Form of Assignment and Acceptance
F-1                   Form of Legal Opinion of Weil, Gotshal & Manges LLP
F-2                   Form of Local Counsel Opinion
G-1                   Form of Term Note
G-2                   Form of Revolving Credit Note
G-3                   Form of Swing Line Note
H                     Form of Prepayment Option Notice
I                     Form of Exemption Certificate
J                     Form of Lender Addendum

                                      -iv-

<PAGE>

                  CREDIT AGREEMENT, dated as of August 17, 1998, among THE
GRAND UNION COMPANY, a Delaware corporation (the "Borrower"), the several banks
and other financial institutions or entities from time to time parties to this
Agreement (the "Lenders"), WARBURG DILLON READ LLC, as co-advisor and
co-arranger, UBS AG, STAMFORD BRANCH, as syndication agent (in such capacity,
the "Syndication Agent"), LEHMAN BROTHERS INC., as co-advisor and co-arranger
(together with Warburg Dillon Read LLC in their capacities as co-advisors and
co-arrangers, the "Arrangers"), LEHMAN COMMERCIAL PAPER INC., as administrative
agent (in such capacity, the "Administrative Agent"), and LEHMAN COMMERCIAL
PAPER INC., as collateral agent (in such capacity, the "Collateral Agent").


                              W I T N E S S E T H:


                  WHEREAS, on June 24, 1998 (the "Petition Date"), the Borrower
filed a voluntary petition under Section 301 of the Bankruptcy Code with the
United States Bankruptcy Court for the District of New Jersey (the "Bankruptcy
Court") initiating its chapter 11 case (the "Case");

                  WHEREAS, on the Petition Date, following a prepetition
solicitation of votes for the acceptance or rejection of the Borrower's plan of
reorganization dated May 22, 1998 (the "Plan of Reorganization") pursuant to
Section 1126 of the Bankruptcy Code, the Borrower filed with the Bankruptcy
Court the Plan of Reorganization, together with a certification of its
balloting agent certifying that the Plan of Reorganization had been accepted by
the requisite number and amount of claims and amount of Preferred Stock
interests pursuant to Section 1126 of the Bankruptcy Code;

                  WHEREAS, the Borrower requested that the Lenders make
available a term loan and revolving credit and letter of credit facility in an
aggregate principal amount not to exceed $300,000,000, under which all of the
Borrower's obligations are guaranteed by the Subsidiary Guarantors, and the
proceeds of which will be used (a) to refinance revolving credit loans, and to
replace or cash collateralize letters of credit outstanding under the
Borrower's $172,022,020 secured debtor-in-possession credit facility (the "DIP
Credit Facility"), (b) to refinance the Supplemental Term Loans under the
Prepetition Credit Facility, (c) to pay fees and expenses in connection with
the Plan of Reorganization as confirmed by the Bankruptcy Court, (d) to finance
the working capital needs of the Borrower and the Subsidiary Guarantors in the
ordinary course of business and (e) for general corporate purposes, including,
without limitation, capital expenditures; and

                  WHEREAS, the Lenders are willing to make such credit
facilities available upon and subject to the terms and conditions hereinafter
set forth;

                  NOW, THEREFORE, in consideration of the premises and the
agreements hereinafter set forth, the parties hereto hereby agree as follows:

<PAGE>
                                                                              2


                             SECTION 1. DEFINITIONS

                  1.1 Defined Terms. As used in this Agreement, the terms
listed in this Section 1.1 shall have the respective meanings set forth in this
Section 1.1.

                  "Accounts": as to any Person, all rights to receive payment
         for goods sold or leased by such Person or for services rendered in
         the ordinary course of business of such Person to the extent not
         evidenced by an instrument or chattel paper, together with all
         interest, finance charges and other amounts payable by an account
         debtor in respect thereof.

                  "Adjustment Date":  as defined in the Pricing Grid.

                  "Affiliate": as to any Person, any other Person which,
         directly or indirectly, is in control of, is controlled by, or is
         under common control with, such Person. For purposes of this
         definition, "control" of a Person means the power, directly or
         indirectly, either to (a) vote 10% or more of the securities having
         ordinary voting power for the election of directors (or persons
         performing similar functions) of such Person or (b) direct or cause
         the direction of the management and policies of such Person, whether
         by contract or otherwise.

                  "Agents":  the collective reference to the Syndication Agent, 
         the Administrative Agent and the Collateral Agent.

                  "Aggregate Exposure": with respect to any Lender at any time,
         an amount equal to (a) until the Closing Date, the aggregate amount of
         such Lender's Commitments at such time and (b) thereafter, the sum of
         (i) the aggregate then unpaid principal amount of such Lender's Term
         Loans and (ii) the amount of such Lender's Revolving Credit Commitment
         then in effect or, if the Revolving Credit Commitments have been
         terminated, the amount of such Lender's Revolving Extensions of Credit
         then outstanding.

                  "Aggregate Exposure Percentage" with respect to any Lender at
         any time, the ratio (expressed as a percentage) of such Lender's
         Aggregate Exposure at such time to the Aggregate Exposure of all
         Lenders at such time.

                  "Agreement":  this Credit Agreement, as amended, supplemented 
         or otherwise modified from time to time.

                  "Applicable Margin": (a) during the period from and including
         the Closing Date to the first Adjustment Date occurring on or after
         the first anniversary of the Closing Date, (i) 2% per annum with
         respect to Base Rate Loans and (ii) 3% per annum with respect to
         Eurodollar Loans and (b) on and after the first Adjustment Date, the
         Applicable Margin determined pursuant to the Pricing Grid.


<PAGE>
                                                                              3

                  "Application":  an application, in such form as the Issuing 
         Lender may specify from time to time, requesting the Issuing Lender to 
         open a Letter of Credit.

                  "Asset Sale": any Disposition of Property or series of
         related Dispositions of Property (excluding any such Disposition
         permitted by clause (b), (c) or (d) of Section 7.5) which yields gross
         proceeds to the Borrower or any of its Subsidiaries (valued at the
         initial principal amount thereof in the case of non-cash proceeds
         consisting of notes or other debt securities and valued at fair market
         value in the case of other non-cash proceeds) in excess of $100,000.

                  "Assignee":  as defined in Section 10.6(c).

                  "Assignor":  as defined in Section 10.6(c).

                  "Available Revolving Credit Commitment": as to any Revolving
         Credit Lender at any time, an amount equal to the excess, if any, of
         (a) such Lender's Revolving Credit Commitment then in effect over (b)
         such Lender's Revolving Extensions of Credit then outstanding;
         provided, that in calculating any Lender's Revolving Extensions of
         Credit for the purpose of determining such Lender's Available
         Revolving Credit Commitment pursuant to Section 2.9(a), the aggregate
         principal amount of Swing Line Loans then outstanding shall be deemed
         to be zero.

                  "Bankruptcy Code":  The Bankruptcy Reform Act of 1978, as 
         heretofore and hereafter amended, and codified as 11 U.S.C. ss.ss.101 
         et seq.

                  "Bankruptcy Court":  as defined in the Recitals.

                  "Base Rate": for any day, a rate per annum (rounded upwards,
         if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
         Prime Rate in effect on such day, (b) the Base CD Rate in effect on
         such day plus 1% and (c) the Federal Funds Effective Rate in effect on
         such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean
         the rate of interest per annum publicly announced from time to time by
         Citibank N.A. as its prime or base rate in effect at its principal
         office in New York City (the Prime Rate not being intended to be the
         lowest rate of interest charged by Citibank N.A. in connection with
         extensions of credit to debtors); "Base CD Rate" shall mean the sum of
         (a) the product of (i) the Three-Month Secondary CD Rate and (ii) a
         fraction, the numerator of which is one and the denominator of which
         is one minus the C/D Reserve Percentage and (b) the C/D Assessment
         Rate; and "Three- Month Secondary CD Rate" shall mean, for any day,
         the secondary market rate for three-month certificates of deposit
         reported as being in effect on such day (or, if such day shall not be
         a Business Day, the next preceding Business Day) by the Board through
         the public information telephone line of the Federal Reserve Bank of
         New York (which rate will, under the current practices of the Board,
         be published in Federal Reserve Statistical Release H.15(519) during
         the week following such day), or, if such rate shall not be so
         reported on such day or such next preceding Business Day, the average
         of the secondary market quotations for three-month certificates 


<PAGE>
                                                                              4


         of deposit of major money center banks in New York City
         received at approximately 10:00 A.M., New York City time, on
         such day (or, if such day shall not be a Business Day, on the
         next preceding Business Day) by Citibank N.A. from three New
         York City negotiable certificate of deposit dealers of
         recognized standing selected by it. Any change in the Base Rate
         due to a change in the Prime Rate, the Three-Month Secondary CD
         Rate or the Federal Funds Effective Rate shall be effective as
         of the opening of business on the effective day of such change
         in the Prime Rate, the Three-Month Secondary CD Rate or the
         Federal Funds Effective Rate, respectively.

                  "Base Rate Loans":  Loans the rate of interest applicable to 
         which is based upon the Base Rate.

                  "Benefitted Lender":  as defined in Section 10.7.

                  "Board":  the Board of Governors of the Federal Reserve System
         of the United States (or any successor).

                  "Borrowing Date":  any Business Day specified by the Borrower 
         as a date on which the Borrower requests the relevant Lenders to make
         Loans hereunder.

                  "Business":  as defined in Section 4.17.

                  "Business Day": (i) for all purposes other than as covered by
         clause (ii) below, a day other than a Saturday, Sunday or other day on
         which commercial banks in New York City are authorized or required by
         law to close and (ii) with respect to all notices and determinations
         in connection with, and payments of principal and interest on,
         Eurodollar Loans, any day which is a Business Day described in clause
         (i) and which is also a day for trading by and between banks in Dollar
         deposits in the interbank eurodollar market.

                  "Capital Expenditures": for any period, with respect to any
         Person, the aggregate of all expenditures by such Person and its
         Subsidiaries for the acquisition or leasing (pursuant to a capital
         lease) of fixed or capital assets or additions to equipment (including
         replacements, capitalized repairs and improvements during such period)
         which should be capitalized under GAAP on a consolidated balance sheet
         of such Person and its Subsidiaries.

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

<PAGE>
                                                                              5


                  "Capital Stock":  any and all shares, interests, 
         participations or other equivalents (however designated) of capital
         stock of a corporation, any and all equivalent ownership interests in
         a Person (other than a corporation) and any and all warrants, rights
         or options to purchase any of the foregoing.

                  "Case":  as defined in the Recitals.

                  "Cash Equivalents": (a) marketable direct obligations issued
         by, or unconditionally guaranteed by, the United States Government or
         issued by any agency thereof and backed by the full faith and credit
         of the United States, in each case maturing within one year from the
         date of acquisition; (b) certificates of deposit, time deposits,
         eurodollar time deposits or overnight bank deposits having maturities
         of one year or less from the date of acquisition issued by any Lender
         or by any commercial bank organized under the laws of the United
         States of America or any state thereof having combined capital and
         surplus of not less than $500,000,000; (c) commercial paper of an
         issuer rated at least A-2 by Standard & Poor's Ratings Services
         ("S&P") or P-2 by Moody's Investors Service, Inc. ("Moody's"), or
         carrying an equivalent rating by a nationally recognized rating
         agency, if both of the two named rating agencies cease publishing
         ratings of commercial paper issuers generally, and maturing within six
         months from the date of acquisition; (d) repurchase obligations of any
         Lender or of any commercial bank satisfying the requirements of clause
         (b) of this definition, having a term of not more than 30 days with
         respect to securities issued or fully guaranteed or insured by the
         United States government; (e) securities with maturities of one year
         or less from the date of acquisition issued or fully guaranteed by any
         state, commonwealth or territory of the United States, by any
         political subdivision or taxing authority of any such state,
         commonwealth or territory or by any foreign government, the securities
         of which state, commonwealth, territory, political subdivision, taxing
         authority or foreign government (as the case may be) are rated at
         least A by S&P or A by Moody's; (f) securities with maturities of six
         months or less from the date of acquisition backed by standby letters
         of credit issued by any Lender or any commercial bank satisfying the
         requirements of clause (b) of this definition; or (g) shares of money
         market mutual or similar funds which invest exclusively in assets
         satisfying the requirements of clauses (a) through (f) of this
         definition.

                  "C/D Assessment Rate": for any day as applied to any Base
         Rate Loan, the annual assessment rate in effect on such day which is
         payable by a member of the Bank Insurance Fund maintained by the
         Federal Deposit Insurance Corporation (the "FDIC") classified as
         well-capitalized and within supervisory subgroup "B" (or a comparable
         successor assessment risk classification) within the meaning of 12
         C.F.R. ss. 327.4 (or any successor provision) to the FDIC (or any
         successor) for the FDIC's (or such successor's) insuring time deposits
         at offices of such institution in the United States.

                  "C/D Reserve Percentage":  for any day as applied to any Base 
         Rate Loan, that percentage (expressed as a decimal) which is in effect
         on such day, as prescribed by the Board, for determining the maximum
         reserve requirement for a Depositary Institution (as 


<PAGE>
                                                                              6


         defined in Regulation D of the Board as in effect from time to time)
         in respect of new non-personal time deposits in Dollars having a
         maturity of 30 days or more.

                  "Closing Date":  the date on which the conditions precedent 
         set forth in Section 5.1 shall have been satisfied.

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

                  "Collateral":  all Property of the Loan Parties, now owned or 
         hereafter acquired, upon which a Lien is purported to be created by
         any Security Document.

                  "Commitment":  as to any Lender, the sum of the Term Loan 
         Commitment and the Revolving Credit Commitment of such Lender.

                  "Commitment Fee Rate":  1/2 of 1% per annum.

                  "Commonly Controlled Entity": an entity, whether or not
         incorporated, which is under common control with the Borrower within
         the meaning of Section 4001 of ERISA or is part of a group which
         includes the Borrower and which is treated as a single employer under
         Section 414 of the Code.

                  "Compliance Certificate":  a certificate duly executed by a 
         Responsible Officer substantially in the form of Exhibit B.

                  "Confidential Information Memorandum":  the Confidential 
         Information Memorandum dated July, 1998 and furnished to the Lenders.

                  "Confirmation Order":  an order of the Bankruptcy Court 
         confirming the Plan of Reorganization in the Case.

                  "Consolidated Current Assets": at any date, all amounts
         (other than cash and Cash Equivalents) which would, in conformity with
         GAAP, be set forth opposite the caption "total current assets" (or any
         like caption) on a consolidated balance sheet of the Borrower and its
         Subsidiaries at such date.

                  "Consolidated Current Liabilities": at any date, all amounts
         which would, in conformity with GAAP, be set forth opposite the
         caption "total current liabilities" (or any like caption) on a
         consolidated balance sheet of the Borrower and its Subsidiaries at
         such date, but excluding (a) the current portion of any Funded Debt of
         the Borrower and its Subsidiaries and (b) without duplication of
         clause (a) above, all Indebtedness consisting of Revolving Credit
         Loans or Swing Line Loans to the extent otherwise included therein.

                  "Consolidated EBITDA":  for any period, Consolidated Net 
         Income for such period plus, without duplication and to the extent
         reflected as a charge in the statement of such Consolidated Net Income
         for such period, the sum of (a) income tax expense, (b)

<PAGE>
                                                                              7


         interest expense, amortization or writeoff of debt discount and debt
         issuance costs and commissions, discounts and other fees and charges
         associated with Indebtedness (including the Loans), (c) depreciation
         and amortization expense, (d) amortization of intangibles (including,
         but not limited to, goodwill) and organization costs, (e) any
         extraordinary, unusual or non-recurring expenses or losses (including,
         whether or not otherwise includable as a separate item in the
         statement of such Consolidated Net Income for such period, losses on
         sales of assets outside of the ordinary course of business), (f)
         Chapter 11 expenses or administrative costs reflecting Chapter 11
         expenses and (g) any other non-cash charges, and minus, to the extent
         included in the statement of such Consolidated Net Income for such
         period, the sum of (a) interest income, (b) any extraordinary, unusual
         or non-recurring income or gains (including, whether or not otherwise
         includable as a separate item in the statement of such Consolidated
         Net Income for such period, gains on the sales of assets outside of
         the ordinary course of business; it being understood that the
         foregoing excludes up to $3,000,000 per fiscal year derived from
         recurring asset sales) and (c) any other non-cash income, all as
         determined on a consolidated basis.

                  "Consolidated Interest Coverage Ratio":  for any period, the 
         ratio of (a) Consolidated EBITDA for such period to (b) Consolidated
         Interest Expense for such period.

                  "Consolidated Interest Expense": for any period, total
         interest expense (including that attributable to Capital Lease
         Obligations but excluding amortization of deferred financing costs) of
         the Borrower and its Subsidiaries for such period with respect to all
         outstanding Indebtedness of the Borrower and its Subsidiaries
         (including, without limitation, all commissions, discounts and other
         fees and charges owed with respect to letters of credit and bankers'
         acceptance financing and net costs under Hedge Agreements in respect
         of interest rates to the extent such net costs are allocable to such
         period in accordance with GAAP).

                  "Consolidated Leverage Ratio": as at the last day of any
         period of four consecutive fiscal quarters, the ratio of (a)
         Consolidated Total Debt on such day to (b) Consolidated EBITDA for
         such period; provided that for purposes of calculating Consolidated
         EBITDA of the Borrower and its Subsidiaries for any period, the
         Consolidated EBITDA of any Person acquired by the Borrower or its
         Subsidiaries during such period shall be included on a pro forma basis
         for such period (assuming the consummation of such acquisition and the
         incurrence or assumption of any Indebtedness in connection therewith
         occurred on the first day of such period) if the consolidated balance
         sheet of such acquired Person and its consolidated Subsidiaries as at
         the end of the period preceding the acquisition of such Person and the
         related consolidated statements of income and stockholders' equity and
         of cash flows for the period in respect of which Consolidated EBITDA
         is to be calculated (i) have been previously provided to the
         Administrative Agent and the Lenders and (ii) either (A) have been
         reported on without a qualification arising out of the scope of the
         audit by independent certified 


<PAGE>
                                                                              8

         public accountants of nationally recognized standing or (B) have been
         found reasonably acceptable by the Administrative Agent.

                  "Consolidated Net Income": for any period, the consolidated
         net income (or loss) of the Borrower and its Subsidiaries, determined
         on a consolidated basis in accordance with GAAP; provided that there
         shall be excluded (a) the income (or deficit) of any Person accrued
         prior to the date it becomes a Subsidiary of the Borrower or is merged
         into or consolidated with the Borrower or any of its Subsidiaries, (b)
         the income (or deficit) of any Person (other than a Subsidiary of the
         Borrower) in which the Borrower or any of its Subsidiaries has an
         ownership interest, except to the extent that any such income is
         actually received by the Borrower or such Subsidiary in the form of
         dividends or similar distributions and (c) the undistributed earnings
         of any Subsidiary of the Borrower to the extent that the declaration
         or payment of dividends or similar distributions by such Subsidiary is
         not at the time permitted by the terms of any Contractual Obligation
         (other than under any Loan Document) or Requirement of Law applicable
         to such Subsidiary.

                  "Consolidated Net Working Capital":  at any date, the excess 
         of Consolidated Current Assets on such date over Consolidated Current
         Liabilities on such date.

                  "Consolidated Total Debt":  at any date, the aggregate 
         principal amount of all Funded Debt of the Borrower and its
         Subsidiaries at such date, determined on a consolidated basis in
         accordance with GAAP.

                  "Contractual Obligation":  as to any Person, any provision of 
         any security issued by such Person or of any agreement, instrument or
         other undertaking to which such Person is a party or by which it or
         any of its Property is bound.

                  "Default":  any of the events specified in Section 8, whether 
         or not any requirement for the giving of notice, the lapse of time, or
         both, has been satisfied.

                  "Disposition":  with respect to any Property, any sale, sale 
         and leaseback, assignment, conveyance, transfer or other disposition
         thereof; the terms "Dispose" and "Disposed of" shall have correlative
         meanings.

                  "Dollars" and "$":  dollars in lawful currency of the United 
         States of America.

                  "Domestic Subsidiary":  any Subsidiary of the Borrower 
         organized under the laws of any jurisdiction within the United States
         of America.

                  "ECF Percentage": 75%; provided, that, with respect to each
         fiscal year of the Borrower (commencing with the fiscal year in which
         Closing Date occurs), the ECF Percentage shall be reduced to 50% if
         the Consolidated Leverage Ratio on the last day of such fiscal year is
         less than 3.25 to 1.0.

<PAGE>
                                                                              9


                  "Environmental Laws": any and all laws, rules, orders,
         regulations, statutes, ordinances, guidelines, codes, decrees, or
         other legally enforceable requirement (including, without limitation,
         common law) of the United States or any other nation, or any state,
         local, municipal or other governmental authority, regulating, relating
         to or imposing liability or standards of conduct concerning protection
         of the environment or of human health, or employee health and safety,
         as has been, is now, or may at any time hereafter be, in effect.

                  "Environmental Permits":  any and all permits, licenses, 
         approvals, registrations, notifications, exemptions and any other
         authorization required under any Environmental Law.

                  "ERISA":  the Employee Retirement Income Security Act of 1974,
         as amended from time to time.

                  "Eurocurrency Reserve Requirements": for any day as applied
         to a Eurodollar Loan, the aggregate (without duplication) of the
         maximum rates (expressed as a decimal fraction) of reserve
         requirements in effect on such day (including, without limitation,
         basic, supplemental, marginal and emergency reserves under any
         regulations of the Board or other Governmental Authority having
         jurisdiction with respect thereto) dealing with reserve requirements
         prescribed for eurocurrency funding (currently referred to as
         "Eurocurrency Liabilities" in Regulation D of the Board) maintained by
         a member bank of the Federal Reserve System.

                  "Eurodollar Base Rate": with respect to each day during each
         Interest Period pertaining to a Eurodollar Loan, the rate per annum
         determined on the basis of the rate for deposits in Dollars for a
         period equal to such Interest Period commencing on the first day of
         such Interest Period appearing on Page 3750 of the Dow Jones Markets
         screen as of 11:00 A.M., London time, two Business Days prior to the
         beginning of such Interest Period. In the event that such rate does
         not appear on Page 3750 of the Dow Jones Markets screen (or otherwise
         on such screen), the "Eurodollar Base Rate" for purposes of this
         definition shall be determined by reference to such other comparable
         publicly available service for displaying eurodollar rates as may be
         selected by the Administrative Agent or, in the absence of such
         availability, by reference to the rate at which the Administrative
         Agent is offered Dollar deposits at or about 11:00 A.M., New York City
         time, two Business Days prior to the beginning of such Interest Period
         in the interbank eurodollar market where its eurodollar and foreign
         currency and exchange operations are then being conducted for delivery
         on the first day of such Interest Period for the number of days
         comprised therein.

                  "Eurodollar Loans":  Loans the rate of interest applicable to 
         which is based upon the Eurodollar Rate.

<PAGE>
                                                                             10


                  "Eurodollar Rate":  with respect to each day during each 
         Interest Period pertaining to a Eurodollar Loan, a rate per annum
         determined for such day in accordance with the following formula
         (rounded upward to the nearest 1/100th of 1%):

                              Eurodollar Base Rate
                    ----------------------------------------
                    1.00 - Eurocurrency Reserve Requirements

                  "Eurodollar Tranche":  the collective reference to Eurodollar 
         Loans the then current Interest Periods with respect to all of which
         begin on the same date and end on the same later date (whether or not
         such Loans shall originally have been made on the same day).

                  "Event of Default":  any of the events specified in Section 8,
         provided that any requirement for the giving of notice, the lapse of
         time, or both, has been satisfied.

                  "Excess Cash Flow": for any fiscal year of the Borrower, the
         excess, if any, of (a) the sum, without duplication, of (i)
         Consolidated Net Income for such fiscal year, (ii) an amount equal to
         the amount of all non-cash charges (including depreciation and
         amortization) deducted in arriving at such Consolidated Net Income,
         (iii) decreases in Consolidated Net Working Capital for such fiscal
         year, (iv) an amount equal to the aggregate net non-cash loss on the
         Disposition of Property by the Borrower and its Subsidiaries during
         such fiscal year (other than sales of inventory in the ordinary course
         of business), to the extent deducted in arriving at such Consolidated
         Net Income and (v) the net increase during such fiscal year (if any)
         in deferred tax accounts of the Borrower over (b) the sum, without
         duplication, of (i) an amount equal to the amount of all non-cash
         credits included in arriving at such Consolidated Net Income, (ii) the
         aggregate amount actually paid by the Borrower and its Subsidiaries in
         cash during such fiscal year on account of Capital Expenditures and
         any such expenditures permitted to be carried over pursuant to Section
         7.7 (excluding (A) the principal amount of Indebtedness incurred in
         connection with such expenditures, (B) any such expenditures financed
         with the proceeds of any Reinvestment Deferred Amount and (C) any such
         expenditures permitted to be carried over from the prior fiscal year
         pursuant to Section 7.7), (iii) the aggregate amount of all
         prepayments of Revolving Credit Loans and Swing Line Loans during such
         fiscal year to the extent accompanying permanent optional reductions
         of the Revolving Credit Commitments and all optional prepayments of
         the Term Loans during such fiscal year, (iv) the aggregate amount of
         all regularly scheduled principal payments of Funded Debt (including,
         without limitation, the Term Loans) of the Borrower and its
         Subsidiaries made during such fiscal year (other than in respect of
         any revolving credit facility to the extent there is not an equivalent
         permanent reduction in commitments thereunder), (v) increases in
         Consolidated Net Working Capital for such fiscal year, (vi) an amount
         equal to the sum of (A) the aggregate net non-cash gain on the
         Disposition of Property and (B) the aggregate net cash gain on the
         first $5 million of proceeds on the Disposition of Property, by the
         Borrower and its Subsidiaries during such fiscal year (other than
         sales of inventory in the ordinary course of business), to the extent
         included in arriving at such Consolidated Net Income, (vii) the net
         decrease during such fiscal year (if 

<PAGE>
                                                                             11

         any) in deferred tax accounts of the Borrower, and (viii) cash
         disbursements made in respect of liabilities to the extent reserved
         against on the financial statements of the Borrower and its
         Subsidiaries as of the Closing Date and not otherwise deducted in
         determining Consolidated Net Income.

                  "Excess Cash Flow Application Date":  as defined in Section 
         2.12(c).

                  "Excluded Foreign Subsidiaries":  any Foreign Subsidiary in 
         respect of which either (i) the pledge of all of the Capital Stock of
         such Subsidiary as Collateral or (ii) the guaranteeing by such
         Subsidiary of the Obligations, would, in the good faith judgment of
         the Borrower, result in adverse tax consequences to the Borrower.

                  "Facility":  each of (a) the Term Loan Commitments and the 
         Term Loans made thereunder (the "Term Loan Facility") and (b) the
         Revolving Credit Commitments and the extensions of credit made
         thereunder (the "Revolving Credit Facility").

                  "Federal Funds Effective Rate": for any day, the weighted
         average of the rates on overnight federal funds transactions with
         members of the Federal Reserve System arranged by federal funds
         brokers, as published on the next succeeding Business Day by the
         Federal Reserve Bank of New York, or, if such rate is not so published
         for any day which is a Business Day, the average of the quotations for
         the day of such transactions received by Citibank N.A. from three
         federal funds brokers of recognized standing selected by it.

                  "Fee Properties":  the collective reference to the real 
         properties owned in fee by the respective Loan Parties described on
         Part I of Schedule 1.1, including all buildings, improvements,
         structures and fixtures now or subsequently located thereon.

                  "Foreign Subsidiary":  any Subsidiary of the Borrower that is 
         not a Domestic Subsidiary.

                  "Funded Debt": as to any Person, all Indebtedness of such
         Person that matures more than one year from the date of its creation
         or matures within one year from such date but is renewable or
         extendible, at the option of such Person, to a date more than one year
         from such date or arises under a revolving credit or similar agreement
         that obligates the lender or lenders to extend credit during a period
         of more than one year from such date, including, without limitation,
         all current maturities and current sinking fund payments in respect of
         such Indebtedness whether or not required to be paid within one year
         from the date of its creation and, in the case of the Borrower,
         Indebtedness in respect of the Loans.

                  "Funding Office":  the office specified from time to time by 
         the Administrative Agent as its funding office by notice to the
         Borrower and the Lenders.

<PAGE>
                                                                             12


                  "GAAP": generally accepted accounting principles in the
         United States of America as in effect from time to time, except that
         for purposes of Section 7.1, GAAP shall be determined on the basis of
         such principles in effect on the date hereof and consistent with those
         used in the preparation of the most recent audited financial
         statements delivered pursuant to Section 4.1(b). In the event that any
         "Accounting Change" (as defined below) shall occur and such change
         results in a change in the method of calculation of financial
         covenants, standards or terms in this Agreement, then the Borrower and
         the Administrative Agent agree to enter into negotiations in order to
         amend such provisions of this Agreement so as to equitably reflect
         such Accounting Changes with the desired result that the criteria for
         evaluating the Borrower's financial condition shall be the same after
         such Accounting Changes as if such Accounting Changes had not been
         made. Until such time as such an amendment shall have been executed
         and delivered by the Borrower, the Administrative Agent and the
         Required Lenders, all financial covenants, standards and terms in this
         Agreement shall continue to be calculated or construed as if such
         Accounting Changes had not occurred. "Accounting Changes" refers to
         changes in accounting principles required by the promulgation of any
         rule, regulation, pronouncement or opinion by the Financial Accounting
         Standards Board of the American Institute of Certified Public
         Accountants or, if applicable, the Securities and Exchange Commission
         (or successors thereto or agencies with similar functions).

                  "Governmental Authority":  any nation or government, any state
         or other political subdivision thereof and any entity exercising
         executive, legislative, judicial, regulatory or administrative
         functions of or pertaining to government (including, without
         limitation, the National Association of Insurance Commissioners).

                  "Guarantee and Collateral Agreement":  the Guarantee and 
         Collateral Agreement to be executed and delivered by the Borrower and
         each Subsidiary Guarantor, substantially in the form of Exhibit A, as
         the same may be amended, supplemented or otherwise modified from time
         to time.

                  "Guarantee Obligation": as to any Person (the "guaranteeing
         person"), any obligation of (a) the guaranteeing person or (b) another
         Person (including, without limitation, any bank under any letter of
         credit) to induce the creation of which the guaranteeing person has
         issued a reimbursement, counterindemnity or similar obligation, in
         either case guaranteeing or in effect guaranteeing any Indebtedness,
         leases, dividends or other obligations (the "primary obligations") of
         any other third Person (the "primary obligor") in any manner, whether
         directly or indirectly, including, without limitation, any obligation
         of the guaranteeing person, whether or not contingent, (i) to purchase
         any such primary obligation or any Property constituting direct or
         indirect security therefor, (ii) to advance or supply funds (1) for
         the purchase or payment of any such primary obligation or (2) to
         maintain working capital or equity capital of the primary obligor or
         otherwise to maintain the net worth or solvency of the primary
         obligor, (iii) to purchase Property, securities or services primarily
         for the purpose of assuring the owner of any such primary obligation
         of the ability of the primary obligor to make payment of such primary
         obligation or (iv) otherwise to assure or hold harmless the owner of
         any such primary 

<PAGE>
                                                                             13


         obligation against loss in respect thereof; provided, however, that
         the term Guarantee Obligation shall not include endorsements of
         instruments for deposit or collection in the ordinary course of
         business. The amount of any Guarantee Obligation of any guaranteeing
         person shall be deemed to be the lower of (a) an amount equal to the
         stated or determinable amount of the primary obligation in respect of
         which such Guarantee Obligation is made and (b) the maximum amount for
         which such guaranteeing person may be liable pursuant to the terms of
         the instrument embodying such Guarantee Obligation, unless such
         primary obligation and the maximum amount for which such guaranteeing
         person may be liable are not stated or determinable, in which case the
         amount of such Guarantee Obligation shall be such guaranteeing
         person's maximum reasonably anticipated liability in respect thereof
         as determined by the Borrower in good faith.

                  "Hedge Agreements": all interest rate swaps, caps or collar
         agreements or similar arrangements entered into by the Borrower
         providing for protection against fluctuations in interest rates or
         currency exchange rates or the exchange of nominal interest
         obligations, either generally or under specific contingencies.

                  "Indebtedness": of any Person at any date, without
         duplication, (a) all indebtedness of such Person for borrowed money,
         (b) all obligations of such Person for the deferred purchase price of
         Property or services (other than current trade payables incurred in
         the ordinary course of such Person's business), (c) all obligations of
         such Person evidenced by notes, bonds, debentures or other similar
         instruments, (d) all indebtedness created or arising under any
         conditional sale or other title retention agreement with respect to
         Property acquired by such Person (even though the rights and remedies
         of the seller or lender under such agreement in the event of default
         are limited to repossession or sale of such Property), (e) all Capital
         Lease Obligations of such Person, (f) all obligations of such Person,
         contingent or otherwise, as an account party under acceptance, letter
         of credit or similar facilities, (g) all obligations of such Person,
         contingent or otherwise, to purchase, redeem, retire or otherwise
         acquire for value any Capital Stock of such Person, (h) all Guarantee
         Obligations of such Person in respect of obligations of the kind
         referred to in clauses (a) through (g) above; (i) all obligations of
         the kind referred to in clauses (a) through (h) above secured by (or
         for which the holder of such obligation has an existing right,
         contingent or otherwise, to be secured by) any Lien on Property
         (including, without limitation, accounts and contract rights) owned by
         such Person, whether or not such Person has assumed or become liable
         for the payment of such obligation, (j) for the purposes of Section
         8(e) only, all obligations of such Person in respect of Hedge
         Agreements and (k) the liquidation value of any mandatorily redeemable
         preferred Capital Stock of such Person or its Subsidiaries held by any
         Person other than such Person and its Wholly Owned Subsidiaries.

                  "Indemnified Liabilities":  as defined in Section 10.5.

                  "Indemnitee":  as defined in Section 10.5.

<PAGE>
                                                                             14


                  "Insolvency":  with respect to any Multiemployer Plan, the 
         condition that such Plan is insolvent within the meaning of Section
         4245 of ERISA.

                  "Insolvent":  pertaining to a condition of Insolvency.

                  "Intellectual Property":  the collective reference to all 
         rights, priorities and privileges relating to intellectual property,
         whether arising under United States, multinational or foreign laws or
         otherwise, including, without limitation, copyrights, copyright
         licenses, patents, patent licenses, trademarks, trademark licenses,
         technology, know-how and processes, and all rights to sue at law or in
         equity for any infringement or other impairment thereof, including the
         right to receive all proceeds and damages therefrom.

                  "Interest Payment Date": (a) as to any Base Rate Loan, the
         last day of each March, June, September and December to occur while
         such Loan is outstanding and the final maturity date of such Loan, (b)
         as to any Eurodollar Loan having an Interest Period of three months or
         less, the last day of such Interest Period, (c) as to any Eurodollar
         Loan having an Interest Period longer than three months, each day
         which is three months, or a whole multiple thereof, after the first
         day of such Interest Period and the last day of such Interest Period
         and (d) as to any Loan (other than any Revolving Credit Loan that is a
         Base Rate Loan and any Swing Line Loan), the date of any repayment or
         prepayment made in respect thereof.

                  "Interest Period": as to any Eurodollar Loan, (a) initially,
         the period commencing on the borrowing or conversion date, as the case
         may be, with respect to such Eurodollar Loan and ending one, two,
         three or six months thereafter, as selected by the Borrower in its
         notice of borrowing or notice of conversion, as the case may be, given
         with respect thereto; and (b) thereafter, each period commencing on
         the last day of the next preceding Interest Period applicable to such
         Eurodollar Loan and ending one, two, three or six months thereafter,
         as selected by the Borrower by irrevocable notice to the
         Administrative Agent not less than three Business Days prior to the
         last day of the then current Interest Period with respect thereto;
         provided that, all of the foregoing provisions relating to Interest
         Periods are subject to the following:

                               (i) if any Interest Period would otherwise end
                  on a day that is not a Business Day, such Interest Period
                  shall be extended to the next succeeding Business Day unless
                  the result of such extension would be to carry such Interest
                  Period into another calendar month in which event such
                  Interest Period shall end on the immediately preceding
                  Business Day;

                              (ii) any Interest Period that would otherwise
                  extend beyond the scheduled Revolving Credit Termination Date
                  or beyond the date final payment is due on the Term Loans
                  shall end on the Revolving Credit Termination Date or such
                  due date, as applicable;

<PAGE>
                                                                             15


                             (iii) any Interest Period that begins on the last
                  Business Day of a calendar month (or on a day for which there
                  is no numerically corresponding day in the calendar month at
                  the end of such Interest Period) shall end on the last
                  Business Day of a calendar month; and

                              (iv) the Borrower shall select Interest Periods
                  so as not to require a payment or prepayment of any
                  Eurodollar Loan during an Interest Period for such Loan.

                  "Inventory":  all inventory of the Borrower and its 
         Subsidiaries as defined and classified by the Borrower and the
         Subsidiary Guarantors on a basis consistent with the Borrower's and
         Subsidiary Guarantors' current and historical accounting practices,
         excluding perishables.

                  "Investments":  as defined in Section 7.8.

                  "Issuing Lender":  UBS AG, Stamford Branch, in its capacity as
         issuer of any Letter of Credit.

                  "L/C Commitment":  $50,000,000.

                  "L/C Fee Payment Date":  the last day of each March, June, 
         September and December and the last day of the Revolving Credit
         Commitment Period.

                  "L/C Obligations": at any time, an amount equal to the sum of
         (a) the aggregate then undrawn and unexpired amount of the then
         outstanding Letters of Credit and (b) the aggregate amount of drawings
         under Letters of Credit which have not then been reimbursed pursuant
         to Section 3.5.

                  "L/C Participants":  the collective reference to all the 
         Revolving Credit Lenders other than the Issuing Lender.

                  "Leased Properties":  the collective reference to the real 
         properties leased by the respective Loan Parties described on Part II
         of Schedule 1.1, including all buildings, improvements, structures and
         fixtures now or subsequently located thereon and owned or leased by
         the respective Loan Parties.

                  "Lender Addendum":  with respect to any initial Lender, a 
         Lender Addendum, substantially in the form of Exhibit J, to be
         executed and delivered by such Lender on the Closing Date as provided
         in Section 10.16.

                  "Letters of Credit":  as defined in Section 3.1(a).

                  "Lien": any mortgage, pledge, hypothecation, assignment,
         deposit arrangement, encumbrance, lien (statutory or other), charge or
         other security interest or any preference, 

<PAGE>
                                                                             16


         priority or other security agreement or preferential arrangement of
         any kind or nature whatsoever (including, without limitation, any
         conditional sale or other title retention agreement and any capital
         lease having substantially the same economic effect as any of the
         foregoing).

                  "Loan":  any loan made by any Lender pursuant to this 
         Agreement.

                  "Loan Documents":  this Agreement, the Security Documents and 
         the Notes.

                  "Loan Parties":  the Borrower and each Subsidiary of the 
         Borrower which is a party to a Loan Document.

                  "Majority Facility Lenders": with respect to any Facility,
         the holders of more than 50% of the aggregate unpaid principal amount
         of the Term Loans or the Total Revolving Extensions of Credit, as the
         case may be, outstanding under such Facility (or, in the case of the
         Revolving Credit Facility, prior to any termination of the Revolving
         Credit Commitments, the holders of more than 50% of the Total
         Revolving Credit Commitments).

                  "Majority Revolving Credit Facility Lenders":  the Majority 
         Facility Lenders in respect of the Revolving Credit Facility.

                  "Material Adverse Effect": a material adverse effect on (a)
         the business, assets, property, condition (financial or otherwise) of
         the Borrower and its Subsidiaries taken as a whole or (b) the validity
         or enforceability of this Agreement or any of the other Loan Documents
         or the rights or remedies of the Agents or the Lenders hereunder or
         thereunder.

                  "Material Environmental Amount":  an amount payable by the 
         Borrower and/or its Subsidiaries for investigative and remedial costs,
         compliance costs, compensatory damages, natural resource damages,
         punitive damages, fines, penalties or any combination thereof which,
         in the aggregate, exceed $5,000,000.

                  "Materials of Environmental Concern": any gasoline or
         petroleum (including crude oil or any fraction thereof) or petroleum
         products, polychlorinated biphenyls, urea-formaldehyde insulation,
         asbestos, pollutants, contaminants, radioactivity, and any other
         substances or forces of any kind, whether or not any such substance or
         force is defined as hazardous or toxic under any Environmental Law,
         that is regulated pursuant to or could give rise to liability under
         any Environmental Law.

                  "Mortgaged Properties":  the collective reference to each of 
         the Fee Properties and the Leased Properties.

                  "Mortgages": the collective reference to each of the
         mortgages, deeds of trust and deeds to secure debt encumbering each of
         the Mortgaged Properties to be executed and 

<PAGE>
                                                                             17


         delivered by the respective Loan Parties in favor of, or for the
         benefit of, the Administrative Agent for the benefit of the Lenders,
         substantially in the form of Exhibit D (with such changes thereto as
         shall be advisable under the law of the jurisdiction in which such
         mortgage, deed to secure debt or deed of trust is to be recorded), as
         the same may be amended, supplemented or otherwise modified from time
         to time.

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

                  "Net Cash Proceeds": (a) in connection with any Asset Sale or
         any Recovery Event, the proceeds thereof in the form of cash and Cash
         Equivalents (including any such proceeds received by way of deferred
         payment of principal pursuant to a note or installment receivable or
         purchase price adjustment receivable or otherwise, but only as and
         when received) of such Asset Sale or Recovery Event, net of attorneys'
         fees, accountants' fees, investment banking fees, amounts required to
         be applied to the repayment of Indebtedness secured by a Lien
         expressly permitted hereunder on any asset which is the subject of
         such Asset Sale or Recovery Event and other customary fees and
         expenses actually incurred in connection therewith and net of taxes
         paid or reasonably estimated to be payable as a result thereof (after
         taking into account any available tax credits or deductions and any
         tax sharing arrangements) and (b) in connection with any issuance or
         sale of equity securities or debt securities or instruments or the
         incurrence of loans, the cash proceeds received from such issuance or
         incurrence, net of attorneys' fees, investment banking fees,
         accountants' fees, underwriting discounts and commissions and other
         customary fees and expenses actually incurred in connection therewith.

                  "New Lending Office":  as defined in Section 2.17(d).

                  "Non-Excluded Taxes":  as defined in Section 2.20(a).

                  "Non-U.S. Lender":  as defined in Section 2.20(d).

                  "Notes":  the collective reference to any promissory note 
                            evidencing Loans.

                  "Obligations": the unpaid principal of and interest on
         (including, without limitation, interest accruing after the maturity
         of the Loans and Reimbursement Obligations and interest accruing after
         the filing of any petition in bankruptcy, or the commencement of any
         insolvency, reorganization or like proceeding, relating to the
         Borrower, whether or not a claim for post-filing or post-petition
         interest is allowed in such proceeding) the Loans and all other
         obligations and liabilities of the Borrower to the Administrative
         Agent or to any Lender (or, in the case of Hedge Agreements, any
         affiliate of any Lender), whether direct or indirect, absolute or
         contingent, due or to become due, or now existing or hereafter
         incurred, which may arise under, out of, or in connection with, this
         Agreement, any other Loan Document, the Letters of Credit, any Hedge
         Agreement entered into with any Lender or any affiliate of any Lender
         or any other 

<PAGE>
                                                                             18


         document made, delivered or given in connection herewith or therewith,
         whether on account of principal, interest, reimbursement obligations,
         fees, indemnities, costs, expenses (including, without limitation, all
         fees, charges and disbursements of counsel to the Administrative Agent
         or to any Lender that are required to be paid by the Borrower pursuant
         hereto) or otherwise.

                  "Other Taxes": any and all present or future stamp or
         documentary taxes or any other excise or property taxes, charges or
         similar levies arising from any payment made hereunder or from the
         execution, delivery or enforcement of, or otherwise with respect to,
         this Agreement or any other Loan Document.

                  "Participant":  as defined in Section 10.6(b).

                  "Payment Office":  the office specified from time to time by 
         the Administrative Agent as its payment office by notice to the
         Borrower and the Lenders.

                  "PBGC":  the Pension Benefit Guaranty Corporation established 
         pursuant to Subtitle A of Title IV of ERISA (or any successor).

                  "Permitted Liens": Liens permitted to exist under Section 7.3.

                  "Person":  an individual, partnership, corporation, limited 
         liability company, business trust, joint stock company, trust,
         unincorporated association, joint venture, Governmental Authority or
         other entity of whatever nature.

                  "Petition Date":  as defined in the Recitals.

                  "Plan": at a particular time, any employee benefit plan which
         is covered by ERISA and in respect of which the Borrower or a Commonly
         Controlled Entity is (or, if such plan were terminated at such time,
         would under Section 4069 of ERISA be deemed to be) an "employer" as
         defined in Section 3(5) of ERISA.

                  "Plan of Reorganization":  as defined in the Recitals.

                  "Prepetition Credit Facility":  the prepetition $250,000,000 
         senior secured credit facility agented by Bankers Trust Company.

                  "Pricing Grid":  the pricing grid attached hereto as Annex A.

                  "Pro Forma Balance Sheet":  as defined in Section 4.1(a).

                  "Projections":  as defined in Section 6.2(c).

<PAGE>
                                                                             19


                  "Property":  any right or interest in or to property of any 
         kind whatsoever, whether real, personal or mixed and whether tangible
         or intangible, including, without limitation, Capital Stock.

                  "Recovery Event":  any settlement of or payment in respect of 
         any property or casualty insurance claim or any condemnation
         proceeding relating to any asset of the Borrower or any of its
         Subsidiaries.

                  "Refunded Swing Line Loans":  as defined in Section 2.7.

                  "Refunding Date":  as defined in Section 2.7.

                  "Register":  as defined in Section 10.6(d).

                  "Regulation U":  Regulation U of the Board as in effect from 
         time to time.

                  "Reimbursement Obligation":  the obligation of the Borrower to
         reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn
         under Letters of Credit.

                  "Reinvestment Deferred Amount": with respect to any
         Reinvestment Event, the aggregate Net Cash Proceeds received by the
         Borrower or any of its Subsidiaries in connection therewith which are
         not applied to prepay the Term Loans or reduce the Revolving Credit
         Commitments pursuant to Section 2.12(b) as a result of the delivery of
         a Reinvestment Notice.

                  "Reinvestment Event":  any Asset Sale or Recovery Event in 
         respect of which the Borrower has delivered a Reinvestment Notice.

                  "Reinvestment Notice": a written notice executed by a
         Responsible Officer stating that no Event of Default has occurred and
         is continuing and that the Borrower (directly or indirectly through a
         Subsidiary) intends and expects to use all or a specified portion of
         the Net Cash Proceeds of an Asset Sale or Recovery Event to acquire
         assets useful in its business.

                  "Reinvestment Prepayment Amount":  with respect to any 
         Reinvestment Event, the Reinvestment Deferred Amount relating thereto
         less any amount expended prior to the relevant Reinvestment Prepayment
         Date to acquire assets useful in the Borrower's business.

                  "Reinvestment Prepayment Date": with respect to any
         Reinvestment Event, the earlier of (a) the date occurring one year
         after such Reinvestment Event and (b) the date on which the Borrower
         shall have determined not to, or shall have otherwise ceased to,
         acquire assets useful in the Borrower's business with all or any
         portion of the relevant Reinvestment Deferred Amount.

<PAGE>
                                                                             20


                  "Reorganization":  with respect to any Multiemployer Plan, the
         condition that such plan is in reorganization within the meaning of
         Section 4241 of ERISA.

                  "Reportable Event":  any of the events set forth in Section 
         4043(b) of ERISA, other than those events as to which the thirty day
         notice period is waived under subsections .27, .28, .29, .30, .31,
         .32, .34 or .35 of PBGC Reg. ss. 4043.

                  "Required Lenders": at any time, the holders of more than 50%
         of (a) until the Closing Date, the Commitments and (b) thereafter, the
         sum of (i) the aggregate unpaid principal amount of the Term Loans
         then outstanding and (ii) the Total Revolving Credit Commitments then
         in effect or, if the Revolving Credit Commitments have been
         terminated, the Total Revolving Extensions of Credit then outstanding.

                  "Required Prepayment Lenders":  the Majority Facility Lenders 
         in respect of each Facility.

                  "Requirement of Law": as to any Person, the Certificate of
         Incorporation and By-Laws or other organizational or governing
         documents of such Person, and any law, treaty, rule or regulation or
         determination of an arbitrator or a court or other Governmental
         Authority, in each case applicable to or binding upon such Person or
         any of its Property or to which such Person or any of its Property is
         subject.

                  "Responsible Officer":  the chief executive officer, 
         president, chief administrative officer or chief financial officer of
         the Borrower, but in any event, with respect to financial matters, the
         chief financial officer, the treasurer and controller of the Borrower.

                  "Restricted Payments":  as defined in Section 7.6.

                  "Revolving Credit Commitment": as to any Lender, the
         obligation of such Lender, if any, to make Revolving Credit Loans and
         participate in Swing Line Loans and Letters of Credit, in an aggregate
         principal and/or face amount not to exceed the amount set forth under
         the heading "Revolving Credit Commitment" opposite such Lender's name
         on Schedule 1 to the Letter Addendum delivered by such Lender, or, as
         the case may be, in the Assignment and Acceptance pursuant to which
         such Lender became a party hereto, as the same may be changed from
         time to time pursuant to the terms hereof. The original amount of the
         Total Revolving Credit Commitments is $70,000,000.

                  "Revolving Credit Commitment Period":  the period from and 
         including the Closing Date to the Revolving Credit Termination Date.

                  "Revolving Credit Lender":  each Lender which has a Revolving 
         Credit Commitment or which is the holder of Revolving Credit Loans.

                  "Revolving Credit Loans":  as defined in Section 2.4.

<PAGE>
                                                                             21


                  "Revolving Credit Percentage": as to any Revolving Credit
         Lender at any time, the percentage which such Lender's Revolving
         Credit Commitment then constitutes of the Total Revolving Credit
         Commitments (or, at any time after the Revolving Credit Commitments
         shall have expired or terminated, the percentage which the aggregate
         principal amount of such Lender's Revolving Credit Loans then
         outstanding constitutes of the aggregate principal amount of the
         Revolving Credit Loans then outstanding).

                  "Revolving Credit Termination Date":  August 17, 2003.

                  "Revolving Extensions of Credit": as to any Revolving Credit
         Lender at any time, an amount equal to the sum of (a) the aggregate
         principal amount of all Revolving Credit Loans made by such Lender
         then outstanding, (b) such Lender's Revolving Credit Percentage of the
         L/C Obligations then outstanding and (c) such Lender's Revolving
         Credit Percentage of the aggregate principal amount of Swing Line
         Loans then outstanding.

                  "Security Documents":  the collective reference to the 
         Guarantee and Collateral Agreement, the Mortgages and all other
         security documents hereafter delivered to the Administrative Agent
         granting a Lien on any Property of any Person to secure the
         obligations and liabilities of any Loan Party under any Loan Document.

                  "Single Employer Plan":  any Plan which is covered by Title IV
         of ERISA, but which is not a Multiemployer Plan.

                  "Solvent": when used with respect to any Person, means that,
         as of any date of determination, (a) the amount of the "present fair
         saleable value" of the assets of such Person will, as of such date,
         exceed the amount of all "liabilities of such Person, contingent or
         otherwise", as of such date, as such quoted terms are determined in
         accordance with applicable federal and state laws governing
         determinations of the insolvency of debtors, (b) the present fair
         saleable value of the assets of such Person will, as of such date, be
         greater than the amount that will be required to pay the liability of
         such Person on its debts as such debts become absolute and matured,
         (c) such Person will not have, as of such date, an unreasonably small
         amount of capital with which to conduct its business, and (d) such
         Person will be able to pay its debts as they mature. For purposes of
         this definition, (i) "debt" means liability on a "claim", and (ii)
         "claim" means any (x) right to payment, whether or not such a right is
         reduced to judgment, liquidated, unliquidated, fixed, contingent,
         matured, unmatured, disputed, undisputed, legal, equitable, secured or
         unsecured or (y) right to an equitable remedy for breach of
         performance if such breach gives rise to a right to payment, whether
         or not such right to an equitable remedy is reduced to judgment,
         fixed, contingent, matured or unmatured, disputed, undisputed, secured
         or unsecured.

                  "Subsidiary": as to any Person, a corporation, partnership,
         limited liability company or other entity of which shares of stock or
         other ownership interests having ordinary voting power (other than
         stock or such other ownership interests having such 

<PAGE>
                                                                             22


         power only by reason of the happening of a contingency) to elect a
         majority of the board of directors or other managers of such
         corporation, partnership or other entity are at the time owned, or the
         management of which is otherwise controlled, directly or indirectly
         through one or more intermediaries, or both, by such Person. Unless
         otherwise qualified, all references to a "Subsidiary" or to
         "Subsidiaries" in this Agreement shall refer to a Subsidiary or
         Subsidiaries of the Borrower.

                  "Subsidiary Guarantor":  each Subsidiary of the Borrower other
         than any Excluded Foreign Subsidiary.

                  "Swing Line Commitment":  the obligation of the Swing Line 
         Lender to make Swing Line Loans pursuant to Section 2.6 in an
         aggregate principal amount at any one time outstanding not to exceed
         $10,000,000.

                  "Swing Line Lender":  Lehman Commercial Paper Inc., in its 
         capacity as the lender of Swing Line Loans.

                  "Swing Line Loans":  as defined in Section 2.6.

                  "Swing Line Participation Amount":  as defined in Section 2.7.

                  "Term Loans":  as defined in Section 2.1.

                  "Term Loan Commitment": as to any Term Loan Lender, the
         obligation of such Lender, if any, to make a Term Loan to the Borrower
         hereunder in a principal amount not to exceed the amount set forth
         under the heading "Term Loan Commitment" opposite such Lender's name
         on Schedule 1 to the Letter Addendum delivered by such Lender, or, as
         the case may be, in the Assignment and Acceptance pursuant to which
         such Lender became a party hereto, as the same may be changed from
         time to time pursuant to the terms hereof. The original aggregate
         amount of the Term Loan Commitments is $230,000,000.

                  "Term Loan Lender":  each Lender which has a Term Loan 
         Commitment or which is the holder of a Term Loan.

                  "Term Loan Percentage": as to any Lender at any time, the
         percentage which such Lender's Term Loan Commitment then constitutes
         of the aggregate Term Loan Commitments (or, at any time after the
         Closing Date, the percentage which the aggregate principal amount of
         such Lender's Term Loans then outstanding constitutes of the aggregate
         principal amount of the Term Loans then outstanding).

                  "Total Revolving Credit Commitments":  at any time, the 
         aggregate amount of the Revolving Credit Commitments then in effect.

<PAGE>
                                                                             23


                  "Total Revolving Extensions of Credit":  at any time, the 
         aggregate amount of the Revolving Extensions of Credit of the
         Revolving Credit Lenders outstanding at such time.

                  "Transferee":  as defined in Section 10.15.

                  "Type":  as to any Loan, its nature as a Base Rate Loan or a 
         Eurodollar Loan.

                  "Underlying Lease":  as defined in Section 4.8.

                  "Uniform Customs":  the Uniform Customs and Practice for 
         Documentary Credits (1993 Revision), International Chamber of Commerce
         Publication No. 500, as the same may be amended from time to time.

                  "Wholly Owned Subsidiary":  as to any Person, any other Person
         all of the Capital Stock of which (other than directors' qualifying
         shares required by law) is owned by such Person directly and/or
         through other Wholly Owned Subsidiaries.

                  "Wholly Owned Subsidiary Guarantor":  any Subsidiary Guarantor
         that is a Wholly Owned Subsidiary of the Borrower.

                  1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto or thereto.

                  (b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Borrower and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP.

                  (c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.

                  (d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.


                   SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

                  2.1 Term Loan Commitments. (a) Subject to the terms and
conditions hereof, each Term Loan Lender severally agrees to make a term loan
(a "Term Loan") to the Borrower on the Closing Date in an amount not to exceed
the amount of the Term Loan Commitment of 

<PAGE>
                                                                             24


such Lender. The Term Loans may from time to time be Eurodollar Loans or Base
Rate Loans, as determined by the Borrower and notified to the Administrative
Agent in accordance with Sections 2.2 and 2.13.

                  2.2 Procedure for Term Loan Borrowing. The Borrower shall
give the Administrative Agent irrevocable notice (which notice must be received
by the Administrative Agent prior to 10:00 A.M., New York City time, one
Business Day prior to the anticipated Closing Date) requesting that the Term
Loan Lenders make the Term Loans on the Closing Date and specifying the amount
to be borrowed. The Term Loans made on the Closing Date shall initially be Base
Rate Loans, and no Term Loan may be converted into or continued as a Eurodollar
Loan prior to the date which is 90 days after the Closing Date, or, if earlier,
the date on which the Syndication Agent completes the syndication of the
Facilities and the entities selected in such syndication process become parties
to this Agreement. Upon receipt of such notice the Administrative Agent shall
promptly notify each Term Loan Lender thereof. Not later than 12:00 Noon, New
York City time, on the Closing Date, each Term Loan Lender shall make available
to the Administrative Agent at the Funding Office an amount in immediately
available funds equal to the Term Loan to be made by such Lender. The
Administrative Agent shall credit to the account of the Borrower on the books
of the Funding Office the aggregate of the amounts made available to the
Administrative Agent by the Term Loan Lenders in immediately available funds.

                  2.3 Repayment of Term Loans. The Term Loan of each Lender
shall mature and be payable in one payment on August 17, 2003.

                  2.4 Revolving Credit Commitments. (a) Subject to the terms
and conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("Revolving Credit Loans") to the Borrower from time to
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding which, when added to such Lender's Revolving
Credit Percentage of the sum of (i) the L/C Obligations then outstanding and
(ii) the aggregate principal amount of the Swing Line Loans then outstanding,
does not exceed the amount of such Lender's Revolving Credit Commitment then in
effect. During the Revolving Credit Commitment Period the Borrower may use the
Revolving Credit Commitments by borrowing, prepaying the Revolving Credit Loans
in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof. The Revolving Credit Loans may from time to time be
Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified
to the Administrative Agent in accordance with Sections 2.5 and 2.13, provided
that no Revolving Credit Loan shall be made as a Eurodollar Loan after the day
that is one month prior to the Revolving Credit Termination Date.

                  (b) The Borrower shall repay all outstanding Revolving Credit
Loans on the Revolving Credit Termination Date.

                  2.5 Procedure for Revolving Credit Borrowing. The Borrower
may borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrower shall give
the Administrative Agent irrevocable notice 

<PAGE>
                                                                             25


(which notice must be received by the Administrative Agent prior to 12:00 Noon,
New York City time, (a) three Business Days prior to the requested Borrowing
Date, in the case of Eurodollar Loans, or (b) one Business Day prior to the
requested Borrowing Date, in the case of Base Rate Loans), specifying (i) the
amount and Type of Revolving Credit Loans to be borrowed, (ii) the requested
Borrowing Date and (iii) in the case of Eurodollar Loans, the respective
amounts of each such Type of Loan and the respective lengths of the initial
Interest Period therefor. Any Revolving Credit Loans made on the Closing Date
shall initially be Base Rate Loans, and no Revolving Credit Loan may be made
as, converted into or continued as a Eurodollar Loan prior to the date which is
90 days after the Closing Date, or, if earlier, the date on which the
Syndication Agent completes the syndication of the Facilities and the entities
selected in such syndication process become parties to this Agreement. Each
borrowing under the Revolving Credit Commitments shall be in an amount equal to
(x) in the case of Base Rate Loans, $1,000,000 or a whole multiple thereof (or,
if the then aggregate Available Revolving Credit Commitments are less than
$1,000,000, such lesser amount) and (y) in the case of Eurodollar Loans,
$5,000,000 or a whole multiple of $1,000,000 in excess thereof; provided, that
the Swing Line Lender may request, on behalf of the Borrower, borrowings under
the Revolving Credit Commitments which are Base Rate Loans in other amounts
pursuant to Section 2.7. Upon receipt of any such notice from the Borrower, the
Administrative Agent shall promptly notify each Revolving Credit Lender
thereof. Each Revolving Credit Lender will make the amount of its pro rata share
of each borrowing available to the Administrative Agent for the account of the
Borrower at the Funding Office prior to 12:00 Noon, New York City time, on the
Borrowing Date requested by the Borrower in funds immediately available to the
Administrative Agent. Such borrowing will then be made available to the
Borrower by the Administrative Agent crediting the account of the Borrower on
the books of the Funding Office with the aggregate of the amounts made
available to the Administrative Agent by the Revolving Credit Lenders and in
like funds as received by the Administrative Agent.

                  2.6 Swing Line Commitment. (a) Subject to the terms and
conditions hereof, the Swing Line Lender agrees to make a portion of the credit
otherwise available to the Borrower under the Revolving Credit Commitments from
time to time during the Revolving Credit Commitment Period by making swing line
loans ("Swing Line Loans") to the Borrower; provided that (i) the aggregate
principal amount of Swing Line Loans outstanding at any time shall not exceed
the Swing Line Commitment then in effect (notwithstanding that the Swing Line
Loans outstanding at any time, when aggregated with the Swing Line Lender's
other outstanding Revolving Credit Loans hereunder, may exceed the Swing Line
Commitment then in effect) and (ii) the Borrower shall not request, and the
Swing Line Lender shall not make, any Swing Line Loan if, after giving effect
to the making of such Swing Line Loan, the aggregate amount of the Available
Revolving Credit Commitments would be less than zero. During the Revolving
Credit Commitment Period, the Borrower may use the Swing Line Commitment by
borrowing, repaying and reborrowing, all in accordance with the terms and
conditions hereof. Swing Line Loans shall be Base Rate Loans only.

                  (b) The Borrower shall repay all outstanding Swing Line Loans
on the Revolving Credit Termination Date.

<PAGE>
                                                                             26


                  2.7 Procedure for Swing Line Borrowing; Refunding of Swing
Line Loans. (a) Whenever the Borrower desires that the Swing Line Lender make
Swing Line Loans it shall give the Swing Line Lender irrevocable telephonic
notice confirmed promptly in writing (which telephonic notice must be received
by the Swing Line Lender not later than 1:00 P.M., New York City time, on the
proposed Borrowing Date), specifying (i) the amount to be borrowed and (ii) the
requested Borrowing Date (which shall be a Business Day during the Revolving
Credit Commitment Period). Each borrowing under the Swing Line Commitment shall
be in an amount equal to $500,000 or a whole multiple of $100,000 in excess
thereof. Not later than 3:00 P.M., New York City time, on the Borrowing Date
specified in a notice in respect of Swing Line Loans, the Swing Line Lender
shall make available to the Administrative Agent at the Funding Office an
amount in immediately available funds equal to the amount of the Swing Line
Loan to be made by the Swing Line Lender. The Administrative Agent shall make
the proceeds of such Swing Line Loan available to the Borrower on such
Borrowing Date by depositing such proceeds in the account of the Borrower with
the Administrative Agent on such Borrowing Date in immediately available funds.

                  (b) The Swing Line Lender, at any time and from time to time
in its sole and absolute discretion may, on behalf of the Borrower (which
hereby irrevocably directs the Swing Line Lender to act on its behalf), on one
Business Day's notice given by the Swing Line Lender no later than 12:00 Noon,
New York City time, request each Revolving Credit Lender to make, and each
Revolving Credit Lender hereby agrees to make, a Revolving Credit Loan, in an
amount equal to such Revolving Credit Lender's Revolving Credit Percentage of
the aggregate amount of the Swing Line Loans (the "Refunded Swing Line Loans")
outstanding on the date of such notice, to repay the Swing Line Lender. Each
Revolving Credit Lender shall make the amount of such Revolving Credit Loan
available to the Administrative Agent at the Funding Office in immediately
available funds, not later than 10:00 A.M., New York City time, one Business
Day after the date of such notice. The proceeds of such Revolving Credit Loans
shall be immediately made available by the Administrative Agent to the Swing
Line Lender for application by the Swing Line Lender to the repayment of the
Refunded Swing Line Loans. The Borrower irrevocably authorizes the Swing Line
Lender to charge the Borrower's accounts with the Administrative Agent (up to
the amount available in each such account) in order to immediately pay the
amount of such Refunded Swing Line Loans to the extent amounts received from
the Revolving Credit Lenders are not sufficient to repay in full such Refunded
Swing Line Loans.

                  (c) If prior to the time a Revolving Credit Loan would have
otherwise been made pursuant to Section 2.7(b), one of the events described in
Section 8(f) shall have occurred and be continuing with respect to the Borrower
or if for any other reason, as determined by the Swing Line Lender in its sole
discretion, Revolving Credit Loans may not be made as contemplated by Section
2.7(b), each Revolving Credit Lender shall, on the date such Revolving Credit
Loan was to have been made pursuant to the notice referred to in Section 2.7(b)
(the "Refunding Date"), purchase for cash an undivided participating interest
in the then outstanding Swing Line Loans by paying to the Swing Line Lender an
amount (the "Swing Line Participation Amount") equal to (i) such Revolving
Credit Lender's Revolving Credit Percentage times (ii) the sum of the 

<PAGE>
                                                                             27


aggregate principal amount of Swing Line Loans then outstanding which were to
have been repaid with such Revolving Credit Loans.

                  (d) Whenever, at any time after the Swing Line Lender has
received from any Revolving Credit Lender such Lender's Swing Line
Participation Amount, the Swing Line Lender receives any payment on account of
the Swing Line Loans, the Swing Line Lender will distribute to such Lender its
Swing Line Participation Amount (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which such Lender's
participating interest was outstanding and funded and, in the case of principal
and interest payments, to reflect such Lender's pro rata portion of such
payment if such payment is not sufficient to pay the principal of and interest
on all Swing Line Loans then due); provided, however, that in the event that
such payment received by the Swing Line Lender is required to be returned, such
Revolving Credit Lender will return to the Swing Line Lender any portion
thereof previously distributed to it by the Swing Line Lender.

                  (e) Each Revolving Credit Lender's obligation to make the
Loans referred to in Section 2.7(b) and to purchase participating interests
pursuant to Section 2.7(c) shall be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Revolving Credit
Lender or the Borrower may have against the Swing Line Lender, the Borrower or 
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower; (iv) any breach of this Agreement or
any other Loan Document by the Borrower, any other Loan Party or any other
Revolving Credit Lender; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.

                  2.8 Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of the appropriate Revolving Credit Lender or Term Loan Lender, as the
case may be, (i) the then unpaid principal amount of each Revolving Credit Loan
of such Revolving Credit Lender on the Revolving Credit Termination Date (or
such earlier date on which the Loans become due and payable pursuant to Section
8), (ii) the then unpaid principal amount of each Swing Line Loan of such Swing
Line Lender on the Revolving Credit Termination Date (or such earlier date on
which the Loans become due and payable pursuant to Section 8) and (iii) the
principal amount of each Term Loan of such Term Loan Lender as set forth in
Section 2.3 (or on such earlier date on which the Loans become due and payable
pursuant to Section 8). The Borrower hereby further agrees to pay interest on
the unpaid principal amount of the Loans from time to time outstanding from the
date hereof until payment in full thereof at the rates per annum, and on the
dates, set forth in Section 2.15.

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

<PAGE>
                                                                             28


                  (c) The Administrative Agent, on behalf of the Borrower,
shall maintain the Register pursuant to Section 10.6(e), and a subaccount
therein for each Lender, in which shall be recorded (i) the amount of each Loan
made hereunder and any Note evidencing such Loan, the Type thereof and each
Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) both the amount of any sum received by the
Administrative Agent hereunder from the Borrower and each Lender's share
thereof.

                  (d) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.8(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made
to such Borrower by such Lender in accordance with the terms of this Agreement.

                  (e) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing any Term Loans,
Revolving Credit Loans or Swing Line Loans, as the case may be, of such Lender,
substantially in the forms of Exhibit G-1, G-2 or G-3, respectively, with
appropriate insertions as to date and principal amount.

                  2.9 Commitment Fees, etc. (a) The Borrower agrees to pay to
the Administrative Agent for the account of each Revolving Credit Lender a
commitment fee for the period from and including the Closing Date to the last
day of the Revolving Credit Commitment Period, computed at the Commitment Fee
Rate on the average daily amount of the Available Revolving Credit Commitment
of such Lender during the period for which payment is made, payable quarterly
in arrears on the last day of each March, June, September and December and on
the Revolving Credit Termination Date, commencing on the first of such dates to
occur after the Closing Date.

                  (b) The Borrower agrees to pay to the Agents the fees in the
amounts and on the dates agreed to in writing by the Borrower and the Agents.

                  2.10 Termination or Reduction of Revolving Credit
Commitments. The Borrower shall have the right, upon not less than three
Business Days' notice to the Administrative Agent, to terminate the Revolving
Credit Commitments or, from time to time, to reduce the amount of the Revolving
Credit Commitments; provided that no such termination or reduction of Revolving
Credit Commitments shall be permitted if, after giving effect thereto and to
any prepayments of the Revolving Credit Loans and Swing Line Loans made on the
effective date thereof, the Total Revolving Extensions of Credit would exceed
the Total Revolving Credit Commitments. Any such reduction shall be in an
amount equal to $1,000,000, or a whole multiple thereof, and shall reduce
permanently the Revolving Credit Commitments then in effect.

<PAGE>
                                                                             29


                  2.11 Optional Prepayments. The Borrower may at any time and
from time to time prepay the Loans, in whole or in part, upon irrevocable
notice delivered to the Administrative Agent at least three Business Days prior
thereto in the case of Eurodollar Loans and at least one Business Day prior
thereto in the case of Base Rate Loans, which notice shall specify the date and
amount of prepayment and whether the prepayment is of Eurodollar Loans or Base
Rate Loans; provided, that if a Eurodollar Loan is prepaid on any day other
than the last day of the Interest Period applicable thereto, the Borrower shall
also pay any amounts owing pursuant to Section 2.21; and provided, further that
Swing Line Loans may be prepaid on the same day as such notice. Upon receipt of
any such notice the Administrative Agent shall promptly notify each relevant
Lender thereof. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with
(except in the case of Revolving Credit Loans which are Base Rate Loans and
Swing Line Loans) accrued interest to such date on the amount prepaid. Partial
prepayments of Term Loans and Revolving Credit Loans shall be in an aggregate
principal amount of $1,000,000 or a whole multiple thereof. Partial prepayments
of Swing Line Loans shall be in an aggregate principal amount of $100,000 or a
whole multiple thereof. Prepayments of the Term Loans shall, subject to the
right of each Term Loan Lender to decline all or any portion of any optional
prepayment applicable thereto pursuant to Section 2.18(d), be in the amounts
set forth below during the periods set forth below:


                                                     Prepayment Amount
                                                     (expressed as a % of
Period                                                Principal Amount)
------                                              ----------------------

August 17, 1998 to August 17, 1999                          102%

August 18, 1999 to February 18, 2000                        101%

February 19, 2000 and Thereafter                            100%


                  2.12 Mandatory Prepayments and Commitment Reductions. (a)
Unless the Required Prepayment Lenders shall otherwise agree, if any Capital
Stock shall be issued, or Indebtedness incurred, by the Borrower or any of its
Subsidiaries (excluding any Indebtedness incurred in accordance with Section
7.2 and excluding Capital Lease Obligations), an amount equal to 50% of the Net
Cash Proceeds thereof, in the case of any Capital Stock issued, and an amount
equal to 100% of the Net Cash Proceeds thereof, in the case of any Indebtedness
incurred, shall be applied on the date of such issuance or incurrence toward
the prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.12(e).

                  (b) Unless the Required Prepayment Lenders shall otherwise
agree, if on any date the Borrower or any of its Subsidiaries shall receive Net
Cash Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment
Notice shall be delivered in respect thereof as set forth in clause (ii) below,
such Net Cash Proceeds shall be applied on the next Business Day toward the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.12(d); provided, that, notwithstanding
the foregoing, (i) the aggregate Net Cash Proceeds of (A) Asset Sales up to
$5,000,000 in any fiscal year of the 

<PAGE>
                                                                             30


Borrower and (B) Recovery Events may be excluded from the foregoing requirement
pursuant to a Reinvestment Notice in any fiscal year of the Borrower and (ii)
on each Reinvestment Prepayment Date, an amount equal to the Reinvestment
Prepayment Amount with respect to the relevant Reinvestment Event shall be
applied toward the prepayment of the Term Loans and the reduction of the
Revolving Credit Commitments as set forth in Section 2.12(e).

                  (c) Unless the Required Prepayment Lenders shall otherwise
agree, if, for any fiscal year of the Borrower commencing with the fiscal year
ending March 27, 1999, there shall be Excess Cash Flow, the Borrower shall, on
the relevant Excess Cash Flow Application Date, apply the ECF Percentage of
such Excess Cash Flow toward the prepayment of the Term Loans and the reduction
of the Revolving Credit Commitments as set forth in Section 2.12(c). Each such
prepayment and commitment reduction shall be made on a date (an "Excess Cash
Flow Application Date") no later than five days after the earlier of (i) the
date on which the financial statements of the Borrower referred to in Section
6.1(a), for the fiscal year with respect to which such prepayment is made, are
required to be delivered to the Lenders and (ii) the date such financial
statements are actually delivered.

                  (d) If, at any time during the Revolving Credit Commitment
Period, the Total Revolving Extensions of Credit exceed the amount of the Total
Revolving Credit Commitments, the Borrower shall, without notice of demand,
immediately prepay the Revolving Credit Loans and/or Swing Line Loans in an
aggregate principal amount equal to such excess, together with interest accrued
to the date of such payment or prepayment.

                  (e) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to this Section 2.12 shall be applied,
first, to the prepayment of the Term Loans and, second, to reduce permanently
the Revolving Credit Commitments. Any such reduction of the Revolving Credit
Commitments shall be accompanied by prepayment of the Revolving Credit Loans
and/or Swing Line Loans to the extent, if any, that the Total Revolving
Extensions of Credit exceed the amount of the Total Revolving Credit
Commitments as so reduced, provided that if the aggregate principal amount of
Revolving Credit Loans and Swing Line Loans then outstanding is less than the
amount of such excess (because L/C Obligations constitute a portion thereof),
the Borrower shall, to the extent of the balance of such excess, replace
outstanding Letters of Credit and/or deposit an amount in cash in a cash
collateral account established with the Administrative Agent for the benefit of
the Lenders on terms and conditions satisfactory to the Administrative Agent.
The application of any prepayment pursuant to this Section 2.12 shall be made
first to Base Rate Loans and second to Eurodollar Loans. Each prepayment of the
Loans under this Section 2.12 (except in the case of Revolving Credit Loans
that are Base Rate Loans and Swing Line Loans) shall be accompanied by accrued
interest to the date of such prepayment on the amount prepaid. Prepayments of
the Term Loans (except with respect to prepayments pursuant to Section 2.12
(c)) shall, subject to the right of each Term Loan Lender to decline all or any
portion of any mandatory prepayment applicable thereto pursuant to Section
2.18(d), be in the amounts set forth below during the periods set forth below:

<PAGE>
                                                                             31


                                                          Prepayment Amount
                                                          (expressed as a % of
Period                                                     Principal Amount)
------                                                    --------------------

August 17, 1998 to August 17, 1999                               102%

August 18, 1999 to February 18, 2000                             101%

February 19, 2000 and Thereafter                                 100%


                  2.13 Conversion and Continuation Options. (a) The Borrower
may elect from time to time to convert Eurodollar Loans to Base Rate Loans by
giving the Administrative Agent at least two Business Days' prior irrevocable
notice of such election, provided that any such conversion of Eurodollar Loans
may only be made on the last day of an Interest Period with respect thereto.
The Borrower may elect from time to time to convert Base Rate Loans to
Eurodollar Loans by giving the Administrative Agent at least three Business
Days' prior irrevocable notice of such election (which notice shall specify the
length of the initial Interest Period therefor), provided that no Base Rate
Loan under a particular Facility may be converted into a Eurodollar Loan (i)
when any Event of Default has occurred and is continuing and the Administrative
Agent or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such conversions or
(ii) after the date that is one month prior to the final scheduled termination
or maturity date of such Facility. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.

                  (b) Any Eurodollar Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving irrevocable notice to the Administrative Agent, in accordance
with the applicable provisions of the term "Interest Period" set forth in
Section 1.1, of the length of the next Interest Period to be applicable to such
Loans, provided that no Eurodollar Loan under a particular Facility may be
continued as such (i) when any Event of Default has occurred and is continuing
and the Administrative Agent has or the Majority Facility Lenders in respect of
such Facility have determined in its or their sole discretion not to permit
such continuations or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Facility, and provided, further,
that if the Borrower shall fail to give any required notice as described above
in this paragraph or if such continuation is not permitted pursuant to the
preceding proviso such Loans shall be automatically converted to Base Rate
Loans on the last day of such then expiring Interest Period. Upon receipt of
any such notice the Administrative Agent shall promptly notify each relevant
Lender thereof.

                  2.14 Minimum Amounts and Maximum Number of Eurodollar
Tranches. Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions, continuations and optional prepayments of Eurodollar
Loans hereunder and all selections of Interest Periods hereunder shall be in
such amounts and be made pursuant to such elections so that, (a) after giving
effect thereto, the aggregate principal amount of the Eurodollar Loans
comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole
multiple of 

<PAGE>
                                                                             32


$1,000,000 in excess thereof and (b) no more than ten Eurodollar
Tranches shall be outstanding at any one time.

                  2.15 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such
day plus the Applicable Margin.

                  (b) Each Base Rate Loan shall bear interest at a rate per
annum equal to the Base Rate plus the Applicable Margin.

                  (c) (i) If all or a portion of the principal amount of any
Loan or Reimbursement Obligation shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), all outstanding Loans and
Reimbursement Obligations (whether or not overdue) shall bear interest at a
rate per annum which is equal to (x) in the case of the Loans, the rate that
would otherwise be applicable thereto pursuant to the foregoing provisions of
this Section 2.15 plus 2%, or (y) in the case of Reimbursement Obligations, the
rate applicable to Base Rate Loans under the Revolving Credit Facility plus 2%,
and (ii) if all or a portion of any interest payable on any Loan or
Reimbursement Obligation or any commitment fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum equal to the rate then applicable to Base Rate Loans under the
relevant Facility plus 2% (or, in the case of any such other amounts that do
not relate to a particular Facility, the rate then applicable to Base Rate
Loans under the Revolving Credit Facility plus 2%), in each case, with respect
to clauses (i) and (ii) above, from the date of such non-payment until such
amount is paid in full (as well after as before judgment).

                  (d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c) of this
Section 2.15 shall be payable from time to time on demand.

                  2.16 Computation of Interest and Fees. (a) Interest, fees and
commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed with respect to Eurodollar Loans and
on the basis of a 365- (or 366-, as the case may be) day year for the actual
days elapsed with respect to Base Rate Loans. The Administrative Agent shall as
soon as practicable notify the Borrower and the relevant Lenders of each
determination of a Eurodollar Rate. Any change in the interest rate on a Loan
resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of the effective date
and the amount of each such change in interest rate.

                  (b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the Borrower,
deliver to the Borrower a statement showing the quotations used by the
Administrative Agent in determining any interest rate pursuant to Section
2.15(a).

<PAGE>
                                                                             33


                  2.17  Inability to Determine Interest Rate.  If prior to the 
first day of any Interest Period:

                  (a) the Administrative Agent shall have determined (which
         determination shall be conclusive and binding upon the Borrower) that,
         by reason of circumstances affecting the relevant market, adequate and
         reasonable means do not exist for ascertaining the Eurodollar Rate for
         such Interest Period, or

                  (b) the Administrative Agent shall have received notice from
         the Majority Facility Lenders in respect of the relevant Facility that
         the Eurodollar Rate determined or to be determined for such Interest
         Period will not adequately and fairly reflect the cost to such Lenders
         (as conclusively certified by such Lenders) of making or maintaining
         their affected Loans during such Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to
the Borrower and the relevant Lenders as soon as practicable thereafter. If
such notice is given (x) any Eurodollar Loans under the relevant Facility
requested to be made on the first day of such Interest Period shall be made as
Base Rate Loans, (y) any Loans under the relevant Facility that were to have
been converted on the first day of such Interest Period to Eurodollar Loans
shall be continued as Base Rate Loans and (z) any outstanding Eurodollar Loans
under the relevant Facility shall be converted, on the first day of such
Interest Period, to Base Rate Loans. Until such notice has been withdrawn by
the Administrative Agent, no further Eurodollar Loans under the relevant
Facility shall be made or continued as such, nor shall the Borrower have the
right to convert Loans under the relevant Facility to Eurodollar Loans.

                  2.18 Pro Rata Treatment and Payments. (a) Each borrowing by
the Borrower from the Lenders hereunder, each payment by the Borrower on
account of any commitment fee and any reduction of the Commitments of the
Lenders shall be made pro rata according to the respective Term Loan
Percentages or Revolving Credit Percentages, as the case may be, of the
relevant Lenders. Each payment (other than prepayments) in respect of principal
or interest in respect of the Loans, each payment in respect of fees payable
hereunder, and each payment in respect of Reimbursement Obligations, shall be
applied to the amounts of such obligations owing to the Lenders pro rata
according to the respective amounts then due and owing to the Lenders.

                  (b) Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Term Loans shall be made pro
rata according to the respective outstanding principal amounts of the Term
Loans then held by the Term Loan Lenders (except as otherwise provided in
Section 2.18(d)). Amounts prepaid on account of the Term Loans may not be
reborrowed.

                  (c) Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Revolving Credit Loans shall be
made pro rata according to the respective outstanding principal amounts of the
Revolving Credit Loans then held by the Revolving Credit Lenders.

<PAGE>
                                                                             34


                  (d) Notwithstanding anything to the contrary in Sections
2.11, 2.12 or 2.18, each Term Loan Lender may, at its option, decline all or
any portion of any partial prepayment applicable to the Term Loans of such
Lender; accordingly, with respect to the amount of any prepayment described in
Section 2.11 or 2.12 that is allocated to Term Loans (such amounts, the
"Prepayment Amount"), the Borrower will, in the case of any prepayment required
to be made pursuant to Section 2.11 or 2.12, in lieu of applying such amount to
the prepayment of Term Loans, on the date specified in Section 2.11 or 2.12 for
such prepayment, give the Administrative Agent telephonic notice (promptly
confirmed in writing) requesting that the Administrative Agent prepare and
provide to each Term Loan Lender a notice (each, a "Prepayment Option Notice")
as described below. As promptly as practicable after receiving such notice from
the Borrower, the Administrative Agent will send to each Term Loan Lender a
Prepayment Option Notice, which shall be in the form of Exhibit H, and shall
include an offer by the Borrower to prepay on the date (each a "Prepayment
Date") that is 10 Business Days after the date of the Prepayment Option Notice,
the relevant Term Loans of such Lender by an amount equal to the portion of the
Prepayment Amount indicated in such Lender's Prepayment Option Notice as being
applicable to such Lender's Term Loans and such further amount, if any, as may
be available to additionally prepay such Lender's Term Loans from the portion
of the Prepayment Amount not accepted by the Accepting Lenders. On the
Prepayment Date, (i) the Borrower shall pay to the Administrative Agent the
aggregate amount necessary to prepay that portion of the outstanding relevant
Term Loans in respect of which Lenders have accepted prepayment as described
above (such Lenders, the "Accepting Lenders"), and such amount shall be applied
to reduce the Prepayment Amounts with respect to each Accepting Lender, (ii)
the Borrower shall pay to the Administrative Agent an amount equal to the
portion of the Prepayment Amount not accepted by the Accepting Lenders
(excluding such amount required to be prepaid pursuant to Section 2.12(c)), and
such amount shall be applied, first, to prepay the Term Loans of each Accepting
Lender, pro rata, agreeing to accept prepayment of such additional amount as
described above and, second, to the permanent reduction of the Revolving Credit
Commitments, and (iii) the Borrower shall be entitled to retain the remaining
portion of the Prepayment Amount not accepted by the Accepting Lenders.

                  (e) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 1:00 p.m., New York City time, on the due date thereof to the Administrative
Agent, for the account of the Lenders, at the Payment Office, in Dollars and in
immediately available funds. The Administrative Agent shall distribute such
payments to the Lenders promptly upon receipt in like funds as received. If any
payment hereunder (other than payments on the Eurodollar Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day. If any payment on a Eurodollar Loan becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day. In
the case of any extension of any payment of principal pursuant to the preceding
two sentences, interest thereon shall be payable at the then applicable rate
during such extension.

<PAGE>
                                                                             35


                  (f) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make
the amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to
the Administrative Agent by the required time on the Borrowing Date therefor,
such Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available
to the Administrative Agent. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this paragraph
shall be conclusive in the absence of manifest error. If such Lender's share of
such borrowing is not made available to the Administrative Agent by such Lender
within three Business Days of such Borrowing Date, the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to Base Rate Loans under the relevant Facility, on demand,
from the Borrower.

                  (g) Unless the Administrative Agent shall have been notified
in writing by the Borrower prior to the date of any payment being made
hereunder that the Borrower will not make such payment to the Administrative
Agent, the Administrative Agent may assume that the Borrower is making such
payment, and the Administrative Agent may, but shall not be required to, in
reliance upon such assumption, make available to the Lenders their respective
pro rata shares of a corresponding amount. If such payment is not made to the
Administrative Agent by the Borrower within three Business Days of such
required date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or any Lender
against the Borrower.

                  2.19 Requirements of Law. (a) If the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof or compliance by any Lender with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof:

                         (i) shall subject any Lender to any tax of any kind
         whatsoever with respect to this Agreement, any Letter of Credit, any
         Application or any Eurodollar Loan made by it, or change the basis of
         taxation of payments to such Lender in respect thereof (except for
         Non-Excluded Taxes covered by Section 2.20 and changes in the rate of
         taxes based on or measured by net income and franchise taxes imposed
         in lieu thereof of such Lender);

                        (ii) shall impose, modify or hold applicable any
         reserve, special deposit, compulsory loan or similar requirement
         against assets held by, deposits or other liabilities in or for the
         account of, advances, loans or other extensions of credit by, or any
         other 

<PAGE>
                                                                             36


         acquisition of funds by, any office of such Lender which is not
         otherwise included in the determination of the Eurodollar Rate
         hereunder; or

                       (iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes
entitled to claim any additional amounts pursuant to this Section 2.19, it
shall promptly notify the Borrower (with a copy to the Administrative Agent) of
the event by reason of which it has become so entitled.

                  (b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter
of Credit to a level below that which such Lender or such corporation could
have achieved but for such adoption, change or compliance (taking into
consideration such Lender's or such corporation's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time, after submission by such Lender to the Borrower (with a copy to
the Administrative Agent) of a written request therefor, the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
for such reduction.

                  (c) A certificate as to any additional amounts payable
pursuant to this Section 2.19 submitted by any Lender to the Borrower (with a
copy to the Administrative Agent) shall be conclusive in the absence of
manifest error. The obligations of the Borrower pursuant to this Section 2.19
shall survive the termination of this Agreement and the payment of the Loans
and all other amounts payable hereunder.

                  2.20 Taxes. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding taxes based on or measured by net income and franchise
taxes (imposed in lieu thereof) imposed on any Agent or any Lender as a result
of a present or former connection between such Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from such Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document). If any such non-excluded
taxes, levies, imposts, duties, charges, 

<PAGE>
                                                                             37


fees, deductions or withholdings ("Non-Excluded Taxes") or Other Taxes are
required to be withheld from any amounts payable to any Agent or any Lender
hereunder, the amounts so payable to such Agent or such Lender shall be
increased to the extent necessary to yield to such Agent or such Lender (after
payment of all Non- Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender with respect to any
Non-Excluded Taxes (i) that are attributable to such Lender's failure to comply
with the requirements of paragraph (d) or paragraph (e) of this Section 2.20 or
(ii) to the extent that the obligation to withhold amounts with respect to
United States federal withholding tax existed on the date such Lender became a
party to this Agreement (or, in the case of a Participant, on the date such
Participant became a Participant hereunder) or, with respect to payments to a
New Lending Office, the date such Lender designated such New Lending Office
with respect to a Loan, except to the extent that such Lender's assignor (if
any) was entitled, at the time of assignment or such Lender was entitled at the
time the New Lending Office was designated, to receive additional amounts from
the Borrower with respect to such Non-Excluded Taxes pursuant to this Section
2.20(a).

                  (b) In addition, the Borrower shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.

                  (c) Whenever any Non-Excluded Taxes or Other Taxes are
payable by the Borrower, as promptly as possible thereafter the Borrower shall
send to the Administrative Agent for the account of the relevant Agent or
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Agents the required receipts or other
required documentary evidence, the Borrower shall indemnify the Administrative
Agent and the Lenders for any incremental taxes, interest or penalties that may
become payable by any Agent or any Lender as a result of any such failure. The
agreements in this Section 2.20 shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.

                  (d) Each Lender (or Transferee) that is not a United States
person as defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender")
shall deliver to the Borrower and the Administrative Agent (or, in the case of
a Participant, to the Lender from which the related participation shall have
been purchased) (x) two copies of either U.S. Internal Revenue Service Form
1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption from
U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with
respect to payments of "portfolio interest" a statement substantially in the
form of Exhibit I and a Form W-8, or any subsequent versions thereof or
successors thereto properly completed and duly executed by such Non-U.S. Lender
claiming complete exemption from, or a reduced rate of, U.S. federal
withholding tax on all payments by the Borrower under this Agreement and the
other Loan Documents and (y) any other related documents reasonably requested
by the Borrower. Such forms shall be delivered by each Non-U.S. Lender on or
before the date it becomes a party to this Agreement (or, in the case of any
Participant, on or before the date such Participant purchases the related
participation) and on or before the date, if any, such Non-U.S. Lender changes
its 

<PAGE>
                                                                             38


applicable lending office by designating a different lending office (a "New
Lending Office"). In addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered
by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the
Borrower at any time it determines that it is no longer in a position to
provide any previously delivered certificate to the Borrower (or any other form
of certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall
not be required to deliver any form pursuant to this paragraph that such
Non-U.S. Lender is not legally able to deliver.

                  (e) A Lender that is entitled to an exemption from or
reduction of non-U.S. withholding tax under the law of the jurisdiction in
which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), at the time or times
prescribed by applicable law or reasonably requested by the Borrower, such
properly completed and executed documentation prescribed by applicable law as
will permit such payments to be made without withholding or at a reduced rate,
provided that such Lender is legally entitled to complete, execute and deliver
such documentation and in such Lender's reasonable judgment such completion,
execution or submission would not materially prejudice the legal position of
such Lender.

                  (f) If any Agent or any Lender determines that it has
received a refund in respect of any Non-Excluded Taxes or Other Taxes as to
which indemnification has been paid by the Borrower pursuant to Section 2.20,
it shall promptly remit such refund (including any interest) to the Borrower,
net of all out-of-pocket expenses of such Agent or such Lender; provided,
however, that the Borrower, upon the request of such Agent or such Lender,
agrees promptly to return such refund (plus any interest) to such party in the
event such party is required to repay such refund to the relevant taxing
authority requiring prepayment or such refund. Such Agent or Lender shall
provide the Borrower with a copy of any notice or assessment from the relevant
taxing authority (deleting any confidential information contained therein)
requiring repayment of such refund.

                  2.21 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment of Eurodollar
Loans on a day which is not the last day of an Interest Period with respect
thereto. Such indemnification may include an amount equal to the excess, if
any, of (i) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to
the last day of such Interest Period (or, in the case of a failure to borrow,
convert or continue, the Interest Period that would have commenced on the date
of such failure) in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Applicable Margin included
therein, if 

<PAGE>
                                                                             39


any) over (ii) the amount of interest (as reasonably determined by
such Lender) which would have accrued to such Lender on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market. A certificate as to any amounts payable pursuant
to this Section 2.21 submitted to the Borrower by any Lender shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.

                  2.22 Illegality. Notwithstanding any other provision herein,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be cancelled and (b) such Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect
to such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of
the then current Interest Period with respect thereto, the Borrower shall pay
to such Lender such amounts, if any, as may be required pursuant to Section
2.21.

                  2.23 Change of Lending Office. Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of Section 2.19 or
2.20(a) with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the good faith judgment of such Lender,
cause such Lender and its lending office(s) to suffer no economic, legal or
regulatory disadvantage, and provided, further, that nothing in this Section
2.23 shall affect or postpone any of the obligations of any Borrower or the
rights of any Lender pursuant to Section 2.19 or 2.20(a).


                          SECTION 3. LETTERS OF CREDIT

                  3.1 L/C Commitment. (a) Subject to the terms and conditions
hereof, the Issuing Lender, in reliance on the agreements of the other
Revolving Credit Lenders set forth in Section 3.4(a), agrees to issue letters
of credit ("Letters of Credit") for the account of the Borrower on any Business
Day during the Revolving Credit Commitment Period in such form as may be
approved from time to time by the Issuing Lender; provided that the Issuing
Lender shall have no obligation to issue any Letter of Credit if, after giving
effect to such issuance, (i) the L/C Obligations would exceed the L/C
Commitment or (ii) the aggregate amount of the Available Revolving Credit
Commitments would be less than zero. Each Letter of Credit shall (i) be
denominated in Dollars and (ii) expire no later than the earlier of (x) the
first anniversary of its date of issuance and (y) the date which is three
Business Days prior to the Revolving Credit Termination Date, provided that any
Letter of Credit with a one-year term may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date
referred to in clause (y) above).

<PAGE>
                                                                             40


                  (b) Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
New York.

                  (c) The Issuing Lender shall not at any time be obligated to
issue any Letter of Credit hereunder if such issuance would conflict with, or
cause the Issuing Lender or any L/C Participant to exceed any limits imposed
by, any applicable Requirement of Law.

                  3.2 Procedure for Issuance of Letter of Credit. The Borrower
may from time to time request that the Issuing Lender issue a Letter of Credit
by delivering to the Issuing Lender at its address for notices specified herein
an Application therefor, completed to the satisfaction of the Issuing Lender,
and such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days but no later than five
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed to by the Issuing Lender and the Borrower. The Issuing
Lender shall furnish a copy of such Letter of Credit to the Borrower promptly
following the issuance thereof. The Issuing Lender shall promptly furnish to
the Administrative Agent, which shall in turn promptly furnish to the Lenders,
notice of the issuance of each Letter of Credit (including the amount thereof).

                  3.3 Fees and Other Charges. (a) The Borrower shall pay a fee
on the daily average undrawn amount of all outstanding Letters of Credit at a
per annum rate equal to the Applicable Margin then in effect with respect to
Eurodollar Loans under the Revolving Credit Facility shared ratably among the
Revolving Credit Lenders and payable quarterly in arrears on each L/C Fee
Payment Date after the issuance date. In addition, the Borrower shall pay to
the Issuing Lender for its own account a fronting fee of 1/8 of 1% per annum,
payable quarterly in arrears on each L/C Fee Payment Date after the issuance
date.

                  (b) In addition to the foregoing fees, the Borrower shall pay
or reimburse the Issuing Lender for such normal and customary costs and
expenses as are incurred or charged by the Issuing Lender in issuing,
negotiating, effecting payment under, amending or otherwise administering any
Letter of Credit.

                  3.4 L/C Participations. (a) The Issuing Lender irrevocably
agrees to grant and hereby grants to each L/C Participant, and, to induce the
Issuing Lender to issue Letters of Credit hereunder, each L/C Participant
irrevocably agrees to accept and purchase and hereby accepts and purchases from
the Issuing Lender, on the terms and conditions hereinafter stated, for such
L/C Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Percentage in the Issuing Lender's obligations
and rights under each Letter of Credit issued hereunder and the amount of each
draft paid by the Issuing Lender thereunder. Each L/C Participant
unconditionally and irrevocably agrees with the Issuing Lender that, if a 

<PAGE>
                                                                             41


draft is paid under any Letter of Credit for which the Issuing Lender is not
reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at
the Issuing Lender's address for notices specified herein an amount equal to
such L/C Participant's Revolving Credit Percentage of the amount of such draft,
or any part thereof, which is not so reimbursed.

                  (b) If any amount required to be paid by any L/C Participant
to the Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under any Letter of Credit is
paid to the Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to the Issuing Lender on demand
an amount equal to the product of (i) such amount, times (ii) the daily average
Federal Funds Effective Rate during the period from and including the date such
payment is required to the date on which such payment is immediately available
to the Issuing Lender, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360. If any such amount required to be paid by any L/C Participant pursuant to
Section 3.4(a) is not made available to the Issuing Lender by such L/C
Participant within three Business Days after the date such payment is due, the
Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to Base Rate Loans under the Revolving Credit
Facility. A certificate of the Issuing Lender submitted to any L/C Participant
with respect to any amounts owing under this Section 3.4 shall be conclusive in
the absence of manifest error.

                  (c) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C Participant
its pro rata share of such payment in accordance with Section 3.4(a), the
Issuing Lender receives any payment related to such Letter of Credit (whether
directly from the Borrower or otherwise, including proceeds of collateral
applied thereto by the Issuing Lender), or any payment of interest on account
thereof, the Issuing Lender will distribute to such L/C Participant its pro
rata share thereof; provided, however, that in the event that any such payment
received by the Issuing Lender shall be required to be returned by the Issuing
Lender, such L/C Participant shall return to the Issuing Lender the portion
thereof previously distributed by the Issuing Lender to it.

                  3.5 Reimbursement Obligation of the Borrower. The Borrower
agrees to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies the Borrower of the date and amount of a draft presented under any
Letter of Credit and paid by the Issuing Lender for the amount of (a) such
draft so paid and (b) any taxes, fees, charges or other costs or expenses
incurred by the Issuing Lender in connection with such payment. Each such
payment shall be made to the Issuing Lender at its address for notices
specified herein in lawful money of the United States of America and in
immediately available funds. Interest shall be payable on any and all amounts
remaining unpaid by the Borrower under this Section 3.4 from the date such
amounts become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate set forth in (i) until the second
Business Day following the date of the applicable drawing, Section 2.15(b) and
(ii) thereafter, Section 2.15(c). Each drawing under any Letter of Credit shall
(unless an event of the type described in clause (i) or (ii) of Section 8(f)

<PAGE>
                                                                             42


shall have occurred and be continuing with respect to the Borrower, in which
case the procedures specified in Section 3.4 for funding by L/C Participants
shall apply) constitute a request by the Borrower to the Administrative Agent
for a borrowing pursuant to Section 2.5 of Base Rate Loans (or, at the option
of the Administrative Agent and the Swing Line Lender in their sole discretion,
a borrowing pursuant to Section 2.7 of Swing Line Loans) in the amount of such
drawing. The Borrowing Date with respect to such borrowing shall be the date of
such drawing.

                  3.6 Obligations Absolute. The Borrower's obligations under
this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower may have or have had against the Issuing Lender, any
beneficiary of a Letter of Credit or any other Person. The Borrower also agrees
with the Issuing Lender that the Issuing Lender shall not be responsible for,
and the Borrower's Reimbursement Obligations under Section 3.5 shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Borrower and
any beneficiary of any Letter of Credit or any other party to which such Letter
of Credit may be transferred or any claims whatsoever of the Borrower against
any beneficiary of such Letter of Credit or any such transferee. The Issuing
Lender shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct
of the Issuing Lender. The Borrower agrees that any action taken or omitted by
the Issuing Lender under or in connection with any Letter of Credit or the
related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care specified in
the Uniform Commercial Code of the State of New York, shall be binding on the
Borrower and shall not result in any liability of the Issuing Lender to the
Borrower.

                  3.7 Letter of Credit Payments. If any draft shall be
presented for payment under any Letter of Credit, the Issuing Lender shall
promptly notify the Borrower of the date and amount thereof. The responsibility
of the Issuing Lender to the Borrower in connection with any draft presented
for payment under any Letter of Credit shall, in addition to any payment
obligation expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are substantially in
conformity with such Letter of Credit.

                  3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.

<PAGE>
                                                                             43


                   SECTION 4. REPRESENTATIONS AND WARRANTIES

                  To induce the Agents and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, the Borrower represents and warrants to each Agent and each Lender
that:

                  4.1 Financial Condition. (a) The pro forma consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at August
15, 1998 (including the notes thereto) (the "Pro Forma Balance Sheet"), copies
of which have heretofore been furnished to each Lender, has been prepared
giving effect (as if such events had occurred on such date) to (i) the Loans to
be made on the Closing Date and the use of proceeds thereof and (ii) the
payment of fees and expenses in connection with the foregoing. The Pro Forma
Balance Sheet has been prepared based on the best information available to the
Borrower as of the date of delivery thereof, and presents fairly on a pro forma
basis the estimated financial position of Borrower and its consolidated
Subsidiaries as at August 15, 1998, assuming that the events specified in the
preceding sentence had actually occurred at such date.

                  (b) The audited consolidated balance sheets of the Borrower
and its Subsidiaries as at March 28, 1998, March 29, 1997 and March 30, 1996
and the related consolidated statements of income and of cash flows for the
fiscal years ended on such dates, reported on by and accompanied by a report
from Price Waterhouse LLP, present fairly the consolidated financial condition
of the Borrower and its Subsidiaries as at such date, and the consolidated
results of its operations and its consolidated cash flows for the respective
fiscal years then ended. All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). The Borrower and its
Subsidiaries do not have any material Guarantee Obligations, contingent
liabilities and liabilities for taxes, or any long-term leases or unusual
forward or long-term commitments, including, without limitation, any interest
rate or foreign currency swap or exchange transaction or other obligation in
respect of derivatives, which are not reflected in the most recent financial
statements referred to in this paragraph. During the period from March 28, 1998
to and including the date hereof there has been no Disposition by the Borrower
of any material part of its business or Property.

                  4.2 No Change. Since March 28, 1998 there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect, other than the commencement of the Case.

                  4.3 Corporate Existence; Compliance with Law. Each of the
Borrower and its Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the corporate power and authority, and the legal right, to own and operate its
Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification and (d) is in compliance with 

<PAGE>
                                                                             44


all Requirements of Law except to the extent that the failure to comply
therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.

                  4.4 Corporate Power; Authorization; Enforceable Obligations.
Each Loan Party has the corporate power and authority, and the legal right, to
make, deliver and perform the Loan Documents to which it is a party and, in the
case of the Borrower, to borrow hereunder. Each Loan Party has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Loan Documents to which it is a party and, in the case of the Borrower,
to authorize the borrowings on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the transactions and the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of this Agreement
or any of the Loan Documents, except the filings referred to in Section 4.19.
Each Loan Document has been duly executed and delivered on behalf of each Loan
Party thereto. This Agreement constitutes, and each other Loan Document upon
execution will constitute, a legal, valid and binding obligation of each Loan
Party thereto, enforceable against each such Loan Party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by equitable principles (whether
enforcement is sought by proceedings in equity or at law).

                  4.5  No Legal Bar.  The execution, delivery and performance 
of this Agreement and the other Loan Documents, the issuance of Letters of
Credit, the borrowings hereunder and the use of the proceeds thereof will not
violate any Requirement of Law or any Contractual Obligation of the Borrower or
any of its Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of their respective properties or revenues
pursuant to any Requirement of Law or any such Contractual Obligation (other
than the Liens created by the Security Documents). No Requirement of Law or
Contractual Obligation applicable to the Borrower or any of its Subsidiaries
could reasonably be expected to have a Material Adverse Effect.

                  4.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
of its Subsidiaries or against any of their respective properties or revenues
(a) with respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (b) which could reasonably be expected to
have a Material Adverse Effect.

                  4.7 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.

                  4.8 Ownership of Property; Liens. Each of the Borrower and
its Subsidiaries has title in fee simple to, or a 

<PAGE>
                                                                             45


valid leasehold interest in, all its real property, and good title to, or a
valid leasehold interest in, all its other Property, and none of such Property
is subject to any Lien except Permitted Liens. The Fee Properties as listed on
Part I of Schedule 1.1 constitute all the real properties owned in fee by the
respective Loan Parties set forth therein, the Leased Properties as listed on
Part II of Schedule 1.1 constitute all of the real properties leased by the
respective Loan Parties set forth therein which may be made subject to a
recorded Lien either (a) without violating the terms of the applicable
Underlying Lease or (b) with the consent of the landlord thereunder, and each
lease agreement under which an interest in a Leased Property is held (as
amended, an "Underlying Lease") is in full force and effect.

                  4.9 Intellectual Property. The Borrower and each of its
Subsidiaries owns, or is licensed to use, all Intellectual Property necessary
for the conduct of its business as currently conducted. No material claim has
been asserted and is pending by any Person challenging or questioning the use
of any Intellectual Property or the validity or effectiveness of any
Intellectual Property, nor does the Borrower know of any valid basis for any
such claim. The use of Intellectual Property by the Borrower and its
Subsidiaries does not infringe on the rights of any Person in any material
respect.

                  4.10 Taxes. Each of the Borrower and each of its Subsidiaries
has filed or caused to be filed all Federal, state and other material tax
returns which are required to be filed and has paid all taxes shown to be due
and payable on said returns or on any assessments made against it or any of its
Property and all other material taxes, fees or other charges imposed on it by
any Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be).

                  4.11 Federal Regulations. No part of the proceeds of any
Loans will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U as now and
from time to time hereafter in effect or for any purpose which violates the
provisions of the Regulations of the Board. If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1 referred to in Regulation U.

                  4.12 Labor Matters. There are no strikes or other labor
disputes against the Borrower or any of its Subsidiaries pending or, to the
knowledge of the Borrower, threatened that (individually or in the aggregate)
could reasonably be expected to have a Material Adverse Effect. Hours worked by
and payment made to employees of the Borrower and its Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable
Requirement of Law dealing with such matters that (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect. All
payments due from the Borrower or any of its Subsidiaries on account of
employee health and welfare insurance that (individually or in the aggregate)
could reasonably be expected to have a Material Adverse Effect if not paid have
been paid or accrued as a liability on the books of the Borrower or the
relevant Subsidiary.

<PAGE>
                                                                             46


                  4.13 ERISA. Except for the voluntary petition filed by the
Borrower under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for
the District of Delaware in 1995 and except for the commencement of the Case,
neither a Reportable Event nor an "accumulated funding deficiency" (within the
meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during
the five-year period prior to the date on which this representation is made or
deemed made with respect to any Plan, and each Plan has complied in all
material respects with the applicable provisions of ERISA and the Code. No
termination of a Single Employer Plan has occurred, and no Lien in favor of the
PBGC or a Plan has arisen, during such five-year period. The present value of
all accrued benefits under each Single Employer Plan (based on those
assumptions used to fund such Plans) did not, as of the last annual valuation
date prior to the date on which this representation is made or deemed made,
exceed the value of the assets of such Plan allocable to such accrued benefits
by a material amount. Neither the Borrower nor any Commonly Controlled Entity
has had a complete or partial withdrawal from any Multiemployer Plan which has
resulted or could reasonably be expected to result in a material liability
under ERISA, and neither the Borrower nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the Borrower or any
such Commonly Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding the date on
which this representation is made or deemed made. To the knowledge of the
Borrower, no such Multiemployer Plan is in Reorganization or Insolvent.

                  4.14  Investment Company Act; Other Regulations.  No Loan 
Party is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
No Loan Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness.

                  4.15 Subsidiaries. The Subsidiaries listed on Schedule 4.15
constitute all the Subsidiaries of the Borrower at the date hereof.

                  4.16 Use of Proceeds. The proceeds of the Loans shall be used
(a) to refinance the DIP Credit Facility, (b) to pay fees and expenses in
connection with the Plan of Reorganization as confirmed by the Bankruptcy
Court, (c) to finance the working capital needs of the Borrower and the
Subsidiary Guarantors in the ordinary course of business, (d) to refinance the
Supplemental Term Loans under the Prepetition Credit Facility, and (e) for
general corporate purposes, including, without limitation, capital
expenditures.

                  4.17 Environmental Matters. Other than exceptions to any of
the following that could not, individually or in the aggregate, reasonably be
expected to give rise to a Material Adverse Effect or result in the payment of
a Material Environmental Amount:

                  (a) Each of the Borrower and its Subsidiaries: (i) is, and
within the period of all applicable statutes of limitation have been, in
compliance with all applicable Environmental Laws; (ii) holds all Environmental
Permits (each of which is in full force and effect) required for any of its
current or intended operations or required of it with respect to any property
owned, leased, or otherwise operated by it; (iii) is, and within the period of
all applicable statutes of 

<PAGE>
                                                                             47


limitation has been, in compliance with all of its Environmental Permits; and
(iv) reasonably believes that: each of its Environmental Permits will be timely
renewed and complied with, without material expense; any additional
Environmental Permits that may be required of any of it will be timely obtained
and complied with, without material expense; and compliance with any
Environmental Law that is or is expected to become applicable to it will be
timely attained and maintained, without material expense.

                  (b) Materials of Environmental Concern are not present at,
on, under, in, or about any real property now or formerly owned and, to the
knowledge of the Borrower, are not present at, on, under, in, or about any
property now or formerly leased or operated, by the Borrower or any of its
Subsidiaries or at any other location (including, without limitation, any
location to which Materials of Environmental Concern have been sent for re-use
or recycling or for treatment, storage, or disposal) which could reasonably be
expected to (i) give rise to liability of the Borrower or any of its
Subsidiaries under any applicable Environmental Law or otherwise result in
costs to the Borrower or any of its Subsidiaries, or (ii) interfere with the
Borrower's or any of its Subsidiaries' continued operations, or (iii) impair
the fair saleable value of any real property owned or leased by the Borrower or
any of its Subsidiaries.

                  (c) There is no judicial, administrative, or arbitral
proceeding (including any notice of violation or alleged violation) under or
relating to any Environmental Law to which the Borrower or any of its
Subsidiaries is, or to the knowledge of the Borrower will be, named as a party
that is pending or, to the knowledge of the Borrower, threatened.

                  (d) Neither the Borrower nor any of its Subsidiaries has
received any written request for information, or been notified that it is a
potentially responsible party under or relating to the federal Comprehensive
Environmental Response, Compensation, and Liability Act or any similar
Environmental Law, or with respect to any Materials of Environmental Concern.

                  (e) Neither the Borrower nor any of its Subsidiaries has
entered into or agreed to any consent decree, order, or settlement or other
agreement, nor is subject to any judgment, decree, or order or other agreement,
in any judicial, administrative, arbitral, or other forum, relating to
compliance with or liability under any Environmental Law.

                  (f) Neither the Borrower nor any of its Subsidiaries has
assumed or retained, by contract or operation of law, any liabilities of any
kind, fixed or contingent, known or unknown, under any Environmental Law or
with respect to any Material of Environmental Concern.

                  (g) For the purpose of Section 8 of this Agreement, each of
the foregoing representations and warranties contained in this Section 4.17
that are qualified in any way by the knowledge of the Borrower shall be deemed
not to be so qualified.

                  4.18 Accuracy of Information, etc. No statement or
information contained in this Agreement, any other Loan Document, the Plan of
Reorganization and the disclosure statement related thereto, the Confidential
Information Memorandum or any other document, certificate or statement
furnished to the Arrangers, the Agents, the Lenders or any of them, by or on
behalf of 

<PAGE>
                                                                             48


any Loan Party for use in connection with the transactions contemplated by this
Agreement or the other Loan Documents, contained as of the date such statement,
information, document or certificate was so furnished (or, in the case of the
Confidential Information Memorandum, as of the date of this Agreement), any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which such statements are made.
The projections and pro forma financial information contained in the materials
referenced above are based upon good faith estimates and assumptions believed
by management of the Borrower to be reasonable at the time made, it being
recognized by the Lenders that such financial information as it relates to
future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount. There is no fact
known to any Loan Party that could reasonably be expected to have a Material
Adverse Effect that has not been expressly disclosed herein, in the other Loan
Documents, in the Confidential Information Memorandum or in any other
documents, certificates and statements furnished to the Arrangers, the Agents
or the Lenders for use in connection with the transactions contemplated hereby
and by the other Loan Documents.

                  4.19 Security Documents. (a) The Guarantee and Collateral
Agreement is effective to create in favor of the Administrative Agent, for the
benefit of the Agents and the Lenders, a legal, valid and enforceable security
interest in the Collateral described therein and proceeds thereof. In the case
of the Pledged Stock described in the Guarantee and Collateral Agreement, when
stock certificates representing such Pledged Stock are delivered to the
Administrative Agent, and in the case of the other Collateral described in the
Guarantee and Collateral Agreement, when financing statements in appropriate
form are filed in the offices specified on Schedule 3 of the Guarantee and
Collateral Agreement, the Guarantee and Collateral Agreement shall constitute a
fully perfected Lien on, and security interest in, all right, title and
interest of the Loan Parties in such Collateral and the proceeds thereof, as
security for the Obligations (as defined in the Guarantee and Collateral
Agreement), in each case prior and superior in right to any other Person
(except as otherwise set forth herein).

                  (b) Each of the Mortgages is effective to create in favor of
the Administrative Agent, for the benefit of the Agents and the Lenders, a
legal, valid and enforceable Lien on the Mortgaged Properties described therein
and proceeds thereof, and when the Mortgages are filed in the offices specified
on Schedule 4.19(b), each such Mortgage shall constitute a fully perfected Lien
on, and security interest in, all right, title and interest of the Loan Parties
in the Mortgaged Properties and the proceeds thereof, as security for the
Obligations (as defined in the relevant Mortgage), in each case prior and
superior in right to any other Person (except as otherwise set forth in any
such Mortgage).

                  4.20 Solvency. Each Loan Party is, and after giving effect to
the transaction contemplated hereby and the incurrence of all Indebtedness and
obligations being incurred in connection herewith and therewith will be and
will continue to be, Solvent.

                  4.21 Regulation H. No Mortgage encumbers improved real
property which is located in an area that has been identified by the Secretary
of Housing and Urban Development 

<PAGE>
                                                                             49


as an area having special flood hazards and in
which flood insurance has been made available under the National Flood
Insurance Act of 1968.


                        SECTION 5. CONDITIONS PRECEDENT

                  5.1 Conditions to Initial Extension of Credit. The agreement
of each Lender to make the initial extension of credit requested to be made by
it is subject to the satisfaction, prior to or concurrently with the making of
such extension of credit on the Closing Date, of the following conditions
precedent:

                  (a) Loan Documents. The Administrative Agent shall have
         received (i) this Agreement, executed and delivered by a duly
         authorized officer of the Borrower, (ii) the Guarantee and Collateral
         Agreement, executed and delivered by a duly authorized officer of the
         Borrower and each Subsidiary Guarantor, (iii) a Mortgage covering each
         of the Mortgaged Properties, executed and delivered by a duly
         authorized officer of each party thereto, and (iv) for the account of
         each relevant Lender, Notes conforming to the requirements hereof and
         executed and delivered by a duly authorized officer of the Borrower.

<PAGE>
                                                                             50


                  (b) Confirmation of Plan of Reorganization. The Bankruptcy
         Court shall have entered on or before August 31, 1998 a final order in
         form and substance reasonably satisfactory to the Agents confirming in
         accordance with Section 1129 of the Bankruptcy Code the Plan of
         Reorganization, which order shall be in full force and effect and
         shall not have been stayed, reversed, vacated or otherwise modified.

                  (c) Pro Forma Balance Sheet; Financial Statements. The
         Lenders shall have received (i) the Pro Forma Balance Sheet, (ii) the
         audited consolidated financial statements of the Borrower for the 1998
         fiscal year and (iii) reasonably satisfactory unaudited interim
         consolidated financial statements of the Borrower for each fiscal
         month and quarterly period ended subsequent to the date of the latest
         applicable financial statements delivered pursuant to clause (ii) of
         this paragraph as to which such financial statements are available,
         and such financial statements shall not, in the reasonable judgment of
         the Lenders, reflect any material adverse change in the consolidated
         financial condition of the Borrower, from that reflected in the
         financial statements or projections contained in the Confidential
         Information Memorandum.

                  (d) Approvals. All governmental, shareholder and third party
         approvals (including landlords' and other consents) necessary in
         connection with the continuing operations of the Borrower and its
         Subsidiaries and the transactions contemplated hereby shall have been
         obtained and be in full force and effect, and all applicable waiting
         periods shall have expired without any action being taken or
         threatened by any competent authority which would restrain, prevent or
         otherwise impose adverse conditions on the transaction or the
         financing contemplated hereby.

                  (e) Related Agreements. The Administrative Agent shall have
         received (in a form reasonably satisfactory to the Agents, with a copy
         for each Lender, true and correct copies, certified as to authenticity
         by the Borrower, of each Underlying Lease and such other documents or
         instruments as may be reasonably requested by the Agents, including,
         without limitation, a copy of any other debt instrument, security
         agreement or other material contract to which the Loan Parties may be
         a party.

                  (f) Fees. The Lenders, the Arrangers and the Agents shall
         have received all fees required to be paid, and all expenses
         (including, without limitation, legal fees and expenses, title
         premiums, survey charges and recording taxes and fees) for which
         invoices have been presented, on or before the Closing Date. All such
         amounts will be paid with proceeds of Loans made on the Closing Date
         and will be reflected in the funding instructions given by the
         Borrower to the Administrative Agent on or before the Closing Date.

                  (g) Business Plan. The Lenders shall have received a business
         plan for fiscal years 1999-2003 and a written analysis of the business
         and prospects of the Borrower and its Subsidiaries for the period from
         the Closing Date through March 31, 2003.

<PAGE>
                                                                             51


                  (h) Termination of Prepetition Credit Facility. The
         Administrative Agent shall have received evidence satisfactory to the
         Administrative Agent and Syndication Agent that the Prepetition Credit
         Facility shall be simultaneously terminated, all amounts thereunder
         shall be simultaneously paid in full and arrangements satisfactory the
         Syndication Agent and the Administrative agent shall have been made
         for the termination or assignment in favor of the Collateral Agent, as
         the case may be, of Liens and security interests granted in connection
         therewith.

                  (i) Lien Searches. The Administrative Agent shall have
         received the results of a recent lien search in each of the
         jurisdictions where assets of the Loan Parties are located, and such
         search shall reveal no liens on any of the assets of the Borrower or
         its Subsidiaries except for (i) Permitted Liens, (ii) liens to be
         discharged or assigned to the Collateral Agent on or prior to the
         Closing Date pursuant to documentation reasonably satisfactory to the
         Agents or (iii) liens which in the aggregate are reasonably determined
         by the Agents to be immaterial.

                  (j) Environmental Assessment. The Administrative Agent shall
         have received an environmental assessment with respect to the Borrower
         and its Subsidiaries specified by the Administrative Agent.

                  (k) Closing Certificate. The Administrative Agent shall have
         received, with a counterpart for each Lender, a certificate of each
         Loan Party, dated the Closing Date, substantially in the form of
         Exhibit C, with appropriate insertions and attachments.

                  (l) Legal Opinions. The Administrative Agent shall have
         received the following executed legal opinions:

                                 (i) the legal opinion of Weil, Gotshal &
                  Manges LLP, counsel to the Borrower and its Subsidiaries,
                  substantially in the form of Exhibit F-1; and

                                (ii) the legal opinion of local counsel in each
                  of New Jersey, Vermont, Connecticut, New Hampshire,
                  Pennsylvania, Tennessee and Georgia and of such other special
                  and local counsel as may be required by the Administrative
                  Agent, substantially in the form of Exhibit F-2.

         Each such legal opinion shall cover such other matters incident to the
         transactions contemplated by this Agreement as the Administrative
         Agent may reasonably require.

                  (m) Pledged Stock; Stock Power; Pledged Notes. The
         Administrative Agent shall have received (i) the certificates
         representing the shares of Capital Stock pledged pursuant to the
         Guarantee and Collateral Agreement, together with an undated stock
         power for each such certificate executed in blank by a duly authorized
         officer of the pledgor thereof and (ii) each promissory note pledged
         to the Administrative Agent pursuant to the Guarantee and Collateral
         Agreement endorsed (without recourse) in blank 

<PAGE>
                                                                             52


         (or accompanied by an executed transfer form in blank satisfactory to
         the Syndication Agent) by the pledgor thereof.

                  (n) Filings, Registrations and Recordings. Each document
         (including, without limitation, any Uniform Commercial Code financing
         statement) required by the Security Documents or under law or
         reasonably requested by the Administrative Agent to be filed,
         registered or recorded in order to create in favor of the
         Administrative Agent, for the benefit of the Agents and the Lenders, a
         perfected Lien on the Collateral described therein, prior and superior
         in right to any other Person (other than Permitted Liens), shall be in
         proper form for filing, registration or recordation.

                  (o) Title Insurance; Flood Insurance. (i) If requested by the
         Administrative Agent, the Administrative Agent shall have received,
         and the title insurance companies issuing the policies referred to in
         clause (ii) below (collectively, the "Title Insurance Company") shall
         have received, maps or plats of an as-built survey of the sites of the
         Fee Properties certified to the Administrative Agent and the Title
         Insurance Company in a manner satisfactory to them, dated a date
         satisfactory to the Administrative Agent and the Title Insurance
         Company by an independent professional licensed land surveyor
         satisfactory to the Administrative Agent and the Title Insurance
         Company, which maps or plats and the surveys on which they are based
         shall be made in accordance with the Minimum Standard Detail
         Requirements for Land Title Surveys jointly established and adopted by
         the American Land Title Association and the American Congress on
         Surveying and Mapping in 1992, and, without limiting the generality of
         the foregoing, there shall be surveyed and shown on such maps, plats
         or surveys the following: (A) the locations on such sites of all the
         buildings, structures and other improvements and the established
         building setback lines; (B) the lines of streets abutting the sites
         and width thereof; (C) all access and other easements appurtenant to
         the sites; (D) all roadways, paths, driveways, easements,
         encroachments and overhanging projections and similar encumbrances
         affecting the site, whether recorded, apparent from a physical
         inspection of the sites or otherwise known to the surveyor; (E) any
         encroachments on any adjoining property by the building structures and
         improvements on the sites; (F) if the site is described as being on a
         filed map, a legend relating the survey to said map; and (G) the flood
         zone designations, if any, in which the Fee Properties are located.

                  (ii) The Administrative Agent shall have received in respect
         of each Mortgaged Property a mortgagee's title insurance policy (or
         policies) or marked up unconditional binder for such insurance. Each
         such policy shall (A) be in an amount satisfactory to the
         Administrative Agent; (B) be issued at ordinary rates; (C) insure that
         the Mortgage insured thereby creates a valid first Lien on such
         Mortgaged Property free and clear of all defects and encumbrances,
         except as disclosed therein; (D) name the Administrative Agent for the
         benefit of the Lenders as the insured thereunder; (E) be in the form
         of ALTA Loan Policy - 1970 (Amended 10/17/70 and 10/17/84) (or
         equivalent policies); (F) contain such endorsements and affirmative
         coverage as the Administrative Agent may reasonably request and (G) be
         issued by title companies satisfactory to the Administrative Agent
         (including any such title companies acting as co-insurers or
         reinsurers, at the 

<PAGE>
                                                                             53


         option of the Administrative Agent). The Administrative Agent shall
         have received evidence satisfactory to it that all premiums
         in respect of each such policy, all charges for mortgage recording
         tax, and all related expenses, if any, have been paid.

                  (iii) If requested by the Administrative Agent, the
         Administrative Agent shall have received (A) a policy of flood
         insurance which (1) covers any parcel of improved real property which
         is encumbered by any Mortgage (2) is written in an amount not less
         than the outstanding principal amount of the indebtedness secured by
         such Mortgage which is reasonably allocable to such real property or
         the maximum limit of coverage made available with respect to the
         particular type of property under the National Flood Insurance Act of
         1968, whichever is less, and (3) has a term ending not later than the
         maturity of the Indebtedness secured by such Mortgage and (B)
         confirmation that the Borrower has received the notice required
         pursuant to Section 208(e)(3) of Regulation H of the Board.

                  (iv) The Administrative Agent shall have received a copy of
         all recorded documents referred to, or listed as exceptions to title
         in, the title policy or policies referred to in clause (ii) above and
         a copy of all other material documents affecting the Mortgaged
         Properties.

                  (p) Insurance. The Administrative Agent shall have received
         insurance certificates satisfying the requirements of Section 5.3 of
         the Guarantee and Collateral Agreement and of Section 5 of each
         Mortgage.

                  (q) Estoppel Certificate. The Administrative Agent shall have
         received, with a copy for each Lender, a certificate in form and
         substance satisfactory to Agent and its counsel from the landlord
         under each Underlying Lease with respect to each Leased Property
         consenting to the Mortgage encumbering such Leased Property and
         certifying (i) that the Loan Party who is the tenant under the
         Underlying Lease is not in default in the performance of any of its
         obligations under such Underlying Lease and (ii) to such other matters
         as may be requested by the Administrative Agent.

                  5.2 Conditions to Each Extension of Credit. The agreement of
each Lender to make any extension of credit requested to be made by it on any
date (including, without limitation, its initial extension of credit) is
subject to the satisfaction of the following conditions precedent:

                  (a) Representations and Warranties. Each of the
         representations and warranties made by any Loan Party in or pursuant
         to the Loan Documents shall be true and correct in all material
         respects on and as of such date as if made on and as of such date.

                  (b) No Default. No Default or Event of Default shall have
         occurred and be continuing on such date or after giving effect to the
         extensions of credit requested to be made on such date.

<PAGE>
                                                                             54


Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.


                        SECTION 6. AFFIRMATIVE COVENANTS

                  The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or any Agent hereunder, the Borrower shall and
shall cause each of its Subsidiaries to:

                  6.1 Financial Statements. Furnish to each Agent and each
Lender:

                  (a) as soon as available, but in any event within 90 days
         after the end of each fiscal year of the Borrower, a copy of the
         audited consolidated balance sheet of the Borrower and its
         consolidated Subsidiaries as at the end of such year and the related
         audited consolidated statements of income and of cash flows for such
         year, setting forth in each case in comparative form the figures for
         the previous year, reported on without a "going concern" or like
         qualification or exception, or qualification arising out of the scope
         of the audit, by Price Waterhouse LLP or other independent certified
         public accountants of nationally recognized standing;

                  (b) as soon as available, but in any event not later than 45
         days after the end of each of the first three quarterly periods of
         each fiscal year of the Borrower, the unaudited consolidated balance
         sheet of the Borrower and its consolidated Subsidiaries as at the end
         of such quarter and the related unaudited consolidated statements of
         income and of cash flows for such quarter and the portion of the
         fiscal year through the end of such quarter, setting forth in each
         case in comparative form the figures for the previous year, certified
         by a Responsible Officer as being fairly stated in all material
         respects (subject to normal year-end audit adjustments); and

                  (c) as soon as available, but in any event not later than 45
         days after the end of each month occurring during each fiscal year of
         the Borrower (other than the third, sixth, ninth and twelfth such
         month), the unaudited consolidated balance sheets of the Borrower and
         its Subsidiaries as at the end of such month and the related unaudited
         consolidated statements of income and of cash flows for such month and
         the portion of the fiscal year through the end of such month, setting
         forth in each case in comparative form the figures for the previous
         year, certified by a Responsible Officer as being fairly stated in all
         material respects (subject to normal year-end audit adjustments);

all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).

<PAGE>
                                                                             55


                  6.2 Certificates; Other Information. Furnish to each Agent
and each Lender, or, in the case of clause (g), to the relevant Lender:

                  (a) concurrently with the delivery of the financial
         statements referred to in Section 6.1(a), a certificate of the
         independent certified public accountants reporting on such financial
         statements stating that in making the examination necessary therefor
         no knowledge was obtained of any Default or Event of Default, except
         as specified in such certificate;

                  (b) concurrently with the delivery of any financial
         statements pursuant to Section 6.1, (i) a certificate of a Responsible
         Officer stating that, to the best of each such Responsible Officer's
         knowledge, each Loan Party during such period has observed or
         performed all of its covenants and other agreements, and satisfied
         every condition, contained in this Agreement and the other Loan
         Documents to which it is a party to be observed, performed or
         satisfied by it, and that such Responsible Officer has obtained no
         knowledge of any Default or Event of Default except as specified in
         such certificate and (ii) in the case of quarterly or annual financial
         statements, (x) a Compliance Certificate containing all information
         necessary for determining compliance by the Borrower and its
         Subsidiaries with the provisions of this Agreement referred to therein
         as of the last day of the fiscal quarter or fiscal year of the
         Borrower, as the case may be, and (y) to the extent not previously
         disclosed to the Administrative Agent, a listing of any county or
         state within the United States where any Loan Party keeps inventory or
         equipment and of any Intellectual Property acquired by any Loan Party
         since the date of the most recent list delivered pursuant to this
         clause (y) (or, in the case of the first such list so delivered, since
         the Closing Date);

                  (c) as soon as available, and in any event no later than 45
         days after the end of each fiscal year of the Borrower, a detailed
         consolidated budget for the following fiscal year (including a
         projected consolidated balance sheet of the Borrower and its
         Subsidiaries as of the end of the following fiscal year, and the
         related consolidated statements of projected cash flow, projected
         changes in financial position and projected income), and, as soon as
         available, significant revisions, if any, of such budget and
         projections with respect to such fiscal year (collectively, the
         "Projections"), which Projections shall in each case be accompanied by
         a certificate of a Responsible Officer stating that such Projections
         are based on reasonable estimates, information and assumptions and
         that such Responsible Officer has no reason to believe that such
         Projections are incorrect or misleading in any material respect;

                  (d) within 45 days after the end of each fiscal quarter of
         the Borrower, a narrative discussion and analysis of the financial
         condition and results of operations of the Borrower and its
         Subsidiaries for such fiscal quarter and for the period from the
         beginning of the then current fiscal year to the end of such fiscal
         quarter, as compared to the portion of the Projections covering such
         periods and to the comparable periods of the previous year;

<PAGE>
                                                                             56


                  (e) within five days after the same are sent, copies of all
         financial statements and reports which the Borrower sends to the
         holders of any class of its debt securities or public equity
         securities and, within five days after the same are filed, copies of
         all financial statements and reports which the Borrower may make to,
         or file with, the Securities and Exchange Commission or any successor
         or analogous Governmental Authority; and

                  (f) promptly, such additional financial and other information
         as any Lender may from time to time reasonably request.

                  6.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its material obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrower or its Subsidiaries, as the case may be.

                  6.4 Conduct of Business and Maintenance of Existence, etc.
(a) (i) Preserve, renew and keep in full force and effect its corporate
existence and (ii) take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business, except, in each case, as otherwise permitted by Section 7.4 and
except, in the case of clause (ii) above, to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect; and (b)
comply with all Contractual Obligations and Requirements of Law except to the
extent that failure to comply therewith could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect.

                  6.5 Maintenance of Property; Insurance. (a) Keep all Property
useful and necessary in its business in good working order and condition,
ordinary wear and tear excepted and (b) maintain with financially sound and
reputable insurance companies insurance on all its Property in at least such
amounts and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually insured
against in the same general area by companies engaged in the same or a similar
business.

                  6.6 Inspection of Property; Books and Records; Discussions;
Collateral Audit. (a) Keep proper books of records and account in which full,
true and correct entries in conformity with GAAP and all Requirements of Law
shall be made of all dealings and transactions in relation to its business and
activities, (b) permit representatives of any Lender to visit and inspect any
of its properties and examine and make abstracts from any of its books and
records at any reasonable time and as often as may reasonably be desired and to
discuss the business, operations, properties and financial and other condition
of the Borrower and its Subsidiaries with officers and employees of the
Borrower and its Subsidiaries and with its independent certified public
accountants and (c) permit a firm satisfactory to the Administrative Agent (it
being understood that Arthur Anderson & Co. shall be deemed to be satisfactory)
to perform, at the expense of the Borrower, an annual independent audit with
respect to Accounts and Inventory of the Borrower and its Subsidiaries as may
be directed by the Administrative Agent; provided that the Lenders shall have
the right, to the extent the Administrative Agent 

<PAGE>
                                                                             57


determines, in its reasonable judgment, that it is necessary to have such an
audit performed more frequently than once a year, to have such an audit so
performed, at the expense of the Borrower.

                  6.7 Notices. Promptly give notice to the Administrative Agent
and each Lender of:

                  (a)  the occurrence of any Default or Event of Default;

                  (b) any (i) default or event of default under any Contractual
         Obligation of the Borrower or any of its Subsidiaries or (ii)
         litigation, investigation or proceeding which may exist at any time
         between the Borrower or any of its Subsidiaries and any Governmental
         Authority, which in either case, if not cured or if adversely
         determined, as the case may be, could reasonably be expected to have a
         Material Adverse Effect;

                  (c) any litigation or proceeding affecting the Borrower or
         any of its Subsidiaries in which the amount involved is $500,000 or
         more and not covered by insurance or in which injunctive or similar
         relief is sought;

                  (d) the following events, as soon as possible and in any
         event within 30 days after the Borrower knows or has reason to know
         thereof: (i) the occurrence of any Reportable Event with respect to
         any Plan, a failure to make any required contribution to a Plan, the
         creation of any Lien in favor of the PBGC or a Plan or any withdrawal
         from, or the termination, Reorganization or Insolvency of, any
         Multiemployer Plan or (ii) the institution of proceedings or the
         taking of any other action by the PBGC or the Borrower or any Commonly
         Controlled Entity or any Multiemployer Plan with respect to the
         withdrawal from, or the termination, Reorganization or Insolvency of,
         any Plan; and

                  (e) any development or event which has had or could
         reasonably be expected to have a Material Adverse Effect.

Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Borrower or the relevant Subsidiary
proposes to take with respect thereto.

                  6.8 Environmental Laws. (a) (i) Comply in all material
respects with all Environmental Laws applicable to it, and obtain, comply in
all material respects with and maintain any and all Environmental Permits
necessary for its operations as conducted and as planned; and (ii) ensure that
all of its tenants, subtenants, contractors, subcontractors, and invitees
comply in all material respects with all Environmental Laws, and obtain, comply
with and maintain any and all Environmental Permits, applicable to any of them
insofar as any failure to so comply, obtain or maintain reasonably could be
expected to adversely affect the Borrower.

                  (b) Prior to acquiring any ownership or leasehold interest in
real property, either directly or indirectly (including without limitation a
stock purchase) the Borrower shall evaluate, based on the property's current
and prior use, whether such property could reasonably result in a 

<PAGE>
                                                                             58


potential liability under any Environmental Law. Where such evaluation
indicates the possibility of such a potential liability, the Borrower shall
take all measures to satisfy itself reasonably that such property's potential
liability under any Environmental Law, when added to all other such liabilities
of the Borrower and its Subsidiaries at all properties of which the Borrower is
aware at which the Borrower or any Subsidiary may have liability under any
Environmental Law (whether or not the Borrower or any Subsidiary has or
formerly had any ownership or leasehold interest in such property either
directly or indirectly), shall not exceed a Material Environmental Amount; and,
if the Borrower cannot be so reasonably satisfied, it shall not acquire such
interest.

                  6.9 Interest Rate Protection. In the case of the Borrower,
within 90 days after the Closing Date, enter into Hedge Agreements to the
extent necessary to provide that at least 50% of the aggregate principal amount
of the Term Loans is subject to interest rate protection for a period of not
less than three years, which Hedge Agreements shall have terms and conditions
reasonably satisfactory to the Administrative Agent.

                  6.10 Additional Collateral, etc. (a) With respect to any
Property acquired after the Closing Date by the Borrower or any of its
Subsidiaries (other than (x) any Property described in paragraph (b), (c) or
(d) below and (y) any Property subject to a Permitted Lien) as to which the
Administrative Agent, for the benefit of the Lenders, does not have a perfected
Lien, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement or such other documents as
the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a security interest in
such Property and (ii) take all actions necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in such Property, including without limitation, the
filing of Uniform Commercial Code financing statements in such jurisdictions as
may be required by the Guarantee and Collateral Agreement or by law or as may
be requested by the Administrative Agent.

                  (b) With respect to any fee interest in any real property
having a value (together with improvements thereof) of at least $500,000
acquired after the Closing Date by the Borrower or any of its Subsidiaries
(other than any such real property subject to a Permitted Lien), promptly (i)
execute and deliver a first priority Mortgage in favor of the Administrative
Agent, for the benefit of the Agents and Lenders, covering such real property,
(ii) if requested by the Administrative Agent, provide the Lenders with (x)
title and extended coverage insurance covering such real property in an amount
at least equal to the purchase price of such real estate (or such other amount
as shall be reasonably specified by the Administrative Agent) as well as a
current ALTA survey thereof, together with a surveyor's certificate and (y) any
consents or estoppels reasonably deemed necessary or advisable by the
Administrative Agent in connection with such mortgage or deed of trust, each of
the foregoing in form and substance reasonably satisfactory to the
Administrative Agent and (iii) if requested by the Administrative Agent,
deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.

<PAGE>
                                                                             59


                  (c) With respect to any new Subsidiary (other than an
Excluded Foreign Subsidiary) created or acquired after the Closing Date (which,
for the purposes of this paragraph, shall include any existing Subsidiary that
ceases to be an Excluded Foreign Subsidiary), by the Borrower or any of its
Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative
Agent deems necessary or advisable to grant to the Administrative Agent, for
the benefit of the Lenders, a perfected first priority security interest in the
Capital Stock of such new Subsidiary which is owned by the Borrower or any of
its Subsidiaries, (ii) deliver to the Administrative Agent the certificates
representing such Capital Stock, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of the Borrower or such
Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to become a
party to the Guarantee and Collateral Agreement and (B) to take such actions
necessary or advisable to grant to the Administrative Agent for the benefit of
the Lenders a perfected first priority security interest in the Collateral
described in the Guarantee and Collateral Agreement with respect to such new
Subsidiary, including, without limitation, the filing of Uniform Commercial
Code financing statements in such jurisdictions as may be required by the
Guarantee and Collateral Agreement or by law or as may be requested by the
Administrative Agent, and (iv) if requested by the Administrative Agent,
deliver to the Administrative Agent legal opinions relating to the matters
described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.

                  (d) With respect to any new Excluded Foreign Subsidiary
created or acquired after the Closing Date by the Borrower or any of its
Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative
Agent deems necessary or advisable in order to grant to the Administrative
Agent, for the benefit of the Lenders, a perfected first priority security
interest in the Capital Stock of such new Subsidiary which is owned by the
Borrower or any of its Subsidiaries (provided that in no event shall more than
65% of the total outstanding Capital Stock of any such new Subsidiary be
required to be so pledged), (ii) deliver to the Administrative Agent the
certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of the
Borrower or such Subsidiary, as the case may be, and take such other action as
may be necessary or, in the opinion of the Administrative Agent, desirable to
perfect the Lien of the Administrative Agent thereon, and (iii) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.

                  6.11 Further Assurances. In the case of the Borrower, from
time to time execute and deliver, or cause to be executed and delivered, such
additional instruments, certificates or documents, and take all such actions,
as the Administrative Agent may reasonably request, for the purposes of
implementing or effectuating the provisions of this Agreement and the other
Loan Documents, or of more fully perfecting or renewing the rights of the
Administrative Agent and the Lenders with respect to the Collateral (or with
respect to any additions thereto or replacements or proceeds thereof or with
respect to any other property or assets hereafter acquired by the Borrower
which may be deemed to be part of the Collateral) pursuant hereto or 

<PAGE>
                                                                             60


thereto. Upon the exercise by the Administrative Agent or any Lender of any
power, right, privilege or remedy pursuant to this Agreement or the other Loan
Documents which requires any consent, approval, recording, qualification or
authorization of any Governmental Authority, the Borrower will execute and
deliver, or will cause the execution and delivery of, all applications,
certifications, instruments and other documents and papers that the
Administrative Agent or such Lender may be required to obtain from the Borrower
or any of its Subsidiaries for such governmental consent, approval, recording,
qualification or authorization.

                  6.12 Survey, etc. (a) To the extent not delivered by the
Closing Date, Borrower shall, within 45 days of the Closing Date, deliver to
the Administrative Agent and the Title Insurance Company surveys of the Fee
Properties meeting the requirements of Section 5.1(o)(i) such that the Title
Company will omit corresponding survey exceptions on the relevant title
insurance policies issued pursuant to Section 5.1(o)(ii) or to be issued
pursuant to Section 6.12(d) and will issue those endorsements to such title
insurance policies (such as survey and access) that cannot be issued without
such surveys.

                  (b) To the extent not delivered by the Closing Date, Borrower
shall use best efforts to obtain estoppel certificates meeting the requirements
of Section 5.1(q) in respect of each Underlying Lease by December 1, 1998. On
the first Business Day of each calendar month commencing October 1, 1998 and
ending on December 1, 1998, Borrower shall (i) deliver to the Administrative
Agent and the Title Company all such estoppel certificates received by Borrower
to such date, (ii) deliver to the Administrative Agent (A) a Mortgage covering
each Leased Property to which such estoppel certificate relates, executed by a
duly authorized officer of Borrower and (B) a mortgagee's title insurance
policy in respect of each such corresponding Leased Property meeting all of the
requirements of Section 5.1(o)(ii), dated a date satisfactory to the
Administrative Agent, together with all recorded documents referred to, or
listed as exceptions to title in, the title policy or policies referred to in
clause (B) above and a copy of all other material documents affecting each such
Leased Property.

                  (c) With respect to Leased Properties with respect to which
the corresponding Underlying Lease is not of record (pursuant to a recorded
memorandum thereof or as may otherwise be required in accordance with
applicable law of such state), Borrower shall use best efforts to cause such
Underlying Lease to be of record. Promptly after such Underlying Lease shall be
of record, Borrower shall deliver to the Administrative Agent (i) a Mortgage
covering each such corresponding Mortgaged Property, executed by a duly
authorized officer of Borrower and (ii) a mortgagee's title insurance policy in
respect of each such corresponding Mortgaged Property meeting all of the
requirements of Section 5.1(o)(ii), dated a date satisfactory to the
Administrative Agent, together with all recorded documents referred to, or
listed as exceptions to title in, the title policy or policies referred to in
clause (B) above and a copy of all other material documents affecting each such
Mortgaged Property.

                  (d) For each Mortgaged Property set forth on Schedule
6.12(d), Borrower shall, within 45 days of the Closing Date, deliver to the
Administrative Agent (i) a Mortgage covering each such Leased Property,
executed by a duly authorized officer of Borrower, (ii) a mortgagee's title
insurance policy in respect of each such corresponding Leased Property meeting

<PAGE>
                                                                             61


all of the requirements of Section 5.1(o)(ii), dated a date satisfactory to the
Administrative Agent, together with all recorded documents referred to, or
listed as exceptions to title in, the title policy or policies referred to in
clause (B) above and a copy of all other material documents affecting each such
Mortgaged Property, and (iii) the legal opinion of local counsel in each of
Tennessee, Georgia and Texas in substantially in the form of Exhibit F-2.


                         SECTION 7. NEGATIVE COVENANTS

                  The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or any Agent hereunder, the Borrower shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly:


                  7.1  Financial Condition Covenants.

                  (a) Consolidated Leverage Ratio. Permit the Consolidated
Leverage Ratio as at the last day of any period of four consecutive fiscal
quarters of the Borrower (or, if less, the number of full fiscal quarters
subsequent to the Closing Date) ending with any fiscal quarter set forth below
to exceed the ratio set forth below opposite such fiscal quarter:

                                                                 Consolidated
Fiscal Quarter                                                  Leverage Ratio
--------------                                                  --------------
October 16, 1999                                                     4.60
January 8, 2000                                                      4.50
April 1, 2000                                                        4.50
July 22, 2000                                                        4.45
October 14, 2000                                                     4.30
January 6, 2001                                                      4.15
March 31, 2001                                                       4.00
July 21, 2001                                                        4.00
October 13, 2001                                                     4.00
January 5, 2002                                                      3.75
March 30, 2002                                                       3.75
July 20, 2002                                                        3.75
October 12, 2002                                                     3.75
January 4, 2003                                                      3.75
March 29, 2003                                                       3.75
July 19, 2003                                                        3.75


                  (b) Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio for any period of four consecutive fiscal
quarters of the Borrower (or, if less, the 

<PAGE>
                                                                             62


number of full fiscal quarters subsequent to the Closing Date) ending with any
fiscal quarter set forth below to be less than the ratio set forth below
opposite such fiscal quarter:

                                                           Consolidated Interest
Fiscal Quarter                                                Coverage Ratio
--------------                                             ---------------------
January 2, 1999                                                    1.60
April 3, 1999                                                      1.65
July 24, 1999                                                      1.75
October 16, 1999                                                   1.80
January 8, 2000                                                    1.90
April 1, 2000                                                      1.90
July 22, 2000                                                      1.90
October 14, 2000                                                   1.95
January 6, 2001                                                    2.00
March 31, 2001                                                     2.00
July 21, 2001                                                      2.10
October 13, 2001                                                   2.20
January 5, 2002                                                    2.25
March 30, 2002                                                     2.30
July 20, 2002                                                      2.40
October 12, 2002                                                   2.40
January 4, 2003                                                    2.40
March 29, 2003                                                     2.40
July 19, 2003                                                      2.40


                  7.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:

                  (a)  Indebtedness of any Loan Party pursuant to any Loan 
         Document;

                  (b) Indebtedness of the Borrower to any Subsidiary and of any
         Wholly Owned Subsidiary Guarantor to the Borrower or any other
         Subsidiary;

                  (c) Indebtedness (including, without limitation, Capital
         Lease Obligations other than as set forth in Section 7.2(f)) secured
         by Permitted Liens in an aggregate principal amount not to exceed
         $15,000,000 at any one time outstanding;

                  (d) Indebtedness outstanding on the date hereof and listed on
         Schedule 7.2(d) and any refinancings, refundings, renewals or
         extensions thereof (without any increase in the principal amount
         thereof or any shortening of the maturity of any principal amount
         thereof);

<PAGE>
                                                                             63


                  (e) Guarantee Obligations made in the ordinary course of
         business by the Borrower or any of its Subsidiaries of obligations of
         the Borrower or any Subsidiary Guarantor;

                  (f) Capital Lease Obligations with respect to vehicles, new
         stores and office equipment leased in the ordinary course of the
         Borrower's business; and

                  (g) Letters of credit outstanding under the Prepetition
         Credit Facility.

                  7.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its Property, whether now owned or hereafter
acquired, except for:

                  (a) Liens for taxes not yet due or which are being contested
         in good faith by appropriate proceedings, provided that adequate
         reserves with respect thereto are maintained on the books of the
         Borrower or its Subsidiaries, as the case may be, in conformity with
         GAAP;

                  (b) carriers', warehousemen's, mechanics', materialmen's,
         repairmen's or other like Liens arising in the ordinary course of
         business which are not overdue for a period of more than 30 days or
         which are being contested in good faith by appropriate proceedings;

                  (c) pledges or deposits in connection with workers'
         compensation, insurance and social security legislation;

                  (d) deposits to secure the performance of bids, trade
         contracts (other than for borrowed money), leases, statutory
         obligations, surety and appeal bonds, performance bonds and other
         obligations of a like nature incurred in the ordinary course of
         business and letters of credit outstanding under the Prepetition
         Credit Facility;

                  (e) easements, rights-of-way, restrictions and other similar
         encumbrances incurred in the ordinary course of business which, in the
         aggregate, are not substantial in amount and which do not in any case
         materially detract from the value of the Property subject thereto or
         materially interfere with the ordinary conduct of the business of the
         Borrower or any of its Subsidiaries;

                  (f) Liens in existence on the date hereof listed on Schedule
         7.3(f), securing Indebtedness permitted by Section 7.2(d), provided
         that no such Lien is spread to cover any additional Property after the
         Closing Date and that the amount of Indebtedness secured thereby is
         not increased;

                  (g) Liens securing Indebtedness of the Borrower or any other
         Subsidiary incurred pursuant to Section 7.2(c) to finance the
         acquisition of fixed or capital assets, provided that (i) such Liens
         shall be created substantially simultaneously with the acquisition of
         such fixed or capital assets, (ii) such Liens do not at any time
         encumber any Property 

<PAGE>
                                                                             64


         other than the Property financed by such Indebtedness and (iii) the 
         amount of Indebtedness secured thereby is not increased;

                  (h)  Liens created pursuant to the Security Documents;

                  (i) any interest or title of a lessor under any lease entered
         into by the Borrower or any other Subsidiary in the ordinary course of
         its business and covering only the assets so leased; and

                  (j) with the consent of the Administrative Agent, Liens in
         respect of deposits with utilities in the ordinary course of business;
         provided, however, that (i) the Borrower shall use its best efforts
         not to make any such deposits with utilities, (ii) the Borrower shall
         use its best efforts to terminate all such deposit arrangements and
         (iii) the aggregate amount of such deposits at any time shall not
         exceed $4,000,000.

                  7.4 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business, except that:

                  (a) any Subsidiary of the Borrower may be merged or
         consolidated with or into the Borrower (provided that the Borrower
         shall be the continuing or surviving corporation) or with or into any
         Subsidiary Guarantor (provided that the Subsidiary Guarantor shall be
         the continuing or surviving corporation); and

                  (b) any Subsidiary of the Borrower may Dispose of any or all
         of its assets (upon voluntary liquidation or otherwise) to the
         Borrower or any Subsidiary Guarantor.

                  7.5 Limitation on Disposition of Property. Dispose of any of
its Property (including, without limitation, receivables and leasehold
interests), whether now owned or hereafter acquired, or, in the case of any
Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any
Person, except:

                  (a)  the Disposition of obsolete or worn out property in the 
         ordinary course of business;

                  (b)  the sale of inventory in the ordinary course of business;

                  (c)  Dispositions permitted by Sections 7.4(b) or 7.11;

                  (d) the sale or issuance of any Subsidiary's Capital Stock to
         the Borrower or any Subsidiary Guarantor;

                  (e) the Disposition of other assets (including, without
         limitation, the surrender or termination of leases or the non-exercise
         of lease extensions) having a fair market value not to exceed
         $5,000,000 in the aggregate for any fiscal year of the Borrower; and

<PAGE>
                                                                             65


                  (f) any Asset Sale (subject to the limitation contained in
         Section 7.5(e)) or Recovery Event, provided, that the requirements of
         Section 2.12(b) are complied with in connection therewith.

                  7.6 Limitation on Restricted Payments. Declare or pay any
dividend (other than dividends payable solely in common stock of the Person
making such dividend) on, or make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of, any Capital Stock of the
Borrower or any Subsidiary, whether now or hereafter outstanding, or make any
other distribution in respect thereof, either directly or indirectly, whether
in cash or property or in obligations of the Borrower or any Subsidiary
(collectively, "Restricted Payments"), except that any Subsidiary may make
Restricted Payments to the Borrower or any Subsidiary Guarantor.

                  7.7 Limitation on Capital Expenditures. Make or commit to
make any Capital Expenditure, except (a) Capital Expenditures of the Borrower
and its Subsidiaries in the ordinary course of business not exceeding for any
fiscal year of the Borrower set forth below the amount set forth below opposite
such fiscal year

                  Fiscal Year                       Amount
                  -----------                       ------
                      1999                        $60,000,000
                      2000                         80,000,000
                      2001                         52,500,000
                      2002                         55,000,000
                      2003                         57,500,000

; provided, that (i) any such amount referred to above, if not so expended in
the fiscal year for which it is permitted, may be carried over for expenditure
in the next succeeding fiscal year but such amount shall not exceed 25% of the
amount for such fiscal year set forth above, (ii) to the extent the Borrower
retains Excess Cash Flow in any fiscal year pursuant to this Agreement, the
amount referred to above for the fiscal year following the fiscal year in which
the Borrower retains Excess Cash Flow shall be increased by the amount of
Excess Cash Flow so retained by the Borrower and (iii) Capital Expenditures
made pursuant to this clause (a) during any fiscal year shall be deemed made,
first, in respect of amounts permitted for such fiscal year as provided above
and, second, in respect of amounts carried over from the prior fiscal year
pursuant to subclause (i) above, (b) Capital Expenditures made with the
proceeds of any Reinvestment Deferred Amount and (c) Capital Expenditures with
respect to Capital Lease Obligations with respect to vehicles, new stores and
office equipment leased in the ordinary course of the Borrower's business.

                  7.8 Limitation on Investments. Make any advance, loan,
extension of credit (by way of guaranty or otherwise) or capital contribution
to, or purchase any Capital Stock, bonds, notes, debentures or other debt
securities of, or any assets constituting an ongoing business from, or make any
other investment in, any other Person (all of the foregoing, "Investments"),
except:

                  (a)  extensions of trade credit in the ordinary course of 
         business;

<PAGE>
                                                                             66


                  (b)  investments in Cash Equivalents;

                  (c) Investments arising in connection with the incurrence of
         Indebtedness permitted by Section 7.2(b) and (e) ;

                  (d) loans and advances to employees of the Borrower or any
         Subsidiaries of the Borrower in the ordinary course of business
         (including, without limitation, for travel, entertainment and
         relocation expenses) in an aggregate amount for the Borrower and
         Subsidiaries of the Borrower not to exceed $500,000 at any one time
         outstanding;

                  (e)  the transaction contemplated pursuant to the Plan of 
         Reorganization;

                  (f) Investments in assets useful in the Borrower's business
         made by the Borrower or any of its Subsidiaries with the proceeds of
         any Reinvestment Deferred Amount;

                  (g) Investments (other than those relating to the incurrence
         of Indebtedness permitted by Section 7.8(c)) by the Borrower or any of
         its Subsidiaries in the Borrower or any Person that, prior to such
         investment, is a Subsidiary Guarantor;

                  (h) Investments in existence on the date hereof listed on
         Schedule 7.8(h);

                  (i) loans and advances to developers in connection with the
         construction of new store locations not exceeding $10,000,000 at any
         one time outstanding; provided that such advances are evidenced by
         promissory notes in favor if the Borrower and such notes are pledged
         to the Collateral Agent for the ratable benefit of the Lenders
         pursuant to the Security Documents;

                  (j) notes payable from purchasers of stores to the extent
         permitted pursuant to this Agreement, so long as (i) the amount of any
         such note with respect to any store shall note exceed $500,000, (ii)
         the aggregate amounts of all such notes shall not exceed $5,000,000
         and (iii) all such notes are pledged to the Collateral Agent for the
         ratable benefit of the Lenders pursuant to the Security Documents; and

                  (k) debt or equity securities received in connection with the
         bankruptcy or reorganization of suppliers and/or customers and in
         settlement if delinquent obligations of, and other disputes with,
         customers and/or suppliers in the ordinary course of business; and

                  (l) additional Investments of a nature not contemplated
         pursuant to the foregoing clauses (a) through (k); provided that all
         Investments pursuant to this clause (l) shall not exceed $1,000,000 at
         any one time.

                  7.9 Limitation on Optional Payments and Modifications of Debt
Instruments, etc. (a) Amend, modify or otherwise change, or consent or agree to
any amendment, modification, waiver or other change to, any of the terms of any
Indebtedness (other than 

<PAGE>
                                                                             67


Indebtedness pursuant to this Agreement) (other than any such amendment,
modification, waiver or other change which (i) would extend the maturity or
reduce the amount of any payment of principal thereof, reduce the rate or
extend the date for payment of interest thereon or relax any covenant or other
restriction applicable to the Borrower or any of its Subsidiaries and (ii) does
not involve the payment of a consent fee in excess of 1% of the amount of
Indebtedness affected), or (b) amend its certificate of incorporation in any
manner determined by the Administrative Agent to be adverse to the Lenders.

                  7.10 Limitation on Transactions with Affiliates. Enter into
any transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than the
Borrower or any Subsidiary Guarantor) unless such transaction is (a) otherwise
permitted under this Agreement, (b) in the ordinary course of business of the
Borrower or such Subsidiary, as the case may be, and (c) upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary, as the
case may be, than it would obtain in a comparable arm's length transaction with
a Person which is not an Affiliate.

                  7.11 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by the Borrower or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by the Borrower or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower or such
Subsidiary, except any sale by the Borrower or any of its Subsidiaries of (x)
the Borrower's stores located at New Fairfield, Connecticut; Corinth, New York;
Vestal, New York; Vestal Plaza, New York; and Manchester Center, Vermont, (y) a
store or facility, and in each case related land, to the extent acquired or
constructed after the Closing Date or (z) equipment acquired or constructed
after the Closing Date, in each case within 270 days of such acquisition or the
substantial completion of such construction, which is then leased back to the
respective seller (pursuant to, in the case of any such equipment, a capital
lease); provided that the proceeds of the respective sale shall be entirely
cash and shall not be less than 95% of the fair market value of the respective
asset being sold (as determined by the Borrower in good faith), and the
respective lease shall provide for substantially equal annual payments (except
that a balloon payment shall be permitted at the end of the lease term) (i)
based upon an amortization schedule of at least 15 years and with a minimum
term of at least 15 years or at least 5 years in the case of personal property,
provided that such a transaction shall be permitted only if the anticipated
lease payments are such that, when aggregated with the existing lease
obligations of the Borrower and its Subsidiaries, are not projected to cause a
violation of any other provision of this Agreement.

                  7.12 Limitation on Changes in Fiscal Periods. Permit the
fiscal year of the Borrower to end on a day other than the Saturday closest to
the last day in March or change the Borrower's method of determining fiscal
periods.

                  7.13 Limitation on Negative Pledge Clauses. Enter into or
suffer to exist or become effective any agreement which prohibits or limits the
ability of the Borrower or any of its Subsidiaries to create, incur, assume or
suffer to exist any Lien upon any of its Property or 

<PAGE>
                                                                             68


revenues, whether now owned or hereafter acquired, to secure the Obligations
or, in the case of any guarantor, its obligations under the Guarantee and
Collateral Agreement, other than (a) this Agreement and the other Loan
Documents and (b) any agreements governing any purchase money Liens or Capital
Lease Obligations otherwise permitted hereby (in which case, any prohibition or
limitation shall only be effective against the assets financed thereby).

                  7.14 Limitation on Restrictions on Subsidiary Distributions.
Enter into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any
Indebtedness owed to, the Borrower or any other Subsidiary, (b) make
Investments in the Borrower or any other Subsidiary or (c) transfer any of its
assets to the Borrower or any other Subsidiary, except for such encumbrances or
restrictions existing under or by reason of (i) any restrictions existing under
the Loan Documents and (ii) any restrictions with respect to a Subsidiary
imposed pursuant to an agreement which has been entered into in connection with
the Disposition of all or substantially all of the Capital Stock or assets of
such Subsidiary.

                  7.15 Limitation on Lines of Business. Enter into any
business, either directly or through any Subsidiary, except for those
businesses in which the Borrower and its Subsidiaries are engaged on the date
of this Agreement or which are reasonably related thereto.


                          SECTION 8. EVENTS OF DEFAULT

                  If any of the following events shall occur and be continuing:

                  (a) The Borrower shall fail to pay any principal of any Loan
         or Reimbursement Obligation when due in accordance with the terms
         hereof; or the Borrower shall fail to pay any interest on any Loan or
         Reimbursement Obligation, or any other amount payable hereunder or
         under any other Loan Document, within three days after any such
         interest or other amount becomes due in accordance with the terms
         hereof; or

                  (b) Any representation or warranty made or deemed made by any
         Loan Party in any Loan Document or which is contained in any
         certificate, document or financial or other statement furnished by it
         at any time under or in connection with this Agreement or any such
         other Loan Document shall prove to have been inaccurate in any
         material respect on or as of the date made or deemed made; or

                  (c) (i) Any Loan Party shall default in the observance or
         performance of any agreement contained Section 6.4(a)(i) and (ii)
         (with respect to the Borrower only), Section 6.7(a) or Section 7 of
         this Agreement, or Section 5.5(a), Section 5.6, Section 5.7, Section
         5.8(a), Section 5.8(b), Section 5.9(a) or Section 5.10(b) of the
         Guarantee and Collateral Agreement or (ii) an "Event of Default" under
         and as defined in any Mortgage shall have occurred and be continuing;
         or

<PAGE>
                                                                             69


                  (d) Any Loan Party shall default in the observance or
         performance of any other agreement contained in this Agreement or any
         other Loan Document (other than as provided in paragraphs (a) through
         (c) of this Section 8), and such default shall continue unremedied for
         a period of 30 days; or

                  (e) The Borrower or any of its Subsidiaries shall (i) default
         in making any payment of any principal of any Indebtedness (including,
         without limitation, any Guarantee Obligation, but excluding the Loans)
         on the scheduled or original due date with respect thereto; or (ii)
         default in making any payment of any interest on any such Indebtedness
         beyond the period of grace, if any, provided in the instrument or
         agreement under which such Indebtedness was created; or (iii) default
         in the observance or performance of any other agreement or condition
         relating to any such Indebtedness or contained in any instrument or
         agreement evidencing, securing or relating thereto, or any other event
         shall occur or condition exist, the effect of which default or other
         event or condition is to cause, or to permit the holder or beneficiary
         of such Indebtedness (or a trustee or agent on behalf of such holder
         or beneficiary) to cause, with the giving of notice if required, such
         Indebtedness to become due prior to its stated maturity or (in the
         case of any such Indebtedness constituting a Guarantee Obligation) to
         become payable; provided, that a default, event or condition described
         in clause (i), (ii) or (iii) of this paragraph (e) shall not at any
         time constitute an Event of Default unless, at such time, one or more
         defaults, events or conditions of the type described in clauses (i),
         (ii) and (iii) of this paragraph (e) shall have occurred and be
         continuing with respect to Indebtedness the outstanding principal
         amount of which exceeds in the aggregate $5,000,000; or

                  (f) (i) The Borrower or any of its Subsidiaries shall
         commence any case, proceeding or other action (A) under any existing
         or future law of any jurisdiction, domestic or foreign, relating to
         bankruptcy, insolvency, reorganization or relief of debtors, seeking
         to have an order for relief entered with respect to it, or seeking to
         adjudicate it a bankrupt or insolvent, or seeking reorganization,
         arrangement, adjustment, winding-up, liquidation, dissolution,
         composition or other relief with respect to it or its debts, or (B)
         seeking appointment of a receiver, trustee, custodian, conservator or
         other similar official for it or for all or any substantial part of
         its assets, or the Borrower or any of its Subsidiaries shall make a
         general assignment for the benefit of its creditors; or (ii) there
         shall be commenced against the Borrower or any of its Subsidiaries any
         case, proceeding or other action of a nature referred to in clause (i)
         above which (A) results in the entry of an order for relief or any
         such adjudication or appointment or (B) remains undismissed,
         undischarged or unbonded for a period of 60 days; or (iii) there shall
         be commenced against the Borrower or any of its Subsidiaries any case,
         proceeding or other action seeking issuance of a warrant of
         attachment, execution, distraint or similar process against all or any
         substantial part of its assets which results in the entry of an order
         for any such relief which shall not have been vacated, discharged, or
         stayed or bonded pending appeal within 60 days from the entry thereof;
         or (iv) the Borrower or any of its Subsidiaries shall take any action
         in furtherance of, or indicating its consent to, approval of, or
         acquiescence in, any of the acts set forth in clause (i), (ii), or
         (iii) above; or (v) the 

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                                                                             70


         Borrower or any of its Subsidiaries shall generally not, or shall be
         unable to, or shall admit in writing its inability to, pay its debts
         as they become due; or

                  (g) (i) Any Person shall engage in any "prohibited
         transaction" (as defined in Section 406 of ERISA or Section 4975 of
         the Code) involving any Plan, (ii) any "accumulated funding
         deficiency" (as defined in Section 302 of ERISA), whether or not
         waived, shall exist with respect to any Plan or any Lien in favor of
         the PBGC or a Plan shall arise on the assets of the Borrower or any
         Commonly Controlled Entity, (iii) a Reportable Event shall occur with
         respect to, or proceedings shall commence to have a trustee appointed,
         or a trustee shall be appointed, to administer or to terminate, any
         Single Employer Plan, which Reportable Event or commencement of
         proceedings or appointment of a trustee is, in the reasonable opinion
         of the Required Lenders, likely to result in the termination of such
         Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan
         shall terminate for purposes of Title IV of ERISA, (v) the Borrower or
         any Commonly Controlled Entity shall, or in the reasonable opinion of
         the Required Lenders is likely to, incur any liability in connection
         with a withdrawal from, or the Insolvency or Reorganization of, a
         Multiemployer Plan or (vi) any other event or condition shall occur or
         exist with respect to a Plan; and in each case in clauses (i) through
         (vi) above, such event or condition, together with all other such
         events or conditions, if any, could, in the sole judgment of the
         Required Lenders, reasonably be expected to have a Material Adverse
         Effect; or

                  (h) One or more judgments or decrees shall be entered against
         the Borrower or any of its Subsidiaries involving in the aggregate a
         liability (not paid or fully covered by insurance as to which the
         relevant insurance company has acknowledged coverage) of $5,000,000 or
         more, and all such judgments or decrees shall not have been vacated,
         discharged, stayed or bonded pending appeal within 30 days from the
         entry thereof; or

                  (i) Any of the Security Documents shall cease, for any
         reason, to be in full force and effect, or any Loan Party or any
         Affiliate of any Loan Party shall so assert, or any Lien created by
         any of the Security Documents shall cease to be enforceable and of the
         same effect and priority purported to be created thereby; or

                  (j) The guarantee contained in Section 2 of the Guarantee and
         Collateral Agreement shall cease, for any reason, to be in full force
         and effect or any Loan Party or any Affiliate of any Loan Party shall
         so assert; or

                  (k) Any "person" or "group" (as such terms are used in
         Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
         amended (the "Exchange Act")), shall become, or obtain rights (whether
         by means or warrants, options or otherwise) to become, the "beneficial
         owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange
         Act), directly or indirectly, of more than 50% of the outstanding
         common stock of the Borrower;

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                                                                             71


then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under
this Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) shall immediately become due and payable, and (B) if such event is
any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Majority Revolving Credit Facility Lenders,
the Administrative Agent may, or upon the request of the Majority Revolving
Credit Facility Lenders, the Administrative Agent shall, by notice to the
Borrower declare the Revolving Credit Commitments to be terminated forthwith,
whereupon the Revolving Credit Commitments shall immediately terminate; and
(ii) with the consent of the Required Lenders, the Administrative Agent may, or
upon the request of the Required Lenders, the Administrative Agent shall, by
notice to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit
shall have presented the documents required thereunder) to be due and payable
forthwith, whereupon the same shall immediately become due and payable. With
respect to all Letters of Credit with respect to which presentment for honor
shall not have occurred at the time of an acceleration pursuant to this
paragraph, the Borrower shall at such time deposit in a cash collateral account
opened by the Administrative Agent an amount equal to the aggregate then
undrawn and unexpired amount of such Letters of Credit. Amounts held in such
cash collateral account shall be applied by the Administrative Agent to the
payment of drafts drawn under such Letters of Credit, and the unused portion
thereof after all such Letters of Credit shall have expired or been fully drawn
upon, if any, shall be applied to repay other obligations of the Borrower
hereunder and under the other Loan Documents. After all such Letters of Credit
shall have expired or been fully drawn upon, all Reimbursement Obligations
shall have been satisfied and all other obligations of the Borrower hereunder
and under the other Loan Documents shall have been paid in full, the balance,
if any, in such cash collateral account shall be returned to the Borrower (or
such other Person as may be lawfully entitled thereto).


                             SECTION 9. THE AGENTS

                  9.1 Appointment. Each Lender hereby irrevocably designates
and appoints the Agents as the agents of such Lender under this Agreement and
the other Loan Documents, and each such Lender irrevocably authorizes each
Agent, in such capacity, to take such action on its behalf under the provisions
of this Agreement and the other Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to the such Agent by the terms
of this Agreement and the other Loan Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, no Agent shall have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,

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                                                                             72


responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any Agent.

                  9.2 Delegation of Duties. Each Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.

                  9.3 Exculpatory Provisions. Neither any Agent nor any of
their respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found
by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any Loan Party or
any officer thereof contained in this Agreement or any other Loan Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Agents under or in connection with, this Agreement
or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder. The Agents shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.

                  9.4 Reliance by Administrative Agent. Each Agent shall be
entitled to rely, and shall be fully protected in relying, upon any instrument,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Loan Parties), independent
accountants and other experts selected by the Administrative Agent. The Agents
may deem and treat the payee of any Note as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Administrative Agent. Each Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action. Each Agent shall in
all cases be fully protected in acting, or in refraining from acting, under
this Agreement and the other Loan Documents in accordance with a request of the
Required Lenders (or, if so specified by this Agreement, all Lenders), and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders and all future holders of the Loans.

<PAGE>
                                                                             73


                  9.5 Notice of Default. No Agent shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders (or, if so specified by this Agreement, all
Lenders); provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.

                  9.6 Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that neither the Agents nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates have
made any representations or warranties to it and that no act by any Agent
hereinafter taken, including any review of the affairs of a Loan Party or any
affiliate of a Loan Party, shall be deemed to constitute any representation or
warranty by any Agent to any Lender. Each Lender represents to the Agents that
it has, independently and without reliance upon any Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and
their affiliates and made its own decision to make its Loans hereunder and
enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders
by the Administrative Agent hereunder, no Agent shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party which may come into the possession of such Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.

                  9.7 Indemnification. The Lenders agree to indemnify each
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Aggregate Exposure Percentages in effect on the date on which
indemnification is sought under this Section 9.6 (or, if indemnification is
sought after the date upon which the Commitments shall have terminated and the
Loans shall have been paid in full, ratably in accordance with such Aggregate
Exposure Percentages immediately prior to such date), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Loans) be imposed on, incurred by or asserted against such Agent in any way

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                                                                             74


relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by such Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements which are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from such Agent's gross negligence or willful misconduct. The agreements in
this Section 9.7 shall survive the payment of the Loans and all other amounts
payable hereunder.

                  9.8  Agent in Its Individual Capacity.  Each Agent and its 
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with any Loan Party as though such Agent was not an Agent.
With respect to its Loans made or renewed by it and with respect to any Letter
of Credit issued or participated in by it, each Agent shall have the same
rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include each Agent in its individual capacity.

                  9.9 Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent upon 10 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Loan Documents, then the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8(a) or Section
8(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor
agent has accepted appointment as Administrative Agent by the date that is 10
days following a retiring Administrative Agent's notice of resignation, the
retiring Administrative Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. The Syndication Agent may, at
any time, by notice to the Lenders and the Administrative Agent, resign as
Syndication Agent hereunder, whereupon the duties, rights, obligations and
responsibilities hereunder shall automatically be assumed by, and inure to the
benefit of, the Administrative Agent, without any further act by the
Syndication Agent, the Administrative Agent or any Lender. After any retiring
Agent's resignation as Agent, the provisions of this Section 9 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement and the other Loan Documents.

                  9.10 Authorization to Release Liens. The Administrative Agent
is hereby irrevocably authorized by each of the Lenders to release any Lien
covering any Property of the 

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                                                                             75


Borrower or any of its Subsidiaries that is the subject of a Disposition which
is permitted by this Agreement or which has been consented to in accordance
with Section 10.1.

                  9.11 The Arrangers. The Arrangers, in their capacity as such,
shall have no duties or responsibilities, and shall incur no liability, under
this Agreement and the other Loan Documents.


                           SECTION 10. MISCELLANEOUS

                  10.1 Amendments and Waivers. Neither this Agreement, any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 10.1. The Required Lenders and each Loan Party to the relevant Loan
Document may, or (with the written consent of the Required Lenders) the Agents
and each Loan Party to the relevant Loan Document may, from time to time, (a)
enter into written amendments, supplements or modifications hereto and to the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights of the Lenders
or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders, or the Agents, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall (i) forgive the principal amount or extend the final
scheduled date of maturity of any Loan, reduce the stated rate of any interest
or fee payable hereunder or extend the scheduled date of any payment thereof,
or increase the amount or extend the expiration date of any Commitment of any
Lender, in each case without the consent of each Lender directly affected
thereby; (ii) amend, modify or waive any provision of this Section 10.1 or
reduce any percentage specified in the definition of Required Lenders or
Required Prepayment Lenders, consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement and the
other Loan Documents, release all or substantially all of the Collateral or
release all or substantially all of the Subsidiary Guarantors from their
obligations under the Guarantee and Collateral Agreement, in each case without
the consent of all Lenders; (iii) amend, modify or waive any condition
precedent to any extension of credit under the Revolving Credit Facility set
forth in Section 5.2 (including, without limitation, in connection with any
waiver of an existing Default or Event of Default) without the consent of the
Majority Revolving Credit Facility Lenders; (iv) reduce the percentage
specified in the definition of Majority Facility Lenders with respect to any
Facility without the written consent of all Lenders under such Facility; (v)
amend, modify or waive any provision of Section 9 without the consent of the
Agents; (vi) amend, modify or waive any provision of Section 2.6 or 2.7 without
the written consent of the Swing Line Lender; (vii) amend, modify or waive any
provision of Section 2.18 without the consent of each Lender directly affected
thereby; or (viii) amend, modify or waive any provision of Section 3 without
the consent of the Issuing Lender. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Loan Parties, the Lenders, the Administrative Agent and all
future holders of the Loans. In the case of any waiver, the Loan Parties, the
Lenders and the Administrative Agent shall be restored to their 

<PAGE>
                                                                             76


former position and rights hereunder and under the other Loan Documents, and
any Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon. Any such waiver,
amendment, supplement or modification shall be effected by a written instrument
signed by the parties required to sign pursuant to the foregoing provisions of
this Section 10.1; provided, that delivery of an executed signature page of any
such instrument by facsimile transmission shall be effective as delivery of a
manually executed counterpart thereof.

                  10.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice,
when received, addressed (a) in the case of the Borrower, the Syndication Agent
and the Administrative Agent, as follows and (b) in the case of the Lenders, as
set forth on Schedule 1 to the Letter Addendum to which such Lender is a party
or, in the case of a Lender which becomes a party to this Agreement pursuant to
an Assignment and Acceptance, in such Assignment and Acceptance or (c) in the
case of any party, to such other address as such party may hereafter notify to
the other parties hereto:

The Borrower:                               The Grand Union Company
                                            201 Willowbrook Boulevard
                                            Wayne, New Jersey 07470-0466
                                            Attention:  Chief Financial Officer
                                            Telecopy:  (973) 890-6551
                                            Telephone:  (973) 890-6340

                  with a copy to:           Weil, Gotshal & Manges LLP
                                            767 Fifth Avenue
                                            New York, New York  10153
                                            Attention: Ted S. Waksman, Esq.
                                            Telecopy:  (212) 310-8007
                                            Telephone: (212) 310-8000

        The Administrative Agent:           Lehman Commercial Paper Inc.
                                            3 World Financial Center
                                            New York, New York 10285
                                            Attention:  Michael O'Brien
                                            Telecopy:  (212) 528-0819
                                            Telephone:  (212) 526-0437

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                                                                             77


The Syndication Agent:                      UBS AG, Stamford Branch
                                            677 Washington Blvd.
                                            Stamford, Conn. 06912
                                            Attention: Denise Clerkin
                                            Telecopy:  (203) 719-4176
                                            Telephone:  (203) 719-3146

provided that any notice, request or demand to or upon the either Agent or any
Lender shall not be effective until received.

                  10.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the either Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

                  10.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit hereunder.

                  10.5 Payment of Expenses. The Borrower agrees (a) to pay or
reimburse the Agents for all their reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Agents (b) to pay or reimburse each Lender and
the Agents for all its costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the other Loan
Documents and any such other documents, including, without limitation, the fees
and disbursements of counsel (including the allocated fees and expenses of
in-house counsel), consultants and other experts to each Lender and of counsel
to the Agents, (c) to pay, indemnify, and hold each Lender and the Agents
harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Lender and the Agents and their respective
officers, directors, employees, affiliates, agents and controlling persons
(each, an "Indemnitee") harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and 

<PAGE>
                                                                             78


administration of this Agreement, the other Loan Documents and any such other
documents, including, without limitation, any of the foregoing relating to the
use of proceeds of the Loans or the violation of, noncompliance with or
liability under, any Environmental Law applicable to the operations of the
Borrower any of its Subsidiaries or any of the Properties (all the foregoing in
this clause (d), collectively, the "Indemnified Liabilities"), provided, that
the Borrower shall have no obligation hereunder to any Indemnitee with respect
to Indemnified Liabilities to the extent such Indemnified Liabilities are found
by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from the gross negligence or willful misconduct of such
Indemnitee. Without limiting the foregoing, and to the extent permitted by
applicable law, the Borrower agrees not to assert and to cause its Subsidiaries
not to assert, and hereby waives and agrees to cause its Subsidiaries so to
waive, all rights for contribution or any other rights of recovery with respect
to all claims, demands, penalties, fines, liabilities, settlements, damages,
costs and expenses of whatever kind or nature, under or related to
Environmental Laws, that any of them might have by statute or otherwise against
any Indemnitee. The agreements in this Section 10.5 shall survive repayment of
the Loans and all other amounts payable hereunder.

                  10.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Agents, all future holders of the Loans and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Agents and each Lender.

                  (b) Any Lender may, without the consent of the Borrower, in
accordance with applicable law, at any time sell to one or more banks,
financial institutions or other entities (each, a "Participant") participating
interests in any Loan owing to such Lender, any Commitment of such Lender or
any other interest of such Lender hereunder and under the other Loan Documents.
In the event of any such sale by a Lender of a participating interest to a
Participant, such Lender's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other
Loan Documents, and the Borrower and the Agents shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event
shall any Participant under any such participation have any right to approve
any amendment or waiver of any provision of any Loan Document, or any consent
to any departure by any Loan Party therefrom, except to the extent that such
amendment, waiver or consent would reduce the principal of, or interest on, the
Loans or any fees payable hereunder, or postpone the date of the final maturity
of the Loans, in each case to the extent subject to such participation. The
Borrower agrees that if amounts outstanding under this Agreement and the Loans
are due or unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participant shall, to
the maximum extent permitted by applicable law, be deemed to have the right of
setoff in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement, provided that, in
purchasing such participating interest, such Participant shall be deemed to
have agreed to share with the Lenders the proceeds thereof as provided in
Section 10.7(a) as fully as if 

<PAGE>
                                                                             79


it were a Lender hereunder. The Borrower also agrees that each Participant
shall be entitled to the benefits of Sections 2.19, 2.20 and 2.21 with respect
to its participation in the Commitments and the Loans outstanding from time to
time as if it was a Lender; provided, that no Participant shall be entitled to
receive any greater amount pursuant to any such Section than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.

                  (c) Any Lender (an "Assignor") may, in accordance with
applicable law, at any time and from time to time assign to any Lender or any
Affiliate thereof or, with the consent of the Borrower, the Agents and, with
respect to Revolving Credit Loans, the Issuing Lender, which, in each case,
shall not be unreasonably withheld or delayed, to a bank, financial institution
or other entity (an "Assignee") all or any part of its rights and obligations
under this Agreement pursuant to an Assignment and Acceptance, substantially in
the form of Exhibit E, executed by such Assignee and such Assignor and delivered
to the Administrative Agent for its acceptance and recording in the Register;
provided that no such assignment to an Assignee shall be in an aggregate
principal amount of less than $2,000,000 (other than in the case of an
assignment of all of a Lender's interests under this Agreement). Any such
assignment need not be ratable as among the Facilities. Upon such execution,
delivery, acceptance and recording, from and after the effective date 
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Commitment and/or Loans as set forth therein, and (y) the Assignor
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of an Assignor's rights and obligations
under this Agreement, such Assignor shall cease to be a party hereto).
Notwithstanding any provision of this Section 10.6, the consent of the Borrower
shall not be required for any assignment which occurs at any time when any 
Event of Default shall have occurred and be continuing.

                  (d) The Administrative Agent shall maintain at its address
referred to in Section 10.2 a copy of each Assignment and Acceptance delivered
to it and a register (the "Register") for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Loans owing to, each Lender from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrower, the
Agents and the Lenders shall treat each Person whose name is recorded in the
Register as the owner of the Loans and any Notes evidencing such Loans recorded
therein for all purposes of this Agreement. Any assignment of any Loan, whether
or not evidenced by a Note, shall be effective only upon appropriate entries
with respect thereto being made in the Register (and each Note shall expressly
so provide). Any assignment or transfer of all or part of a Loan evidenced by a
Note shall be registered on the Register only upon surrender for registration
of assignment or transfer of the Note evidencing such Loan, accompanied by a
duly executed Assignment and Acceptance; thereupon one or more new Notes in the
same aggregate principal amount shall be issued to the designated Assignee, and
the old Notes shall be returned by the Administrative Agent to the Borrower
marked "cancelled". The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.

<PAGE>
                                                                             80


                  (e) Upon its receipt of an Assignment and Acceptance executed
by an Assignor and an Assignee (and, in any case where the consent of any other
Person is required by Section 10.6(c), by each such other Person) together with
payment to the Administrative Agent of a registration and processing fee of
$3,500 (except that no such registration and processing fee shall be payable
(y) in connection with an assignment involving Lehman Commercial Paper Inc. or
Swiss Bank Corporation or (z) in the case of an Assignee which is already a
Lender or is an affiliate of a Lender or a Person under common management with
a Lender), the Administrative Agent shall (i) promptly accept such Assignment
and Acceptance and (ii) on the effective date determined pursuant thereto
record the information contained therein in the Register and give notice of
such acceptance and recordation to the Lenders and the Borrower. On or prior to
such effective date, the Borrower, at its own expense, upon request, shall
execute and deliver to the Administrative Agent (in exchange for the Revolving
Credit Note and/or applicable Term Notes, as the case may be, of the assigning
Lender) a new Revolving Credit Note and/or applicable Term Notes, as the case
may be, to the order of such Assignee in an amount equal to the Revolving
Credit Commitment and/or applicable Term Loans, as the case may be, assumed or
acquired by it pursuant to such Assignment and Acceptance and, if the Assignor
has retained a Revolving Credit Commitment and/or Term Loans, as the case may
be, upon request, a new Revolving Credit Note and/or Term Notes, as the case
may be, to the order of the Assignor in an amount equal to the Revolving Credit
Commitment and/or applicable Term Loans, as the case may be, retained by it
hereunder. Such new Note or Notes shall be dated the Closing Date and shall
otherwise be in the form of the Note or Notes replaced thereby.

                  (f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section concerning assignments of Loans
and Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.

                  10.7 Adjustments; Set-off. (a) Except to the extent that this
Agreement provides for payments to be allocated to a particular Lender or to
the Lenders under a particular Facility, if any Lender (a "Benefitted Lender")
shall at any time receive any payment of all or part of the Obligations owing
to it, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 8(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Obligations, such Benefitted Lender shall purchase for
cash from the other Lenders a participating interest in such portion of each
such other Lender's Obligations, or shall provide such other Lenders with the
benefits of any such collateral, as shall be necessary to cause such Benefitted
Lender to share the excess payment or benefits of such collateral ratably with
each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.

                  (b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly 

<PAGE>
                                                                             81


waived by the Borrower to the extent permitted by applicable law, upon any
amount becoming due and payable by the Borrower hereunder (whether at the
stated maturity, by acceleration or otherwise), to set off and appropriate and
apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or
the account of the Borrower, as the case may be. Each Lender agrees promptly to
notify the Borrower and the Administrative Agent after any such setoff and
application made by such Lender, provided that the failure to give such notice
shall not affect the validity of such setoff and application.

                  10.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. Delivery of an executed signature page of this
Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.

                  10.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

                  10.10 Integration. This Agreement and the other Loan
Documents represent the agreement of the Borrower, the Administrative Agent and
the Lenders with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof not expressly set forth
or referred to herein or in the other Loan Documents.

                  10.11  GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.

                  10.12  Submission To Jurisdiction; Waivers.  The Borrower 
hereby irrevocably and unconditionally:

                  (a) submits for itself and its Property in any legal action
         or proceeding relating to this Agreement and the other Loan Documents
         to which it is a party, or for recognition and enforcement of any
         judgment in respect thereof, to the non-exclusive general jurisdiction
         of the courts of the State of New York, the courts of the United
         States of America for the Southern District of New York, and appellate
         courts from any thereof;

<PAGE>
                                                                             82


                  (b) consents that any such action or proceeding may be
         brought in such courts and waives any objection that it may now or
         hereafter have to the venue of any such action or proceeding in any
         such court or that such action or proceeding was brought in an
         inconvenient court and agrees not to plead or claim the same;

                  (c) agrees that service of process in any such action or
         proceeding may be effected by mailing a copy thereof by registered or
         certified mail (or any substantially similar form of mail), postage
         prepaid, to the Borrower, as the case may be at its address set forth
         in Section 10.2 or at such other address of which the Administrative
         Agent shall have been notified pursuant thereto;

                  (d) agrees that nothing herein shall affect the right to
         effect service of process in any other manner permitted by law or
         shall limit the right to sue in any other jurisdiction; and

                  (e) waives, to the maximum extent not prohibited by law, any
         right it may have to claim or recover in any legal action or
         proceeding referred to in this Section 10.12 any special, exemplary,
         punitive or consequential damages.

                  10.13 Acknowledgements. The Borrower hereby acknowledges
         that:

                  (a) it has been advised by counsel in the negotiation,
         execution and delivery of this Agreement and the other Loan Documents;

                  (b) neither the Administrative Agent nor any Lender has any
         fiduciary relationship with or duty to the Borrower arising out of or
         in connection with this Agreement or any of the other Loan Documents,
         and the relationship between Administrative Agent and Lenders, on one
         hand, and the Borrower, on the other hand, in connection herewith or
         therewith is solely that of debtor and creditor; and

                  (c) no joint venture is created hereby or by the other Loan
         Documents or otherwise exists by virtue of the transactions
         contemplated hereby among the Lenders or among the Borrower and the
         Lenders.

                  10.14 Confidentiality. Each of the Agents and the Lenders
agrees to keep confidential all non-public information provided to it by any
Loan Party pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent any Agent or any
Lender from disclosing any such information (a) to any other Agent, any other
Lender or any affiliate of any Lender, (b) to any Participant or Assignee
(each, a "Transferee") or prospective Transferee which agrees to comply with
the provisions of this Section 10.14, (c) any of its employees, directors,
agents, attorneys, accountants and other professional advisors, (d) upon the
request or demand of any Governmental Authority having jurisdiction over it,
(e) in response to any order of any court or other Governmental Authority or as
may otherwise be required pursuant to any Requirement of Law, (f) if requested
or required to do so in connection with any litigation or similar proceeding,
(g) which has been publicly 

<PAGE>
                                                                             83


disclosed other than in breach of this Section 10.14, (h) to the National
Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information about a
Lender's investment portfolio in connection with ratings issued with respect to
such Lender or (i) in connection with the exercise of any remedy hereunder or
under any other Loan Document.

                  10.15  WAIVERS OF JURY TRIAL.  THE BORROWER, THE AGENTS
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

                  10.16 Delivery of Lender Addenda. Each initial Lender shall
become a party to this Agreement by delivering to the Administrative Agent and
the Syndication Agent a Letter Addendum duly executed by such Lender, the
Borrower and each Agent.

<PAGE>
                                                                             84

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

                                         THE GRAND UNION COMPANY


                                         By: /s/   Francis E. Nicastro
                                             -----------------------------------
                                             Name:  Francis E. Nicastro
                                             Title: Vice President and Treasurer

                                         LEHMAN BROTHERS INC.,
                                         as Co-Arranger


                                         By: /s/   William Gallagher
                                             -----------------------------------
                                             Name:  William Gallagher
                                             Title:

                                         LEHMAN COMMERCIAL PAPER INC., as
                                         Administrative Agent and as a Lender


                                         By: /s/   William Gallagher
                                             -----------------------------------
                                         Name:  William Gallagher
                                         Title:


                                         LEHMAN COMMERCIAL PAPER INC.,
                                         as Collateral Agent


                                         By: /s/   William Gallagher
                                             -----------------------------------
                                         Name:  William Gallagher
                                         Title:


<PAGE>
                                                                             85


                                         WARBURG DILLON READ LLC, as
                                         Co-Arranger


                                         By: /s/   Michael R. Grayer
                                             -----------------------------------
                                         Name:  Michael R. Grayer
                                         Title: Managing Director
                                                  Leveraged Finance

                                         By: /s/   David W. Barth
                                             -----------------------------------
                                         Name:  David W. Barth
                                         Title: Associate Director
                                                  Leveraged Finance

                                         UBS AG, STAMFORD BRANCH,
                                          as Syndication Agent and as a Lender


                                         By: /s/   Michael R. Grayer
                                             -----------------------------------
                                         Name:  Michael R. Grayer
                                         Title: Managing Director
                                                  Leveraged Finance


                                         By: /s/   Thomas R. Salzano
                                             -----------------------------------
                                         Name:  Thomas R. Salzano
                                         Title: Associate Director

<PAGE>


                                                                        Annex A


                    PRICING GRID FOR REVOLVING CREDIT LOANS,
                        SWING LINE LOANS AND TERM LOANS

=============================================================================
          Consolidated           Applicable Margin        Applicable Margin for
         Leverage Ratio         for Eurodollar Loans         Base Rate Loans
-----------------------------------------------------------------------------
[greater than] 3.75X                    3.00%                      2.00%
-----------------------------------------------------------------------------
[greater than] 3.25X                    2.75%                      1.75%
-----------------------------------------------------------------------------
   [less than] 3.25X                    2.50%                      1.50%
=============================================================================

Changes in the Applicable Margin with respect to Loans resulting from changes
in the Consolidated Leverage Ratio shall become effective on the date (the
"Adjustment Date") on which financial statements are delivered to the Lenders
pursuant to Section 6.1 (but in any event not later than the 45th day after the
end of each of the first three quarterly periods of each fiscal year or the
90th day after the end of each fiscal year, as the case may be) and shall
remain in effect until the next change to be effected pursuant to this
paragraph. If any financial statements referred to above are not delivered
within the time periods specified above, then, until such financial statements
are delivered, the Consolidated Leverage Ratio as at the end of the fiscal
period that would have been covered thereby shall for the purposes of this
definition be deemed to be greater than 3.75 to 1. In addition, at all times
while an Event of Default shall have occurred and be continuing, the
Consolidated Leverage Ratio shall for the purposes of this definition be deemed
to be greater than 3.75 to 1. Each determination of the Consolidated Leverage
Ratio pursuant to this definition shall be made with respect to the period of
four consecutive fiscal quarters of the Borrower ending at the end of the
period covered by the relevant financial statements.